GNSS Genasys Inc

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Delaware		000-24248		87-0361799
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

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☐	Written communications 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 240.14.a-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))

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.00001 par value per share	GNSS	NASDAQ Capital Market

Item 1.01

Entry into a Material Definitive Agreement.

Item 2.02

Results of Operations and Financial Condition.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Item 3.02

Unregistered Sales of Equity Securities.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Item 7.01

Regulation FD Disclosure

Item 9.01

Financial Statements and Exhibits.

(d)

Exhibits.

Exhibit  Number		Exhibit
4.1		Warrant Agreement
10.1		Term Loan and Security Agreement
10.2		Right of First Refusal Agreement
99.1		Financial Results Press Release, dated May 14, 2024, issued by the Company
99.2		Press Release regarding Loan Transaction, dated May 14, 2024, issued by the Company
99.3		Press Release regarding Director Appointments, dated May 14, 2024, issued by the Company
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

Date: May 14, 2024
	Genasys Inc.
	By:	/s/ Dennis D. Klahn
		Dennis D. Klahn
		Chief Financial Officer

Exhibit 4.1

 

Execution Version

WARRANT AGREEMENT

 

THIS WARRANT AGREEMENT (as amended from time to time in accordance with the terms hereof, this “Agreement”), dated as of May 13, 2024, is by and between Genasys Inc., a Delaware corporation, as Borrower (the “Company”), and Issuer Direct Corporation as warrant agent (together with its successors and assigns, the “Warrant Agent”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Loan Agreement (defined below).

 

RECITALS

 

WHEREAS, the Company has entered into that certain Term Loan and Security Agreement (the “Loan Agreement”), dated as of May 13, 2024, by and among the Company (“Borrower”), the Guarantors party thereto, the Lenders party thereto from time to time, and Cantor Fitzgerald Securities, as administrative and collateral agent for the Lenders, pursuant to which the Lenders agreed to lend to the Borrower an aggregate of $15,000,000; and

 

WHEREAS, in connection with the transactions contemplated by the Loan Agreement, on the Closing Date, pursuant to an exemption from registration provided by Section 4(a)(2), and Rule 506 thereunder, of the Securities Act, the Company is issuing to the Initial Lenders an aggregate of 3,068,182 warrants (the “Warrants”), with each Warrant entitling the holder thereof to purchase one share of Common Stock (as may be adjusted in accordance herewith, the “Warrant Shares”); and

 

WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and may be exercised and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent and the registered holders of the Warrants (the “Holders”); and

 

WHEREAS, the Company desires for the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, transfer, exchange and exercise of the Warrants and other matters as provided herein; and

 

WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when issued, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Definition of Terms. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings indicated in this Section 1.1.

 

(a)            “30-Day Average VWAP” means the average VWAP for the thirty (30) preceding Trading Days

 

(b)          “Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Article V) of shares of Common Stock that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).

 

 

(c)           “Affiliate” means, with respect to any specified Person, at any time, a Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person at such time. For purposes of this definition, “control,” when used with respect to any specified Person, shall mean (i) the direct or indirect ownership of more than 50% of the total voting power of securities or other evidences of ownership interest in such Person or (ii) the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise.

 

(d)            “Aggregate Warrant Exercise Price” means, with respect to a Warrant, the product of the Exercise Price multiplied by the number of Warrant Shares issuable upon exercise thereof.

 

(e)            “Applicable Procedures” means, with respect to any transfer or exchange of, or exercise of any Warrants evidenced by, any Global Warrant Certificate, the rules and procedures of the Depository that apply to such transfer, exchange or exercise.

 

(f)            “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

(g)           “Black Scholes Value” means the value of the unexercised Warrants subject to a Put Notice or a Call Notice at the time such Put Notice or Call Notice is delivered, which value is to be calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day that the Put Notice or Call Notice is delivered and (2) the sum of the price per share being offered in cash in the applicable Fundamental Transaction (if any) plus the Fair Market Value of the non-cash consideration being offered in the applicable Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date that the Put Notice or Call Notice is delivered, (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of the Warrants as of the date that a Put Notice or Call Notice is delivered and (2) the remaining term of the Warrants as of the date of consummation of the applicable Fundamental Transaction, (iv) a zero cost of borrow and (v) an expected volatility equal to the 90 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Fundamental Transaction, (B) the consummation of the applicable Fundamental Transaction and (C) in the case of the exercise of a Put Right, the date on which the applicable Holder was first notified by the Company in writing of the execution and delivery of a definitive agreement with respect to the applicable Fundamental Transaction.

 

(g)           “Bloomberg” means Bloomberg Financial Markets or, to the extent Bloomberg Financial Markets is not in existence as of any date of determination, an equivalent, reliable reporting service reasonably acceptable to the Super-Majority Holders and the Company.

 

(h)            “Board” means the board of directors of the Company.

 

 

(i)            “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York, NY or San Diego, CA are authorized or required by law to remain closed.

 

(j)            “Closing Date” means the date of this Agreement (such date being the date of the consummation of the transactions contemplated by the Loan Agreement).

 

(k)           “Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last trade price of such security in the Over the Counter Bulletin Board (the “Bulletin Board”) for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” (or any successor) by the OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price shall be the Fair Market Value.

 

(l)             “Common Stock” means (i) the Company’s shares of common stock, $0.00001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(m)          “Common Stock Equivalent” means any security or obligation which is by its terms convertible or exchangeable into shares of Common Stock or another Common Stock Equivalent, and any option, warrant or other subscription or purchase right with respect to Common Stock.

 

(n)           “Company Order” means a written request or order signed in the name of the Company by any two officers, at least one of whom must be its Chief Executive Officer, President, Chief Financial Officer, Treasurer, any Assistant Treasurer, Secretary, or any Assistant Secretary, and delivered to the Warrant Agent.

 

(o)           “Convertible Securities” means any capital stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.

 

(p)           “Definitive Warrant Certificate” means a Warrant Certificate in the form attached hereto as Exhibit A, registered in the name of the Holder thereof that is not held by the Depository or its nominee and does not bear the Global Warrant Legend.

 

(q)            “Depository” means DTC and its successors as depository hereunder.

 

(r)             “DTC” means The Depository Trust Company.

 

(s)            “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time.

 

 

(t)          “Excluded Issuance” means the issuance or deemed issuance of (i) shares of Common Stock, Options or Convertible Securities issued or issuable to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company pursuant to an equity compensation program or arrangement approved by the Board or the compensation committee of the Board; (ii) shares of Common Stock issued or issuable upon the conversion or exercise of Options or Convertible Securities issued prior to the Closing Date, if any, provided that neither the conversion price or exercise price nor number of shares issuable under such Options or Convertible Securities is amended, modified or changed after the Closing Date other than pursuant to the provisions of such Options or Convertible Securities as they exist as of the Closing Date; (iii) shares of Common Stock issued or issuable pursuant to any event for which adjustment is made pursuant to Article V; (iv) shares of Common Stock, Options or Convertible Securities issued or issuable pursuant to and as consideration for (A) the acquisition of another corporation or other entity by the Company, by merger, purchase of stock or other equity interests, purchase of substantially all of the assets or other reorganization approved by the Board, or (B) an acquisition of assets from another corporation or other entity approved by the Board; (v) shares of Common Stock, Options or Convertible Securities issued or issuable as consideration in connection with a strategic transaction or joint venture approved by the Board or (vi) shares of Common Stock issued upon the exercise of the Warrants.

 

(u)           “Fair Market Value” means (i) in the case of cash, the amount of such cash, (ii) in the case of a security, the Market Price of such security, or (iii) in the case of any consideration other than cash or securities, the amount as agreed between the Company and the Majority Holders; or if the Company and the Majority Holders do not agree on such amount within fifteen (15) Business Days, the fair value of such consideration as determined in good faith by the Board, notice of which shall be provided in writing to each Holder; provided, however, that if the Majority Holders object in writing to the fair value as determined by the Board within ten (10) Business Days after the Company gives written notice thereof to each Holder, the Company shall engage an independent, reputable appraiser selected in good faith by the Board, notice of whose selection shall be provided in writing to each Holder, to determine the fair value of such consideration (provided, however, that if the Majority Holders object in writing to the appraiser selected by the Board within ten (10) Business Days after the Company gives written notice of the selection to each Holder, the appraiser shall be selected jointly by the Company and the Majority Holders). The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(v)            “Form of Assignment” means a certificate in substantially the form attached hereto as Exhibit C accounting for the transfer of Warrants.

 

(w)         “Freely Tradable Shares” means any shares of capital stock which are eligible for resale by the Holders without limitation or restriction pursuant to an effective registration statement under the Securities Act covering the resale thereof and do not bear, and are not subject to, any restrictive legend, stop transfer of similar restriction.

 

(x)           “Fund” means any Person (other than a natural Person), fund, commingled investment vehicle or managed account that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities.

 

(y)          “Fundamental Transaction” means any of the following transactions, whether effected directly or indirectly in one or a series of related transactions: (i) any merger or consolidation of the Company with or into another person, (ii) any sale, lease, exclusive license, assignment, transfer, conveyance or other disposition of all or substantially all of the assets of the Company and its subsidiaries taken as a whole, (iii) the consummation of any purchase offer, tender offer or exchange offer (whether by the Company or another person) pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property, (iv) any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange by the Company pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property and (v) the consummation of a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another person or group of persons; provided, however, only those transactions described in clauses (i), (iii) , (iv) and (v) that result in (a) a person or group (as such term is used in Section 13(d) of the Exchange Act) becoming beneficial owners of a majority of the outstanding Common Stock or (b) the holders of the Company’s outstanding Common Stock as of immediately prior to the transaction (or series of related transactions) beneficially owning less than a majority by voting power of the outstanding shares of common stock of the surviving or successor entity as of immediately after the transaction, shall be considered a Fundamental Transaction for purposes of Section 5.7.

 

 

(z)            “Global Warrant Certificate” means a Warrant Certificate deposited with or on behalf of and registered in the name of the Depository or its nominee, that bears the Global Warrant Legend and that has the “Schedule of Decreases of Warrants” attached thereto.

 

(aa)          “Global Warrant Legend” the legend substantially in the form set forth in Exhibit A hereto.

 

(bb)       “Governmental Authority” means any government of any nation or any federation, province or state or any other political subdivision thereof, any entity, authority or body with the right to exercise executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission or instrumentality, or any political subdivision thereof, any court, tribunal or arbitrator, and any self-regulatory organization.

 

(cc)          “Initial Holder Representation Letter” means a representation letter substantially in the form attached hereto as Exhibit D.

 

(dd)          “Lenders” means the lenders identified in the Loan Agreement.

 

(ee)          “Majority Holders” means Holders representing more than fifty percent (50%) of the Warrants then outstanding.

 

(ff)          “Market Price” as of a particular date means: (i) if the security is then listed on the Nasdaq or any other national securities exchange, the Closing Sale Price of one (1) share of such security on such exchange on the last Trading Day for such security prior to such date; (ii) if the security is then quoted on the Bulletin Board or any similar quotation system or association, the Closing Sale Price of one (1) share of such security on the Bulletin Board or such other quotation system or association on the last Trading Day for such security prior to the such date or, if no such Closing Sale Price is available, the average of the high bid and the low asked price quoted thereon on the last Trading Day for such security prior to such date; or (iii) if the security is not then listed on a national securities exchange or quoted on the Bulletin Board or such other quotation system or association, the fair value of one (1) share of such security as of such date, as agreed between the Company and the Majority Holders; provided, that, if the Company and the Majority Holders do not agree upon such fair value within fifteen (15) Business Days, the Market Price shall be the fair value of one (1) share of such security as determined in good faith by the Board, notice of which shall be provided in writing to each Holder; provided, however, that if the Majority Holders object in writing to the fair value as determined by the Board within ten (10) Business Days after the Company gives written notice thereof to each Holder, the Company shall engage an independent, reputable appraiser selected in good faith by the Board, notice of whose selection shall be provided in writing to each Holder, to determine the fair value of one (1) share of such security (provided, however, that if the Majority Holders object in writing to the appraiser selected by the Board within ten (10) Business Days after the Company gives written notice of the selection to each Holder, the appraiser shall be selected jointly by the Company and the Majority Holders). The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(gg)         “Nasdaq” means The NASDAQ Capital Market.

 

 

(hh)          “New Warrant Certificate” means a new Warrant Certificate issued in accordance with the terms of this Agreement and in substantially the form attached hereto as Exhibit A.

 

(ii)            “Notice of Exercise” means the exercise form for the election to exercise the Warrants in substantially the form attached hereto as Exhibit B.

 

(jj)            “Options” means any rights, warrants or options to subscribe for, convert or exchange into, or purchase or acquire shares of Common Stock or Convertible Securities.

 

(kk)         “Person” means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any Governmental Authority.

 

(ll)            “Principal Market” means, with respect to the Common Stock, the Nasdaq and, with respect to any other security, the principal securities exchange or trading market for such other security.

 

(mm)        “Securities Act” means the Securities Act of 1933, as amended from time to time.

 

(nn)        “Super-Majority Holders” means the Holders representing at least sixty-six and two-thirds percent (66 2/3%) of the Warrants then outstanding.

 

(oo)        “Trading Day” means, with respect to any security, any day on which such security is traded on the Principal Market, or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded, provided that “Trading Day” shall not include any day that the Common Stock is scheduled to trade for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such Trading Market or Quotation System (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time), unless such day is otherwise designated as a Trading Day in writing by the applicable Holder.

 

(pp)          “Transferee Representation Letter” means a representation letter substantially in the form attached hereto as Exhibit E.

 

(nn)        “VWAP” means, with respect to any security, for each Trading Day, the volume- weighted average sale price on the Principal Market as reported by, or based upon data reported by, Bloomberg through its “Volume at Price” function in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time or, if the Principal Market is not the principal trading market for such security, the volume weighted average sale price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg or, if no volume-weighted average sale price is reported for such security by Bloomberg, then the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security that are listed in the over the counter market by the Financial Industry Regulatory Authority, Inc. or on the Bulletin Board (or any successor) or in the OTCQB market or “pink sheets” (or any successor) by the OTC Markets Group, Inc.; provided, however, that if VWAP cannot be calculated for such security on such date in the manner provided above, the VWAP shall be the Fair Market Value of a share of Common Stock using a volume- weighted method as mutually determined by the Company and the Majority Holders, or if the Company and the Majority Holders do not agree upon such Fair Market Value within ten (10) Business Days, by a nationally recognized independent investment banking firm retained for this purpose by the Company and reasonably acceptable to the majority of the Lenders, the reasonable fees and expenses of which shall be paid by the Company. The determination of such investment banking firm shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

 

(qq)          “Warrant Certificate” means a certificate in substantially the form attached hereto as Exhibit A representing such number of Warrants as is indicated on the face thereof, which, for the avoidance of doubt, are either Global Warrant Certificates or Definitive Warrant Certificates.

 

Section 1.2 Rules of Construction. The singular form of any word used herein, including the terms defined in Section 1.1 hereof, shall include the plural, and vice versa. The use herein of a word of any gender shall include correlative words of all genders. Unless otherwise specified, references to Articles, Sections and other subdivisions of this Agreement are to the designated Articles, Sections and other subdivision of this Agreement as originally executed. The words “hereof,” “herein,” “hereunder” and words of similar import refer to this Agreement as a whole. References to “$” are to dollars in lawful currency of the United States of America.

 

ARTICLE II

APPOINTMENT OF WARRANT AGENT

 

Section 2.1 Appointment. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the express terms and subject to the conditions set forth in this Agreement (and no implied terms or conditions), and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the express terms and subject to the conditions set forth in this Agreement.

 

ARTICLE III

WARRANTS

 

Section 3.1 Original Issuance of Warrants. On the Closing Date, (a) one or more Global Warrant Certificates evidencing the Warrants shall be executed by the Company and delivered to the Warrant Agent for countersignature, and the Warrant Agent shall, upon receipt of a Company Order and at the direction of the Company set forth therein, countersign and deliver such Global Warrant Certificates for original issuance to the Depository, or its custodian, for crediting to the accounts of the Lenders (or, subject to applicable securities laws, an Affiliate or Approved Fund of such Lender) pursuant to the Applicable Procedures of the Depository in effect on the Closing Date and (b) each Lender (or such Affiliate or Approved Fund of such Lender) shall (as a condition of receipt of the applicable Warrants) execute and deliver to the Company an Initial Holder Representation Letter. Except as otherwise set forth in this Agreement, the Global Warrant Certificates delivered to the Depository (or a nominee thereof) on the Closing Date shall be the only Warrant Certificates issued or outstanding under this Agreement. Each Warrant Certificate shall evidence the number of Warrants specified therein, and each Warrant evidenced thereby shall represent the right, subject to the provisions contained herein and therein, to purchase one share of Common Stock, subject to adjustment as provided in this Agreement.

 

Section 3.2 Form of Warrant Certificates. The Warrant Certificates evidencing the Warrants shall be in registered form only and substantially in the form set forth in Exhibit A hereto, shall be dated the date on which countersigned by the Warrant Agent, shall have such insertions as are appropriate or required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends and endorsements typed, stamped, printed, lithographed or engraved thereon (which does not impact the Warrant Agent’s rights, duties or immunities) as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed, or to conform to usage.

 

 

Section 3.3 Execution and Delivery of Warrant Certificates. Warrant Certificates evidencing the Warrants which may be countersigned and delivered under this Agreement are limited to Warrant Certificates evidencing an aggregate number of 3,068,182 Warrants except for Warrant Certificates countersigned and delivered upon registration of, transfer of, or in exchange for, or in lieu of, one or more previously countersigned Warrant Certificates pursuant this Agreement. The Warrant Certificates shall be executed, either by manual or facsimile signature, in the corporate name and on behalf of the Company by its Chief Executive Officer, President, Chief Financial Officer, Treasurer, or any Assistant Treasurer under corporate seal reproduced thereon and attested to by the Secretary or any Assistant Secretary of the Company, either manually or by facsimile signature printed thereon. The Warrant Certificates shall be countersigned, either by manual or facsimile signature, by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though such person had not ceased to be such officer of the Company, and any Warrant Certificate may be signed on behalf of the Company by such person as, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company, although at the date of the execution of this Agreement any such person was not such officer.

 

Section 3.4             Global Warrant Certificates.

 

(a)            Subject to the Warrant Shares being registered for resale by the Company pursuant to an effective registration statement under the Securities Act pursuant to Section 4.17 below, each Global Warrant Certificate shall bear the Global Warrant Legend.

 

(b)          So long as a Global Warrant Certificate is registered in the name of the Depository or its nominee, members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Agreement with respect to the Warrants evidenced by such Global Warrant Certificate held on their behalf by the Depository or its custodian, and the Depository may be treated by the Company, the Warrant Agent and any agent of the Company or the Warrant Agent as the absolute owner of such Warrants, and as the sole Holder of such Warrant Certificate, for all purposes. Accordingly, any such Agent Member’s beneficial interest in such Warrants will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depository or its nominee or its Agent Members, and neither the Company nor the Warrant Agent shall have any responsibility or liability with respect to such records maintained by the Depository or its nominee or its Agent Members. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any security.

 

(c)            Any holder of a beneficial interest in Warrants evidenced by a Global Warrant Certificate registered in the name of the Depository or its nominee shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in the Warrants evidenced by such Global Warrant Certificate may be effected only through a book-entry system maintained by the Depository as the Holder of such Global Warrant Certificate (or its agent), and that ownership of a beneficial interest in Warrants evidenced thereby shall be reflected solely in such book-entry form.

 

(d)            Transfers of a Global Warrant Certificate registered in the name of the Depository or its nominee shall be limited to transfers in whole, and not in part, to the Depository, its successors, and their respective nominees except as set forth in Section 3.4(e). Interests of beneficial owners in a Global Warrant Certificate registered in the name of the Depository or its nominee shall be transferred in accordance with the Applicable Procedures of the Depository.

 

 

(e)            A Global Warrant Certificate registered in the name of the Depository or its nominee shall be exchanged for Definitive Warrant Certificates only if the Depository (i) has notified the Company that it is unwilling or unable to continue as or ceases to be a clearing agency registered under Section 17A of the Exchange Act and (ii) a successor to the Depository registered as a clearing agency under Section 17A of the Exchange Act is not able to be appointed by the Company within ninety (90) days or the Depository is at any time unwilling or unable to continue as Depository and a successor to the Depository is not able to be appointed by the Company within ninety (90) days. In any such event, each Global Warrant Certificate registered in the name of the Depository or its nominee shall be surrendered to the Warrant Agent for cancellation in accordance with this Agreement, and the Company shall execute, and the Warrant Agent shall countersign and deliver, upon the Company’s instruction, to each beneficial owner identified by the Depository, in exchange for such beneficial owner’s beneficial interest in such Global Warrant Certificate, Definitive Warrant Certificates evidencing, in the aggregate, the number of Warrants theretofore represented by such Global Warrant Certificate with respect to such beneficial owner’s respective beneficial interest. Any Definitive Warrant Certificate delivered in exchange for an interest in a Global Warrant Certificate pursuant to this Section 3.4(e) shall not bear the Global Warrant Legend. Interests in any Global Warrant Certificate may not be exchanged for Definitive Warrant Certificates other than as provided in this Section 3.4(e).

 

(f)            The holder of a Global Warrant Certificate registered in the name of the Depository or its nominee may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder of a Warrant Certificate is entitled to take under this Agreement or such Global Warrant Certificate.

 

(g)          Each Global Warrant Certificate will evidence such of the outstanding Warrants as will be specified therein and each shall provide that it evidences the aggregate number of outstanding Warrants from time to time endorsed thereon and that the aggregate number of outstanding Warrants evidenced thereby may from time to time be reduced, to reflect exercises or expirations. Any endorsement of a Global Warrant Certificate to reflect the amount of any decrease in the aggregate number of outstanding Warrants evidenced thereby, whether in the case of an exercise or in the case of expiration, will be made by the Warrant Agent.

 

(h)            The Company initially appoints DTC to act as Depository with respect to the Global Warrant Certificates.

 

(i)           Every Warrant Certificate authenticated and delivered in exchange for, or in lieu of, a Global Warrant Certificate or any portion thereof, in accordance with this Agreement, shall be authenticated and delivered in the form of, and shall be, a Global Warrant Certificate, and a Global Warrant Certificate may not be exchanged for a Definitive Warrant Certificate, in each case, other than as provided in Section 3.4(e). Whenever any provision herein refers to issuance by the Company and countersignature and delivery by the Warrant Agent of a new Warrant Certificate in exchange for the portion of a surrendered Warrant Certificate that has not been exercised, in lieu of the surrender of any Global Warrant Certificate and the issuance, countersignature and delivery of a new Global Warrant Certificate in exchange therefor, the Warrant Agent, on the Company’s instruction, may endorse such Global Warrant Certificate to reflect a reduction in the number of Warrants evidenced thereby in the amount of Warrants so evidenced that have been so exercised.

 

(j)             Beneficial interests in any Global Warrant Certificate may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Warrant Certificate in accordance with the Applicable Procedures.

 

(k)           At such time as all Warrants evidenced by a particular Global Warrant Certificate have been exercised or expired in whole and not in part, such Global Warrant Certificate shall, if not in custody of the Warrant Agent, be surrendered to or retained by the Warrant Agent for cancellation in accordance with this Agreement.

 

 

Section 3.5             Warrant Register.

 

(a)               The Warrant Certificates evidencing the Warrants shall be issued in registered form only.

 

(b)               The Warrant Agent shall maintain books (the “Warrant Register”) for the registration of the original issuances, exercises, exchanges and cancellations of the Warrants, as well as all transfers in accordance with this Agreement. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company. The Company and the Warrant Agent may deem and treat the registered Holder of each Warrant as the absolute owner of the Warrants represented thereby for the purpose of any exercise thereof or any distribution to such Holder, and for all other purposes, absent actual notice to the contrary.

 

(c)             Every Warrant Certificate surrendered for registration of transfer or exchange shall (if so required by the Company or the Warrant Agent) be: (i) duly endorsed and containing a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association, or (ii) be accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent, duly executed by the Holder thereof or his attorney duly authorized in writing, also containing a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association. Further, to effect such transfer or exchange, all other necessary information or documentation shall be provided as the Warrant Agent may reasonably request.

 

(d)               The Warrant Agent shall, upon request of the Company from time to time, deliver to the Company such reports of registered ownership of the Warrants and such records of transactions with respect to the Warrants and the shares of Common Stock as the Company may reasonably request. The Warrant Agent shall, upon reasonable advance notice, also make available to the Company for inspection by the Company’s agents or employees, from time to time as the Company may reasonably request, such original books of accounts and records maintained by the Warrant Agent in connection with the issuance and exercise of Warrants hereunder, such inspections to occur during normal business hours.

 

(e)               The Warrant Agent shall keep copies of this Agreement and any notices given to Holders hereunder available for inspection, upon reasonable advance notice, by the Holders during normal business hours. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent reasonably may request.

 

ARTICLE IV

TERMS AND EXERCISE OF WARRANTS

 

Section 4.1            Exercise Price. Each Warrant shall entitle the registered Holder thereof, subject to the provisions of this Agreement and applicable law, the right to purchase from the Company one share of Common Stock (subject to adjustment from time to time as provided in Article V hereof), at a price of $2.53 per share (subject to adjustment from time to time as provided in Article V, the “Exercise Price”).

 

Section 4.2           Exercise Period; Expiration. The Warrants may be exercised by the Holder thereof, in whole or in part (but not as to a fractional Warrant or a fractional share of Common Stock), at any time and from time to time after the Closing Date and prior to 5:00 P.M., New York time on May 13, 2029 (such period, the “Exercise Period”). To the extent that a Warrant or portion thereof is not exercised prior to the expiration of the Exercise Period, such Warrant shall be automatically cancelled and will become permanently and irrevocably null and void with no action by any Person, and with no further rights hereunder or under any Warrant Certificate representing such Warrants, upon such expiration and the Holder of such Warrant shall not be entitled to any distribution, payment or other amount in respect of such Warrant.

 

 

Section 4.3             Method of Exercise. In order for a Holder to exercise all or any of the Warrants represented by a Warrant Certificate, the Holder thereof must (i) (x) in the case of a Global Warrant Certificate, deliver to the Warrant Agent a Notice of Exercise, setting forth the number of Warrants being exercised and, if applicable, whether cashless exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof and deliver such Warrants by book-entry transfer through the facilities of the Depository to the Warrant Agent in accordance with the Applicable Procedures and otherwise comply with the Applicable Procedures in respect of the exercise of such Warrants or (y) in the case of a Definitive Warrant Certificate, at the office of the Warrant Agent, (I) deliver to the Warrant Agent a Notice of Exercise, setting forth the number of Warrants being exercised and, if applicable, whether cashless exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof as well as any such other necessary information the Warrant Agent may reasonably require, and (II) surrender to the Warrant Agent the Definitive Warrant Certificate evidencing such Warrants; and (ii) pay to the Warrant Agent an amount equal to (x) all taxes required to be paid by the Holder, if any, pursuant to this Agreement prior to, or concurrently with, exercise of such Warrants and (y) except in the case of a cashless exercise, an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which the Warrants are being exercised (the “Aggregate Exercise Price”) in United States dollars, in case of (x) and (y), by wire transfer in immediately available funds, to the account of the Company at the Warrant Agent or such other account of the Company at such banking institution as the Company shall have given notice to the Warrant Agent and such Holder in accordance with this Agreement. The Company reserves the right to waive any of the conditions to any particular exercise of Warrants or any defects in the Notice(s) of Exercise with respect to any particular exercise of Warrants.

 

Section 4.4            Partial Exercise. If fewer than all the Warrants represented by a Warrant Certificate are exercised, (i) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, the Warrant Agent shall cause the custodian of DTC to endorse the “Schedule of Decreases of Warrants” attached to such Global Warrant Certificate to reflect the Warrants being exercised and (ii) in the case of exercise of Warrants evidenced by a Definitive Warrant Certificate, such Definitive Warrant Certificate shall be surrendered and a new Definitive Warrant Certificate of the same tenor and for the number of Warrants which were not exercised shall be executed by the Company. The Warrant Agent shall countersign the new Definitive Warrant Certificate, registered in such name or names, subject to the provisions of this Agreement regarding registration of transfer and payment of governmental charges in respect thereof, as may be directed in writing by the Holder, and shall deliver the new Definitive Warrant Certificate to the Person or Persons in whose name such new Definitive Warrant Certificate is so registered. The Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Definitive Warrant Certificates duly executed on behalf of the Company for such purpose.

 

Section 4.5             Cashless Exercise.

 

(a)          Notwithstanding any provisions in this Agreement to the contrary, the Holder of any Warrants may, at such Holder’s option, in such Holder’s Notice of Exercise pursuant to Section 4.3, elect to exercise Warrants, in whole or in part, by (i) in the case of Warrants evidenced by a Global Warrant Certificate, providing notice to the Warrant Agent pursuant to the Applicable Procedures and the Notice of Exercise; or (ii) in the case of Warrants evidenced by a Definitive Warrant Certificate, providing notice pursuant to the Notice of Exercise, in the case of (i) or (ii), that the Holder desires to exercise such Warrants or portion thereof by means of a “cashless exercise” in which such Holder, in lieu of paying to the Company the applicable Exercise Price by wire transfer in immediately available funds, may elect to receive a number of Warrant Shares equal to the value determined pursuant to the following formula (it being understood that any portion of the Warrants being exercised on such date that are not being exercised by means of a cashless exercise will not be affected by this calculation):

 

X = (A – B) * C / A

 

 

where:

 

(A) =         the 30-Day Average VWAP ending on the Trading Day immediately preceding the date the applicable Notice of Exercise is delivered to the Company pursuant to Section

4.3 hereof;

 

(B) =         the Exercise Price at the time of such exercise;

 

(C) =         the number of Warrant Shares issuable upon the exercise of the applicable Warrants being exercised, if such exercise were by means of a cash exercise rather than a cashless exercise; and

 

(X) =         the number of Warrant Shares to be issued to such Holder in respect of a cashless exercise of Warrants.

 

If the foregoing calculation results in a negative number, then no Warrant Shares shall be issuable via a cashless exercise. If Warrant Shares are issued in such a cashless exercise the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of the applicable Warrants, to the extent permitted in accordance with Section 3(a)(9) of the Securities Act. The Company agrees not to take any position contrary to this Section 4.5.

 

Section 4.6             Issuance of Common Stock.

 

(a)          Upon due exercise of Warrants evidenced by any Warrant Certificate in conformity with this Agreement, the Warrant Agent shall, when actions specified in this Article IV have been effected and satisfied, as applicable, deliver to the Company the Notice of Exercise received from such Holder, if applicable, deliver or deposit all funds in accordance with Section 4.3, and advise the Company by telephone at the end of such day of the amount of funds so deposited to its account. The Company shall thereupon, within one (1) Trading Day after any delivery of any Notice of Exercise and the Aggregate Exercise Price delivered prior to 12:00 noon Eastern Time and two (2) Trading Days after any delivery of any Notice of Exercise and the Aggregate Exercise Price delivered on or after 12:00 noon Eastern Time (such date, the “Warrant Share Delivery Date”), (i) determine the number of shares of Common Stock issuable pursuant to exercise of such Warrants pursuant to Section 4.9 or, if cashless exercise applies, Section 4.5 and (ii) (x) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, deliver or cause to be delivered to the Recipient (as defined below) in accordance with the Applicable Procedures shares of Common Stock in book-entry form to be so held through the facilities of DTC in an amount equal to, or, if the Common Stock may not then be held in book-entry form through the facilities of DTC, duly executed certificates representing, or (y) in the case of exercise of Warrants evidenced by Definitive Warrant Certificates, execute or cause to be executed and deliver or cause to be delivered to the Recipient (as defined below) a certificate or certificates representing, in case of (x) and (y), the aggregate number of Warrant Shares issuable upon such exercise (based upon the aggregate number of Warrants so exercised), as so determined, together with an amount in cash in lieu of any fractional share(s), if the Company so elects pursuant to this Agreement. The Warrant Shares in book-entry form or certificate or certificates representing such Warrant Shares so delivered shall be, to the extent possible, in such denomination or denominations as such Holder shall request in the applicable Notice of Exercise and shall be registered or otherwise placed in the name of, and delivered to, the Holder or, subject to Section 4.14, such other Person as shall be designated by the Holder in such Notice of Exercise (the Holder or such other Person being referred to herein as the “Recipient”).

 

 

Section 4.7             Time of Exercise. Each exercise of a Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which each of the requirements for exercise of such Warrant specified in this Agreement, including, if applicable, payment of the Aggregate Exercise Price, have been duly satisfied. At such time, Warrant Shares in book-entry form or the certificates for the shares of Common Stock issuable upon such exercise as provided in Section 4.6 shall be deemed to have been issued and, for all purposes of this Agreement, the Recipient shall, as between such Person and the Company, be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which the applicable Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares.

 

Section 4.8             Cancellation of Warrant Certificates. Any Definitive Warrant Certificate surrendered for exercise shall, if surrendered to the Company, be delivered to the Warrant Agent. All Warrant Certificates surrendered or delivered to or received by the Warrant Agent for cancellation pursuant to this Section 4.8 or Section 3.4(e) or Section 3.4(k) shall be promptly cancelled by the Warrant Agent and shall not be reissued by the Company. The Warrant Agent shall destroy any such cancelled Warrant Certificates and deliver its certificate of destruction to the Company, unless the Company shall otherwise direct in writing.

 

Section 4.9            Shares Issuable. The number of shares of Common Stock “obtainable upon exercise” of Warrants at any time shall be the number of shares of Common Stock into which such Warrants are then exercisable. The Company will confirm the number of shares issuable if so requested by the Warrant Agent. The number of shares of Common Stock “into which each Warrant is exercisable” shall be one share, subject to adjustment as provided in Article V.

 

Section 4.10          Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of issuance upon the exercise of the Warrants, a number of shares of Common Stock equal to the aggregate Warrant Shares issuable upon the exercise of all outstanding Warrants. The Company shall take such actions as may be reasonably necessary to assure that all such shares of Common Stock may be so issued without violating the Company’s governing documents, any agreements to which the Company is a party, any requirements of any national securities exchange upon which shares of Common Stock may be listed or any applicable laws. The Company covenants that it will take such actions as may be reasonably necessary or appropriate in order that all Warrant Shares issued upon exercise of the Warrants will, upon issuance in accordance with the terms of this Agreement, be fully paid and non-assessable and free from any and all (i) security interests created by or imposed upon the Company and (ii) taxes, liens and charges with respect to the issuance thereof.

 

Section 4.11         Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. If, the Company and Warrant Agent fail, for any reason or no reason, to deliver or cause to be delivered to the Holder the Warrant Shares in accordance with the provisions of Section 4.6 above on or before the Warrant Share Delivery Date, and if on or after the Warrant Share Delivery Date such Holder purchases (in an open market transaction or otherwise) or such Holder’s brokerage firm otherwise purchases shares of Common Stock to deliver in satisfaction of a sale by such Holder of shares of Common Stock which such Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall, within three (3) Business Days after such Holder’s request and in such Holder’s sole discretion, either (i) pay cash to such Holder in an amount equal to such Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased, at which point the Company’s obligation to deliver such Warrant Shares shall terminate, or (ii) promptly honor its obligation to deliver to such Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder and pay cash to such Holder in an amount equal to the excess, if any, of the such Holder’s total purchase price (including brokerage commissions, if any) for such shares of Common Stock so purchased over the product of (x) such number of shares of Common Stock multiplied by (y) the price at which the sell order giving rise to the Buy-In obligation was executed. Such Holder shall provide the Company with written or email notice indicating the amount payable to such Holder in respect of the Buy-In and, upon request of the Company, evidence supporting the calculation of such amount. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the failure to timely deliver shares of Common Stock upon exercise of a Warrant as required pursuant to the terms hereof.

 

 

Section 4.12          Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares of Common Stock shall be issued upon the exercise of a Warrant. As to any fraction of a share of Common Stock which a Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share of Common Stock. The Company shall provide funding to cover cash payment in lieu of fractional shares of Common Stock. The Warrant Agent shall have no obligation to make cash payments in lieu of fractional shares of Common Stock unless the Company shall have provided the necessary funds to pay in full all amounts due and payable with respect thereto. Each Holder, by its acceptance of Warrants, expressly waives its right to any fraction of a share of Common Stock upon its exercise of such Warrant(s).

 

Section 4.13          Close of Books. The Company shall not close its books against the transfer of any Warrants or any Warrant Shares in any manner which interferes with the timely exercise of such Warrants.

 

Section 4.14          Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to such Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company. The Company shall pay all fees required for same-day processing of any Notice of Exercise and all fees to the DTC (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares. Notwithstanding the foregoing, in connection with the exercise of any Warrants, the Company shall not be required to pay any tax or other charge imposed in respect of any transfer involved in the Company’s issuance and delivery of shares of Common Stock (including certificates therefor) (or any payment of cash or other property in lieu of such shares) to any recipient other than the Holder of the Warrants being exercised (such tax or other charge, a “Non-Registered Holder Tax”), and in case of any such Non-Registered Holder Tax, the Warrant Agent and the Company shall not be required to issue or deliver any such shares (or cash or other property in lieu of such shares) until (a) such Non-Registered Holder Tax has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or the Company or (b) it has been established to the Company’s and the Warrant Agent’s satisfaction that any such Non-Registered Holder Tax that is or may become due has been paid. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement that requires the payment of Non-Registered Holder Taxes, unless and until the Warrant Agent is satisfied that all such Non-Registered Holder Taxes have been paid.

 

Section 4.15         Investment Unit Allocation. The Company agrees, and by acceptance of any Warrant, each initial Holder is deemed to have agreed, (i) that the Term Loan disbursed to the Borrower on the Closing Date and the Warrants issued on the Closing Date, taken together, comprise an “investment unit” for purposes of Section 1273(c)(2) of the Internal Revenue Code, (ii) to treat the investment unit as issued by the Company for U.S. federal income tax purposes and (iii) to allocate the issue price of such investment unit among the Term Loan and the Warrants in proportion to their fair market value as of the Closing Date, in accordance with Treasury Regulations Section 1.1273-2(h). The Lenders shall determine in good faith the fair market value of the Warrants for purposes of allocating the issue price of the investment unit between the Term Loan and the Warrants, as described in clause (iii) above, notice of which shall be provided in writing to the Company; provided, however, that if the Company objects in writing to the fair market value as determined by the Lenders within ten (10) Business Days after the Lenders give written notice thereof, the Company shall engage an independent, reputable appraiser selected jointly by the Company and the Lenders, to determine such fair market value. The fees and expenses of such appraiser shall be paid by the Company. Unless otherwise required by applicable law, the Company agrees, and, by acceptance of any Warrant, each initial Holder is deemed to have agreed, to file all tax returns in a manner consistent with this Section 4.15.

 

 

Section 4.16          Holder’s Exercise Limitations. Unless otherwise agreed in writing by both the Company and the Holder, the Company shall not effectuate any exercise of a Warrant, and a Holder shall not have any right to exercise a Warrant, to the extent that such exercise would result in such Holder (together with such Holder’s Affiliates and any other Persons acting as a group together with such Holder or any of such Holder’s Affiliates, in each case, to the extent that such Affiliates and persons acting as a group are required to aggregate their beneficial ownership of Common Stock for purposes of Section 13(d) of the Exchange Act (“Attribution Parties”)), beneficially owning more than the percentage of Common Stock outstanding set forth on Schedule A attached hereto opposite the name of such Holder (or for the Affiliate of such Holder that elected such Holder receive Warrants) as its “Initial Beneficial Ownership Limitation” (subject to adjustment under this Section 4.16, such Holder’s “Beneficial Ownership Limitation”). For purposes of this Section 4.16, beneficial ownership and the determination of any group status shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder (it being acknowledged and understood by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and that the Holder is solely responsible for the preparation of any schedules required to be filed in accordance therewith). To the extent that the limitations contained in this Section 4.16 apply to a Holder, the determination of whether any Warrants are exercisable, and the portion thereof that is exercisable in relation to other securities owned by such Holder and such Holder’s Attribution Parties, shall be in the discretion of the Holder and the submission of a Notice of Exercise shall be deemed to be a determination by such Holder in relation to other securities owned by such Holder and such Holder’s Attribution Parties that the Warrants set forth in the applicable Notice of Exercise are exercisable. Neither the Company, nor the Warrant Agent shall be required to independently confirm whether any exercise of any Warrant by a Holder would result in the violation by such Holder of its applicable Beneficial Ownership Limitation, and instead the Company and the Warrant Agent shall be able to rely for all purposes on a Notice of Exercise as such Holder’s determination and confirmation that such exercise set forth therein does not result in such Holder exceeding its Beneficial Ownership Limitation. Upon the written request of a Holder, the Company shall within two (2) Business Days confirm in writing to such Holder the number of shares of Common Stock then outstanding. A Holder, upon notice to the Company, may increase or decrease its Beneficial Ownership Limitation, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the Common Stock outstanding and the provisions of this Section 4.16 shall continue to apply. Any change in the Beneficial Ownership Limitation will not be effective until the sixty- first (61st) day after such notice is delivered to the Company. The limitations contained in this paragraph shall apply to a successor holder of any Warrants which successor holder shall be subject to the same Beneficial Ownership Limitation as its transferor unless and until changed in accordance with this Section 4.16.

 

Section 4.17          No Warrant Share Legends. The Warrant Shares shall be registered for resale by the Company pursuant to an effective registration statement under the Securities Act as required pursuant to the Loan Agreement, thereafter, the Warrant Shares shall remain Freely Tradable Shares, and the Warrant Shares shall be issued upon exercise of the Warrants without restrictive legend unless the Holder is or has been an Affiliate of the Company and such legend is required by law.

 

Section 4.18           Cap on Shares of Common Stock. Notwithstanding anything herein to the contrary, the maximum number of Warrant Shares eligible to be issued in connection with the exercise of the Warrants upon adjustment in accordance Sections 5.3, 5.4 or 5.5 hereof, shall not exceed (i) 19.9% of the outstanding shares of Common Stock immediately prior to the initial entry into this Agreement, or (ii) 19.9% of the combined voting power of the then outstanding voting securities of the Company immediately prior to the initial entry into this Agreement (the “Share Cap”), unless the Company has previously obtained the approval of the Company’s shareholders under applicable rules and requirements of the Nasdaq for the issuance of shares of Common Stock in excess of the Share Cap (the “Shareholder Approval”), prior to issuing any Excess Shares (as defined below). In the event the number of shares of Common Stock to be issued to Holders hereunder in connection with the exercise of the Warrants exceeds the Share Cap, then the Company shall, in lieu of issuing such shares in excess of the Share Cap, pay the Holders the cash value of such shares of Common Stock which exceed the Share Cap (the “Excess Shares”), upon exercise of the applicable Warrants by the Holders thereof, with the value of each such Excess Share being the Fair Market Value thereof. For the sake of clarity, in the event Shareholder Approval has been received, or there is no limit on the number of Warrant Shares which may be issued under applicable Nasdaq rules pursuant to the terms of this Warrant Agreement, there shall be no Excess Shares, this Section 4.13 shall have no effect, and the requirement to pay cash for any Excess Shares shall apply only if, and to the extent that, the exercise of the Warrants would result in a number of Warrant Shares being issued in excess of the Share Cap. To the extent that any concurrent exercise of Warrants by multiple Holders results in the Share Cap being exceeded, the maximum number of Warrant Shares issuable without exceeding the Share Cap shall be issued pro rata to each exercising Holder. Nothing herein shall prevent or limit the Company’s ability to issue a number of Warrant Shares up to, but without exceeding, the Share Cap.

 

 

ARTICLE V

ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES

 

Section 5.1            General. In order to prevent dilution of the rights granted under the Warrants, the Exercise Price and number of shares of Common Stock issuable upon exercise of each Warrant shall be subject to adjustment from time to time as provided in this Article V; provided, that if more than one subsection of this Article V is applicable to a single event, the subsection shall be applied that produces the largest adjustment in favor of the Holders and no single event shall cause an adjustment under more than one subsection of this Article V so as to result in duplication.

 

Section 5.2          Stock Dividends and Splits. If the Company, at any time while a Warrant is outstanding: (a) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of a Warrant), (b) subdivides outstanding shares of Common Stock into a larger number of shares, (c) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case (i) the Exercise Price of each outstanding Warrant shall be increased or decreased to an amount determined by multiplying (x) the Exercise Price in effect immediately prior to such event by (y) a fraction, the numerator of which is the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and the denominator of which is the number of shares of Common Stock outstanding immediately after such event and (ii) the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged. Any adjustment made pursuant to this Section 5.2 shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. In the event that such dividend or distribution is not so made, the Exercise Price and the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be readjusted, effective as of the date when the Board determines not to make such dividend or distribution, to the Exercise Price that would then be in effect and the number of Warrant Shares issuable upon exercise of each outstanding Warrant if such record date had not been fixed.

 

 

Section 5.3            Tender or Exchange Offer. If the Company, at any time while a Warrant is outstanding, makes any payment or distribution in respect of any tender offer or exchange offer for shares of Common Stock where the Fair Market Value of the consideration per share of Common Stock when paid or distributed by the Company exceeds the Market Price of a share of Common Stock actually acquired in such tender offer or exchange offer as of the Business Day immediately preceding the first public announcement of the tender offer or exchange offer (the aggregate excess amount for all Common Stock acquired in such tender offer or exchange offer, the “Excess Tender Amount”), then, and in each such case, (i) the Exercise Price of each outstanding Warrant shall be decreased to an amount determined by multiplying (x) the Exercise Price in effect immediately prior to the close of business on the expiration date of the tender offer or exchange offer by (y) a fraction, (1) the numerator of which is the positive difference of (A) the Market Price of a share of Common Stock on the Business Day immediately preceding the first public announcement of the tender offer or exchange offer minus (B) the quotient determined by dividing (I) the Excess Tender Amount by (II) the number of shares of Common Stock outstanding immediately after the expiration of the tender offer or exchange offer (after giving effect to the purchase or exchange of Common Stock) and (2) the denominator of which is the Market Price of a share of Common Stock on the Business Day immediately preceding the first public announcement of the tender offer or exchange offer and (ii) the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged. Such adjustment shall become effective immediately after any such exchange offer or tender offer is consummated.

 

Section 5.4            Adjustment of Exercise Price Upon Issuance of Shares of Common Stock. If the Company, at any time while a Warrant is outstanding, in each case, other than in an Excluded Issuance, grants, issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 5.4    is deemed to have granted, issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share less than a price equal to the Exercise Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (such Exercise Price then in effect, the “Applicable Price” and such issuance, a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price of each outstanding Warrant shall be reduced to an amount equal to the quotient determined by dividing (1) the sum of (I) the product of (x) the Applicable Price multiplied by (y) the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance plus (II) the aggregate consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the number of shares of Common Stock outstanding immediately after such Dilutive Issuance. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price under this Section 5.4), the following shall be applicable:

 

(a)           Issuance of Options. If the Company shall, at any time or from time to time after the Closing Date, in any manner (other than in an Excluded Issuance) grant, issue or sell or enter into any agreement to grant, issue or sell (whether directly or by assumption in a merger or otherwise) any Options, whether or not such Options or the right to convert or exchange any Convertible Securities issuable upon the exercise of such Options are immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 5.4(d)) for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon the exercise of such Options is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued as of the date of the granting, issuance or sale (or the date of execution of such agreement to grant, issue or sell, as applicable) of such Options (and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price under this Section 5.4), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of this Section 5.4) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of all such Options, plus (y) the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus (z), in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of all such Convertible Securities and the conversion or exchange of all such Convertible Securities, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of all such Options or upon the conversion or exchange of all Convertible Securities issuable upon the exercise of all such Options. Except as otherwise provided in Section 5.4(c), no further adjustment of the Exercise Price shall be made upon the actual issuance of Common Stock or of Convertible Securities upon exercise of such Options or upon the actual issuance of Common Stock upon conversion or exchange of Convertible Securities issuable upon exercise of such Options. Simultaneously with any adjustment to the Exercise Price of the Warrants pursuant this Section 5.4(a), the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged.

 

 

(b)           Issuance of Convertible Securities. If the Company shall, at any time or from time to time after the Closing Date, in any manner (other than in an Excluded Issuance) grant, issue or sell or enter into any agreement to grant, issue or sell (whether directly or by assumption in a merger or otherwise) any Convertible Securities, whether or not the right to convert or exchange any such Convertible Securities is immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 5.4(d)) for which Common Stock is issuable upon the conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of the total maximum amount of such Convertible Securities shall be deemed to have been issued as of the date of the granting, issuance or sale (or the date of execution of such agreement to grant, issue or sell, as applicable) of such Convertible Securities (and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price pursuant to this Section 5.4), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of this Section 5.4) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Convertible Securities, plus (y) the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange of all such Convertible Securities, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. Except as otherwise provided in Section 5.4(c), no further adjustment of the Exercise Price shall be made upon the actual issuance of Common Stock upon conversion or exchange of such Convertible Securities or the granting, issuance or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Exercise Price have been made pursuant to the other provisions of this Section 5.4. Simultaneously with any adjustment to the Exercise Price of the Warrants pursuant this Section 5.4(b), the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged.

 

(c)           Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the consideration, if any, payable upon the conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than (i) proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 5.2, (ii) changes in conversion or exercise prices, as applicable, resulting from anti-dilution provisions contained in the instruments governing such securities which are in effect as of the Closing Date, and/or (iii) changes in conversion or exercise prices, as applicable, in respect of securities issued in an Excluded Issuance), then the Exercise Price then in effect shall be adjusted to an amount equal to the Exercise Price that would have been in effect had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 5.4(c), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was outstanding as of the date hereof) are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. Simultaneously with any adjustment to the Exercise Price of the Warrants pursuant this Section 5.4(c), the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged. No adjustment pursuant to this Section 5.4(c) shall be made if such adjustment would result in an increase of the Exercise Price of the Warrants or a decrease in the number of Warrant Shares.

 

 

(d)           Calculation of Consideration Received. If any Option, Convertible Security or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company, together comprising one integrated transaction, the aggregate amount of consideration therefor shall be deemed to be the Fair Market Value of such portion of the aggregate consideration received by the Company in such transaction as is attributable to such Options, Convertible Securities or Adjustment Rights, which portion shall be allocated based on the relative Fair Market Value of the applicable Options, Convertible Securities or Adjustment Rights and the other securities issued or sold or deemed to be issued or sold in connection therewith. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the Fair Market Value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of such securities during the five (5) consecutive Trading Day period applicable to such securities ending on the date immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the Fair Market Value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be.

 

(e)           Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them to (i) receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (ii) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be), provided, that if before the distribution to its holders of Common Stock the Company legally abandons its plan to pay or deliver such dividend, distribution, subscription or purchase rights and, to the extent such plan is publicly disclosed, announces the abandonment of such plan, then thereafter the adjustment previously made in respect thereof shall be rescinded and annulled.

 

(f)           Treatment of Terminated Options or Convertible Securities. Upon the occurrence of any event (other than any event that (i) constitutes or occurs in connection with a Fundamental Transaction or (ii) involves the Company making any payment or providing any consideration to the holder of such Option or Convertible Security) that results in (x) the lapse of any unexercised Option (or any portion thereof) prior to the scheduled expiration date thereof or (y) the early termination of a conversion or exchange right with respect to any unconverted or unexchanged Convertible Security (or portion thereof), in each case, for which any adjustment was made pursuant to this Section 5.4, the Exercise Price then in effect hereunder shall forthwith be changed pursuant to the provisions of this Section 5.4 to the Exercise Price which would have been in effect at the time of such lapse or early termination had such unexercised Option (or portion thereof) or unconverted or unexchanged Convertible Security (or portion thereof), to the extent outstanding immediately prior to such lapse or early termination, never been issued.

 

Section 5.5           Pro Rata Distributions. If the Company, at any time while a Warrant is outstanding, shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock (other than Common Stock) or other securities, assets, property or Options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction, but excluding any distribution made upon the consummation of a Fundamental Transaction to the extent included in the Alternate Consideration) (a “Distribution”), then, in each such case, effective immediately after the record date mentioned above, (i) the Exercise Price of each outstanding Warrant shall be decreased to an amount determined by subtracting the (x) then per share Fair Market Value at such record date of the portion of such Distribution applicable to one (1) outstanding share of the Common Stock from (y) the amount of such Exercise Price and (ii) the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged. The adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.

 

 

Section 5.6          Other Events. If the Company (or any subsidiary of the Company), at any time while a Warrant is outstanding, shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holders from dilution or if any event occurs of the type contemplated by the provisions of this Article V but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Board shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares issuable upon exercise of a Warrant so as to protect the rights of the Holders, provided that no such adjustment pursuant to this Section 5.6 will increase the Exercise Price or decrease the number of Warrant Shares issuable upon exercise of a Warrant as otherwise determined pursuant to this Article V, provided further that if the Majority Holders provide written notice in accordance with Section 8.2 to the Company within twenty (20) Business Days after notice of such adjustment is given by the Company to each Holder in accordance with Section 5.8 that they do not accept such adjustments as appropriately protecting their interests hereunder against such dilution, then the Board and the Majority Holders shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company.

 

Section 5.7             Fundamental Transaction.

 

(a)          In the event of a Fundamental Transaction, the Warrants shall remain outstanding and each Holder shall have the right thereafter to receive, upon exercise of a Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of such Warrant (assuming such Holder failed to exercise its rights of election, if any, as to the kind or amount of securities, cash or property receivable upon such Fundamental Transaction) (the “Alternate Consideration”). The Aggregate Warrant Exercise Price will not be affected by any such Fundamental Transaction, but, in the event of any such exercise occurring on or after the effectiveness of such Fundamental Transaction, the Company shall apportion the Aggregate Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then each Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of a Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Agreement prior to such Fundamental Transaction and shall, at the option of each Holder, deliver to such Holder in exchange for such Holder’s Warrants a security of the Successor Entity evidenced by a written instrument (reasonably satisfactory in form and substance to the Majority Holders) on substantially similar terms and substance to the Warrants which are exercisable for the Alternate Consideration (which, if the Alternate Consideration consists solely of capital stock of such Successor Entity (or its parent entity), shall represent a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Warrant Shares issuable upon exercise of the Warrants (without regard to any limitations on the exercise of the Warrants) prior to such Fundamental Transaction, and with an exercise price which applies the Exercise Price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of the Warrants immediately prior to the consummation of such Fundamental Transaction)). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Agreement referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of, the Company and shall assume all of the obligations of the Company under this Agreement with the same effect as if such Successor Entity had been named as the Company herein.

 

 

(b)            Notwithstanding anything to the contrary contained herein, in the event of a Fundamental Transaction, the Company shall provide (or cause the Warrant Agent to provide) written notice (a “Fundamental Transaction Notice”) of a Fundamental Transaction to all Holders reasonably promptly after public announcement by the Company of the execution and delivery of a definitive agreement with respect to such Fundamental Transaction (and, in any event, not less than thirty (30) days prior to the consummation of such Fundamental Transaction), which notice shall include the date such Fundamental Transaction is expected to be consummated.

 

  (i)            Holder Put Right. At any time on or after a Holder’s receipt of a Fundamental Transaction Notice in accordance with Section 5.7(b) and before the third Business Day prior to the consummation of such Fundamental Transaction, each Holder shall have the right (the “Put Right”) to require the Company to repurchase any portion of the Warrants held by such Holder concurrently with the consummation of such Fundamental Transaction by delivering written notice to the Company (the “Put Notice”) indicating the portion of the Warrants held by the Holder to which the Put Notice applies. In the event a Holder exercises the Put Right in accordance with this Section 5.7(b)(i), the Company shall, concurrently with and subject to the consummation of the Fundamental Transaction, repurchase, or cause another party to such Fundamental Transaction to purchase, the Warrants to which the Put Notice applies for an amount in cash equivalent to the aggregate value of such Warrants as determined by the Black Scholes Value.

 

  (ii)        Company Call Right. At any time on or after the fifteenth (15th) day following the giving of a Fundamental Transaction Notice to all Holders of outstanding Warrants in accordance with Section 5.7(b) and before the third Business Day prior to the consummation of such Fundamental Transaction, the Company shall have the right (the “Call Right”) to repurchase the Warrants from all Holders thereof concurrently with the consummation of such Fundamental Transaction by delivering an irrevocable written notice of exercise of the Call Right to all Holders of the Warrants (the “Call Notice”) indicating the Company’s intent to exercise the Call Right concurrent with and subject to the consummation of such Fundamental Transaction. In the event the Company exercises the Call Right in accordance with this Section 5.7(b)(ii) the Company shall repurchase, or cause another party to such Fundamental Transaction to purchase, all of the unexercised Warrants for which a Notice of Exercise shall not have been delivered to the Company prior to the last Business Day preceding the consummation of such Fundamental Transaction for an amount in cash equivalent to the aggregate value of such Warrants as determined by the Black Scholes Value. Notwithstanding the foregoing, the Holders shall retain the right to exercise the Warrants subject to the Call Notice at any time prior to the last Business Day preceding the consummation of such Fundamental Transaction, and the Company covenants and agrees that it will honor all Notices of Exercise with respect thereto.

 

Section 5.8            Notice of Adjustments. Whenever the number and/or kind of Warrant Shares or the Exercise Price is adjusted as provided in this Agreement, the Company shall promptly (i) prepare and deliver to the Warrant Agent, or cause to be prepared and delivered by the Warrant Agent, a written statement setting forth the adjusted number and/or kind of shares issuable upon the exercise of Warrants, the Exercise Price of the Warrants after such adjustment, the facts requiring such adjustment, the computation by which the adjustment was made and the record date or the effective date of the event and adjustment, and (ii) cause the Warrant Agent to give written notice of the foregoing to each Holder in the manner provided in Section 8.2 below. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event or any adjustment therefrom. The Warrant Agent shall be fully protected in relying upon any such written notice delivered in accordance with this Section 5.8, and on any adjustment therein contained and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such written notice.

 

 

Section 5.9           Calculations; Minimum Adjustments. All adjustment calculations under this Article V shall be made to the nearest one one-thousandth (1/1,000) of one cent ($0.01) or to the nearest one one-thousandth (1/1,000) of a share, as the case may be. For purposes of this Article V, subject to the adjustments set forth in Section 5.4(a) and Section 5.4(b), the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. No adjustment to the Exercise Price or the number of Warrant Shares issuable upon exercise of a Warrant shall be made if the amount of such adjustment would be less than $0.01 or one-tenth (1/10th) of a share of Common Stock, respectively, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.01 or 1/10^th of a share of Common Stock, respectively, or more.

 

Section 5.10          Form of Warrant After Adjustments. The form of Warrant Certificate need not be changed because of any adjustments in the Exercise Price or the number and/or kind of shares issuable upon exercise of the Warrants, and the Warrant Certificates theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated therein, as initially issued; provided, that such adjustments in the Exercise Price or the number and/or kind of shares issuable upon exercise of the Warrants pursuant to the terms of this Agreement shall nonetheless have effect upon exercise of the Warrants. The Company, however, may at any time in its sole discretion make any change in the form of Warrant Certificate that it may deem appropriate to give effect to such adjustments and that does not affect the substance of the Warrant Certificate or this Agreement (including the rights, duties, liabilities or obligations of the Warrant Agent), and any Warrant Certificate thereafter issued, whether in exchange or substitution for an outstanding Warrant Certificate, may be in the form so changed.

 

ARTICLE VI

OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS

 

Section 6.1          No Rights or Liability as Stockholder. The Warrants do not entitle the Holders to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof, except as expressly set forth in herein. No provision thereof and no mere enumeration therein of the rights or privileges of the Holders shall give rise to any liability of any Holder for the Exercise Price hereunder or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

 

Section 6.2           Notice to Allow Exercise by Holder. If (a) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (b) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (c) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (d) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, consolidation or merger to which the Company (or any of its subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (e) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to each Holder at its last email address as it shall appear upon the Warrant Register, at least fourteen (14) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Agreement constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holders shall remain entitled to exercise the Warrants during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 6.3          Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in this Section 6.3, the Warrants and all rights hereunder are transferable by the Holders, in whole or in part, on the records of the Warrant Agent, subject to surrender of the applicable Warrant Certificate (if any) by the applicable Holder, by delivery of a Form of Assignment properly completed and duly signed, together with funds sufficient to pay any transfer taxes payable upon the making of such transfer, to the principal office of the Warrant Agent. Upon receipt of the foregoing, to the extent a Warrant Certificate is requested in writing by the transferee, the Company shall execute and deliver, or shall cause to be executed and delivered, one or more New Warrant Certificates evidencing the Warrants so transferred to the transferee and, to the extent a Warrant Certificate is requested by the transferor, a New Warrant Certificate evidencing the remaining portion of the Warrants not so transferred, if any, to the transferring Holder. Notwithstanding the foregoing, the Company shall not be required to effectuate a transfer that would result in the issuance of Warrants for the purchase of a fraction of a share of Common Stock. In connection with any transfer hereunder, the transferee’s acceptance of the transferred Warrants and (if applicable) the New Warrant Certificate shall be deemed to constitute acceptance by such transferee of all of the rights and obligations of a Holder of a Warrant. If requested by the Company or the Warrant Agent, in the event that the Warrants are not then covered under an effective registration statement under the Securities Act, the Holder and, where applicable, the transferee, shall, as a condition to the effectiveness of such transfer, provide the Company and the Warrant Agent, together with such Form of Assignment, with a duly executed Transferee Representation Letter or such information, confirmations and acknowledgements as are reasonably necessary for the Company and/or the Warrant Agent to confirm that an exemption from registration exists for such proposed transfer.

 

Section 6.4            Registration Rights. The Holders shall be entitled to the benefit of certain registration rights with respect to the Warrants and the Warrant Shares as set forth in the Loan Agreement.

 

Section 6.5          Lost, Stolen, Mutilated or Destroyed Warrant Certificates. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant Certificate or stock certificate, if mutilated, the Company or Warrant Agent will make and deliver a new Warrant Certificate or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant Certificate or stock certificate.

 

 

ARTICLE VII

CONCERNING THE WARRANT AGENT AND OTHER MATTERS

 

Section 7.1             Resignation, Removal, Consolidation or Merger of Warrant Agent.

 

(a)          Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent (which successor Warrant Agent may not be the Company or an Affiliate of the Company and must be reasonably acceptable to the Majority Holders) in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of sixty (60) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the Holder of a Warrant, then the Holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. The Company may, at any time and for any reason, at no cost to the Holders, remove the Warrant Agent and appoint a successor Warrant Agent (which successor Warrant Agent may not be the Company or an Affiliate of the Company and must be reasonably acceptable to the Majority Holders) by written instrument signed by the Company and specifying such removal and the date when it is intended to become effective, one copy of which shall be delivered to the Warrant Agent being removed and one copy to the successor Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a Person organized and existing under the laws of the United States of America, or any state thereunder, in good standing. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, rights, immunities, duties and obligations of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent, the Company shall make, execute, acknowledge and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties and obligations.

 

(b)          Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall (i) give notice thereof to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment, and (ii) cause written or email notice thereof to be delivered to each Holder at such Holder’s address or email address, as applicable, appearing on the Warrant Register.

 

(c)           Merger or Consolidation of Warrant Agent. Any Person into which the Warrant Agent may be merged or with which it may be consolidated or any entity resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act.

 

Section 7.2          Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder in accordance with a separate fee schedule to be mutually agreed upon by the Company and the Warrant Agent and shall, pursuant to its obligations under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.

 

Section 7.3           Further Assurances. The Company agrees to perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement.

 

 

Section 7.4             Liability of Warrant Agent.

 

(a)           Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chief Executive Officer, Chief Financial Officer, President, Executive Vice President, Vice President, Secretary or Chairman of the Board and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.

 

(b)           Indemnity. The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant Agent and hold it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant Agent’s gross negligence, willful misconduct or bad faith.

 

(c)          Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions of Article V hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.

 

(d)          Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Common Stock through the exercise of the Warrants.

 

ARTICLE VIII

MISCELLANEOUS

 

Section 8.1           Binding Effects; Benefits. This Agreement shall inure to the benefit of and shall be binding upon the Company and the Warrant Agent and their respective heirs, legal representatives, successors and assigns. Nothing in this Agreement, expressed or implied, is intended to or shall confer on any person other than the Company, the Warrant Agent and the Holders, or their respective heirs, legal representatives, successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

Section 8.2           Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand; when received by the addressee if sent by a nationally recognized overnight courier; (b) on the date and time sent by email of a PDF document, with receipt acknowledged, if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (c)    on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.2).

 

(a)            If to the Warrant Agent, to: Issuer Direct Corporation, One Glenwood Avenue, Suite 1001, Raleigh, NC 27603, Attention: Julie Felix & Krista Riley, Email: julie.felix@issuerdirect.com, krista.riley@issuerdirect.com.

 

 

(b)           If to the Company, to: Genasys Inc., 16262 West Bernardo Drive, San Diego, California 92127, Attention: Chief Financial Officer, Email: dklahn@genasys.com.

 

(c)           If to the Holder of any Warrant, to the address or email address of such Holder as shown on the Warrant Register. Any notice required to be delivered by the Company to the Holder of any Warrant may be given by the Warrant Agent on behalf of the Company.

 

Section 8.3            Counterparts. This Agreement may be executed in any number of original or electronic PDF counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

Section 8.4          Construction. This Agreement shall be deemed to be jointly drafted by the Company and the Warrant Agent and shall not be construed against any Person as the drafter hereof. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, Agreement.

 

Section 8.5            Amendments and Waivers. Any provision of this Agreement may be amended or waived, but only pursuant to a written agreement signed by the Warrant Agent and the Company and consented to in writing by the Super-Majority Holders, provided that no such amendment or waiver shall, without the written consent of each Holder, (i) increase the Exercise Price or decrease the number of Warrant Shares receivable upon exercise of the Warrants held by such Holder, (ii) shorten the Exercise Period of any Warrants held by such Holder, (iii) modify any provision of Article V in a manner adverse to such Holder, (iv) change any of the provisions of this Section 8.5 or the definitions of “Majority Holders” or “Super-Majority Holders” or any other provision hereof specifying the number or percentage of Holders required to amend or waive any rights hereunder or make any determination or grant any consent hereunder or otherwise act with respect to this Agreement or any Warrants or (v) increase the obligations of such Holder or otherwise materially and adversely affect the rights and benefits of such Holder under this Agreement. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder by such party.

 

Section 8.6            No Inconsistent Agreements; No Impairment. The Company shall not, on or after the date hereof, enter into any agreement with respect to its securities which conflicts with the rights granted to the Holders in this Agreement. The Company represents and warrants to the Holders that the rights granted hereunder do not in any way conflict with the rights granted to holders of the Company’s securities under any other agreements. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Agreement and in the taking of all such action as may be necessary in order to preserve the exercise rights of the Holders against impairment.

 

 

Section 8.7          Governing Law. This Agreement and each Warrant issued hereunder shall be governed by and construed under the laws of the State of New York in all respects as such laws are applied to agreements among New York residents entered into and to be performed entirely within New York, without reference to conflicts of laws or principles thereof. The parties hereto agree that any action brought by either party under or in relation to this Agreement, including without limitation to interpret or enforce any provision of this Agreement, shall be brought in, and each party agrees to and does hereby submit to the exclusive jurisdiction and venue of, any state or federal court located in the City of New York, borough of Manhattan, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for notices to it contemplated by this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives any right it may have to, and agrees not to request, a trial by jury for the adjudication of any action brought by either party under or in relation to this Agreement.

 

Section 8.8            Remedies. Each Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

Section 8.9            Severability. In the event that any one or more of the provisions contained in this Agreement, or the application thereof in any circumstances, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

 

Section 8.10          Binding Effect on Holders. By acceptance of any Warrant, each Holder acknowledges the terms of this Agreement and agrees to be bound hereby.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned parties hereto as of the date first above written.

 

	GENASYS INC.
	By:	/s/ Richard S. Danforth
		Name: Richard S. Danforth
		Title: Chief Executive Officer

 

Signature Page to the Warrant Agreement

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned parties hereto as of the date first above written.

 

	ISSUER DIRECT CORPORATION
	By:	/s/ Julie Felix
		Name: Julie Felix
		Title: Senior Platform Specialist

 

 

Exhibit 10.1

 

---

 

TERM LOAN AND SECURITY AGREEMENT

 

by and among

 

GENASYS INC.,

 

as Borrower,

 

THE GUARANTORS NAMED HEREIN,

 

as Guarantors,

 

THE LENDERS FROM TIME TO TIME PARTY HERETO,

 

as Lenders

and

 

CANTOR FITZGERALD SECURITIES,

as Collateral Agent and Administrative Agent

Dated as of May 13. 2024

 

---

 

 

TABLE OF CONTENTS

 

PAGE

 

1.	DEFINITIONS AND CONSTRUCTION.		1
	1.1	Definitions, Code Terms, Accounting Terms and Construction	1
2.	LOANS AND TERMS OF PAYMENT.		1
	2.1	Term Loan	1
	2.2	Evidence of Term Loan; Notes	1
	2.3	Borrowing Procedures	1
	2.4	Payments; Optional Prepayments	2
	2.5	Mandatory Prepayments	3
	2.6	Interest Rates: Rates, Payments, and Calculations	5
	2.7	Designated Account	8
	2.8	Statements of Obligations	8
	2.9	[Reserved]	9
	2.10	Effect of Maturity	9
	2.11	Original Issue Discount	9
	2.12	Fees	9
	2.13	Payments by the Lenders to the Agent; Settlement	10
	2.14	Purchase Price Allocation; Tax Treatment	10
3.	SECURITY INTEREST.		10
	3.1	Grant of Security Interest	10
	3.2	Borrower Remains Liable	10
	3.3	Assignment of Insurance	11
	3.4	Financing Statements	11
4.	CONDITIONS.		11
	4.1	Conditions Precedent to Closing	11
5.	REPRESENTATIONS AND WARRANTIES.		11
6.	AFFIRMATIVE COVENANTS.		12
	6.1	Financial Statements, Reports, Certificates	12
	6.2	[Intentionally Omitted]	12
	6.3	Existence	12
	6.4	Maintenance of Properties	12
	6.5	Taxes; Obligations	12
	6.6	Insurance	13
	6.7	Inspections, Exams, Collateral Exams and Appraisals	13
	6.8	Account Verification	13
	6.9	Compliance with Laws	13
	6.10	Environmental	14
	6.11	Disclosure Updates	14
	6.12	Collateral Covenants	15
	6.13	Material Contracts	20

 

 

	6.14	Location of Inventory, Equipment and Books	20
	6.15	Further Assurances	20
	6.16	Post-Closing Deliverables	21
7.	NEGATIVE COVENANTS.		21
	7.1	Indebtedness	21
	7.2	Liens	22
	7.3	Restrictions on Fundamental Changes	22
	7.4	Disposal of Assets	23
	7.5	Change of Name	24
	7.6	Nature of Business	24
	7.7	Prepayments	24
	7.8	Amendments	24
	7.9	Change of Control	25
	7.10	Accounting Methods	25
	7.11	Investments	25
	7.12	Transactions with Affiliates	25
	7.13	Use of Proceeds	25
	7.14	Limitation on Issuance of Stock	25
	7.15	Consignments	25
	7.16	Inventory and Equipment with Bailees	25
	7.17	Other Payments and Distributions	26
	7.18	Minimum Liquidity	26
	7.19	Benefits	26
8.	[INTENTIONALLY OMITTED].		26
9.	EVENTS OF DEFAULT.		26
10.	RIGHTS AND REMEDIES.		29
	10.1	Rights and Remedies	29
	10.2	Pledged Collateral	31
	10.3	Agent Appointed Attorney in Fact	33
	10.4	Remedies Cumulative	34
	10.5	Crediting of Payments and Proceeds	34
	10.6	Marshaling	34
	10.7	License	34
11.	WAIVERS; INDEMNIFICATION.		35
	11.1	Demand; Protest; etc.	35
	11.2	Agent’s Liability for Collateral	35
	11.3	Indemnification	35
12.	NOTICES.		36
13.	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.		13
14.	ASSIGNS; SUCCESSORS; REPLACEMENT OF LENDERS.		39
	14.1	Binding Effect; Successors and Assigns	39

 

 

	14.2	Assignments and Participations	39
	14.3	Replacement of Lender	41
15.	AMENDMENTS; WAIVERS.		41
	15.1	Amendments and Waivers	41
	15.2	No Waiver; Cumulative Remedies	43
16.	TAXES, YIELD PROTECTION AND ILLEGALITY.		43
	16.1	Taxes	43
	16.2	Increased Costs and Reduction of Return	46
	16.3	Certificates of Lenders	47
	16.4	Illegality.	47
17.	THE ADMINISTRATIVE AGENT		47
	17.1	Appointment	47
	17.2	Nature of Duties	48
	17.3	Rights, Exculpation, Etc.	49
	17.4	Reliance	51
	17.5	Indemnification	51
	17.6	Agent Individually	51
	17.7	Sub-agents	51
	17.8	Successor Agent	52
	17.9	Delivery of Information	52
	17.10	Collateral Matters	53
	17.11	Agency for Perfection	54
	17.12	Actions With Respect To Collateral	54
	17.13	Filing of Proofs of Claim	54
	17.14	Erroneous Payments	55
18.	GUARANTY		57
	18.1	Guarantors	57
	18.2	Guaranty; Limitation of Liability	57
	18.3	Guaranty Absolute	58
	18.4	Waivers and Acknowledgments	59
	18.5	Subrogation	60
	18.6	Guaranty Supplements	60
	18.7	Subordination	61
	18.8	Continuing Guaranty; Assignments	61
19.	GENERAL PROVISIONS.		61
	19.1	Effectiveness	61
	19.2	Section Headings	61
	19.3	Interpretation	61
	19.4	Severability of Provisions	62
	19.5	Debtor-Creditor Relationship	62
	19.6	Counterparts; Electronic Execution	62
	19.7	Revival and Reinstatement of Obligations	62
	19.8	Confidentiality	63
	19.9	Expenses	64
	19.10	Setoff	64
	19.11	Release; Retention in Satisfaction; Etc.	65
	19.12	Survival	66
	19.13	Patriot Act	66
	19.14	Integration	66
	19.15	Lender Instructions	66
	19.16	Original Issue Discount	66

 

 

EXHIBITS AND SCHEDULES

 

Schedule 1.1	Definitions
Schedule 2.1(a)	Commitments
Schedule 6.1	Financial Statement, Reports, Certificates
Schedule 6.6	Schedule of Insurance
Schedule 6.12(l)(i)	Pledged Certificated Stock
Schedule 6.12(l)(ii)	Pledged Debt Instruments

 

Exhibit A	Form of Compliance Certificate
Exhibit B	Conditions Precedent
Exhibit C	Form of Note
Exhibit D	Representations and Warranties
Exhibit E	Information Certificate
Exhibit F	Form of Guaranty Supplement
Exhibit G	Form of Borrowing Certificate
Exhibit H	Form of Assignment & Assumption Agreement
Exhibit I	Post-Closing Deliverables
Exhibit J	Form of Copyright Security Agreement
Exhibit K	Form of Patent Security Agreement
Exhibit L	Form of Trademark Security Agreement

 

Schedule A-1	Collection Account
Schedule A-2	Authorized Person
Schedule D-1	Designated Account
Schedule P-1	Permitted Investments
Schedule P-2	Permitted Liens

 

TERM LOAN AND SECURITY AGREEMENT

 

THIS TERM LOAN AND SECURITY AGREEMENT (this “Agreement”), is entered into as of this 13th day of May, 2024, by and among Genasys Inc., a Delaware corporation (“Borrower”), the Guarantors (hereinafter defined), the lenders party hereto from time to time (the “Lenders”) and Cantor Fitzgerald Securities, in its capacities as administrative agent (the “Administrative Agent”) and collateral agent hereunder (the “Collateral Agent”, and together with the Administrative Agent, collectively, the “Agent”).

 

WHEREAS, the Borrower has requested that the Lenders make a term loan in the aggregate principal amount of $15,000,000 to the Borrower on the Closing Date (the “Term Loan”);

 

WHEREAS, the Lenders have agreed to make the Term Loan to the Borrower on the Closing Date subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree, subject to the satisfaction of the conditions set forth herein, as follows:

 

1.	DEFINITIONS AND CONSTRUCTION.

 

1.1         Definitions, Code Terms, Accounting Terms and Construction. Capitalized terms used in this Agreement shall have the meanings specified herein and on Schedule 1.1. Additionally, matters of (a) interpretation of terms defined in the Code, (b) interpretation of accounting terms and (c) construction, in each case, are set forth in Schedule 1.1.

 

2.	LOANS AND TERMS OF PAYMENT.

 

2.1          Term Loan.

 

(a)    Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Loan Parties contained herein, each Lender, severally and not jointly, agrees to make its portion of the Term Loan to Borrower on the Closing Date in an aggregate principal amount equal to the amount of such Lender’s Commitment. After giving effect to the making of its portion of the Term Loan, each Lender’s Commitment shall terminate immediately and without further action.

 

(b)    Amounts borrowed pursuant to this Section 2.1 that are repaid or prepaid may not be reborrowed at any time during the term of this Agreement. The outstanding principal amount of the Term Loan, together with interest accrued and unpaid thereon, shall be due and payable on the Maturity Date.

 

2.2         Evidence of Term Loan; Notes. The Term Loan made by the Lenders is evidenced by this Agreement and, if requested by any Lender, Borrower shall promptly execute and deliver to such Lender a Note payable to such Lender and its registered assigns in a principal amount equal to the portion of the Term Loan made by such Lender and its registered assigns.

 

2.3          Borrowing Procedures.

 

(a)          Procedure for Borrowing.

 

(i)    The Borrowing of the Term Loan shall be made by a written request, in the form of the Borrowing Certificate, by an Authorized Person delivered to the Agent. Such written request must be received by the Agent no later than 11:00 a.m. (New York City time) on the Closing Date.

 

 

(ii)    Promptly following receipt of a Borrowing request in accordance with Section 2.3(a)(i), the Agent shall forthwith advise each Lender of the details thereof.

 

(b)         Making of Loans. Upon satisfaction of the conditions precedents set forth in Section 4.1 hereof, each Lender shall make its portion of the Term Loan on the Closing Date by wire transfer of immediately available funds to the Designated Account. Notwithstanding anything to the contrary herein, no Lender shall be obligated to make any portion of the Term Loan if one (1) or more of the applicable conditions precedent set forth in Section 4.1 will not be satisfied on the Closing Date unless such condition has been waived by the Required Lenders.

 

(c)         Protective Advances. Each Lender, acting through the Agent, may make an additional loan for any reason at any time in its Permitted Discretion, without Borrower’s compliance with any of the conditions of this Agreement, and (i) disburse the proceeds directly to third Persons in order to protect the Agent’s interest in the Collateral or to perform any obligation of Borrower under this Agreement or otherwise to enhance the likelihood of repayment of the Obligations, or (ii) apply the proceeds to outstanding Obligations then due and payable (such advance, a “Protective Advance”). All Protective Advances shall constitute Obligations for all purposes hereunder.

 

2.4          Payments; Optional Prepayments.

 

(a)          Payments by Borrower. Except as otherwise expressly provided herein, all payments by Borrower to Agent and/or Lenders shall be made to the Agent (for the benefit of Lenders when such payments are not solely for Agent’s benefit).

 

(b)          Optional Prepayments Generally. Borrower may at any time upon written notice by Borrower to the Agent, not later than 12:00 p.m. (New York City time) two (2) Business Days prior to the day of prepayment (which notice shall specify the amount and date of the prepayment), prepay the Term Loan in whole or in part in an amount greater than or equal to $500,000 (or the full remaining amount) provided that (i) any voluntary prepayment made from the Closing Date through the first anniversary of the Closing Date, shall be accompanied by a prepayment premium equal to one percent (1%) of such prepayment made and (ii) any voluntary prepayment made after the first anniversary of the Closing Date, shall be payable without penalty or premium. Any prepayment of the Term Loan shall be applied as provided in Section 2.4(d). All voluntary prepayments of principal shall be accompanied by the corresponding amount of interest accrued on such principal.

 

(c)         Notices. The notice of any prepayment pursuant to clause (b) above shall not thereafter be revocable by Borrower and the Agent will promptly notify each Lender thereof and of such Lender’s pro rata share of such prepayment; provided, however, that a notice of prepayment delivered by Borrower in connection with a prepayment of the Obligations in full may state that such prepayment is conditioned upon the effectiveness of other credit facilities, the proceeds of which shall be used to repay the Obligations in full in cash, in which case such notice may be revoked by Borrower (by written notice provided to the Agent on or prior to the specified effective date thereof) if such condition is not satisfied. The payment amount specified in such notice shall be due and payable on the date specified therein (except as provided in the foregoing proviso).

 

 

(d)          Application of Payments.

 

(i)    Payments Prior to Event of Default. Subject to Section 2.4(d)(ii) immediately below, all amounts paid by Borrower to or for the benefit of the Agent and Lenders in respect of the Obligations (other than payments specifically earmarked for principal, interest, fees or expenses hereunder while no Default or Event of Default is then continuing), shall be applied in the following order of priority:

 

FIRST, to the payment of fees and reasonable documented out-of-pocket costs and expenses (including reasonable documented out-of-pocket attorneys’ fees) of the Agent, including Expenses, then due and payable hereunder or under any other Loan Documents;

 

SECOND, pro rata to the payment of any Expenses of the Secured Parties, to the extent then due and payable by the Borrower under the Loan Documents;

 

THIRD, pro rata to the payment of accrued unpaid interest then due and payable to the Lenders hereunder on account of the Term Loan and then to the payment of principal (including all OID that has been added to principal) then outstanding with respect to the Term Loan;

 

FOURTH, pro rata to the payment of all other Obligations not otherwise referred to in this Section 2.4(d)(i) then due and payable.

 

In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to the application to the next succeeding category and (ii) each of the Secured Parties entitled to payment shall receive an amount equal to its pro rata share of amounts available to be applied pursuant to clauses second, third and fourth above.

 

(ii)    Payments Subsequent to Event of Default. Notwithstanding anything in this Agreement or any other Loan Document which may be construed to the contrary, subsequent to the occurrence and during the continuance of an Event of Default, all payments and prepayments with respect to the Obligations (from realization on Collateral or otherwise) shall be applied as provided in Section 2.4(d)(i); provided that, upon satisfaction in full of all Obligations, such amount shall be paid to Borrower or such other Person entitled thereto under applicable law. Borrower and each other Loan Party hereby irrevocably waives the right to direct the application during the continuance of an Event of Default of any and all payments in respect of any Obligation and any Proceeds of Collateral.

 

2.5          Mandatory Prepayments

 

 

(a)          Principal Payments. The principal amount of the Term Loan, together with all interest and fees due thereon (and all other Obligations), shall be due and payable in full in cash on the Maturity Date.

 

(b)          Reserved.

 

 

(c)          Dispositions; Events of Loss. If a Loan Party or any Subsidiary of a Loan Party shall at any time or from time to time:

 

(i)    make a Disposition; or

 

(ii)    suffer an Event of Loss;

 

and the aggregate amount of the Net Proceeds received by the Loan Parties in connection with such Disposition or Event of Loss and all other Dispositions and Events of Loss occurring during such fiscal year exceeds $500,000, then (A) Borrower shall promptly (but in no event less than one (1) Business Day prior to the payment with respect to such Disposition or Event of Loss) notify the Agent of such Disposition or Event of Loss (including the amount of the estimated Net Proceeds to be received in respect thereof) and (B) promptly following receipt of the Net Proceeds of such Disposition or Event of Loss, Borrower shall deliver, or cause to be delivered, an amount equal to such excess Net Proceeds to Agent for distribution to the Lenders as a prepayment of the Term Loan, which amount shall include all accrued interest thereon, if any, and each such payment shall be applied in accordance with Section 2.4(d)(i). Notwithstanding the foregoing and provided no Event of Default has occurred and is continuing, such prepayment shall not be required to the extent a Loan Party or such Subsidiary reinvests such excess Net Proceeds of such Disposition or Event of Loss in capital assets then used or usable in the business of Borrower or such Subsidiary or to repair or replace the property subject to such Event of Loss, within one hundred eighty (180) days after the date of such Disposition or Event of Loss provided that all Net Proceeds from any Disposition or Event of Loss with respect to Collateral, shall be reinvested in Collateral.

 

(d)          No Implied Consent. Provisions contained in this Section 2.5 for the application of proceeds of certain transactions shall not be deemed to constitute consent of the Lenders to transactions that are not otherwise permitted by the terms hereof or the other Loan Documents.

 

(e)          Prepayment Premium (Mandatory Prepayment). Any mandatory prepayments required under Section 2.5(c) to be paid from the Closing Date through the first anniversary of the Closing Date, shall be accompanied by a prepayment premium equal to one percent (1%) of such prepayment made. Any mandatory prepayments required under Section 2.5(c) to be paid after the first anniversary of the Closing Date, shall be payable without penalty or premium.

 

(f)          Prepayment Premium (Savings Clause). The prepayment premium (referenced in Section 2.4(b) and Section 2.5(e), as applicable) shall be due and payable in connection with any prepayment made from the Closing Date through the first anniversary of the Closing Date (whether voluntary or required to be made pursuant to Section 2.4(b), Section 2.5(e) or otherwise) whether after the occurrence and during the continuance of an Event of Default, after the Obligations have been accelerated in accordance with Section 10.1, while any Loan Party is subject to any Insolvency Proceeding, case or proceeding under the Bankruptcy Code or under any other insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (including, but not limited to, on account of a distribution to the Lenders under a plan of reorganization or as a result of a liquidation), or as a result of the Administrative Agent’s, Collateral Agent’s or Lenders’ exercise of any right or remedy following the occurrence of an Event of Default whether before or after the commencement of any of the foregoing proceedings.

 

 

2.6          Interest Rates: Rates, Payments, and Calculations.

 

(a)         Interest Rates; Payment. Subject to Sections 2.6(b) and 2.6(e), the Term Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to, at the option of the Borrower, (i) the Three Month Term SOFR Rate plus five percent (5%) provided that one hundred percent (100%) of such interest shall be payable in cash in arears on the last Business Day of each calendar quarter (for all interest accrued during such calendar quarter) or (ii) the Three Month Term SOFR Rate plus six percent (6%) provided that such interest shall be payable in arears fifty percent (50%) in cash and fifty percent (50%) in Freely Tradable Shares, the number of such shares of Common Stock to be determined by Borrower using a price per share that is the lower of (x) ninety-five percent (95%) of the 5-Day Average VWAP and (y) ninety-five percent (95%) of the closing price or bid price, as applicable, of the Common Stock on the Trading Day immediately prior to the date on which interest for such calendar quarter is due, in either case, on the last Business Day of each calendar quarter (for all interest accrued during such calendar quarter) provided that unless Borrower elects by written notice to Agent, to pay interest pursuant to clause (ii) of this sentence no later than three (3) Business Days before interest for such calendar quarter is due, Borrower shall be deemed to elect to pay interest for such quarter pursuant to clause (i) of this sentence. For each calendar quarter, the Three Month Term SOFR Rate applicable for such quarter shall be determined by Agent as of the second to last Business Day of the immediately preceding calendar quarter (consistent with the mechanism set forth in the definition of Term SOFR set forth herein). Notwithstanding anything to the contrary set forth in this Agreement, Borrower shall not issue any shares of Common Stock hereunder (and shall pay such applicable amount of interest to affected Lender(s) in cash) and the affected Lender shall not have the right to receive such portion of interest due in Freely Tradable Shares pursuant to the terms and conditions of this Agreement and any such issuance shall be null and void and treated as if never made, to the extent that after giving effect to such issuance, such Lender, together with its Attribution Parties collectively, would Beneficially Own in excess of 9.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock Beneficially Owned by such Lender shall include the number of shares of Common Stock held by such Lender and its Attribution Parties plus the number of shares of Common Stock issuable upon payment of interest to which the determination of such sentence relates and the number of Warrant Shares Beneficially Owned and currently exercisable by such Lender and its Attribution Parties, provided, however, the number of shares of Common Stock Beneficially Owned shall exclude the number of shares of Common Stock that would be issuable upon exercise or conversion of the unexercised or unconverted portion of any other securities of Borrower (including, without limitation, any convertible notes or convertible preferred stock or warrants) Beneficially Owned by such Lender or its Attribution Parties that are subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 2.6(a) that are in excess of such limitation. For so long as the Term Loan remains outstanding, Borrower shall at all times reserve for issuance that number of Freely Tradable Shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as shall be necessary to satisfy the Borrower’s obligation to issue shares of Common Stock in payment of interest under this Agreement. Notwithstanding any other provisions hereof (but without limiting Section 2.6(b) and/or Section 2.6(f)(i) hereof), interest shall only be payable pursuant to clause (i) of the first sentence set forth in this Section 2.6(a) while any Event of Default is continuing. The Borrower shall be solely responsible for determining the amount of Freely Tradeable Shares due to the Lenders on any Interest Payment Date and for delivering such Freely Tradeable Shares to the applicable Lenders, and the Agent shall have no obligation to calculate or verify the Borrower’s calculations or to deliver or cause the delivery of any Freely Tradeable Shares provided that (i) within three (3) Business Days after making a payment of interest pursuant to clause (ii) of the first sentence of this Section 2.6(a), the Borrower shall send to Lenders a written calculation of such interest payment made in Common Stock, in detail reasonably acceptable to Required Lenders, and Required Lenders shall have three (3) Business Days after receiving such written calculation to dispute such calculation, in which case, the Required Lenders shall promptly inform the Borrower of the discrepancy and provide Borrower with Required Lenders’ written calculation with respect to such payment, (ii) the Required Lenders’ calculation referenced in clause (i) of this sentence shall be deemed correct, conclusive and binding absent manifest error and (iii) the Borrower shall promptly, and in no case more than two (2) Business Days after receiving such notice of discrepancy from Required Lenders, pay any additional amounts (if applicable) to Agent. Further, the Agent shall have no obligation to monitor the number of Freely Tradeable Shares Beneficially Owned by any Lender, or such Lender’s compliance with the ownership limitations hereunder.

 

 

(b)        Default Rate. Upon the occurrence and during the continuation of an Event of Default, at the reasonable discretion of the Required Lenders and upon written notice by the Required Lenders to the Agent, the principal amount of all Obligations shall bear interest at a per annum rate equal to two (2) percentage points above the per annum rate otherwise applicable hereunder (the “Default Rate”). For the avoidance of doubt, upon Required Lenders’ election to charge the Default Rate, the Default Rate shall commence on the date of the occurrence of an Event of Default irrespective of the date of reporting or declaration of such Event of Default and irrespective of the date on which the Required Lenders elect to charge the Default Rate. All such interest shall be payable in cash concurrent with interest payable pursuant to Section 2.6(a) hereof.

 

(c)         Payment. Except as otherwise provided under Section 2.6(b), interest shall be paid in arrears not later than 1:00 p.m. (New York City time) on the last Business Day of each calendar quarter (for interest accrued during such calendar quarter). All payments received by the Agent after 1:00 p.m. (New York City time) shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. Interest shall also be paid in cash with respect to any prepayment hereunder on the date such prepayment is paid. If the Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by the Agent from Borrower and such related payment is not received by the Agent, then the Agent will be entitled to recover such amount from such Lender on demand without setoff, counterclaim or deduction of any kind. If any payment to be made by Borrower hereunder shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected on computing interest or fees, as the case may be.

 

(d)          Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year, in each case, for the actual number of days elapsed in the period during which the interest or fees accrue.

 

(e)         Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrower, the Agent and the Lenders, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, however, that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, as of the date of this Agreement, Borrower is and shall be liable only for the payment of such maximum amount as is allowed by law, and payment received from Borrower in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations related thereto to the extent of such excess.

 

 

(f)           Inability to Determine Rates.

 

(i)    Alternate Rate of Interest. Subject to clause (ii) below, if (i) the Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Three Month Term SOFR Rate (including because the Term SOFR Reference Rate is not available or published on a current basis); or (ii) the Agent is advised by the Required Lenders that the Three Month Term SOFR Rate will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their portion of the Term Loan (or its portion of the Term Loan) during any applicable calendar quarter;

 

then the Agent shall give notice thereof to the Borrower and the Lenders as provided in Section 12 as promptly as practicable thereafter and, until the Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the initial Benchmark, the Term Loan shall bear interest at (x) the Base Rate plus five percent (5%) per annum in the case of Section 2.6(a)(i) and (y) Base Rate plus six percent (6%) per annum in the case of Section 2.6(a)(ii), with all other provisions of Section 2.6(a) remaining the same other than those provisions that expressly pertain only to the initial Benchmark such as the last sentence of Section 2.6(a).

 

(ii)    Benchmark Replacement. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any calendar quarter with respect to the initial Benchmark, then such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under the other Loan Documents without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document.

 

(iii)    Notices: Standards for Decisions and Determinations. The Agent will promptly notify the Borrower and the Lenders of (A) any occurrence of a Benchmark Transition Event and (B) the implementation of any Benchmark Replacement. Any determination, decision or election that may be made by the Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.6(f), including any determination with respect to the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.6(f).

 

(iv)    Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the Three Month Term SOFR Rate for the initial Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that such tenor for the initial Benchmark is or will be no longer representative, then the initial Benchmark will be replaced by the Benchmark Replacement and interest on all Obligations shall thereafter accrue at (x) the Base Rate plus five percent (5%) per annum in the case of Section 2.6(a)(i) and (y) Base Rate plus six percent (6%) per annum in the case of Section 2.6(a)(ii), with all other provisions of Section 2.6(a) remaining the same other than those provisions that expressly pertain only to the initial Benchmark such as the last sentence of Section 2.6(a).

 

 

(v)    At any time that a tenor for the initial Benchmark is not an Available Tenor, the component of Base Rate based upon the initial Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate.

 

2.7          Designated Account. Unless otherwise agreed by the Lenders and Borrower, the proceeds of the Term Loan shall be remitted by Lenders to the Designated Account.

 

2.8          Statements of Obligations.

 

(a)          The Agent, on behalf of the Lenders, shall record on its books and records the amount of the Term Loan made hereunder, the interest rate applicable, all payments of principal and interest thereon and the principal balance thereof from time to time outstanding. The Agent shall deliver to Borrower on a quarterly basis a loan statement setting forth the amount of the principal balance of the Term Loan then outstanding. Such record and such loan statement shall, absent manifest error, be conclusive evidence of the amount of the Term Loan made by the Lenders to Borrower and then outstanding and the interest and payments thereon unless, within thirty (30) calendar days after Borrower’s request to inspect such record or Borrower’s receipt of a loan statement, as applicable, Borrower shall deliver to the Agent written objection thereto describing the error or errors contained in such record or loan statement, as applicable. Any failure to so record or any error in doing so, or any failure to deliver such loan statement shall not, however, limit or otherwise affect the obligation on Borrower hereunder (or under any Note) to pay any amount owing with respect to the Term Loan or provide the basis for any claim against the Agent.

 

(b)         The Agent, acting as a non-fiduciary agent of Borrower solely with respect to the actions described in this Section 2.8(b), shall establish and maintain at its address referred to in Section 12 (or at such other U.S. address as the Agent may notify Borrower) (A) a record of ownership (the “Register”) in which the Agent agrees to register by book entry the interests (including any rights to receive payment hereunder) of each Lender in the Term Loan and any assignment of any such interest and (B) accounts in the Register in which it shall record (1) the names and addresses of the Lenders (and each change thereto pursuant to Section 14), (2) the Commitments of each Lender, (3) the amount of the outstanding Term Loan and the funding by each Lender of any portion thereof, (4) the amount of any principal amounts of (and stated interest on) the Term Loan owing to each Lender pursuant to the terms hereof from time to time, and (5) any other payment received by the Agent from Borrower and its application to the Obligations. The entries in the Register shall be conclusive absent manifest error.

 

(c)         Notwithstanding anything to the contrary contained in this Agreement, the Term Loan (including any Notes evidencing any portion of the Term Loan) are registered obligations, the right, title and interest of the Lenders and their assignees in and to the Term Loan (and/or any portion thereof) shall be transferable only upon notation of such transfer in the Register and no assignment thereof shall be effective until recorded therein. This Section 2.8 and Section 14 shall be construed so that the Term Loan is at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code.

 

 

(d)          The Loan Parties, the Agent and Lenders shall treat each Person whose name is recorded in the Register pursuant to this Section 2.8 as a Lender for all purposes of this Agreement. Information contained in the Register with respect to any Lender shall be available for access by Borrower, the Agent or such Lender during normal business hours and from time to time upon at least one Business Day’s prior notice.

 

2.9         [Reserved].

 

2.10       Effect of Maturity. (i) On the Maturity Date, the Term Loan, all accrued interest thereon and all other outstanding Obligations shall immediately become due and payable without notice or demand and Borrower shall immediately repay all of the Obligations in cash in full. No termination of the obligations of the Lenders (other than cash payment in full of the Obligations (other than unasserted contingent indemnification obligations) and termination of any other obligation of the Lenders to provide additional credit hereunder) shall relieve or discharge any Loan Party of its duties, obligations, or covenants hereunder or under any other Loan Document and the Agent’s Liens in the Collateral shall continue to secure the Obligations and shall remain in effect until all Obligations (other than unasserted contingent indemnification obligations) have been paid in full in cash (and, in the case of an election made under Section 2.6(a) hereof with respect to payment of certain outstanding interest in accordance with the provisions thereof, payment of such interest from Stock issued by the Borrower) and the Lenders’ obligations to provide additional credit hereunder shall have been terminated. Provided that the Agent has not received prior written notice that there is a suit, action, proceeding or claim pending or threatened against an Indemnified Person under this Agreement with respect to any Indemnified Liabilities, the Agent shall, at the Loan Parties’ request and expense, release or terminate any filings or other agreements that perfect the Agent’s Liens in the Collateral, upon the Agent’s receipt of each of the following, in form and content satisfactory to the Agent and the Required Lenders: (i) cash payment in full of all Obligations (other than unasserted contingent indemnification obligations), (ii) evidence that any obligation of the Lenders to provide any further credit to Borrower has been terminated (it being understood that upon the making of the Term Loan on the Closing Date, the Lenders shall have no further obligation to make loans or otherwise extend credit to the Borrower and/or its Subsidiaries hereunder and/or under the Loan Documents), (iii) a general release of all claims against the Secured Parties and their respective Affiliates, Agent-Related Parties, and Lender-Related Persons by Borrower, each other Loan Party and all of the Borrower’s other Subsidiaries relating to the Secured Parties’ performance and obligations under the Loan Documents and any other matters related to the Loan Documents, and (iv) an agreement by Borrower and each Guarantor to indemnify the Secured Parties and their respective Affiliates, Agent-Related Parties, and Lender-Related Persons for any payments received by the Secured Parties or their Affiliates that are applied to the Obligations as a final payoff that may subsequently be returned or otherwise not paid for any reason. The Agent shall have no duty to investigate whether there is any suit, action, proceeding or claim pending or threatened against an Indemnified Person under this Agreement with respect to any Indemnified Liabilities, and shall be fully protected and shall have no liability to any Indemnified Person or any other Person for releasing or terminating any filings or other agreements that perfect the Agent’s Liens in the Collateral in accordance with this Section 2.10.

 

2.11       Original Issue Discount. The Term Loan shall be issued with an original issue discount (the “OID”) of two percent (2.0%) such that the Lenders will lend 98 cents of each $1 of the Term Loan made pursuant to Section 2.1(a). The OID shall immediately constitute part of the principal amount of the Term Loan for all purposes upon the making of the Term Loan (and shall continue to constitute principal for all purposes thereafter until paid in full in cash).

 

2.12        Fees. Borrower shall pay to the Agent the fees payable in the amounts and at times separately agreed upon in writing between Borrower and the Agent. Such fees shall be fully earned and irrevocable when paid and shall not be refundable for any reason whatsoever.

 

 

2.13        Payments by the Lenders to the Agent; Settlement.

 

(a)          In the case of any payment of principal received by the Agent from Borrower in respect of all or any portion of the Term Loan prior to 12:00 p.m. (New York City time) on any Business Day, the Agent shall pay to each applicable Lender such Lender’s Commitment Percentage of such payment on such Business Day, and, in the case of any payment of principal received by the Agent from Borrower in respect of the Term Loan later than 12:00 p.m. (New York City time) on any Business Day, the Agent shall pay to each applicable Lender such Lender’s Commitment Percentage of such payment on the next Business Day.

 

(b)          Procedures. The Agent is hereby authorized by each Loan Party and each other Secured Party to establish procedures (and to amend such procedures from time to time) to facilitate administration and servicing of the Term Loan and other matters incidental thereto. Without limiting the generality of the foregoing, the Agent is hereby authorized to establish procedures to make available or deliver, or to accept, notices, documents and similar items on, by posting to or submitting and/or completion, on Debt domain or Intralinks systems.

 

2.14       Purchase Price Allocation; Tax Treatment. Each Lender and each Loan Party agree that (i) the Term Loan and the Warrant shall be treated as an “investment unit” as that term is defined in Section 1273(c)(2) of the Code, and (ii) the aggregate fair market value of each of such investment units on the Closing Date is $1,000, where $886.47 is allocable to the Term Loan and $113.53 is allocable to the Warrant.  Each Lender and each Loan Party shall report and cause each of its Affiliates to report the transaction contemplated by this Agreement (including any original issue discount calculations) in a manner consistent with this Section 2.14 for all tax purposes and none of them shall take any position or permit any of its Affiliates to take any position (whether in audits, tax returns or otherwise) that is inconsistent with this Section 2.14 unless required to do so by applicable law in which case it shall notify the other parties hereto. 

 

3.	SECURITY INTEREST.

 

3.1         Grant of Security Interest. Borrower and each Loan Party hereby unconditionally grants, assigns, and pledges to the Agent for the benefit of the Secured Parties, to secure payment and performance of the Obligations, a continuing security interest (hereinafter referred to as the “Security Interest”) in all of such Borrower’s and Loan Party’s right, title, and interest in and to the Collateral, as security for the payment and performance of all Obligations. Borrower and each Loan Party shall also grant the Agent a Lien and security interest in all Commercial Tort Claims that it may have from time to time against any Person. The Security Interest created hereby secures the payment and performance of the Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, the Collateral secures the payment of all amounts which constitute part of the Obligations and would be owed by Borrower or any other Loan Party to the Secured Parties, but for the fact that they are unenforceable or not allowable (in whole or in part) as a claim in an Insolvency Proceeding involving Borrower or any other Loan Party due to the existence of such Insolvency Proceeding.

 

3.2        Borrower Remains Liable. Anything herein to the contrary notwithstanding, (a) Borrower and each other Loan Party shall remain liable under the contracts and agreements included in the Collateral to perform all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Secured Parties of any of the rights hereunder shall not release Borrower or any other Loan Party from any of its duties or obligations under such contracts and agreements included in the Collateral, and (c) the Secured Parties shall not have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Secured Parties be obligated to perform any of the obligations or duties of Borrower or any other Loan Party thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

 

 

3.3         Assignment of Insurance. As additional security for the Obligations, Borrower and each other Loan Party hereby collaterally assigns to the Agent for the benefit of the Secured Parties all rights of Borrower and such Loan Party under every policy of insurance covering the Collateral and all other assets and property of Borrower and each other Loan Party (including, without limitation business interruption insurance and proceeds thereof) and all business records and other documents relating to it subject to Section 2.5(c) hereof, and all monies (including proceeds and refunds) that may be payable under any policy, and, while an Event of Default is continuing, Borrower and each other Loan Party hereby directs the issuer of each policy to pay all such monies directly and solely to the Agent for the benefit of the Secured Parties. While an Event of Default is continuing, the Agent may (but shall not be obligated to), in the Agent’s or Borrower’s or any other Loan Party’s name, execute and deliver proofs of claim, receive payment of proceeds and endorse checks and other instruments representing payment of the policy of insurance, and adjust, litigate, compromise or release claims against the issuer of any policy. While an Event of Default is continuing, any monies received under any insurance policy collaterally assigned to the Agent, other than liability insurance policies, or received as payment of any award or compensation for condemnation or taking by eminent domain, shall be paid to the Agent and, as determined by the Required Lenders in their Permitted Discretion, may be applied to prepayment of the Obligations or disbursed to Borrower subject to the terms set forth in Section 2.5(c) hereof.

 

3.4         Financing Statements. Borrower and each other Loan Party authorizes the Agent to file, at the expense of the Loan Parties, financing statements describing Collateral to perfect the Agent’s Security Interest in the Collateral, and the Agent may describe the Collateral as “all personal property” or “all assets” or describe specific items of Collateral including without limitation any Commercial Tort Claims. All, if any, financing statements filed before the date of this Agreement to perfect the Security Interest were authorized by Borrower and each other Loan Party and are hereby ratified.

 

4.	CONDITIONS.

 

4.1          Conditions Precedent to Closing. The obligation of the Lenders to make the Term Loan is subject to the fulfillment, to the satisfaction of the Agent and the Lenders, of each of the applicable conditions precedent set forth on Exhibit B.

 

5.	REPRESENTATIONS AND WARRANTIES.

 

In order to induce the Agent and the Lenders to enter into this Agreement, Borrower, and each other Loan Party makes the representations and warranties to the Agent and the Lenders set forth on Exhibit D. Each of such representations and warranties shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the Closing Date, and shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the date of the making of the Term Loan, as though made on and as of the date on which the Term Loan is made (after giving effect thereto) (except to the extent that such representations and warranties relate solely to an earlier date in which case such representations and warranties shall continue to be true and correct as of such earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement.

 

 

6.	AFFIRMATIVE COVENANTS.

 

Borrower and each other Loan Party covenants and agrees that, until the payment in full of the Obligations (other than unasserted contingent indemnification obligations), Borrower and each other Loan Party shall and shall cause their respective Subsidiaries to comply with each of the following:

 

6.1         Financial Statements, Reports, Certificates. Deliver to Agent copies of each of the financial statements, reports, Projections and other items set forth on Schedule 6.1 no later than the times specified therein. In addition, Borrower agrees that no Loan Party or Domestic Subsidiary of Borrower will have a fiscal year different from that of Borrower. Borrower agrees to maintain a system of accounting that enables Borrower to produce financial statements in accordance with GAAP. Each Loan Party shall also (a) keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to the sales of such Loan Party and its Subsidiaries, and (b) maintain its billing systems/practices substantially as in effect as of the Closing Date.

 

6.2         [Intentionally Omitted].

 

6.3         Existence. Except as otherwise permitted under Section 7.3 or Section 7.4, each Loan Party and any Domestic Subsidiary shall at all times maintain and preserve in full force and effect (a) its existence (including being in good standing in its jurisdiction of organization) and (b) all rights and franchises, contracts, licenses and permits material to its business; provided, however, that no Loan Party nor any of its Subsidiaries shall be required to preserve any such right or franchise, licenses, contracts, or permits if such Person’s Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to such Person or to the Agent or the Lenders.

 

6.4        Maintenance of Properties. Maintain and preserve all of its assets that are necessary or useful in the ordinary course conduct of its business in good working order and condition, ordinary wear, tear and casualty excepted and Permitted Dispositions excepted (and except where the failure to so maintain and preserve such assets would not reasonably be expected to result in a Material Adverse Change), and comply with the material provisions of all material leases and licenses to which it is a party as lessee or licensee, so as to prevent the loss or forfeiture thereof, unless such provisions are the subject of a Permitted Protest.

 

6.5          Taxes; Obligations.

 

Borrower shall and shall cause each Loan Party or its Subsidiaries to (i) timely file all federal and state income tax returns and other material tax returns required to be filed or otherwise supplied to a Governmental Authority with respect to taxes, and (ii) pay and discharge (y) all material Taxes imposed, levied, or assessed against any Loan Party or its Subsidiaries, or any of their respective assets or in respect of any of its income, businesses, or franchises to be paid in full, before delinquency or the expiration of any extension period, and (z) all material claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of their properties or assets which, in each case, could be a liability of or be imposed on Borrower or any of its Subsidiaries; provided no such Tax, claim or obligation need to be paid if it would not reasonably be expected to result in a Material Adverse Change or the validity of such claim, Tax or obligation is the subject of a Permitted Protest and so long as, in the case of a claim, Tax or obligation that has or may become a Lien against any of the Collateral, such Permitted Protest conclusively operates to stay the sale of any portion of the Collateral to satisfy such assessment or Tax.

 

 

6.6        Insurance. At the Loan Parties’ expense, maintain insurance with respect to the assets of each Loan Party and each of its Subsidiaries wherever located, covering liabilities, losses or damages as are customarily insured against by other Persons engaged in the same or similar businesses, including, without limitation, the insurance coverage set forth in Schedule 6.6. All such policies of insurance shall be with financially sound and reputable insurance companies acceptable to the Required Lenders (for the avoidance of doubt, the Borrower’s insurers in place as of the date hereof are acceptable to Required Lenders) and in such amounts as is carried generally by other persons engaged in the same or in similar businesses similarly situated and located and in any event in amount, adequacy and scope reasonably satisfactory to the Required Lenders (for the avoidance of doubt, based on the current facts and circumstances as of the date hereof, such amount, adequacy and scope in place as of the date hereof are reasonably satisfactory to Required Lenders). All property insurance policies covering the Collateral are to be made payable to the Agent for the benefit of the Secured Parties, as its interests may appear, in case of loss, pursuant to a lender loss payable endorsement reasonably acceptable to the Required Lenders and are to contain such other provisions as the Required Lenders may reasonably require to fully protect the Secured Parties’ interest in the Collateral and to any payments to be made under such policies. Such evidence of property and general liability insurance shall be delivered to the Agent, with such lender loss payable endorsements (but only in respect of Collateral) and additional insured endorsements (with respect to general liability coverage) in favor of the Agent and shall provide for not less than 30 days (10 days in the case of non-payment) prior written notice to the Agent of the exercise of any right of cancellation. If Borrower fails to maintain such insurance, the Agent may, but shall not be obligated to, arrange for such insurance, but at the Loan Parties’ expense and without any responsibility on the Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Borrower shall give the Agent prompt notice of any loss exceeding $500,000 covered by its casualty or business interruption insurance. Upon the occurrence and during the continuance of an Event of Default, the Agent shall have the sole right to file claims under any property and general liability insurance policies in respect of the Collateral, to receive and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

 

6.7         Inspections, Exams, Collateral Exams and Appraisals. Subject to the Disclosure Restrictions, at the Loan Parties’ expense, permit the Agent and each of the Agent’s duly authorized representatives to visit any of its properties, or cause any other Person to allow the Agent to visit any such Person’s property on which any Collateral is located, and inspect any of any Loan Party’s assets or Books and Records, to conduct inspections, exams and appraisals of the Collateral, to examine and make copies of its Books and Records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees at such reasonable times and intervals as the Required Lenders may designate and, so long as no Default or Event of Default exists, with reasonable prior notice to Borrower and no more than once per fiscal year at Loan Parties’ expense.

 

6.8         Account Verification. Permit the Agent, in the Agent’s name or in the name of a nominee of the Agent, while an Event of Default is continuing, to verify the validity, amount or any other matter relating to any Account, by mail, telephone, facsimile transmission or otherwise. Further, at the request of the Agent, while an Event of Default is continuing, each Loan Party shall send requests for verification of Accounts and send notices of assignment of Accounts to Account Debtors and other obligors.

 

6.9         Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Change; provided, however, that this Section 6.9 shall not apply to laws related to Taxes (other than with respect to employee benefit plans), which are the subject of Section 6.5.

 

 

6.10        Environmental.

 

(a)         Keep any Real Property either owned or operated by Borrower or any other Loan Party free of any Environmental Lien or post bonds or other financial assurances in an amount sufficient to satisfy the Environmental Liabilities evidenced by such Environmental Lien, subject to Loan Parties’ right to engage in a Permitted Protest so long as, in the case of an Environmental Lien that has become a Lien against any of the Collateral, (i) such Permitted Protest conclusively operates to stay the sale of any portion of the Collateral to satisfy such Environmental Lien, and (ii) any such other Lien is at all times subordinate to the Agent’s Liens;

 

(b)          Comply, in all material respects, with Environmental Laws and provide to the Agent documentation of such compliance which the Agent reasonably requests, subject to Loan Parties’ right to engage in a Permitted Protest;

 

(c)         Promptly notify the Agent of any Release of which Borrower or any other Loan Party has knowledge of a Hazardous Material in any reportable quantity from or onto Real Property and take any Remedial Action required to abate said Release or otherwise to come into compliance, in all material respects, with applicable Environmental Law; and

 

(d)         Promptly, but in any event within five (5) Business Days of its receipt thereof, provide the Agent with written notice of any of the following: (i) notice that an Environmental Lien has been issued or recorded against any Real Property, (ii) commencement of any Environmental Action or written notice that an Environmental Action will be filed against any Loan Party or any of its Subsidiaries, and (iii) written notice of a violation, citation, or other administrative order from a Governmental Authority (x) located in the United States or Canada or (y) any other Governmental Authority to the extent such violation, citation, or other administrative order reasonably would be expected to result in a Material Adverse Change.

 

6.11        Disclosure Updates.

 

(a)          Promptly and in no event later than five (5) Business Days after obtaining knowledge thereof notify the Agent:

 

(i)    if any written information, exhibit, or report furnished to the Agent or the Lenders contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made (and any notification pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto);

 

(ii)    of all actions, suits, or proceedings brought by or against any Loan Party or any of its Subsidiaries before any court or Governmental Authority which reasonably would be expected to result in a Material Adverse Change, provided that, in any event, such notification shall not be later than five (5) days after service of process with respect thereto on any Loan Party or any of its Subsidiaries;

 

 

(iii)    of (i) any disputes or claims by Borrower’s or any other Loan Party’s customers exceeding $500,000 individually or $1,000,000 in the aggregate during any fiscal year; or (ii) Goods returned to or recovered by Loan Parties outside of the ordinary course of business, with a Fair Market Value exceeding $500,000 individually or $1,000,000 in the aggregate;

 

(iv)    of any material loss or damage to any Collateral or any substantial adverse change in the Collateral;

 

(v)    of a violation of any law, rule or regulation, the non-compliance with which reasonably would be expected to result in a Material Adverse Change;

 

(vi)    of any disputes or claims by Borrower’s or any other Loan Party’s subcontractors exceeding $500,000 individually or $500,000 in the aggregate during any fiscal year;

 

(vii)    of any default or event of default under any other Indebtedness for borrowed money; or

 

(viii)    of any default, breach or other violation of any Material Contract.

 

(b)          Immediately upon obtaining knowledge thereof, notify the Agent of any event or condition which constitutes a Default or an Event of Default and provide a statement of the action that such Borrower proposes to take with respect to such Default or Event of Default.

 

(c)        Promptly following the request of the Agent (at the written direction of the Required Lenders), each Loan Party shall deliver to the Agent any other materials, reports, records or information reasonably requested relating to the operations, business affairs, financial condition of any Loan Party or its Subsidiaries or the Collateral.

 

6.12        Collateral Covenants. The covenants in this Section 6.12 shall apply to all Collateral, except as expressly provided below.

 

(a)         Possession of Collateral. In the event that any Collateral, including Proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, or Chattel Paper, in each case, having an aggregate value or face amount of $375,000 or more for all such Negotiable Collateral, Investment Related Property, or Chattel Paper, the Loan Parties shall promptly (and in any event within three (3) Business Days after receipt thereof), notify the Agent thereof, and, the applicable Loan Party, promptly (and in any event within three (3) Business Days) after request by the Agent (at the written direction of the Required Lenders), shall execute such other documents and instruments as shall be requested by the Agent or, if applicable, endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property, or Chattel Paper to the Agent, together with such undated powers (or other relevant document of assignment or transfer acceptable to the Required Lenders) endorsed in blank as shall be requested by the Agent, and shall do such other acts or things deemed necessary by Agent (at the written direction of the Required Lenders) to enhance, perfect and protect the Agent’s Liens therein.

 

 

(b)          Chattel Paper.

 

(i)    Promptly (and in any event within three (3) Business Days) after request by the Agent (at the written direction of the Required Lenders), each Loan Party shall take all steps reasonably necessary to grant the Agent control of all electronic Chattel Paper of any Loan Party in accordance with the Code and all “transferable records” as that term is defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in effect in any relevant jurisdiction, to the extent that the individual or aggregate value or face amount of such electronic Chattel Paper equals or exceeds $375,000;

 

(ii)    If any Loan Party retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent permitted hereby), promptly upon the request of the Agent (at the written direction of the Required Lenders), such Chattel Paper and instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the Security Interest of Cantor Fitzgerald Securities, as Agent”; and

 

(c)         Control Agreements. With respect to all Deposit Accounts, Securities Accounts and commodities accounts owned as of the Closing Date, as soon as practicable following the Closing Date (but not to exceed forty-five days after the Closing Date) and, with respect to all Deposit Accounts, Securities Accounts and commodities accounts acquired and/or opened after the Closing Date, as soon as practicable following opening or acquisition (but not to exceed forty-five days after opening or acquisition):

 

(i)    Each Loan Party shall obtain a Control Agreement from each bank maintaining a Deposit Account for such Loan Party, other than an Excluded Account;

 

(ii)    Each Loan Party shall obtain a Control Agreement, from each issuer of uncertificated securities, securities intermediary, or commodities intermediary issuing or holding any financial assets or commodities to or for any such Loan Party; and

 

(iii)    Each Loan Party shall cause the Agent to obtain “control,” as such term is defined in the Code, with respect to all of such Loan Party’s investment property.

 

(d)        Letter-of-Credit Rights. If the Loan Parties (or any of them) are or become the beneficiary of letters of credit having a face amount or value of $375,000 or more in the aggregate, then the applicable Loan Party or Loan Parties shall promptly (and in any event within three (3) Business Days after becoming a beneficiary), notify the Agent thereof and, promptly (and in any event within three (3) Business Days) after request by the Agent (at the written direction of the Required Lenders), enter into a tri-party agreement with the Agent and the issuer or confirming bank with respect to letter-of-credit rights assigning such letter-of-credit rights to the Agent and directing all payments thereunder to the Collection Account unless otherwise directed by the Agent, all in form and substance reasonably satisfactory to the Required Lenders.

 

(e)         Commercial Tort Claims. If the Loan Parties (or any of them) obtain or otherwise incur Commercial Tort Claims having a value, or involving an asserted claim, in the amount of $250,000 or more in the aggregate for all Commercial Tort Claims, then the applicable Loan Party or Loan Parties shall, within five (5) Business Days of obtaining knowledge that it has obtained or incurred such Commercial Tort Claim, notify the Agent that it has obtained or incurred such Commercial Tort Claims and, promptly (and in any event within ten (10) Business Days) after obtaining knowledge that it has obtained or incurred such Commercial Tort Claim, amend Schedule 5.6(d) to the Information Certificate to describe such Commercial Tort Claims in a manner that reasonably identifies such Commercial Tort Claims and which is otherwise reasonably satisfactory to the Required Lenders, and hereby authorizes the filing of additional financing statements or amendments to existing financing statements describing such Commercial Tort Claims, and agrees to do such other acts or things deemed necessary by the Agent (at the written direction of the Required Lenders) to give the Agent for the benefit of the Secured Parties a perfected security interest in any such Commercial Tort Claim(s), which Commercial Tort Claim(s) shall not be subject to any other Liens other than Permitted Liens.

 

 

(f)          Government Contracts. Other than Accounts the aggregate value of which does not at any one time exceed $500,000, if any Account of any Loan Party arises out of a contract or contracts with the United States of America or any State or any department, agency, or instrumentality thereof, Loan Parties shall promptly (and in any event within three (3) Business Days of the creation thereof) notify the Agent thereof and, promptly (and in any event within three (3) Business Days) after request by the Agent (at the written direction of the Required Lenders), execute any instruments or take any steps reasonably required by the Agent in order that all moneys due or to become due under such contract or contracts shall be assigned to the Agent, for the benefit of the Secured Parties, and shall provide written notice thereof under the applicable state and federal Assignment of Claims Act or other applicable law.

 

(g)          Intellectual Property.

 

(i)    On the Closing Date and, for all Intellectual Property other than Material Intellectual Property, within forty-five (45) days after the end of each calendar year (or, in the case of Material Intellectual Property arising, acquired or developed after the Closing Date, within thirty (30) days after such Material Intellectual Property arises or is acquired or developed) (or more frequently upon the request of the Agent (at the written direction of the Required Lenders)), in order to facilitate filings with the PTO and the United States Copyright Office, each Loan Party shall execute and deliver to the Agent one or more Copyright Security Agreements (if such Loan Party owns any Copyrights and to the extent that any such Copyrights are not already subject to a duly recorded Copyright security agreement) and/or Patent Security Agreement and Trademark Security Agreements (if such Loan Party owns any Patents or Trademarks and to the extent that such Patent and Trademarks are not already subject to a duly recorded Patent and Trademark security agreement), in each case, in form and substance reasonably satisfactory to Required Lenders, to further evidence the Agent’s Lien on such Loan Party’s Patents, Trademarks, or Copyrights (if any), and the General Intangibles of such Loan Party relating thereto or represented thereby arising, developed and/or acquired during such calendar year (or such shorter period of time, as applicable) just ended;

 

(ii)    Each Loan Party shall have the duty, exercised in a commercially reasonable manner in the reasonable business judgment of such Loan Party, with respect to Intellectual Property that is necessary in the ordinary course conduct of such Loan Party’s business, to protect and diligently enforce and defend at such Loan Party’s expense its Intellectual Property, including (A) to diligently enforce and defend, including promptly suing for infringement, misappropriation, dilution, or other similar violation and to recover any and all damages for such infringement, misappropriation, dilution, or other similar violation, and filing for opposition, interference, and cancellation against conflicting Intellectual Property rights of any Person, (B) to prosecute diligently any trademark application or service mark application that is part of the Trademarks pending as of the date hereof or hereafter, (C) to prosecute diligently any patent application that is part of the Patents pending as of the date hereof or hereafter, (D) to prosecute diligently any copyright application that is part of the Copyrights pending as of the date hereof or hereafter, (E) to take all reasonable and necessary action to preserve and maintain all of such Loan Party’s Trademarks, Patents, Copyrights, other Intellectual Property, Intellectual Property Licenses, and its rights therein, including paying all maintenance fees and filing of applications for renewal, affidavits of use, and affidavits of noncontestability, and (F) to require all employees, consultants, and contractors of each Loan Party who were involved in the creation or development of such Intellectual Property to sign agreements containing assignment to such Loan Party of Intellectual Property rights created or developed and obligations of confidentiality. No Loan Party shall abandon any Intellectual Property or Intellectual Property License that is necessary in the ordinary course conduct of such Loan Party’s business. Each Loan Party shall take the steps described in this Section 6.12(g)(ii) with respect to all new or acquired Intellectual Property to which it or any of its Subsidiaries is now or later becomes entitled that is necessary in the ordinary course conduct of such Loan Party’s or Domestic Subsidiary’s business;

 

 

(iii)    Each Loan Party acknowledges and agrees that the Secured Parties shall have no duties with respect to any Intellectual Property or Intellectual Property Licenses of any Loan Party. Without limiting the generality of this Section 6.12(g)(iii), each Loan Party acknowledges and agrees that the Secured Parties shall not be under any obligation to take any steps necessary to preserve rights in the Collateral consisting of Intellectual Property or Intellectual Property Licenses against any other Person, but the Agent (at the written direction of the Required Lenders), may do so at its option from and after the occurrence and during the continuance of an Event of Default, and all expenses incurred in connection therewith (including reasonable documented out-of-pocket fees and expenses of attorneys and other professionals) shall constitute Obligations hereunder;

 

(iv)    Each Loan Party shall promptly file an application with the United States Copyright Office for any Copyright that has not been registered with the United States Copyright Office if such Copyright that is necessary in the ordinary course conduct of such Loan Party’s business. Any expenses incurred in connection with the foregoing shall be borne by the Loan Parties; and

 

(v)    No Loan Party shall enter into any Intellectual Property License to receive any license or rights in any Intellectual Property of any other Person unless such Loan Party has used commercially reasonable efforts to permit the assignment of or grant of a Lien in such Intellectual Property License (and all rights of such Loan Party thereunder) to the Agent (and any transferees of the Agent) for the benefit of the Secured Parties.

 

(h)          Investment Related Property.

 

(i)    Upon the occurrence and during the continuance of an Event of Default, following the request of the Agent (at the written direction of the Required Lenders), all sums of money and property paid or distributed in respect of the Investment Related Property that are received by any Loan Party shall be held by such Loan Party in trust for the benefit of the Agent segregated from such Loan Party’s other property, and such Loan Party shall deliver it promptly to the Agent in the exact form received; and

 

(ii)    Each Loan Party shall cooperate with the Agent in obtaining all necessary approvals and making all necessary filings under federal, state, or local law to effect the perfection of the Security Interest on the Investment Related Property and, while an Event of Default is continuing, to effect any sale or transfer thereof.

 

 

(i)         After Acquired Collateral. Within thirty (30) days after acquiring, manufacturing and/or developing Collateral after the Closing Date, the Borrower shall take whatever action is necessary, including without limitation, executing agreements, preparing and filing financing statements, preparing and recording mortgages, preparing or supplementing (and recording) IP Security Agreements and entering into Control Agreements, to grant (if necessary) and otherwise provide Agent with a perfected first priority security interest in such Collateral.

 

(j)           [Intentionally Omitted].

 

(k)         Motor Vehicles; Titled Goods. As required by Exhibit I hereto, or to the extent acquired or manufactured after the Closing Date, Loan Parties shall promptly notify Agent of the acquisition or manufacture of titled Equipment having a value in excess of $150,000 and, as reasonably requested by the Agent (at the written direction of the Required Lenders) with respect to such titled Equipment, the applicable Loan Party shall deliver to the Agent an original certificate of title or similar document issued by the applicable Governmental Authority for each such Equipment titled under state law, together with a signed title application naming the Agent as lien holder with respect to such Equipment and will cause such title certificates to be filed (with the Agent’s Lien noted thereon) in the appropriate filing office.

 

(l)           Pledged Collateral. As long as any Obligation remains outstanding (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted):

 

(i)    Delivery of Pledged Collateral & Pledged Investment Property. Each Loan Party shall (i) deliver (promptly, but not to exceed thirty (30 days) after acquiring, certification, execution or forming) to the Agent, in suitable form for transfer and in form and substance satisfactory to the Required Lenders, (A) all Pledged Certificated Stock, including all Stock described on Schedule 6.12(l)(i), (B) all Pledged Debt Instruments, including all Indebtedness described on Schedule 6.12(l)(ii), having a stated value in excess of $375,000 in the aggregate and (C) all certificates and instruments evidencing Pledged Investment Property with a stated value in excess of $375,000 in the aggregate and (ii) maintain all other Pledged Investment Property with a stated value in excess of $375,000 in the aggregate in a Controlled Securities Account.

 

(ii)    Event of Default. During the continuance of an Event of Default, the Agent shall have the right, at the written direction of the Required Lenders and upon notice to the Loan Parties, to (i) transfer to or to register in its name or in the name of its nominees any Pledged Collateral or any Pledged Investment Property and (ii) exchange any certificate or instrument representing or evidencing any Pledged Collateral or any Pledged Investment Property for certificates or instruments of smaller or larger denominations.

 

(iii)    Pledged Uncertificated Stock. Each Loan Party hereby covenants and agrees that, without the prior express written consent of the Required Lenders, it will not agree to any election by any limited liability company to treat the Pledged Stock as securities governed by Article 8 of the Uniform Commercial Code of any jurisdiction and in any event will promptly notify the Agent in writing if such Pledged Stock will be treated as a security governed by Article 8 of the Uniform Commercial Code of any jurisdiction and, in such event, take such action as the Agent make request in order to establish the Agent’s “control” (within the meaning of Section 8-106 of the UCC) over such Pledged Stock.

 

 

(iv)    Cash Distributions with respect to Pledged Collateral. Except as provided in Section 10.2 and subject to the limitations set forth in this Agreement, such Loan Party shall be entitled to receive all cash distributions and dividends paid in respect of the Pledged Collateral.

 

(v)    Voting Rights. Except as provided in Section 10.2, the Loan Parties shall be entitled to exercise all voting, consent and corporate, partnership, limited liability company and similar rights with respect to the Pledged Collateral; provided, however, that no vote shall be cast, consent given or right exercised or other action taken by such Loan Party that would contravene or result in any violation of any provision of any Loan Document in any material respect.

 

6.13       Material Contracts. Upon request, provide the Agent with copies of (a) each Material Contract and (b) each material amendment or modification of any Material Contract not previously disclosed to Agent. Borrower and each other Loan Party shall maintain all Material Contracts in full force and effect and shall not default in the payment or performance of any material obligations thereunder.

 

6.14       Location of Inventory, Equipment and Books. Each Loan Party shall keep its Inventory and Equipment (other than vehicles and Equipment out for repair) and Books of each Loan Party and each of its Domestic Subsidiaries only at the locations identified on Schedule 5.29 to the Information Certificate and keep the chief executive office of each Loan Party and each of its Subsidiaries only at the locations identified on Schedule 5.6(b) to the Information Certificate; provided, however, that, so long as no Event of Default has occurred and is continuing, each Loan Party may (a) move Equipment to and from and keep Equipment at any domestic location accessible by a Loan Party without restriction and owned, leased or licensed by a Loan Party’s customer(s) to the extent necessary for such Loan Party’s provision of services to such customer and so long as such Loan Party timely reports the presence of such Equipment, (b) send Equipment to repairmen and (c) move Collateral in transit between Loan Parties or from Loan Parties to customers. Loan Parties shall not move Collateral outside the United States other than pursuant to sales to customers located outside the United States in the ordinary course of business.

 

6.15        Further Assurances.

 

(a)         At any time upon the reasonable request of the Agent or the Required Lenders, execute or deliver to the Agent any and all financing statements, fixture filings, security agreements, pledges, assignments, escrow agreements with respect to software (provided that in the case of escrow agreements with respect to software, Agent shall only be permitted to require delivery of this type of agreement while an Event of Default is continuing), endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel, and all other documents (the “Additional Documents”) that the Agent or the Required Lenders may reasonably request and in form and substance reasonably satisfactory to the Agent or the Required Lenders, to protect its interests in the Collateral, to create, perfect, and continue perfection or to better perfect the Agent’s Liens in all of the assets that constitute Collateral of each Loan Party under applicable Legal Requirements in the United States (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, if Borrower or any other Loan Party refuses or fails to execute or deliver any reasonably requested Additional Documents, such Borrower and such other Loan Party hereby authorizes the Agent to execute any such Additional Documents in the applicable Loan Party’s name, as applicable, and authorizes the Agent to file such executed Additional Documents in any appropriate filing office. In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as are necessary or that the Agent (at the direction of the Required Lenders) may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of Borrower and each other Loan Party, other than Excluded Property, under applicable Legal Requirements in the United States or other applicable local law.

 

 

(b)         Borrower and each other Loan Party authorizes the filing by the Agent of financing or continuation statements, or amendments thereto, and such Loan Party will execute and deliver to the Agent such other instruments or notices, as the Agent may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby under applicable Legal Requirements in the United States.

 

(c)        Borrower and each other Loan Party authorizes the Agent at any time and from time to time to file, transmit, or communicate, as applicable, financing statements and amendments (i) describing the Collateral as “all personal property of debtor” or “all assets of debtor” or words of similar effect, (ii) describing the Collateral as being of equal or lesser scope or with greater detail, or (iii) that contain any information required by Part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of such financing statement. Borrower and each other Loan Party also hereby ratifies any and all financing statements or amendments previously filed by the Agent in any jurisdiction.

 

(d)        Borrower and each other Loan Party acknowledges that no Loan Party is authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in connection with this Agreement without the prior written consent of the Agent (at the written direction of the Required Lenders).

 

6.16       Post-Closing Deliverables. Borrower shall satisfy the requirements and/or provide to the Agent each of the documents, instruments, agreements and information set forth on Exhibit I hereto, on or before the date specified for such requirement on such Exhibit or such later date to be determined by the Required Lenders in their reasonable discretion, each of which shall be completed or provided in form and substance reasonably satisfactory to the Agent and the Required Lenders.

 

7.	NEGATIVE COVENANTS.

 

Borrower and each Loan Party covenants and agrees that, until termination of all of the Commitments of each of the Lenders hereunder and payment in full of the Obligations in cash (other than any unasserted contingent indemnification obligations (and, in the case of an election made under Section 2.6(a) hereof with respect to payment of certain outstanding interest in accordance with the provisions thereof, payment of such interest from Stock issued by the Borrower)), neither Borrower nor any other Loan Party will do, nor will Borrower or any other Loan Party permit any of their Subsidiaries to do any of the following:

 

7.1          Indebtedness.

 

(a)          Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except for Permitted Indebtedness.

 

 

(b)          Incur any Permitted Indebtedness that is contractually subordinated in right of payment to any other Indebtedness of a Loan Party unless such Indebtedness is also contractually subordinated in right of payment to the Obligations on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of Borrower solely by virtue of being unsecured or by virtue of being secured on a junior Lien basis.

 

For purposes of determining compliance with this Section 7.1, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness, or is entitled to be incurred pursuant to Section 7.1(a), Borrower will be permitted to classify and divide such item of Indebtedness on the date of its incurrence, in any manner that complies with this Section 7.1. Indebtedness under this Agreement will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (a) of the definition of Permitted Indebtedness. For purposes of determining compliance with any U.S. dollar denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that any Loan Party may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.

 

7.2         Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any (a) Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens or (b) Lien of any subcontractor of Borrower or any other Loan Party on the assets of any customer of Borrower or any other Loan Party, unless, and to the extent, such subcontractor Lien is discharged, satisfied, vacated, bonded, or stayed within seven (7) Business Days thereof.

 

7.3          Restrictions on Fundamental Changes.

 

(a)         Enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock, except for (i) any merger between Loan Parties, provided that Borrower must be the surviving entity of any such merger to which it is a party and (ii) any merger between any Loan Party’s Subsidiaries that are not Loan Parties.

 

(b)          Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), except for (i) the liquidation or dissolution of non-operating Subsidiaries of Borrower with nominal assets and nominal liabilities, (ii) the liquidation or dissolution of a Loan Party (other than a Borrower) or any of its wholly-owned Subsidiaries so long as all of the assets (including any interest in any Stock) of such liquidating or dissolving Loan Party or Subsidiary are transferred to a Loan Party that is not liquidating or dissolving, or (iii) the liquidation or dissolution of a Subsidiary of a Borrower that is not a Loan Party (other than any such Subsidiary the Stock of which (or any portion thereof) is subject to a Lien in favor of the Agent) so long as all of the assets of such liquidating or dissolving Subsidiary are transferred to a Subsidiary of a Borrower that is not liquidating or dissolving.

 

(c)          Sell or otherwise transfer all or substantially all of the assets of any Loan Party or any of their respective Subsidiaries, other than to a Loan Party.

 

(d)          Suspend or cease operation of a substantial portion of its or their business, except as permitted pursuant to Sections 7.3(a) or (b) above or in connection with the transactions permitted pursuant to Section 7.4.

 

 

(e)          Form or acquire any (i) direct Subsidiary, (ii) indirect Subsidiary in the United States, or indirect Subsidiary in a Foreign Jurisdiction unless (x) in the case of the formation or acquisition of Domestic Subsidiaries of the Loan Parties, (1) Loan Parties provide the Agent with written notice of the formation or acquisition of each Domestic Subsidiary within ten (10) days after such formation or acquisition and provide the Agent with copies of all organizational and formation documents related thereto as the Agent or the Required Lenders may request in its Permitted Discretion, (2) in the case of any acquisition, any such acquisition is otherwise permitted hereunder, including without limitation Section 7.11 and (3) in the case of the formation or acquisition of any Domestic Subsidiaries, the Borrower complies with Section 18.6 in regards to such new Subsidiary and (y) in the case of the formation or acquisition of any Subsidiary that is a controlled foreign corporation (within the meaning of Section 957 of the IRC) or any Foreign Subsidiary Holding Company, within twenty days (20) days after such Subsidiary is formed or acquired (each, a “First Tier Foreign Subsidiary”), the applicable Loan Party shall have pledged (in a manner satisfactory to Required Lenders) sixty five percent (65%) of the voting Stock issued by such First Tier Foreign Subsidiary to the Agent for the benefit of the Secured Parties to secure the Obligations.

 

7.4         Disposal of Assets. Other than Permitted Dispositions or transactions expressly permitted by Section 7.3, sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral or any other asset except as expressly permitted by this Agreement. The Agent and the Required Lenders shall not be deemed to have consented to any sale or other disposition of any of the Collateral or any other asset except as expressly permitted in this Agreement or the other Loan Documents. Notwithstanding any provisions set forth herein, including the definition of “Permitted Dispositions”, (i) in no event shall any Loan Party that owns (or has an exclusive license to) any Intellectual Property that is material to the operations or the business of the Borrower and its Subsidiaries, be permitted to sell, transfer, assign or grant an exclusive license with respect to any interest in such Intellectual Property to any other Person (including without limitation, any Subsidiary that is not a Loan Party) other than to another Loan Party, and (ii) no Subsidiary of Borrower that is not a Loan Party shall be permitted to own (or have an exclusive license to), develop, or receive from any Loan Party, any Intellectual Property that is material to the operations or the business of Borrower and its Subsidiaries.

 

 

7.5         Change of Name. Except upon ten (10) days’ prior written notice to the Agent and prior delivery to the Agent of all additional financing statements (which the Borrower shall promptly file or record in all appropriate filing and/or recording offices), if any, necessary to maintain the validity, perfection and priority of the security interests provided for herein and such other documents as reasonably requested by the Agent or the Required Lenders, change the name, organizational identification number, state of organization, organizational identity or “location” for purposes of Section 9-307 of the Code of any Loan Party, or, except upon ten (10) days’ prior written notice to the Agent, change the name, organizational identification number, state of organization, organizational identity or “location” for purposes of Section 9-307 of the Code of any Loan Party’s Subsidiaries.

 

7.6        Nature of Business. Make any material change in the nature of its or their business as conducted on the date of this Agreement or acquire any properties or assets that are not reasonably related to the conduct of such business activities; provided, however, that the foregoing shall not prevent Borrower or any other Loan Party or any of its Subsidiaries from engaging in any business that is reasonably related or ancillary to its business.

 

7.7          Prepayments. Except in connection with Refinancing Indebtedness permitted under the definition of Permitted Indebtedness,

 

(a)          optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan Party or any of its Subsidiaries, other than (A) the Obligations in accordance with this Agreement and (B) Permitted Indebtedness owing to a Loan Party; provided, that no Event of Default has occurred and is occurring, or would occur after giving effect to such payment; and

 

(b)          make any payment on account of Indebtedness that has been contractually subordinated in right of payment to the Obligations if such payment is not permitted at such time under the subordination terms and conditions; except to the extent permitted under the Intercompany Subordination Agreement, if applicable.

 

7.8          Amendments. Directly or indirectly, amend, modify, or change any of the terms or provisions of:

 

(a)         any agreement, instrument, document, indenture, or other writing evidencing or concerning Permitted Indebtedness (i) other the Obligations in accordance with this Agreement, (ii) if the effect thereof, either individually or in the aggregate, would reasonably be expected to be materially adverse to the interests of the Agent or the Lenders and (iii) to the extent otherwise permitted under this Section 7.8;

 

(b)          any Material Contract except (i) Reserved, (ii) to the extent that such amendment, modification, or change would not, individually or in the aggregate, reasonably be expected to be materially adverse to the interests of the Agent or the Lenders or (iii) to the extent otherwise permitted under this Section 7.8; and

 

(c)          the Governing Documents of any Loan Party or any of its Subsidiaries if the effect thereof, either individually or in the aggregate, would reasonably be expected to be materially adverse to the interests of the Agent or the Lenders.

 

 

7.9          Change of Control. Cause, permit, or suffer to exist, directly or indirectly, any Change of Control.

 

7.10        Accounting Methods. Modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP).

 

7.11        Investments. Except for Permitted Investments, directly or indirectly, make or acquire any Investment, or incur any liabilities (including contingent obligations) for or in connection with any Investment.

 

7.12        Transactions with Affiliates. Directly or indirectly enter into or permit to exist any transaction with any Affiliate of Borrower, any other Loan Party or any of their Subsidiaries except for:

 

(a)          transactions in the ordinary course of business, undertaken in good faith, upon fair and reasonable terms and no less favorable than would be obtained in a comparable arm’s length transaction with a non-Affiliate;

 

(b)          so long as it has been approved by a Loan Party’s Board of Directors in accordance with applicable law, any customary indemnities provided for the benefit of directors (or comparable managers) of such Loan Party;

 

(c)          so long as it has been approved by a Loan Party’s Board of Directors in accordance with applicable law, the payment of reasonable compensation, severance, or employee benefit arrangements to employees, officers, and directors of a Loan Party and its Subsidiaries in the ordinary course of business;

 

(d)          transactions permitted by Section 7.3 or Section 7.17; and

 

(e)          Permitted Affiliate Transactions.

 

7.13       Use of Proceeds. Use the proceeds of any loan made hereunder for any purpose other than (a) to pay fees, costs, and expenses, including Expenses, incurred in connection with this Agreement, the other Loan Documents, (b) to pay any other fees, costs and expenses incurred in connection with the Transactions and (c) consistent with the terms and conditions hereof, for general corporate and working capital purposes (provided that no part of the proceeds of the Term Loan made to Borrower will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System).

 

7.14        Limitation on Issuance of Stock. Except for the issuance or sale of Common Stock by Borrower (and the Warrants as part of the Transaction), issue or sell or enter into any agreement or arrangement for the issuance and sale of any Stock of Borrower or a Subsidiary of Borrower other than to a Loan Party.

 

7.15      Consignments. Except for Inventory referenced in this Section 7.15 and Section 7.16 with an aggregate Fair Market Value less than $500,000, consign any of its Inventory or sell any of its Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale, except as set forth on Schedule 7.15 to the Information Certificate.

 

7.16       Inventory and Equipment with Bailees. Except for Inventory referenced in this Section 7.15 and Section 7.16 with an aggregate Fair Market Value less than $500,000, store the Inventory or Equipment of any Loan Party or any of its Subsidiaries at any time now or hereafter with a bailee, warehouseman, or similar party, except as set forth on Schedule 7.16 to the Information Certificate or except as otherwise permitted herein.

 

 

7.17        Other Payments and Distributions. Except for Permitted Distributions, the Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly:

 

(a)          declare or pay any dividend or make any other payment or distribution on account of any Loan Party’s Stock (including, without limitation, any payment in connection with any merger or consolidation involving any Loan Party or any of its Subsidiaries), or to the direct or indirect holders of any Loan Party’s Stock in their capacity as such (other than dividends or distributions payable in Stock (other than Prohibited Preferred Stock) of Borrower);

 

(b)          purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Borrower) any Stock of any Loan Party;

 

(c)          except as permitted by Section 7.7 hereof, make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of any Loan Party that is contractually subordinated in right of payment to the Obligations of such Loan Party, as the case may be, except a payment of regularly scheduled interest or principal at the Stated Maturity thereof or otherwise to the extent permitted under any applicable subordination agreement; or

 

(d)          make any Investment other than Permitted Investments (all such payments and other actions set forth in these clauses (a) through (c) above being collectively referred to as “Restricted Payments”).

 

7.18        Minimum Liquidity. The Loan Parties shall not permit Liquidity to be less than $4,000,000 at any time.

 

7.19        Benefits. Adopt, sponsor, maintain, become obligated to contribute to, or incur any liability with respect to a Benefit Plan (and shall ensure that none of their ERISA Affiliates do any of the foregoing).

 

8.	[INTENTIONALLY OMITTED].

 

9.	EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement:

 

 

9.1         If Borrower fails to pay when due and payable, or when declared due and payable, all or any portion of the Obligations consisting of principal, interest, fees, charges or other amounts due to any Lender or the Agent, reimbursement of Expenses, or other amounts constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding);

 

9.2          If any Loan Party or any of its Subsidiaries:

 

(a)          fails to perform or observe any covenant or other agreement contained in any of (i) Sections 6.1, 6.3 (solely if Borrower is not in legal existence), 6.6, 6.7 (solely if any Loan Party or any of its Subsidiaries refuses to allow the Agent or its representatives or agents to visit its properties, inspect its assets or books or records, examine and make copies of its books and records, or discuss its affairs, finances, and accounts with its officers and employees), 6.8, 6.11 and/or (ii) Section 7;

 

(b)         fails to perform or observe any covenant or other agreement contained in any of Sections 6.4, 6.5, 6.9, 6.10, 6.12, 6.13, 6.15 and/or 6.16 and such failure continues for a period of fifteen (15) days after the earlier of (i) the date on which such failure shall first become known by any officer of any Loan Party or (ii) the date on which written notice thereof is given to any Loan Party by the Agent; or

 

(c)         fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is unable to be cured or is the subject of another provision of this Section 9 (in which event such other provision of this Section 9 shall govern), and such failure continues for a period of thirty (30) days after the earlier of (i) the date on which such failure shall first become known to or should have been known by any officer of any Loan Party or (ii) the date on which written notice thereof is given to any Loan Party by the Agent;

 

9.3         If one or more judgments, orders, or awards for the payment of money in an amount in excess of $375,000 in any one case or in excess of $750,000 in the aggregate (except to the extent fully covered (other than to the extent of customary deductibles) by insurance pursuant to which the insurer has not denied coverage) is entered or filed against a Loan Party or any of its Subsidiaries, or with respect to any of their respective assets, and either (a) there is a period of thirty (30) consecutive days at any time after the entry of any such judgment, order, or award during which (1) the same is not discharged, satisfied, vacated, or bonded pending appeal, or (2) a stay of enforcement thereof is not in effect, or (b) enforcement proceedings are commenced upon such judgment, order, or award;

 

9.4          If an Insolvency Proceeding is commenced by a Loan Party or any of its Subsidiaries;

 

9.5        If an Insolvency Proceeding is commenced against a Loan Party or any of its Subsidiaries and any of the following events occur: (a) such Loan Party or such Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within sixty (60) calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Loan Party or its Subsidiary, or (e) an order for relief shall have been issued or entered therein;

 

 

9.6          If any Loan Party or any of its Subsidiaries is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of the business affairs of such Loan Party and its Subsidiaries, taken as a whole;

 

9.7         If there is a default in one or more agreements to which a Loan Party or any of its Subsidiaries is a party with one or more Persons (other than an Affiliate of a Loan Party or any of its Subsidiaries that has waived such default in writing) relative to the Indebtedness of such Loan Party or such Subsidiary involving an aggregate amount of $500,000 or more, and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such Person, irrespective of whether exercised, to accelerate the maturity of such Loan Party’s or its Subsidiary’s obligations thereunder;

 

9.8       If any warranty, representation or certificate made herein or in any other Loan Document or delivered in writing to the Agent in connection with this Agreement or any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof;

 

9.9        If the obligation of any Guarantor under its Guaranty or any other Loan Document to which any Guarantor is a party is limited or terminated by operation of law or by such Guarantor (other than in accordance with the terms of this Agreement), or if any Guarantor fails to perform any obligation under its Guaranty or under any such Loan Document, or repudiates or revokes or purports to repudiate or revoke any obligation under its Guaranty, or under any such Loan Document, or any Guarantor ceases to exist except in connection with a transaction permitted under this Agreement;

 

9.10        If this Agreement or any other Loan Document that purports to create a Lien on Collateral, shall, for any reason, fail or cease to create a valid and perfected Lien thereon having the priority required herein or therein;

 

9.11        there occurs any Material Adverse Change;

 

9.12        If any Loan Party has engaged in fraudulent activity with respect to the Collateral or other matters;

 

9.13        If the shares of the common stock of the Borrower issuable upon exercise of the Warrants or issued to the Lenders as payment of interest hereunder are no longer Freely Tradable Shares; or

 

9.14      The validity or enforceability of any Loan Document (or any portion thereof) shall at any time for any reason be declared to be null and void by a court of competent jurisdiction, or a proceeding shall be commenced by a Loan Party or any of its Subsidiaries, or a proceeding shall be commenced by any Governmental Authority having jurisdiction over a Loan Party or any of its Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or a Loan Party or any of its Subsidiaries shall deny that such Loan Party or such Subsidiary has any liability or obligation purported to be created under any Loan Document.

 

 

10.	RIGHTS AND REMEDIES.

 

10.1        Rights and Remedies.

 

(a)         Upon the occurrence and during the continuation of an Event of Default, the Agent or its authorized representatives (at the written direction of the Required Lenders) may in addition to any other rights or remedies provided for hereunder or under any other Loan Document or by applicable law, do any one or more of the following:

 

(i)    declare the Obligations, whether evidenced by this Agreement or by any of the other Loan Documents, immediately due and payable, whereupon the same shall become and be immediately due and payable and Borrower shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by Borrower and each other Loan Party;

 

(ii)    declare any outstanding funding obligations (and any other obligation to extend credit) of each Lender under this Agreement terminated, whereupon such funding obligations (and such other obligations to extend credit, if any) shall immediately be terminated;

 

(iii)    give notice to an Account Debtor or other Person obligated to pay an Account, a General Intangible, Negotiable Collateral, or other amount due, notice that the Account, General Intangible, Negotiable Collateral or other amount due has been assigned to the Agent for security and must be paid directly to the Agent and the Agent may collect the Accounts, General Intangible and Negotiable Collateral of Borrower and each other Loan Party directly, and any collection costs and expenses shall constitute part of the Obligations under the Loan Documents;

 

(iv)    without notice to or consent from any Loan Party or any of its Subsidiaries, and without any obligation to pay rent or other compensation, take exclusive possession of all locations where any Loan Party or any of its Subsidiaries conduct its business or has any rights of possession and use the locations to store, process, manufacture, sell, use, and liquidate or otherwise dispose of items that are Collateral, and for any other incidental purposes deemed appropriate by the Required Lenders in good faith, including, without limitation, the right, in the Required Lenders’ Permitted Discretion, through any Person or otherwise, to enter upon any job site and complete any portion of any of the Loan Parties’ projects as the Required Lenders deem necessary to collect or realize on any Collateral; and

 

(v)    exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the Code or any other applicable law.

 

 

(b)          Without limiting the generality of the foregoing, Borrower and each other Loan Party expressly agrees that upon the occurrence and during the continuation of an Event of Default:

 

(i)    The Agent or its authorized representatives (at the written direction of the Required Lenders), without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon Borrower, any other Loan Party or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code or any other applicable law), may take immediate possession of all or any portion of the Collateral, including with respect to any Collateral consisting of Intellectual Property, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Collateral by the applicable Loan Party to the Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as the Required Lenders shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained) and (i) require Loan Parties to, and Borrower and each other Loan Party hereby agrees that it will at its own expense and upon request of the Agent (at the written direction of the Required Lenders) forthwith, assemble all or part of the Collateral as directed by the Agent and make it available to the Agent at one or more locations designated by the Agent where such Borrower or other Loan Party conducts business, and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Agent’s or Loan Party’s offices or elsewhere, for cash, on credit, and upon such other terms as the Required Lenders may deem commercially reasonable. Borrower and each other Loan Party acknowledges and agrees that Borrower and each Loan Party’s Equipment is highly specialized and not widely marketable, and as such, the Agent shall not be required to widely or generally advertise any private or public sale of such Equipment. Borrower and each other Loan Party agrees that, to the extent notice of sale shall be required by law, at least 10 days’ notice to such Borrower or such other Loan Party 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 such notice shall constitute a reasonable “authenticated notification of disposition” within the meaning of Section 9-611 of the Code. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Agent (at the written direction of the Required Lenders) may adjourn any public or private sale from time to time, and such sale may be made at the time and place to which it was so adjourned. Borrower and each other Loan Party agrees that the internet shall constitute a “place” for purposes of Section 9-610(b) of the Code. If permitted by law, Agent (on behalf of Secured Parties) shall be permitted to acquire such Collateral (by credit bid or otherwise) at any such private sale or public sale. Borrower and each other Loan Party agrees that any sale of Collateral to a counterparty to a Material Contract, or to a licensor pursuant to the terms of a license agreement between such licensor and Borrower or such other Loan Party, is sufficient to constitute a commercially reasonable sale (including as to method, terms, manner, and time) within the meaning of Section 9-610 of the Code;

 

(ii)    The Agent or its authorized representatives (at the written direction of the Required Lenders) may, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it under applicable law and without the requirement of notice to or upon any Loan Party or any other Person (which notice is hereby expressly waived to the maximum extent permitted by the Code or any other applicable law), (i) with respect to any Loan Party’s Deposit Accounts in which the Agent’s Liens are perfected by control under Section 9-104 of the Code, instruct the bank maintaining such Deposit Account for the applicable Loan Party to pay the balance of such Deposit Account to or for the benefit of the Agent, and (ii) with respect to any Loan Party’s Securities Accounts in which the Agent’s Liens are perfected by control under Section 9-106 of the Code, instruct the securities intermediary maintaining such Securities Account for the applicable Loan Party to (A) transfer any cash in such Securities Account to or for the benefit of the Agent, or (B) liquidate any financial assets in such Securities Account that are customarily sold on a recognized market and transfer the cash proceeds thereof to or for the benefit of the Agent;

 

 

(iii)    any cash held by the Agent as Collateral and all cash proceeds received by the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied against the Obligations in the order set forth in Section 10.5. In the event the proceeds of Collateral are insufficient to satisfy all of the Obligations in full, Borrower and each other Loan Party shall remain jointly and severally liable for any such deficiency; and

 

(iv)    the Obligations arise out of a commercial transaction, and that if an Event of Default shall occur the Agent shall have the right to an immediate writ of possession without notice of a hearing. The Agent shall have the right to the appointment of a receiver for each Loan Party or for the properties and assets of each Loan Party, and Borrower and each other Loan Party hereby consents to such rights and such appointment and hereby waives any objection such Borrower or such other Loan Party may have thereto or the right to have a bond or other security posted by the Agent, and further agrees that, to the extent permitted by applicable law, such receiver may be granted the power to sell any Collateral, subject only to the Agent’s rights therein. Borrower acknowledges that the nature of its business, which includes progress billing, technical contracts, and the use of Equipment in varied locations, renders the appointment of a receiver reasonably necessary and, makes other remedies inadequate for the liquidation of the Collateral, to the extent the Agent elects to proceed with such appointment.

 

Notwithstanding the foregoing or anything to the contrary contained in Section 10.1(a), upon the occurrence of any Event of Default described in Section 9.4 or Section 9.5, in addition to the remedies set forth above, without any notice to Borrower or any other Person or any act by the Agent or the Lenders, all obligations (if any) of the Lenders to provide any further extensions of credit hereunder shall automatically terminate and the Obligations shall automatically and immediately become due and payable and Borrower shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by Borrower.

 

10.2        Pledged Collateral.

 

(a)          Voting Rights. During the continuance of an Event of Default, upon notice (which may be concurrent with such exercise) by the Agent to the relevant Loan Party or Loan Parties, the Agent or its nominee (at the written direction of the Required Lenders) may exercise (A) any voting, consent, corporate or other right pertaining to the Pledged Collateral including without limitation at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right of conversion, exchange and subscription and any other right, privilege or option pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion any Pledged Collateral upon the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental change in the corporate or equivalent structure of any issuer of Pledged Stock, the right to deposit and deliver any Pledged Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Agent (at the written direction of the Required Lenders) may reasonably determine), all without liability (except for the gross negligence or willful misconduct of the Agent or Lenders as determined by a final order of a court of competent jurisdiction no longer subject to appeal) except to account for property actually received by it; provided, however, that the Agent shall have no duty to any Loan Party to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

 

 

(b)        Proxies. In order to permit the Agent to exercise the voting and other consensual rights that it may be entitled to exercise pursuant hereto during the continuance of an Event of Default and to receive all dividends and other distributions that it may be entitled to receive hereunder, upon an Event of Default (i) each Loan Party shall promptly execute and deliver (or cause to be executed and delivered) to the Agent all such proxies, dividend payment orders and other instruments as the Agent (at the direction of the Required Lenders) may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, such Loan Party hereby grants to the Agent (subject to the terms of Section 10.2(a)) an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or members, as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person (including the issuer of such Pledged Collateral or any officer or agent thereof) during the continuance of an Event of Default and which proxy shall only terminate upon the payment in full of the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).

 

(c)        Authorization of Issuers. Each Loan Party hereby expressly irrevocably authorizes and instructs, without any further instructions from such Loan Party, each issuer of any Pledged Collateral pledged hereunder by such Loan Party to (i) comply with any instruction received by it from the Agent in writing that states that an Event of Default is continuing and is otherwise in accordance with the terms of this Agreement and each Loan Party agrees that such issuer shall be fully protected from liabilities to such Loan Party in so complying and (ii) unless otherwise expressly permitted by this Agreement, during the continuance of an Event of Default pay any dividend or make any other payment with respect to the Pledged Collateral directly to the Agent.

 

(d)          Sale of Pledged Collateral.

 

(i)    Each Loan Party recognizes that the Agent may be unable to effect a public sale of any Pledged Collateral by reason of certain prohibitions contained in the Securities Act and applicable state or foreign securities laws or otherwise or may determine that a public sale is impracticable, not desirable or not commercially reasonable and, accordingly, may resort to one or more private sales thereof to a restricted group of purchasers that shall be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Loan Party acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Agent shall be under no obligation to delay a sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Act or under applicable state securities laws even if such issuer would agree to do so.

 

 

(ii)    Each Loan Party agrees to use its commercially reasonable efforts to do or cause to be done all such other acts (other than registering securities for public sale under the Securities Act or under applicable state securities laws) as may be necessary to make such sale or sales of any portion of the Pledged Collateral pursuant to Section 10 valid and binding and in compliance with all applicable Legal Requirements. Each Loan Party further agrees that a breach of any covenant contained herein will cause irreparable injury to the Agent and other Secured Parties, that the Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained herein shall be specifically enforceable against such Loan Party, and such Loan Party hereby waives and agrees not to assert any defense against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under this Agreement or gross negligence or willful misconduct of the Agent as determined by a final order of a court of competent jurisdiction no longer subject to appeal. Each Loan Party waives any and all rights of contribution or subrogation upon the sale or disposition of all or any portion of the Pledged Collateral by the Agent.

 

10.3       Agent Appointed Attorney in Fact. Borrower and each other Loan Party hereby irrevocably appoints the Agent its attorney-in-fact, with full authority in the place and stead of Borrower and such Loan Party and in the name of Borrower or such Loan Party or otherwise, at such time as an Event of Default has occurred and is continuing, to take any action and to execute any instrument which the Agent has been directed in writing by the Required Lenders to accomplish the purposes of this Agreement, including:

 

(i)    to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Accounts or any other Collateral of such Borrower or such other Loan Party;

 

(ii)    to receive, indorse, and collect any drafts or other instruments, documents, Negotiable Collateral or Chattel Paper;

 

(iii)    to file any claims or take any action or institute any proceedings which the Agent (at the written direction of the Required Lenders) may deem necessary or desirable for the collection of any of the Collateral of such Borrower or such other Loan Party or otherwise to enforce the rights of the Secured Parties with respect to any of the Collateral;

 

(iv)    to repair, alter, or supply Goods, if any, necessary to fulfill in whole or in part the purchase order of any Person obligated to Borrower or such other Loan Party in respect of any Account of such Borrower or such other Loan Party;

 

(v)    to use any Intellectual Property or Intellectual Property Licenses of such Borrower or such other Loan Party including but not limited to any labels, Patents, Trademarks, URLs, domain names, industrial designs, Copyrights, or advertising matter, in preparing for sale, advertising for sale, or selling Inventory or other Collateral and to collect any amounts due under Accounts, contracts or Negotiable Collateral of such Borrower or such other Loan Party;

 

(vi)    to take exclusive possession of all locations where Borrower or any other Loan Party conducts its business or has rights of possession, without notice to or consent of Borrower or any Loan Party and to use such locations to store, process, manufacture, sell, use, and liquidate or otherwise dispose of items that are Collateral, without obligation to pay rent or other compensation for the possession or use of any location;

 

 

(vii)    the Agent shall have the right, but shall not be obligated, to bring suit in its own name or in the applicable Loan Party’s name, to enforce the Intellectual Property and Intellectual Property Licenses and, if the Agent shall commence any such suit, the appropriate Borrower or such other Loan Party shall, at the request of the Agent, do any and all lawful acts and execute any and all documents reasonably required by the Agent in aid of such enforcement; and

 

(viii)    to the extent permitted by applicable law, Borrower and each other Loan Party hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until all Commitments of the Lenders to provide the Term Loan are terminated and all Obligations (other than unasserted contingent indemnification obligations) have been paid in full in cash (and, in the case of an election made under Section 2.6(a) hereof with respect to payment of certain outstanding interest in accordance with the provisions thereof, payment of such interest from Stock issued by the Borrower).

 

10.4       Remedies Cumulative. The rights and remedies of the Agent and the Lenders under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Agent and the Lenders shall have all other rights and remedies not inconsistent herewith as provided under the Code, by applicable law, or in equity. No exercise by the Agent or the Lenders of one right or remedy shall be deemed an election, and no waiver by the Lenders of any Default or Event of Default shall be deemed a continuing waiver. No delay by the Agent or the Lenders shall constitute a waiver, election, or acquiescence by it.

 

10.5       Crediting of Payments and Proceeds. In the event that the Obligations have been accelerated pursuant to Section 10.1(a) or the Agent or the Lenders have exercised any remedy set forth in this Agreement or any other Loan Document, all payments received by the Agent or the Lenders upon the Obligations and all net proceeds from the enforcement of the Obligations shall be applied to the Obligations in accordance with Section 2.4(d).

 

10.6        Marshaling. The Agent or the Lenders shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies under this Agreement and under the other Loan Documents and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, Borrower and each other Loan Party hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Agent or the Lenders’ rights and remedies under this Agreement or under any other Loan Document or instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, Borrower hereby irrevocably waives the benefits of all such laws.

 

10.7       License. Effective upon the occurrence of and during the continuation of any Event of Default, to the extent permitted by applicable law, Borrower and each other Loan Party hereby grants to the Agent an irrevocable (so long as Obligations remain outstanding), non-exclusive, worldwide and royalty-free license or sublicense to use or otherwise exploit all Intellectual Property rights of Borrower and such Loan Party now owned or hereafter acquired, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used in the compilation or printout thereof (subject to any confidentiality provisions applicable to such Intellectual Property rights), for the purpose of enabling the Agent to exercise rights and remedies under this Section 10, including: (a) completing the manufacture of any in-process materials following any Event of Default so that such materials become saleable Inventory, all in accordance with the same quality standards previously adopted by Borrower or such other Loan Party for its own manufacturing; and (b) selling, leasing or otherwise disposing of any or all Collateral following the occurrence and during the continuance of any Event of Default.

 

 

11.	WAIVERS; INDEMNIFICATION.

 

11.1        Demand; Protest; etc.

 

Borrower and each other Loan Party waives demand, protest, notice of protest, notice of default (except as expressly provided for herein or in any other Loan Document) or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guaranties at any time held by the Agent or any Lender on which Borrower or such other Loan Party may in any way be liable.

 

11.2       Agent’s Liability for Collateral. Borrower and each other Loan Party hereby agrees that: (a) except as otherwise provided under the Code or expressly provided under this Agreement, the Agent shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrower and such other Loan Parties.

 

11.3      Indemnification. Borrower and each other Loan Party shall pay, indemnify, defend, and hold the Lender-Related Persons and Agent-Related Parties (each, an “Indemnified Person”) harmless (to the fullest extent permitted by applicable law) from and against any and all claims, demands, suits, actions, investigations, proceedings, losses, liabilities, fines, costs, penalties, and damages, and all reasonable documented out-of-pocket fees and disbursements of attorneys, experts, or consultants, but subject to the proviso in the definition of “Expenses”, and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution and delivery, enforcement, performance, or administration (including any restructuring, forbearance or workout with respect hereto) of this Agreement, any of the other Loan Documents or the transactions contemplated hereby or thereby or the monitoring of compliance by Borrower and each other Loan Party and each of its Subsidiaries with the terms of the Loan Documents, (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, and the transactions related to the foregoing or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, (c) in connection with the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Loan Documents, (d) with respect to the failure by Borrower or any other Loan Party to perform or observe any of the provisions hereof or any other Loan Document, (e) in connection with the exercise or enforcement of any of the rights of the Agent or Lenders hereunder or under any other Loan Document, and (f) in connection with or arising out of any Release of Hazardous Materials at, on, under, to or from any Real Property or any Environmental Action, Environmental Liabilities or Remedial Action related in any way to any such Real Property (each and all of the foregoing, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, neither Borrower nor any other Loan Party shall have any obligation to any Indemnified Person under this Section 11.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person or its officers, directors, employees, or attorneys, as determined by a final, non-appealable order of a court of competent jurisdiction. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Borrower or any other Loan Party was required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrower or such other Loan Party with respect thereto. This Section 11.3 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

 

12.

NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail (postage prepaid, return receipt requested), overnight courier or electronic mail (at such email addresses as a party may designate in accordance herewith). In the case of notices or demands to Borrower, any other Loan Party, or the Agent, as the case may be, they shall be sent to the respective address set forth below:

 

If to Borrower and/or any Guarantor:	GENASYS INC. 16262 West Bernardo Drive San Diego, CA 92127 Attention: Chief Financial Officer dklahn@genasys.com
with courtesy copies to (which shall not constitute Notice for purposes of this Section 12):	DENTONS DURHAM JONES PINEGAR P.C.
	192 E 200 North, Third Floor St. George, UT 84770 Attention: Joshua E. Little          joshua.e.little@dentons.com
If to the Agent:
	CANTOR FITZGERALD SECURITIES 110 E. 59th Street New York, NY 10022 Attention: R. Yeh (Genasys) E-mail: Rayn.Yeh@cantor.com
	and
	Cantor Fitzgerald Securities 900 West Trade Street, Suite 725 Charlotte, North Carolina 28202 Phone: (747) 374-0574 Attention: B. Young (Genasys) E-mail: BYoung@cantor.com

 

 

With courtesy copies to (which shall not constitute: Notice for purposes of this Section 12):
	Shipman & Goodwin LLP One Constitution Plaza Hartford, CT 06103 Attn: Nathan Z. Plotkin Email: nplotkin@goodwin.com
	BROWN RUDNICK LLP One Financial Center Boston, MA 02111 Attn: Andreas P. Andromalos E-mail: aandromalos@brownrudnick.com

 

Any party hereto may change the address at which it is to receive notices hereunder, by notice in writing in the foregoing manner given to the other parties. All notices or demands sent in accordance with this Section 12 shall be deemed received on the earlier of the date of actual receipt or three (3) Business Days after the deposit thereof in the mail; provided, that (a) notices sent by overnight courier service shall be deemed to have been given when received and (b) notices by electronic mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgment). Any notice given by the Agent or any Lender to Borrower as provided in this Section 12 shall be deemed sufficient notice as to all Loan Parties, regardless of whether each Loan Party is sent a separate copy of such notice or whether each Loan Party is specifically identified in such notice. Notices to the Agent shall be effective upon actual receipt.

 

Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified the Agent that it is incapable of receiving notices under Section 2 by electronic communication. The Agent may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

 

13.	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

(a)         THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO AS WELL AS ALL CLAIMS, CONTROVERSIES OR DISPUTES ARISING UNDER OR RELATED TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

(b)       THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE TRIED AND LITIGATED IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK AND THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER, EACH OTHER LOAN PARTY AND THE SECURED PARTIES WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).

 

(c)         TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, EACH OTHER LOAN PARTY, THE AGENT AND EACH LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH, A “CLAIM”). BORROWER, EACH OTHER LOAN PARTY, THE AGENT AND EACH LENDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(d)         NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST THE AGENT OR ANY LENDER, OR ANY AFFILIATE OF THE AGENT OR ANY LENDER OR ANY DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, THE AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

 

 

14.	ASSIGNS; SUCCESSORS; REPLACEMENT OF LENDERS.

 

14.1       Binding Effect; Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of, but only to the benefit of, Borrower, the other Loan Parties hereto (in each case except for Section 17), the Agent and each Lender receiving the benefits of the Loan Documents and each other Secured Party and, in each case, their respective successors and permitted assigns. None of the Loan Parties shall have the right to assign any rights or obligations hereunder or any interest herein without the consent of all Lenders. No consent to assignment by the Lenders shall release Borrower nor any other Loan Party from its Obligations.

 

14.2        Assignments and Participations.

 

(a)          [Intentionally Omitted].

 

(b)        Right to Assign. Subject to the next sentence, each Lender may sell, transfer, negotiate or assign (a “Sale”) all or a portion of its rights and obligations hereunder (including its rights and obligations with respect to the Term Loan and/or any portion thereof) to (i) any existing Lender (other than an Impacted Lender), (ii) any Affiliate or Approved Fund of any existing Lender (other than an Impacted Lender) or (iii) any other Person with the prior written consent (which consent shall, in each case, not be unreasonably withheld or delayed) of the Agent; provided, however, that the aggregate outstanding principal amount (determined as of the effective date of the applicable Assignment) of the Term Loan subject to any such Sale shall be in a minimum amount of $1,000,000, unless such Sale is made to an existing Lender or an Affiliate or Approved Fund of any existing Lender, is of the assignor’s (together with its Affiliates and Approved Funds) entire interest in the Term Loan hereunder or is made with the prior written consent of the Agent. The Agent’s refusal to accept a Sale to a Loan Party, or to a Person that would be an Impacted Lender, or the imposition of conditions or limitations (including limitations on voting) upon Sales to such Persons, shall not be deemed to be unreasonable.

 

Notwithstanding anything else to the contrary provided herein, as long as no Event of Default under Sections 9.1, 9.4 or 9.5 is continuing, no Lender shall be permitted to assign any portion of or all of the Term Loan to any Disqualified Person. The Agent and each assignor of its interest in the Term Loan hereunder shall be entitled to rely conclusively on a representation of the assignee Lender in the relevant Assignment that such assignee is not a Disqualified Person, provided that such reliance by such assignor is in good faith and reasonable under the circumstances existing at the time of the Sale. The Agent shall not have any responsibility or liability for monitoring the list of, identifying, or enforcing provisions relating to, Disqualified Persons.

 

(c)          [Reserved].

 

 

(d)        Procedure. The parties to each Sale made in reliance on clause (b) above (other than those described in clauses (f) or (g) below) shall execute and deliver to the Agent an Assignment via an electronic settlement system designated by the Agent (or, if previously agreed with the Agent, via a manual execution and delivery of the Assignment) evidencing such Sale, together with any existing Note subject to such Sale (or any affidavit of loss therefor acceptable to the Agent), a completed administrative questionnaire in form and substance satisfactory to the Agent, any Tax forms required to be delivered pursuant to Section 16.1 and payment of an assignment fee in the amount of $3,500 to the Agent, unless waived or reduced by the Agent in its sole discretion; provided, that (i) if a Sale by a Lender is made to an Affiliate or an Approved Fund of such assigning Lender, then no assignment fee shall be due in connection with such Sale, and (ii) if a Sale by a Lender is made to an assignee that is not an Affiliate or Approved Fund of such assignor Lender, and concurrently to one or more Affiliates or Approved Funds of such assignee, then only one assignment fee of $3,500 shall be due in connection with such Sale (unless waived or reduced by the Agent). Agent may waive such $3,500 fee in its sole discretion. Upon receipt of all the foregoing, and conditioned upon such receipt and, if such Assignment is made in accordance with clause (iii) of Section 14.2(b), upon the Agent consenting to such Assignment, from and after the effective date specified in such Assignment, the Agent shall record or cause to be recorded in the Register the information contained in such Assignment.

 

(e)          Effectiveness. Subject to the recording of an Assignment by the Agent in the Register pursuant to Section 2.8(b), (i) the assignee thereunder shall become a party hereto and, subject to the requirements of Section 16.1(f) and to the extent that rights and obligations under the Loan Documents have been assigned to such assignee pursuant to such Assignment, shall have the rights and obligations of a Lender, including the obligation to make its portion of the Term Loan, (ii) any applicable Note shall be transferred to such assignee through such entry and (iii) the assignor thereunder shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Assignment, relinquish its rights (except for those surviving the termination of the Commitments and the payment in full of the Obligations) and be released from its obligations under the Loan Documents, other than those relating to events or circumstances occurring prior to such assignment and those obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 19.8(a) (and, in the case of an Assignment covering all or the remaining portion of an assigning Lender’s rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto).

 

(f)          Grant of Security Interests. In addition to the other rights provided in this Section 14.2, each Lender may grant a security interest in, or otherwise assign as collateral, any of its rights under this Agreement, whether now owned or hereafter acquired (including rights to payments of principal or interest on the Term Loan), to (A) any federal reserve bank (pursuant to Regulation A of the Federal Reserve Board), without notice to the Agent or Borrower or (B) any holder of, or trustee for the benefit of the holders of, such Lender’s Indebtedness or equity securities, by notice to the Agent and Borrower; provided, however, that no such holder or trustee, whether because of such grant or assignment or any foreclosure thereon (unless such foreclosure is made through an assignment in accordance with clause (b) above), shall be entitled to any rights of such Lender hereunder and no such Lender shall be relieved of any of its obligations hereunder and the Agent and the Loan Parties shall continue to deal solely and directly with the assigning Lender.

 

(g)          Reserved.

 

 

14.3       Replacement of Lender. Within forty-five days after: (i) receipt by Borrower of written notice and demand from any Lender (an “Affected Lender”) for payment of additional amounts as provided in Sections 16.1 and/or 16.2; or (ii) any failure by any Lender (other than the Agent or an Affiliate of the Agent) to consent to a requested amendment, waiver or modification to any Loan Document in which Required Lenders have already consented to such amendment, waiver or modification but the consent of each Lender (or each Lender directly affected thereby, as applicable) is required with respect thereto, Borrower may, at its option, notify the Agent and such Affected Lender (or such defaulting or non-consenting Lender) of Borrower’s intention to obtain, at Borrower’s expense, a replacement Lender (“Replacement Lender”) for such Affected Lender (or such defaulting or non-consenting Lender, as the case may be), which Replacement Lender shall be reasonably satisfactory to the Agent and the Required Lenders. In the event Borrower obtains a Replacement Lender within forty-five (45) days following notice of its intention to do so, the Affected Lender (or such defaulting or non-consenting Lender, as the case may be) shall sell and assign its portion of the Term Loan and Commitments (if any) to such Replacement Lender, at par, provided that Borrower has reimbursed such Affected Lender for its increased costs, if any, for which it is entitled to reimbursement under this Agreement through the date of such sale and assignment. In the event that a replaced Lender does not execute an Assignment pursuant to Section 14.2 within five (5) Business Days after receipt by such replaced Lender of notice of replacement pursuant to this Section 14.3 and presentation to such replaced Lender of an Assignment evidencing an assignment pursuant to this Section 14.3, Borrower shall be entitled (but not obligated) to execute such an Assignment on behalf of such replaced Lender, and any such Assignment so executed by Borrower, the Replacement Lender and the Agent, shall be effective for purposes of this Section 14.3 and Section 14.2. Notwithstanding the foregoing, with respect to a Lender that is an Impacted Lender, the Agent or Borrower may, but shall not be obligated to, obtain a Replacement Lender and execute an Assignment on behalf of such Impacted Lender at any time with three (3) Business Days’ prior notice to such Lender (unless notice is not practicable under the circumstances) and cause such Lender’s portion of the Term Loan and Commitments (if any) to be sold and assigned, in whole or in part, at par. Upon any such assignment and payment and compliance with the other provisions of Section 14.2, such replaced Lender shall no longer constitute a “Lender” for purposes hereof; provided, any rights of such replaced Lender to indemnification hereunder shall survive. If any assignments are consummated pursuant to this Section 14.3 when a prepayment premium would have been due had such assignment been a voluntary prepayment, the Borrower shall pay such prepayment premium to such Lender being replaced.

 

15.	AMENDMENTS; WAIVERS.

 

15.1        Amendments and Waivers.

 

(a)         Subject to the provisions of Sections 17.10, no amendment or waiver of, or supplement or other modification (which shall include any direction to the Agent by the Required Lenders) to, any Loan Document (other than any fee letter or similar agreement) or any provision thereof, and no consent with respect to any departure by any Loan Party therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by the Agent with the consent of the Required Lenders and delivered to the Agent if signed by the Required Lenders and not the Agent), and Borrower and then such waiver shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, supplement (including any additional Loan Document) or consent shall, unless in writing and signed by all the Lenders directly and adversely affected thereby (or by the Agent with the consent of all the Lenders directly and adversely affected thereby), in addition to the Agent, the Required Lenders (or by the Agent with the consent of the Required Lenders) and Borrower, do any of the following:

 

(i)    increase or extend the Commitment of any Lender (or reinstate any Commitment of any Lender previously terminated);

 

(ii)    postpone or delay any date fixed for, or reduce or waive, any scheduled installment of principal or any payment of interest, fees, premiums or other amounts (other than principal) due to the Lenders (or any of them) hereunder or under any other Loan Document (for the avoidance of doubt, mandatory prepayments pursuant to Section 2.5 may be postponed, delayed, reduced, waived or modified with only the consent of Required Lenders);

 

 

(iii)    reduce the principal of, or the rate of interest specified herein (it being agreed that waiver of the Default Rate shall only require the consent of Required Lenders) or the amount of interest payable in cash specified herein on any Obligations, or of any fees, premiums or other amounts payable hereunder or under any other Loan Document;

 

(iv)    (A) change or have the effect of changing the priority or pro rata treatment of any payments (including voluntary and mandatory prepayments and, including without limitation, as set forth in Section 2.5 hereof) or the application of a payment as set forth in Section 2.4(d) hereof, or (B) extend the date fixed for any scheduled installment of principal or interest due to any of the Lenders under any Loan Document;

 

(v)    change the aggregate unpaid principal amount or type of the Term Loan which shall be required for the Lenders or any of them to take any action hereunder;

 

(vi)    amend this Section 15.1 or, subject to the terms of this Agreement, the definition of Required Lenders or any provision providing for consent or other action by all Lenders; or

 

(vii)    discharge any Loan Party from its respective payment Obligations under the Loan Documents, or release all or substantially all of the Collateral, in each case, except as otherwise may be provided or permitted under this Agreement or the other Loan Documents.

 

(b)          No amendment, waiver or consent shall, unless in writing and signed by the Agent, in addition to the Required Lenders or all Lenders directly affected thereby, as the case may be (or by the Agent with the consent of the Required Lenders or all the Lenders directly affected thereby, as the case may be), affect the rights or duties of the Agent under this Agreement or any other Loan Document.

 

(c)          [Reserved].

 

(d)        If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender (or each affected Lender) and that has been approved by the Required Lenders, Borrower may replace such non-consenting Lender in accordance with Section 14.3.

 

 

15.2       No Waiver; Cumulative Remedies. No failure by the Agent or the Lenders to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by the Agent or the Lenders in exercising the same, will operate as a waiver thereof. No waiver by the Agent or the Lenders will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by the Agent or the Lenders on any occasion shall affect or diminish the Agent’s or any Lender’s rights thereafter to require strict performance by Borrower or any other Loan Party of any provision of this Agreement. The Agent’s and Lenders’ rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that the Agent and Lenders may have.

 

16.	TAXES, YIELD PROTECTION AND ILLEGALITY.

 

16.1        Taxes.

 

(a)          All payments made by or on behalf of any Loan Party hereunder or under any note or other Loan Document will be made free and clear of, and without deduction or withholding for, any Indemnified Taxes; provided that if any Taxes are required to be withheld or deducted from such payments under applicable law then (i) the Loan Party making such payment shall be entitled to withhold or deduct such Taxes as required by applicable law, such Loan Party shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and (ii) if such Taxes are Indemnified Taxes, the sum payable by the Loan Party shall be increased as necessary so that the payment of the applicable amount due under this Agreement, any note, or Loan Document, including any additional amount paid pursuant to this Section 16.1(a), after withholding or deduction for or on account of such Indemnified Taxes, will not be less than the amount that would have been payable had no such deductions or withholdings been made.

 

(b)          Any Loan Party that made a payment of Taxes to a Governmental Authority pursuant to Section 16.1(a) will furnish to the Agent as soon as practicable after such payment, certified copies of receipts evidencing such payment by the applicable Loan Party, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

 

(c)          Without limiting the foregoing provisions, the Loan Parties shall timely pay, or shall cause to be timely paid, to the relevant Governmental Authority in accordance with applicable law any Other Taxes.

 

(d)          The Loan Parties shall jointly and severally reimburse and indemnify, within ten (10) days after receipt of demand therefor (with copy to the Agent), the Agent or each Lender for all Indemnified Taxes (including any Taxes imposed by any jurisdiction on amounts payable under this Section 16.1) paid or payable by the Agent or such Lender, as the case may be, or required to be withheld or deducted from a payment to the Agent or such Lender, as the case may be, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. A certificate of the Agent or such Lender (or of the Agent on behalf of such Lender) claiming any compensation under this Section 16.1(d), setting forth the amounts to be paid thereunder and delivered to Borrower with copy to the Agent, shall be conclusive, binding and final for all purposes, absent manifest error.

 

(e)          Any Lender claiming any additional amounts payable or requiring the Loan Parties to pay additional amounts to any Governmental Authority pursuant to this Section 16.1 shall (at the request of the Loan Parties) use its reasonable efforts to change the jurisdiction of its Lending Office or assign its rights and obligations hereunder to another or its offices, branches or affiliates if such a change or assignment (i) would reduce payment of any such additional amounts pursuant to this Section 16.1 and (ii) would not be otherwise disadvantageous to such Lender. The Loan Parties agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such change or assignment.

 

 

(f)          (i) Each Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Agent and Borrower at the time or times reasonably requested by Borrower or the Agent and at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Agent or Borrower as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, each Lender, if reasonably requested by the Agent or Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Agent or Borrower as will enable the Agent or Borrower to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 16.1(f)(ii), (iii), and (v) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(i)    Each Foreign Lender shall, to the extent it is legally entitled to do so, on or prior to the date such Foreign Lender becomes a Lender hereunder and from time to time as required by applicable law and if requested by Borrower or the Agent, provide the Agent and Borrower with two duly executed and properly completed copies of each of the following, as applicable: (A) Form W-8ECI (or successor form) claiming exemption from U.S. withholding Tax because the income is effectively connected with a U.S. trade or business or Form W-8BEN or W-8BEN-E (or successor form), as applicable, claiming exemption from, or a reduction of, U.S. withholding Tax under an income Tax treaty, (B) in the case of a Foreign Lender claiming exemption under Sections 871(h) or 881(c) of the IRC, Form W-8BEN or W-8BEN- E (or successor forms), as applicable, claiming exemption from U.S. withholding Tax under the portfolio interest exemption and a certificate in form and substance acceptable to Borrower and the Agent that such Foreign Lender is not (1) a “bank” within the meaning of Section 881(c)(3)(A) of the IRC, (2) a “10 percent shareholder” of Borrower within the meaning of Section 871(h)(3)(B) of the IRC or (3) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the IRC (a “U.S. Tax Compliance Certificate”), (C) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY (or successor form), accompanied by IRS Form W-8ECI or IRS Form W-8BEN or W-8BEN-E (or successor forms), as applicable, a U.S. Tax Compliance Certificate and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership for U.S. federal income tax purposes and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption under Sections 871(h) or 881(c) of the IRC, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner or (D) any other applicable form prescribed by applicable law certifying as to the entitlement of such Foreign Lender to such exemption from U.S. withholding Tax or reduced rate with respect to all payments to be made to such Foreign Lender under the Loan Documents, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or the Agent to determine the withholding or deduction required to be made.

 

 

(ii)    Each Lender that is a U.S. Person shall on or prior to the date such Lender becomes a Lender hereunder and from time to time if requested by Borrower or the Agent, provide the Agent and Borrower with two completed copies of Form W-9 (certifying that such Lender is entitled to an exemption from U.S. backup withholding Tax) or any successor form.

 

(iii)    [Intentionally Omitted].

 

(iv)    If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such Lender shall deliver to the Agent and Borrower at the time or times prescribed by law and at such time or times reasonably requested by the Agent and Borrower such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by the Agent and Borrower as may be necessary for the Agent and Borrower to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (v), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

Each Lender agrees that if any form or certification it previously delivers expires or becomes obsolete or inaccurate in any respect, it shall promptly (1) deliver to Borrower and the Agent (in such number of copies as shall be requested by the recipient) renewals, amendments or additional or successor forms, properly completed and duly executed by such Lender, together with any other certificate or statement of exemption from or reduction in U.S. federal withholding Tax or backup withholding or (2) notify the Agent and Borrower in writing of its legal inability to do so.

 

(g)         If any Lender determines in its sole discretion exercised in good faith that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 16.1, it shall pay to the relevant Loan Party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 16.1 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such Loan Party, upon the request of such Lender, shall repay to such Lender the amount paid over pursuant to this Section 16.1(g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such Lender is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 16.1(g), in no event shall the Lender be required to pay any amount to a Loan Party pursuant to this Section 16.1(g) the payment of which would place the Lender in a less favorable net after-Tax position than the Lender would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 16.1(g) shall not be construed to require any Lender to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Loan Party or any other Person.

 

 

(h)         Each Lender shall severally indemnify the Agent, within 10 days after demand therefor, for (i) any Taxes as to which it has been indemnified pursuant to this Section 16.1 attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Agent for such Taxes and without limiting the obligation of the Loan Parties to do so) and (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 14.2(g) relating to the maintenance of a Participant Register, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Agent to the Lender from any other source against any amount due to the Agent under this paragraph (h).

 

(i)           For purposes of this Section 16.1, the term “applicable law” includes FATCA.

 

16.2        Increased Costs and Reduction of Return.

 

(a)          If any Lender shall have determined that:

 

(i)    the introduction of any Capital Adequacy Regulation after the Closing Date;

 

(ii)    any change in any Capital Adequacy Regulation after the Closing Date;

 

(iii)    any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof after the Closing Date; or

 

(iv)    compliance by such Lender (or its Lending Office) or any entity controlling the Lender, with any Capital Adequacy Regulation in clauses (i) through (iii) above;

 

materially affects the amount of capital required or expected to be maintained by such Lender or any entity controlling such Lender and (taking into consideration such Lender’s or such entities’ policies with respect to capital adequacy) determines that the amount of such capital is increased as a consequence of its Commitment(s), loans, credits or obligations under this Agreement, then, within thirty (30) days of written demand of such Lender (with a copy to the Agent), Borrower shall pay to such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender (or the entity controlling the Lender) for such increase; provided, that Borrower shall not be required to compensate any Lender pursuant to this Section 16.2(a) for any amounts incurred more than 180 days prior to the date that such Lender notifies Borrower in writing of the amounts and of such Lender’s intention to claim compensation thereof; provided, further, that if the event giving rise to such increase is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

(b)         Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case in respect of this clause (ii) pursuant to Basel III, shall, in each case, be deemed to be a change in Capital Adequacy Regulation after the Closing Date under Section 16.2(a) above, as applicable, regardless of the date enacted, adopted or issued.

 

 

(c)          Any Lender claiming any additional amounts payable pursuant to this Section 16.2 shall use reasonable efforts (consistent with its internal policies and Legal Requirements), to change the jurisdiction of its lending office if such a change would reduce any such additional amounts (or any similar amount that may thereafter accrue) and would not, in the sole determination of such Lender, be otherwise disadvantageous to such Lender.

 

16.3      Certificates of Lenders. Any Lender claiming reimbursement or compensation pursuant to this Section 16 shall deliver to Borrower (with a copy to the Agent) a certificate setting forth in reasonable detail the amount payable to such Lender hereunder and such certificate shall be conclusive and binding on Borrower in the absence of manifest error.

 

16.4        Illegality.

 

(a)         If a Lender determines that, as a result of a change in law occurring after the later of the Closing Date and the date such Lender became a party hereto, it is unlawful to maintain any Term Loan that accrues interest at the Three Month Term SOFR Rate, then, upon its receipt of notice of such fact and demand from such Lender (with a copy to the Agent), the portion of the Term Loan owed to such Lender shall immediately begin to accrue interest at (x) the Base Rate plus five percent (5%) per annum in the case of Section 2.6(a)(i) and (y) Base Rate plus six percent (6%) per annum in the case of Section 2.6(a)(ii), with all other provisions of Section 2.6(a) remaining the same other than those provisions that expressly pertain only to the initial Benchmark such as the last sentence of Section 2.6(a).

 

17.	THE ADMINISTRATIVE AGENT

 

17.1        Appointment. Each Lender (including, without limitation, by assignment) hereby irrevocably appoints and authorizes the Administrative Agent and the Collateral Agent to exercise the powers of each such Agent as set forth in this Agreement and the other Loan Documents, including: (a) to receive on behalf of each Lender any payment of principal of or interest on the Term Loan outstanding hereunder and all other amounts accrued hereunder for the account of the Lenders and paid to such Agent, and to distribute promptly to each Lender its share of all payments so received; (b) to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Term Loan, and related matters and to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Collateral and related matters; (c) to execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to this Agreement or any other Loan Document; (d) to make the Term Loan on behalf the applicable Lenders as provided in this Agreement or any other Loan Document; (e) at the direction of the Required Lenders, to perform, exercise, and enforce any and all other rights and remedies of the Lenders with respect to Borrower or any other Loan Party, the Obligations, or otherwise related to any of same to the extent reasonably incidental to the exercise by such Agent of the rights and remedies specifically authorized to be exercised by such Agent by the terms of this Agreement or any other Loan Document; (f) to incur and pay such fees necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to this Agreement or any other Loan Document; (g) to execute and deliver the Loan Documents, as Agent, to accept delivery of the Loan Documents from the Loan Parties and to perform all of its undertakings and obligations under each such Loan Document; and (h) to take such action as such Agent deems appropriate on its behalf to administer the Term Loan and the Loan Documents and to exercise such other powers delegated to such Agent by the terms hereof or the other Loan Documents (including, without limitation, the power to give or to refuse to give notices, waivers, consents, approvals and instructions and the power to make or to refuse to make determinations and calculations) together with such powers as are reasonably incidental thereto to carry out the purposes hereof and thereof. As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, enforcement or collection of the Term Loan), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) only upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as the Agent shall believe in good faith to be necessary hereunder or under the Loan Documents), and such instructions of the Required Lenders shall be binding upon all Lenders and all makers of the Term Loan; provided, however, that the Agent shall not be required to take any action which, in the reasonable opinion of the Agent, exposes the Agent to liability or which may expose the Agent to liability or is contrary to this Agreement or any other Loan Document or applicable law. Except as otherwise provided in this Section 17, each of the Administrative Agent and the Collateral Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Each of the Administrative Agent and the Collateral Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made in compliance with this Section 17 and without gross negligence or willful misconduct of the Administrative Agent or the Collateral Agent as determined by a final order of a court of competent jurisdiction no longer subject to appeal. The provisions of this Section 17 are solely for the benefit of the Agent and the Lenders, and no Loan Party shall have any rights as a third-party beneficiary of any of such provisions.

 

 

17.2      Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement or in the other Loan Documents. The duties of the Agent shall be mechanical and administrative in nature. Nothing in this Agreement or any other Loan Document, express or implied, is intended to or shall be construed to impose upon the Agent any obligations in respect of this Agreement or any other Loan Document except as expressly set forth herein or therein. Each Lender shall make its own independent investigation of the financial condition and affairs of Borrower and the Guarantors in connection with the making and the continuance of the Term Loan hereunder and shall make its own appraisal of the creditworthiness of Borrower and the Guarantors and the value of the Collateral, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into their possession before the making of the Term Loan hereunder or at any time or times thereafter. The Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until written notice thereof is given to the Administrative Agent by Borrower or the Lenders, and shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or under any other Loan Document or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or in any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, and other Loan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Section 4 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to it or as to those conditions precedent specifically required to be to its satisfaction, (vi) the existence, value, perfection or priority of any collateral security or the financial or other condition of Borrower and its Subsidiaries or any other Loan Party, obligor or guarantor, or (vii) any failure by Borrower, any Loan Party or any other Person (other than itself) to perform any of its obligations hereunder or under any other Loan Document or the performance or observance of any covenants, agreements or other terms or conditions set forth herein or therein. Anything contained herein to the contrary notwithstanding, the Administrative Agent shall not have any liability arising from confirmations of the amount of the outstanding Term Loan or any components thereof.

 

 

17.3        Rights, Exculpation, Etc.

 

(a)         The Agent and its directors, officers, affiliates (other than any affiliate in its capacity as Lender, such Lender to be subject to the corresponding applicable provisions of this Agreement), agents or employees shall not be liable for any action taken or omitted to be taken by them under or in connection with this Agreement or the other Loan Documents, except for their own gross negligence or willful misconduct (which shall not include any action taken or omitted to be taken strictly in accordance with any express direction, instruction or certificate of the Required Lenders (or such other number or percentage of the Lenders as the Agent shall believe in good faith to be necessary hereunder or under the Loan Documents), for which the Agent shall have no liability) as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal. Without limiting the generality of the foregoing, the Agent (i) may treat the payee of the Term Loan as the owner thereof until the Agent receives written notice of the assignment or transfer thereof, pursuant to Section 14 hereof, signed by such payee and in form satisfactory to the Administrative Agent; (ii) may consult with legal counsel (including, without limitation, counsel to the Agent or counsel to any Loan Party), independent public accountants, and other experts selected by any of them and shall not be liable for any action taken or omitted to be taken in good faith by any of them in accordance with the advice of such counsel, accountant or experts; (iii) make no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, certificates, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Person, the existence or possible existence of any Default or Event of Default, or to inspect the Collateral or other property (including, without limitation, the books and records) of any Person; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall not be deemed to have made any representation or warranty regarding the existence, sufficiency, value or collectibility of the Collateral, the condition of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by Borrower or any Guarantor in connection therewith, nor shall the Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral. The Agent shall not be liable for any apportionment or distribution of payments made in good faith pursuant to Section 2.4(d) and 10.5, and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Lender to whom payment was due but not made, shall be to recover from other Lenders any payment in excess of the amount which they are determined to be entitled. The Agent may at any time request written instructions from the Required Lenders (or such other number or percentage of the Lenders as the Agent shall believe in good faith to be necessary hereunder or under the Loan Documents), including by e-mail from counsel to the Required Lenders, with respect to any actions or approvals which by the terms of this Agreement or of any of the other Loan Documents the Agent is permitted or required to take or to grant, and if such instructions are promptly requested, the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval under any of the Loan Documents until they shall have received such instructions from the Required Lenders (or such other number or percentage of the Lenders as the Agent shall believe in good faith to be necessary hereunder or under the Loan Documents). The instructions as aforesaid and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Required Lenders (or such other number or percentage of the Lenders as the Agent shall believe in good faith to be necessary hereunder or under the Loan Documents).

 

 

(b)          The Agent shall have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent jurisdiction.

 

(c)          The Agent shall be obligated to perform such duties and only such duties as are specifically set forth in this Agreement or in any Loan Document, and no implied covenants or obligations shall be read into this Agreement or any Loan Document against the Agent. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law, and the Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender. The Agent shall not be under any obligation to take any action which is discretionary under the provisions hereof except as set forth in Section 17.1. The Agent shall be under no obligation to exercise any of the rights or powers vested in them by this Agreement at the request or direction of the Required Lenders (or such other number or percentage of the Lenders as the Agent shall believe in good faith to be necessary hereunder or under the Loan Documents) pursuant to this Agreement, unless (i) upon request of Agent, the Agent shall have been provided adequate security and indemnity as determined by the Agent in its sole discretion (including without limitation from the Lenders and/or Borrower or the Guarantors) against any and all costs, expenses and liabilities which might be incurred by them in compliance with such request or direction, including reasonable advances as may be requested by the Agent and (ii) the Agent shall receive such written instructions as the Agent deems appropriate. If a Default or Event of Default has occurred and is continuing, then the Agent shall take such action with respect to such Default or Event of Default as shall be instructed by the Required Lenders (or such other number or percentage of the Lenders as the Agent shall believe in good faith to be necessary hereunder or under the Loan Documents) in the written instructions (with indemnities) described in this Section 17.3(d), provided that, unless and until the Agent shall have received such instructions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as they shall deem advisable in the best interests of the Lenders, and the Agent shall not incur liability to any Lender by reason of so refraining.

 

(d)         Whenever in the administration of this Agreement, or pursuant to any of the Loan Documents, the Agent shall deem it necessary or desirable (in each case, in its sole discretion) that a matter be proved or established with respect to Borrower or the Guarantors in connection with the taking, suffering or omitting of any action hereunder by the Agent, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively provided or established by a certificate of an Authorized Person of Borrower delivered to the Agent and such certificate shall be full warranty to the Agent for any action taken, suffered or omitted in reliance thereon; provided that Borrower shall have no obligation to provide any such certificate except as otherwise required hereunder.

 

(e)          Agent shall not be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

(f)          In no event shall Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, future changes in applicable law or regulation, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that Agent shall use reasonable efforts consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

 

17.4       Reliance. The Agent may rely, and shall be fully protected in acting, upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document which they believe in good faith to be genuine and to have been signed or presented by the proper party or parties or, in the case of facsimiles, to have been sent by the proper party or parties. In the absence of its gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal, each Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to it and conforming to the requirements of this Agreement or any Loan Document. The Agent shall not be required to keep themselves informed as to the performance or observance by Borrower, any other Loan Party or any of their respective Subsidiaries of this Agreement, the Loan Documents or any other document, referred to or provided for herein or to inspect the properties or books of Borrower, any other Loan Party or their respective Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of Borrower or any other Loan Party (or any of its Affiliates) which may come into the possession of the Agent or any of its Affiliates. Each other party hereto will consult with its own legal counsel to the extent that it deems necessary in connection with the Loan Documents and the matters contemplated therein.

 

17.5       Indemnification. Whether or not the transactions contemplated hereby are consummated, to the extent that any Agent is not promptly reimbursed and indemnified by Borrower, each Lender will reimburse and indemnify such Agent and any Agent-Related Party from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, fees, costs, expenses, advances or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against such Agent in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by such Agent under this Agreement or any of the other Loan Documents, in proportion to each Lender’s pro rata share of the Term Loan, including, without limitation, advances and disbursements made pursuant to Section 17.10, and the reasonable fees, charges and disbursements of any counsel for each Agent; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, fees, costs, expenses, advances or disbursements for which there has been a final judgment of a court of competent jurisdiction no longer subject to appeal that such liability resulted from such Agent’s gross negligence or willful misconduct. The obligations of the Lenders under this Section 17.5 shall survive the payment in full of the Obligations and the termination of this Agreement, or the earlier resignation or removal of the Agent.

 

17.6        Agent Individually. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial or other business with Borrower or any other Loan Party as if it were not acting as an Agent pursuant hereto without any duty to account to the other Lenders.

 

17.7      Sub-agents. The Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Agent. The Agent and any such sub-agent may perform any and all of their duties and exercise their rights and powers through their respective Agent-Related Parties. The provisions of Section 11.3, this Section 17 and Section 19.9 shall apply to any such sub-agent and to the Agent-Related Parties of the Agent and such sub-agent, and shall apply to their respective activities in connection with the activities of the Agent. The Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

 

 

17.8        Successor Agent.

 

(a)         The Agent may resign from the performance of all its functions and duties hereunder and under the other Loan Documents at any time by giving at least thirty (30) days’ prior written notice to Borrower and each Lender. The Agent may be removed with or without cause by the Required Lenders upon thirty (30) days’ prior written notice from the Required Lenders to the Agent. Any resignation or removal shall take effect upon the acceptance by a successor Agent of appointment pursuant to clauses (b) and (c) below or as otherwise provided below.

 

(b)         Upon any such notice of resignation or removal, the Required Lenders shall appoint a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be immediately discharged from its duties and obligations under this Agreement and the other Loan Documents.

 

(c)          If no such successor Agent shall have been so appointed by the Required Lenders within 30 days after the retiring Agent gives notice of its resignation or thirty (30) days after the Required Lenders give notice of removal to the retiring Agent, then the retiring Agent may (but is not required to) on behalf of the Lenders, appoint a successor Agent, provided that if the Agent shall notify Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation or removal shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Agent on behalf of the Lenders under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Agent as provided for in clause (b) above. The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor.

 

(d)          After the retiring Agent’s resignation or removal under this Section 17.8, the provisions of this Section 17, Section 11.3, and Section 19.9 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Agent-Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent or on behalf of the Agent and if applicable, while continuing to hold collateral security on behalf of the Lenders under any of the Loan Documents. Any corporation or association into which the Agent may be merged or converted or with which it may be consolidated shall be the Agent under this Agreement without further act.

 

17.9       Delivery of Information. The Agent shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by the Agent from Borrower, any Subsidiary, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Loan Document except (i) as specifically provided in this Agreement or any other Loan Document and (ii) as specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of the Agent at the time of receipt of such request and then only in accordance with such specific request. Notwithstanding anything to the contrary herein, upon receipt of notices from the Loan Parties required by this Agreement, Agent shall forthwith notify the Lenders of the existence and content of such notices.

 

 

17.10      Collateral Matters.

 

(a)         Each Lender hereby irrevocably authorizes and ratifies Agent’s entry into this Agreement and the Loan Documents. Each Lender hereby irrevocably agrees that any action taken by the Agent with respect to the Collateral in accordance with the provisions of this Agreement or the Loan Documents, and the exercise by the Agent of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized by and binding upon all Lenders. The Agent is hereby irrevocably authorized on behalf of all Lenders, without the necessity of any notice to or further consent from any Lender to take any action with respect to any Collateral or the Loan Documents which may be necessary to perfect and maintain perfected the Agent’s Liens upon the Collateral, for the benefit of the Secured Parties (though the Agent shall have no obligation to take sure actions). The Lenders hereby irrevocably authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral upon the payment of all Obligations (other than unasserted contingent indemnification obligations) and termination of the Commitments; or constituting property being sold or disposed of in compliance with the terms of this Agreement and the other Loan Documents; or if approved, authorized or ratified in writing by the Required Lenders or all Lenders (as applicable).

 

(b)         Without in any manner limiting the Collateral Agent’s authority to act without any specific or further authorization or consent by the Lenders (as set forth in Section 17.10(a)), each Lender agrees to confirm in writing, upon request by the Collateral Agent, the authority to release Collateral conferred upon the Collateral Agent under Section 17.10(a). Upon receipt by the Collateral Agent of confirmation from the requisite amount of Lenders of its authority to release any particular item or types of Collateral, and upon prior written request by Borrower set forth in a certificate of the Borrower executed by an Authorized Person, the Collateral Agent shall at Borrower’s sole cost and expense (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be reasonably requested by the Borrower to evidence the release of the Liens granted to the Collateral Agent for the benefit of the Lenders upon such Collateral, and acknowledge and agree that any such action by the Collateral Agent shall bind the Lenders; provided, however, that (i) the Collateral Agent shall not be required to execute any such document on terms which, in the Collateral Agent’s opinion, would expose the Collateral Agent to liability or create any obligations or entail any consequence other than the release of such Liens without recourse, representation or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Lien upon the interests in the Collateral retained by Borrower or any Guarantor.

 

(c)        The Collateral Agent shall have no obligation whatsoever to any Lender to assure that the Collateral exists, is genuine, or is owned by Borrower or any Guarantor or is cared for, protected or insured or has been encumbered or that the Agent’s Liens granted to the Collateral Agent pursuant to this Agreement or any other Loan Document are valid or have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to maintain the perfection of any Agent’s Liens on the Collateral, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 17.10 or in any other Loan Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given that the Collateral Agent shall have no duty or liability whatsoever to any Lender or otherwise, except upon being directed by the Required Lenders as otherwise provided herein.

 

 

(d)          Notwithstanding anything set forth herein to the contrary, the Agent shall have a duty of ordinary care with respect to any Collateral delivered to the Agent or its designated representatives that is in the Agent’s or its designated representatives’ possession or control. The Agent shall not be responsible for insuring the Collateral or for the payment of Taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral. The Agent will be deemed to have exercised ordinary care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property, and the Agent will not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Agent in good faith.

 

17.11      Agency for Perfection. Each Agent and each Lender hereby appoints each other Agent and each other Lender as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral in assets which, in accordance with Article 9 of the Uniform Commercial Code, can be perfected by possession or control (or where the security interest of a secured party with possession or control has priority over the security interest of another secured party) and each Agent and each Lender hereby acknowledges that it holds possession of or otherwise controls any such Collateral for the benefit of the Agent and the Lenders, collectively, as secured party. Should the Administrative Agent or any Lender obtain possession or control of any such Collateral, the Administrative Agent or such Lender shall notify the Collateral Agent thereof, and, promptly upon the Collateral Agent’s request therefor shall deliver such Collateral to the Collateral Agent or in accordance with the Collateral Agent’s instructions. In addition, the Collateral Agent shall also have the power and authority hereunder to appoint such other sub-agents as may be necessary or required under applicable state law or otherwise to perform its duties and enforce its rights with respect to the Collateral and under the Loan Documents. By its execution and delivery of this Agreement, Borrower hereby consents to the foregoing.

 

17.12     Actions With Respect To Collateral. The Agent shall not have any responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, (ii) taking any necessary steps to preserve the rights against any parties with respect to any Collateral or (iii) taking any action other than as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as the Agent shall believe in good faith to be necessary hereunder or under the Loan Documents), subject to the provisions of this Agreement.

 

17.13    Filing of Proofs of Claim. In case of any Default or Event of Default under Sections 9.4 and 9.5 the Agent (regardless of whether the principal of the Term Loan shall then be due and payable and regardless of whether the Agent has made any demand on Borrower) shall be entitled and empowered, by intervention in an Insolvency Proceeding or otherwise:

 

(a)          To (i) file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loan and all other Obligations that is owing and unpaid and (ii) file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Agent and their respective agents and counsel and all other amounts due to the Lenders, the Agent under Sections 2.12, 11.3 and 19.9) allowed in such judicial proceeding; and

 

 

(b)          To collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same.

 

Each Lender hereby authorizes any custodian, receiver, assignee, trustee, conservator, sequestrator or other similar official in any such judicial proceeding: (i) to make such payments to the Agent; and (ii) if the Agent shall consent to the making of such payments directly to the Lenders, to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agent and their respective agents and counsel, and any other amounts due to the Agent under Sections 2.12, 11.3 and 19.9. Nothing contained herein shall be deemed to authorize the Agent to authorize or consent to or accept or adopt on behalf of any lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any lender or to authorize the Agent to vote in respect of the claim of any Lender in any such proceeding. Each Lender retains the right to file and prove a claim separately.

 

17.14      Erroneous Payments.

 

(a)          If the Administrative Agent (x) notifies a Lender or Secured Party, or any Person who has received funds on behalf of a Lender or Secured Party (any such Lender, Secured Party or other recipient (and each of their respective successors and assigns), a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Secured Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof) (provided, that, without limiting any other rights or remedies (whether at law or in equity), the Administrative Agent may not make any such demand under this clause (a) with respect to an Erroneous Payment unless such demand is made within 5 Business Days of the date of receipt of such Erroneous Payment by the applicable Payment Recipient), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this Section 17.14 and held in trust for the benefit of the Administrative Agent, and such Lender or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.

 

 

(b)        Without limiting immediately preceding clause (a), each Lender, Secured Party or any Person who has received funds on behalf of a Lender or Secured Party (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, Issuing Bank or Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:

 

(i)    it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and

 

(ii)    such Lender or Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this (b).

 

For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this (b) shall not have any effect on a Payment Recipient’s obligations pursuant to (a) or on whether or not an Erroneous Payment has been made.

 

(c)         Each Lender or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender or Secured Party under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned under immediately preceding clause (a).

 

(d)         The parties hereto agree that (x) irrespective of whether the Administrative Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Lender or Secured Party, to the rights and interests of such Lender or Secured Party, as the case may be) under the Loan Documents with respect to such amount (the “Erroneous Payment Subrogation Rights”) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party; provided that this Section 17.14 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Obligations of the Borrower relative to the amount (and/or timing for payment) of the Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, immediately preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from, or on behalf of (including through the exercise of remedies under any Loan Document), the Borrower for the purpose of making a payment on the Obligations.

 

 

(e)       To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.

 

(f)        Each party’s obligations, agreements and waivers under this Section 17.14 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender or Issuing Bank, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.

 

18.

GUARANTY

 

18.1        Guarantors. Each Guarantor hereby acknowledges and confirms that its guarantee of the Obligations hereunder is secured by the Collateral pledged by it pursuant to and in accordance with the Loan Documents delivered by it in connection herewith.

 

18.2        Guaranty; Limitation of Liability.

 

(a)         Each Guarantor, jointly and severally, hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required payment, prepayment or by acceleration, demand or otherwise, of all Obligations of each other Loan Party now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal (including, without limitation, all OID), interest, premiums, fees, indemnities, contract causes of action, costs, reasonable and documented out-of-pocket expenses or otherwise (such Obligations being the “Guaranteed Obligations”), and agrees to pay reasonable and documented out-of-pocket expenses (including, without limitation, reasonable and documented out- of-pocket fees and expenses of counsel) incurred by the Agent or any other Lender in enforcing any rights under this Guaranty or any other Loan Document. Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to the Agent or any Lender under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowed due to the existence of a bankruptcy, reorganization or similar proceeding involving such other Loan Party.

 

(b)          Each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Lender under this Guaranty, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor and each other guarantor so as to maximize the aggregate amount paid to the Agent or Lenders under or in respect of the Loan Documents.

 

 

18.3       Guaranty Absolute. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or any Lender with respect thereto. The obligations of each Guarantor under or in respect of this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Loan Party under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against Borrower or any other Loan Party or whether Borrower or any other Loan Party is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses (other than payment of the Obligations to the extent of such payment) it may now have or hereafter acquire in any way relating to, any or all of the following:

 

(a)          any lack of validity or enforceability of any Loan Documents or any agreement or instrument relating thereto;

 

(b)        any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or any of its Subsidiaries or otherwise;

 

(c)          any taking, exchange, release or non-perfection of any Collateral or any other collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

 

(d)         any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries;

 

(e)          any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries;

 

(f)          any failure of the Agent or any Lender to disclose to any Loan Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party now or hereafter known to the Agent or such Lender (each Guarantor waiving any duty on the part of the Agent or Lenders to disclose such information) provided that each Guarantor shall have any contractual defenses that the applicable Loan Party has under any Loan Document including payment in full of the Obligations;

 

(g)          the failure of any other Person to execute or deliver any Guaranty Supplement or any other guaranty or agreement or the release or reduction of liability of any Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or

 

(h)          any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Agent or any Lender that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety other than payment in full of the Guaranteed Obligations; provided that each Guarantor shall have any contractual defenses that the applicable Loan Party has under any Loan Document.

 

This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Lender or any other Person upon the insolvency, bankruptcy or reorganization of Borrower or any other Loan Party or otherwise, all as though such payment had not been made.

 

 

18.4        Waivers and Acknowledgments.

 

(a)          To the extent allowed under applicable law, each Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Agent or any Lender protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any Collateral.

 

(b)          Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

 

(c)       Each Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by the Agent or any Lender that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Loan Parties, any other guarantor or any other Person or any Collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Guaranteed Obligations of such Guarantor hereunder.

 

(d)         Each Guarantor acknowledges that the Agent may, without notice to or demand upon such Guarantor and without affecting the liability of such Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale, and each Guarantor hereby waives any defense to the recovery by the Agent and the other Lenders against such Guarantor of any deficiency after such nonjudicial sale and any defense or benefits that may be afforded by applicable law.

 

(e)         Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of the Agent or any Lender to disclose to such Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party or any of its Subsidiaries now or hereafter known by the Agent or such Lender.

 

(f)          Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 18.3 and this Section 18.4 are knowingly made in contemplation of such benefits.

 

 

18.5      Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against Borrower, any other Loan Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of such Guarantor’s Obligations under or in respect of this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Agent or any Lender against Borrower, any other Loan Party or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from Borrower, any other Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash (or, in the case of payment of a certain portion of interest pursuant to Section 2.6(a), payment of such interest from Stock issued by the Borrower). If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the payment in full in cash (and, if applicable, in Stock of Borrower pursuant to the immediately preceding sentence) of the Guaranteed Obligations (other than unasserted contingent indemnification obligations) and all other amounts payable under this Guaranty, such amount shall be received and held in trust for the benefit of the Agent and the Lenders, shall be segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered to the Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) any Guarantor shall make payment to the Agent or any Lender of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash (and, if applicable, Stock issued by the Borrower with respect to certain amounts of interest pursuant to Section 2.6(a)) and (iii) the Maturity Date shall have occurred, the Agent or Lenders will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Guaranty.

 

18.6        Guaranty Supplements. If any Loan Party creates or acquires a Domestic Subsidiary (other than a Foreign Subsidiary Holding Company) on or after the Closing Date, within thirty (30) days after such Domestic Subsidiary is formed or acquired, such Loan Party shall cause such Domestic Subsidiary to become a Guarantor and Loan Party hereunder for all purposes including without limitation to grant (and perfect) a security interest in substantially all of its property and assets to Agent for the benefit of the Secured Parties to secure the Guaranteed Obligations, by executing (and/or filing, as applicable) the Guaranty Supplement (hereinafter defined) and such other security agreements, filings and recordings that are necessary to grant and/or perfect first priority perfected liens in such Subsidiaries’ assets pursuant to the Guaranty Supplement (subject to the provisions hereof that limit the obligation of the Loan Parties to perfect Liens in certain types and/or amounts of the Loan Parties’ assets and/or Collateral). Upon the execution and delivery to the Agent by any such Person of a guaranty supplement in substantially the form of Exhibit F hereto (each, a “Guaranty Supplement”), (a) such Person shall be referred to as an “Additional Guarantor” and shall become and be a Guarantor hereunder, and each reference in this Guaranty to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and each reference in any other Loan Document to a “Loan Party” shall also mean and be a reference to such Additional Guarantor if it is a Subsidiary of Borrower, and (b) each reference herein to “this Guaranty,” “hereunder,” “hereof” or words of like import referring to this Guaranty, and each reference in any other Loan Document to the “Guaranty,” “thereunder,” “thereof,” or words of like import referring to this Guaranty, shall mean and be a reference to this Guaranty as supplemented by such Guaranty Supplement. For the avoidance of doubt, in no event shall a Subsidiary of a Loan Party that is a Foreign Subsidiary or a Foreign Subsidiary Holding Company (or a Subsidiary of a Foreign Subsidiary or Foreign Subsidiary Holding Company) be required to join in the Guaranty or become a Guarantor hereunder.

 

 

18.7        Subordination. Each Guarantor hereby subordinates any and all debts, liabilities and other Obligations owed to such Guarantor by each other Loan Party (the “Subordinated Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 18.7:

 

(a)          Prohibited Payments, Etc. Unless the Required Lenders otherwise agree, upon the occurrence and during the continuance of an Event of Default, no Guarantor shall demand, accept or take any action to collect any payment on account of the Subordinated Obligations.

 

(b)        Prior Payment of Guaranteed Obligations. In any Insolvency Proceeding relating to any other Loan Party, each Guarantor agrees that the Agent and Lenders shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of an Insolvency Proceeding, whether or not constituting an allowed claim in such proceeding (“Postpetition Interest”)) before such Guarantor receives payment of any Subordinated Obligations.

 

(c)         Turn-Over. After the occurrence and during the continuance of any Event of Default, each Guarantor shall, if the Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Agent and the Lenders and deliver such payments to the Agent on account of the Guaranteed Obligations (including all Postpetition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.

 

(d)         Agent Authorization. After the occurrence and during the continuance of any Event of Default, the Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of each Guarantor, to collect and enforce, and to submit claims in respect of, the Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Postpetition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in respect of, the Subordinated Obligations and (B) to pay any amounts received on such obligations to the Agent for application to the Guaranteed Obligations (including any and all Postpetition Interest).

 

18.8       Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty (and, if applicable, in Stock issued by the Borrower with respect to certain amounts of interest pursuant to Section 2.6(a)) and the termination of all Commitments, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agent, the Lenders and their respective successors, transferees and assigns. No Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders.

 

19.	GENERAL PROVISIONS.

 

19.1        Effectiveness. This Agreement shall be binding and deemed effective when executed by Borrower, each other Loan Party, the Agent and the Lenders (subject to the other provisions hereof in regards to the obligation to make the Term Loan, including without limitation, Section 4.1).

 

19.2        Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

 

19.3      Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Agent, the Lenders or any Loan Party, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

 

 

19.4        Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

19.5       Debtor-Creditor Relationship. The relationship between the Agent and Lenders, on the one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor. The Agent and the Lenders shall not have (and shall not be deemed to have) any fiduciary relationship or duty to any Loan Party arising out of or in connection with the Loan Documents or the transactions contemplated thereby, and there is no agency or joint venture relationship between the Agent and the Lenders, on the one hand, and the Loan Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein.

 

19.6        Counterparts; Electronic Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by tele facsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by tele facsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The words “execution,” “signed,” “signature,” shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

19.7       Revival and Reinstatement of Obligations. If the incurrence or payment of the Obligations by Borrower or any other Loan Party or the transfer to the Agent or the Lenders of any property should for any reason subsequently be asserted, or declared, to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (each, a “Voidable Transfer”), and if the Agent or any Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Agent or such Lender is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys’ fees of the Agent or such Lender related thereto, the liability of Borrower or such other Loan Party automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made and all of the Agent’s Liens in the Collateral shall be automatically reinstated without further action.

 

 

19.8        Confidentiality.

 

(a)          The Lender Parties agree that information regarding the Loan Parties and their Subsidiaries, their operations, assets, and existing and contemplated business plans (“Confidential Information”) shall be treated by the Lender Parties in a confidential manner, and shall not be disclosed by the Lender Parties to Persons who are not parties to this Agreement, except: (i) to attorneys for and other advisors, accountants, auditors, and consultants to the Lender Parties and to employees, directors and officers of the Lender Parties (the Persons in this clause (i), “Lender Representatives”) on a “need to know” basis in connection with this Agreement and the other Loan Documents, and the transactions contemplated hereby and thereby on a confidential basis, (ii) to Subsidiaries and Affiliates of the Lender Parties, provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 19.8 and keep such Confidential Information confidential, (iii) as may be required by regulatory authorities, (iv) as may be required by statute, decision, or judicial or administrative order, rule, or regulation; provided that (x) prior to any disclosure under this clause (iv), the disclosing party agrees to provide Borrower with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to Borrower pursuant to the terms of the applicable statute, decision, or judicial or administrative order, rule, or regulation and (y) any disclosure under this clause (iv) shall be limited to the portion of the Confidential Information as may be required by such statute, decision, or judicial or administrative order, rule, or regulation, (v) as may be agreed to in advance in writing by Borrower, (vi) as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, provided, that, (x) prior to any disclosure under this clause (vi) the disclosing party agrees to provide Borrower with prior written notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior written notice to Borrower pursuant to the terms of the subpoena or other legal process and (y) any disclosure under this clause (vi) shall be limited to the portion of the Confidential Information as may be required by such Governmental Authority pursuant to such subpoena or other legal process, (vii) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by the Lender Parties or Lender Representatives), (viii) in connection with any assignment, participation or pledge of any Lender Party’s interest under this Agreement (or any proposed assignment, participation or pledge), provided that prior to receipt of Confidential Information any such assignee, participant, or pledgee shall have agreed in writing to receive such Confidential Information hereunder subject to the terms of this Section 19.8, (ix) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; (x) to equity owners of each Loan Party and (xi) in connection with, and to the extent reasonably necessary for, the exercise of any secured creditor remedy under this Agreement or under any other Loan Document.

 

(b)          Anything in this Agreement to the contrary notwithstanding, the Agent and the Lenders may use the name, logos, and other insignia of the Loan Parties and the total amount of Term Loan provided hereunder in any “tombstone” or comparable advertising, on its website or in other marketing materials of the Agent or the Lenders provided that the form of such usage shall have been reasonably approved by the Borrower.

 

(c)        The Loan Parties hereby acknowledge that (i) the Agent may, but shall not be obligated to, make available to the Lenders materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on Debt domain, Intralinks or another similar electronic system (the “Platform”) and (ii) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Loan Parties or their Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Each of the Loan Parties hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that: (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Loan Parties shall be deemed to have authorized the Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to each Loan Party or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Confidential Information, they shall be treated as set forth in clause (a) above); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”.

 

 

(d)          The Platform is provided “as is” and “as available.” Neither the Agent nor any Agent-Related Party warrants the accuracy or completeness of the communications through the Platform or the adequacy of the Platform and each expressly disclaims liability for errors or omissions in such communications. No warranty or representation of any kind, express, implied, or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Agent or any Agent-Related Party in connection with such communications or the Platform. In no event shall the Agent or any Agent-Related Party have any liability to any Loan Party, any Lender, or any other Person for damages of any kind, whether or not based on strict liability and whether or not direct or indirect, special, incidental, or consequential damages, losses, or expenses (whether in tort, contract, or otherwise) arising out of any Loan Party’s or Agent’s transmission of communications through the Internet, except to the extent the liability of any such Person is found in a final ruling by a court of competent jurisdiction to have resulted primarily from such Person’s gross negligence or willful misconduct (though even in such case, such Agent or Agent-Related Party shall not be liable for any indirect, special, incidental, or consequential damages).

 

19.9       Expenses. Borrower and each other Loan Party agrees to pay the Expenses (a) within ten (10) days after receiving an invoice for Expenses incurred or (b) the date on which demand therefor is made by the Agent or a Lender on Borrower, and each other Loan Party agrees that its obligations contained in this Section 19.9 shall survive payment or satisfaction in full of all other Obligations.

 

19.10      Setoff.

 

(a)         Right of Setoff. Each of the Agent, each Lender and each Affiliate (including each branch office thereof) of any of them is hereby authorized (subject to the immediately following sentence), without notice or demand (each of which is hereby waived by each Loan Party), at any time and from time to time during the continuance of any Event of Default and to the fullest extent permitted by applicable Legal Requirements, to set off and apply any and all deposits (whether general or special, time or demand, provisional or final) at any time held and other Indebtedness, claims or other obligations at any time owing by the Agent, such Lender or any of their respective Affiliates to or for the credit or the account of Borrower or any other Loan Party against any Obligation of any Loan Party now or hereafter existing, whether or not any demand was made under any Loan Document with respect to such Obligation and even though such Obligation may be unmatured. No Lender shall exercise any such right of setoff without the prior consent of the Agent or Required Lenders and any application of such setoff shall be subject to clause (b) below. Each of the Agent and each Lender agrees promptly to notify Borrower and the Agent after any such setoff and application made by such Lender or its Affiliates; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights under this Section 19.10 are in addition to any other rights and remedies (including other rights of setoff) that the Agent, the Lenders, their Affiliates and the other Secured Parties, may have.

 

 

(b)         Sharing of Payments, Etc. If any Lender, directly or through an Affiliate or branch office thereof, obtains any payment of any Obligation of any Loan Party (whether voluntary, involuntary or through the exercise of any right of setoff or the receipt of any Collateral or “proceeds” (as defined under the applicable UCC) of Collateral) other than pursuant to Section 14.2 or Section 16 and such payment exceeds the amount such Lender would have been entitled to receive if all payments had gone to, and been distributed by, the Agent in accordance with the provisions of the Loan Documents, including Section 2.4(d) hereof, such Lender shall purchase for cash from other Lenders such participations in their Obligations as necessary for such Lender to share such excess payment with such Lenders to ensure such payment is applied as though it had been received by the Agent and applied in accordance with this Agreement (or, if such application would then be at the discretion of Borrower, applied to repay the Obligations in accordance herewith); provided, however, that (a) if such payment is rescinded or otherwise recovered from such Lender in whole or in part, such purchase shall be rescinded and the purchase price therefor shall be returned to such Lender without interest and (b) such Lender shall, to the fullest extent permitted by applicable Legal Requirements, be able to exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the applicable Loan Party in the amount of such participation.

 

19.11      Release; Retention in Satisfaction; Etc.

 

 

(a)         Collateral hereunder shall be released if and to the extent permitted hereunder (in accordance with the provisions hereof), including without limitation, upon the transfer or sale of any asset or property theretofore included in Collateral to the extent permitted under Section 7.4, or otherwise permitted under this Agreement; (in each case, other than transfers or sales to a Loan Party) provided, that the Agent shall have received a certificate reasonably satisfactory to the Agent from a responsible officer of each Loan Party certifying that the release of such Collateral is permitted under this Agreement (the “Release Certificate”).

 

(b)        Except as may be expressly applicable pursuant to Section 9-620 of the UCC, no action taken or omission to act by the Agent or the Lenders hereunder or the other Loan Documents shall be deemed to constitute a retention of the Collateral in satisfaction of the Obligations or otherwise to be in full satisfaction of the Obligations, and the Obligations shall remain in full force and effect until the Agent and the Lenders shall have applied payments (including, without limitation, collections from Collateral) towards the Obligations in the full amount then outstanding.

 

(c)          Subject to Sections 2.10 and 17.10, upon such release or any release of Collateral or any part thereof in accordance with the provisions of the Loan Documents and provided that the Agent shall have received the Release Certificate, the Agent shall, upon the request and at the sole cost and expense of the Loan Parties and promptly after the Agent’s receipt of such request, (i) assign, transfer and deliver to the Loan Parties, against receipt and without recourse to or representation or warranty by the Agent except as to the fact that the Agent has not encumbered the released assets except in accordance with the Loan Documents, such of the Collateral or any part thereof to be released (in the case of a release) as may be in possession of the Agent and as shall not have been sold or otherwise applied pursuant to the terms hereof or any other Loan Document, and (ii) execute documents and instruments prepared by the Loan Parties and acceptable to the Agent (including UCC-3 termination financing statements or releases) acknowledging the release of such Collateral.

 

 

19.12     Survival. All representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Agent may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as any of the Obligations is outstanding and unpaid and so long as the obligation of the Lenders to provide extensions of credit hereunder has not expired or been terminated. Section 11.3, Section 16.1(h), Section 17, and Section 19.9 shall survive the termination of the Commitments and this Agreement and the repayment, satisfaction, or discharge of the Obligations.

 

19.13     Patriot Act. The Agent and each Lender hereby notify the Loan Parties that pursuant to the requirements of the Patriot Act, they are required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow the Agent or the Lenders to identify each Loan Party in accordance with the Patriot Act. In addition, if the Agent or any Lender is required by law or regulation or internal policies to do so, it shall have the right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary individual background checks for the Loan Parties, and (b) OFAC/PEP searches and customary individual background checks of the Loan Parties’ senior management and key principals, and Borrower and each other Loan Party agrees to cooperate in respect of the conduct of such searches and further agrees that the reasonable costs and charges for such searches shall constitute Expenses hereunder and be for the account of Borrower.

 

19.14      Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and thereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

 

19.15    Lender Instructions. Each Lender hereby instructs the Agent to execute and deliver on behalf of such Lender, and agrees to be bound by, any Intercompany Subordination Agreement, and any other documents and filings that are contemplated to be executed and delivered or filed in connection herewith or therewith, including, without limitation, all documents and filings listed on Exhibit I attached hereto (Post-Closing Deliverables). Each Lender hereby acknowledges and agrees that (x) the foregoing instructed actions constitute an instruction from all the Lenders under Section 17 and (y) Sections 11.3, 17.3, 17.5, and 19.9 and any other rights, privileges, protections, immunities, and indemnities in favor the Agent hereunder apply to any and all actions taken or not taken by the Agent in accordance with such instruction.

 

19.16      Original Issue Discount.

 

IF THE TERM LOAN IS ISSUED PURSUANT TO THIS AGREEMENT WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTION 1271 ET SEQ. OF THE IRC, THEN A LENDER MAY OBTAIN THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE AND THE YIELD TO MATURITY BY SUBMITTING A REQUEST FOR SUCH INFORMATION TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 12.

 

[Signature pages to follow]

 

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

 

BORROWER:   GENASYS INC.     By:                  /s/ Richard Danforth          Name:         Richard S. Danforth               Title:         Chief Executive Officer                 OTHER LOAN PARTIES:   GENASYS PUERTO RICO LLC     By:                  /s/ Richard Danforth          Name:         Richard S. Danforth               Title:         Chief Executive Officer                   EVERTEL TECHNOLOGIES LLC     By:                  /s/ Richard Danforth          Name:         Richard S. Danforth               Title:         Chief Executive Officer               ZONEHAVEN LLC     By:                  /s/ Richard Danforth          Name:         Richard S. Danforth               Title:         Chief Executive Officer

 

 

THE ADMINISTRATIVE AGENT AND COLLATERAL AGENT:     CANTOR FITZGERALD SECURITIES     By:                  /s/ James Buccola               Name:         James Buccola                        Title:         Head of Fixed Income

 

 

THE LENDERS:   Whitebox Multi-Strategy Partners, LP By: Whitebox Advisors LLC, its investment manager   By:        /s/ Andrew Thau                           Name:   Andrew M. Thau          Title:     Managing Director     Whitebox Relative Value Partners, LP By: Whitebox Advisors LLC, its investment manager   By:        /s/ Andrew Thau                           Name:   Andrew M. Thau          Title:     Managing Director     Pandora Select Partners, LP By: Whitebox Advisors LLC, its investment manager   By:       /s/ Andrew Thau                            Name:  Andrew M. Thau          Title:    Managing Director     Whitebox GT Fund, LP By: Whitebox Advisors LLC, its investment manager   By:       /s/ Andrew Thau                            Name:  Andrew M. Thau          Title:    Managing Director

 

 

Exhibit 10.2

 

EXECUTION VERSION

 

 

RIGHT OF FIRST REFUSAL

AGREEMENT

 

THIS RIGHT OF FIRST REFUSAL AGREEMENT (this “Agreement”), is made as of May 13, 2024 by and among Genasys Inc., a Delaware corporation (the “Borrower”), and the Lenders (as defined below). Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Loan Agreement (as defined below).

 

WHEREAS, the Borrower has entered into that certain Term Loan and Security Agreement as of even date herewith with Cantor Fitzgerald Securities, as Agent, pursuant to which Lenders have agreed to make a term loan in the aggregate principal amount of $15,000,000 to the Borrower (the “Loan Agreement”); and

 

WHEREAS, the Borrower desires to grant and Lenders desire to accept a right of first refusal with respect to the Borrower’s raising debt or equity capital on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree, subject to the satisfaction of the conditions set forth herein, as follows:

 

ARTICLE I

CERTAIN DEFINITIONS

 

“Debt Security” means any agreement, instrument, document, indenture, bond, note, or other writing evidencing or concerning Indebtedness or Obligations, or any guaranty of thereof, and any options, preemptive rights, or other rights to acquire such Indebtedness or Obligations, whether secured or unsecured and whether or not a “security” under the securities laws of the United States.

 

“Equity Security” means any shares of capital stock and any other securities convertible into, or exchangeable or exercisable for, such shares of capital stock, and any warrants, options, calls, preemptive rights, or other rights to acquire such shares of capital stock, and any securities issued in respect thereof, or in substitution therefor.

 

“Independent Third Party” means, with respect to the Borrower, any Person who is not an Affiliate of the Borrower (other than Lenders).

 

ARTICLE II

RIGHT OF FIRST REFUSAL

 

Section 2.01     Right of First Refusal.

 

(a)          Right of First Refusal. From and after the date hereof and until twelve (12) months from the date hereof, each time the Borrower or a controlled Affiliate thereof seeks to refinance any Obligations or seeks to raise any debt or equity financing or other capital from, or receives a financing term sheet or other offer that the Borrower or its Affiliate desires to accept for or related to the raising of debt or equity financing or other capital from, an Independent Third Party, in a private or public transaction or series of transactions, including, without limitation, the offer or sale of any debt or equity “security” as defined by applicable securities laws, including, without limitation, any (x) Equity Security or (y) Debt Security (each, a “Third Party Financing Offer”), the Borrower shall give written notice of such Third Party Financing Offer, as set forth below, no later than the Business Day following receipt of such Third Party Financing Offer.

 

 

 

 

(b)         ROFR Notice.

 

(i)           The Borrower’s written notice (a “ROFR Notice”) shall be delivered in accordance with this Agreement and shall state that the Borrower or its controlled Affiliate has received a bona fide Third Party Financing Offer it intends to accept and set forth in reasonable detail a description of the terms and conditions of such Third Party Financing Offer, including

 

(A)          the identity of the Independent Third Party who made such Third Party Financing Offer:

 

(B)          a description of the Debt Security and/or Equity Securities subject to such Third Party Financing Offer including, without limitation, any warrants, options, calls, preemptive rights, or other rights (the “Subject Securities”);

 

(C)          with respect to any Debt Securities, the principal amount, interest rate, all other pricing terms, the term and other material terms and conditions of such Debt Securities;

 

(D)          with respect to any Equity Securities, the per share purchase price for the Subject Securities, all other pricing terms, the term and other material terms and conditions of such Equity Securities;

 

(E)          a description of any non-cash consideration in sufficient detail to permit the valuation thereof; and

 

(F)           the proposed date of the closing of the financing contemplated by such Third Party Financing Offer, which shall not be less the thirty (30) days of the ROFR Notice.

 

(ii)          The ROFR Notice shall constitute the Borrower’s offer to issue the Subject Securities to or the Borrower’s request to obtain loans or other debt financing from the Lenders on the terms and conditions set forth in such ROFR Notice, which offer shall be irrevocable for a period of 10 Business Days from the date of delivery of the ROFR Notice (the “ROFR Notice Period”).

 

(iii)         By delivering the ROFR Notice, the Borrower represents and warrants to the Lenders that: (x) such Third Party Financing Offer is a bona fide arm’s length offer from an Independent Third Party, which the Borrower intends to consummate; and (y) the Borrower has the necessary power and authority to issue the Subject Securities or otherwise obtain the loans or other debt financing as contemplated by the Third Party Financing Offer.

 

 

(c)          Exercise of Right of First Refusal.

 

(i)       Upon receipt of any ROFR Notice, the Lenders shall have until the end of the ROFR Notice Period to deliver a written notice (a “ROFR Exercise Notice”) to the Borrower stating that the Lenders are exercising their right to purchase all (but not less than all) of the Subject Securities or, as applicable, make all (but not less than all) of the requested loans on the terms and conditions specified in such ROFR Notice (it being understood that although the terms and conditions are required to be on the same or better pricing and other terms and conditions, such pricing, terms and conditions may be set forth in documentation prepared by Lenders and reasonably acceptable to Borrower).

 

(ii)      Any ROFR Exercise Notice so delivered shall set forth the terms and conditions, including any same or better pricing and other terms and conditions, of the Lenders’ financing proposal for the Borrower (“Lender Financing Proposal”).

 

(iii)     Within five (5) Business Days following the receipt by the Borrower of the Lender Financing Proposal, the Borrower and the Lenders shall enter into good faith negotiations to enter into a mutually acceptable definitive agreement(s) to consummate the Lender Financing Proposal in accordance with the terms and conditions thereof within forty-five (45) Business Days following the beginning of such negotiations (the “Lender Financing Period”).

 

(d)          Financing with Independent Third Party. If the Lenders do not deliver a ROFR Exercise Notice during the ROFR Notice Period or a mutually acceptable agreement among the Borrower and Lenders is not entered into within the duration of the Lender Financing Period, then the Borrower may, during the 60 Business Day period immediately following the expiration of the ROFR Notice Period or the Lender Financing Period, as applicable (the “ROFR Completion Period”), seek to close the Third Party Financing Offer identified in the ROFR Notice on terms and conditions no more favorable to such Independent Third Party than those offered to the Lenders. If the Borrower does not consummate such Third Party Financing Offer within the ROFR Completion Period, the rights provided hereunder shall be deemed revived, and the Borrower shall not enter into a financing arrangement or issue the Subject Securities or any other securities, including Debt Securities and/or Equity Securities, to the Independent Third Party unless first offered to the Lenders in accordance with this Section 2.01(d).

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.01     Representations of the Parties. Each party represents and warrants that:

 

(a)           It (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization and (ii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into this Agreement and to carry out the transactions contemplated hereby.

 

(b)          The execution, delivery, and performance by such party have been duly authorized by all necessary action on the part of such Loan Party.

 

(c)          The execution, delivery, and performance of this Agreement do not and will not (i)    violate the Governing Documents of any party or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on any such party or its Subsidiaries, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a breach of or default under any agreement, or (iii) require any approval or consent of any Person.

 

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.01     Term. This Agreement shall remain in full force and effect through the first anniversary of the date above first written and shall automatically terminate at the end of such first anniversary date.

 

Section 4.02     Amendment. This Agreement may not be terminated or modified in any way nor shall any right or obligation of any party hereto be waived or modified, except by a writing signed and delivered by each such party (or its successors and/or permitted assigns).

 

Section 4.03     Choice of Law and Venue; Jury Trial Waiver.

 

(a)           THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO AS WELL AS ALL CLAIMS, CONTROVERSIES OR DISPUTES ARISING UNDER OR RELATED TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

(b)           THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE TRIED AND LITIGATED IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK AND THE COUNTY OF NEW YORK, STATE OF NEW YORK. EACH PARTY WAIVES TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 4.03(b).

 

(c)          TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER AND EACH LENDER PARTY HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE BORROWER AND EACH LENDER REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

 

Section 4.04     Entire Agreement. This Agreement and the other Loan Documents constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof and thereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled.

 

Section 4.05     Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

Section 4.06     Assignment of Rights.

 

(a)          The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

(b)          The rights of the Lenders hereunder are not assignable without the Borrower’s written consent (which shall not be unreasonably withheld, delayed or conditioned), except (i) by a Lender to any Affiliate, or (ii) to an assignee or transferee who is a Lender or an Affiliate thereof, it being acknowledged and agreed that any such assignment, including an assignment contemplated by the preceding clauses (i) or (ii) shall be subject to and conditioned upon any such assignee’s delivery to the Borrower and the other Lenders of a counterpart signature page hereto pursuant to which such assignee shall confirm its agreement to be subject to and bound by all of the provisions set forth in this Agreement that were applicable to the assignor of such assignee.

 

(c)          Except in connection with an assignment by the Borrower by operation of law to the acquirer of the Borrower, the rights and obligations of the Borrower hereunder may not be assigned under any circumstances.

 

Section 4.07     Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

 

Section 4.08     Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

 

Section 4.09     Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

Section 4.10     Specific Performance. In addition to any and all other remedies that may be available at law in the event of any breach of this Agreement, each Lender shall be entitled to specific performance of the agreements and obligations of the Borrower hereunder and to such other injunction or other equitable relief as may be granted by a court of competent jurisdiction.

 

[Signature Pages Follow]

 

 

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

 

BORROWER:

 

	GENASYS INC.
	By:	/s/ Richard S. Danforth
		Name: Richard S. Danforth
		Title: Chief Executive Officer

 

 

 

LENDERS:

 

	Whitebox Multi-Strategy Partners, LP
	By:	Whitebox Advisors LLC, its investment manager
	By:	/s/ Andrew M. Thau
	Name:	Andrew M. Thau
	Title:	Managing Director
	Whitebox Relative Value Partners, LP
	By:	Whitebox Advisors LLC, its investment manager
	By:	/s/ Andrew M. Thau
	Name:	Andrew M. Thau
	Title:	Managing Director
	Pandora Select Partners, LP
	By:	Whitebox Advisors LLC, its investment manager
	By:	/s/ Andrew M. Thau
	Name:	Andrew M. Thau
	Title:	Managing Director
	Whitebox GT Fund, LP
	By:	Whitebox Advisors LLC, its investment manager
	By:	/s/ Andrew M. Thau
	Name:	Andrew M. Thau
	Title:	Managing Director

 

 

Exhibit 99.1

 

 

Genasys Inc. Reports Fiscal Second Quarter 2024 Financial Results

 

Increased Scope in Puerto Rico Expands Opportunity to $75 million

 

CROWS 16 Program Established

 

SAN DIEGO – May 14, 2024 – Genasys Inc. (NASDAQ: GNSS), the leader in Protective Communications, today announced financial results for the Company’s fiscal second quarter ended March 31, 2024.

 

Richard S. Danforth, Chief Executive Officer of Genasys, Inc., commented, “Genasys is finally turning the corner. The previously announced project in Puerto Rico has been expanded to $75 million and the final terms and conditions are expected to be completed before the end of our fiscal third quarter. Additionally, the CROWS 16 program, which is included in the U.S. 2024 DoD budget, provides further confidence and visibility into Genasys’ LRAD business for years to come.” 

 

Mr. Danforth continued, “Bookings activity in our Software business continues to track in line with our aggressive expectations. Not only does our footprint in California continue to expand but we are also seeing broader adoption with Genasys software being utilized in 39 states, The outlook for the hardware business is outstanding, and the recurring revenues of the software business rapidly growing. We are more confident in the long-term health of our business than we have ever been.” 

 

Fiscal 2Q 2024 Financial Summary

 

●

Revenue of $5.7 million, versus $11.2 million in 2Q 2023

●

GAAP operating loss of ($6.9) million, versus ($3.4) million in 2Q 2023.

●

GAAP net loss of ($6.9) million versus ($3.4) million in 2Q 2023. GAAP net loss per share ($0.16) versus ($0.09) in 2Q 2023.

●

Adjusted EBITDA of ($5.7) million, versus ($2.3) million in 2Q 2023.

 

Business Highlights 

 

●

Expanded project value of previously announced Early Warning System (EWS) for 37 dams on the island of Puerto Rico to approximately $75 million.

●

Fortified balance sheet through $15 million, two-year term loan agreement. Loan agreement calls for non-amortizing quarterly interest payments, with pre-payment optionality.

●

Expanded our Board of Directors with two independent directors with extensive understanding of the public sector markets for emergency planning, management and response.

 

Business Outlook

 

Over the past several weeks, we have had numerous constructive conversations with our Puerto Rican customer, PREPA. As a result of those conversations, we now expect the project in Puerto Rico to generate approximately $75 million in revenue to Genasys. The timing of revenue recognition is not yet clear, however the Company expects to receive an initial award payment, in addition to the return of the $3.5 million bid bond shortly after signing the final terms and conditions of the contract. Design approval and equipment installation is expected to be broken down into seven separate groups of dams, each with their own Emergency Operations Center (EOC). While the initial RFP contemplated completion of all installations within 240 days of the total project approval, the revised approach of sequentially approving and installing groups of dams could extend beyond the end of fiscal 2025.

 

Regardless of precise timing, the project in Puerto Rico is expected to generate substantial EBITDA and cash. Importantly, by breaking down the project into distinct groups, the cash for deposits, installation, and final approvals is expected to flow consistently over the duration of the project. This approach is expected to lead to overall better margins in our hardware business as overhead absorption should be more distributed, especially as the CROWS 16 program ramps up.

 

Today’s announced financing is expected to provide adequate resources to enable Genasys to continue growing its software business, while ramping production and deliveries to our hardware customers. Profits from the Puerto Rico dam project and future CROWS 16 deliveries are expected to not only enable timely repayment of the debt obligation, but also strengthen the Company’s balance sheet.

 

Entering fiscal 2024, we expected a very back end loaded year from a revenue standpoint, given the exceptionally low initial backlog. Though the US DoD budget was passed at the end of March, we have yet to see related funding and subsequent purchase orders flow to Genasys. While funding and orders are still considered likely to progress, and we are very confident that CROWS 16 and the Puerto Rico dam project will drive substantial revenues in fiscal 2025 and beyond, we no longer expect fiscal 2024 hardware revenues to meet prior forecasts. Software revenues are still expected to grow sequentially with ARR at least doubling year over year at fiscal year end.

 

Fiscal 2Q 2024 Financial Review

 

Fiscal Second quarter revenue was $5.7 million, a decrease of 48.8% from $11.2 million in the prior year’s quarter. Software revenue increased 104% while hardware revenue decreased 61%, compared with the fiscal 2023 second quarter. Within software, quarterly recurring revenue increased 123% year over year, and ARR finished the quarter at $6.5 million.

 

Gross profit margin was 37.9%, compared with 43.9% in the second quarter of fiscal 2023. The drop in gross profit is primarily attributable to lower hardware revenue in this year’s quarter and the related reduction in overhead absorption. Software gross margins were lower year on year due to extraordinary event driven costs incurred in the quarter.

 

Operating expenses of $9.2 million increased from $8.3 million in fiscal 2Q 2023. Selling, general and administrative expenses increased 10% from $6.1 million in the prior year to $6.6 million in the quarter ended March 31, 2024. Research and development expenses increased 11% year over year to $2.5 million primarily due to the acquisition of Evertel and efforts to increase the features and functionality of our software offerings.

 

GAAP net loss in the quarter was ($6.9) million, or ($0.16) per share, compared with a GAAP net loss of ($3.4) million, or ($0.09) per share, in the second quarter of fiscal 2023.

 

 

Excluding other income and expense, net income tax expense (benefit), depreciation, stock-based compensation and amortization of intangibles, Adjusted EBITDA was ($5.7) million for the second quarter of fiscal 2024, compared with ($2.3) million for the prior fiscal year period.

 

Cash, cash equivalents and marketable securities totaled $6.6 million as of March 31, 2023, compared with $10.1 million as of September 30, 2023. Not included is the $3.5 million Bid Bond that is reflected in Prepaid Expenses.

 

We include in this press release the non-GAAP operational metrics of adjusted EBITDA, which we believe provide helpful information to investors with respect to evaluating the Company’s performance. Adjusted EBITDA represents our net loss before other income and expense, net, income tax expense (benefit), depreciation and amortization expense and stock-based compensation. We do not consider these items to be indicative of our core operating performance. The items that are non-cash include depreciation and amortization expense and stock-based compensation. Adjusted EBITDA is a measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding allocation of capital and invest in initiatives that are focused on cultivating new markets for our solutions. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis.

 

Webcast and Conference Call Details

 

Management will host a conference call to discuss the financial results for the second quarter of fiscal year 2024 this afternoon at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. To access the conference call, dial toll-free (888) 390-3967, or international at (862) 298-0702. A webcast will also be available at the following link: https://www.webcaster4.com/Webcast/Page/1375/50525.

 

Questions to management may be submitted before the call by emailing them to: ir@genasys.com. A replay of the webcast will be available approximately four hours after the presentation on the page of the Company’s website.

 

About Genasys Inc.

 

Genasys Inc. (NASDAQ: GNSS) is the global leader in Protective Communications Solutions and Systems, designed around one premise: ensuring organizations and public safety agencies are “Ready when it matters™”. The Company provides the Genasys Protect platform, the most comprehensive portfolio of preparedness, response, and analytics software and systems, as well as Genasys Long Range Acoustic Devices® (LRAD®) that deliver directed, audible voice messages with exceptional vocal clarity from close range to 5,500 meters. Genasys serves state and local governmental agencies, and education (SLED); enterprise organizations in critical sectors such as oil and gas, utilities, manufacturing, and automotive; and federal governments and the military. Genasys Protective Communications Solutions have diverse applications, including emergency warning and mass notification for public safety, critical event management for enterprise companies, de-escalation for defense and law enforcement, and automated detection of real-time threats like active shooters and severe weather. Today, Genasys protects over 70 million people globally and is used in more than 100 countries, including more than 500 cities, counties, and states in the U.S. For more information, visit genasys.com.

 

 

Forward-Looking Statements

 

Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in any forward-looking statement. The risks and uncertainties in these forward-looking statements include without limitation the business impact of geopolitical conflicts, epidemics or pandemics, and other causes that may affect our supply chain, and other risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control. Risks and uncertainties are identified and discussed in our filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management's expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended September 30, 2023. Genasys Inc. disclaims any intent or obligation to publicly update or revise forward-looking statements, except as otherwise specifically stated.

 

Investor Relations Contacts

 

Brian Alger, CFA

SVP, IR and Corporate Development

ir@genasys.com

(858) 676-0582

 

 

Genasys Inc.
Condensed Consolidated Balance Sheets
(Unaudited - in thousands)
		March 31,				September 30,
		2024				2023
ASSETS
Current assets:
Cash and cash equivalents		$	3,544			$	8,665
Short-term marketable securities			3,011				1,481
Restricted cash			-				758
Accounts receivable, net			2,820				5,952
Inventories, net			6,564				6,501
Prepaid expenses and other			6,324				1,851
Total current assets			22,263				25,208
Long-term restricted cash			346				96
Property and equipment, net			1,483				1,551
Goodwill			13,251				10,282
Intangible assets, net			9,743				8,427
Operating lease right of use asset			3,507				3,886
Prepaid expenses and other - noncurrent			439				455
Total assets		$	51,032			$	49,905
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	2,597			$	2,785
Accrued liabilities			8,308				7,466
Operating lease liabilities, current portion			1,027				1,008
Total current liabilities			11,932				11,259
Other liabilities, noncurrent			445				551
Operating lease liabilities, noncurrent			3,773				4,283
Total liabilities			16,150				16,093
Total stockholders' equity			34,882				33,812
Total liabilities and stockholders' equity		$	51,032			$	49,905

 

 

Genasys Inc.
Condensed Consolidated Statements of Operations
(Unaudited - in thousands, except per share amounts)
		Three months ended								Six months ended
		March 31,								March 31,
		2024				2023				2024				2023
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues		$	5,739			$	11,213			$	10,100			$	21,700
Cost of revenues			3,562				6,288				6,444				11,943
Gross profit			2,177				4,925				3,656				9,757
			37.9	%			43.9	%			36.2	%			45.0	%
Operating expenses:
Selling, general and administrative			6,640				6,054				13,158				12,439
Research and development			2,531				2,281				4,722				4,216
Total operating expenses			9,171				8,335				17,880				16,655
Loss from operations			(6,994	)			(3,410	)			(14,224	)			(6,898	)
Other income and expense, net			51				15				128				(4	)
Loss before income taxes			(6,943	)			(3,395	)			(14,096	)			(6,902	)
Income tax (benefit) expense			(5	)			8				(434	)			8
Net loss		$	(6,938	)		$	(3,403	)		$	(13,662	)		$	(6,910	)
Net loss per common share:
Basic		$	(0.16	)		$	(0.09	)		$	(0.31	)		$	(0.19	)
Weighted average common shares outstanding:
Basic			44,248				36,817				44,027				36,756
Reconciliation of GAAP measures to non-GAAP measures
Net loss		$	(6,938	)		$	(3,403	)		$	(13,662	)		$	(6,910	)
Other income and expense, net			(51	)			(15	)			(128	)			4
Income tax (benefit) expense			(5	)			8				(434	)			8
Depreciation and amortization			731				639				1,460				1,282
Stock based compensation			524				513				970				933
Adjusted EBITDA		$	(5,739	)		$	(2,258	)		$	(11,794	)		$	(4,683	)

 

Exhibit 99.2

 

Genasys Announces $15 Million Two-Year Term Loan Agreement

 

SAN DIEGO, CA – May 14, 2024 – Genasys Inc. (NASDAQ: GNSS), the global leader in protective communications, today announced the close of a $15 million two-year senior secured term loan with an institutional investor experienced in government contracts and specifically conducting business in Puerto Rico, as well as the Company's customer there, PREPA. Proceeds from the financing will be used for working capital and other general corporate purposes, enabling continuing growth in its Software business as well as facilitating delivery against the previously announced project award in Puerto Rico.

 

The loan is secured by substantially all of the Company’s assets and was issued with a 2% original issue discount (OID). Interest on the principal is payable quarterly in cash at a rate of the three-month Secured Overnight Financing Rate (SOFR) plus five percent (5%). The Company may elect to pay interest quarterly 50% in cash and 50% in common shares at a quarterly interest rate of the three-month SOFR plus six percent (6%). The loan is non-amortizing and is due May 13, 2026. The loan agreement also allows Genasys to prepay principal at 101% of par at any time during the first year, and at par thereafter prior to due date. In addition, the Company issued approximately 3.1 million five-year warrants to the Investor, each exchangeable for one share of common stock at an exercise price of $2.53, subject to adjustment.

 

ROTH Capital Partners acted as Placement Agent and legal representation was provided by Dentons Durham Jones Pinegar P.C.

 

About Genasys Inc.

 

Genasys Inc. (NASDAQ: GNSS) is the global leader in Protective Communications Solutions and Systems, designed around one premise: ensuring organizations and public safety agencies are “Ready when it matters™.” The company provides the Genasys Protect platform, the most comprehensive portfolio of preparedness, response, and analytics software and systems, as well as Genasys Long Range Acoustic Devices (LRAD®) that deliver directed, audible voice messages with intelligible vocal clarity from close range to 5,500 meters. Genasys serves state and local governmental agencies, and education (SLED); enterprise organizations in critical sectors such as oil and gas, utilities, manufacturing, and automotive; and federal governments and the military. Genasys Protective Communications Solutions have diverse applications, including emergency warning and mass notification for public safety, critical event management for enterprise companies, de-escalation for defense and law enforcement, and automated detection of real-time threats like active shooters and severe weather. Protecting people and saving lives for over 40 years, Genasys covers more than 70 Million people in over 100 countries worldwide, including more than 500 U.S. cities, counties and states. For more information, visit genasys.com.

 

 

Forward-Looking Statements

 

Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in any forward-looking statement. The risks and uncertainties in these forward-looking statements include without limitation the business impact of geopolitical conflicts, epidemics or pandemics, and other causes that may affect our supply chain, and other risks and uncertainties, many of which involve factors or circumstances that are beyond the Company’s control. Risks and uncertainties are identified and discussed in our filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management’s expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the “Risk Factors” section of the Company’s Form 10-K for the fiscal year ended September 30, 2023. Genasys Inc. disclaims any intent or obligation to publicly update or revise forward-looking statements, except as otherwise specifically stated.

 

 

Investor Relations Contact

 

Brian Alger, CFA

SVP, IR and Corporate Development

ir@genasys.com

(858) 676-0582

 

 

Exhibit 99.3

 

Genasys Announces Expansion of Its Board of Directors

 

Bill Dodd, Retiring California State Senator and Craig Fugate, Former Administrator of FEMA Join Genasys' Board of Directors

 

SAN DIEGO, CA – May 14, 2024 – Genasys Inc. (NASDAQ: GNSS), the global leader in protective communications, today announced that both Bill Dodd, and Craig Fugate have been nominated to and have accepted positions on Genasys' Board of Directors. The addition of Mr. Dodd and Mr. Fugate bolsters Genasys' leadership team with unique expertise in emergency management and public sector procurement processes.

 

Senator Dodd brings more than 20 years of state and local government experience. Starting out as a small business owner, Senator Dodd began his public service with 15 years on the Napa County Board of Supervisors, eventually progressing to the state Assembly in 2014 and ultimately serving two four-year terms in the California State Senate. As Senator Dodd finishes his second term, he Chairs the Government Organization Committee, and is a member of the Transportation Committee, Energy Utilities and Communications Committee, the Business Professions Committee, and the Insurance Committee.

 

"Serving the Northern California counties for over twenty years, I am acutely aware of the numerous emergencies that local and regional emergency managers must prepare for and manage. Genasys' solutions have been instrumental in improving communication, preparedness, and community safety with my constituents." said Senator Dodd. "Moving on from public service, I look forward to leveraging my experience to assist Genasys expand its reach and grow its business not only in California, but throughout the country."

 

Mr. Fugate was confirmed by the US Senate and began his service as Administrator of the Federal Emergency Management Agency (FEMA) in May 2009. Under his leadership, emergency management was promoted as a community and shared responsibility. At Craig’s direction, FEMA fostered resiliency, a community-oriented approach to emergency management to build sustainable and resilient communities. Before serving at the Federal level, Fugate served as Director of the Florida Division of Emergency Management (FDEM). During Mr. Fugate’s tenure, the FDEM program became the first statewide emergency management program in the nation to receive full accreditation from the Emergency Management Accreditation Program. Craig began his emergency management career as a volunteer firefighter, paramedic, and a Lieutenant with the Alachua County Fire Rescue where he moved from exclusive fire rescue operations to serving as the Emergency Manager for Alachua County in Gainesville, Florida. He spent a decade in that role until May 1997 when he was appointed Bureau Chief for Preparedness and Response for FDEM.

 

 

"I know of no other company that provides both the hardware and the software necessary to manage and communicate during an emergency. " said Mr. Fugate. "I am excited to join the team and extend the reach."

 

"The addition of Bill and Craig to our Board of Directors will have a near immediate impact on our business," said Richard Danforth, Chief Executive Officer for Genasys. "We look forward to leveraging their profound experience and delivering for our shareholders."

 

About Genasys Inc.

 

Genasys Inc. (NASDAQ: GNSS) is the global leader in Protective Communications Solutions and Systems, designed around one premise: ensuring organizations and public safety agencies are “Ready when it matters™.” The company provides the Genasys Protect platform, the most comprehensive portfolio of preparedness, response, and analytics software and systems, as well as Genasys Long Range Acoustic Devices (LRAD®) that deliver directed, audible voice messages with intelligible vocal clarity from close range to 5,500 meters. Genasys serves state and local governmental agencies, and education (SLED); enterprise organizations in critical sectors such as oil and gas, utilities, manufacturing, and automotive; and federal governments and the military. Genasys Protective Communications Solutions have diverse applications, including emergency warning and mass notification for public safety, critical event management for enterprise companies, de-escalation for defense and law enforcement, and automated detection of real-time threats like active shooters and severe weather. Protecting people and saving lives for over 40 years, Genasys covers more than 70 Million people in over 100 countries worldwide, including more than 500 U.S. cities, counties and states. For more information, visit genasys.com.

 

Forward-Looking Statements

 

Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in any forward-looking statement. The risks and uncertainties in these forward-looking statements include without limitation the business impact of geopolitical conflicts, epidemics or pandemics, and other causes that may affect our supply chain, and other risks and uncertainties, many of which involve factors or circumstances that are beyond the Company’s control. Risks and uncertainties are identified and discussed in our filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management’s expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the “Risk Factors” section of the Company’s Form 10-K for the fiscal year ended September 30, 2023. Genasys Inc. disclaims any intent or obligation to publicly update or revise forward-looking statements, except as otherwise specifically stated.

 

Investor Relations Contact

 

Brian Alger, CFA

SVP, IR and Corporate Development

ir@genasys.com

(858) 676-0582

 

 

v3.24.1.1.u2

Document And Entity Information	May 13, 2024
Document Information [Line Items]
Entity, Registrant Name	Genasys Inc.
Document, Type	8-K
Document, Period End Date	May 13, 2024
Entity, Incorporation, State or Country Code	DE
Entity, File Number	000-24248
Entity, Tax Identification Number	87-0361799
Entity, Address, Address Line One	16262 West Bernardo Drive
Entity, Address, City or Town	San Diego
Entity, Address, State or Province	CA
Entity, Address, Postal Zip Code	92127
City Area Code	858
Local Phone Number	676-1112
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity, Emerging Growth Company	false
Title of 12(b) Security	Common stock
Trading Symbol	GNSS
Security Exchange Name	NASDAQ
Amendment Flag	false
Entity, Central Index Key	0000924383

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