CONFORMED COPY
REVOLVING CREDIT AND GUARANTY AGREEMENT
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of January 7, 1998
among PARAGON TRADE BRANDS, INC., a Delaware corporation (the "BORROWER") and a
debtor and debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code, PTB INTERNATIONAL, INC., a Delaware corporation ("PTB
INTERNATIONAL"), CHANGING PARADIGMS, INC., an Ohio corporation, PARAGON TRADE
BRANDS FSC, INC., a U.S. Virgin Islands corporation, PTB ACQUISITION SUB, INC.,
a Delaware corporation (each, a "GUARANTOR" and collectively, the "GUARANTORS"),
THE CHASE MANHATTAN BANK, a New York banking corporation ("CHASE"), each of the
other financial institutions from time to time party hereto (together with
Chase, the "BANKS") and THE CHASE MANHATTAN BANK, as agent (in such capacity,
the "AGENT") for the Banks.
INTRODUCTORY STATEMENT
On January 6, 1998, the Borrower filed a voluntary petition with the
Bankruptcy Court initiating the Case. The Borrower has continued in the
possession of its assets and in the management of its businesses pursuant to
Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower has applied to the Banks for a revolving credit and letter
of credit facility in an aggregate principal amount not to exceed $75,000,000,
all of the Borrower's obligations under which are to be guaranteed by the
Guarantors.
The proceeds of the Loans will be used to provide working capital for,
and for other general corporate purposes of, the Borrower.
To provide guarantees and security for the repayment of the Loans, the
reimbursement of any draft drawn under a Letter of Credit and the payment of the
other Obligations of the Borrower and the Guarantors hereunder and under the
other Loan Documents (including, without limitation, the Obligations of the
Borrower under Section 6.03(iv)), the Borrower and the Guarantors will provide
to the Agent and the Banks the following (each as more fully described herein):
(a) a guaranty from each of the Guarantors of the due and punctual
payment and performance of the obligations of the Borrower hereunder;
(b) with respect to the Obligations of the Borrower hereunder, an
allowed administrative expense claim in the Case pursuant to Section 364(c)(1)
of the Bankruptcy Code having priority over all administrative expenses of the
kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code;
(c) with respect to the Obligations of the Borrower hereunder, a
perfected first priority Lien, pursuant to Section 364(c)(2) of the Bankruptcy
Code, upon all unencumbered property of the Borrower and all cash maintained in
the Letter of Credit Account;
(d) with respect to the Obligations of the Borrower hereunder, a
perfected Lien, pursuant to Section 364(c)(3) of the Bankruptcy Code, upon all
property of the Borrower that is subject to valid and perfected Liens in
existence on the Filing Date, junior to such valid and perfected Liens (except
as otherwise provided in subparagraph (e) of this paragraph with respect to
Liens in connection with the Judgment); and
(e) with respect to the Obligations of the Borrower hereunder, a
perfected first priority priming Lien, pursuant to Section 364(d)(1) of the
Bankruptcy Code, upon any property of the Borrower to which any liens attached
prior to the Filing Date in respect of the Judgment.
All of the claims and the Liens granted in the Case to the Agent and the
Banks shall (insofar as claims against and assets of the Borrower are concerned)
be subject to the Carve-Out to the extent provided in Section 2.23, PROVIDED
that following the Termination Date, amounts in the Letter of Credit Account
shall not be subject to the Carve-Out.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
SECTION 1.01 DEFINED TERMS.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Section 2.
"ACCOUNTS" shall have the meaning set forth in the Security and Pledge
Agreement.
"ACCOUNT DEBTOR" shall mean the Person obligated on an Account.
"ADDITIONAL CREDIT" shall have the meaning given such term in Section
4.02(d) hereof.
"ADJUSTED LIBOR RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the quotient of (a) the LIBOR
Rate in effect for such Interest Period divided by (b) a percentage (expressed
as a decimal) equal to 100% minus Statutory Reserves. For purposes hereof, the
term "LIBOR RATE" shall mean the rate (rounded upwards, if necessary, to the
next 1/16 of 1%)
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at which dollar deposits approximately equal in principal amount to such
Eurodollar Borrowing and for a maturity comparable to such Interest Period are
offered to the principal London office of the Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"AFFILIATE" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person. For purposes of this definition, a Person (a
"CONTROLLED PERSON") shall be deemed to be "controlled by" another Person (a
"CONTROLLING PERSON") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"AGENT" shall have the meaning set forth in the first paragraph of this
Agreement.
"AGREEMENT" shall mean this Revolving Credit and Guaranty Agreement, as
the same may from time to time be further amended, modified or supplemented.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof, "PRIME RATE" shall mean the rate of interest per
annum publicly announced from time to time by the Agent as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective on the date such change is publicly announced. "BASE CD RATE"
shall mean the sum of (a) the quotient of (i) the Three-Month Secondary CD Rate
divided by (ii) a percentage expressed as a decimal equal to 100% minus
Statutory Reserves and (b) the Assessment Rate. "THREE-MONTH SECONDARY CD RATE"
shall mean, for any day, the secondary market rate for three-month certificates
of deposit reported as being in effect on such day (or, if such day shall not be
a Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Agent from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by it. "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it. If
for any reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective
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Rate or both for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent as the then current net annual assessment rate that will be employed in
determining amounts payable by the Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or any
successor) of time deposits made in dollars at the Agent's domestic offices.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Bank and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit D.
"AVAILABLE ACCOUNTS RECEIVABLE" shall mean, on any date, (i) 80% of
Eligible Accounts Receivable as of such date LESS the Dilution Reserve and
Customer Claims Reserve then in effect MINUS (ii) Coupon Liability.
"AVAILABLE INVENTORY" shall mean, on any date, an amount that is equal
to the sum, without duplication, of (a) 55% of the Eligible Inventory Value of
Work-In-Process PLUS (b) 50% of the Eligible Inventory Value of Raw
Materials-Other and Pulp Inventory PLUS (c) 25% of the Eligible Inventory Value
of Materials and Supplies PLUS (d) 65% of the Eligible Inventory Value of
Finished Goods MINUS (e) the Lease Reserve.
"BANKRUPTCY CODE" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 ET SEQ.
"BANKRUPTCY COURT" shall mean the United States Bankruptcy Court for the
Northern District of Georgia, Atlanta Division, or any other court having
jurisdiction over the Case from time to time.
"BANKS" shall have the meaning set forth in the first paragraph of this
Agreement.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"BORROWER" shall have the meaning set forth in the first paragraph of
this Agreement.
"BORROWING" shall mean the incurrence of Loans of a single Type made
from all the Banks on a single date and having, in the case of Eurodollar Loans,
a single Interest Period (with any ABR
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Loan made pursuant to Section 2.16 being considered a part of the related
Borrowing of Eurodollar Loans).
"BORROWING BASE" shall (i) mean, on any day, for purposes of extensions
of credit hereunder in an aggregate amount not in excess of $20,000,000, an
amount that is equal to 70% of the Borrower's domestic accounts receivable
outstanding for less than 120 days (less discounts, returns and allowances as
shown on the Borrower's books and records) and (ii) on and after the date on
which any Additional Credit is extended, mean on any day an amount that is equal
to the sum, without duplication, of (a) Available Accounts Receivable PLUS (b)
Available Inventory PLUS (c) the Real Property Component. The Borrowing Base
shall be computed weekly in accordance with Section 5.10. The Borrowing Base at
any time in effect shall be determined by reference to the Borrowing Base
Certificate most recently delivered hereunder.
"BORROWING BASE CERTIFICATE" shall mean a certificate substantially in
the form of Exhibit E (with such changes therein as may be required by the Agent
to reflect the components of and reserves against, the Borrowing Base as
provided for hereunder from time to time), executed and certified by a Financial
Officer of the Borrower, which shall include appropriate exhibits and schedules
as referred to therein, PROVIDED that prior to the extension of any Additional
Credit, the term "Borrowing Base Certificate" shall mean a weekly certificate of
a Financial Officer that sets forth the Borrower's domestic accounts receivable
outstanding for less than 120 days (less discounts, returns and allowances as
shown on the Borrower's books and records).
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or other
day on which banks in the State of New York are required or permitted to close
(and, for a Letter of Credit, other than a day on which the Fronting Bank
issuing such Letter of Credit is closed); PROVIDED, HOWEVER, that when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits on the
London interbank market.
"CAPITAL EXPENDITURES" shall mean, for any period, the aggregate of all
cash expenditures (whether paid in cash or accrued as liabilities during such
period and excluding that portion of Capitalized Leases which is capitalized on
the consolidated balance sheet of the Borrower and the Guarantors) net of cash
amounts received by the Borrower and the Guarantors from other Persons during
such period in reimbursement of Capital Expenditures made by the Borrower and
the Guarantors, excluding interest capitalized during construction, by the
Borrower and the Guarantors during such period that, in conformity with GAAP,
are required to be included in or reflected by the property, plant, equipment or
similar fixed asset accounts reflected in the consolidated balance sheet of the
Borrower and the Guarantors (including equipment which is purchased
simultaneously with the trade-in of existing equipment owned by the Borrower or
any of the Guarantors to the extent of the gross amount of such purchase price
less the book value of the equipment being traded in at such time), but
excluding expenditures made in connection with the replacement or restoration of
assets, to the extent reimbursed or financed from insurance proceeds paid on
account of the loss of or damage to the assets being replaced or restored, or
from awards of compensation arising from the taking by condemnation or eminent
domain of such assets being replaced.
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"CAPITALIZED LEASE" shall mean, as applied to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"CARVE-OUT" shall have the meaning set forth in Section 2.23.
"CASE" shall mean the Chapter 11 Case of the Borrower pending in the
Bankruptcy Court.
"CHASE" shall have the meaning set forth in the first paragraph of this
Agreement.
"CLOSING DATE" shall mean the date on which this Agreement has been
executed and the conditions precedent to the making of the initial Loans set
forth in Section 4.01 have been satisfied or waived, which date shall occur
promptly upon the entry of the Interim Order, but no later than January 22,
1998.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall mean the Collateral under the Security and Pledge
Agreements.
"COMMITMENT" shall mean, with respect to each Bank, the commitment of
each Bank hereunder in the amount set forth opposite its name on Annex A hereto
or as may subsequently be set forth in the Register from time to time, as the
same may be reduced from time to time pursuant to Section 2.10.
"COMMITMENT FEE" shall have the meaning set forth in Section 2.20.
"COMMITMENT LETTER" shall mean that certain Commitment Letter dated
January 7, 1998 among the Agent, Chase Securities Inc. and the Borrower.
"COMMITMENT PERCENTAGE" shall mean at any time, with respect to each
Bank, the percentage obtained by dividing its Commitment at such time by the
Total Commitment at such time.
"CONSUMMATION DATE" shall mean the date of the substantial consummation
(as defined in Section 1101 of the Bankruptcy Code and including the effective
date of the Reorganization Plan) of a Reorganization Plan of the Borrower which
is confirmed pursuant to an order of the Bankruptcy Court.
"CONVERSION AGREEMENT" shall have the meaning set forth in Section
7.01(f).
"COUPON LIABILITY" shall mean such amount as is determined from time to
time by Xxxxxxxx Manufacturers Services, Inc. or any other coupon clearing house
satisfactory to the Agent.
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"CUSTOMER CLAIMS RESERVE" shall mean the amount to be determined in the
sole reasonable discretion of the Agent of all allowances that the Borrower may
be obligated to rebate to a customer pursuant to the terms of any agreement or
understanding, written or oral, and any other similar obligations that have been
incurred but not reported.
"DOLLARS" AND "$" shall mean lawful money of the United States of
America.
"DILUTION PERCENTAGE" shall mean, on any date, the total of the prior
month's non-cash credits to accounts receivable divided by total sales for the
prior month.
"DILUTION RESERVE" shall mean, on any date, the excess of the Dilution
Percentage over 5% MULTIPLIED BY Eligible Accounts Receivable. If the excess of
the Dilution Percentage over 5% is less than zero, the Dilution Reserve shall be
zero.
"EBITDA" shall mean, with respect to the Borrower and its Subsidiaries
for any period, all as determined in accordance with GAAP the consolidated net
income (or net loss) for such period, PLUS (a) the sum of (i) depreciation
expense, (ii) amortization expense, (iii) other non-cash charges, (iv) provision
for LIFO adjustment for inventory valuation, (v) net total Federal, state and
local income tax expense, (vi) gross interest expense for such period less gross
interest income for such period, (vii) extraordinary losses, (viii) any
non-recurring charge or restructuring charge which in accordance with GAAP is
not included in the calculation of operating income, (ix) the cumulative effect
of any change in accounting principles and (x) "Chapter 11 expenses" (or
"administrative costs reflecting Chapter 11 expenses") as shown on the
Borrower's consolidated statement of income for such period LESS (b)
extraordinary gains PLUS or MINUS (c) the amount of cash received or expended in
such period in respect of any amount which, under clause (viii) above, was taken
into account in determining EBITDA for such or any prior period.
"ELIGIBLE ACCOUNTS RECEIVABLE" shall mean, on any date, all Accounts of
the Borrower on such date that (i) have been invoiced and represent the bona
fide sale and delivery of merchandise in the ordinary course of business in
connection with its trade operations, and (ii) are deemed by the Agent in good
faith to be eligible for inclusion in the calculation of the Borrowing Base.
Without limiting the foregoing, to qualify as an Eligible Account Receivable, an
Account shall indicate the Borrower as sole payee and as sole remittance party.
Unless otherwise approved from time to time in writing by the Agent, no Account
shall be an Eligible Account Receivable if:
(a) the Borrower does not have sole lawful and absolute title to such
Account; or
(b) it arises out of a sale made to an Affiliate; or
(c) (i) it is unpaid more than 90 days from the date of invoice or more
than 60 days from the due date or (ii) it has been written off the Borrower's
books or has been otherwise designated as uncollectible; or
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(d) more than 50% in face amount of all Accounts of the same Account
Debtor and its known Affiliates, taken together, are ineligible pursuant to
clause (c) above; or
(e) the Account Debtor (i) is a creditor of the Borrower, (ii) has or
has asserted a right of setoff against the Borrower or (iii) has disputed its
liability (whether by chargeback or otherwise) or made any claim with respect to
the Account or any other Account of the Borrower which has not been resolved, in
each case, without duplication, to the extent of the amount owed by the Borrower
to the Account Debtor, the amount of such actual or asserted right of setoff, or
the amount of such dispute or claim, as the case may be; or
(f) the Account Debtor is insolvent or the subject of any bankruptcy
case or insolvency proceeding of any kind; or
(g) the Account is not payable in dollars or the Account Debtor is
either not incorporated under the laws of the United States of America or any
State thereof or is located outside or has its principal place of business or
substantially all of its assets outside the continental United States, except to
the extent the Account is supported by an irrevocable letter of credit
reasonably satisfactory to the Agent (as to form, substance and issuer) and
assigned to and directly drawable by the Agent; or
(h) the sale to the Account Debtor is on a xxxx-and-hold, guaranteed
sale, sale-and-return, ship-and-return, sale on approval or consignment or other
similar basis or made pursuant to any other written agreement providing for
repurchase or return of any merchandise which has been claimed to be defective
or otherwise unsatisfactory; or
(i) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower duly assigns
its rights to payment of such Account to the Agent pursuant to the Assignment of
Claims Act of 1940, as amended, which assignment and related documents and
filings shall be in form and substance reasonably satisfactory to the Agent; or
(j) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the Account Debtor, or the Account represents a
progress-billing or otherwise does not represent a completed sale; or
(k) the Account does not comply with all requirements of applicable law,
including without limitation the Federal Consumer Credit Protection Act, the
Federal Truth in Lending Act and Regulation Z of the Board of Governors of the
Federal Reserve System; or
(l) the Account is subject to any adverse security deposit, progress
payment or other similar advance made by or for the benefit of the Account
Debtor to the extent thereof; or
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(m) (i) either the perfection, enforceability or validity of the Agent's
security interest or right or ability to receive direct payments as to such
Account is governed by any Federal or state statutory requirement other than
those of (x) the statutes referred to in clause (k) above or (y) the Uniform
Commercial Code, (ii) it is not subject to a valid and perfected first priority
Lien in favor of the Agent, subject to no other Liens or (iii) it does not
otherwise conform to the representations and warranties contained in the Loan
Documents; or
(n) as to all or any part of such Account a check, promissory note,
draft, trade acceptance or other instrument for the payment of money has been
received, presented for payment and returned uncollected for any reason; or
(o) the Account is the result of the sale of seconds, thirds or scrap.
Without limiting the foregoing, (x) no Account shall be an Eligible
Account Receivable (i) unless it names the Borrower as sole payee or (ii) if it
is for goods that have been sold under a purchase order or pursuant to the terms
of a contract or other agreement or understanding (written or oral) that
indicates that any Person other than the Borrower has or has had or is purported
to have or have had an ownership interest in such goods, and (y) in determining
the aggregate amount of Accounts from the same Account Debtor and any Affiliates
thereof that are unpaid more that 90 days from the date of invoice or more than
60 days from the due date pursuant to clause (c) above, there shall be excluded
the amount of any net credit balances due and owing to the Account Debtor in
respect of Accounts that are so unpaid.
"ELIGIBLE ASSIGNEE" shall mean (i) a commercial bank having total assets
in excess of $1,000,000,000; (ii) a finance company, insurance company or other
financial institution or fund, in each case acceptable to the Agent, which in
the ordinary course of business extends credit of the type similar to the Loans
and has total assets in excess of $200,000,000 and whose becoming an assignee
would not constitute a prohibited transaction under Section 4975 of ERISA; and
(iii) any other financial institution satisfactory to the Borrower and the
Agent.
"ELIGIBLE INVENTORY" shall mean, on any date, all Inventory of the
Borrower on such date deemed by the Agent in good faith to be eligible for
inclusion in the calculation of the Borrowing Base. Without limiting the
foregoing, to qualify as "Eligible Inventory", no Person other than the Borrower
shall have any direct or indirect ownership interest or title to such Inventory.
Unless otherwise from time to time approved in writing by the Agent, no
Inventory shall be deemed Eligible Inventory if:
(a) it is not owned solely by the Borrower or the Borrower does not have
sole and good, valid and unencumbered title thereto; or
(b) it is not located in the continental United States; or
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(c) it is not located on property owned or leased by the Borrower or in
a contract warehouse specified on a schedule attached to the Security and Pledge
Agreement, and, except as otherwise approved by the Agent, covered by an
agreement satisfactory in form and substance to the Agent covering the Agent's
access to such Inventory and waiving the lessor's or contract warehouseman's
Liens therein, and segregated or otherwise separately identifiable from goods of
all others, if any, stored on the premises, other than Inventory that has been
sent out to intermediary processors in the ordinary course of such person's
business and consistent with past practice;
(d) it is not subject to a valid and perfected first priority Lien in
favor of the Agent, except, with respect to Inventory stored at sites described
in clause (c) above, for Liens for unpaid rent or normal and customary
warehousing charges, in each case, not yet due; or
(e) it is goods returend or rejected by the Borrower's customers or
goods in transit to third parties (other than to warehouse sites described in
clause (c) above);
(f) it is seconds or thirds or is obsolete or slow moving or
unmerchantable, or does not otherwise conform to the representations and
warranties contained in the Loan Documents;
(g) it is located at a plant that the Borrower plans to dispose of;
(h) any portion of its value is attributable to capitalized overhead
costs; or
(i) it is located at the Xxxxxxx Plant, but such Inventory shall be
excluded from Eligible Inventory only to the extent that its Eligible Inventory
Value is in excess of $2,000,000.
Without limiting the foregoing, Inventory shall not be Eligible
Inventory if (i) the purchase order, invoice or any other document in connection
therewith indicates that any Person other than the Borrower has any ownership
interest therein or (ii) it arises from a contract or other agreement with a
supplier or customer that has a contracting party other than the Borrower.
"ELIGIBLE INVENTORY VALUE" shall mean at the time of any determination
thereof the lower of cost (less any appropriate revaluation reserves or reserve
for obsolete Inventory and any profits accrued in connection with transfers of
Inventory between plants of the Borrower) or fair market value of the Eligible
Inventory at such time, in dollars, determined in accordance with the Borrower's
historical standard cost accounting practices less the Reserve for Variances.
"ENVIRONMENTAL LIEN" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under federal or state environmental laws or
regulations, or (ii) damages arising from or costs incurred by such Governmental
Authority in response to a release or threatened release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment.
"EQUIPMENT" shall have the meaning set forth in the Security and Pledge
Agreement.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower is a member and
which is under common control within the meaning of Section 414(b) or (c) of the
Code and the regulations promulgated and rulings issued thereunder.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned thereto in
Regulation D issued by the Board, as in effect from time to time.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR LOAN" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.
"EVENT OF DEFAULT" shall have the meaning given such term in Section 7.
"FEES" shall collectively mean the Commitment Fees, Letter of Credit
Fees and other fees referred to in Section 2.19.
"FILING DATE" shall mean January 6, 1998, the date on which the Borrower
filed the voluntary petitions initiating its Case.
"FINAL ORDER" shall have the meaning given such term in Section 4.02(d).
"FINANCIAL OFFICER" shall mean the Chief Financial Officer, Vice
President Finance or the Treasurer of the Borrower.
"FINISHED GOODS" shall mean, on any date, the Eligible Inventory of the
Borrower on such date that constitutes finished goods as shown on the Borrower's
perpetual stock status reports in accordance with the Borrower's historical
classification of finished goods.
"FRONTING BANK" shall mean Chase or such other Bank (which other Bank
shall be reasonably satisfactory to the Borrower) as may agree with Chase to act
in such capacity.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with those used in preparing the financial statements referred
to in Section 3.04.
"GAFFNEY PLANT" shall mean the Borrower's manufacturing facility located
in Gaffney, South Carolina.
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"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"GUARANTORS" shall have the meaning set forth in the first paragraph
of this Agreement.
"INDEBTEDNESS" shall mean, at any time and with respect to any Person,
(i) all indebtedness of such Person for borrowed money; (ii) all indebtedness of
such Person for the deferred purchase price of property or services (other than
property, including inventory, and services purchased, and trade payables, other
expense accruals (including coupon accruals) and deferred compensation items
arising, in the ordinary course of business); (iii) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments (other
than performance, surety and appeal bonds arising in the ordinary course of
business); (iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property); (v) all obligations of such Person under leases which
have been or should be, in accordance with GAAP, recorded as capital leases, to
the extent required to be so recorded; (vi) all reimbursement, payment or
similar obligations of such Person, contingent or otherwise, under acceptance,
letter of credit or similar facilities and all obligations of such Person in
respect of (x) currency swap agreements, currency future or option contracts and
other similar agreements designed to hedge against fluctuations in foreign
interest rates, and (y) interest rate swap, cap or collar agreements and
interest rate future or option contracts; (vii) all Indebtedness referred to in
clauses (i) through (vi) above guaranteed directly or indirectly by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (A) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (B) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such Indebtedness or to
assure the holder of such Indebtedness against loss in respect of such
Indebtedness; (C) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (D) otherwise to
assure a creditor against loss in respect of such Indebtedness; and (viii) all
Indebtedness referred to in clauses (i) through (vii) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"INSUFFICIENCY" shall mean, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA using reasonable actuarial assumptions as to interest rates
and mortality.
"INTERIM ORDER" shall have the meaning given such term in Section
4.01(b).
"INTEREST EXPENSE" shall mean interest expense as determined in
accordance with GAAP.
12
"INTEREST PAYMENT DATE" shall mean (i) as to each Eurodollar Loan , the
last day of the Interest Period in respect thereof and (ii) as to all ABR Loans,
the last calendar day of each March, June, September and December and the date
on which any ABR Loans are refinanced with Eurodollar Loans pursuant to Section
2.12.
"INTEREST PERIOD" shall mean, as to any Borrowing of Eurodollar Loans,
the period commencing on the date of such Borrowing (including as a result of a
refinancing of ABR Loans) or on the last day of the preceding Interest Period
applicable to such Borrowing and ending on the numerically corresponding day (or
if there is no corresponding day, the last day) in the calendar month that is
one, two or three months thereafter, as the Borrower may elect in the related
notice delivered pursuant to Sections 2.06(b) or 2.12; PROVIDED, however, that
(i) if any Interest Period would end on a day which shall not be a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day,
and (ii) no Interest Period shall end later than the Termination Date.
"INTERNATIONAL BASKET" shall have the meaning set forth in Section 6.09.
"INVENTORY" shall have the meaning set forth in the Security and Pledge
Agreement.
"INVESTMENTS" shall have the meaning given such term in Section 6.10.
"JUDGMENT" shall mean the judgment entered by the United States District
Court for the District of Delaware on or about January 6, 1998 in the action
titled "The Procter and Xxxxxx Company v. Paragon Trade Brands, Inc." (Civ.
Action No. 94-16 LON).
"LEASE RESERVE" shall mean the actual expenses for the preceding 3
months associated with the Borrower's leased facilities which contain Inventory.
"LETTER OF CREDIT" shall mean any irrevocable letter of credit issued
pursuant to Section 2.03, which letter of credit shall be (i) a standby letter
of credit, (ii) issued for purposes for which the Borrower has historically
obtained letters of credit or for such other purposes as are reasonably
acceptable to the Agent, (iii) denominated in Dollars and (iv) otherwise in such
form as may be reasonably approved from time to time by the Agent and the
applicable Fronting Bank.
"LETTER OF CREDIT ACCOUNT" shall mean the account established by the
Borrower under the sole and exclusive control of the Agent maintained at the
office of the Agent at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 designated as
the "Paragon Trade Brands, Inc. Letter of Credit Account" that shall be used
solely for the purposes set forth in Sections 2.03(b) and 2.13.
"LETTER OF CREDIT FEES" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.21.
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"LETTER OF CREDIT OUTSTANDINGS" shall mean, at any time, the sum of (i)
the aggregate undrawn stated amount of all Letters of Credit then outstanding
PLUS (ii) all amounts theretofore drawn under Letters of Credit and not then
reimbursed.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or other
title retention agreement or any lease in the nature thereof).
"LOAN" shall have the meaning given such term in Section 2.01.
"LOAN DOCUMENTS" shall mean this Agreement, the Letters of Credit, the
Security and Pledge Agreements, and any other instrument or agreement executed
and delivered in connection herewith.
"MATERIALS AND SUPPLIES" shall mean, on any date, the Eligible Inventory
of the Borrower on such date that constitutes packaging and spare parts
inventory as shown on the Borrower's perpetual stock status reports in
accordance with the Borrower's historical classification of materials and
supplies, including corrugated materials.
"MATURITY DATE" shall mean July 7, 1999.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" shall mean a Single Employer Plan, which (i) is
maintained for employees of the Borrower or an ERISA Affiliate and at least one
Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such Plan has been or
were to be terminated.
"OBLIGATIONS" shall mean (a) the due and punctual payment of principal
of and interest on the Loans and the reimbursement of all amounts drawn under
Letters of Credit, and (b) the due and punctual payment of the Fees and all
other present and future, fixed or contingent, monetary obligations of the
Borrower and the Guarantors to the Banks and the Agent under the Loan Documents
and in respect of Indebtedness permitted by Section 6.03 (iv).
"ORDERS" shall mean the Interim Order and the Final Order of the
Bankruptcy Court referred to in Sections 4.01(b) and 4.02(d).
"OTHER TAXES" shall have the meaning given such term in Section 2.18.
"P AND G" shall have the meaning set forth in Section 7.01(f).
14
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.
"PENSION PLAN" shall mean a defined benefit pension or retirement plan
which meets and is subject to the requirements of Section 401(a) of the Code.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within twelve
months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below, investments
in commercial paper maturing within six months from the date of acquisition
thereof and having, at such date of acquisition, a rating of at least "A" or the
equivalent thereof from Standard & Poor's Corporation or of at least "A2" or the
equivalent thereof from Xxxxx'x Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits (including Eurodollar time deposits) maturing within six months
from the date of acquisition thereof issued or guaranteed by or placed with (i)
any domestic office of the Agent or the bank with whom the Borrower and the
Guarantors maintain their cash management system, provided, that if such bank is
not a Bank hereunder, such bank shall have entered into an agreement with the
Agent pursuant to which such bank shall have waived all rights of setoff and
confirmed that such bank does not have, nor shall it claim, a security interest
therein or (ii) any domestic office of any other commercial bank of recognized
standing organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not
less than $250,000,000 and is the principal banking Subsidiary of a bank holding
company having a long-term unsecured debt rating of at least "A" or the
equivalent thereof from Standard & Poor's Corporation or at least "A2" or the
equivalent thereof from Xxxxx'x Investors Service, Inc.;
(d) investments in commercial paper maturing within six months from the
date of acquisition thereof and issued by (i) the holding company of the Agent
or (ii) the holding company of any other commercial bank of recognized standing
organized under the laws of the United States of America or any State thereof
that has (A) a combined capital and surplus in excess of $250,000,000 and (B)
commercial paper rated at least "A" or the equivalent thereof from Standard &
Poor's Corporation or of at least "A2" or the equivalent thereof from Xxxxx'x
Investors Service, Inc.;
(e) investments in repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (a) above
entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above; and
15
(f) investments in money market funds substantially all the assets of
which are comprised of securities of the types described in clauses (a) through
(e) above.
"PERMITTED LIENS" shall mean (i) Liens imposed by law (other than
Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (ii) statutory and other Liens of landlords, Liens of
tenants arising from occupancy rights and statutory Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed under ERISA) imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP; (iii)
Liens (other than any Lien imposed under ERISA) incurred or deposits made in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result of
progress payments under government contracts; (iv) easements (including, without
limitation, reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations, encroachments, variations and
zoning and other restrictions, charges or encumbrances (whether or not
recorded), which do not interfere materially with the ordinary conduct of the
business of the Borrower or any Guarantor, as the case may be, and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to the Borrower or any Guarantor, as the case
may be; (v) purchase money Liens (including Capitalized Leases) upon or in any
property acquired or held in the ordinary course of business to secure the
purchase price of such property or to secure Indebtedness permitted by Section
6.03(iii) solely for the purpose of financing the acquisition of such property;
and (vi) extensions, renewals or replacements of any Lien referred to in
paragraphs (i) through (v) above, PROVIDED that the principal amount of the
obligation secured thereby is not increased and that any such extension, renewal
or replacement is limited to the property originally encumbered thereby.
"PERSON" shall mean any natural person, corporation, division of a
corporation, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision
thereof.
"PLAN" shall mean a Single Employer Plan or a Multiemployer Plan.
"PREPAYMENT DATE" shall mean thirty (30) days after the entry of the
Interim Order by the Bankruptcy Court if the Final Order has not been entered by
the Bankruptcy Court prior to the expiration of such thirty (30) day period.
16
"PRE-PETITION PAYMENT" shall mean a payment (by way of adequate
protection or otherwise) of principal or interest or otherwise on account of any
pre-petition Indebtedness or trade payables or other pre-petition claims against
the Borrower.
"PTB CANADA" shall mean Paragon Trade Brands (Canada) Inc., a
wholly-owned Subsidiary of the Borrower.
"PTB INTERNATIONAL" shall have the meaning set forth in the first
paragraph of this Agreement.
"PULP INVENTORY" shall mean, on any date, the Eligible Inventory of the
Borrower on such date that constitutes pulp inventory as shown on the Borrower's
perpetual stock status reports in accordance with the Borrower's historical
classification of pulp inventory.
"RAW MATERIALS-OTHER" shall mean, on any date, the Eligible Inventory of
the Borrower on such date that constitutes other raw materials as shown on the
Borrower's perpetual stock status reports in accordance with the Borrower's
historical classification of other raw materials, but excluding corrugated
materials.
"REAL PROPERTY COMPONENT" shall mean $40,000,000, PROVIDED that such
amount shall be (i) $25,000,000 until such time as the Agent shall be satisfied,
in its sole discretion, with the legal details, perfection and enforceability
under South Carolina law of the assignment to the Agent by the Borrower of its
leasehold interest in the Gaffney Plant (including, without limitation, the
assignment of the Borrower's right to compel the conveyance of fee title to the
real property comprising the Gaffney Plant) and shall have received the
favorable opinion of South Carolina counsel satisfactory to the Agent with
respect thereto, (ii) automatically and permanently reduced at the time of the
sale, transfer or other disposition by the Borrower of any real property,
leasehold interest in real property or Equipment (other than real property,
leasehold interests in real property and Equipment described in the schedule of
proposed asset sales heretofore furnished by the Borrower to the Agent in
connection with the property dispositions that are permitted by clause (ii) of
Section 6.11) by an amount that is equal to the appraised value thereof as
reflected in the most recent appraisal with respect thereto furnished to the
Agent pursuant to Section 5.11 (it being understood that if any such appraisal
sets forth a range of values for the subject property, the "appraised value" of
such property shall be the arithmetic mean of the high and low values specified
for such property in such appraisal as determined by the Agent) and (iii)
otherwise adjusted as determined by the Agent to reflect the appraised values
that are set forth in the appraisals that are furnished to the Agent from time
to time pursuant to Section 5.11.
"REGISTER" shall have the meaning set forth in Section 10.03(d).
"REORGANIZATION PLAN" shall mean a plan of reorganization in the Case.
"REQUIRED BANKS" shall mean, at any time, Banks (including Chase)
holding Loans representing in excess of 50% of the aggregate principal amount of
such Loans outstanding or, if no
17
such Loans are outstanding, Banks having Commitments representing in excess of
50% of the Total Commitment.
"RESERVE FOR VARIANCES" shall mean, on any date, the amount thereof that
is a favorable variance attributable to material price and labor variances at
the Borrower's plants (excluding the Gaffney Plant) that results when standard
costs and actual costs differ, whereby only a certain portion, to be determined
at the sole discretion of the Agent, of the favorable variance in excess of
capitalized overhead costs (referred to in paragraph (h) in the definition of
"Eligible Inventory") shall be the Reserve for Variances.
"SECTION 6.09 AGREEMENTS" shall have the meaning set forth in Section
6.09
"SECTION 6.09 AMOUNT" shall have the meaning set forth in Section 6.09.
"SECURITY AND PLEDGE AGREEMENTS" shall have the meaning set forth in
Section 4.01(c).
"SINGLE EMPLOYER PLAN" shall mean a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of which
the Borrower could have liability under Section 4069 of ERISA in the event such
Plan has been or were to be terminated.
"STATUTORY RESERVES" shall mean on any date the percentage (expressed as
a decimal) established by the Board and any other banking authority which is (i)
for purposes of the definition of Base CD Rate, the then stated maximum rate of
all reserves (including, but not limited to, any emergency, supplemental or
other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City, for new three month negotiable nonpersonal time
deposits in dollars of $100,000 or more or (ii) for purposes of the definition
of Adjusted LIBOR Rate, the then stated maximum rate for all reserves (including
but not limited to any emergency, supplemental or other marginal reserve
requirements) applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency Liabilities (or any successor category of liabilities
under Regulation D issued by the Board, as in effect from time to time). Such
reserve percentages shall include, without limitation, those imposed pursuant to
said Regulation. The Statutory Reserves shall be adjusted automatically on and
as of the effective date of any change in such percentage.
"SUBSIDIARY" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, association or other business entity (whether
now existing or hereafter organized) of which at least a majority of the
securities or other ownership interests having ordinary voting power for the
election of directors is, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"SUPER-MAJORITY BANKS" shall have the meaning given such term in Section
10.10(b).
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"SUPERPRIORITY CLAIM" shall mean a claim against the Borrower in the
Case which is an administrative expense claim having priority over any or all
administrative expenses of the kind specified in Sections 503(b) or 507(b) of
the Bankruptcy Code.
"TAXES" shall have the meaning given such term in Section 2.18.
"TERMINATION DATE" shall mean the earliest to occur of (i) the
Prepayment Date, (ii) the Maturity Date, (iii) the Consummation Date and (iv)
the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.
"TERMINATION EVENT" shall mean (i) a "reportable event", as such term is
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a "reportable event" not subject to the provision for 30-day notice to the
PBGC under Section 4043 of ERISA or such regulations) or an event described in
Section 4068 of ERISA excluding events described in Section 4043(c)(9) of ERISA
or 29 CFR Sections 2615.21 or 2615.23, or (ii) the withdrawal of the Borrower or
any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a "substantial employer", as such term is defined in Section 4001(c) of
ERISA, or the incurrence of liability by the Borrower or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or
(iii) providing notice of intent to terminate a Plan pursuant to Section 4041(c)
of ERISA or the treatment of a Plan amendment as a termination under Section
4041 of ERISA, or (iv) the institution of proceedings to terminate a Plan by the
PBGC under Section 4042 of ERISA, or (v) any other event or condition (other
than the commencement of the Case and the failure to have made any contribution
accrued as of the Filing Date but not paid) which would reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the imposition of any
liability under Title IV of ERISA (other than for the payment of premiums to the
PBGC).
"TOTAL COMMITMENT" shall mean, at any time, the sum of the Commitments
at such time.
"TRANSFEREE" shall have the meaning given such term in Section 2.18.
"TYPE" when used in respect of any Loan or Borrowing shall refer to the
rate of interest by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall mean
the Adjusted LIBOR Rate and the Alternate Base Rate.
"UNUSED TOTAL COMMITMENT" shall mean, at any time, (i) the Total
Commitment less (ii) the sum of (x) the aggregate outstanding principal amount
of all Loans and (y) the aggregate Letter of Credit Outstandings.
"WITHDRAWAL LIABILITY" shall have the meaning given such term under Part
I of Subtitle E of Title IV of ERISA.
19
"WORK-IN-PROCESS" shall mean, on any date, the Eligible Inventory of the
Borrower on such date that constitutes work-in-process as shown on the
Borrower's perpetual stock status reports in accordance with the Borrower's
historical classification of work-in-process.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Sections,
Exhibits and Schedules shall be deemed references to Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; PROVIDED, HOWEVER, that for purposes of determining compliance
with any covenant set forth in Section 6, such terms shall be construed in
accordance with GAAP as in effect on the date of this Agreement applied on a
basis consistent with the application used in the Borrower's audited financial
statements referred to in Section 3.04.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
SECTION 2.01 COMMITMENT OF THE BANKS.
(a) Each Bank severally and not jointly with the other Banks agrees,
upon the terms and subject to the conditions herein set forth to make revolving
credit loans (each a "LOAN" and collectively, the "LOANS") to the Borrower at
any time and from time to time during the period commencing on the date hereof
and ending on the Termination Date (or the earlier date, if any, of termination
of the Total Commitment) in an aggregate principal amount not to exceed, when
added to such Bank's Commitment Percentage of the then aggregate Letter of
Credit Outstandings (in excess of the amount of cash then held in the Letter of
Credit Account pursuant to Section 2.13(a)), the Commitment of such Bank, which
Loans may be repaid and reborrowed in accordance with the provisions of this
Agreement. At no time shall the sum of the then outstanding aggregate principal
amount of the Loans PLUS the then aggregate Letter of Credit Outstandings exceed
the lesser of (i) the Total Commitment of $75,000,000, as the same may be
reduced from time to time pursuant to Section 2.10, and (ii) the sum of the
Borrowing Base PLUS cash then held in the Letter of Credit Account pursuant to
Section 2.13(a).
(b) Each Borrowing shall be made by the Banks PRO RATA in accordance
with their respective Commitments; PROVIDED, HOWEVER, that the failure of any
Bank to make any Loan shall not in itself relieve the other Banks of their
obligations to lend.
SECTION 2.02 BORROWING BASE.
(a) Notwithstanding any other provision of this Agreement to the
contrary, the aggregate principal amount of all outstanding Loans plus the then
aggregate Letter of Credit Outstandings (in excess of the amount of cash then
held in the Letter of Credit Account pursuant to Section 2.13(a))
20
shall not at any time exceed the Borrowing Base and no Loan shall be made or
Letter of Credit issued in violation of the foregoing.
(b) Cash held in the Letter of Credit Account shall not be available for
use by the Borrower, whether pursuant to Section 363 of the Bankruptcy Code or
otherwise.
SECTION 2.03 LETTERS OF CREDIT.
(a) Upon the terms and subject to the conditions herein set forth, the
Borrower may request a Fronting Bank, at any time and from time to time after
the date hereof and prior to the Termination Date, to issue, and subject to the
terms and conditions contained herein, such Fronting Bank shall issue, for the
account of the Borrower one or more Letters of Credit, PROVIDED that no Letter
of Credit shall be issued if after giving effect to such issuance (i) the
aggregate Letter of Credit Outstandings shall exceed $10,000,000, (ii) the
aggregate Letter of Credit Outstandings, when added to the aggregate outstanding
principal amount of the Loans, would exceed the lesser of the Total Commitment
and the amount calculated in accordance with Section 2.02(a) or (iii) the
provisions of Section 2.02 would be violated thereby and PROVIDED FURTHER that
no Letter of Credit shall be issued if the Fronting Bank shall have received
notice from the Agent or the Required Banks that the conditions to such issuance
have not been met.
(b) No Letter of Credit shall expire later than the earlier of (x)
twelve months from the date of issuance of such Letter of Credit and (y) 60 days
after the Maturity Date, PROVIDED that if any Letter of Credit shall be
outstanding on the Termination Date, the Borrower shall, at or prior to the
Termination Date, (i) cause all Letters of Credit which expire after the
Termination Date to be returned to the Fronting Bank undrawn and marked
"cancelled" or (ii) if the Borrower is unable to do so in whole or in part,
either (x) provide a "back-to-back" letter of credit to one or more Fronting
Banks in a form reasonably satisfactory to such Fronting Bank and the Agent,
issued by a bank satisfactory to such Fronting Bank and the Agent, in an amount
equal to 105% of the then undrawn stated amount of all outstanding Letters of
Credit issued by such Fronting Banks and/or (y) deposit cash in the Letter of
Credit Account in an amount equal to 105% of the then undrawn stated amount of
all outstanding Letters of Credit as collateral security for the Borrower's
reimbursement obligations in connection therewith, such cash to be remitted to
the Borrower upon the expiration, cancellation or other termination or
satisfaction of such reimbursement obligations.
(c) The Borrower shall pay to each Fronting Bank, in addition to such
other fees and charges as are specifically provided for in Section 2.21 hereof,
such fees and charges in connection with the issuance and processing of the
Letters of Credit issued by such Fronting Bank as are customarily imposed by
such Fronting Bank from time to time in connection with letter of credit
transactions.
(d) Drafts drawn under each Letter of Credit shall be reimbursed by the
Borrower in Dollars not later than the first Business Day following the date of
draw and shall bear interest from the date of draw until the first Business Day
following the date of draw at a rate per annum equal to the Alternate Base Rate
PLUS 1/2 of 1% and thereafter until reimbursed in full at a rate per annum equal
to
21
the Alternate Base Rate PLUS 2-1/2% (computed on the basis of the actual number
of days elapsed over any year of 360 days). The Borrower shall effect such
reimbursement (x) if such draw occurs prior to the Termination Date (or the
earlier date of termination of the Total Commitment), in cash or through a
Borrowing without the satisfaction of the conditions precedent set forth in
Section 4.02 or (y) if such draw occurs on or after the Termination Date (or the
earlier date of termination of the Total Commitment), in cash. Each Bank agrees
to make the Loans described in clause (x) of the preceding sentence
notwithstanding a failure to satisfy the applicable lending conditions thereto
or the provisions of Section 2.02 or the occurrence of the Termination Date.
(e) Immediately upon the issuance of any Letter of Credit by any
Fronting Bank, such Fronting Bank shall be deemed to have sold to each Bank
other than such Fronting Bank and each such other Bank shall be deemed
unconditionally and irrevocably to have purchased from such Fronting Bank,
without recourse or warranty, an undivided interest and participation, to the
extent of such Bank's Commitment Percentage, in such Letter of Credit, each
drawing thereunder and the obligations of the Borrower and the Guarantors under
this Agreement with respect thereto. Upon any change in the Commitments pursuant
to Section 10.03, it is hereby agreed that with respect to all Letter of Credit
Outstandings, there shall be an automatic adjustment to the participations
hereby created to reflect the new Commitment Percentages of the assigning and
assignee Banks. Any action taken or omitted by a Fronting Bank under or in
connection with a Letter of Credit, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Fronting Bank any
resulting liability to any other Bank.
(f) In the event that a Fronting Bank makes any payment under any Letter
of Credit and the Borrower shall not have reimbursed such amount in full to such
Fronting Bank pursuant to this Section, the Fronting Bank shall promptly notify
the Agent, which shall promptly notify each Bank of such failure, and each Bank
shall promptly and unconditionally pay to the Agent for the account of the
Fronting Bank the amount of such Bank's Commitment Percentage of such
unreimbursed payment in Dollars and in same day funds. If the Fronting Bank so
notifies the Agent, and the Agent so notifies the Banks prior to 11:00 a.m. (New
York City time) on any Business Day, such Banks shall make available to the
Fronting Bank such Bank's Commitment Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Bank shall not
have so made its Commitment Percentage of the amount of such payment available
to the Fronting Bank, such Bank agrees to pay to such Fronting Bank, forthwith
on demand such amount, together with interest thereon, for each day from such
date until the date such amount is paid to the Agent for the account of such
Fronting Bank at the Federal Funds Effective Rate. The failure of any Bank to
make available to the Fronting Bank its Commitment Percentage of any payment
under any Letter of Credit shall not relieve any other Bank of its obligation
hereunder to make available to the Fronting Bank its Commitment Percentage of
any payment under any Letter of Credit on the date required, as specified above,
but no Bank shall be responsible for the failure of any other Bank to make
available to such Fronting Bank such other Bank's Commitment Percentage of any
such payment. Whenever a Fronting Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Banks pursuant to
this paragraph, such Fronting Bank shall pay to each Bank
22
which has paid its Commitment Percentage thereof, in Dollars and in same day
funds, an amount equal to such Bank's Commitment Percentage thereof.
SECTION 2.04 ISSUANCE. Whenever the Borrower desires a Fronting Bank to
issue a Letter of Credit, it shall give to such Fronting Bank and the Agent at
least two Business Days' prior written (including telegraphic, telex, facsimile
or cable communication) notice (or such shorter period as may be agreed upon by
the Agent, the Borrower and the Fronting Bank) specifying the date on which the
proposed Letter of Credit is to be issued (which shall be a Business Day), the
stated amount of the Letter of Credit so requested, the expiration date of such
Letter of Credit and the name and address of the beneficiary thereof.
SECTION 2.05 NATURE OF LETTER OF CREDIT OBLIGATIONS ABSOLUTE. The
obligations of the Borrower to reimburse the Banks for drawings made under any
Letter of Credit shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation (it being understood that any such payment by the
Borrower shall be without prejudice to, and shall not constitute a waiver of,
any rights the Borrower might have or might acquire as a result of the payment
by the Fronting Bank of any draft or the reimbursement by the Borrower thereof):
(i) any lack of validity or enforceability of any Letter of Credit; (ii) the
existence of any claim, setoff, defense or other right which the Borrower may
have at any time against a beneficiary of any Letter of Credit or against any of
the Banks, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction; (iii) any draft, demand,
certificate or other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; (iv) payment by a Fronting
Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vi) the fact that any Event of Default
shall have occurred and be continuing.
SECTION 2.06 MAKING OF LOANS.
(a) Except as contemplated by Section 2.11, Loans shall be either ABR
Loans or Eurodollar Loans as the Borrower may request subject to and in
accordance with this Section, PROVIDED that all Loans made pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, be Loans of the
same Type. Each Bank may fulfill its Commitment with respect to any Eurodollar
Loan or ABR Loan by causing any lending office of such Bank to make such Loan;
PROVIDED that any such use of a lending office shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement. Each Bank shall, subject to its overall policy considerations, use
reasonable efforts (but shall not be obligated) to select a lending office which
will not result in the payment of increased costs by the Borrower pursuant to
Section 2.15. Subject to the other provisions of this Section and the provisions
of Section 2.12, Borrowings of Loans of more than one Type may be incurred at
the same time, PROVIDED that no more than five (5) Borrowings of Eurodollar
Loans may be outstanding at any time.
23
(b) The Borrower shall give the Agent prior notice of each Borrowing
hereunder of at least three Business Days for Eurodollar Loans and one Business
Day for ABR Loans; such notice shall be irrevocable and shall specify the amount
of the proposed Borrowing (which shall not be less than $3,000,000 in the case
of Eurodollar Loans and $500,000 in the case of ABR Loans) and the date thereof
(which shall be a Business Day) and shall contain disbursement instructions.
Such notice, to be effective, must be received by the Agent not later than 12:00
noon, New York City time, on the third Business Day in the case of Eurodollar
Loans and the first Business Day in the case of ABR Loans, preceding the date on
which such Borrowing is to be made except as provided in the last sentence of
this Section 2.06(b). Such notice shall specify whether the Borrowing then being
requested is to be a Borrowing of ABR Loans or Eurodollar Loans. If no election
is made as to the Type of Loan, such notice shall be deemed a request for
Borrowing of ABR Loans. The Agent shall promptly notify each Bank of its
proportionate share of such Borrowing, the date of such Borrowing, the Type of
Borrowing or Loans being requested and the Interest Period or Interest Periods
applicable thereto, as appropriate. On the borrowing date specified in such
notice, each Bank shall make its share of the Borrowing available at the office
of the Agent at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, no later than 12:00
noon, New York City time, in immediately available funds. Upon receipt of the
funds made available by the Banks to fund any borrowing hereunder, the Agent
shall disburse such funds in the manner specified in the notice of borrowing
delivered by the Borrower and shall use reasonable efforts to make the funds so
received from the Banks available to the Borrower no later than 2:00 p.m. New
York City time (other than as provided in the following sentence). With respect
to ABR Loans of $5,000,000 or less, the Banks shall make such Borrowings
available to the Borrower by 4:00 p.m., New York City time, on the same Business
Day that the Borrower gives notice to the Agent of such Borrowing by 12:00 noon,
New York City time.
SECTION 2.07 REPAYMENT OF LOANS.
(a) The Borrower hereby unconditionally promises to pay to the Agent for
the account of each Bank the then unpaid principal amount of each Loan on the
Termination Date.
(b) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Bank
resulting from each Loan made by such Bank, including the amounts of principal
and interest payable and paid to such Bank from time to time hereunder.
(c) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Bank hereunder and (iii)
the amount of any sum received by the Agent hereunder for the account of the
Banks and each Bank's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be PRIMA FACIE evidence of the existence and
amounts of the obligations recorded therein;
24
PROVIDED that the failure of any Bank or the Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Bank may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Bank a promissory note payable to the order of such Bank (or, if
requested by such Bank, to such Bank and its registered assigns) and in a form
approved by the Agent. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 10.03) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).
SECTION 2.08 INTEREST ON LOANS.
(a) Subject to the provisions of Section 2.09, each ABR Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal to the Alternate Base Rate PLUS 1/2 of
1%.
(b) Subject to the provisions of Section 2.09, each Eurodollar Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal, during each Interest Period
applicable thereto, to the Adjusted LIBOR Rate for such Interest Period in
effect for such Borrowing PLUS 1 1/2%.
(c) Accrued interest on all Loans shall be payable in arrears on each
Interest Payment Date applicable thereto, at maturity (whether by acceleration
or otherwise), after such maturity on demand and (with respect to Eurodollar
Loans) upon any repayment or prepayment thereof (on the amount prepaid).
SECTION 2.09 DEFAULT INTEREST. If the Borrower or any Guarantor, as the
case may be, shall default in the payment of the principal of or interest on any
Loan or in the payment of any other amount becoming due hereunder (including,
without limitation, the reimbursement pursuant to Section 2.03(d) of any draft
drawn under a Letter of Credit), whether at stated maturity, by acceleration or
otherwise, the Borrower or such Guarantor, as the case may be, shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to (x) in the case
of Borrowings consisting of Eurodollar Loans, the Adjusted LIBOR Rate in effect
for such Borrowing PLUS 3 1/2% and (y) in the case of all other amounts, the
Alternate Base Rate PLUS 2 1/2%.
SECTION 2.10 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT. Upon at
least two Business Days' prior written notice to the Agent, the Borrower may at
any time in whole permanently terminate, or from time to time in part
permanently reduce, the Unused Total Commitment. Each such reduction of the
Commitments shall be in the principal amount of
25
$5,000,000 or any integral multiple thereof. Simultaneously with each reduction
or termination of the Commitment, the Borrower shall pay to the Agent for the
account of each Bank the Commitment Fee accrued on the amount of the Commitment
of such Bank so terminated or reduced through the date thereof. Any reduction of
the Total Commitment pursuant to this Section shall be applied PRO RATA to
reduce the Commitment of each Bank.
SECTION 2.11 ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower absent manifest
error) that reasonable means do not exist for ascertaining the applicable
Adjusted LIBOR Rate, the Agent shall, as soon as practicable thereafter, give
written or telegraphic notice of such determination to the Borrower and the
Banks, and any request by the Borrower for a Borrowing of Eurodollar Loans
(including pursuant to a refinancing with Eurodollar Loans) pursuant to Section
2.06 or 2.12 shall be deemed a request for a Borrowing of ABR Loans. After such
notice shall have been given and until the circumstances giving rise to such
notice no longer exist, each request for a Borrowing of Eurodollar Loans shall
be deemed to be a request for a Borrowing of ABR Loans.
SECTION 2.12 REFINANCING OF LOANS. The Borrower shall have the right, at
any time, on three Business Days' prior irrevocable notice to the Agent (which
notice, to be effective, must be received by the Agent not later than 12:00
noon, New York City time, on the third Business Day preceding the date of any
refinancing), (x) to refinance (without the satisfaction of the conditions set
forth in Section 4 as a condition to such refinancing) any outstanding Borrowing
or Borrowings of Loans of one Type (or a portion thereof) with a Borrowing of
Loans of the other Type or (y) to continue an outstanding Borrowing of
Eurodollar Loans for an additional Interest Period, subject to the following:
(a) as a condition to the refinancing of ABR Loans with Eurodollar Loans
and to the continuation of Eurodollar Loans for an additional Interest Period,
no Event of Default shall have occurred and be continuing at the time of such
refinancing;
(b) if less than a full Borrowing of Loans shall be refinanced, such
refinancing shall be made pro rata among the Banks in accordance with the
respective principal amounts of the Loans comprising such Borrowing held by the
Banks immediately prior to such refinancing;
(c) the aggregate principal amount of Loans being refinanced shall be at
least $1,000,000, PROVIDED that no partial refinancing of a Borrowing of
Eurodollar Loans shall result in the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $3,000,000 in aggregate principal
amount;
(d) each Bank shall effect each refinancing by applying the proceeds of
its new Eurodollar Loan or ABR Loan, as the case may be, to its Loan being
refinanced;
26
(e) the Interest Period with respect to a Borrowing of Eurodollar Loans
effected by a refinancing or in respect to the Borrowing of Eurodollar Loans
being continued as Eurodollar Loans shall commence on the date of refinancing or
the expiration of the current Interest Period applicable to such continuing
Borrowing, as the case may be;
(f) a Borrowing of Eurodollar Loans may be refinanced only on the last
day of an Interest Period applicable thereto; and
(g) each request for a refinancing with a Borrowing of Eurodollar Loans
which fails to state an applicable Interest Period shall be deemed to be a
request for an Interest Period of one month.
In the event that the Borrower shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall
not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of ABR Loans at the expiration of the then-current Interest
Period. The Agent shall, after it receives notice from the Borrower, promptly
give each Bank notice of any refinancing, in whole or part, of any Loan made by
such Bank.
SECTION 2.13 MANDATORY PREPAYMENT; COMMITMENT TERMINATION; CASH
COLLATERAL. The outstanding Obligations shall be subject to mandatory prepayment
as follows:
(a) if at any time the aggregate principal amount of the outstanding
Loans plus the aggregate Letter of Credit Outstandings exceeds the lesser of (x)
the Total Commitment and (y) the sum of the Borrowing Base PLUS cash deposited
in the Letter of Credit Account pursuant to Section 2.13(a), the Borrower will
within three Business days (i) prepay the Loans in an amount necessary to cause
the aggregate principal amount of the outstanding Loans PLUS the aggregate
Letter of Credit Outstandings in excess of the amount of cash so held in the
Letter of Credit Account to be equal to or less than the Total Commitment and/or
the Borrowing Base, as the case may be, and (ii) if, after giving effect to the
prepayment in full of the Loans, the aggregate Letter of Credit Outstandings in
excess of the amount of cash so held in the Letter of Credit Account exceeds the
Total Commitment and/or the Borrowing Base, as the case may be, deposit into the
Letter of Credit Account an amount equal to 105% of the amount by which the
aggregate Letter of Credit Outstandings in excess of the amount of cash so held
in the Letter of Credit Account so exceeds the Total Commitment or Borrowing
Base, as the case may be;
(b) upon the Termination Date, the Total Commitment shall be terminated
in full and the Borrower shall pay the Loans in full and, if any Letter of
Credit remains outstanding, deposit into the Letter of Credit Account an amount
equal to 105% of the amount by which the sum of the aggregate Letter of Credit
Outstandings exceeds the amount of cash held in the Letter of Credit Account.
27
SECTION 2.14 OPTIONAL PREPAYMENT OF LOANS; REIMBURSEMENT OF BANKS.
(a) The Borrower shall have the right at any time and from time to time
to prepay any Loans, in whole or in part, (x) with respect to Eurodollar Loans,
upon at least three Business Days' prior written, telex or facsimile notice to
the Agent and (y) with respect to ABR Loans on the same Business Day if written,
telex or facsimile notice is received by the Agent prior to 12:00 noon, New York
City time, and thereafter upon at least one Business Day's prior written, telex
or facsimile notice to the Agent; PROVIDED, HOWEVER, that (i) each such partial
prepayment shall be in integral multiples of $500,000, (ii) no prepayment of
Eurodollar Loans shall be permitted pursuant to this Section 2.14(a) other than
on the last day of an Interest Period applicable thereto (and other than in
connection with the syndication of the credit facility evidenced by this
Agreement), and (iii) no partial prepayment of a Borrowing of Eurodollar Loans
shall result in the aggregate principal amount of the Eurodollar Loans remaining
outstanding pursuant to such Borrowing being less than $3,000,000. Each notice
of prepayment shall specify the prepayment date, the principal amount of the
Loans to be prepaid and in the case of Eurodollar Loans, the Borrowing or
Borrowings pursuant to which made, shall be irrevocable and shall commit the
Borrower to prepay such Loan by the amount and on the date stated therein. The
Agent shall, promptly after receiving notice from the Borrower hereunder, notify
each Bank of the principal amount of the Loans held by such Bank which are to be
prepaid, the prepayment date and the manner of application of the prepayment.
(b) The Borrower shall reimburse each Bank on demand for any loss
incurred or to be incurred by it in the reemployment of the funds released (i)
resulting from any prepayment (for any reason whatsoever, including, without
limitation, refinancing with ABR Loans) of any Eurodollar Loan required or
permitted under this Agreement, if such Loan is prepaid other than on the last
day of the Interest Period for such Loan (including, without limitation, any
such prepayment in connection with the syndication of the credit facility
evidenced by this Agreement) or (ii) in the event that after the Borrower
delivers a notice of borrowing under Section 2.06 in respect of Eurodollar
Loans, such Loans are not made on the first day of the Interest Period specified
in such notice of borrowing for any reason other than a breach by such Bank of
its obligations hereunder. Such loss shall be the amount as reasonably
determined by such Bank as the excess, if any, of (A) the amount of interest
which would have accrued to such Bank on the amount so paid or not borrowed at a
rate of interest equal to the Adjusted LIBOR Rate for such Loan, for the period
from the date of such payment or failure to borrow to the last day (x) in the
case of a payment or refinancing with ABR Loans other than on the last day of
the Interest Period for such Loan, of the then current Interest Period for such
Loan, or (y) in the case of such failure to borrow, of the Interest Period for
such Loan which would have commenced on the date of such failure to borrow, over
(B) the amount of interest which would have accrued to such Bank on such amount
by placing such amount on deposit for a comparable period with leading banks in
the London interbank market. Each Bank shall deliver to the Borrower from time
to time one or more certificates setting forth the amount of such loss as
determined by such Bank.
(c) In the event the Borrower fails to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.14(a), the
Borrower on demand by any Bank shall
28
pay to the Agent for the account of such Bank any amounts required to compensate
such Bank for any loss incurred by such Bank as a result of such failure to
prepay, including, without limitation, any loss, cost or expenses incurred by
reason of the acquisition of deposits or other funds by such Bank to fulfill
deposit obligations incurred in anticipation of such prepayment, but without
duplication of any amounts paid under Section 2.14(b). Each Bank shall deliver
to the Borrower from time to time one or more certificates setting forth the
amount of such loss as determined by such Bank.
(d) Any partial prepayment of the Loans by the Borrower pursuant to
Sections 2.13 or 2.14 shall be applied as specified by the Borrower or, in the
absence of such specification, as determined by the Agent, PROVIDED that in each
case no Eurodollar Loans shall be prepaid pursuant to Section 2.13 to the extent
that such Loan has an Interest Period ending after the required date of
prepayment unless and until all outstanding ABR Loans and Eurodollar Loans with
Interest Periods ending on such date have been repaid in full.
SECTION 2.15 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Bank of the
principal of or interest on any Eurodollar Loan made by such Bank or any fees or
other amounts payable hereunder (other than changes in respect of Taxes, Other
Taxes and taxes imposed on, or measured by, the net income or overall gross
receipts or franchise taxes of such Bank by the jurisdiction in which such Bank
has its principal office or in which the applicable lending office for such
Eurodollar Loan is located or by any political subdivision or taxing authority
therein, or by any other jurisdiction or by any political subdivision or taxing
authority therein other than a jurisdiction in which such Bank would not be
subject to tax but for the execution and performance of this Agreement), or
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Bank (except any such reserve requirement which is reflected in
the Adjusted LIBOR Rate) or shall impose on such Bank or the London interbank
market any other condition affecting this Agreement or the Eurodollar Loans made
by such Bank, and the result of any of the foregoing shall be to increase the
cost to such Bank of making or maintaining any Eurodollar Loan or to reduce the
amount of any sum received or receivable by such Bank hereunder (whether of
principal, interest or otherwise) by an amount reasonably deemed by such Bank to
be material, then the Borrower will pay to such Bank in accordance with
paragraph (c) below such additional amount or amounts as will compensate such
Bank for such additional costs incurred or reduction suffered.
(b) If any Bank shall have reasonably determined that the adoption or
effectiveness after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any lending office of such
Bank) or any Bank's
29
holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or on the capital of such Bank's holding company, if any,
as a consequence of this Agreement, the Loans made by such Bank pursuant hereto,
such Bank's Commitment hereunder or the issuance of, or participation in, any
Letter of Credit by such Bank to a level below that which such Bank or such
Bank's holding company could have achieved but for such adoption, change or
compliance (taking into account such Bank's policies and the policies of such
Bank's holding company with respect to capital adequacy) by an amount reasonably
deemed by such Bank to be material, then from time to time the Borrower shall
pay to such Bank such additional amount or amounts as will compensate such Bank
or such Bank's holding company for any such reduction suffered.
(c) A certificate of each Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank or its holding company as specified
in paragraph (a) or (b) above, as the case may be, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
each Bank the amount shown as due on any such certificate delivered to it within
10 days after its receipt of the same. Any Bank receiving any such payment shall
promptly make a refund thereof to the Borrower if the law, regulation, guideline
or change in circumstances giving rise to such payment is subsequently deemed or
held to be invalid or inapplicable.
(d) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to such period or any
other period. The protection of this Section shall be available to each Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
SECTION 2.16 CHANGE IN LEGALITY.
(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if after the date of this Agreement (x) any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration thereof shall make it unlawful for a Bank to
make or maintain a Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan or (y) at any time any
Bank determines that the making or continuance of any of its Eurodollar Loans
has become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the London interbank market or the position of
such Bank in such market, then, by written notice to the Borrower, such Bank may
(i) declare that Eurodollar Loans will not thereafter be made by such Bank
hereunder, whereupon any request by the Borrower for a Eurodollar Borrowing
shall, as to such Bank only, be deemed a request for an ABR Loan unless such
declaration shall be subsequently withdrawn; and (ii) require that all
outstanding Eurodollar Loans made by it be converted to ABR Loans, in which
event all such Eurodollar Loans shall be automatically converted to ABR Loans as
of the effective date of such notice as provided in paragraph (b) below. In the
event any Bank shall exercise its rights under clause (i) or (ii) of this
30
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the Eurodollar Loans that would have been made by
such Bank or the converted Eurodollar Loans of such Bank shall instead be
applied to repay the ABR Loans made by such Bank in lieu of, or resulting from
the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.16, a notice to the Borrower by any
Bank pursuant to paragraph (a) above shall be effective, if lawful, and if any
Eurodollar Loans shall then be outstanding, on the last day of the then-current
Interest Period, otherwise, such notice shall be effective on the date of
receipt by the Borrower.
SECTION 2.17 PRO RATA TREATMENT, ETC. All payments and repayments of
principal and interest in respect of the Loans (except as provided in Sections
2.15 and 2.16) shall be made pro rata among the Banks in accordance with the
then outstanding principal amount of the Loans and/or participations in Letter
of Credit Outstandings and all outstanding undrawn Letters of Credit (and the
unreimbursed amount of drawn Letters of Credit) hereunder and all payments of
Commitment Fees and Letter of Credit Fees (other than those payable to a
Fronting Bank) shall be made pro rata among the Banks in accordance with their
Commitments. All payments by the Borrower hereunder shall be (i) net of any tax
applicable to the Borrower or a Guarantor and (ii) made in Dollars in
immediately available funds at the office of the Agent by 12:00 noon, New York
City time, on the date on which such payment shall be due. Interest in respect
of any Loan hereunder shall accrue from and including the date of such Loan to
but excluding the date on which such Loan is paid in full or converted to a Loan
of a different Type.
SECTION 2.18 TAXES.
(a) Any and all payments by the Borrower or any Guarantor hereunder
shall be made free and clear of and without deduction for any and all current or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, EXCLUDING (i) taxes imposed on or measured by
the net income or overall gross receipts of the Agent or any Bank (or any
transferee or assignee thereof, including a participation holder (any such
entity being called a "TRANSFEREE")) and franchise taxes imposed on the Agent or
any Bank (or Transferee) by the United States or any jurisdiction under the laws
of which the Agent or any such Bank (or Transferee) is organized or in which the
applicable lending office of any such Bank (or Transferee) is located or any
political subdivision thereof or by any other jurisdiction or by any political
subdivision or taxing authority therein other than a jurisdiction in which the
Agent or such Bank would not be subject to tax but for the execution and
performance of this Agreement and (ii) taxes, levies, imposts, deductions,
charges or withholdings ("AMOUNTS") with respect to payments hereunder to a Bank
(or Transferee) in accordance with laws in effect on the later of the date of
this Agreement and the date such Bank (or Transferee) becomes a Bank (or
Transferee, as the case may be), but not excluding, with respect to such Bank
(or Transferee), any increase in such Amounts solely as a result of any change
in such laws occurring after such later date or any Amounts that would not have
been imposed but for actions (other than actions contemplated by this Agreement)
taken by the Borrower after such later date (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
31
hereinafter referred to as "TAXES"). If the Borrower or any Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Banks (or any Transferee) or the Agent, (i) the sum payable
shall be increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) such Bank (or Transferee) or the Agent (as the case may be) shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any current or future stamp
or documentary taxes or any other excise or property taxes, charges, assessments
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "OTHER TAXES").
(c) The Borrower will indemnify each Bank (or Transferee) and the Agent
for the full amount of Taxes and Other Taxes paid by such Bank (or Transferee)
or the Agent, as the case may be, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted by the relevant
taxing authority or other Governmental Authority. Such indemnification shall be
made within 30 days after the date any Bank (or Transferee) or the Agent, as the
case may be, makes written demand therefor. If a Bank (or Transferee) or the
Agent shall become aware that it is entitled to receive a refund in respect of
Taxes or Other Taxes as to which it has been indemnified by the Borrower
pursuant to this Section, it shall promptly notify the Borrower of the
availability of such refund and shall, within 30 days after receipt of a request
by the Borrower, apply for such refund at the Borrower's expense. If any Bank
(or Transferee) or the Agent receives a refund in respect of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower pursuant to this
Section, it shall promptly notify the Borrower of such refund and shall, within
30 days after receipt of a request by the Borrower (or promptly upon receipt, if
the Borrower has requested application for such refund pursuant hereto), repay
such refund to the Borrower (to the extent of amounts that have been paid by the
Borrower under this Section with respect to such refund plus interest that is
received by the Bank (or Transferee) or the Agent as part of the refund), net of
all out-of-pocket expenses of such Bank (or Transferee) or the Agent and without
additional interest thereon; PROVIDED that the Borrower, upon the request of
such Bank (or Transferee) or the Agent, agrees to return such refund (plus
penalties, interest or other charges) to such Bank (or Transferee) or the Agent
in the event such Bank (or Transferee) or the Agent is required to repay such
refund. Nothing contained in this subsection (c) shall require any Bank (or
Transferee) or the Agent to make available any of its tax returns (or any other
information relating to its taxes that it deems to be confidential).
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by the Borrower in respect of any payment to any Bank (or Transferee)
or the Agent, the Borrower will furnish to the Agent, at its address referred to
on the signature pages hereof, the original or a certified copy of a receipt
evidencing payment thereof.
32
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section shall survive
the payment in full of the principal of and interest on all Loans made
hereunder.
(f) Each Bank (or Transferee) that is organized under the laws of a
jurisdiction outside the United States shall, if legally able to do so, prior to
the immediately following due date of any payment by the Borrower hereunder,
deliver to the Borrower such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
(A) Internal Revenue Service Form W-8 or W-9 and (B) Internal Revenue Service
Form 1001 or Form 4224 and any other certificate or statement of exemption
required by Treasury Regulation Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any
subsequent version thereof or successors thereto, properly completed and duly
executed by such Bank (or Transferee) establishing that such payment is (i) not
subject to United States Federal withholding tax under the Code because such
payment is effectively connected with the conduct by such Bank (or Transferee)
of a trade or business in the United States or (ii) totally exempt from United
States Federal withholding tax or subject to a reduced rate of such tax under a
provision of an applicable tax treaty. Unless the Borrower and the Agent have
received forms or other documents satisfactory to them indicating that such
payments hereunder are not subject to United States Federal withholding tax or
are subject to such tax at a rate reduced by an applicable tax treaty, the
Borrower or the Agent shall withhold taxes from such payments at the applicable
statutory rate.
(g) The Borrower shall not be required to pay any additional amounts to
any Bank (or Transferee) in respect of United States Federal withholding tax
pursuant to subsection (a) above if the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank (or Transferee) to
comply with the provisions of subsection (f) above.
(h) Any Bank (or Transferee) claiming any additional amounts payable
pursuant to this Section 2.18 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its applicable lending office
if the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts that may thereafter accrue and would not,
in the sole reasonable determination of such Bank, be otherwise materially
disadvantageous to such Bank (or Transferee).
SECTION 2.19 CERTAIN FEES. The Borrower shall pay (i) to the Agent, for
the respective accounts of the Agent and the Banks, the fees set forth in that
certain letter agreement dated January 7, 1998 among the Agent, Chase Securities
Inc. and the Borrower and (ii) to the Agent on behalf of the Banks a fee in the
amount of $562,500 upon and at the time of a termination in whole of the
Commitment prior to the Termination Date.
SECTION 2.20 COMMITMENT FEE. The Borrower shall pay to the Banks a
commitment fee (the "COMMITMENT FEE") for the period commencing on the date the
Commitment Letter is executed to the Termination Date or the earlier date of
termination of the Commitment, computed (on the basis of the actual number of
days elapsed over a year of 360 days) at the rate of one-half of
33
one percent (1/2%) per annum on the average daily Unused Total Commitment. Such
Commitment Fee, to the extent then accrued, shall be payable (x) monthly, in
arrears, on the last calendar day of each month, (y) on the Termination Date and
(z) as provided in Section 2.10 hereof, upon any reduction or termination in
whole or in part of the Total Commitment.
SECTION 2.21 LETTER OF CREDIT FEES. The Borrower shall pay with respect
to each Letter of Credit (i) to the Agent on behalf of the Banks a fee
calculated (on the basis of the actual number of days elapsed over a year of 360
days) at the rate of (x) one and one-half (1-1/2%) per annum on the daily
average Letter of Credit Outstandings and (ii) to the Fronting Bank such
Fronting Bank's customary fees for issuance, amendments and processing referred
to in Section 2.03. In addition, the Borrower agrees to pay each Fronting Bank
for its account a fronting fee in respect of each Letter of Credit issued by
such Fronting Bank, for the period from and including the date of issuance of
such Letter of Credit to and including the date of termination of such Letter of
Credit, computed at a rate, and payable at times, to be determined by such
Fronting Bank, the Borrower and the Agent. Accrued fees described in clause (i)
of the first sentence of this paragraph in respect of each Letter of Credit
shall be due and payable monthly in arrears on the last calendar day of each
month and on the Termination Date, or such earlier date as the Total Commitment
is terminated. Accrued fees described in clause (ii) of the first sentence of
this paragraph in respect of each Letter of Credit shall be payable at times to
be determined by the Fronting Bank, the Borrower and the Agent.
SECTION 2.22 NATURE OF FEES. All Fees shall be paid on the dates due, in
immediately available funds, to the Agent for the respective accounts of the
Agent and the Banks, as provided herein and in the letter described in Section
2.19. Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 2.23 PRIORITY AND LIENS.
(a) The Borrower hereby covenants, represents and warrants that, upon
entry of the Interim Order (i) pursuant to Section 364(c)(1) of the Bankruptcy
Code, the Obligations of the Borrower hereunder and under the Loan Documents and
in respect of Indebtedness permitted by Section 6.03(iv) shall at all times
constitute allowed administrative expense claims in the Case having priority
over all administrative expenses of the kind specified in Sections 503(b) or
507(b) of the Bankruptcy Code, (ii) pursuant to Section 364(c)(2) of the
Bankruptcy Code, the Obligations of the Borrower hereunder and under the Loan
Documents and in respect of Indebtedness permitted by Section 6.03(iv) shall at
all times be secured by a perfected first priority Lien on all unencumbered
property of the Borrower and all cash maintained in the Letter of Credit Account
and any direct investments of the funds contained therein, (iii) pursuant to
Section 364(c)(3) of the Bankruptcy Code, the Obligations of the Borrower
hereunder and under the Loan Documents and in respect of Indebtedness permitted
by Section 6.03 shall be secured by a perfected Lien upon all property of the
Borrower that is subject to valid and perfected Liens in existence on the Filing
Date, junior to such valid and perfected Liens (except as otherwise provided in
the following clause), and (iv) pursuant to Section 364(d)(1) of the Bankruptcy
Code, the Obligations of the Borrower hereunder and under
34
the Loan Documents and in respect of Indebtedness permitted by Section 6.03(iv)
shall at all times be secured by a perfected first priority priming lien on any
property of the Borrower to which any liens attached prior to the Filing Date in
respect of the Judgment, subject in each case only to (x) in the event of the
occurrence and during the continuance of an Event of Default or an event that
would constitute an Event of Default with the giving of notice or lapse of time
or both, the payment of allowed and unpaid professional fees and disbursements
incurred by the Borrower and any statutory committees appointed in the Case in
an aggregate amount not in excess of $3,000,000 and (y) the payment of unpaid
fees pursuant to 28 U.S.C. Section 1930 (collectively, the "CARVE-OUT"),
PROVIDED that following the Termination Date amounts in the Letter of Credit
Account shall not be subject to the Carve-Out. The Banks agree that so long as
no Event of Default or event which with the giving of notice or lapse of time or
both would constitute an Event of Default shall have occurred and be continuing,
the Borrower shall be permitted to pay compensation and reimbursement of
expenses allowed and payable under 11 U.S.C. Section 330 and 11 U.S.C. Section
331, as the same may be due and payable, and the same shall not reduce the
Carve-Out.
(b) As to all real property the title to which is held by the Borrower,
or the possession of which is held by the Borrower pursuant to leasehold
interest, the Borrower hereby assigns and conveys as security, grants a security
interest in, hypothecates, mortgages, pledges and sets over unto the Agent on
behalf of the Banks all of the right, title and interest of the Borrower in all
of such owned real property and in all such leasehold interests, together in
each case with all of the right, title and interest of the Borrower in and to
all buildings, improvements, and fixtures related thereto, any lease or sublease
thereof, all general intangibles relating thereto and all proceeds thereof. The
Borrower acknowledges that, pursuant to the Orders, the Liens in favor of the
Agent on behalf of the Banks in all of such real property and leasehold
instruments shall be perfected without the recordation of any instruments of
mortgage or assignment. The Borrower further agrees that, upon the request of
the Agent, the Borrower shall enter into separate fee and leasehold mortgages in
recordable form with respect to such properties on terms reasonably satisfactory
to the Agent.
SECTION 2.24 RIGHT OF SET-OFF. Subject to the provisions of Section
7.01, upon the occurrence and during the continuance of any Event of Default,
the Agent and each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law and without further order of or
application to the Bankruptcy Court, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Agent and each such Bank to or for
the credit or the account of the Borrower or any Guarantor against any and all
of the obligations of such Borrower or Guarantor now or hereafter existing under
the Loan Documents, irrespective of whether or not such Bank shall have made any
demand under any Loan Document and although such obligations may be unmatured.
Each Bank and the Agent agrees promptly to notify the Borrower and Guarantors
after any such set-off and application made by such Bank or by the Agent, as the
case may be, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank and the Agent
under this Section are in addition to other rights and remedies which such Bank
and the Agent may have upon the occurrence and during the continuance of any
Event of Default.
35
SECTION 2.25 SECURITY INTEREST IN LETTER OF CREDIT ACCOUNT. Pursuant to
Section 364(c)(2) of the Bankruptcy Code, the Borrower hereby assigns and
pledges to the Agent, for its benefit and for the ratable benefit of the Banks,
and hereby grant to the Agent, for its benefit and for the ratable benefit of
the Banks, a first priority security interest, senior to all other Liens, if
any, in all of the Borrower's right, title and interest in and to the Letter of
Credit Account and any direct investment of the funds contained therein.
SECTION 2.26 PAYMENT OF OBLIGATIONS. Upon the maturity (whether by
acceleration or otherwise) of any of the Obligations under this Agreement or any
of the other Loan Documents, the Banks shall be entitled to immediate payment of
such Obligations without further application to or order of the Bankruptcy
Court.
SECTION 2.27 NO DISCHARGE; SURVIVAL OF CLAIMS. The Borrower agrees that
(i) its obligations hereunder shall not be discharged by the entry of an order
confirming the Reorganization Plan (and the Borrower, pursuant to Section
1141(d)(4) of the Bankruptcy Code and upon entry of the Interim Order, hereby
waives any such discharge) and (ii) the Superpriority Claim granted to the Agent
and the Banks pursuant to the Order and described in Section 2.23 and the Liens
granted to the Agent pursuant to the Order and described in Sections 2.23 and
2.25 shall not be affected in any manner by the entry of an order confirming the
Reorganization Plan.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make Loans and issue and/or participate
in Letters of Credit hereunder, the Borrower and each of the Guarantors jointly
and severally represent and warrant as follows:
SECTION 3.01 ORGANIZATION AND AUTHORITY. Each of the Borrower and the
Guarantors (i) is a corporation duly organized and validly existing under the
laws of the jurisdiction of its incorporation or organization and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on the
financial condition, operations, business, properties or assets of the Borrower
and the Guarantors taken as a whole; (ii) has the requisite corporate power and
authority to effect the transactions contemplated hereby, and by the other Loan
Documents to which it is a party (subject to approval of the Bankruptcy Court,
in the case of the Borrower with respect to matters not in the ordinary course
of business); and (iii) has all requisite corporate power and authority and the
legal right to own, pledge, mortgage and operate its properties, and to conduct
its business as now or currently proposed to be conducted (subject to approval
of the Bankruptcy Court, in the case of the Borrower with respect to matters not
in the ordinary course of business).
SECTION 3.02 DUE EXECUTION. The execution, delivery and performance by
each of the Borrower and the Guarantors of each of the Loan Documents to which
it is a party (i) are within the respective corporate powers of each of the
Borrower and the Guarantors, have been duly authorized by all necessary
corporate action, including the consent of shareholders where required,
36
and do not (A) contravene the charter or by-laws of any of the Borrower or the
Guarantors, (B) violate any law (including, without limitation, the Securities
Exchange Act of 1934) or regulation (including, without limitation, Regulations
G, T, U or X of the Board of Governors of the Federal Reserve System), or any
order or decree of any court or governmental instrumentality, (C) violate or
result in a breach of, or constitute a default under, any material indenture,
mortgage or deed of trust (entered into after the Filing Date in the case of the
Borrower and whenever entered into in the case of the Guarantors) or any
material lease, agreement or other instrument (entered into after the Filing
Date in the case of the Borrower and whenever entered into in the case of the
Guarantors) binding on the Borrower or the Guarantors or any of their
properties, or (D) result in or require the creation or imposition of any Lien
upon any of the property of any of the Borrower or the Guarantors other than the
Liens granted pursuant to this Agreement; and (iii) do not require the consent,
authorization by or approval of or notice to or filing or registration with any
Governmental Authority other than (in the case of the Borrower) the entry of the
Orders. This Agreement has been duly executed and delivered by each of the
Borrower and the Guarantors. This Agreement is, and each of the other Loan
Documents to which the Borrower and each of the Guarantors is or will be a
party, when delivered hereunder or thereunder, will be, a legal, valid and
binding obligation of the Borrower and each Guarantor, as the case may be,
enforceable against the Borrower and the Guarantors, as the case may be, in
accordance with its terms, subject (in the case of the Borrower) to the terms of
the Orders.
SECTION 3.03 STATEMENTS MADE. The information that has been delivered in
writing by the Borrower or any of the Guarantors to the Agent or to the
Bankruptcy Court in connection with any Loan Document, and any financial
statement delivered pursuant hereto or thereto (other than to the extent that
any such statements constitute projections, financial or otherwise), taken as a
whole and in light of the circumstances in which made, contains no untrue
statement of a material fact and does not omit to state a material fact
necessary to make such statements not misleading; and, to the extent that any
such information constitutes projections, such projections were prepared in good
faith on the basis of assumptions, methods, data, tests and information believed
by the Borrower or such Guarantor to be reasonable at the time such projections
were furnished.
SECTION 3.04 FINANCIAL STATEMENTS. The Borrower has furnished the Banks
with copies of (i) the audited consolidated financial statement and schedules of
the Borrower and its consolidated Subsidiaries for the fiscal year ended
December 29, 1996 and (ii) the unaudited consolidated financial statements of
the Borrower and its consolidated Subsidiaries for the fiscal quarter ended
September 28, 1997. Such financial statements present fairly the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis as of such dates and for such periods
(excluding the effect of the Judgment); such balance sheets and the notes
thereto disclose all liabilities, direct or contingent, of the Borrower and its
consolidated Subsidiaries as of the dates thereof required to be disclosed by
GAAP and such financial statements were prepared in a manner consistent with
GAAP, subject to normal year end adjustments. No material adverse change in the
operations, business, properties, assets, prospects or condition (financial or
otherwise) of the Borrower and its consolidated Subsidiaries, taken as a whole,
has occurred from that set forth in the Borrower's audited consolidated
financial statements for the year
37
ended December 29, 1996, other than (x) the Judgment, (y) those which
customarily occur and as a result of events leading up to and following the
commencement of a proceeding under Chapter 11 of the Bankruptcy Code and (z) the
commencement of the Case.
SECTION 3.05 OWNERSHIP. Each of the Persons listed on Schedule 3.05 is a
wholly-owned, direct or indirect Subsidiary of the Borrower, and the Borrower
owns no other Subsidiaries, whether directly or indirectly, other than as set
forth on Schedule 3.05. The Borrower has no direct Subsidiary that is not a
Guarantor other than PTB Canada.
SECTION 3.06 LIENS. Except for Liens existing on the Filing Date as
reflected on Schedule 3.06, there are no Liens of any nature whatsoever on any
assets of the Borrower or any of the Guarantors other than: (i) Permitted Liens;
(ii) other Liens permitted pursuant to Section 6.01 and (iii) Liens in favor of
the Agent and the Banks. Neither the Borrower nor any Guarantor is party to any
contract, agreement, lease or instrument the performance of which, either
unconditionally or upon the happening of an event, will result in or require the
creation of a Lien on any assets of the Borrower or any Guarantor or otherwise
result in a violation of this Agreement other than the Liens granted to the
Agent and the Banks as provided for in this Agreement.
SECTION 3.07 COMPLIANCE WITH LAW.
(a) (i) The operations of the Borrower and the Guarantors comply in all
material respects with all applicable environmental, health and safety statutes
and regulations, including, without limitation, regulations promulgated under
the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 ET SEQ.);
(ii) to the Borrower's and each of the Guarantor's knowledge, none of the
operations of the Borrower or the Guarantors is the subject of any Federal or
state investigation evaluating whether any remedial action involving a material
expenditure by the Borrower or any Guarantor is needed to respond to a release
of any Hazardous Waste or Hazardous Substance (as such terms are defined in any
applicable state or Federal environmental law or regulations) into the
environment; and (iii) to the Borrower's and each of the Guarantor's knowledge,
the Borrower and the Guarantors do not have any material contingent liability in
connection with any release of any Hazardous Waste or Hazardous Substance into
the environment.
(b) Neither the Borrower nor any Guarantor is, to the best of its
knowledge, in violation of any law, rule or regulation, or in default with
respect to any judgment, writ, injunction or decree of any Governmental
Authority the violation of which, or a default with respect to which, would have
a material adverse effect on the financial condition, operations, business,
properties or assets of the Borrower and the Guarantors taken as a whole (except
as otherwise determined by the Judgment).
SECTION 3.08 INSURANCE. All policies of insurance of any kind or nature
owned by or issued to the Borrower and the Guarantors, including, without
limitation, policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation,
employee health and welfare, title, property and liability insurance, are in
full force and
38
effect and are of a nature and provide such coverage as is sufficient and as is
customarily carried by companies of the size and character of the Borrower and
the Guarantors.
SECTION 3.09 THE ORDERS. On the date of the making of the initial Loans
or the issuance of the initial Letters of Credit hereunder, whichever first
occurs, the Interim Order will have been entered and will not have been stayed,
amended, vacated, reversed or rescinded. On the date of the making of any Loan
or the issuance of any Letter of Credit, the Interim Order or the Final Order,
as the case may be, shall have been entered and shall not have been amended,
stayed, vacated or rescinded. Upon the maturity (whether by the acceleration or
otherwise) of any of the Obligations hereunder and under the other Loan
Documents, the Banks shall, subject to the provisions of Section 7.01, be
entitled to immediate payment of such obligations, and to enforce the remedies
provided for hereunder, without further application to or order by the
Bankruptcy Court.
SECTION 3.10 USE OF PROCEEDS. The proceeds of the Loans shall be used
for working capital and for other general corporate purposes of the Borrower.
SECTION 3.11 LITIGATION. Except as set forth on Schedule 3.11, there are
no actions, suits or proceedings pending or, to the knowledge of the Borrower or
the Guarantors, threatened against or affecting the Borrower or the Guarantors
or any of their respective properties, before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which have a reasonable possibility of being determined adversely to
the Borrower or a Guarantor and which, if determined adversely, would have a
material adverse effect on the financial condition, business, properties,
prospects, operations or assets of the Borrower and the Guarantors taken as a
whole.
SECTION 4. CONDITIONS OF LENDING
SECTION 4.01 CONDITIONS PRECEDENT TO INITIAL LOANS AND INITIAL LETTERS
OF CREDIT. The obligation of the Banks to make the initial Loans or the Fronting
Bank to issue the initial Letter of Credit, whichever may occur first, is
subject to the following conditions precedent:
(a) SUPPORTING DOCUMENTS. The Agent shall have received for each of
the Borrower and the Guarantors:
(i) a copy of such entity's certificate of incorporation,
as amended, certified as of a recent date by the Secretary of
State of the state of its incorporation;
(ii) a certificate of such Secretary of State, dated as of
a recent date, as to the good standing of and payment of taxes
by, that entity and as to the charter documents on file in the
office of such Secretary of State; and
(iii) a certificate of the Secretary or an Assistant
Secretary of that entity dated the date of the initial Loans or
the initial Letter of Credit hereunder,
39
whichever first occurs, and certifying (A) that attached thereto
is a true and complete copy of the by-laws of that entity as in
effect on the date of such certification, (B) that attached
thereto is a true and complete copy of resolutions adopted by the
Board of Directors of that entity authorizing the Borrowings and
Letter of Credit extensions hereunder, the execution, delivery
and performance in accordance with their respective terms of this
Agreement, the Loan Documents and any other documents required or
contemplated hereunder or thereunder and the granting of the
security interest in the Letter of Credit Account and other Liens
contemplated hereby, (C) that the certificate of incorporation of
that entity has not been amended since the date of the last
amendment thereto indicated on the certificate of the Secretary
of State furnished pursuant to clause (i) above and (D) as to the
incumbency and specimen signature of each officer of that entity
executing this Agreement and the Loan Documents or any other
document delivered by it in connection herewith or therewith
(such certificate to contain a certification by another officer
of that entity as to the incumbency and signature of the
officer signing the certificate referred to in this clause
(iii)).
(b) INTERIM ORDER. At the time of the making of the initial Loans or at
the time of the issuance of the initial Letter of Credit, whichever first
occurs, the Agent and the Banks shall have received a certified copy of an order
of the Bankruptcy Court in substantially the form of Exhibit A-1 (the "INTERIM
ORDER") approving the Loan Documents and granting the Superpriority Claim status
and Liens described in Section 2.23 which shall (i) have been entered upon an
application or motion of the Borrower satisfactory in form and substance to the
Agent on such prior notice to such parties in interest in the Case as may in
each case be reasonably satisfactory to the Agent, (ii) authorize extensions of
credit in an aggregate amount of up to $20,000,000, (iii) approve the payment by
the Borrower of all of the Fees set forth in Section 2.19, (iv) be in full force
and effect, and (v) not have been stayed, reversed, modified or amended in any
respect and, if the Interim Order is the subject of a pending appeal in any
respect, neither the making of such Loans nor the issuance of such Letter of
Credit nor the performance by the Borrower or any of the Guarantors of any of
their respective obligations hereunder or under the Loan Documents or under any
other instrument or agreement referred to herein shall be the subject of a
presently effective stay pending appeal.
(c) SECURITY AND PLEDGE AGREEMENTS; PERFECTION. The Borrower and the
Guarantors shall have duly executed and delivered to the Agent a Security and
Pledge Agreement in substantially the form of Exhibit B (as the same may from
time to time be amended, modified or supplemented, the "SECURITY AND PLEDGE
AGREEMENT") and the Agent shall have received evidence satisfactory to it that
all actions that the Agent may reasonably deem necessary or desirable in order
to perfect and protect the Liens created by the Security and Pledge Agreement
have been taken (including, without limitation, the delivery to the Agent of (1)
certificates representing the Pledged Shares referred to in the Security and
Pledge Agreement, accompanied by undated stock powers executed in blank, (2)
instruments evidencing the Pledged Debt (if any) referred to in the Security and
Pledge Agreement endorsed in blank and (3) financing statements satisfactory in
form and substance to the Agent under the Uniform Commercial Code of all
jurisdictions that the Agent may deem necessary or desirable in order to perfect
and protect the Liens granted by the Security and Pledge Agreement.
40
(d) FIRST DAY ORDERS. All of the "first day orders" presented to the
Bankruptcy Court at or about the time of the commencement of the Case shall be
reasonably satisfactory in form and substance to the Agent.
(e) OPINION OF COUNSEL TO THE BORROWER. The Agent and the Banks shall
have received the favorable written opinion of counsel to the Borrower and the
Guarantors reasonably acceptable to the Agent, dated the date of the initial
Loans or the issuance of the initial Letter of Credit, whichever first occurs,
substantially in the form of Exhibit C.
(f) PAYMENT OF FEES; EXPENSE DEPOSIT. The Borrower shall have paid to
the Agent the then unpaid balance of all accrued and unpaid Fees then owed under
and pursuant to this Agreement and as referred to in Section 2.19 and shall have
deposited with the Agent the sum of $100,000 in respect of the Agent's
out-of-pocket fees and expenses referred to in Section 10.05 (which deposit
shall be in addition to the undertakings set forth in such Section).
(g) CORPORATE AND JUDICIAL PROCEEDINGS. All corporate and judicial
proceedings and all instruments and agreements in connection with the
transactions among the Borrower, the Guarantors, the Agent and the Banks
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Agent, and the Agent shall have received all information and
copies of all documents and papers, including records of corporate and judicial
proceedings, which the Agent may have reasonably requested in connection
therewith, such documents and papers where appropriate to be certified by proper
corporate, governmental or judicial authorities.
(h) INFORMATION. The Agent shall have received such information
(financial or otherwise) as may be reasonably requested by the Agent.
(i) COMPLIANCE WITH LAWS. The Borrower and the Guarantors shall have
granted the Agent access to and the right to inspect all reports, audits and
other internal information of the Borrower and the Guarantors relating to
environmental matters, and any third party verification of certain matters
relating to compliance with environmental laws and regulations requested by the
Agent, and the Agent shall be reasonably satisfied that the Borrower and the
Guarantors are in compliance in all material respects with all applicable
environmental laws and regulations and be satisfied with the costs of
maintaining such compliance.
(j) CLOSING DOCUMENTS. The Agent shall have received all closing
documents (including security documents granting liens in favor of the Agent
contemplated hereby) required by this Agreement reasonably satisfactory in form
and substance to the Agent.
SECTION 4.02 CONDITIONS PRECEDENT TO EACH LOAN AND EACH LETTER OF
CREDIT. The obligation of the Banks to make each Loan and of the Fronting Bank
to issue each Letter of Credit, including the initial Loan and the initial
Letter of Credit, is subject to the following conditions precedent:
41
(a) NOTICE. The Agent shall have received a notice with respect to such
borrowing or issuance, as the case may be, as required by Section 2.
(b) REPRESENTATIONS AND WARRANTIES. All representations and warranties
contained in this Agreement and the other Loan Documents or otherwise made in
writing in connection herewith or therewith shall be true and correct in all
material respects on and as of the date of each Borrowing or the issuance of
each Letter of Credit hereunder with the same effect as if made on and as of
such date except to the extent such representations and warranties expressly
relate to an earlier date.
(c) NO DEFAULT. On the date of each Borrowing hereunder or the issuance
of each Letter of Credit, the Borrower and Guarantors shall be in compliance
with all of the terms and provisions set forth herein to be observed or
performed and no Event of Default or event which upon notice or lapse of time or
both would constitute an Event of Default shall have occurred and be continuing.
(d) ORDERS. The Interim Order shall be in full force and effect and
shall not have been stayed, reversed, modified or amended in any respect without
the prior written consent of the Agent and the Required Banks, PROVIDED, that at
the time of the making of any Loan or the issuance of any Letter of Credit the
aggregate amount of either of which, when added to the sum of the principal
amount of all Loans then outstanding and the Letter of Credit Outstandings,
would exceed $20,000,000 in the aggregate (collectively, the "ADDITIONAL
CREDIT"), the Agent and each of the Banks shall have received a certified copy
of an order of the Bankruptcy Court in substantially the form of Exhibit A-2
(the "FINAL Order"), which, in any event, shall have been entered by the
Bankruptcy Court no later than 30 days after the entry of the Interim Order, and
at the time of the extension of any Additional Credit the Final Order shall be
in full force and effect, and shall not have been stayed, reversed, modified or
amended in any respect without the prior written consent of the Agent and the
Required Banks; and if either the Interim Order or the Final Order is the
subject of a pending appeal in any respect, neither the making of the Loans nor
the issuance of any Letter of Credit nor the performance by the Borrower or any
Guarantor of any of their respective obligations under any of the Loan Documents
shall be the subject of a presently effective stay pending appeal.
(e) ADDITIONAL CREDIT. At the time of the extension of any Additional
Credit (in addition to the requirements of Section 4.02(d)), and in any event no
later than 70 days after the entry of the Interim Order, (i) the Agent shall
have completed, and be satisfied in its sole judgment with the scope and results
of, the Agent's due diligence investigation of the business, condition
(financial and otherwise), operations, assets and prospects of the Borrower,
(ii) the Agent shall have received a report with respect to the Borrower's
reporting and accounts receivable systems prepared (at the Borrower's expense)
by Chase's Specialized Due Diligence Group and such report shall be satisfactory
in form and substance to the Agent, (iii) the Agent shall have received UCC-11
and other lien searches with respect to the Borrower and each guarantor
satisfactory to the Agent (dated as of a date reasonably satisfactory to the
Agent); and (iv) the Agent shall be satisfied in its sole discretion with the
definition and calculation of the Borrowing Base (and there shall have been
executed and
42
delivered an amendment to this Agreement satisfactory in form and substance to
the Agent setting forth such definition).
(f) PAYMENT OF FEES. The Borrower shall have paid to the Agent the then
unpaid balance of all accrued and unpaid Fees then payable under and pursuant to
this Agreement and the letter referred to in Section 2.19.
(g) BORROWING BASE CERTIFICATE. The Agent shall have received the timely
delivery of the most recent Borrowing Base Certificate (dated no more than seven
(7) days prior to the making of a Loan or the issuance of a Letter of Credit)
required to be delivered hereunder.
(h) YEAR 2000. The Agent shall be satisfied with the then status of the
Borrower's Year 2000 compliance program.
(i) UCC-11 SEARCHES. The Agent shall have received UCC-11 searches
conducted in the jurisdictions in which the Borrower and the Guarantors conduct
business (dated as of a date reasonably satisfactory to the Agent), reflecting
the absence of Liens and encumbrances in the assets of the Borrower and the
Guarantors other than such Liens as may be satisfactory to the Agent.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section have been
satisfied or waived at that time.
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)), or any amount shall remain outstanding or
unpaid under this Agreement, the Borrower and each of the Guarantors agrees
that, unless the Required Banks shall otherwise consent in writing, it will:
SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower and the Guarantors, deliver to the Agent and each of the Banks:
(a) within 90 days after the end of each fiscal year, the Borrower's
consolidated and consolidating balance sheets and related statements of income
and cash flows, showing the financial condition of the Borrower and its
Subsidiaries on a consolidated and consolidating basis as of the close of such
fiscal year and the results of their respective operations during such year, the
consolidated statement of the Borrower to be audited for the Borrower and its
consolidated Subsidiaries by Xxxxxx Xxxxxxxx LLP or by other independent public
accountants of recognized national standing acceptable to the Required Banks and
accompanied by an opinion of such accountants (which shall not be qualified in
any material respect other than with respect to the Case),
43
and the consolidating statement to be subjected to the auditing procedures
applied to such audit of the consolidated statement, and to be certified by a
Financial Officer of the Borrower to the effect that such consolidated financial
statements fairly present the financial condition and results of operations of
the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters and within 90 days after the end of the fourth fiscal quarter of each
fiscal year, the Borrower's consolidated and consolidating balance sheets and
related statements of income and cash flows, showing the financial condition of
the Borrower and its Subsidiaries on a consolidated and consolidating basis as
of the close of such fiscal quarter and the results of their operations during
such fiscal quarter and the then elapsed portion of the fiscal year, each
certified by a Financial Officer as fairly presenting the financial condition
and results of operations of the Borrower and it Subsidiaries on a consolidated
and consolidating basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements under (a) or
(b) above, (i) a certificate of a Financial Officer, certifying such statements
(A) certifying that no Event of Default or event which upon notice or lapse of
time or both would constitute an Event of Default has occurred, or, if such an
Event of Default or event has occurred, specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with respect thereto and
(B) setting forth computations in reasonable detail satisfactory to the Agent
demonstrating compliance with the provisions of Sections 6.04 and 6.05 and (ii)
a certificate (which certificate may be limited to accounting matters and
disclaim responsibility for legal interpretations) of such accountants
accompanying the audited consolidated financial statements delivered under (a)
above certifying that, in the course of the regular audit of the business of the
Borrower and its consolidated Subsidiaries, such accountants have obtained no
knowledge that an Event of Default has occurred and is continuing, or if, in the
opinion of such accountants, an Event of Default has occurred and is continuing,
specifying the nature thereof and all relevant facts with respect thereto;
(d) concurrently within any delivery of financial statements under (b)
above, monthly financial projections for the following six fiscal month period;
(e) within 35 days of the end of each fiscal month (commencing with the
fiscal month ending on or about January 30, 1998, PROVIDED that the reports for
such fiscal month required by this Section may be delivered together with the
reports for the fiscal month ending on March 1, 1998 required by this Section)
the unaudited monthly cash flow reports of the Borrower and its Subsidiaries on
a consolidated basis as of the close of such fiscal month and for the then
elapsed portion of the fiscal year, together with the Borrower's consolidated
and consolidating balance sheets and related statements of income, showing the
financial condition of the Borrower and its Subsidiaries on a consolidated and
consolidating basis as of the close of such fiscal month and the results of
their operations during such fiscal month and the then elapsed portion of the
fiscal year, all certified by a Financial Officer as fairly presenting the
results of operations of the Borrower and the Guarantors on
44
a consolidated basis, subject to normal year-end audit adjustments, PROVIDED
that the financial statements of Changing Paradigms, Inc. need not be
consolidated with the Borrower's financial statements more frequently than
quarterly;
(f) as soon as possible, and in any event on or before April 30, 1998,
the Borrower's unaudited consolidated and consolidating balance sheet as of the
Filing Date in detail reasonably satisfactory to the Agent;
(g) as soon as practicable, any material modifications to the Borrower's
January 6, 1998 (11:32 p.m.) forecast heretofore furnished to the Agent;
(h) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by it
with the Securities and Exchange Commission, or any governmental authority
succeeding to any of or all the functions of said commission, or with any
national securities exchange, as the case may be;
(i) as soon as available and in any event (A) within 30 days after the
Borrower or any of its ERISA Affiliates knows or has reason to know that any
Termination Event described in clause (i) of the definition of Termination Event
with respect to any Single Employer Plan of the Borrower or such ERISA Affiliate
has occurred and (B) within 10 days after the Borrower or any of its ERISA
Affiliates knows or has reason to know that any other Termination Event with
respect to any such Plan has occurred, a statement of a Financial Officer of the
Borrower describing such Termination Event and the action, if any, which the
Borrower or such ERISA Affiliate proposes to take with respect thereto;
(j) promptly and in any event within 10 days after receipt thereof by
the Borrower or any of its ERISA Affiliates from the PBGC copies of each notice
received by the Borrower or any such ERISA Affiliate of the PBGC's intention to
terminate any Single Employer Plan of the Borrower or such ERISA Affiliate or to
have a trustee appointed to administer any such Plan;
(k) promptly and in any event within 30 days after the filing thereof
with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each Single
Employer Plan of the Borrower or any of its ERISA Affiliates;
(l) within 10 days after notice is given or required to be given to the
PBGC under Section 302(f)(4)(A) of ERISA of the failure of the Borrower or any
of its ERISA Affiliates to make timely payments to a Plan, a copy of any such
notice filed and a statement of a Financial Officer of the Borrower setting
forth (A) sufficient information necessary to determine the amount of the lien
under Section 302(f)(3), (B) the reason for the failure to make the required
payments and (C) the action, if any, which the Borrower or any of its ERISA
Affiliates proposed to take with respect thereto;
(m) promptly and in any event within 10 days after receipt thereof by
the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of
each notice received by the Borrower
45
or any ERISA Affiliate concerning (A) the imposition of Withdrawal Liability by
a Multiemployer Plan, (B) the determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the meaning of Title IV of ERISA, (C)
the termination of a Multiemployer Plan within the meaning of Title IV of ERISA,
or (D) the amount of liability incurred, or which may be incurred, by the
Borrower or any ERISA Affiliate in connection with any event described in clause
(A), (B) or (C) above;
(n) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or any
Subsidiary as the Agent or any Bank may reasonably request; and
(o) furnish to the Agent and its counsel promptly after the same is
available, copies of all pleadings, motions, applications, judicial information,
financial information and other documents filed by or on behalf of the Borrower
with the Bankruptcy Court in the Case, or distributed by or on behalf of the
Borrower or any of the Guarantors to any official committee appointed in the
Case.
SECTION 5.02 CORPORATE EXISTENCE. Do or cause to be done and cause each
of the Guarantors to do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its corporate existence, material
rights, licenses, permits and franchises and comply in all material respects
with all laws and regulations applicable to it, PROVIDED, HOWEVER, nothing in
this provision will restrict the Guarantors from entering into a transaction
permitted by Section 6.02.
SECTION 5.03 INSURANCE. (a) Keep its insurable properties insured at all
times, against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies of the same or similar size in
the same or similar businesses; and maintain in full force and effect public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrower or any Guarantor, as the case may
be, in such amounts and with such deductibles as are customary with companies of
the same or similar size in the same or similar businesses and in the same
geographic area; and (b) maintain such other insurance or self insurance as may
be required by law.
SECTION 5.04 OBLIGATIONS AND TAXES. With respect to the Borrower and
each Guarantor, pay all its material obligations (arising after the Filing Date
in the case of the Borrower and whenever arising in the case of the Guarantors)
promptly and in accordance with their terms and pay and discharge promptly all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property (arising after the
Filing Date in the case of the Borrower and whenever arising in the case of the
Guarantors), before the same shall become in default, as well as all material
lawful claims for labor, materials and supplies or otherwise (arising after the
Filing Date in the case of the Borrower and whenever arising in the case of the
Guarantors), which, if unpaid, might become a Lien or charge upon such
properties or any part thereof; provided, however, that the Borrower and each
Guarantor shall not be required to pay and discharge or to cause to be paid and
discharged any such obligation, tax, assessment, charge, levy or
46
claim so long as the validity or amount thereof shall be contested in good faith
by appropriate proceedings (if the Borrower and the Guarantors shall have set
aside on their books adequate reserves therefor). For purposes of this Section
5.04, "MATERIAL OBLIGATIONS" means obligations, the breach of which would have a
material adverse effect on the business or financial condition of the Borrower
and its Subsidiaries taken as a whole.
SECTION 5.05 NOTICE OF EVENT OF DEFAULT, ETC. Promptly give to the Agent
notice in writing of any Event of Default or the occurrence of any event or
circumstance which with the passage of time or giving of notice or both would
constitute an Event of Default.
SECTION 5.06 ACCESS TO BOOKS AND RECORDS. Maintain or cause to be
maintained at all times true and complete books and records of the financial
operations of the Borrower and the Guarantors; and provide the Agent and its
representatives access to all such books and records during regular business
hours, in order that the Agent may examine and make abstracts from such books,
accounts, records and other papers for the purpose of verifying the accuracy of
the various reports delivered by the Borrower or the Guarantors to the Agent or
the Banks pursuant to this Agreement or for otherwise ascertaining compliance
with this Agreement; and at any reasonable time and from time to time during
regular business hours, upon reasonable notice, permit the Agent and any agents
or representatives (including, without limitation, appraisers) thereof to visit
the properties of the Borrower and the Guarantors and to conduct examinations of
and to monitor the Collateral held by the Agent.
SECTION 5.07 BUSINESS PLAN. No later than 90 days after the Closing
Date, furnish to the Agent the Borrower's business plan which shall be
satisfactory in form and substance to the Agent, and make its senior officers
available to discuss the same with the Agent upon the Agent's reasonable
request.
SECTION 5.08 MAINTENANCE OF CONCENTRATION ACCOUNTS. By no later than
March 30, 1998, the Borrower shall have established, and shall thereafter
maintain, with the Agent an account or accounts to be used by the Borrower as
its principal concentration account or accounts, and the Borrower shall transfer
to such concentration account or accounts funds maintained in its operating
accounts at such times and in such amounts as may be satisfactory to the Agent
(and, in connection therewith, shall use reasonable efforts to cause the
financial institutions with which it maintains depository accounts to execute
and deliver such blocked account agreements as may be reasonably satisfactory to
the Agent).
SECTION 5.09 APPRAISALS. Deliver to the Agent, no later than 90 days
after the Filing Date, appraisals of all of the real property owned in fee by
the Borrower prepared by a member of the American Institute of Real Estate
Appraisers, all of such appraisals to be satisfactory in form and substance to
the Agent.
SECTION 5.10 BORROWING BASE CERTIFICATE. Furnish, commencing on March
23, 1998, a Borrowing Base Certificate to the Agent (x) during the period within
which clause (i) of the
47
definition of the term "Borrowing Base" is applicable, as soon as available and
in any event on or before Wednesday of each week for the week ending on the
immediately preceding Friday, and (y) as soon as available and in any event (a)
on or before Wednesday of each week a Borrowing Base Certificate for the last
day of the immediately preceding week and (b) within 15 days after the end of
each fiscal month a Borrowing Base Certificate showing the Borrowing Base as of
the close of business on the last day of such fiscal month, each such
certificate to be certified as complete and correct on behalf of the Borrower by
a Financial Officer of the Borrower, and (c) such other supporting documentation
and additional reports with respect to the Borrowing Base that are satisfactory
to the Agent.
SECTION 5.11 AUDITS.
(a) At any time upon the request of the Agent or the Required Banks
through the Agent, permit the Agent or professionals (including consultants,
accountants and appraisers) retained by the Agent to conduct evaluations and
appraisals of (i) the Borrower's practices in the computation of the Borrowing
Base and (ii) the assets included in the Borrowing Base, and pay the reasonable
fees and expenses in connection therewith (including, without limitation, the
fees and expenses associated with services performed by the Agent's Collateral
Monitoring Department).
(b) In connection with any evaluation and appraisal relating to the
computation of the Borrowing Base, agree to maintain such additional reserves
(for purposes of computing the Borrowing Base) in respect of Eligible Accounts
Receivable and Eligible Inventory and make such other adjustments to its
parameters for including Eligible Accounts Receivable and Eligible Inventory in
the Borrowing Base as the Agent shall require.
SECTION 6. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)) or any amount shall remain outstanding or
unpaid under this Agreement, unless the Required Banks shall otherwise consent
in writing, the Borrower and each of the Guarantors will not (and will not, in
the case of the Borrower, apply to the Bankruptcy Court for authority to):
SECTION 6.01 LIENS. Incur, create, assume or suffer to exist any Lien on
any asset of the Borrower or the Guarantors, now owned or hereafter acquired by
the Borrower or any of such Guarantors, other than (i) Liens which were existing
on the Filing Date as reflected on Schedule 3.06 hereto and, with respect to
Liens existing on the property of the Guarantors, extensions, renewals,
refinancings or replacements thereof, provided, however, that no such
extensions, renewals, refinancings or replacements will extend to or cover any
property not theretofore subject to the Lien being extended, renewed, refinanced
or replaced; (ii) Permitted Liens; (iii) Liens in favor of the Agent and the
Banks; (iv) Liens securing purchase money Indebtedness permitted by Section
6.03(iii); (v)
48
other Liens arising in the ordinary course of business upon or on any other
assets of the Borrower or the Guarantors securing obligations (other than for
borrowed money) in an aggregate amount not to exceed $500,000 at any time
outstanding; and (vi) with respect to the Guarantors, Environmental Liens and
Liens imposed by ERISA that are not material to the Guarantors.
SECTION 6.02 MERGER, ETC. Merge with or into or consolidate with or
into, or convey, transfer or otherwise dispose of (whether in one transaction or
in a series of related transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to, any Person, except that any
Guarantor may merge or consolidate with or transfer all or substantially all of
its assets to any other Guarantor.
SECTION 6.03 INDEBTEDNESS. Contract, create, incur, assume or suffer to
exist any Indebtedness, except for (i) Indebtedness under this Agreement, (ii)
Indebtedness incurred prior to the Filing Date (including existing Capitalized
Leases) and (in the case of the Guarantors) renewals, extensions, modifications
or refinancings of such Indebtedness that do not increase the principal amount
thereof, (iii) Indebtedness incurred subsequent to the Filing Date secured by
purchase money Liens and Capitalized Leases in an aggregate amount not to exceed
$500,000, (iv) Indebtedness owed to Chase or any of its banking Affiliates in
respect of any overdrafts and related liabilities arising from treasury,
depository and cash management services or in connection with any automated
clearing house transfers of funds, (v) guarantees permitted under Section 6.06
and (vi) Indebtedness of the Guarantors to the Borrower resulting from the
making by the Borrower of Investments that are permitted by clauses (iii) and
(v) of Section 6.10.
SECTION 6.04 CAPITAL EXPENDITURES.
(a) Make Capital Expenditures during each period beginning on December
29, 1997 and ending on each of the dates listed below in an aggregate amount in
excess of the amount specified opposite such date:
DATE AMOUNT
March 29, 1998 $12,000,000
June 28, 1998 22,000,000
September 27, 1998 31,000,000
December 27, 1998 39,000,000
(b) Make Capital Expenditures in an aggregate amount in excess of (x)
$41,000,000 during the four fiscal quarters ending on March 28, 1999 or (y)
$34,000,000 during the four fiscal quarters ending on June 27, 1999.
49
SECTION 6.05 EBITDA.
(a) Permit cumulative EBITDA for each period beginning on December 29,
1997 and ending on each of the dates listed below to be less than the amount
specified opposite such date:
DATE EBITDA
February 1, 1998 $ 3,191,000
March 1, 1998 5,678,000
March 29, 1998 8,096,000
May 3, 1998 11,215,000
May 31, 1998 13,101,000
June 28, 1998 14,932,000
August 2, 1998 18,322,000
August 30,1998 20,581,000
September 27, 1998 22,666,000
November 1, 1998 26,465,000
November 29, 1998 28,986,000
December 27,1998 32,007,000
(b) Permit cumulative EBITDA for each twelve-month period ending on or
about each of the dates listed below to be less than the amount specified
opposite such date:
DATE EBITDA
January 31, 1999 $32,815,000
February 28, 1999 33,089,000
March 28, 1999 33,638,000
May 2, 1999 34,428,000
May 30, 1999 35,081,000
June 27, 1999 36,272,000
SECTION 6.06 GUARANTEES AND OTHER LIABILITIES. Purchase or repurchase
(or agree, contingently or otherwise, so to do) the Indebtedness of, or assume,
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance of any obligation or capability of so
doing, or otherwise), endorse or otherwise become liable, directly or
indirectly, in connection with the obligations, stock or dividends of any
Person, except (i) for any guaranty of Indebtedness or other obligations of the
Borrower or any Guarantor if the Person issuing such guaranty could have
incurred such Indebtedness or obligations under this Agreement, (ii) by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business and (iii) as contemplated by the Section 6.09 Agreements
hereinafter referred to (but subject to the International Basket hereinafter
referred to insofar as the Borrower is concerned).
50
SECTION 6.07 CHAPTER 11 CLAIMS. Incur, create, assume, suffer to exist
or permit any other Super-Priority Claim which is PARI PASSU with or senior to
the claims of the Agent and the Banks hereunder, except for the Carve-Out.
SECTION 6.08 DIVIDENDS; CAPITAL STOCK. Declare or pay, directly or
indirectly, any dividends or make any other distribution or payment, whether in
cash, property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of its capital stock (or any
options, warrants, rights or other equity securities or agreements relating to
any of its capital stock), or set apart any sum for the aforesaid purposes,
PROVIDED that any Guarantor may pay dividends or make any other such
distribution or payments to the Borrower.
SECTION 6.09 TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 6.09 with respect to various agreements to which the Borrower and PTB
International are parties (the "SECTION 6.09 AGREEMENTS"), sell or transfer any
property or assets to, or otherwise engage in any other transactions with, any
of its Affiliates, other than in the ordinary course of business at prices and
on terms and conditions not less favorable to the Borrower or such Guarantor
than could be obtained on an arm's-length basis from unrelated third parties,
PROVIDED that, notwithstanding anything to the contrary set forth on Schedule
6.09, the sum of the aggregate amount of all expenditures that are made by the
Borrower after the date hereof in connection with the Section 6.09 Agreements
PLUS the fair market value of all assets that are transferred by the Borrower
after the date hereof in connection with the Section 6.09 Agreements (such sum,
the "SECTION 6.09 AMOUNT"), when added to the aggregate principal amount of all
loans and advances that are made by the Borrower to PTB International after the
date hereof, shall not exceed the International Basket (as hereinafter defined)
at any time. As used herein, the term "INTERNATIONAL BASKET" shall mean a
cumulative amount that is equal to the sum of (w) all of the cash dividends that
are received by the Borrower after the date hereof from PTB International and
PTB Canada PLUS (x) all amounts received by the Borrower after the date hereof
on account of receivables referred to in paragraph 4 of Schedule 6.10 or on
account of other receivables from any of the Persons referred to in the
attachment to such Schedule PLUS (y) the net proceeds that are received by the
Borrower after January 6, 1998 from dispositions of property that are permitted
under Section 6.11(ii) PLUS (z) $5,500,000 during the period commencing on the
date hereof and ending on December 27, 1998 and $8,500,000 during the period
commencing on the date hereof and ending on the Maturity Date, PROVIDED that
notwithstanding anything to the contrary contained in this definition, the
International Basket shall not exceed $14,750,000 from the date hereof through
December 27, 1998 and $17,750,000 from the date hereof through the Maturity
Date.
SECTION 6.10 INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or acquire
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment in, any other Person (all of the foregoing, "INVESTMENTS"), except
for (i) ownership by the Borrower or the Guarantors of the capital stock of each
of the Subsidiaries listed on Schedule 3.05 and other Investments set forth on
Schedule 6.10, (ii) Permitted Investments, (iii) short-term loans and advances
to the Guarantors for the payment of ordinary course expenses in amounts
satisfactory to the Agent, (iv) Investments by PTB International
51
after the date hereof that are contemplated by the Section 6.09 Agreements and
that are funded by PTB International's own cash flow (including, without
limitation, dividends and distributions received by PTB International) and (v)
loans and advances by the Borrower to PTB International after the date hereof
and the expenditure by the Borrower of Section 6.09 Amounts, PROVIDED that the
aggregate principal amount of such loans and advances to PTB International, when
added to the Section 6.09 Amounts expended by the Borrower after the date
hereof, shall not exceed the International Basket at any time.
SECTION 6.11 DISPOSITION OF ASSETS. Sell or otherwise dispose of any
assets (including, without limitation, the capital stock of any Subsidiary)
except for (i) sales of inventory, fixtures and equipment in the ordinary course
of business, (ii) dispositions of other properties no longer used or useful in
the business of the Borrower and the Guarantors, PROVIDED that all such
dispositions shall be for fair market value and PROVIDED FURTHER that the
aggregate fair market value of all such other properties disposed of shall not
exceed $12,000,000 from the date hereof through December 27, 1998 and
$18,000,000 from the date hereof through the Maturity Date, and (iii) as
contemplated by the Section 6.09 Agreements (but subject to the International
Basket insofar as the Borrower is concerned).
SECTION 6.12 NATURE OF BUSINESS. In the case of the Borrower, modify or
alter in any material manner the nature and type of its business as conducted at
or prior to the Filing Date or the manner in which such business is conducted
(except as required by the Bankruptcy Code).
SECTION 7. EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT. In the case of the happening of any of
the following events and the continuance thereof beyond the applicable period of
grace if any (each, an "EVENT OF DEFAULT"):
(a) any material representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any Loan Document or in connection with this
Agreement or the credit extensions hereunder or any material statement or
representation made in any report, financial statement, certificate or other
document furnished by the Borrower or any Guarantor to the Banks under or in
connection with this Agreement, shall prove to have been false or misleading in
any material respect when made or delivered; or
(b) default shall be made in the payment of any (i) Fees or interest on
the Loans when due, and such default shall continue unremedied for more than two
(2) Business Days or (ii) principal of the Loans or other amounts payable by the
Borrower hereunder (including, without limitation, reimbursement obligations or
cash collateralization in respect of Letters of Credit), when and as the same
shall become due and payable, whether at the due date thereof (including the
Prepayment Date) or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise; or
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(c) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any covenant, condition or agreement contained in
Section 6 hereof; or
(d) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement or any of the
other Loan Documents and such default shall continue unremedied for more than
ten (10) days (PROVIDED that such period shall be three Business Days in the
case of Section 5.10) ; or
(e) the Case shall be dismissed or converted to a case under Chapter 7
of the Bankruptcy Code; a trustee under Chapter 11 of the Bankruptcy Code shall
be appointed in the Case and the order appointing such trustee shall not be
reversed or vacated within 30 days after the entry thereof; or an application
shall be filed by the Borrower for the approval of any other Super-Priority
Claim (other than the Carve-Out) in the Case which is PARI PASSU with or senior
to the claims of the Agent and the Banks against the Borrower hereunder, or
there shall arise or be granted any such PARI PASSU or senior Super-Priority
Claim; or
(f) the Bankruptcy Court shall (A) enter an order or orders granting
relief from the automatic stay applicable under Section 362 of the Bankruptcy
Code to (x) the holder or holders of any security interest to permit foreclosure
(or the granting of a deed in lieu of foreclosure or the like) on any assets of
the Borrower which have a value in excess of $500,000 in the aggregate or (y)
the holder of any judgment against the Borrower in an amount in excess of
$500,000 to permit enforcement thereof to attach, execute or take any similar
action on or against any property of the Borrower to satisfy such judgment or
(B) grant injunctive relief against the Borrower in respect of the Judgment that
(1) materially (in the exercise of the Agent's reasonable judgment) modifies,
impairs or curtails the Borrower's ability to continue to manufacture and sell
products using the patents that were determined by the Judgment to infringe on
patents held by The Procter and Xxxxxx Company ("P AND G") in accordance with
the terms of that certain Agreement Concerning Product Conversion Period that
was executed by the Borrower on August 28, 1997 and by P and G on September 4,
1997 (the "CONVERSION AGREEMENT") or (2) after the expiration of the Conversion
Period (as defined in the Conversion Agreement in accordance with the terms of
the Conversion Agreement), (i) causes a material adverse change in the financial
condition, business, prospects, operations or assets of the Borrower or (ii) has
a material adverse effect on the ability of the Borrower to perform its
obligations under any Loan Document; or
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) relief in respect of PTB International, or
of a substantial part of its property or assets, under the Bankruptcy Code or
any other Federal or state bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for PTB International or for a substantial part
of its property or assets or (iii) the winding-up or liquidation of PTB
International; and such proceeding or petition shall continue undismissed for a
period of 30 days or an order or decree approving or ordering any of the
foregoing shall be entered; or
53
(h) PTB International shall (i) voluntarily commence any proceeding or
file any petition seeking relief under the Bankruptcy Code or any other Federal
or state bankruptcy, insolvency, receivership or similar law, (ii) consent to
the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in subparagraph (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for it or for a substantial part
of its property or assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due or
(vii) take any action for the purpose of effecting any of the foregoing; or
(i) any Person or group (as defined in the Securities Exchange Act of
1934, as amended) shall acquire for the first time the ownership of, or the
direct or indirect power to vote, more than 30% of the issued outstanding voting
stock of the Borrower; or
(j) any action shall be taken to enforce the guaranty of PTB Canada of
the Borrower's pre-petition bank debt and shall remain unstayed for a period in
excess of 10 Business Days;
(k) any material provision of any Loan Document shall, for any reason,
cease to be valid and binding on the Borrower or any of the Guarantors, or the
Borrower or any of the Guarantors shall so assert in any pleading filed in any
court; or
(l) an order of the Bankruptcy Court shall be entered appointing a
responsible officer or an examiner with enlarged powers relating to the
operation of the business (powers beyond those set forth in Section 1106(a)(3)
and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code and
such order shall not be reversed or vacated within 30 days after the entry
thereof; or
(m) an order of the Bankruptcy Court shall be entered reversing,
amending, supplementing, staying for a period in excess of 10 days, vacating or
otherwise modifying either of the Orders (without the prior written consent of
the Agent and the Required Banks); or
(n) any judgment or order as to a liability or debt for the payment of
money (arising after the Filing Date in the case of the Borrower and whenever
arising in the case of the Guarantors) in excess of $500,000 shall be rendered
against the Borrower or any of the Guarantors and the enforcement thereof shall
not have been stayed (excluding the Judgment and any further proceedings in
relation thereto but subject to the provisions of subparagraph (f) above); or
(o) any non-monetary judgment or order with respect to a post-petition
event shall be rendered against the Borrower, or any non-monetary judgment or
order shall be rendered against any of the Guarantors, which does or would
reasonably be expected to (i) cause a material adverse change in the financial
condition, business, prospects, operations or assets of the Borrower and the
54
Guarantors taken as a whole on a consolidated basis, (ii) have a material
adverse effect on the ability of the Borrower or any of the Guarantors to
perform their respective obligations under any Loan Document, or (iii) have a
material adverse effect on the rights and remedies of the Agent or any Bank
under any Loan Document, and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(p) the Borrower shall make any Pre-Petition Payment other than as
permitted by orders of the Bankruptcy Court reasonably satisfactory in form and
substance to the Agent referred to in Section 4.01(d) or as otherwise agreed to
by the Agent; or
(q) any Termination Event described in clause (iii) or (iv) of the
definition of such term shall have occurred and shall continue unremedied for
more than 10 days and the sum (determined as of the date of occurrence of such
Termination Event) of the Insufficiency of the Plan in respect of which such
Termination Event shall have occurred and be continuing and the Insufficiency of
any and all other Plans with respect to which such a Termination Event
(described in such clause (iii) or (iv)) shall have occurred and then exist is
equal to or greater than $500,000; or
(R) (i) the Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate
does not have reasonable grounds to contest such Withdrawal Liability and is not
in fact contesting such Withdrawal Liability in a timely and appropriate manner,
and (iii) the amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $500,000 or requires payments exceeding $500,000 per
annum in excess of the annual payments made with respect to such MultiEmployer
Plans by the Borrower or such ERISA Affiliate for the plan year immediately
preceding the plan year in which such notification is received; or
(s) the Borrower or any ERISA Affiliate thereof shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years that include the date hereof by an amount exceeding $500,000; or
(t) the Borrower or any ERISA Affiliate shall have committed a failure
described in Section 302(f)(1) of ERISA (other than the failure to make any
contribution accrued and unpaid as of the Filing Date) and the amount determined
under Section 302(f)(3) of ERISA is equal to or greater than $500,000; or
55
(u) it shall be determined (whether by the Bankruptcy Court or by any
other judicial or administrative forum) that the Borrower or any Guarantor is
liable for the payment of claims arising out of any failure to comply (or to
have complied) with applicable environmental laws or regulations the payment of
which will have a material adverse effect on the financial condition, business,
properties, operations or assets of the Borrower and the Guarantors, taken as a
whole;
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Agent may, and at the request of the Required Banks, shall, by notice
to the Borrower (with a copy to counsel for the Official Creditors' Committee
appointed in the Case, to counsel for the agent and the lenders under the
Borrower's Amended and Restated Credit Agreement dated as of February 6, 1996
and to the United States Trustee for the Northern District of Georgia), take one
or more of the following actions, at the same or different times (PROVIDED, that
with respect to clause (iv) below insofar as accounts of the Borrower are
concerned and the enforcement of Liens against the Borrower or other remedies
with respect to the Collateral provided by the Borrower under clause (v) below,
the Agent shall provide the Borrower (with a copy to counsel for the Official
Creditors' Committee appointed in the Case, to counsel for the agent and the
lenders under the Borrower's Amended and Restated Credit Agreement dated as of
February 6, 1996 and to the United States Trustee for the Northern District of
Georgia) with five (5) Business Days' written notice prior to taking the action
contemplated thereby and PROVIDED, FURTHER, that upon receipt of notice referred
to in the immediately preceding clause with respect to the accounts referred to
in clause (iv) below, the Borrower may continue to make ordinary course
disbursements from such accounts (other than the Letter of Credit Account) but
may not withdraw or disburse any other amounts from such accounts): (i)
terminate forthwith the Total Commitment; (ii) declare the Loans then
outstanding to be forthwith due and payable, whereupon the principal of the
Loans together with accrued interest thereon and any unpaid accrued Fees and all
other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower and the Guarantors, anything contained herein or in any
other Loan Document to the contrary notwithstanding; (iii) require the Borrower
and the Guarantors upon demand to forthwith deposit in the Letter of Credit
Account cash in an amount which, together with any amounts then held in the
Letter of Credit Account, is equal to the sum of 105% of the then outstanding
Letters of Credit and to the extent the Borrower and the Guarantors shall fail
to furnish such funds as demanded by the Agent, the Agent shall be authorized to
debit the accounts of the Borrower and the Guarantors maintained with the Agent
in such amount; (iv) set-off amounts in the Letter of Credit Account or any
other accounts maintained with the Agent and apply such amounts to the
obligations of the Borrower and the Guarantors hereunder and in the other Loan
Documents; and (v) exercise any and all remedies under the Loan Documents
(including, without limitation, with respect to the Collateral) and under
applicable law available to the Agent and the Banks.
56
SECTION 8. THE AGENT
SECTION 8.01 ADMINISTRATION BY AGENT. The general administration of the
Loan Documents shall be by the Agent. Each Bank hereby irrevocably authorizes
the Agent, at its discretion, to take or refrain from taking such actions as
agent on its behalf and to exercise or refrain from exercising such powers under
the Loan Documents as are delegated by the terms hereof or thereof, as
appropriate, together with all powers reasonably incidental thereto (including
the release of Collateral in connection with any transaction that is expressly
permitted by the Loan Documents). The Agent shall have no duties or
responsibilities except as set forth in this Agreement and the remaining Loan
Documents.
SECTION 8.02 ADVANCES AND PAYMENTS
(a) On the date of each Loan, the Agent shall be authorized (but not
obligated) to advance, for the account of each of the Banks, the amount of the
Loan to be made by it in accordance with its Commitment hereunder. Should the
Agent do so, each of the Banks agrees forthwith to reimburse the Agent in
immediately available funds for the amount so advanced on its behalf by the
Agent, together with interest at the Federal Funds Effective Rate if not so
reimbursed on the date due from and including such date but not including the
date of reimbursement.
(b) Any amounts received by the Agent in connection with this Agreement
(other than amounts to which the Agent is entitled pursuant to Sections 2.19,
8.06, 10.05 and 10.06), the application of which is not otherwise provided for
in this Agreement shall be applied, FIRST, in accordance with each Bank's
Commitment Percentage to pay accrued but unpaid Commitment Fees or Letter of
Credit Fees, and SECOND, in accordance with each Bank's Commitment Percentage to
pay accrued but unpaid interest and the outstanding principal balance of the
Loans and all unreimbursed Letter of Credit drawings. All amounts to be paid to
a Bank by the Agent shall be credited to that Bank, after collection by the
Agent, in immediately available funds either by wire transfer or deposit in that
Bank's correspondent account with the Agent, as such Bank and the Agent shall
from time to time agree.
SECTION 8.03 SHARING OF SETOFFS. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any Guarantor, including, but not limited to, a secured claim
under Section 506 of the Bankruptcy Code or other security or interest arising
from, or in lieu of, such secured claim and received by such Bank under any
applicable bankruptcy, insolvency or other similar law, or otherwise, obtain
payment in respect of its Loans as a result of which the unpaid portion of its
Loans is proportionately less than the unpaid portion of the Loans of any other
Bank (a) it shall promptly purchase at par (and shall be deemed to have
thereupon purchased) from such other Bank a participation in the Loans of such
other Bank, so that the aggregate unpaid principal amount of each Bank's Loans
and its participation in Loans of the other Banks shall be in the same
proportion to the aggregate unpaid principal amount of all Loans then
outstanding as the principal amount of its Loans prior to the obtaining of such
payment was to the principal amount of all Loans outstanding prior to the
obtaining of such payment and (b) such
57
other adjustments shall be made from time to time as shall be equitable to
ensure that the Banks share such payment pro-rata, provided that if any such
non-pro-rata payment is thereafter recovered or otherwise set aside such
purchase of participations shall be rescinded (without interest). The Borrower
and each Guarantor expressly consents to the foregoing arrangements and agrees
that any Bank holding (or deemed to be holding) a participation in a Loan may
exercise any and all rights of banker's lien, setoff (in each case, subject to
the same notice requirements as pertain to clause (iv) of the remedial
provisions of Section 7.01) or counterclaim with respect to any and all moneys
owing by the Borrower to such Bank as fully as if such Bank held a Loan and was
the original obligee thereon, in the amount of such participation.
SECTION 8.04 AGREEMENT OF REQUIRED BANKS. Upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part of
the Required Banks, action shall be taken by the Agent for and on behalf or for
the benefit of all Banks upon the direction of the Required Banks, and any such
action shall be binding on all Banks. No amendment, modification, consent, or
waiver shall be effective except in accordance with the provisions of Section
10.10.
SECTION 8.05 LIABILITY OF AGENT.
(a) The Agent when acting on behalf of the Banks, may execute any of its
respective duties under this Agreement by or through any of its respective
officers, agents, and employees, and neither the Agent nor its directors,
officers, agents, employees or Affiliates shall be liable to the Banks or any of
them for any action taken or omitted to be taken in good faith, or be
responsible to the Banks or to any of them for the consequences of any oversight
or error of judgment, or for any loss, unless the same shall happen through its
gross negligence or willful misconduct. The Agent and its respective directors,
officers, agents, employees and Affiliates shall in no event be liable to the
Banks or to any of them for any action taken or omitted to be taken by them
pursuant to instructions received by them from the Required Banks or in reliance
upon the advice of counsel selected by it. Without limiting the foregoing,
neither the Agent, nor any of its respective directors, officers, employees,
agents or Affiliates shall be responsible to any Bank for the due execution,
validity, genuineness, effectiveness, sufficiency, or enforceability of, or for
any statement, warranty, or representation in, this Agreement, any Loan Document
or any related agreement, document or order, or shall be required to ascertain
or to make any inquiry concerning the performance or observance by the Borrower
of any of the terms, conditions, covenants, or agreements of this Agreement or
any of the Loan Documents.
(b) Neither the Agent nor any of its respective directors, officers,
employees, agents or Affiliates shall have any responsibility to the Borrower or
the Guarantors on account of the failure or delay in performance or breach by
any Bank or by the Borrower or the Guarantors of any of their respective
obligations under this Agreement or any of the Loan Documents or in connection
herewith or therewith.
58
(c) The Agent, in its capacity as Agent hereunder, shall be entitled to
rely on any communication, instrument, or document reasonably believed by such
person to be genuine or correct and to have been signed or sent by a person or
persons believed by such person to be the proper person or persons, and such
person shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by such
person.
SECTION 8.06 REIMBURSEMENT AND INDEMNIFICATION. Each Bank agrees (i) to
reimburse (x) the Agent for such Bank's Commitment Percentage of any expenses
and fees incurred for the benefit of the Banks under this Agreement and any of
the Loan Documents, including, without limitation, fees of counsel referred to
in Section 10.05 (including patent counsel) and compensation of agents and
employees paid for services rendered on behalf of the Banks, and any other
expense incurred in connection with the operations or enforcement thereof not
reimbursed by the Borrower or the Guarantors and (y) the Agent for such Bank's
Commitment Percentage of any expenses of the Agent incurred for the benefit of
the Banks that the Borrower has agreed to reimburse pursuant to Section 10.05
and has failed to so reimburse and (ii) to indemnify and hold harmless the Agent
and any of its directors, officers, employees, agents or Affiliates, on demand,
in the amount of its proportionate share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against it or any of them in any way
relating to or arising out of this Agreement or any of the Loan Documents or any
action taken or omitted by it or any of them under this Agreement or any of the
Loan Documents to the extent not reimbursed by the Borrower or the Guarantors
(except such as shall result from their respective gross negligence or willful
misconduct).
SECTION 8.07 RIGHTS OF AGENT. It is understood and agreed that Chase
shall have the same rights and powers hereunder (including the right to give
such instructions) as the other Banks and may exercise such rights and powers,
as well as its rights and powers under other agreements and instruments to which
it is or may be party, and engage in other transactions with the Borrower or any
Guarantor, as though it were not the Agent of the Banks under this Agreement.
SECTION 8.08 INDEPENDENT BANKS. Each Bank acknowledges that it has
decided to enter into this Agreement and to make the Loans hereunder based on
its own analysis of the transactions contemplated hereby and of the
creditworthiness of the Borrower and the Guarantors and agrees that the Agent
shall bear no responsibility therefor.
SECTION 8.09 NOTICE OF TRANSFER. The Agent may deem and treat a Bank
party to this Agreement as the owner of such Bank's portion of the Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Bank shall have been received by the Agent.
SECTION 8.10 SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent, which
shall be reasonably satisfactory to the Borrower.
59
If no successor Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation, the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of a least $100,000,000, which shall be reasonably
satisfactory to the Borrower. 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 discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 8 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
SECTION 9. GUARANTY
SECTION 9.01 GUARANTY
(a) Each of the Guarantors unconditionally and irrevocably guarantees
the due and punctual payment and performance by the Borrower and the other
Guarantors of the Obligations (including, without limitation, Obligations in
respect of Indebtedness permitted by Section 6.03(iii)). Each of the Guarantors
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice to or further assent from it, and it will remain bound upon
this guaranty notwithstanding any extension or renewal of any of the
Obligations. The Obligations of the Guarantors shall be joint and several.
Notwithstanding anything to the contrary herein, the maximum aggregate amount of
the Obligations that are guaranteed hereunder by any Guarantor shall not exceed
the maximum amount that can be so guaranteed without rendering this guaranty by
such Guarantor voidable under applicable law relating to fraudulent conveyance
or fraudulent transfer.
(b) Each of the Guarantors waives presentation to, demand for payment
from and protest to the Borrower or any other Guarantor, and also waives notice
of protest for nonpayment. The Obligations of the Guarantors hereunder shall not
be affected by (i) the failure of the Agent or a Bank to assert any claim or
demand or to enforce any right or remedy against the Borrower or any other
Guarantor under the provisions of this Agreement or any other Loan Document or
otherwise; (ii) any extension or renewal of any provision hereof or thereof;
(iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the release, exchange, waiver or foreclosure of any security held by the
Agent for the Obligations or any of them; (v) the failure of the Agent or a Bank
to exercise any right or remedy against any other Guarantor; or (vi) the release
or substitution of any Guarantor or any other Guarantor.
(c) Each of the Guarantors further agrees that this guaranty constitutes
a guaranty of performance and of payment when due and not just of collection,
and waives any right to require that any resort be had by the Agent or a Bank to
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any security held for payment of the Obligations or to any balance of any
deposit, account or credit on the books of the Agent or a Bank in favor of the
Borrower or any other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby waives any defense that it might have
based on a failure to remain informed of the financial condition of the Borrower
and of any other Guarantor and any circumstances affecting the ability of the
Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Obligations or any other
instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. Neither of the Agent, nor any of the Banks makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the Obligations.
(f) Subject to the provisions of Section 7.01, upon the Obligations
becoming due and payable (by acceleration or otherwise), the Banks shall be
entitled to immediate payment of such Obligations by the Guarantors upon written
demand by the Agent, without further application to or order of the Bankruptcy
Court.
SECTION 9.02 NO IMPAIRMENT OF GUARANTY. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations. Without limiting the generality of the foregoing, the obligations
of the Guarantors hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Agent or a Bank to assert any claim or demand or
to enforce any remedy under this Agreement or any other agreement, by any waiver
or modification of any provision thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other act
or thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of the Guarantors or would otherwise
operate as a discharge of the Guarantors as a matter of law, unless and until
the Obligations are paid in full.
SECTION 9.03 SUBROGATION. Upon payment by any Guarantor of any sums to
the Agent or a Bank hereunder, all rights of such Guarantor against the Borrower
arising as a result thereof by way of right of subrogation or otherwise, shall
in all respects be subordinate and junior in right of payment to the prior final
and indefeasible payment in full of all the Obligations. If any amount shall be
paid to such Guarantor for the account of the Borrower, such amount shall be
held in trust for the benefit of the Agent and the Banks and shall forthwith be
paid to the Agent and the Banks to be credited and applied to the Obligations,
whether matured or unmatured.
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SECTION 10. MISCELLANEOUS
SECTION 10.01 NOTICES. Notices and other communications provided for
herein shall be in writing (including telegraphic, telex, facsimile or cable
communication) and shall be mailed, telegraphed, telexed, transmitted, cabled or
delivered to the Borrower or any Guarantor at 000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx,
Xxxxxxx 00000, Attention: Chief Financial Officer and to a Bank or the Agent to
it at its address set forth on the signature pages of this Agreement, or such
other address as such party may from time to time designate by giving written
notice to the other parties hereunder. All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the fifth Business Day after the date when
sent by registered or certified mail, postage prepaid, return receipt requested,
if by mail; or when delivered to the telegraph company, charges prepaid, if by
telegram; or when receipt is acknowledged, if by any telegraphic communications
or facsimile equipment of the sender; in each case addressed to such party as
provided in this Section 10.01 or in accordance with the latest unrevoked
written direction from such party; provided, however, that in the case of
notices to the Agent notices pursuant to the preceding sentence and pursuant to
Section 2 shall be effective only when received by the Agent.
SECTION 10.02 SURVIVAL OF AGREEMENT, REPRESENTATIONS AND WARRANTIES,
ETC. All warranties, representations and covenants made by the Borrower or any
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have been
relied upon by the Banks and shall survive the making of the Loans herein
contemplated regardless of any investigation made by any Bank or on its behalf
and shall continue in full force and effect so long as any amount due or to
become due hereunder is outstanding and unpaid and so long as the Commitments
have not been terminated. All statements in any such certificate or other
instrument shall constitute representations and warranties by the Borrower and
the Guarantors hereunder with respect to the Borrower.
SECTION 10.03 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Agent and the Banks and their respective successors and assigns.
Neither the Borrower nor any of the Guarantors may assign or transfer any of
their rights or obligations hereunder without the prior written consent of all
of the Banks. Each Bank may sell participations to any Person in all or part of
any Loan, or all or part of its Commitment, in which event, without limiting the
foregoing, the provisions of Section 2.15 shall inure to the benefit of each
purchaser of a participation (provided that such participant shall look solely
to the seller of such participation for such benefits and the Borrower's and the
Guarantors' liability, if any, under Sections 2.15 and 2.18 shall not be
increased as a result of the sale of any such participation) and the PRO RATA
treatment of payments, as described in Section 2.17, shall be determined as if
such Bank had not sold such participation. In the event any Bank shall sell any
participation, such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower and each of the Guarantors relating to
the Loans, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this
62
Agreement (provided that such Bank may grant its participant the right to
consent to such Bank's execution of amendments, modifications or waivers which
(i) reduce any Fees payable hereunder to the Banks, (ii) reduce the amount of
any scheduled principal payment on any Loan or reduce the principal amount of
any Loan or the rate of interest payable hereunder or (iii) extend the maturity
of the Borrower's obligations hereunder). The sale of any such participation
shall not alter the rights and obligations of the Bank selling such
participation hereunder with respect to the Borrower.
(b) Each Bank may assign to one or more Banks or Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the same
portion of the related Loans at the time owing to it), PROVIDED, HOWEVER, that
(i) other than in the case of an assignment to a Person at least 50% owned by
the assignor Bank, or by a common parent of both, or to another Bank, the Agent
and the Fronting Bank must give their respective prior written consent to such
assignment, which consent will not be unreasonably withheld, (ii) the aggregate
amount of the Commitment and/or Loans of the assigning Bank subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Agent) shall, unless otherwise agreed to
in writing by the Borrower and the Agent, in no event be less than $5,000,000
(or $1,000,000 in the case of an assignment between Banks) and (iii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance with blanks appropriately completed, together with a processing and
recordation fee of $3,500 (for which the Borrower shall have no liability). Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
within ten Business Days after the execution thereof (unless otherwise agreed to
in writing by the Agent), (A) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder and (B) the Bank thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents; (ii) such Bank assignor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Guarantor or the performance or observance by
the Borrower or any Guarantor of any of its obligations under this Agreement or
any of the other Loan Documents or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Loan Documents, together with copies of the
financial statements referred
63
to in Section 3.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such Bank assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms thereto, together with such powers as
are reasonably incidental hereof; and (vi) such assignee agrees that it will
perform in accordance with their terms all obligations that by the terms of this
Agreement are required to be performed by it as a Bank.
(d) The Agent shall maintain at its office a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of the Loans
owing to, each Bank from time to time (the "REGISTER"). The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Guarantors, the Agent and the Banks shall treat each Person the
name of which is recorded in the Register as a Bank hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and the assignee thereunder together with the fee payable in
respect thereto, the Agent shall, if such Assignment and Acceptance has been
completed with blanks appropriately filled and consented to by the Agent and the
Fronting Bank (to the extent such consent is required hereunder), (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt written notice thereof to the Borrower
(together with a copy thereof). No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this
paragraph.
(f) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 10.03, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Borrower or any of the Guarantors furnished to such Bank by or
on behalf of the Borrower or any of the Guarantors; PROVIDED that prior to any
such disclosure, each such assignee or participant or proposed assignee or
participant shall agree in writing to be bound by the provisions of Section
10.04.
(g) The Borrower hereby agrees, to the extent set forth in the
Commitment Letter, to actively assist and cooperate with the Agent in the
Agent's efforts to sell participations herein (as described in Section 10.03(a))
and assign to one or more Banks or Eligible Assignees a portion of its
interests, rights and obligations under this Agreement (as set forth in Section
10.03(b)).
SECTION 10.04 CONFIDENTIALITY. Each Bank agrees to keep any information
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than
64
persons employed or retained by such Bank who are or are expected to become
engaged in evaluating, approving, structuring or administering the Loans;
PROVIDED that nothing herein shall prevent any Bank from disclosing such
information (i) to any other Bank, (ii) to any other person if reasonably
incidental to the administration of the Loans, (iii) upon the order of any court
or administrative agency, (iv) upon the request or demand of any regulatory
agency or authority, (v) which has been publicly disclosed other than as a
result of a disclosure by the Agent or any Bank which is not permitted by this
Agreement, (vi) in connection with any litigation to which the Agent, any Bank,
or their respective Affiliates may be a party to the extent reasonably required,
(vii) to the extent reasonably required in connection with the exercise of any
remedy hereunder, (viii) to such Bank's legal counsel and independent auditors,
and (ix) to any actual or proposed participant or assignee of all or part of its
rights hereunder subject to the proviso in Section 10.03(f) and PROVIDED FURTHER
before such Bank complies with (iii) or (iv) above, it shall (to the extent
practicable under the circumstances) use reasonable efforts to provide the
Borrower with notice of such request.
SECTION 10.05 EXPENSES. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower and the Guarantors agree to pay
all reasonable out-of-pocket expenses incurred by the Agent (including but not
limited to the reasonable fees and disbursements of Xxxxxx, Xxxxx & Xxxxxxx LLP,
counsel for the Agent, any other counsel that the Agent shall retain (including
patent counsel) and any internal or third-party consultants and auditors
advising the Agent and Chase Securities Inc.) in connection with the
preparation, execution, delivery and administration of this Agreement and the
other Loan Documents, the making of the Loans and the issuance of the Letters of
Credit, the perfection of the Liens contemplated hereby (including, without
limitation, trademark and trade name Liens), the syndication of the transactions
contemplated hereby, the reasonable and customary costs, fees and expenses of
the Agent in connection with its periodic monitoring of assets of the Borrower
or the Guarantors (including reasonable and customary internal collateral
monitoring fees) and publicity expenses, and, following the occurrence of an
Event of Default, all reasonable out-of-pocket expenses incurred during the
continuance of such Event of Default by the Banks and the Agent in the
enforcement or protection of the rights of any one or more of the Banks or the
Agent in connection with this Agreement or the other Loan Documents, including
but not limited to the reasonable fees and disbursements of any counsel for the
Banks or the Agent. Such payments shall be made on the date of the Interim Order
and thereafter on demand upon delivery of a statement setting forth such costs
and expenses. The expense deposit of $100,000 referred to in Section 4.01 should
be applied to such payments and the Borrower and the Guarantors shall remain
obligated under this Section to the extent expenses exceed such deposit. Whether
or not the transactions hereby contemplated shall be consummated, the Borrower
and the Guarantors agree to reimburse the Agent and Chase Securities Inc. for
the expenses set forth in the Commitment Letter and the reimbursement provisions
thereof are hereby incorporated herein by reference. The Obligations of the
Borrower and the Guarantors under this Section shall survive the termination of
this Agreement and/or the payment of the Loans.
SECTION 10.06 INDEMNITY. The Borrower and each of the Guarantors agree
to indemnify and hold harmless the Agent, Chase Securities Inc. and the Banks
and their directors, officers, employees, agents and Affiliates (each an
"INDEMNIFIED PARTY") from and against any and all
65
expenses, losses, claims, damages and liabilities incurred by such Indemnified
Party arising out of claims made by any Person in any way relating to the
transactions contemplated hereby, but excluding therefrom all expenses, losses,
claims, damages, and liabilities arising out of or resulting from the gross
negligence or willful misconduct of such Indemnified Party. The Obligations of
the Borrower and the Guarantors under this Section shall survive the termination
of this Agreement and/or the payment of the Loans.
SECTION 10.07 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
WITHIN SUCH STATE AND THE BANKRUPTCY CODE.
SECTION 10.08 NO WAIVER. No failure on the part of the Agent or any of
the Banks to exercise, and no delay in exercising, any right, power or remedy
hereunder or under any of the other Loan Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 10.09 EXTENSION OF MATURITY. Should any payment of principal or
interest or any other amount due hereunder become due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.
SECTION 10.10 AMENDMENTS, ETC.
(a) No modification, amendment or waiver of any provision of this
Agreement or the other Loan Documents, and no consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Banks, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given; PROVIDED, HOWEVER, that no such modification or amendment shall
without the written consent of the Bank affected thereby (x) increase the
Commitment of a Bank (it being understood that a waiver of an Event of Default
shall not constitute an increase in the Commitment of a Bank), or (y) reduce the
principal amount of any Loan or the rate of interest payable thereon, or extend
any date for the payment of interest hereunder or reduce any Fees payable
hereunder or extend the final maturity of the Borrower's obligations hereunder;
and, PROVIDED, FURTHER, that no such modification or amendment shall without the
written consent of (A) all of the Banks (i) amend or modify any provision of
this Agreement which provides for the unanimous consent or approval of the
Banks, (ii) amend this Section 10.10 or the definition of Required Banks, (iii)
amend or modify the Super-Priority Claim status of the Banks contemplated by
Section 2.23 or (iv) release all or substantially all of the Collateral or (B)
the Super-majority Banks referred to in Section 10.10(b) release the obligations
of any Guarantor hereunder. No such amendment or modification
66
may adversely affect the rights and obligations of the Agent or any Fronting
Bank hereunder without its prior written consent. No notice to or demand on the
Borrower or any Guarantor shall entitle the Borrower or any Guarantor to any
other or further notice or demand in the same, similar or other circumstances.
Each assignee under Section 10.03(b) shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, and any consent
by a Bank shall bind any Person subsequently acquiring an interest in the Loans
held by such Bank. No amendment to this Agreement shall be effective against the
Borrower or any Guarantor unless signed by the Borrower or such Guarantor, as
the case may be.
(b) Notwithstanding anything to the contrary contained in Section
10.10(a), in the event that the Borrower requests that this Agreement be
modified or amended in a manner which would require the unanimous consent of all
of the Banks and such modification or amendment is agreed to by the
Super-majority Banks (as hereinafter defined), then with the consent of the
Borrower and the Super-majority Banks, the Borrower and the Super-majority Banks
shall be permitted to amend the Agreement without the consent of the Bank or
Banks which did not agree to the modification or amendment requested by the
Borrower (such Bank or Banks, collectively the "MINORITY BANKS") to provide for
(w) the termination of the Commitment of each of the Minority Banks, (x) the
addition to this Agreement of one or more other financial institutions (each of
which shall be an Eligible Assignee), or an increase in the Commitment of one or
more of the Super-majority Banks, so that the Total Commitment after giving
effect to such amendment shall be in the same amount as the Total Commitment
immediately before giving effect to such amendment, (y) if any Loans are
outstanding at the time of such amendment, the making of such additional Loans
by such new financial institutions or Super-majority Bank or Banks, as the case
may be, as may be necessary to repay in full the outstanding Loans of the
Minority Banks immediately before giving effect to such amendment and (z) such
other modifications to this Agreement as may be appropriate. As used herein, the
term "SUPER-MAJORITY BANKS" shall mean, at any time, Banks, including Chase,
holding Loans representing at least 66-2/3% of the aggregate principal amount of
the Loans outstanding, or if no Loans are outstanding, Banks having Commitments
representing at least 66-2/3% of the Total Commitment.
SECTION 10.11 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.12 HEADINGS. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
67
SECTION 10.13 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same instrument.
SECTION 10.14 PRIOR AGREEMENTS. This Agreement represents the entire
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between the Borrower or a
Guarantor and any Bank or the Agent prior to the execution of this Agreement
which relate to Loans to be made hereunder shall be replaced by the terms of
this Agreement (except as otherwise expressly provided herein with respect to
the Commitment Letter and the letter agreement referred to in Section 2.19,
including without limitation the Borrower's agreement to actively assist the
Agent in the syndication of the transactions contemplated hereby referred to in
Section 10.03(g) and including also the provisions of Section 2.22).
SECTION 10.15 FURTHER ASSURANCES. Whenever and so often as reasonably
requested by the Agent, the Borrower and the Guarantors will promptly execute
and deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances, and promptly do or cause to be done all
such other and further things as may be necessary and reasonably required in
order to further and more fully vest in the Agent all rights, interests, powers,
benefits, privileges and advantages conferred or intended to be conferred by
this Agreement and the other Loan Documents.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
GUARANTORS, THE AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first written.
PARAGON TRADE BRANDS, INC.
By: /S/ XXXX X. XXXXX
--------------------------
Title: Executive Vice President and CFO
PTB INTERNATIONAL, INC.
By: /S/ XXXX X. XXXXX
--------------------------
Title: Vice President and CFO
68
CHANGING PARADIGMS, INC.
By: /S/ XXXXXXXXX X. XXXXXXXXX
--------------------------
Title: Assistant Secretary
PARAGON TRADE BRANDS FSC, INC.
By: /S/ XXXX X. XXXXX
--------------------------
Title: Vice President and CFO
PTB ACQUISITION SUB, INC.
By: /S/ XXXX X. XXXXX
--------------------------
Title: Vice President
THE CHASE MANHATTAN BANK,
INDIVIDUALLY AND AS AGENT
By: /S/ XXXX XXXXXX
--------------------------
Title: Vice President
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
AMSOUTH BANK
By: /S/ XXXXXXX X. XXXXXXX
--------------------------
Title: E.V.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xx. Xxxxxxx X. Xxxxxxx
00
XXX XXXX XX XXXX XXXXXX
By: /S/ XXXX X. XXXXXX
--------------------------
Title: Senior Manager
Notice:
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Mr. Xxxx Xxxxxx
BHF-BANK AKTIENGESELLSCHAFT
By:/S/ XXXXXX XXXXX
--------------------------
Title: Assistant Vice President
By: /S/ XXXX X. XXXXXX
--------------------------
Title: Assistant Vice President
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xx. Xxxxxx Xxxxx
XXXXXX FINANCIAL, INC.
By:/S/ XXXXXX X. XXXXXXX
--------------------------
Title: Vice President
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xx. Xx Xxxxxxx
70
IBJ XXXXXXXX BUSINESS CREDIT CORP.
By: /S/ XXXX XXXXX
--------------------------
Title: Vice President
Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Mr. Wing X. Xxxxx
PNC BANK, NATIONAL ASSOCIATION
By: /S/XXXXXX X. XXXXXXXXXXX
--------------------------
Title: Senior Vice President
0000 Xxxxxx Xxxxxx, 00xx Xxx.
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
WACHOVIA, N.A.
By: /S/ XXXXXXX X. XXXXXXX
--------------------------
Title: Assistant Vice President
000 Xxxxxxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Mr. John Seeds
71
ANNEX A
TO
REVOLVING CREDIT AND GUARANTY AGREEMENT
DATED AS OF APRIL 15, 1998, AS AMENDED
COMMITMENT COMMITMENT
BANK AMOUNT PERCENTAGE
The Chase Manhattan Bank $10,250,000 13.6666666669%
Amsouth Bank $9,250,000 12.0000000000%
The Bank of Nova Scotia $9,250,000 12.0000000000%
BHF-Bank Aktiengesellschaft $9,250,000 12.3333333333%
Xxxxxx Financial, Inc. $9,250,000 12.3333333333%
IBJ Xxxxxxxx Business Credit Corp. $9,250,000 12.3333333333%
PNC Bank, National Association $9,250,000 12.3333333333%
Wachovia, N.A. $9,250,000 12.3333333333%
---------- --------------
TOTAL: $ 75,000,000 100.0000000000%
============ ===============
