EXHIBIT 99.1
$50,000,000
POST-PETITION
LOAN AND SECURITY AGREEMENT
Dated as of December 16, 2004
Among
TROPICAL SPORTSWEAR INT'L CORPORATION, TROPICAL SPORTSWEAR COMPANY, INC.,
SAVANE INTERNATIONAL CORP., APPAREL NETWORK CORP., TSI BRANDS, INC. and TSIL,
INC.
(each, a Borrower and collectively, the Borrowers)
and
THE FINANCIAL INSTITUTIONS PARTY
HERETO FROM TIME TO TIME
(collectively, the Lenders)
and
THE CIT GROUP/COMMERCIAL SERVICES, INC.
(the Agent)
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS.........................................................1
SECTION 1.1 DEFINITIONS...............................................1
SECTION 1.2 OTHER REFERENTIAL PROVISIONS.............................24
SECTION 1.3 EXHIBITS AND SCHEDULES...................................26
ARTICLE II. REVOLVING CREDIT LOANS............................................26
SECTION 2.1 REVOLVING CREDIT LOANS...................................26
SECTION 2.2 MANNER OF BORROWING REVOLVING CREDIT LOANS...............26
SECTION 2.3 REPAYMENT OF REVOLVING CREDIT LOANS; REDUCTION
OF COMMITMENTS...........................................27
SECTION 2.4 REVOLVING CREDIT NOTE....................................28
SECTION 2.5 MANDATORY REPAYMENTS.....................................38
ARTICLE III. LETTER OF CREDIT FACILITY........................................28
SECTION 3.1 ISSUANCE.................................................28
SECTION 3.2 ADVANCES AUTOMATIC; PARTICIPATIONS.......................28
SECTION 3.3 CASH COLLATERAL..........................................29
SECTION 3.4 FEES AND EXPENSES........................................30
SECTION 3.5 REQUEST FOR INCURRENCE OF LETTER OF CREDIT
OBLIGATIONS..............................................30
SECTION 3.6 OBLIGATION ABSOLUTE......................................30
SECTION 3.7 INDEMNIFICATION; NATURE OF LENDERS' DUTIES...............31
ARTICLE IV. GENERAL LOAN PROVISIONS...........................................31
SECTION 4.1 INTEREST.................................................31
SECTION 4.2 FEES.....................................................32
SECTION 4.3 MANNER OF PAYMENT; APPLICATION OF PROCEEDS...............33
SECTION 4.4 LOAN ACCOUNTS; STATEMENTS OF ACCOUNT.....................33
SECTION 4.5 TERMINATION OF AGREEMENT.................................34
SECTION 4.6 MAKING OF ADVANCES.......................................34
SECTION 4.7 SETTLEMENT AMONG LENDERS.................................35
SECTION 4.8 CHANGED CIRCUMSTANCES....................................37
SECTION 4.9 OBLIGATIONS ABSOLUTE.....................................38
SECTION 4.10 BORROWERS' REPRESENTATIVE................................38
SECTION 4.11 AGENT ADVANCES...........................................39
SECTION 4.12 OVERADVANCES.............................................39
SECTION 4.13 RESERVED.................................................40
SECTION 4.14 JOINT AND SEVERAL LIABILITY..............................40
SECTION 4.15 WAIVER OF SURETYSHIP DEFENSES............................41
SECTION 4.16 CONTRIBUTION AND INDEMNIFICATION AMONG THE
BORROWERS................................................42
SECTION 4.17 SUBORDINATION............................................42
SECTION 4.18 SUPER PRIORITY; NATURE OF SECURED OBLIGATIONS AND
THE AGENT'S LIENS........................................59
SECTION 4.19 WAIVER...................................................60
ARTICLE V. CONDITIONS PRECEDENT...............................................43
SECTION 5.1 CONDITIONS PRECEDENT TO REVOLVING CREDIT LOANS
AND LETTERS OF CREDIT....................................43
SECTION 5.2 ALL ADVANCES; LETTERS OF CREDIT..........................45
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BORROWERS.......................46
SECTION 6.1 REPRESENTATIONS AND WARRANTIES...........................46
ARTICLE VII. SECURITY INTEREST................................................54
SECTION 7.1 SECURITY INTEREST........................................54
SECTION 7.2 CONTINUED PRIORITY OF SECURITY INTEREST..................54
SECTION 7.3 LIENS UNDER ORDERS.......................................75
SECTION 7.4 PLEDGED COLLATERAL.......................................75
ARTICLE VIII. COLLATERAL COVENANTS............................................56
SECTION 8.1 COLLECTIONS; PAYMENTS....................................56
SECTION 8.2 INSPECTION, VERIFICATION AND NOTIFICATION................57
SECTION 8.3 INVENTORY COVENANTS......................................58
SECTION 8.4 RETURNED INVENTORY.......................................58
SECTION 8.5 OWNERSHIP AND DEFENSE OF TITLE...........................59
SECTION 8.6 INSURANCE................................................59
SECTION 8.7 RECORDS RELATING TO COLLATERAL; LOCATION OF
OFFICES AND COLLATERAL...................................60
SECTION 8.8 INFORMATION AND REPORTS..................................60
SECTION 8.9 COVENANTS REGARDING INTELLECTUAL PROPERTY
COLLATERAL...............................................62
SECTION 8.10 LANDLORD AND OTHER WAIVERS...............................62
SECTION 8.11 CONTROL AGREEMENTS.......................................62
SECTION 8.12 REAL ESTATE AND FIXTURES.................................62
ARTICLE IX. AFFIRMATIVE COVENANTS.............................................63
SECTION 9.1 PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR
MATTERS..................................................63
SECTION 9.2 COMPLIANCE WITH APPLICABLE LAW...........................63
SECTION 9.3 MAINTENANCE OF PROPERTY..................................63
SECTION 9.4 CONDUCT OF BUSINESS......................................63
SECTION 9.5 INSURANCE................................................63
SECTION 9.6 PAYMENT OF TAXES AND CLAIMS..............................63
SECTION 9.7 ACCOUNTING METHODS AND FINANCIAL RECORDS.................64
SECTION 9.8 USE OF PROCEEDS..........................................64
SECTION 9.9 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL
REQUIREMENTS.............................................64
SECTION 9.10 FURTHER ASSURANCES.......................................64
ARTICLE X. INFORMATION........................................................64
SECTION 10.1 FINANCIAL STATEMENTS.....................................66
SECTION 10.2 RESERVED.................................................66
SECTION 10.3 OFFICER'S CERTIFICATE....................................66
SECTION 10.4 COPIES OF OTHER REPORTS..................................66
SECTION 10.5 NOTICE OF LITIGATION AND OTHER MATTERS...................66
SECTION 10.6 ERISA....................................................67
SECTION 10.7 ACCURACY OF INFORMATION..................................67
SECTION 10.8 REVISIONS OR UPDATES TO SCHEDULES........................67
SECTION 10.9 CHAPTER 11 CASES.........................................92
SECTION 10.10 BUDGET...................................................92
ARTICLE XI. NEGATIVE COVENANTS................................................69
SECTION 11.1 FINANCIAL COVENANTS......................................69
SECTION 11.2 INDEBTEDNESS FOR MONEY BORROWED..........................69
SECTION 11.3 GUARANTIES...............................................69
SECTION 11.4 RESTRICTED INVESTMENTS...................................69
SECTION 11.5 CAPITAL EXPENDITURES.....................................69
SECTION 11.6 RESTRICTED DISTRIBUTIONS AND PAYMENTS....................70
SECTION 11.7 MERGER, CONSOLIDATION AND SALE OF ASSETS.................70
SECTION 11.8 TRANSACTIONS WITH AFFILIATES.............................70
SECTION 11.9 LIENS....................................................70
SECTION 11.10 OPERATING LEASES.........................................70
SECTION 11.11 BENEFIT PLANS............................................70
SECTION 11.12 SALES AND LEASEBACKS.....................................70
SECTION 11.13 CAPITAL STRUCTURE AND BUSINESS...........................70
SECTION 11.14 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS..................70
SECTION 11.15 NO SPECULATIVE TRANSACTIONS..............................71
SECTION 11.16 SUBORDINATED INDEBTEDNESS................................71
SECTION 11.17 TERMINATIONS; AMENDMENTS NOT AUTHORIZED..................71
SECTION 11.18 NO RESTRICTION ON PAYMENTS TO AGENT......................71
SECTION 11.19 PRE-PETITION INDEBTEDNESS................................95
SECTION 11.20 PAYMENT OF INDEBTEDNESS..................................96
SECTION 11.21 CHAPTER 11 CLAIMS........................................97
ARTICLE XII. DEFAULT..........................................................72
SECTION 12.1 EVENTS OF DEFAULT........................................72
SECTION 12.2 REMEDIES.................................................75
SECTION 12.3 APPLICATION OF PROCEEDS..................................77
SECTION 12.4 MISCELLANEOUS PROVISION CONCERNING REMEDIES..............77
SECTION 12.5 TRADEMARK LICENSE........................................79
ARTICLE XIII. ASSIGNMENTS.....................................................79
SECTION 13.1 SUCCESSORS AND ASSIGNS...................................79
SECTION 13.2 ASSIGNMENTS; PARTICIPATIONS..............................79
SECTION 13.3 REPRESENTATION OF LENDERS................................81
ARTICLE XIV. THE AGENT........................................................81
SECTION 14.1 APPOINTMENT OF AGENT.....................................81
SECTION 14.2 DELEGATION OF DUTIES.....................................82
SECTION 14.3 EXCULPATORY PROVISIONS...................................82
SECTION 14.4 RELIANCE BY AGENT........................................82
SECTION 14.5 NOTICE OF DEFAULT........................................82
SECTION 14.6 NON-RELIANCE ON AGENT AND OTHER LENDERS..................82
SECTION 14.7 INDEMNIFICATION..........................................83
SECTION 14.8 AGENT IN ITS INDIVIDUAL CAPACITY.........................83
SECTION 14.9 SUCCESSOR AGENT..........................................83
SECTION 14.10 NOTICES FROM AGENT TO LENDERS............................83
SECTION 14.11 AGENCY FOR PERFECTION....................................83
ARTICLE XV. MISCELLANEOUS.....................................................84
SECTION 15.1 NOTICES..................................................84
SECTION 15.2 EXPENSES.................................................85
SECTION 15.3 STAMP AND OTHER TAXES....................................86
SECTION 15.4 SETOFF; PRO RATA PARTICIPATION...........................86
SECTION 15.5 LITIGATION...............................................87
SECTION 15.6 RESERVED.................................................87
SECTION 15.7 REVERSAL OF PAYMENTS.....................................87
SECTION 15.8 INJUNCTIVE RELIEF........................................87
SECTION 15.9 AMENDMENTS...............................................87
SECTION 15.10 PERFORMANCE OF EACH BORROWER'S DUTIES....................88
SECTION 15.11 INDEMNIFICATION..........................................89
SECTION 15.12 ALL POWERS COUPLED WITH INTEREST.........................89
SECTION 15.13 SURVIVAL.................................................89
SECTION 15.14 SEVERABILITY OF PROVISIONS...............................89
SECTION 15.15 GOVERNING LAW............................................89
SECTION 15.16 COUNTERPARTS.............................................89
SECTION 15.17 REPRODUCTION OF DOCUMENTS................................89
SECTION 15.18 TERM OF AGREEMENT........................................90
SECTION 15.19 CONFIDENTIALITY..........................................90
SECTION 15.20 PRE-PETITION LOAN AGREEMENT.............................119
EXHIBITS-1
EXHIBITS
--------
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF NOTICE OF PROPOSED ADVANCE/CONVERSION/
CONTINUATION
EXHIBIT C FORM OF POWER OF ATTORNEY
EXHIBIT D FORM OF ASSIGNMENT AND TRANSFER AGREEMENT
EXHIBIT E .........FORM OF ACCOUNTS BORROWING BASE
CERTIFICATE
EXHIBIT F .........FORM OF INVENTORY BORROWING BASE
CERTIFICATE
EXHIBIT G .........CERTAIN LETTER OF CREDIT FEES
EXHIBIT H .........EXISTING FLEET LETTERS OF CREDIT
EXHIBIT I .........INTERIM ORDER
SCHEDULES-1
SCHEDULES
---------
SCHEDULE 1.1: Commercial Tort Claims
SCHEDULE 1.2: Mortgaged Properties
SCHEDULE 2.2: Authorized Officers
SCHEDULE 5.1 First Day Orders
SCHEDULE 6.1(a): Organization; Power; Qualification; FEIN
SCHEDULE 6.1(b): Subsidiaries and Ownership of the Borrowers
SCHEDULE 6.1(e): Business Description
SCHEDULE 6.1(f): Compliance with Law; Government Approvals
SCHEDULE 6.1(g): Titles to Properties
SCHEDULE 6.1(h): Liens
SCHEDULE 6.1(i): Indebtedness and Guaranties
SCHEDULE 6.1(j): Litigation
SCHEDULE 6.1(k): Tax Returns and Payments
SCHEDULE 6.1(o): Benefit Plans; ERISA
SCHEDULE 6.1(s): Inventory
SCHEDULE 6.1(u): Chief Executive Office
SCHEDULE 6.1(v): Real Property
SCHEDULE 6.1(w): Corporate and Fictitious Names
SCHEDULE 6.1(z): Employee Relations
SCHEDULE 6.1(aa): Intellectual Property
SCHEDULE 6.1(bb): Trade Names
SCHEDULE 6.1(cc): Brokers
SCHEDULE 6.1(dd): Insurance
SCHEDULE 6.1(ee): Deposit and Disbursement Accounts
SCHEDULE 6.1(ff): Government Contracts
SCHEDULE 6.1(gg): Trade Relations
SCHEDULE 6.1(hh): Agreements and other Documents
SCHEDULE 9.8: Use of Proceeds
POST-PETITION
LOAN AND SECURITY AGREEMENT
Dated as of December 16, 2004
TROPICAL SPORTSWEAR INT'L CORPORATION, a Florida corporation
("Parent"), TROPICAL SPORTSWEAR COMPANY, INC., a Delaware corporation ("TSCI"),
SAVANE INTERNATIONAL CORP., a Texas corporation ("Savane"), APPAREL NETWORK
CORP., a Florida corporation ("Apparel"), TSI BRANDS, INC., a Delaware
corporation ("TSI"), and TSIL, INC., a Delaware corporation ("TSIL"; and
together with Parent, TSCI, Savane, Apparel and TSI, the "Borrowers" and each,
a "Borrower"), the financial institutions party to this Agreement from time to
time (collectively, the "Lenders"), and THE CIT GROUP/COMMERCIAL SERVICES,
INC., a New York corporation, as agent for the Lenders (in such capacity, the
"Agent") agree as follows:
RECITALS:
A........The Borrowers, the Lenders and the Agent are parties
to that certain Loan and Security Agreement, dated as of June 17, 2004 (the
"Pre-Petition Loan Agreement"), pursuant to the terms and conditions of which
the Lenders have made available to the Borrowers a revolving credit facility in
an aggregate amount of up to $60,000,000 (including a letter of credit subline
in an aggregate amount of up to $40,000,000).
B........On December 16, 2004 (the "Petition Date"), the
Borrowers commenced Chapter 11 Case No. [_______] (the "Chapter 11 Cases") by
filing voluntary petitions for reorganization under chapter 11 of title 11 of
the United States Code, 11 U.S.C.ss.ss.101 et seq. (the "Bankruptcy Code"), with
the United States Bankruptcy Court for the Middle District of Florida (the
"Bankruptcy Court").
C........The Borrowers continue to operate their business and
manage their properties as debtors and debtors in possession pursuant to
Sections 1107(a) and 1108 of the Bankruptcy Code.
D........The Borrowers have requested that the Agent and the
Lenders provide a debtor in possession revolving credit facility in an
aggregate amount of up to $50,000,000 (including a letter of credit subline in
an aggregate amount of up to $36,000,000).
E........The Borrowers intend to utilize such funds to repay
the Pre-Petition Revolving Credit Loans and to fund their working capital
requirements during the pendency of the Chapter 11 Cases.
ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions. For the purposes of this Agreement:
"Accounts" means, as to any Person, all of such Person's then
owned or existing and future acquired or arising (a) "accounts", as such terms
is defined in the Uniform Commercial Code, and any and all other receivables
(whether or not specifically listed on schedules furnished to Agent),
including, without limitation, all accounts created by, or arising from, all of
any Borrower's sales, leases, rentals or other dispositions of goods or
renditions of services to its customers (whether or not they have been earned
by performance), including but not limited to, those accounts arising from
sales, leases, rentals or other dispositions of goods or rendition of services
made under any of the trade names, logos or styles of any Borrower, or through
any division of any Borrower; (b) Instruments, Documents, Chattel Paper,
Contracts, Contract Rights, acceptances, and tax refunds relating to any of the
foregoing or arising therefrom; (c) unpaid seller's rights (including
rescission, replevin, reclamation, repossession and stoppage in transit)
relating to any of the foregoing or arising therefrom; (d) rights to any Goods
relating to any of the foregoing or arising therefrom, including rights to
returned, reclaimed or repossessed Goods; (e) reserves and credit balances
relating to any of the foregoing or arising therefrom; (f) Supporting
Obligations and Letter of Credit Rights relating to any of the foregoing or
arising therefrom; (g) insurance policies or rights relating to any of the
foregoing; (h) General Intangibles relating to any of the foregoing or arising
therefrom including, without limitation, all payment intangibles and other
rights to payment (including, but not limited to, those arising in connection
with bank and non-bank credit card receivables) and books and records and any
electronic media and software relating thereto; (i) notes, deposits or property
of Account Debtors relating to any of the foregoing or arising therefrom
securing the obligations of any such Account Debtors to the Borrowers; and (l)
cash and non-cash Proceeds of any and all the foregoing.
"Accounts Borrowing Base" means at any time, for the Borrowers
in the aggregate, an amount equal to the sum of (A) ninety percent (90%) of
Eligible Credit Approved Accounts plus (2) eighty-five percent (85%) of
Eligible Non-Credit Approved Accounts.
The Agent shall have, and reserves, the right at any time, in
its reasonable credit judgment, to adjust the foregoing advance rate
percentages.
"Accounts Borrowing Base Certificate" means a certificate in
the form attached hereto as Exhibit E (or another form acceptable to the Agent)
setting forth the calculation of the Accounts Borrowing Base, including a
calculation of each component thereof, in sufficient detail by Borrowers or
otherwise in such detail as shall be reasonably satisfactory to the Agent. All
calculations of the Accounts Borrowing Base in connection with the preparation
of any Accounts Borrowing Base Certificate shall originally be made by the
Borrowers and certified to the Agent; provided, that the Agent shall have the
right to review and adjust, in the exercise of its reasonable credit judgment,
any such calculation (a) to reflect its reasonable estimate of declines in
value of any of the Collateral described therein, and (b) to the extent that
such calculation is not in accordance with this Agreement.
"Account Debtor" means a Person who is obligated on or in
connection with an Account.
"ACH Transactions" means any cash management or related
services including the automatic clearing house transfer of funds by a Lender
for the account of the Borrowers pursuant to agreement or overdrafts.
"Advance" means an amount or amounts advanced or to be
advanced, as the context requires, by the Lenders to the Borrowers under the
Revolving Credit Facility pursuant to Article 2 hereof.
"Affiliate" means, with respect to a Person, (a) any partner,
officer, manager, director, employee or managing agent of such Person or such
Person's Affiliates; and (b) any other Person (other than a Subsidiary) that,
(i) directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such given Person, (ii)
directly or indirectly beneficially owns or holds 20% or more of any class of
voting stock or partnership or other voting interest of such Person or any
Subsidiary of such Person, or (iii) 20% or more of the voting stock or
partnership or other voting interest of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or partnership or other voting
interest, by contract or otherwise; provided, however, that the term
"Affiliate" shall specifically exclude the Agent and each Lender.
"Agent" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 15.1(c) hereof.
"Agreement" means this Post-Petition Loan and Security
Agreement, including all Schedules, Exhibits and other attachments hereto, and
all amendments, modifications and supplements hereto and thereto and shall mean
and refer to this Agreement as the same may be in effect at the time such
reference becomes operative.
"Agreement Date" means the date as of which this Agreement is
dated.
"Allowed Professional Fees" has the meaning ascribed to such
term in Section 4.18(c).
"Applicable Law" means all applicable provisions of
constitutions, statutes, rules, regulations and orders of all governmental
bodies and of all orders and decrees of all courts and arbitrators, including,
without limitation, applicable Environmental Laws.
"Appraised FM Value" means the fair market value of the
relevant property determined from time to time pursuant to periodic appraisals
(i) conducted by an appraiser satisfactory to the Agent, in its sole
discretion, (ii) which contain results and values which are satisfactory to the
Agent, in its sole discretion, and (iii) which have been accepted by the Agent,
in its sole discretion, and such acceptance has been communicated to the
Borrowers.
"Appraised OL Value" means the net "orderly liquidation" value
of the relevant property determined from time to time pursuant to periodic
appraisals (i) conducted by an appraiser satisfactory to the Agent, in its sole
discretion, (ii) which contain results and values which are satisfactory to the
Agent, in its sole discretion, and (iii) which have been accepted by the Agent,
in its sole discretion, and such acceptance has been communicated to the
Borrowers.
"Approved Sale Price" means, solely with respect to De Minimis
Asset Dispositions, the aggregate purchase price or other consideration, as
approved by the Bankruptcy Court, to be received by the Debtors as
consideration for any asset or assets subject to the Asset Disposition.
"Asset Disposition" means the sale, transfer, conveyance or
other disposition (including, without limitation, pursuant to any merger,
consolidation or sale-leaseback transaction) of any asset or property of any of
the Borrowers including, but not limited to, the capital stock of any Borrower
or any Subsidiary of any Borrower, but excluding sales of Inventory in the
ordinary course of business.
"Assignment and Transfer" means an assignment and transfer,
substantially in the form of Exhibit D hereto, assigning all or a portion of a
Lender's interests, rights and obligations under this Agreement pursuant to
Section 13.2.
"Availability Reserve" means an amount equal to (a) the
Inventory Reserves plus (b) the Minimum Excess Availability Reserve plus (c) a
reserve or reserves in the full amount of the Carve-Out Amount plus (d) an
amount equal to the Pre-Petition Indebtedness plus (e) three (3) months rental
payments or similar charges for any Borrower's leased premises or other
Collateral locations (other than show rooms and sales offices with an amount of
Inventory deemed by the Agent to be immaterial) for which such Borrower has not
delivered to the Agent a Waiver and Consent plus (f) the amount of such other
reserve or reserves as the Agent may establish or deem necessary from time to
time in the exercise of its reasonable credit judgment including, without
limitation, as a result of (i) any reserve established by Agent, in its
discretion, pursuant to Sections 8.1, 8.10, and 8.11 hereof, (ii) any negative
forecasts and/or trends in the business, prospects, operation or financial
condition of the Borrowers (iii) the occurrence of any event or existence of
any condition which has adversely impacted or is reasonably anticipated to
adversely impact the perfection, priority, validity or enforceability of the
Security Interest or Agent's and Lenders' ability to realize on the value of
the Collateral or which is otherwise expected to have a Materially Adverse
Effect, (iv) the existence of any material and unanticipated cash requirement
or liability of the Borrowers, or (v) any other issues, circumstances or facts
that could otherwise negatively impact the Borrowers or the business,
prospects, operations, financial condition or assets of the Borrowers.
"Bank Products" means any one or more of the following types
of services or facilities extended to the Borrowers by FCC or any Affiliate of
FCC (and for purposes hereof, Bank of America, N.A., will be deemed an
Affiliate of FCC): (i) ACH Transactions and (ii) cash management services and
products, including controlled disbursement services, checking accounts, wire
transfer services and all fees and expenses associated therewith.
"Bank Products Liabilities" means Liabilities of a Borrower to
FCC or any Affiliate of FCC arising out of or relating to Bank Products.
"Bankruptcy Code" has the meaning ascribed to such term in the
recitals to this Agreement.
"Bankruptcy Court" has the meaning ascribed to such term in
the recitals to this Agreement.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure and the Official Bankruptcy forms, as amended, the Federal Rules of
Civil Procedure, as amended, as applicable to the Chapter 11 Cases or
proceedings therein, and the local rules of the Bankruptcy Court, as applicable
to the Chapter 11 Cases or proceedings therein, as the case may be.
"Benefit Plan" or "Plan" means an "employee benefit plan" as
defined in Section 3(3) of ERISA (other than a Multi-Employer Plan) in respect
of which a Borrower or any Related Company is, or with respect to defined
benefit plans (as defined under ERISA) within the immediately preceding six
years was, an "employer" as defined in Section 3(5) of ERISA, including such
plans as may be established after the Agreement Date.
"Blocked Account" shall have the meaning ascribed to such term
in Section 8.1(a)(i) of this Agreement.
"Borrower" and "Borrowers" shall have the meanings ascribed to
such terms in the preamble of this Agreement.
"Borrowing Base" means at any time, for the Borrowers in the
aggregate, an amount equal to the lesser of:
(a) an amount equal to (i) the Revolving Credit Facility Amount minus (ii)
an amount equal to the sum of (A) the Letter of Credit Reserve, and (B)
the amount of any Availability Reserves,
or
(b) an amount equal to (i) the sum of (A) the Accounts Borrowing Base; (B)
the Inventory Borrowing Base; and (C) the Fixed Asset Borrowing Base;
minus (ii) an amount equal to the sum of (A) the Letter of Credit
Reserve, and (B) the amount of any Availability Reserves.
"Borrowing Notice" shall have the meaning assigned to such
term in Section 2.2(a)(i).
"Budget" means a rolling thirteen week cash flow forecast (on
a cash basis) initially covering the period from the Petition Date through
March 18, 2005 and other cash flow and financial projections that itemize on a
weekly basis all material expenditures proposed to be made during the term of
this Agreement.
"Business Day" means any day other than a Saturday, Sunday or
other day on which either (i) the office of Chase Bank, in New York, New York
or (ii) the Agent's office in Charlotte, North Carolina, is authorized to close.
"Capital Expenditures" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year
or years.
"Capitalized Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented
by obligations under a Capitalized Lease, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"CARPA" means the Credit Approved Receivables Purchase
Agreement dated November 1, 2003 between CIT and the Parent, as the same may be
amended, modified or supplemented from time to time.
"Carve-Out" has the meaning ascribed to such term in Section
4.18(c).
"Carve-Out Amount" has the meaning ascribed to such term in
Section 4.18(c).
"Carve-Out Expense" has the meaning ascribed to such term in
Section 4.18(c).
"Cash Collateral" means collateral consisting of cash or Cash
Equivalents on which the Agent, for the benefit of itself as Agent and the
Lenders, has a first priority Lien.
"Cash Collateral Account" shall have the meaning assigned to
such term in Section 3.3(a) hereof.
"Cash Equivalents" means
(a) marketable direct obligations issued or unconditionally guaranteed by
the United States Government or issued by any agency thereof and backed
by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof;
(b) commercial paper maturing no more than one year from the date issued
and, at the time of acquisition thereof, having a rating of at least
A-2 from Standard & Poor's Corporation or at least P-1 from ▇▇▇▇▇'▇
Investors Service, Inc.;
(c) certificates of deposit or bankers' acceptances issued in Dollar
denominations and maturing within one year from the date of issuance
thereof issued by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than
$250,000,000.00 and, unless issued by the Agent or a Lender, not
subject to set-off or offset rights in favor of such bank arising from
any banking relationship with such bank; and
(d) repurchase agreements in form and substance and for amounts
satisfactory to the Agent with a term of not more than seven days for
underlying securities of the types described in clauses (a), (b) and
(c) above, entered into with any financial institution meeting the
qualifications specified in clause (c).
"Change of Control" means any of the following: (a) any
person or group of persons (within the meaning of the Securities Exchange Act
of 1934,) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934,) of 40% or more of the issued and outstanding
shares of capital stock of Parent having the right to vote for the election of
directors of Parent under ordinary circumstances; (b) during any period of
twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Parent (together with any new
directors whose election by the board of directors of Parent or whose
nomination for election by the Stockholders of Parent was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office; (c) Parent
ceases to own and control, directly or indirectly, all of the economic and
voting rights associated with all of the outstanding capital stock of the other
Borrowers or (d) Borrowers cease to own and control, directly or indirectly,
all of the economic and voting rights associated with all of the outstanding
capital stock of any of its Subsidiaries.
"Chapter 11 Cases" has the meaning ascribed to such term in
the recitals to this Agreement.
"Charges" means all Federal, state, county, city, municipal,
local, foreign or other governmental taxes (including, without limitation,
taxes owed to PBGC at the time due and payable), levies, assessments, charges,
liens, claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Secured Obligations, (iii) the employees, payroll, income or gross receipts of
a Borrower, (iv) the ownership or use of any assets by a Borrower, or (v) any
other aspect of a Borrower's business.
"Chase Bank" means JPMorgan Chase Bank, N.A., a national
banking association.
"Chase Bank Rate" means the rate of interest per annum
announced by Chase Bank from time to time as its prime rate in effect at its
principal office in the City of New York. Such rate is not intended to be the
lowest rate of interest charged by Chase Bank to its borrowers.
"Chattel Paper" means as to any Person, any "chattel paper,"
as such term is defined in the Uniform Commercial Code, including electronic
chattel paper, now owned or hereafter acquired by such Person.
"CIT" means The CIT Group/Commercial Services, Inc., a New
York corporation, in its capacity other than as Agent.
"Clearing Bank" means any banking institution with which a
Blocked Account has been established pursuant to a Lockbox Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all of each Borrower's right, title and
interest in and to each of the following (whether in the name of such Borrower
or under any of such Borrower's Trade Names), wherever located and whether now
or hereafter existing or now owned or hereafter acquired or arising:
(a) all Accounts,
(b) all Chattel Paper,
(c) all Contracts,
(d) all Contract Rights,
(e) all Deposit Accounts,
(f) all Documents,
(g) all Equipment,
(h) all Fixtures,
(i) all General Intangibles (including payment intangibles and Software),
(j) all Instruments,
(k) all Inventory,
(l) all Investment Property,
(m) all Mortgaged Properties,
(n) all commercial tort claims (which are specifically described on
Schedule 1.1),
(o) all Supporting Obligations and Letter of Credit Rights,
(p) all other Goods and property, whether or not delivered, including,
without limitation, such other goods and property (i) the sale or lease
of which gives or purports to give rise to any Account or other
Collateral, including, but not limited to, all Inventory and other
merchandise returned or rejected by or repossessed from customers, or
(ii) securing any Account or other Collateral, including, without
limitation, all rights as an unpaid vendor or lienor (including,
without limitation, stoppage in transit, replevin and reclamation) with
respect to such other Goods and properties,
(q) all substitutes and replacements for, accessories, attachments, and
other additions to, any of the above and any and all products or masses
into which any Goods are physically united such that their identity is
lost,
(r) all policies and certificates of insurance relating to any of the
foregoing, now owned or hereafter acquired, evidencing or pertaining to
any and all items of Collateral,
(s) all files, correspondence, computer programs, tapes, discs and related
data processing software which contain information identifying or
pertaining to any of the Collateral or any Account Debtor, or showing
the amounts thereof or payments thereon or otherwise necessary or
helpful in the realization thereon or the collection thereof,
(t) all cash deposited with the Agent or any Lender or any Affiliate of the
Agent or any Lender or which the Agent, for the benefit of the Lenders,
or any Lender or such Affiliate is entitled to retain or otherwise
possess as Collateral pursuant to the provisions of this Agreement or
any of the Security Documents or any agreement relating to any Letters
of Credit, and
(u) any and all products and Proceeds of the foregoing (including, but not
limited to, any claim to any item referred to in this definition, and
any claim against any third party for loss of, damage to or destruction
of any or all of, the Collateral or for proceeds payable under, or
unearned premiums with respect to, policies of insurance) in whatever
form, including, but not limited to, cash, Instruments, Chattel Paper,
security agreements and other documents.
"Collection Account" means the Agent's account, currently at
Wachovia Bank, National Association, Charlotte, North Carolina.
"Collection Report" means a report delivered by the Borrowers
to the Agent, from time to time, pursuant to the provisions of Section 8.8(b).
"Commitment" means, as to each Lender, the amount set forth
opposite such Lender's name on the signature pages hereof (or in the Register),
representing such Lender's obligation, upon and subject to the terms and
conditions of this Agreement, to make Advances and to purchase participations
in Letters of Credit.
"Commitment Percentage" means, as to any Lender, the
percentage of the Revolving Credit Facility Amount obtained by dividing such
Lender's Commitment by the Revolving Credit Facility Amount.
"Committees" means, collectively, the official committee of
unsecured creditors and any other committee formed, appointed or approved in
the Chapter 11 Cases, and each of such committees shall be referred to as a
"Committee."
"Common Stock" means, with respect to any corporation, the
shares of common stock of such corporation.
"Consolidated Net Income" means, for any period, the net
income or loss of the Borrowers and their consolidated Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
"Consolidating Balance Sheet" means a Consolidated Balance
Sheet plus individual balance sheets for each Borrower and its consolidated
Subsidiaries, showing all eliminations of inter-company transactions and
prepared in such form as is satisfactory to the Agent.
"Consolidated Balance Sheet" means a consolidated balance
sheet for the Borrowers and their consolidated Subsidiaries, eliminating all
inter-company transactions and Liabilities and prepared in accordance with GAAP.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contracts" means, as to any Person, all "contracts" as such
term is defined in the Uniform Commercial Code, including, without limitation,
all of such Person's then owned or existing and future acquired or arising
contracts, undertakings, or agreements (other than rights evidenced by chattel
paper, documents or instruments as such terms are defined in the Uniform
Commercial Code) in or under which such Person may now or hereafter have any
right, title or interest, including, without limitation, any agreement relating
to Inventory, the terms of payment or the terms of performance of any Account
or any other Collateral.
"Contract Rights" means, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights under
Contracts not yet fully performed and not evidenced by an instrument or chattel
paper, to the extent that the same may lawfully be assigned.
"Control Agreement" means an acknowledgement from, or an
agreement among the Borrowers, the Agent, for the benefit of the Lenders, and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Borrower, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the
name of any Borrower, or (iii) a futures commission merchant or clearing house,
as applicable, with respect to commodity accounts and commodity contracts held
by any Borrower, whereby, among other things, the issuer, securities
intermediary, or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of the Agent, for the
benefits of the Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of the Agent without further consent by the
affected Borrower.
"Cost" means with respect to Eligible Inventory of a Borrower
the lower of cost, determined on a first-in first-out basis, or fair market
value of such Eligible Inventory as determined in accordance with GAAP.
"De Minimis Asset Disposition" means any Asset Disposition for
which the Approved Sale Price of the asset or assets sold, transferred,
conveyed, or otherwise disposed of (including, without limitation, pursuant to
any merger, consolidation or sale-leaseback transaction) does not exceed
$50,000, provided, however, that the aggregate amount of all De Minimis Asset
Dispositions shall not exceed $500,000.
"Default" means any of the events specified in Section 12.1
which with the passage of time or giving of notice or both would constitute an
Event of Default.
"Default Margin" means two percent (2%) per annum.
"Deposit Accounts" means, as to any Person, all "deposit
accounts" as defined in the Uniform Commercial Code, now owned or hereafter
acquired, including, without limitation, all of such Person's demand, time,
savings, passbook, money market or like depository accounts and all
certificates of deposit, maintained with a bank, savings and loan association,
credit union or like organization (other than an account evidenced by a
certificate of deposit that is an instrument under the Uniform Commercial Code).
"Disbursement Account" means an account maintained by and in
the name of a Borrower with a Disbursing Bank for the purposes of depositing
proceeds of Advances.
"Disbursing Bank" means any commercial bank within which a
Borrower maintains a Disbursement Account after the Effective Date.
"Documentary Letter of Credit" means any documentary letter of
credit issued or authorized to be issued by an Issuing Bank for the account of
a Borrower pursuant to Article 3 hereof.
"Documents" means, as to any Person, all "documents" as
defined in the Uniform Commercial Code, now owned or hereafter acquired,
including, without limitation, all of such Person's certificates or documents
of origin and of title, warehouse receipts and manufacturers statements of
origin.
"Domestic Subsidiary" means a Subsidiary of a Borrower (other
than a Subsidiary that is a Borrower) that is incorporated under the laws of a
state of the United States or the District of Columbia.
"Dollar" and "$" means freely transferable United States
dollars.
"Early Termination Date" means any date, prior to the
Expiration Date, on which the Borrowers terminate this Agreement or the
Revolving Credit Facility pursuant to Section 4.5.
"EBITDA" means, for any period Consolidated Net Income for
such period plus without duplication and to the extent deducted in the
determination of Consolidated Net Income for such period, (a) interest, income
taxes, depreciation and amortization expenses, (b) non cash charges for
capitalized CIT costs (which non-cash charges shall not exceed the aggregate
sum of $600,000 during the term of this Agreement); and (c) court approved
professional fees and severance and retention costs related to the petition for
Chapter 11, all as determined on a consolidated basis in accordance with GAAP.
"Effective Date" means the later of (a) the Agreement Date, or
(b) the first date on which all of the conditions set forth in Article 5 shall
have been fulfilled.
"Effective Interest Rate" means the rate of interest per annum
on the Revolving Credit Loans in effect from time to time pursuant to the
provisions of Section 4.1(a).
"Eligible Accounts" of a Borrower, means the unpaid portion of
any Account, including credit card receivables, payable in Dollars to such
Borrower net of any returns, discounts, claims, credits, charges or other
allowances, offsets, deductions, counterclaims, disputes or other defenses and
reduced by the aggregate amount of all reserves, limits and deductions provided
for in this definition, which are deemed by Agent in its reasonable credit
judgment to be eligible for inclusion in the calculation of the Accounts
Borrowing Base; provided, that, unless otherwise approved in writing by the
Agent, (I) no Account shall be deemed to be an Eligible Account of such
Borrower unless it meets all of the following requirements: (a) such Account
arises from the sale of goods, is owned by such Borrower and represents a
complete bona fide transaction which requires no further act under any
circumstances on the part of such Borrower to make such Account payable by the
Account Debtor; (b) such Account has not been not outstanding for longer than
the earlier of (i) one hundred and twenty (120) days after the invoice date
thereof or (ii) sixty (60) days after the due date thereof; (c) such Account
and the underlying contract does not contravene any laws, rules or regulations
applicable thereto including, without limitation, rules and regulations
relating to truth-in-lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy and no party to
the underlying contract is in violation of any such laws, rules or regulation;
(d) such Account is a valid, legally enforceable obligation of the Account
Debtor with respect thereto and is not subject to any present, or contingent
(and no facts (y) exist to the knowledge of any Borrower, or (z) have been
disclosed in the course of any audit, which are the basis for any future)
offset, deduction or counterclaim, dispute or other defense on the part of such
Account Debtor; (e) such Account is subject to the Security Interest, which is
perfected as to such Account, and is subject to no other Lien whatsoever and
the goods, the sale of which gave rise to the Accounts, were not at the time of
the sale subject to any Lien whatsoever; (f) such Borrower is not in breach of
any express or implied representations or warranty with respect to the goods,
the sale of which gave rise to such Account nor in breach of any representation
or warranty, covenant or other agreement contained in the Loan Documents with
respect to such Account; (g) such Account does not arise out of any transaction
with any Subsidiary, Affiliate, creditor, lessor or supplier of such Borrower;
(h) the Account Debtor with respect thereto is located within the United States
of America; (i) such Account is not subject to the Assignment of Claims Act of
1940, as amended from time to time, or any Applicable Law now or hereafter
existing similar in effect thereto, as determined in the sole discretion of
Lender, or to any provision prohibiting its assignment or requiring notice of
or consent to such assignment; (j) the Account Debtor with respect to such
Account is not insolvent or the subject of any bankruptcy or insolvency
proceedings of any kind or of any other proceeding or action, threatened or
pending, which might, in Agent's reasonable credit judgment, have a materially
adverse effect on such Account Debtor; (k) such Account is not owing by an
Account Debtor (other than Wal Mart or Sam's Club) that has then-existing
Accounts owing to such Borrower, fifty percent (50%) of which are not deemed
Eligible Accounts hereunder; (l) such Account is not owing by Wal Mart or Sam's
Club if either such Account Debtor has then-existing Accounts owing to such
Borrower, twenty-five percent (25%) of which are not deemed Eligible Accounts
hereunder; (m) such Account is evidenced by an invoice or other documentation
in a form acceptable to Agent containing only terms normally offered by such
Borrower; (n) such Account is not evidenced by Chattel Paper or an Instrument
of any kind; (o) such Account does not arise out of a rebill or advertising
▇▇▇▇; (r) the Goods, the sale of which gave rise to such Account, were
delivered to the Account Debtor on an absolute sale basis and not on (i) a ▇▇▇▇
and hold sale basis, (ii) a consignment sale basis, (iii) a guaranteed sale
basis, (iv) a sale or return basis, or (v) on the basis of any similar
understanding, and no material part of such Goods has been returned or
rejected; (p) such Account does not arise from the performance of services
under or related to any warranty claim or obligation, or out of fees or charges
imposed by such Borrower for the time value of money; and (q) any other
requirements deemed necessary by the Agent in its reasonable credit judgment
and which are customary either in the commercial finance industry or in the
lending practices of the Agent, and (II) Eligible Accounts of a Borrower shall
not include any Account (a) owed by an Account Debtor (other than Wal Mart or
Sam's Club) if the aggregate unpaid balance of such Accounts exceeds thirty
percent (30%) of the aggregate unpaid balance of all Eligible Accounts owed to
such Borrower at such time, but only to the extent of such excess or (b) owed
by Wal Mart or Sam's Club if the aggregate unpaid balance of such Accounts
exceeds sixty percent (60%) of the aggregate unpaid balance of all Eligible
Accounts owed to such Borrower at such time, but only to the extent of such
excess.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, having total assets
in excess of $500,000,000 or any commercial finance or asset based lending
affiliate of any such commercial bank; (ii) a savings and loan association or
savings bank organized under the laws of the United States, or any State
thereof, or any finance company, insurance company, fund or institutional
investor regularly engaged in the business of making secured loans, which, in
each of the foregoing cases, has total assets of at least $500,000,000
calculated in accordance with GAAP and, unless a Default or Event of Default
exists, is reasonably acceptable to the Borrowers (such approval by the
Borrowers, when required, not to be unreasonably withheld or delayed and to be
deemed given by Borrowers if no objection is received by the assigning Lender
and the Agent from the Borrowers within two (2) Business Days after notice of
such proposed assignment has been provided by the assigning Lender as set forth
in Section 13.2; and (iii) any Lender listed on the signature page of this
Agreement or any finance Affiliate thereof; provided in the case of the
institutions or Lenders described in clauses (i), (ii) and (iii) of this
definition, such institution or Lender is reasonably acceptable to the Agent
and the representations contained in Section 13.2 hereof shall be applicable
with respect to such institution or Lender.
"Eligible Credit Approved Accounts" means Eligible Accounts
that have been approved as to credit by CIT under the CARPA.
"Eligible Non-Credit Approved Accounts" means Eligible
Accounts that are not Eligible Credit Approved Accounts.
"Eligible Inventory" of a Borrower means items of Inventory of
such Borrower consisting of raw materials or finished goods held for sale in
the ordinary course of the business of such Borrower which are deemed by Agent
in its reasonable credit judgment to be eligible for inclusion in the
calculation of the Inventory Borrowing Base. Unless otherwise approved in
writing by the Agent, no Inventory shall be deemed to be Eligible Inventory of
a Borrower unless it meets all of the following requirements: (a) such
Inventory is owned by such Borrower, is subject to the Security Interest, which
is perfected as to such Inventory, and is not subject to any claim of
reclamation, adverse claim, security interest or right of equal or superior
priority to the Security Interest, or any other Lien whatsoever; (b) such
Inventory consists of raw materials or finished goods, but excludes
work-in-process; (c) such Inventory is in good condition and meets all
standards applicable to such goods for their use or sale imposed by any Person
having regulatory authority over such matters; (d) such Inventory is currently
usable or merchantable and readily saleable, at prices approximating at least
the Cost thereof, in the normal course of such Borrower's business; (e) such
Inventory is not slow moving, stale, obsolete, or seconds; (f) such Inventory
(i) is located at one of the locations listed in Schedule 6.1(s) or is
in-transit to such locations, provided that such Inventory that is in transit is
(x) fully insured with the Agent as the loss payee with respect thereto and (y)
is to be paid for by a drawing on a Documentary Letter of Credit issued by the
Agent or an Issuing Bank and (ii) is not Inventory that has been sold on terms,
FOB customer location or destination; (g) such Inventory is in the possession
and control of the Borrower and not any third party; provided that, if such
Inventory is located in a facility owned by a third party or is subject to a
mortgage in favor of a lender other than Agent, then the mortgagee, lessor,
warehouseman, bailee or other third party, as the case may be, shall have
executed and delivered to the Agent a Waiver and Consent in form and substance
satisfactory to the Agent; (h) such Inventory is not food, perishables, live
plants, freight, damaged, defective or unmerchantable goods, sample inventory,
display items, packaging or shipping materials, supplies used or consumed in a
Borrower's business, shrinkage or Inventory scheduled for return to vendors;
(i) such Borrower is not in breach of any express or implied representation or
warranty with respect to either the Inventory in general or to the Eligible
Inventory; (j) it is not subject to any License Agreement or other agreement
that limits, conditions or restricts such Borrower's or the Agent's right to
sell or otherwise dispose of such Inventory unless (i) the aggregate value
(measured as the lower of cost or market value) of such Inventory is not
greater than $1,000,000 or (ii) the Licensor has entered into a Licensor/Lender
Agreement with the Agent; and (k) such Inventory was not produced in violation
of the Fair Labor Standards Act and subject to the so-called "hot goods"
provision contained in Title 29, Chapter 8, U.S.C.ss.215(a).
"Eligible Letters of Credit" means Documentary Letters of
Credit issued to support the purchase of Inventory by any Borrower for shipment
to the United States of America.
"Environmental Laws" means all federal, state, local and
foreign laws now or hereafter in effect relating to pollution or protection of
the environment, including laws relating to emissions, discharges, Releases or
threatened Releases of pollutants, Contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment (including,
without limitation, ambient air, surface water, ground water, or land), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, removal, transport, or handling of pollutants,
Contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes, and any and all regulations, notices or demand letters issued, entered,
promulgated or approved thereunder; such laws and regulations include but are
not limited to the Resource Conservation and Recovery Act, 42 ▇.▇.▇.▇▇. 6901 et
seq., as amended; the Comprehensive Environmental Response, Compensation and
Liability Act, 42 ▇.▇.▇.▇▇. 6901 et seq., as amended; the Toxic Substances
Control Act, 15 ▇.▇.▇.▇▇. 2601 et seq., as amended; the Clean Air Act, 46 U.S.C.
ss. 7401 et seq., as amended; and state and federal lien and environmental
cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental
entity for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such governmental entity in response to, a Release
or threatened Release of Contaminant into the environment.
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law, including, without
limitation, arising under or related to any Environmental Laws, Environmental
Permits, or in connection with any Release or threatened Release or presence of
a Contaminant whether on, at, in, under, from or about or in the vicinity of
any real or personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals, registrations or other written
documents required by any Governmental Authority under any Environmental Laws.
"Equipment" means, as to any Person, all "equipment" as such
term is defined in the Uniform Commercial Code, now owned or hereafter
acquired, including, without limitation, all of such Person's then owned or
existing and future acquired or arising machinery, apparatus, equipment,
furnishings, Fixtures, motor vehicles, computers, trade fixtures, tractors,
trailers, rolling stock, fittings, and other tangible personal property (other
than Inventory) of every kind and description used in such Person's business
operations or owned by such Person or in which such Person has an interest and
all spare parts, accessories and special tools and all increases and accessions
thereto and substitutions and replacements thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time, and any successor statute.
"Event of Default" means any of the events specified in
Section 12.1, provided that any requirement for notice or lapse of time or any
other express condition has occurred or been satisfied.
"Excess Availability" means, at any time, the amount by which
(a) the Borrowing Base at such time, exceeds (b) the aggregate amount of all
Revolving Credit Loans outstanding at such time.
"Exchange Notes" means a note or other similar security that
is registered under the Securities Act of 1933 and that is exchanged for a
Senior Subordinated Note.
"Existing Fleet Bank Letters of Credit" means those letters of
credit issued by Fleet National Bank prior to the Petition Date and listed on
Exhibit H attached hereto.
"Existing Letters of Credit" means the Existing Fleet Bank
Letters of Credit and the Existing Other Letters of Credit.
"Existing Other Letters of Credit" means those letters of
credit issued for the account of a Borrower under the Pre-Petition Loan
Agreement.
"Expiration Date" means October 1, 2005.
"FCC" shall have the meaning given to such term in the
Recitals to this Agreement and shall include any successor to FCC that is an
Affiliate of Bank of America, N.A.
"Fees" mean any and all fees payable to the Agent or any
Lender pursuant to this Agreement or any of the other Loan Documents.
"Final Order" means, collectively, the order of the Bankruptcy
Court entered in the Chapter 11 Cases after a final hearing under Bankruptcy
Rule 4001(c)(2) or such other procedure as approved by the Court, which order
shall be satisfactory in form and substance to the Agent and the Lenders, and
from which no appeal or motion to reconsider has been timely filed, or if
timely filed, such appeal or motion to reconsider has been dismissed or denied
(unless the Agent and the Lenders waive such requirement), together with all
extensions, modifications and amendments thereto, which, among other matters
but not by way of limitation, authorizes the Borrowers to obtain credit, incur
Indebtedness and grant Liens under the Agreement and the other Loan Documents,
as the case may be, and provides for the super priority of the Agent's and the
Lender's claims.
"Financial Covenant Applicability Date" means any date on
which (a) Excess Availability is less than $2,000,000 on such date and (b) the
Agent has provided the Borrower written notice thereof; provided, however, (i)
after the first Financial Covenant Applicability Date to occur after the
Effective Date, if Excess Availability becomes equal to or greater than
$2,000,000 within ten (10) Business Days after such Financial Covenant
Applicability Date (the date on which Excess Availability becomes equal to or
greater than $2,000,000 being hereinafter known as the "Cure Date"), then such
Financial Covenant Applicability Date shall be deemed not to have occurred and
(ii) the same opportunity shall exist for a Cure Date to occur in respect of
any Financial Covenant Applicability Date after the first Financial Covenant
Applicability Date but only after a period of ninety (90) days has elapsed
after the most recent Cure Date.
"Financial Covenant Inapplicability Date" means any date after
the occurrence of any Financial Covenant Applicability Date on which (a) Excess
Availability is equal to or greater than $2,000,000 on such date and (b) the
Agent has provided the Borrower written notice thereof.
"Financial Officer" means the chief financial officer, chief
accounting officer, Treasurer or Controller of a Borrower, or an officer in a
comparable position at any Borrower.
"Financing Statements" means and includes (a) all UCC
financing statements required by Agent and authorized by a Borrower, in form
and substance satisfactory to the Agent for the purpose of perfecting a
security interest in the personal property Collateral and (b) the Fixture
Filings.
"Fiscal Month" means each of the twelve (12) monthly
accounting periods of the Borrowers comprising their Fiscal Year.
"Fiscal Quarter" means each of the quarterly accounting
periods of the Borrowers comprising their Fiscal Year.
"Fiscal Week" means each of the weekly accounting periods of
the Borrowers comprising their Fiscal Year.
"Fiscal Year" means each of the fiscal years of the Borrowers
ending on the Saturday nearest to September 30th of each calendar year.
"Fixed Asset Borrowing Base" means at any time, for the
Borrowers in the aggregate, an amount equal to the lesser of (i) $3,640,000 or
(ii) the sum of (A) fifty percent (50%) of the Appraised FM Value of the
Mortgaged Property and (B) eighty percent (80%) of the Appraised OL Value of
each Borrower's Equipment. Notwithstanding the foregoing to the contrary, the
Fixed Assets Borrowing Base will be reduced by $400,000 on each of March 1,
June 1, and September 1, 2005 and by the Net Proceeds of any Borrower's
Equipment and Mortgaged Property.
The Agent shall have, and reserves, the right at any time, in
its reasonable credit judgment, to adjust the foregoing advance rate
percentages.
"Fixtures" means, as to any Person, all "fixtures" as such
term is defined in the Uniform Commercial Code, now owned or hereafter acquired
by such Person.
"Fixture Filings" means and includes all of those certain UCC
Financing Statements authorized by Borrowers and delivered to Agent, for the
benefit of Lenders, for the purpose of perfecting a security interest in and to
Borrowers' Fixtures.
"Foreign Subsidiary" means a Subsidiary that is not a Domestic
Subsidiary.
"GAAP" means accounting principles generally accepted in the
United States consistently applied and maintained throughout the period
indicated and consistent with the prior financial practice of the Person
referred to.
"General Intangibles" means, as to any Person, all "general
intangibles" as defined in the Uniform Commercial Code, now owned or hereafter
acquired, including, without limitation, all of such Person's then owned or
existing and future acquired or arising general intangibles, choses in action
and causes of action and all other intangible personal property of such Person
of every kind and nature, including, without limitation, Intellectual Property,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, trade secrets, goodwill, computer software, customer lists,
licenses, franchises, tax refund claims, reversions or any rights thereto and
any other amounts payable to such Person from any Benefit Plan, Multiemployer
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, and business interruption, property,
casualty or any similar type of insurance and any proceeds thereof.
"Goods" means, as to any Person, all "goods" as defined in the
Uniform Commercial Code, now owned or hereafter acquired, including, without
limitation, all of such Person's then owned or existing and future acquired or
arising movables, Fixtures, Equipment, Inventory and other tangible personal
property.
"Government Lists" means any of the following lists: (a) the
"Specially Designated Nationals and Blocked Persons List" maintained by OFAC,
(b) any other list of terrorists, terrorist organizations or narcotics
traffickers maintained pursuant to any of the Rules and Regulations of OFAC
that Agent notifies Borrower in writing is to be included in "Governmental
Lists", or (c) any similar list maintained by the United States Department of
State, the United States Department of Commerce or any other Governmental
Authority or pursuant to any Executive Order of the President of the United
States of America that Agent notifies Borrower in writing is to be included in
"Governmental Lists".
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all governmental bodies, whether federal, state, local or foreign
national or provincial and all agencies thereof.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranty," "Guaranteed" or to "Guarantee" as applied to any
obligation of another Person means
(a) a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), directly or indirectly,
in any manner, of any part or all of such obligation of such other
Person, and
(b) an agreement direct or indirect, contingent or otherwise, and whether
or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event
of nonperformance) of any part or all of such obligation of such other
Person whether by (i) the purchase of securities or obligations, (ii)
the purchase, sale or lease (as lessee or lessor) of property or the
purchase or sale of services primarily for the purpose of enabling the
obligor with respect to such obligation to make any payment or
performance (or payment of damages in the event of nonperformance) of
or on account of any part or all of such obligation or to assure the
owner of such obligation against loss, (iii) the supplying of funds to,
or in any other manner investing in, the obligor with respect to such
obligation, (iv) repayment of amounts drawn down by beneficiaries of
letters of credit, or (v) the supplying of funds to or investing in a
Person on account of all or any part of such Person's obligation under
a guaranty of any obligation or indemnifying or holding harmless, in
any way, such Person against any part or all of such obligations.
"Indebtedness" of any Person means, without duplication, (a)
Liabilities, (b) all obligations for money borrowed or for the deferred
purchase price of property or services, other than trade indebtedness incurred
in the ordinary course of business that is unsecured and not overdue by more
than six (6) months unless being contested in good faith, (c) all reimbursement
and other obligations with respect to letters of credit, bankers' acceptances
and surety bonds, whether or not matured, (d) all obligations represented by
bonds, debentures, notes and similar instruments and accepted drafts that
represent extensions of credit, (e) all Capitalized Lease Obligations and the
present value of future rental payments under all synthetic leases, (f) all
obligations (including obligations created or arising under any conditional
sale or title retention agreement) secured by any Lien to which any property or
asset owned or held by such Person is subject, whether or not the obligation
secured thereby shall have been assumed by such Person, (g) all obligations of
other Persons which such Person has Guaranteed, including, but not limited to,
all obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person, (h) all
obligations of such Person under commodity purchase or options agreements or
other commodity price hedging arrangements, in each case whether contingent or
matured, (i) all obligations of such Person under any foreign exchange contract
currency swap agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of such Person
arising from fluctuations in currency values or interest rates, in each case
whether contingent or matured, (j) all obligations in respect of mandatorily
redeemable capital stock and (j) in the case of a Borrower (without
duplication), the Revolving Credit Loans.
"Instruments" means, as to any Person, all "instruments," as
such term is defined in the Uniform Commercial Code, now owned or hereafter
acquired by such Person, including, without limitation, all certificated
securities, all certificates of deposit, and all notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" means, as to any Person, all of such
Person's then owned existing and future acquired or arising patents, patent
rights, copyrights, works which are the subject of copyrights, trademarks,
service marks, trade names, patent, trademark and service ▇▇▇▇ applications,
and all licenses and rights related to any of the foregoing and all other
rights under any of the foregoing, all extensions, renewals reissues,
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to ▇▇▇ for past, present and future infringements of any of the
foregoing.
"Interest Expense" means the interest on Indebtedness during
the period for which computation is being made, excluding (a) the amortization
of fees and costs incurred with respect to the closing of loans which have been
capitalized as transaction costs, and (b) interest paid in kind.
"Interest Payment Date" means for all Loans, the first (1st)
day of each calendar month commencing on the first day of the month immediately
following the Effective Date continuing thereafter until the Secured
Obligations have been irrevocably paid in full.
"Interim Order" means, collectively, the order of the
Bankruptcy Court entered in the Chapter 11 Cases after an interim hearing
(assuming satisfaction of the standards prescribed in Section 364 of the
Bankruptcy Code and Bankruptcy Rule 4001 and other applicable law), together
with all extensions, modifications and amendments thereto, in form and
substance satisfactory to the Agent, which, among other matters but not by way
of limitation, authorizes, on an interim basis, the Borrowers to execute and
perform under this Agreement and the other Loan Documents, substantially in the
form of Exhibit I.
"Inventory" means, as to any Person, all "inventory" as
defined in the Uniform Commercial Code including, without limitation, all of
such Person's then owned or existing and future acquired or arising (a)
inventory, merchandise, Goods and other personal property intended for sale or
lease or for display or demonstration, (b) work in process, (c) raw materials
and other materials and supplies of every nature and description used or which
might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of the foregoing or otherwise used
or consumed in the conduct of business, and (d) Documents evidencing, and
General Intangibles relating to, any of the foregoing.
"Inventory Borrowing Base" means at any time, for the
Borrowers in the aggregate, an amount equal to the lesser of (A) $25,000,000,
(B) sixty percent (60%) of the sum of (i) Eligible Inventory at Cost plus (ii)
the face amount of Eligible Letters of Credit prior to the time title to the
Inventory on order and documented under such Eligible Letters of Credit passes
to a Borrower, (C) eighty-five percent (85%) of the sum of (i) Eligible
Inventory at its Appraised OL Value plus (ii) the Appraised OL Value of the
Inventory on order and documented under Eligible Letters of Credit prior to the
time title to such Inventory passes to a Borrower, or (D) the Accounts
Borrowing Base.
The Agent shall have, and reserves, the right at any time, in
its reasonable credit judgment, to adjust the foregoing advance rate
percentages.
"Inventory Borrowing Base Certificate" means a certificate in
the form attached hereto as Exhibit F (or another form acceptable to the Agent)
setting forth the calculation of the Inventory Borrowing Base, including a
calculation of each component thereof, in sufficient detail by Borrowers or
otherwise in such detail as shall be reasonably satisfactory to the Agent. All
calculations of the Inventory Borrowing Base in connection with the preparation
of any Inventory Borrowing Base Certificate shall originally be made by the
Borrowers and certified to the Agent; provided, that the Agent shall have the
right to review and adjust, in the exercise of its reasonable credit judgment,
any such calculation (a) to reflect its reasonable estimate of declines in
value of any of the Collateral described therein, and (b) to the extent that
such calculation is not in accordance with this Agreement.
"Inventory Reserves" means such reserve or reserves as the
Agent may establish or deem necessary from time to time in the exercise of its
reasonable credit judgment with respect to changes in the determination of the
saleability of the Eligible Inventory or which, without duplication as to
valuation for purposes of the Borrowing Base, reflect such other factors as
negatively affect the value of the Eligible Inventory. Without limiting the
generality of the foregoing, Inventory Reserves may include, but are not
limited to, reserves based on (i) obsolescence, (ii) seasonality, (iii)
shrinkage, (iv) imbalance, (v) change in Inventory character, composition or
mix, (vi) vendor chargebacks, and (vii) estimated reclamation claims of unpaid
sellers of Inventory to any Borrowers including, in each of the foregoing
cases, where any of the foregoing are inconsistent with prior period practice
or performance, industry standards, or current business plans of any Borrower.
"Investment Accounts" means any and all of Borrowers'
securities accounts, brokerage accounts and commodities accounts held with a
brokerage, commodities, investment banking or other financial institution.
"Investment Property" means, as to any Person, all "investment
property", as defined in the Uniform Commercial Code, including, without
limitation, (i) all securities, whether certificated or uncertificated,
including, but not limited to, stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of such Person, including,
but not limited to, the rights of such Person to any Investment Accounts and
the financial assets held by a financial intermediary in such accounts and any
free credit balance or other money owing by any financial intermediary with
respect to such accounts; (iii) all commodity contracts of such Person; and
(iv) all Investment Accounts of such Person.
"IRS" means the Internal Revenue Service or any successor
agency thereto.
"Issuing Bank" means any banking institution which is an
issuer of a Letter of Credit and its successors and assigns hereunder.
"Ledger Debt" means Indebtedness for goods and services
purchased by any Borrower from any Person whose Accounts are factored or
financed by CIT.
"Lender" means, at any time, any financial institution party
to this Agreement as a Lender at such time, including any such Person becoming
a party hereto pursuant to the provisions of Section 13.2, and its successors
and assigns, and "Lenders" means, at any time, all of the financial
institutions party to this Agreement as Lenders at such time, including any
such Persons becoming parties hereto pursuant to the provisions of Section
13.2, and their successors and assigns.
"Letter of Credit" means any Documentary Letter of Credit or
Standby Letter of Credit, including any Existing Letter of Credit.
"Letter of Credit Amount" means, with respect to any Letter of
Credit, the aggregate maximum amount at any time available for drawing under
such Letter of Credit.
"Letter of Credit Default Margin" means 2.00% per annum.
"Letter of Credit Facility" means that part of this Agreement
pursuant to which Letters of Credit or guarantees thereof are provided to
Borrowers.
"Letter of Credit Facility Amount" means the amount of
$27,000,000 with respect to Documentary Letters of Credit and $9,000,000 with
respect to Standby Letters of Credit
"Letter of Credit Obligations" means, at any time, the sum of
(a) the aggregate Reimbursement Obligations of all of the Borrowers at such
time, plus (b) the aggregate Letter of Credit Amount of Letters of Credit
outstanding at such time, plus (c) the aggregate Letter of Credit Amount of
Letters of Credit the issuance of which has been authorized by the Agent and
the Issuing Bank pursuant to Section 3.1 but that have not yet been issued, in
each case as determined by the Agent.
"Letter of Credit Reserve" means, at any time, the aggregate
Letter of Credit Obligations at such time, excluding Letter of Credit
Obligations that are fully secured by Cash Collateral.
"Letter of Credit Rights" means, as to any Person, all "letter
of credit rights" as defined in the Uniform Commercial Code, now owned or
hereafter acquired by such Person.
"Liabilities" means, as at the end of any fiscal period, all
liabilities determined in accordance with GAAP and included on a balance sheet.
"License Agreement" means any agreement between a Borrower
and a Licensor pursuant to which such Borrower is authorized to use any
Intellectual Property in connection with the manufacturing, marketing, sale or
other distribution of any Inventory of such Borrower.
"Licensor" means any Person from whom a Borrower obtains the
right to use (whether on an exclusive or non-exclusive basis) any Intellectual
Property in connection with such Borrower's manufacturing, marketing, sale or
other distribution of any Inventory of such Borrower.
"Licensor/Lender Agreement" means an agreement between the
Agent and a Licensor by which the Agent is given the unqualified right,
vis-a-vis such Licensor, to enforce the Agent's Liens with respect to and to
dispose of a Borrower's Inventory with the benefit of any Intellectual Property
applicable thereto, irrespective of such Borrower's default under any License
Agreement with such Licensor and which is otherwise in form and substance
satisfactory to the Agent.
"Lien" as applied to the property of any Person means: (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge, lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security interest, security title or encumbrance
of any kind in respect of any property of such Person or upon the income and
profits therefrom, whether such interest is based on the common law, statute or
contract, (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person, and (c) the filing of, or any agreement to give, any financing
statement under the UCC of any state or its equivalent in any jurisdiction.
"Loan Account" and "Loan Accounts" shall have the meanings
ascribed thereto in Section 4.4(a).
"Loan Documents" means collectively this Agreement, the Notes,
the Security Documents and each other instrument, agreement or document
executed by any Borrower or any Affiliate or Subsidiary of any Borrower in
connection with this Agreement whether prior to, on or after the Effective Date
and each other instrument, agreement or document referred to herein or
contemplated hereby, all in form and substance acceptable to the Agent.
"Lockbox Agreement" means an agreement among a Borrower, the
Agent and a Clearing Bank, in a form acceptable to the Agent, concerning the
collection, treatment and remission of payments or other deposits which
represent the proceeds of Collateral.
"Margin Stock" means margin stock as defined in Section
221.1(h) of Regulation U, as the same may be amended or supplemented from time
to time.
"Material Contract" means any contract or other arrangement
(other than Loan Documents), whether written or oral, to which any Borrower is
a party as to which the breach, nonperformance, cancellation or failure to
renew by any party thereto could reasonably be expected to have a Materially
Adverse Effect.
"Materially Adverse Effect" means a materially adverse effect
upon (a) the business, assets, properties, liabilities, condition (financial or
otherwise), results of operations or business prospects of any Borrower, (b)
the value of the whole or any material part of the Collateral, or the
enforceability or priority of the Security Interest, (c) the ability of any
Borrower to perform any material obligations hereunder or under any other Loan
Document to which it is a party or (d) the legality, validity, binding effect,
enforceability or admissibility into evidence of any Loan Document or the
rights or remedies of the Agent or the Lenders under or in connection with any
Loan Document. The commencement of the Chapter 11 Cases, and the actions,
proceedings, investigations and other matters related thereto, shall not in and
of themselves constitute a "Material Adverse Effect" but any event or
occurrence that would not have occurred but for the commencement of the Chapter
11 Cases, or the actions, proceedings, investigations and other matters related
thereto, may constitute a "Material Adverse Effect."
"Materially Adverse Change" means an act, omission, situation,
circumstance, event or undertaking which could reasonably be expected to have
singly or in combination with one or more other acts, omissions, situations,
circumstances, events or undertakings a Material Adverse Effect.
"Minimum Commitment" shall have the meaning ascribed to such
term in Section 13.2(a) hereof.
"Minimum Excess Availability Reserve" means, at any time,
$10,000,000.
"Money Borrowed" means, as applied to Indebtedness, (a)
Indebtedness for money borrowed, (b) Indebtedness, whether or not in any such
case the same was for money borrowed, (i) represented by notes payable and
drafts accepted, that represent extensions of credit, (ii) constituting
obligations evidenced by bonds, debentures, notes or similar instruments, or
(iii) upon which interest charges are customarily paid (other than trade
Indebtedness) or that was issued or assumed as full or partial payment for
property, (c) Indebtedness that constitutes a Capitalized Lease Obligation, (d)
Indebtedness that is such by virtue of clause (f) of the definition thereof,
but only to the extent that the obligations Guaranteed are obligations that
would constitute Indebtedness for Money Borrowed and (e) obligations in respect
of mandatory redeemable capital stock, if any, of any Borrower.
"Mortgaged Properties" means the Real Estate described on
Schedule 1.2 hereto.
"Mortgage" means an indenture of mortgage, deed of trust, deed
to secure debt or other similar instrument in form and substance reasonably
satisfactory to the Agent and the Lenders granting to the Agent for the benefit
of the Lenders a Lien on and security interest in the subject Real Estate to
secure the Secured Obligations and other obligations referred to therein.
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA to which a Borrower or a Related Company is
required to contribute or has contributed within the immediately preceding six
years.
"Net Outstandings" of any Lender means, at any time, the sum
of (a) all amounts paid by such Lender to the Agent in respect of Revolving
Credit Loans or the Letter of Credit Obligations under this Agreement, minus
(b) all amounts paid by the Agent to such Lender which are received by the
Agent and which, pursuant to this Agreement, are paid over to such Lender for
application in reduction of the outstanding principal balance of the Revolving
Credit Loans or the Letter of Credit Obligations.
"Net Proceeds" means with respect to any Asset Disposition,
the aggregate cash payments received (directly or indirectly), including any
cash payments received by way of deferred payment of principal pursuant to a
note or installment receivable or otherwise, therefrom, but only as and when
received, net of (i) the transaction costs of such Asset Disposition,
including, without limitation, all reasonable legal and investment banking fees
and expenses, title and recording tax expenses, commissions, fees and expenses
incurred in obtaining regulatory approvals and other reasonable and customary
fees and expenses incurred or agreed to be incurred, (ii) any tax liability
arising from such Asset Disposition including, without limitation, all foreign,
federal, state and local income or other Taxes estimated to be payable
currently, attributable thereto, and (iii) the amount of any contractually
required repayments of Indebtedness (other than the Secured Obligations) to the
extent secured by a Permitted Lien thereon.
"Non-Ratable Loan" means a Revolving Credit Loan made by the
Settlement Lender in accordance with the provisions of Section 4.7(b)(ii).
"Note" means the Revolving Credit Note and "Notes" means more
than one of such Revolving Credit Notes.
"OFAC" mean the Office of Foreign Assets Control, United
States Department of the Treasury, or any other office, agency or department
that succeeds to the duties of OFAC.
"Operating Lease" shall have the meaning assigned to such term
in Section 11.10 hereof.
"Operating Lease Obligations" means, with respect to an
Operating Lease for a Borrower, as of any date, an amount equal to (a) the
monthly lease payment for such Operating Lease including, without limitation,
any projected percentage rent, additional rent, escalation payments, and any
other payments by such Borrower to any lessor under an Operating Lease relating
to common area maintenance, operating expenses, real estate taxes, insurance or
any other expenses allocated to such Borrower as tenant under such Operating
Lease multiplied times (b) the number of months then remaining in the current
term of such Operating Lease.
"Orders" means the Interim Order and the Final Order.
"Overadvance" means any advance made pursuant to Section 4.12
hereof.
"Overextension" shall have the meaning assigned to such term
in Section 2.3(a) hereof.
"Parent" shall have the meaning assigned to such term in the
preamble to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"Permitted Guaranties" means (a) those described on Schedule
6.1(i), or (b) any Guaranty of Permitted Obligations.
"Permitted Indebtedness for Money Borrowed" means (a) the
Pre-Petition Indebtedness, (b) the Indebtedness to Lenders arising under this
Agreement, (c) Indebtedness owed to another Borrower, (d) Permitted Guaranties,
(e) the Senior Subordinated Indebtedness and (f) the Indebtedness set forth on
Schedule 6.1(i) hereof.
"Permitted Liens" means: (a) Liens securing taxes,
assessments and other governmental charges or levies (excluding any Lien
imposed pursuant to any of the provisions of ERISA) or the claims of
materialmen, suppliers, mechanics, carriers, warehousemen or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of
business, but in all cases, only if payment shall not at the time be required
to be made in accordance with Section 9.6, and (b) Liens consisting of deposits
or pledges made in the ordinary course of business in connection with, or to
secure payment of utility payments, bids, tenders, contracts (other than
contracts for payment of money), obligations under workers' compensation,
unemployment insurance or similar legislation or under surety or performance
bonds, in each case arising in the ordinary course of business; (c) Liens
constituting encumbrances in the nature of zoning restrictions, special
assessments, easements and rights or restrictions of record on the use of the
Real Estate, which in the reasonable credit judgment of the Agent do not
materially detract from the value of Real Estate or impair the use thereof in
the business of the applicable Borrower; (d) Liens securing Pre-Petition
Indebtedness; (e) Liens securing the Secured Obligations; (f) Liens arising out
of or resulting from any judgment or award, the time for the appeal or petition
for rehearing of which shall not have expired, or in respect of which the
applicable Borrower is fully protected by insurance or in respect of which such
Borrower shall at any time in good faith be prosecuting an appeal or proceeding
for a review and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured, and as to which appropriate
reserves have been established on the books of such Borrower; and (g) Liens
listed on Schedule 6.1(h).
"Permitted Obligations" means the aggregate amount of
outstanding Purchase Money Indebtedness, Operating Lease Obligations, and
Permitted Indebtedness for Money Borrowed which, and only to the extent, is
incurred subject to the provisions of this Agreement, including without
limitation, Section 11.2.
"Person" means an individual, corporation, partnership,
association, trust or unincorporated organization, or a government or any
agency, division, department, or political subdivision thereof.
"Petition Date" has the meaning ascribed to such term in the
recitals to this Agreement.
"Pledge Agreement" means the Pledge Agreement previously
executed and delivered by certain of the Borrowers and their Subsidiaries to
the Agent for the benefit of the Lenders in connection with the Pre-Petition
Loan Agreement, as the same may be amended, modified or supplemented from time
to time, pursuant to which such Borrowers and their Subsidiaries have pledged
to the Agent, for the benefit of the Lenders, as security for the Secured
Obligations, 66% of the capital stock of each Foreign Subsidiary of such
Borrowers and their Subsidiaries and all of the capital stock of each Domestic
Subsidiary of such Borrowers and their Subsidiaries.
"Power of Attorney" means the Power of Attorney substantially
in the form of Exhibit C hereto, executed and delivered by each Borrower to
Agent contemporaneously herewith, as the same may be amended, modified or
supplemented from time to time.
"Pre-Petition Agent" means CIT in its capacity as the
administrative agent under the Pre-Petition Loan Agreement.
"Pre-Petition Indebtedness" means all Indebtedness and other
obligations of Borrowers to the Pre-Petition Agent or any Pre-Petition Lender
on the Petition Date that arise under the Pre-Petition Loan Agreement, whether
direct or indirect, absolute or contingent or due or to become due, including,
without limitation, the Pre-Petition Revolving Credit Loans, and all interest
accruing on any of the foregoing after the Petition Date and all legal fees and
collection expenses heretofore incurred in collecting any of such Indebtedness.
"Pre-Petition Lenders" means those Persons who were "Lenders"
under (and as defined in) the Pre-Petition Loan Agreement as of the Petition
Date.
"Pre-Petition Loan Agreement" has the meaning ascribed to such
term in the recitals to this Agreement.
"Pre-Petition Revolving Credit Loans" means the "Revolving
Credit Loans" under (and as defined in) the Pre-Petition Loan Agreement.
"Proceeds" means "proceeds," as such term is defined in the
Uniform Commercial Code, including (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Borrower from time to time with
respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Borrower from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Borrower against third parties (i) for past, present or future infringement
of any patent or patent license, or (ii) for past, present or future
infringement or dilution of any copyright, copyright license, trademark or
trademark license, or for injury to the goodwill associated with any trademark
or trademark license, (d) any recoveries by any Borrower against third parties
with respect to any litigation or dispute concerning any of the Collateral
including claims arising out of the loss or nonconformity of, interference with
the use of, defects in, or infringement of rights in, or damage to, Collateral,
(e) all amounts collected on, or distributed on account of, other Collateral,
including dividends, interest, distributions and Instruments with respect to
Investment Property and pledged Stock, and (f) any and all other amounts,
rights to payment or other property acquired upon the sale, lease, license,
exchange or other disposition of Collateral and all rights arising out of
Collateral.
"Professionals" has the meaning ascribed to such term in
Section 4.18(c).
"Purchase Money Indebtedness" means Indebtedness created to
finance or refinance the payment of all or any part of the purchase price (not
in excess of the fair market value thereof) of any tangible asset, other than
Inventory, incurred at the time of or within ten (10) days prior to or after
the acquisition of such tangible asset and secured only by Purchase Money Liens.
"Purchase Money Lien" means any Lien securing Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to
the tangible asset (other than Inventory) which was financed or refinanced
through the incurrence of the Purchase Money Indebtedness secured by such Lien.
"Real Estate" means all of each Borrower's now or hereafter
owned or leased estates in real property, including, without limitation, all
fees, leaseholds and future interests, together with all of such Borrower's now
or hereafter owned or leased interests in the improvements and emblements
thereon, the fixtures attached thereto and the easements appurtenant thereto,
including, without limitation, the real property described on Schedule 6.1(v).
"Register" shall have the meaning assigned to such term in
Section 13.2(c) hereof.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Reimbursement Agreement" means, with respect to a Letter of
Credit, such form of application therefor and form of reimbursement agreement
therefor (whether in a single document or several documents) as the Issuing
Bank may employ in the ordinary course of business for its own account, with
such modifications thereto as may be agreed upon by an Issuing Bank and a
Borrower, provided that such application and agreement and any modifications
thereto are not inconsistent with the terms of this Agreement.
"Reimbursement Obligations" means the reimbursement or
repayment obligations of a Borrower to an Issuing Bank pursuant to Article 3 or
pursuant to a Reimbursement Agreement with respect to amounts that have been
drawn under Letters of Credit.
"Related Company" means, as to any Person, any (a) corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as such Person, (b) partnership or other
trade or business (whether or not incorporated) under common control (within
the meaning of Section 414(c) of the Code) with such Person, or (c) member of
the same affiliated service group (within the meaning of Section 414(m) of the
Code) as such Person or any corporation described in clause (a) above or any
partnership, trade or business described in clause (b) above.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water or
groundwater.
"Remedial Action" means actions required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Replacement Letters of Credit" shall have the meaning
assigned to such term in Section 3.3(a) hereof.
"Required Lenders" means (a) at any time the Lenders are
comprised only of CIT and FCC, one hundred percent (100%) of the Commitment
Percentages of such Lenders and (b) at any other time, any combination of
Lenders whose Commitment Percentages at such time aggregate at least fifty-nine
percent (59%) thereof.
"Restricted Distribution" means, with respect to any Person,
(a) any retirement, redemption, purchase, or other acquisition for value of any
capital stock or other equity securities or membership or partnership interests
issued by such Person, (b) any declaration or payment of any dividend or
distribution on or with respect to any such securities or membership or
partnership interests, (c) any loan or advance by such Person to, or other
investment by such Person in, the holder of any of such securities or
membership or partnership interests, and (d) any other payment by such Person
in respect of such securities or membership or partnership interests.
"Restricted Investments" means any acquisition of property by
a Borrower or any of its Subsidiaries in exchange for cash or other property,
whether in the form of an acquisition of equity interests or Indebtedness, or
the purchase or acquisition by such Borrower or any of its Subsidiaries of any
other property, or a loan, advance, capital contribution or subscription,
except acquisitions of the following: (a) investments in one or more
Subsidiaries of such Borrower to the extent existing on the Effective Date, (b)
current assets arising from the sale or lease of goods or the rendition of
services by such Borrower or any of its Subsidiaries in the ordinary course of
business; (c) fixed assets to be used in the business of such Borrower and any
of its Subsidiaries so long as the acquisition costs thereunder constitute
Capital Expenditures permitted hereunder, (d) goods held for sale or lease or
to be used in the manufacture of goods or the rendition of services by such
Borrower or any of its Subsidiaries in the ordinary course of business; and (e)
Cash Equivalents.
"Restricted Payment" means, with respect to any Person, (a)
any retirement, redemption, repurchase, prepayment or other acquisition, or the
setting aside of any money for a sinking, defeasance or other analogous fund
for any such retirement, redemption, repurchase, prepayment or other
acquisition, prior to the stated maturity thereof or prior to the due date of
any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness of such Person (other than the Secured Obligations
and trade debt), (b) the payment by such Person of the principal amount of or
interest on any Indebtedness (other than trade debt) owing to an Affiliate of
such Person, and (c) the payment of any management, advisory, guaranty,
consulting or other similar fee by such Person to an Affiliate of such Person.
"Revolving Credit Facility" means that part of this Agreement
pursuant to which Revolving Credit Loans are provided to Borrowers.
"Revolving Credit Facility Amount" means the principal amount
equal to $50,000,000.
"Revolving Credit Loans" means, as measured at any time, the
aggregate outstanding amount of the Advances made to all of the Borrowers
pursuant to Section 2.1.
"Revolving Credit Note" means a promissory note made payable
by the Borrowers to the order of a Lender evidencing the obligation of each
Borrower to pay the aggregate unpaid principal amount of the Revolving Credit
Loans made to it by such Lender (and any promissory note or notes that may be
issued from time to time in substitution, renewal, extension, replacement or
exchange therefor whether payable to such Lender or to a different Lender in
connection with a Person becoming a Lender after the Effective Date or
otherwise) substantially in the form of Exhibit A hereto, with all blanks
properly completed, either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed, extended or refinanced.
"Schedule of Accounts" means a schedule delivered by the
Borrowers to the Agent, from time to time, pursuant to the provisions of
Section 8.8(a).
"Schedule of Inventory" means a schedule delivered by the
Borrowers to the Agent, from time to time, pursuant to the provisions of
Section 8.8(c).
"Secured Obligations" means, in each case whether now in
existence or hereafter arising, (a) the principal of, and interest and premium,
if any, on, the Revolving Credit Loans, (b) the Reimbursement Obligations and
all other obligations of any Borrower to the Agent or any Lender (or Fleet
National Bank or FCC in connection with the Existing Fleet Letters of Credit)
arising in connection with the issuance of Letters of Credit (including the
Existing Letters of Credit), (c) Ledger Debt not to exceed $750,000 in the
aggregate at any one time, (d) Bank Products Liabilities and (e) all
indebtedness, liabilities, obligations, covenants and duties of any Borrower to
the Agent or to the Lenders of every kind, nature and description arising under
or in respect of this Agreement, the Notes, any of the other Loan Documents,
whether direct or indirect, absolute or contingent, due or not due, contractual
or tortious, liquidated or unliquidated, and whether or not evidenced by any
note, and whether or not for the payment of money, including without
limitation, fees required to be paid pursuant to Article 4 and expenses
required to be paid or reimbursed pursuant to Section 15.2.
"Security Documents" means each of the following:
(a) the Financing Statements;
(b) the Lockbox Agreements;
(c) the Control Agreements;
(d) the Waivers and Consents;
(e) the Trademark Security Agreement;
(f) the Pledge Agreement; and
(g) each other agreement, document, instrument or writing executed and
delivered by any Borrower or any other Person securing the Secured
Obligations.
"Security Interest" means the valid and perfected first
priority Liens of the Agent, for the benefit of the Agent and the Lenders, on
and in the Collateral effected hereby or by any of the Security Documents or
pursuant to the terms hereof or thereof.
"Senior Subordinated Documents" means the Senior Subordinated
Indenture, the Senior Subordinated Notes and all documents, agreements and
instruments entered into in connection therewith or related thereto.
"Senior Subordinated Indebtedness" means the Indebtedness for
Money Borrowed owing by the Parent evidenced by and owing pursuant to the
Senior Subordinated Documents.
"Senior Subordinated Indenture" means the Indenture, dated
June 10, 1998, among the Parent, certain of its Subsidiaries and the Trustee.
"Senior Subordinated Notes" means the Senior Subordinated
Unsecured Notes issued by the Parent pursuant to the Senior Subordinated
Indenture in the aggregate amount of $100,000,000, and payable in 2008,
together with any Exchange Notes at any time issued with respect thereto.
"Settlement Date" means each Business Day after the Effective
Date selected by the Agent in its sole discretion subject to and in accordance
with the provisions of Section 4.7(b)(i) as of which a Settlement Report is
delivered by the Agent and on which settlement is to be made among the Lenders
in accordance with the provisions of Section 4.7.
"Settlement Lender" means, for the purposes of Section 4.7,
the Agent in its capacity as a Lender.
"Settlement Report" means each report, substantially in the
form agreed to by Agent and Lenders, prepared by the Agent and delivered to
each Lender and setting forth, among other things, as of the Settlement Date
indicated thereon and as of the next preceding Settlement Date, the aggregate
principal balance of all Revolving Credit Loans outstanding, each Lender's
Commitment Percentage thereof, each Lender's Net Outstandings and all
Non-Ratable Loans made, and all payments of principal, interest and fees
received by the Agent from a Borrower during the period beginning on such next
preceding Settlement Date and ending on such Settlement Date.
"Software" means all "software" as such term is defined in the
Uniform Commercial Code, now owned or hereafter acquired by any Borrower, other
than software embedded in any category of Goods, including all computer
programs and all supporting information provided in connection with a
transaction related to any program.
"Standby Letter of Credit" means any letter of credit (other
than a Documentary Letter of Credit) issued by an Issuing Bank for the account
of a Borrower pursuant to Article 3 hereof.
"Subordinated Indebtedness" means the Senior Subordinated
Indebtedness and any other Permitted Indebtedness for Money Borrowed (other
than the Revolving Credit Facility), that is subordinated to the Secured
Obligations on terms and conditions acceptable to the Agent.
"Subsidiary"
(a) when used to determine the relationship of a Person to another Person,
means a Person of which an aggregate of 50% or more of the stock of any
class or classes or 50% or more of other ownership interests is owned
of record or beneficially by such other Person, or by one or more
Subsidiaries of such other Person, or by such other Person and one or
more Subsidiaries of such Person,
(i) if the holders of such stock, or other ownership interests, (A)
are ordinarily, in the absence of contingencies, entitled to
vote for the election of a majority of the directors (or other
individuals performing similar functions) of such Person, even
though the right so to vote has been suspended by the
happening of such a contingency, or (B) are entitled, as such
holders, to vote for the election of a majority of the
directors (or individuals performing similar functions) of
such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or
(ii) in the case of such other ownership interests, if such
ownership interests constitute a majority voting interest, and
(b) when used with respect to a Plan, ERISA or a provision of the Code
pertaining to employee benefit plans, also means any corporation, trade
or business (whether or not incorporated) which is under common control
with a Borrower and is treated as a single employer with such Borrower
under Section 414(b) or (c) of the Code and the regulations thereunder.
"Supporting Obligations" means, as to any Person, all
"supporting obligations" as such term is defined in the Uniform Commercial Code,
now owned or hereafter acquired, including, without limitation, all of such
Person's mortgages, deeds to secure debt and deeds of trust on real or personal
property, guaranties, leases, security agreements, and other agreements and
property which secure or relate to any Collateral, or are acquired for the
purpose of securing and enforcing any item thereof,
"Termination Date" means the first to occur of (a) the
Expiration Date, (b) an Early Termination Date, upon thirty (30) days prior
written notice by the Borrowers, (c) the date of termination of the Lenders'
obligations to make Advances and to incur Letter of Credit Obligations or
permit existing Advances to remain outstanding pursuant to Section 12.2, (d)
the date that is 45 days after the Petition Date if the Final Order has not
been entered by the Bankruptcy Court by such date, unless the Interim Order has
been extended with the Agent's written consent to a date acceptable to the
Agent; (e) the date upon which the Interim Order expires, unless the Final
Order shall have been entered and becomes effective by such date; and (f) the
date a plan or reorganization in the Chapter 11 Cases becomes effective.
"Termination Event" means (a) a "Reportable Event" as defined
in Section 4043(b) of ERISA, but excluding any such event as to which the
provision for 30 days' notice to the PBGC is waived under applicable
regulations, (b) the filing of a notice of intent to terminate a Benefit Plan
or the treatment of a Benefit Plan amendment as a termination under Section
4041 of ERISA, or (c) the institution of proceedings to terminate a Benefit
Plan by the PBGC under Section 4042 of ERISA or the appointment of a trustee to
administer any Benefit Plan.
"Title IV Plan" means a Benefit Plan which is subject to Title
IV of ERISA.
"Total Liabilities" means, as at the end of any fiscal period,
total Liabilities determined in accordance with GAAP and included on the latest
Consolidated Balance Sheet.
"Trademark Security Agreement" means, collectively, the
Trademark Security Agreements previously executed and delivered by certain
Borrowers to the Agent, for the benefit of the Lenders, in connection with the
Pre-Petition Loan Agreement, as the same may be amended, modified or
supplemented from time to time.
"Trade Names" shall have the meaning assigned to such term in
Section 6.1(bb) hereof.
"Trustee" means SunTrust Bank, a Georgia banking corporation.
"UCC" and "Uniform Commercial Code" means the Uniform
Commercial Code as in effect from time to time in North Carolina; provided,
that to the extent that the UCC is used to define any term herein or in any
Loan Document and such term is defined differently in different Articles or
Divisions of the UCC, the definition of such term contained in Revised Article
9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent's or any Lender's Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of North Carolina, the term "UCC" or
"Uniform Commercial Code" means the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority or remedies and for purposes
of definitions related to such provisions.
"Unfunded Vested Accrued Benefits" means with respect to any
Plan at any time, the amount (if any) by which (a) the present value of all
vested non-forfeitable benefits under such Plan exceeds (b) the fair market
value of all Plan assets allocable to such benefits, all determined as of then
most recent valuation date for such Plan.
"Unused Line Fee" shall have the meaning assigned to such term
in Section 4.2(a).
"Waiver and Consent" shall have the meaning assigned to such
term in Section 8.10 hereof.
SECTION 1.2 Other Referential Provisions.
(a) All defined terms in this Agreement, the Exhibits and Schedules hereto
shall have the same meanings when used in any other Loan Document,
unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting terms not
specifically defined or specified herein shall have the meanings
generally attributed to such terms under GAAP including, without
limitation, applicable statements and interpretations issued by the
Financial Accounting Standards Board and bulletins, opinions,
interpretations and statements issued by the American Institute of
Certified Public Accountants or its committees. All financial and
accounting calculations, measurements and computations made for any
purpose relating to this Agreement, including, without limitation, all
computations utilized by any Borrower to determine whether it is in
compliance with any covenant contained herein, shall, unless this
Agreement otherwise provides or unless Required Lenders shall otherwise
consent in writing, be performed in accordance with GAAP That certain
terms or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the
foregoing.
(c) All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders;
the singular shall include the plural, and the plural shall include the
singular. In any circumstance where use of the term "the Borrower" as
opposed to the term "the Borrowers," or vice versa, would limit,
diminish or otherwise impair or negatively affect any of Lenders'
rights hereunder, the plural shall be substituted for the singular, or
vice versa, in such manner as will result in the maintenance or
enlargement of Lenders' rights hereunder or pursuant hereto. By way of
example, but not in limitation, if a reference to "the Borrowers'
property" would otherwise be construed as referring only to property
which is jointly owned by all the Borrowers, such reference shall
instead be construed as referring to the aggregate total of each
Borrower's property.
(d) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provisions of this Agreement.
(e) Titles of Articles and Sections in this Agreement are for convenience
only, do not constitute part of this Agreement and neither limit nor
amplify the provisions of this Agreement, and all references in this
Agreement to Articles, Sections, Subsections, paragraphs, clauses,
subclauses, Schedules or Exhibits shall refer to the corresponding
Article, Section, Subsection, paragraph, clause or subclause of, or
Schedule or Exhibit attached to, this Agreement, unless specific
reference is made to the articles, sections or other subdivisions or
divisions of, or to schedules or exhibits to, another document or
instrument.
(f) Each definition of a document in this Agreement shall include such
document as amended, modified, supplemented or restated from time to
time in accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party to a Loan
Document includes that party and its permitted successors and assigns
permitted hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is referred to in
this Agreement or in any other Loan Document, such time shall be the
local time in the city in which the office of Agent is located as set
forth in Section 15.1 hereof.
(i) Whenever the phrase "to the knowledge of a Borrower" or words of
similar import relating to the knowledge of a Borrower are used herein,
such phrase shall mean and refer to (i) the actual knowledge of the
President, chief executive officer, chief operating officer, chief
financial officer or other Section 16 reporting officers, or (ii) the
knowledge that such officers would have obtained if they had engaged in
good faith in the diligent performance of their duties, including the
making of such reasonable specific inquiries as may be necessary in the
reasonable business judgment of such officers to ascertain the accuracy
of the matter to which such phrase relates.
(j) The term "including" shall not be limiting or exclusive, unless
specifically indicated to the contrary. The terms "reasonable,"
"reasonably" and the like, when used in reference to a decision,
conduct or the discretion of the Agent or a Lender, shall mean and
refer to the reasonableness of the conduct, decision or discretion at
issue of an agent or a lender in a position equivalent to that of the
Agent or Lender, including without limitation the normal and customary
concerns of an agent or a lender including, without limitation,
impairment of collateral, and the timeliness of a borrower's compliance
with payment obligations.
(k) The terms accounts, chattel paper, deposit accounts, documents,
equipment, fixtures, general intangibles, goods, instruments,
inventory, investment property, letter of credit rights, software, and
supporting obligations, as and when used (without being capitalized) in
this Agreement or the Security Documents, shall have the meanings given
those terms in the Uniform Commercial Code.
SECTION 1.3 Exhibits and Schedules. All Exhibits and Schedules attached
hereto are by reference made a part hereof.
ARTICLE II.
REVOLVING CREDIT LOANS
SECTION 2.1 Revolving Credit Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally, but not jointly, to make
Advances to the Borrowers from time to time from the Effective Date to but not
including the Termination Date, as requested or deemed requested by the
Borrowers in accordance with the terms of Section 2.2, in amounts equal to such
Lender's Commitment Percentage of each such Advance requested or deemed
requested hereunder up to an aggregate amount at any one time outstanding equal
to such Lender's Commitment Percentage of the Borrowing Base; provided,
however, that, the aggregate principal amount of all outstanding Revolving
Credit Loans (after giving effect to such Advances requested and any
Non-Ratable Loans) shall not exceed the Borrowing Base. It is expressly
understood and agreed that, the Lenders may and at present intend to use the
Borrowing Base as a maximum ceiling on Revolving Credit Loans to the Borrowers;
provided, further, however, that, the parties agree that, should the Revolving
Credit Loans exceed the ceiling so determined or any other limitation set forth
in this Agreement, such Revolving Credit Loans shall nevertheless constitute
Secured Obligations and, as such, shall be entitled to all benefits thereof and
security therefor. The principal amount of any Advances which are repaid
pursuant to Section 2.3(a) may be reborrowed by the Borrowers, subject to the
terms and conditions of this Agreement, in accordance with the terms of this
Section 2.1. The Agent's and each Lender's books and records reflecting the
date and the amount of each Advance and each repayment of principal thereof
shall constitute prima facie evidence of the accuracy of the information
contained therein, subject to the provisions of Section 4.7. On the date of
the entry of the Final Order (or such earlier date as may be permitted by the
Bankruptcy Court), the Borrowers shall be deemed to have requested, and each
Lender agrees to make available, Revolving Credit Loans in an amount equal to
the outstanding Pre-Petition Indebtedness on such date to pay such obligations
in full, and, after such payment in full of the Pre-Petition Indebtedness, the
Pre-Petition Loan Agreement shall be deemed satisfied and terminated.
SECTION 2.2 Manner of Borrowing Revolving Credit Loans. Advances under
the Revolving Credit Facility shall be made as follows:
(a) Requests for Advances. A request for an Advance shall be made, or
shall be deemed to be made, in the following manner:
(i) a Financial Officer of the Borrowers (or another authorized
representative designated by a Financial Officer of the
Borrowers and listed on Schedule 2.2 hereto) shall deliver to
the Agent a Notice of Proposed Advance/Conversion/
Continuation in the form of Exhibit B hereto (the "Borrowing
Notice") not later than 11:00 a.m. (New York time) on the
Business Day of the proposed Advance. The Borrowing Notice
shall contain the information requested therein including,
without limitation, a statement that an Advance is requested,
the amount of the proposed Advance and the date of the
proposed Advance. Unless the Agent has received notice in
accordance with the provisions of Section 4.6(c) that a Lender
will not make available to the Agent such Lender's ratable
portion of an Advance because of a Default or Event of
Default, the Agent shall use commercially reasonable efforts
to disburse the proceeds of each Advance not later than 3:30
p.m. (New York time) on the Business Day a Borrowing Notice is
received. The Borrowing Notice shall be given in accordance
with the provisions of this Section 2.2 hereof; provided,
however, that upon written notice from Agent, the Parent shall
thereafter include in each Borrowing Notice the amount of
Excess Availability after giving effect to such requested
Advance,
(ii) unless payment is otherwise made by the Borrowers, the becoming
due of any amount required to be paid under this Agreement or
any of the Notes as interest shall be deemed to be a request
for an Advance on the due date in the amount required to pay
such interest,
(iii) unless payment is otherwise made by the Borrowers, the becoming
due of any other Secured Obligation (other than Ledger Debt)
shall be deemed to be a request for an Advance on the due date
in the amount then so due, and such request shall be
irrevocable,
(iv) the receipt by the Agent of notification from an Issuing Bank
to the effect that a drawing has been made under a Letter of
Credit and that a Borrower has failed to reimburse the Issuing
Bank therefor in accordance with the terms of the Letter of
Credit, the Reimbursement Agreement and Article 3, shall be
deemed to be a request for an Advance on the date such
notification is received in the amount of such drawing
which is so unreimbursed, and
(v) unless payment is otherwise made by the Borrowers, the receipt
by Agent of a demand for reimbursement by a Clearing Bank
pursuant to the provisions of any Lockbox Agreement, shall be
deemed to be a request for an Advance on the date any such
demand is received by Agent in the amount set forth therein.
(b) Notification to Lenders. Unless the Agent has elected periodic
settlements pursuant to Section 4.7, the Agent shall promptly notify
the Lenders of any Borrowing Notice delivered or deemed given pursuant
to Section 2.2(a) by 12:00 noon (New York time) on the proposed Advance
date with respect to any Advance. The notice from the Agent to the
Lenders shall set forth the information contained in the applicable
Borrowing Notice. Not later than 1:30 p.m. (New York time) on the
proposed Advance date, each Lender shall make available to the Agent,
for the account of the Borrowers, at the Agent's Office in funds
immediately available to the Agent, an amount equal to such Lender's
Commitment Percentage of the Advance to be made on such Advance date.
(c) Disbursement of Advances. Each Borrower hereby irrevocably authorizes
the Agent to disburse the proceeds of each Advance requested, or deemed
to be requested, pursuant to this Section 2.2 as follows:
(i) the proceeds of each Advance requested under Section 2.2(a)(i)
shall be disbursed by the Agent in Dollars in immediately
available funds by wire transfer to the Disbursement Account,
or by wire transfer to such other account as designated in
writing by the Borrowers at least two (2) Business Days prior
to the borrowing date of such proposed Advance,
(ii) the proceeds of each Advance deemed requested under Section 2.2
(a)(ii) or (iii) or (iv) shall be disbursed by the Agent by
way of direct payment of the relevant interest or Secured
Obligation, as the case may be, and
(iii) the proceeds of each Advance deemed requested under Section
2.2(a)(v) shall be disbursed by the Agent directly to the
Clearing Bank on behalf of the applicable Borrower.
SECTION 2.3 Repayment of Revolving Credit Loans; Reduction of
Commitments.
(a) The Revolving Credit Loans will be repaid as follows:
(i) Whether or not any Default or Event of Default has occurred,
the outstanding principal amount of all the Revolving Credit
Loans is due and payable, and shall be repaid by the
Borrowers in full, not later than the Termination Date;
(ii) If at any time the aggregate outstanding unpaid principal
amount of the Revolving Credit Loans exceeds the Borrowing
Base in effect at such time (such excess referred to herein as
an "Overextension"), the Borrowers shall repay the
Revolving Credit Loans in an amount sufficient to reduce the
aggregate unpaid principal amount of such Revolving Credit
Loans by an amount equal to the Overextension, together with
accrued and unpaid interest on the amount of the Overextension
to the date of repayment; and
(iii) The Borrowers hereby instruct the Agent to repay the Revolving
Credit Loans outstanding on any day in an amount equal to the
amount received by the Agent on such day pursuant to Section
8.1(b).
(b) Reserved.
SECTION 2.4 Revolving Credit Note. Each Lender's Revolving Credit Loans
and the joint and several obligation of the Borrowers to repay such Revolving
Credit Loans shall also be evidenced by a Revolving Credit Note payable to the
order of such Lender. Each Lender's Revolving Credit Note shall be dated the
Effective Date, be duly and validly executed and delivered by the Borrowers and
be in the amount of such Lender's Commitment.
SECTION 2.5 Mandatory Prepayments.
(a) Immediately upon receipt by a Borrower of the proceeds of any Asset
Disposition, such Borrower shall prepay the Revolving Credit Loans in
an amount equal to the Net Proceeds thereof.
(b) Any prepayments made by Borrower pursuant to Section 2.5(a) above shall
be applied in the order set forth in Section 4.3(c). With the
exception of De Minimis Asset Dispositions, the Revolving Credit
Facility Amount shall be permanently reduced by the amount of any such
prepayments.
ARTICLE III.
LETTER OF CREDIT FACILITY
SECTION 3.1 Issuance. The Borrowers, the Agent and the Lenders agree that
the Existing Letters of Credit shall remain outstanding after the date hereof
and shall constitute Secured Obligations hereunder upon the entry of the Final
Order. Each Lender shall be deemed to have purchased risk participations in
such Existing Letters of Credit as more fully described in Section 3.2(b)(ii),
and such Existing Letters of Credit shall be deemed to be included in Letter of
Credit Obligations. In addition, after the Effective Date and subject to the
terms and conditions of the Agreement, Agent and the Lenders agree to incur,
from time to time prior to the Termination Date, upon the request of the
Borrowers and for the Borrowers' account, Letter of Credit Obligations by
causing Letters of Credit to be issued (by Agent or an Affiliate thereof, or a
bank or other legally authorized Person selected by and acceptable to Agent in
its sole discretion, including Fleet National Bank as issuer of the Existing
Fleet Letters of Credit (each, an "Issuing Bank")) for the Borrowers' account
and guaranteed by Agent; provided, however, that if the Issuing Bank is a
Lender, then such Letters of Credit shall not be guaranteed by Agent but rather
each Lender shall, subject to the terms and conditions hereinafter set forth,
purchase (or be deemed to have purchased) risk participations in all such
Letters of Credit issued with the written consent of Agent, as more fully
described in Section 3.2(b)(ii) below. The Agent and the Lenders shall have no
obligation to incur Letter of Credit Obligations if, after giving effect to the
issuance or guaranty by the Lenders of any requested Letter of Credit, (i) the
aggregate amount of all such Letter of Credit Obligations outstanding would
exceed the Letter of Credit Facility Amount or (ii) the aggregate amount of all
Revolving Credit Loans outstanding would exceed the Borrowing Base or (iii) if
no Revolving Credit Loans are outstanding, the aggregate amount of the Letter
of Credit Obligations outstanding would exceed the Borrowing Base. No such
Letter of Credit shall have an expiry date which is more than one year
following the date of issuance thereof, and neither Agent nor the Lenders shall
be under any obligation to incur Letter of Credit Obligations in respect of, or
purchase risk participations in, any Letter of Credit having an expiry date
which is later than five (5) Business Days prior to the Termination Date.
SECTION 3.2 Advances Automatic; Participations.
(a) In the event that Agent or any Lender shall make any payment on or
pursuant to any Letter of Credit Obligation, such payment shall then be
deemed automatically to constitute an Advance under Section 2.2 of the
Agreement regardless of whether a Default or Event of Default shall
have occurred and be continuing and notwithstanding the Borrowers'
failure to satisfy the conditions precedent set forth in Article 5, and
each Lender shall be obligated to pay an amount calculated by applying
such Lender's Commitment Percentage to the aggregate amount of such
payment. The failure of any Lender to make available to Agent for
Agent's own account an amount equivalent to a Lender's Commitment
Percentage as to any such payment by Agent under or in respect of a
Letter of Credit shall not relieve any other Lender of its obligation
hereunder to make available to Agent an amount equivalent to such other
Lender's Commitment Percentage with respect thereto, but no breach by a
Lender shall cause an increase in any other Lender's Commitment
Percentage.
(b) If it shall be illegal or unlawful for any Lender to be deemed to have
assumed a ratable share of the Reimbursement Obligations owed to an
Issuing Bank, or if the Issuing Bank is a Lender, then (i) immediately
and without further action whatsoever, each Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent (or such
Issuing Bank, as the case may be) an undivided interest and
participation in an amount equivalent to such Lender's Commitment
Percentage (based on the Commitments) of the Letter of Credit
Obligations in respect of all Letters of Credit then outstanding and
(ii) thereafter, immediately upon issuance of any Letter of Credit,
each Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such Issuing Bank, as the case may be) an
undivided interest and participation in an amount equivalent to such
Lender's Commitment Percentage (based on the Commitments) of the Letter
of Credit Obligations with respect to such Letter of Credit on the date
of such issuance. Each Lender shall fund its participation in all
payments or disbursements made under the Letters of Credit in the same
manner as provided in the Agreement with respect to Advances as set out
in Section 2.2(b) hereof.
SECTION 3.3 Cash Collateral.
(a) If any Letter of Credit Obligations, whether or not then due and
payable, shall for any reason be outstanding on the Termination Date or
an Event of Default shall have occurred, the Borrowers shall, at the
request of the Agent, either (i) provide cash collateral therefor in
the manner described below, or (ii) cause all such Letters of Credit
and guaranties thereof to be canceled and returned, or (iii) deliver a
stand-by letter (or letters) of credit in guarantee of such Letter of
Credit Obligations, which stand-by letter (or letters) of credit shall
be of like tenor and duration as, and be in an amount equal to one
hundred five percent (105%) of the aggregate then available to be drawn
under, the Letters of Credit to which such outstanding Letter of Credit
Obligations relate and shall be issued by a Person, and shall be
subject to such terms and conditions, as are be satisfactory to Agent
in its sole discretion (the "Replacement Letters of Credit"). If the
Borrowers are required to provide cash collateral for any Letter of
Credit Obligations pursuant to the Agreement prior to the Termination
Date, the Borrowers will deliver to Agent, for the benefit of the
Lenders, cash or Cash Equivalents in an amount equal to one hundred
five percent (105%) of the maximum amount then available to be drawn
under each Letter of Credit outstanding. Such funds or Cash
Equivalents shall be held by Agent in a cash collateral account (the
"Cash Collateral Account") maintained at a bank or financial
institution acceptable to Agent. The Cash Collateral Account shall be
in the name of the Borrowers and shall be pledged to, and subject to
the control of, Agent, for the benefit of Agent and the Lenders, in a
manner satisfactory to Agent. Each Borrower hereby pledges and grants
to Agent, on behalf of itself and the Lenders, a security interest in
all such funds and Cash Equivalents held in any Cash Collateral Account
from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations and
other Secured Obligations, whether or not then due. This Agreement
shall constitute a security agreement under applicable law.
(b) From time to time after funds are deposited in the Cash Collateral
Account by the Borrowers, whether before or after the Termination Date,
Agent may apply such funds or Cash Equivalents then held in the Cash
Collateral Account to the payment of any amounts, in such order as
Agent may elect, as shall be or shall become due and payable by the
Borrowers to Lenders with respect to such Letter of Credit Obligations
of the Borrowers and, upon the satisfaction in full of all Letter of
Credit Obligations, to any other Secured Obligations then due and
payable.
(c) No Borrower nor any Person claiming on behalf of or through any
Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination or satisfaction in full of all Letter of Credit Obligations
and the payment of all amounts payable by the Borrowers to Lenders in
respect thereof, any funds remaining in the Cash Collateral Account
shall be held and applied to other Secured Obligations then due and
owing and upon payment in full of all Secured Obligations, any
remaining amount shall be paid to the Borrowers or as otherwise
required by law.
SECTION 3.4 Fees and Expenses. The Borrowers, jointly and severally,
agree to pay to the Agent, for the benefit of the Lenders (except as otherwise
described in Section 4.2(c)), as compensation for Letter of Credit Obligations
incurred hereunder, the fees set forth in Section 4.2(c) hereof.
SECTION 3.5 Request for Incurrence of Letter of Credit Obligations. The
Borrowers shall give Agent at least two (2) Business Days prior written notice
requesting approval of the issuance, or a guarantee of, any Letter of Credit,
specifying the date such Letter of Credit Obligation is to be incurred,
identifying the beneficiary to which such Letter of Credit Obligation relates
and describing the nature of the transactions proposed to be supported
thereby. The notice shall be accompanied by the form of the Letter of Credit
(which shall be acceptable to the Issuing Bank) to be issued or guaranteed and
a completed application for the Standby Letter of Credit or the Documentary
Letter of Credit in form and substance satisfactory to Borrowers, Agent and the
Issuing Bank. Notwithstanding anything contained herein to the contrary,
Letter of Credit applications by the Borrowers and approvals by Agent may be
made and transmitted pursuant to electronic codes and security measures
mutually agreed upon and established by and among such Borrower, Agent and the
Issuing Bank.
SECTION 3.6 Obligation Absolute. The obligation of the Borrowers to
reimburse Agent and the Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Lender to make payments to Agent with respect to Letters of
Credit shall be unconditional and irrevocable. Such obligations of the
Borrowers and the Lenders to Agent shall be paid strictly in accordance with
the terms hereof under all circumstances including the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit, this
Agreement, the other Loan Documents or any other agreement;
(b) the existence of any claim, set-off, defense or other right which any
Borrower or any of its Affiliates or any Lender may at any time have
against a beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom any such transferee may be acting), Agent,
any Lender, or any other Person, whether in connection with the
Agreement, the Letter of Credit, the transactions contemplated herein
or therein or any unrelated transaction (including any underlying
transaction between such Borrower or any of its Affiliates and the
beneficiary for which the Letter of Credit was procured);
(c) any draft, demand, certificate or any 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;
(d) except as expressly provided in Section 3.7(b)(iii) hereof, payment by
Agent or any Issuing Bank under any Letter of Credit or guaranty
thereof against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit
or such guaranty;
(e) any other circumstance or happening whatsoever, which is similar to any
of the foregoing; or
(f) the fact that a Default or an Event of Default shall have occurred and
be continuing.
SECTION 3.7
Indemnification; Nature of Lenders' Duties.
(a) In addition to amounts payable by the Borrowers to Agent and Lenders as
elsewhere provided in this Agreement, the Borrowers hereby, jointly and
severally, agree to pay and to protect, indemnify, and save harmless
Agent, and each Lender and each Issuing Bank from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including attorneys' fees and, after and during the
continuance of an Event of Default, allocated costs of internal
counsel) which Agent, any Lender or any Issuing Bank may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit or guaranty thereof, or (ii) the failure of Agent
or any Lender seeking indemnification or of any Issuing Bank to honor a
demand for payment under any Letter of Credit or guaranty thereof as a
result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental
Authority, in each case other than to the extent solely as a result of
the gross negligence or willful misconduct of Agent or such Lender (as
finally determined by a court of competent jurisdiction).
(b) As between Agent, any Lender and any Issuing Bank and the Borrowers,
the Borrowers, jointly and severally, hereby assume all risks of the
acts and omissions of, or misuse of any Letter of Credit by
beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law
neither Agent nor any Lender shall be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to
demand payment under such Letter of Credit; provided that, in the case
of any payment by Agent under any Letter of Credit or guaranty thereof,
Agent shall be liable to the extent such payment was made solely as a
result of its gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction) in determining that
the demand for payment under such Letter of Credit or guaranty thereof
complies on its face with any applicable requirements for a demand for
payment under such Letter of Credit or guaranty thereof; (iv) for
errors, omissions, interruptions or delays in transmission or delivery
of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) for errors in interpretation of technical
terms; (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a payment under any Letter of
Credit or guaranty thereof or of the proceeds thereof; (vii) for the
application of the proceeds of any drawing under any Letter of Credit
or guaranty thereof; and (viii) for any consequences arising from
causes beyond the control of Agent or any Lender. None of the above
shall affect, impair, or prevent the vesting of any of Agent's or any
Lender's rights or powers hereunder or under the other Loan Documents.
(c) Nothing contained herein shall be deemed to limit or to expand any
waivers, covenants or indemnities made by any Borrower in favor of any
Issuing Bank in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between such
Borrower and such Issuing Bank.
ARTICLE IV.
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) General Interest Provisions. The Borrowers, jointly and severally,
agree to pay interest to Agent, for the ratable benefit of the Lenders,
on the Revolving Credit Loans from time to time outstanding from the
date of such loan(s) until such principal amount shall be paid in full,
at a rate equal to the Chase Bank Rate then in effect, payable in
arrears as it accrues on each Interest Payment Date.
(b) Non-Business Day Payments. If any payment on the Revolving Credit
Loans becomes due and payable on a day other than a Business Day, the
maturity thereof will be extended to the next succeeding Business Day
and, with respect to payments of principal, interest thereon shall be
payable at then applicable rate during any such extension.
(c) Default Interest. From and after the occurrence of an Event of Default
and at the option of the Agent or at the direction of the Required
Lenders, without notice to the Borrowers, the unpaid principal amount
of each Secured Obligation shall bear interest while such Event of
Default is continuing at a rate per annum equal to the Default Margin
plus the then Effective Interest Rate, payable on demand. The interest
rate provided for in this Section 4.1(c) shall to the extent permitted
by applicable law also apply to and accrue on the amount of any
judgment entered with respect to any Secured Obligation.
(d) Computation. The interest rates provided for in this Section 4.1 and
the fees provided for in Sections 4.2(a) and 4.2(b)(i)(C) shall be
computed on the basis of a year of three hundred sixty (360) days and
the actual number of days elapsed.
(e) Maximum Rate. It is not intended by the Lenders, and nothing contained
in this Agreement or any Note shall be deemed, to establish or require
the payment of a rate of interest in excess of the maximum rate
permitted by applicable law (the "Maximum Rate"). If, in any month,
the Effective Interest Rate, absent such limitation, would have
exceeded the Maximum Rate, then the Effective Interest Rate for that
month shall be the Maximum Rate, and if, in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate,
then the Effective Interest Rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of
interest which would have been paid if the same had not been limited by
the Maximum Rate. In this connection, in the event that, upon payment
in full of the Secured Obligations, the total amount of interest paid
or accrued under the terms of this Agreement is less than the total
amount of interest which would have been paid or accrued if the
Effective Interest Rate had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay to the
Lenders an amount equal to the difference between (i) the lesser of (A)
the amount of interest which would have been charged if the Maximum
Rate had, at all times, been in effect and (B) the amount of interest
which would have accrued had the Effective Interest Rate, at all times,
been in effect, and (ii) the amount of interest actually paid or
accrued under this Agreement. In the event the Lenders receive,
collect or apply as interest any sum in excess of the Maximum Rate,
such excess amount shall be applied to the reduction of the principal
balance of the applicable Secured Obligation, and, if no such principal
is then outstanding, such excess or part thereof remaining shall be
paid to the Borrowers.
SECTION 4.2 Fees.
(a) Unused Line Fee. As additional compensation for the costs and risks in
making the Revolving Credit Facility available to the Borrowers, the
Borrowers agree to pay to the Agent, for the ratable benefit of the
Lenders, in arrears, on the first (1st) Business Day of each month with
respect to the immediately prior month, during the term hereof or any
extension thereof, a fee equal to 0.25% per annum (the "Unused Line
Fee") of the difference between (i) the Revolving Credit Facility
Amount, and (ii) the average daily outstanding balance of the
Revolving Credit Loans and the Letter of Credit Obligations during the
period for which the Unused Line Fee is due.
(b) Letter of Credit Charges and Fees. The Borrowers agree to pay (i) to
the Agent, (A) the fees set forth on Exhibit G with respect to Letters
of Credit other than the Existing Fleet Letters of Credit, (B) an
opening fee of 0.125% of the face amount of each Letter of Credit and
(C) for each month during which any Letter of Credit Obligation is
outstanding, a fee in an amount equal to 3% per annum times the average
amount available to be drawn under each Letter of Credit in such month
(the "Letter of Credit Monthly Fee") and (ii) to FCC the fees set forth
on Exhibit G with respect to the Existing Fleet Letters of Credit.
Each Letter of Credit Monthly Fee shall be paid to Agent, for the
benefit of the Lenders, in arrears on the first (1st) Business Day of
each month with respect to the immediately preceding month and on the
Termination Date or until all such Letter of Credit Obligations have
been paid or otherwise satisfied. Upon the occurrence and during the
continuation of an Event of Default, the Letter of Credit Monthly Fee
shall be increased by an amount equal to the Letter of Credit Default
Margin.
(c) Collateral Monitoring Fee. The Borrowers shall pay to the Agent, for
the ratable benefit of the Lenders, a collateral monitoring fee of
$15,000 for each month or part thereof during which any Revolving
Credit Loans are outstanding and unpaid, payable on the Effective Date
and thereafter in advance on the first Business Day of each calendar
month.
SECTION 4.3 Manner of Payment; Application of Proceeds.
(a) Each payment (including prepayments) by the Borrowers on account of the
principal of or interest on the Revolving Credit Loans or of any other
amounts payable to the Lenders under this Agreement or any Note shall
be made not later than 1:00 p.m. (New York time) on the date specified
for payment under this Agreement to the Agent, for the account of the
Lenders, at the Agent's Office, in Dollars, in immediately available
funds and shall be made without any setoff, counterclaim or deduction
whatsoever and, for purposes of calculating interest on Secured
Obligations, shall be applied to the Secured Obligations as set forth
in Section 8.1(b) hereof. Any payment received after 1:00 p.m. (New
York time) on such day shall be deemed to have been made on the next
succeeding Business Day.
(b) The Borrowers hereby irrevocably authorize each Lender and each
Affiliate of such Lender and each participant herein to charge any
account of the Borrowers maintained with such Lender or with such
Affiliate or participant with such amounts as may be necessary from
time to time to pay any Secured Obligations (whether or not owed to
such Lender, Affiliate or participant) which are not paid when due, and
the proceeds thereof shall be applied as set forth below in Section
4.3(c).
(c) Except as otherwise provided in Section 12.3, the Agent and the Lenders
shall apply all receipts with respect to payments on Revolving Credit
Loans and all proceeds of Collateral (other than the Mortgaged Property
as provided in Section 4.3(d)) and other amounts representing payments
in respect of any of the Secured Obligations (i) first, to the Agent to
pay any unpaid principal and accrued interest on the Agent Advances;
(ii) second, to the Settlement Lender to pay the principal and accrued
interest on any portion of the Non-Ratable Loans outstanding, to be
shared with the Lenders that have acquired and paid for a participating
interest in such Non-Ratable Loans, (iii) third, to the Agent to pay
all costs and expenses including, without limitation, indemnified
amounts, that have not been reimbursed to Agent by the Borrowers or the
Lenders, including interest thereon, if any; (iv) fourth, to the Agent
to pay any fees due the Agent hereunder, including interest thereon, if
any; (v) fifth, to the Lenders for any indemnified amounts and costs
and expenses paid to or reimbursed to the Agent; (vi) sixth, to the
Lenders to pay any unpaid principal and accrued interest on the
Revolving Credit Loans and the other Secured Obligations then
outstanding; (vii) seventh, to pay an amount to the Agent equal to all
outstanding Letter of Credit Obligations to be held as cash collateral
for such Letter of Credit Obligations; (viii) eighth, to any Lender or
any Affiliate thereof in payment of any Bank Products Liabilities and
to CIT in payment of Ledger Debt up to a maximum of $750,000, to be
shared pro rata based on the amount of Bank Products Liabilities and
Ledger Debt (up to a maximum of $750,000) then outstanding; provided,
however, in the event that (x) the aggregate amount of outstanding
Revolving Credit Loans exceeds the Borrowing Base, or (y) upon the
occurrence of an Event of Default, the Agent and the Lenders may apply
all such amounts received in respect of the Secured Obligations or the
Collateral to the payment of Secured Obligations in such manner and in
such order as the Agent may elect in its reasonable credit judgment.
Notwithstanding anything herein to the contrary, the Agent may, as and
to the extent provided in the Orders, apply any proceeds of Collateral
in existence on the Petition Date to the Pre-Petition Obligations
before application of same to any of the Secured Obligations.
SECTION 4.4 Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a loan account in the
Borrowers' name (each, a "Loan Account"). Each Loan Account shall show
as debits thereto each Advance made under this Agreement by such Lender
to the Borrowers and as credits thereto all payments received by such
Lender and applied to the principal of such Revolving Credit Loans
outstanding to the Borrowers so that the balance of the Loan Account at
all times reflects the aggregate principal amount of the Revolving
Credit Loans due such Lender from the Borrowers.
(b) The Agent shall maintain on its books a control account for the
Borrowers in which shall be recorded (i) the amount of each Advance
made hereunder to the Borrowers, (ii) the amount of any principal or
interest due or to become due from the Borrowers hereunder, and (iii)
the amount of any sum received by the Agent hereunder from the
Borrowers and each Lender's ratable share therein.
(c) The entries made in the accounts pursuant to subsections (a) and (b)
shall be prima facie evidence, in the absence of manifest error, of the
existence and amounts of the obligations of the Borrowers therein
recorded and in case of discrepancy between such accounts, in the
absence of manifest error, the accounts maintained pursuant to
subsection (b) shall be controlling.
(d) The Agent will account to the Borrowers monthly with a statement of the
Revolving Credit Loans, charges and payments made to and by the
Borrowers pursuant to this Agreement, and such accounts rendered by the
Agent shall be deemed final, binding and conclusive, save for manifest
error, unless the Agent is notified by the Borrowers in writing to the
contrary within thirty (30) days of the date the account was so
rendered. Such notice by the Borrowers shall be deemed an objection to
only those items specifically objected to therein. Failure of the
Agent to render such account shall in no way affect the rights of the
Agent or of the Lenders hereunder.
SECTION 4.5 Termination of Agreement. On the Termination Date, the
Borrowers shall pay to the Agent, for the account of the Lenders, in same day
funds, an amount equal to all Secured Obligations then outstanding, including,
without limitation, all (i) accrued interest thereon, (ii) all accrued fees
provided for hereunder, and (iii) any amounts payable to the Agent and the
Lenders pursuant to Sections 4.1, 4.2, 4.8, 4.11, 4.12, 4.13, 15.2, 15.3 and
15.13, and, in addition thereto, shall deliver to the Agent, in respect of each
outstanding Letter of Credit, either the Replacement Letter of Credit or the
Cash Collateral as provided in Section 3.3. Upon payment in full of the
amounts specified in this Section 4.5, this Agreement shall be terminated and
the Agent, the Lenders and the Borrowers shall have no further obligations to
any other party hereto except for the obligations to the Agent and the Lenders
pursuant to Section 15.11 hereof and those which survive according to their
express terms.
SECTION 4.6 Making of Advances.
(a) Nature of Obligations of Lenders to Make Advances. The obligations of
the Lenders under this Agreement to make the Revolving Credit Loan are
several and are not joint or joint and several.
(b) Assumption by Agent. Subject to the provisions of Section 4.7 and
notwithstanding the occurrence or continuance of a Default or Event of
Default or other failure of any condition to the making of Advances
hereunder subsequent to the Advances to be made on the Effective Date,
unless the Agent shall have received notice from a Lender in accordance
with the provisions of Section 4.6(c) prior to a proposed borrowing
date that such Lender will not make available to the Agent such
Lender's ratable portion of the amount to be borrowed on such date, the
Agent may assume that such Lender will make such portion available to
the Agent in accordance with Section 2.2(b), and the Agent may, in
reliance upon such assumption, make available to the Borrowers on such
date a corresponding amount. If and to the extent such Lender shall
not make such ratable portion available to the Agent, such Lender and
the Borrowers severally agree to repay to the Agent forthwith on demand
such corresponding amount (the "Make-Whole Amount"), together with
interest thereon for each day from the date such amount is made
available to the Borrowers until the date such amount is repaid to the
Agent at the Effective Interest Rate or, if lower, subject to Section
4.1(e), the Maximum Rate. If such Lender shall repay to the Agent such
corresponding amount, the amount so repaid shall constitute such
Lender's Commitment Percentage of the Advance made on such borrowing
date for purposes of this Agreement. The failure of any Lender to make
available its Commitment Percentage of any Advance shall not (without
regard to whether the Borrowers shall have returned the amount thereof
to the Agent in accordance with this Section 4.6) relieve it or any
other Lender of its obligation, if any, hereunder to make its
Commitment Percentage of such Advance available on such borrowing date,
but no Lender shall be responsible for the failure of any other Lender
to make available its Commitment Percentage of such Advance on the
borrowing date.
(c) Delegation of Authority to Agent.
(i) Without limiting the generality of Section 14.1, each Lender
expressly authorizes the Agent to determine on behalf of such
Lender (A) any reduction or increase of advance rates
applicable to the Borrowing Base, so long as such advance
rates do not at any time exceed the rates set forth in the
Borrowing Base definition, (B) the creation or elimination
of any reserves (other than the Letter of Credit Reserve and
the Minimum Excess Availability Reserve) under the
Revolving Credit Facility and the Borrowing Base, and (C)
whether or not Inventory shall be deemed to constitute
Eligible Inventory. Such authorization may be withdrawn by
the Required Lenders by giving the Agent written notice of such
withdrawal signed by the Required Lenders; provided, however,
that unless otherwise agreed by the Agent such withdrawal of
authorization shall not become effective until the thirtieth
(30th) Business Day after receipt of such notice by the Agent.
Thereafter, the Required Lenders shall jointly instruct the
Agent in writing regarding such matters with such frequency as
the Required Lenders shall jointly determine.
(ii) Unless and until the Agent shall have received written notice
from the Required Lenders that because of a Default or Event of
Default the Required Lenders do not intend to make available to
the Agent such Lenders' ratable share of Advances made after
the effective date of such notice, the Agent shall be entitled
to continue to make the assumptions described in Section 4.6(b).
After receipt of the notice described in the preceding
sentence, which shall become effective on the third (3rd)
Business Day after receipt of such notice by the Agent unless
otherwise agreed by the Agent, the Agent shall be entitled to
make the assumptions described in Section 4.6(b) as to any
Advances as to which it has not received a written notice to
the contrary prior to 11:00 a.m. (New York time) on the
Business Day next preceding the day on which the Advance is to
be made. The Agent shall not be required to make any Advance
as to which it shall have received notice from a Lender of
such Lender's intention not to make its ratable portion of
such Advance available to the Agent. Any withdrawal of
authorization under this Section 4.6(c) shall not affect the
validity of any Advances made prior to the effectiveness
thereof.
SECTION 4.7 Settlement Among Lenders.
(a) Revolving Credit Loans. It is agreed that each Lender's Net
Outstandings are intended by the Lenders to be equal at all times to
such Lender's Commitment Percentage of the aggregate principal amount
of all Revolving Credit Loans outstanding. Notwithstanding such
agreement, the several and not joint obligation of each Lender to fund
Advances made in accordance with the terms of this Agreement ratably in
accordance with such Lender's Commitment Percentage and each Lender's
right to receive its ratable share of principal payments on Revolving
Credit Loans in accordance with its Commitment Percentage, the Lenders
agree that in order to facilitate the administration of this Agreement
and the Loan Documents that settlement among them as to Revolving
Credit Loans may take place on a periodic basis in accordance with the
provisions of this Section 4.7.
(b) Settlement Procedures as to Revolving Credit Loans. To the extent and
in the manner hereinafter provided in this Section 4.7, settlement
among the Lenders as to Revolving Credit Loans may occur periodically
on Settlement Dates determined from time to time by the Agent, which
may occur before or after the occurrence or during the continuance of a
Default or Event of Default and whether or not all of the conditions
set forth in Section 5.2 have been met. On each Settlement Date
payments shall be made by or to the Settlement Lender and the other
Lenders in the manner provided in this Section 4.7 in accordance with
the Settlement Report delivered by the Agent pursuant to the provisions
of this Section 4.7 in respect of such Settlement Date so that as of
each Settlement Date, and after giving effect to the transactions to
take place on such Settlement Date, each Lender's Net Outstandings
shall equal such Lender's Commitment Percentage of the Revolving Credit
Loans outstanding.
(i) Selection of Settlement Dates. If the Agent elects, in its
discretion, but subject to the consent of the Settlement
Lender, to settle accounts among the Lenders with respect to
principal amounts of Revolving Credit Loans less frequently
than each Business Day, then the Agent shall designate periodic
Settlement Dates which may occur on any Business Day after the
Effective Date; provided, however, that the Agent shall
designate as a Settlement Date any Business Day which is an
Interest Payment Date; and provided further, that a
Settlement Date shall occur at least once during each seven-
day period. The Agent shall designate a Settlement Date by
delivering to each Lender a Settlement Report not later than
12:00 noon (New York time) on the proposed Settlement Date,
which Settlement Report shall be with respect to the period
beginning on the next preceding Settlement Date and ending on
such designated Settlement Date.
(ii) Non-Ratable Loans and Payments. Between Settlement Dates, the
Agent shall request and the Settlement Lender may(but shall not
be obligated to) advance to the Borrowers out of the Settlement
Lender's own funds, the entire principal amount of any Advance
requested or deemed requested pursuant to Section 2.2(a) (any
such Advance being referred to as a "Non-Ratable Loan"). The
making of each Non-Ratable Loan by the Settlement Lender shall
be deemed to be a purchase by the Settlement Lender of a one
hundred percent (100%) participation in each other Lender's
Commitment Percentage of the amount of such Non-Ratable Loan.
All payments of principal, interest and any other amount with
respect to such Non-Ratable Loan shall be payable to and
received by the Agent for the account of the Settlement
Lender. Upon demand by the Settlement Lender, with notice
thereof to the Agent, each other Lender shall pay to the
Settlement Lender, as the repurchase of such participation, an
amount equal to one hundred percent (100%) of such Lender's
Commitment Percentage of the principal amount of such
Non-Ratable Loan. Any payments received by the Agent between
Settlement Dates which in accordance with the terms of this
Agreement are to be applied to the reduction of the
outstanding principal balance of Revolving Credit Loans, shall
be paid over to and retained by the Settlement Lender for such
application, and such payment to and retention by the
Settlement Lender shall be deemed, to the extent of each other
Lender's Commitment Percentage of such payment, to be a
purchase by each such other Lender of a participation in the
Revolving Credit Loans (including the repurchase of
participations in Non-Ratable Loans) held by the Settlement
Lender. Upon demand by another Lender, with notice thereof to
the Agent, the Settlement Lender shall pay to the Agent, for
the account of such other Lender, as a repurchase of such
participation, an amount equal to such other Lender's
Commitment Percentage of any such amounts (after application
thereof to the repurchase of any participations of the
Settlement Lender in such other Lender's Commitment Percentage
of any Non-Ratable Loans) paid only to the Settlement Lender
by the Agent.
(iii) Net Decrease in Outstandings. If on any Settlement Date the
increase, if any, in the dollar amount of any Lender's Net
Outstandings which is required to comply with the first
sentence of Section 4.7(a) is less than such Lender's
Commitment Percentage of amounts received by the Agent but
paid only to the Settlement Lender since the next preceding
Settlement Date, such Lender and the Agent, in their respective
records, shall apply such Lender's Commitment Percentage of
such amounts to the increase in such Lender's Net Outstandings,
and the Settlement Lender shall pay to the Agent, for the
account of such Lender, the excess allocable to such Lender.
(iv) Net Increase in Outstandings. If on any Settlement Date the
increase, if any, in the dollar amount of any Lender's Net
Outstandings which is required to comply with the first
sentence of Section 4.7(a) exceeds such Lender's Commitment
Percentage of amounts received by the Agent but paid only to
the Settlement Lender since the next preceding Settlement Date,
such Lender and the Agent, in their respective records, shall
apply such Lender's Commitment Percentage of such amounts to
the increase in such Lender's Net Outstandings, and such Lender
shall pay to the Agent, for the account of the Settlement
Lender, any excess.
(v) No Change in Outstandings. If a Settlement Report indicates
that no Revolving Credit Loans have been made during the period
since the next preceding Settlement Date, then such Lender's
Commitment Percentage of any amounts received by the Agent in
respect of Revolving Credit Loans but paid only to the
Settlement Lender shall be paid by the Settlement Lender to
the Agent, for the account of such Lender. If a Settlement
Report indicates that the increase in the dollar amount of a
Lender's Net Outstandings which is required to comply with the
first sentence of Section 4.7(a) is exactly equal to such
Lender's Commitment Percentage of amounts received by the
Agent in respect of Revolving Credit Loans but paid only to
the Settlement Lender since the next preceding Settlement
Date, such Lender and the Agent, in their respective records,
shall apply such Lender's Commitment Percentage of such
amounts to the increase in such Lender's Net Outstandings.
(vi) Return of Payments. If any amounts received by the Settlement
Lender in respect of the Secured Obligations are later required
to be returned or repaid by the Settlement Lender to the
Borrowers or any other obligor or their respective representa-
tives or successors in interest, whether by court order,
settlement or otherwise, in excess of the Settlement Lender's
Commitment Percentage of all such amounts required to be
returned by all Lenders, each other Lender shall, upon demand
by the Settlement Lender with notice to the Agent, pay to the
Agent for the account of the Settlement Lender, an amount
equal to the excess of such Lender's Commitment Percentage of
all such amounts required to be returned by all Lenders over
the amount, if any, returned directly by such Lender.
(vii) Payments to Agent, Lenders.
(A) Payment by any Lender to the Agent shall be made not later than
1:00 p.m. (New York time) on the Business Day such payment is
due, provided that if such payment is due on demand by
another Lender, such demand is made on the paying Lender not
later than 11:00 a.m. (New York time) on such Business Day.
Payment by the Agent to any Lender shall be made by wire
transfer, promptly following the Agent's receipt of funds for
the account of such Lender and in the type of funds received
by the Agent, provided that if the Agent receives such funds at
or prior to 1:00 p.m. (New York time), the Agent shall pay
such funds to such Lender by 2:00 p.m. (New York time) on such
Business Day. If a demand for payment is made after the
applicable time set forth above, the payment due shall be made
by 2:00 p.m. (New York time) on the first Business Day
following the date of such demand.
(B) If a Lender shall, at any time, fail to make any payment to the
Agent required hereunder, the Agent may, but shall not be
required to, retain payments that would otherwise be made
to such Lender hereunder and apply such payments to such
Lender's defaulted obligations hereunder, at such time, and in
such order, as the Agent may elect in its sole discretion.
(C) With respect to the payment of any funds under this Section
4.7(b), whether from the Agent to a Lender or from a Lender
to the Agent, the party failing to make full payment when
due pursuant to the terms hereof shall, upon demand by the
other party, pay such amount together with interest on such
amount at the then Effective Interest Rate.
(c) Settlement of Other Secured Obligations. All other amounts received by
the Agent on account of, or applied by the Agent to the payment of, any
Secured Obligation owed to the Lenders (including, without limitation,
fees payable to the Lenders pursuant to Sections 4.2(b) and (c) and
proceeds from the sale of, or other realization upon, all or any part
of the Collateral following an Event of Default) that are received by
the Agent on or prior to 1:00 p.m. (New York time) on a Business Day
will be paid by the Agent to each Lender on the same Business Day, and
any such amounts that are received by the Agent after 1:00 p.m. (New
York time) will be paid by the Agent to each Lender on the following
Business Day. Unless otherwise stated herein, the Agent shall
distribute fees payable to the Lenders pursuant to Section 4.2(b) and
(c) ratably to the Lenders based on each Lender's Commitment Percentage
and shall distribute proceeds from the sale of, or other realization
upon, all or any part of the Collateral following an Event of Default
ratably to the Lenders as set forth in Section 12.3.
SECTION 4.8 Changed Circumstances. Each Borrower agrees that if (i) any
law hereafter in effect or (ii) any request, guideline or directive of any
Governmental Authority (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) not in effect as of the
Effective Date with respect to any law now or hereafter in effect (and whether
or not any such law is presently applicable to any Lender) or the
interpretation or administration thereof by any Governmental Authority, shall
either (A) (1) impose, affect, modify or deem applicable any reserve, special
deposit, capital maintenance or similar requirement against any Revolving
Credit Loans, (2) impose on such Lender any other condition regarding any
Advance, this Agreement, any Note or the facilities provided hereunder, or
(3) result in any requirement regarding capital adequacy (including any
risk-based capital guidelines) affecting such Lender being imposed or modified
or deemed applicable to such Lender or (B) subject such Lender to any taxes on
the recording, registration, notarization or other formalization of the
Revolving Credit Loans or Note, and the result of any event referred to in
clause (i) or (ii) above shall be to increase the cost to such Lender of
making, funding or maintaining any Revolving Credit Loans or to reduce the
amount of any sum receivable by such Lender or such Lender's rate of return on
capital with respect to any Revolving Credit Loans to a level below that which
such Lender could have achieved but for such imposition, modification or deemed
applicability (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then, upon
demand by such Lender, each Borrower shall immediately pay to such Lender
additional amounts which shall be sufficient to compensate such Lender for such
increased cost, tax or reduced rate of return. A certificate of such Lender to
the Borrowers claiming compensation under this Section 4.8 shall be final,
conclusive and binding on all parties for all purposes in the absence of
manifest error. Such certificate shall set forth the nature of the occurrence
giving rise to such compensation, the additional amount or amounts to be paid
to it hereunder and the method by which such amounts were determined. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods
SECTION 4.9 Obligations Absolute. Each Borrower agrees that the Secured
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or any Lender with respect thereto. All Secured Obligations shall be
conclusively presumed to have been created in reliance hereon. The liabilities
of each Borrower under this Agreement shall be absolute and unconditional
irrespective of:
(a) any change in the time, manner or place of payment of, or in any other
term of, all or any part of the Secured Obligations, or any other
amendment or waiver thereof or any consent to departure therefrom,
including, but not limited to, any increase in the Secured Obligations
resulting from the extension of additional credit to any Borrower or
otherwise;
(b) any taking, exchange, release or non-perfection of any Collateral or
any other collateral securing the Secured Obligations, or any release,
amendment or waiver of, or consent to or departure from, any guaranty
for all or any of the Secured Obligations;
(c) any change, restructuring or termination of the corporate structure or
existence of any Borrower; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Borrower other than payment or
satisfaction of the Secured Obligations or to the extent of any loss
resulting from the gross negligence or willful misconduct of the Agent,
any Lender or the Issuing Bank, as determined by the final
non-appealable judgment of a court of competent jurisdiction.
SECTION 4.10 Borrowers' Representative. Each of the Borrowers hereby
appoints the Parent as, and the Parent shall act under this Agreement as, the
agent, attorney-in-fact and legal representative of the Borrowers for all
purposes hereunder, including, without limitation, requesting Advances and
receiving account statements and other notices and communications to the
Borrowers (or any of them) from the Agent or any Lender. Accordingly, the
parties agree that any and all actions to be taken hereunder by the Borrowers
may be taken by the Parent for and on behalf of the Borrowers, and any and all
notices and communications permitted or required to be made by the Agent or any
Lender hereunder to the Borrowers, shall be deemed made to all of the Borrowers
if delivered to the Parent. The Agent and the Lenders may rely, and shall be
fully protected in relying, on any Borrowing Notice, request for a Letter of
Credit, disbursement instruction, report, information or any other notice or
communication made or given by the Parent, whether in its own name, on behalf
of any other Borrower or on behalf of "the Borrowers", and neither the Agent
nor any Lender shall have any obligation to make any inquiry or request any
confirmation from or on behalf of any other Borrower as to the binding effect
on it of any such notice, request, instruction, report, information, other
notice or communications, provided that the provisions of this Section 4.10
shall not be construed so as to preclude any Borrower from taking other actions
permitted to be taken by "a Borrower" hereunder. The Parent may from time to
time tender to Agent or Lenders, representations or performance of covenants
hereunder and take actions in respect of other matters on behalf of the
Borrowers, and any such representations, performance or actions by the Parent,
if accepted by Agent or Lenders, as the case may be, shall (irrespective of
whether the particular matter is otherwise authorized elsewhere herein) be
conclusively deemed done with the authorization of and on behalf of one or more
of the Borrowers, as the circumstances and the specific action taken may
indicate. Agent and any Lender may in all cases rely on communications from,
and representations and actions taken by, the Parent as though given,
delivered, made or taken by or from one or more of the Borrowers, and all such
communications, representations and actions shall be binding upon any and every
Borrower in whose behalf such communications, representations or actions were
purportedly taken by the Parent. Notwithstanding anything to the contrary
herein, nothing in this Section 4.10 shall be deemed to grant the Parent the
authority to execute any amendment of any Loan Document on behalf of any
Borrower.
SECTION 4.11 Agent Advances.
(a) The Agent hereby is authorized by the Borrowers and the Lenders, from
time to time in the Agents' sole discretion, (i) after the occurrence
of a Default or an Event of Default (but without constituting a waiver
of such Default or Event of Default), or (ii) at any time that any of
the other applicable conditions precedent set forth in Section 5.2 have
not been satisfied, to make Advances to the Borrowers on behalf of the
Lenders which the Agent, in good faith, determines is necessary (A) to
preserve or protect the Collateral, or any portion thereof, (B) to
enhance the likelihood of repayment of the Secured Obligations, or (C)
to pay any other amount chargeable to the Borrowers pursuant to the
terms of this Agreement, including costs, fees, and expenses (any of
the Advances described in this Section 4.11 being hereinafter referred
to as "Agent Advances").
(b) The Agent Advances shall (i) not exceed the principal amount of
$1,000,000 in the aggregate at any one time, (ii) not be made for the
purpose of paying Ledger Debt, (iii) be repayable on demand or, if
earlier, not later than fifteen (15) days after the making of such
Agent Advances unless otherwise agreed by the Required Lenders, (iv) be
secured by the Collateral, (v) constitute Advances and Secured
Obligations hereunder, and (vi) bear interest at the then Effective
Interest Rate.
SECTION 4.12 Overadvances.
(a) The Agent may make voluntary Overadvances without the written consent
of the Required Lenders for interest, fees or expenses due to Lenders
in accordance with the provisions hereof. If the conditions for
borrowing under Section 5.2 cannot be fulfilled, the Agent may, but is
not obligated to, knowingly and intentionally continue to make Advances
(including Agent Advances) to the Borrowers, at the request of a
Borrower, notwithstanding such failure of condition(s), so long as, at
any time, either (i) the aggregate amount of then outstanding Revolving
Credit Loans would not exceed the Borrowing Base by more than an amount
equal to five percent (5%) of the Revolving Credit Facility Amount, or
(ii) (A) the aggregate amount of outstanding Revolving Credit Loans
would not exceed the Borrowing Base by more than the amount proposed by
the Agent and agreed to by the Required Lenders, and (B) such
Overadvances are made pursuant to a plan (proposed by the Agent and
agreed to by the Required Lenders) for the elimination of such
Overadvances. The Overadvances made under clause (i) of this Section
4.12(a) shall be repayable not later than fifteen (15) days after the
making of such Overadvances unless otherwise agreed by the Required
Lenders. The foregoing provisions are for the sole and exclusive
benefit of the Agent and the Lenders and are not intended to, and shall
not be construed to, create any obligations of the Agent or any Lender
to the Borrowers with respect to Overadvances or otherwise benefit the
Borrowers in any way. The Overadvances and Agent Advances, as
applicable, that are made pursuant to this Agreement shall be subject
to the same terms and conditions as any other Advance except that such
advances shall bear interest at the then Effective Interest Rate;
provided, however, that the making of any Overadvance shall not
constitute a waiver of any Default or Event of Default then in
existence or arising therefrom.
(b) In the event the Agent obtains actual knowledge that the aggregate
amount of outstanding Revolving Credit Loans exceeds the amount
permitted by the preceding paragraph, regardless of the amount of or
reason for such excess, the Agent shall notify the Lenders as soon as
practicable (and prior to making any (or any further) intentional
Overadvances (except for and excluding amounts charged to the
applicable Loan Account for interest, fees, or expenses) unless the
Agent determines that prior notice would result in imminent harm to the
Collateral or its value), and the Lenders thereupon shall, together
with the Agent, jointly determine the terms of arrangements that shall
be implemented with the Borrowers intended to reduce, within a
reasonable time, the outstanding principal amount of the Revolving
Credit Loans of the Borrowers to an amount permitted by the preceding
paragraph. In the event any Lender disagrees over the terms of
reduction and/or repayment of any Overadvance, the terms of reduction
and/or repayment thereof shall be implemented according to the
determination of the Required Lenders.
(c) Each Lender shall be obligated to settle with the Agent as provided in
Section 4.7 for the amount of such Lender's ratable share of any
Overextension reported to such Lender, any Overadvances made as
permitted under this Section 4.12, and any Overextension resulting
from the charging to the applicable Loan Account interest, fees, or
expenses.
(d) Any and all Overadvances made by the Agent (i) shall be repaid upon the
demand of the Agent (except as set forth in Section 4.12(a)(ii) which
amounts shall be repaid pursuant to a plan for repayment as described
in Section 4.12(a)(ii) above), (ii) be secured by the Collateral, and
(iii) constitute Advances and Secured Obligations hereunder.
SECTION 4.13 Reserved.
SECTION 4.14 Joint and Several Liability.
(a) Joint and Several Liability. Each of the Borrowers acknowledges and
agrees that (i) it is a co-borrower hereunder and shall be jointly and
severally, with the other Borrowers, directly and primarily liable to
the Agent and the Lenders for the Secured Obligations regardless of
which Borrower actually receives Advances or other extensions of credit
hereunder or the amount of such Advances received or the manner in
which the Agent and/or such Lender accounts for such Advances or other
extensions of credit on its books and records, (ii) each of the Secured
Obligations shall be secured by all of the Collateral, (iii) each of
the Borrowers shall have the obligations of co-maker and shall be
primary obligors with respect to the Revolving Credit Loans, the Notes,
and the other Secured Obligations, it being agreed that the Advances to
each Borrower inure to the benefit of all Borrowers, and (iv) the Agent
and the Lenders are relying on such joint and several liability of the
Borrowers as co-makers in extending the Revolving Credit Loans
hereunder. Each Borrower's Secured Obligations with respect to
Advances made to it, and each Borrower's Secured Obligations arising as
a result of the joint and several liability of the Borrowers hereunder,
with respect to Advances made to the other Borrowers hereunder, shall
be separate and distinct obligations, but all such Secured Obligations
shall be primary obligations of each Borrower. Each Borrower hereby
unconditionally and irrevocably agrees that upon default in the payment
when due (whether at stated maturity, by acceleration or otherwise) of
any principal of, or interest on, any Revolving Credit Loans or other
Secured Obligation payable by it to the Agent or any Lender, it will
forthwith pay the same, without notice of demand. Notwithstanding
anything to the contrary contained in this Agreement, the Agent shall
be entitled to rely upon any telephonic request for Advances received
by it from any Borrower on behalf of all Borrowers, shall be entitled
to rely upon any other request, notice or other communication received
by it from any Borrower on behalf of all Borrowers, and shall be
entitled to treat its giving of any notice hereunder pursuant to
Section 15.1 hereof as notice to each and all Borrowers.
(b) Unconditional Liability. Each Borrower's Secured Obligations arising
as a result of the joint and several liability of the Borrowers
hereunder with respect to Advances or other extensions of credit made
to the other Borrowers hereunder shall, to the fullest extent permitted
by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Secured Obligations
of the other Borrowers or of any Note or other document evidencing all
or any part of the Secured Obligations of the other Borrowers, (ii) the
absence of any attempt to collect the Secured Obligations from the
other Borrowers, or any other security therefor, or the absence of any
other action to enforce the same, (iii) the waiver, consent, extension,
forbearance or granting of any indulgence by the Agent and/or any
Lender with respect to any provision of any instrument evidencing the
Secured Obligations of the other Borrowers, or any part thereof, or any
other agreement now or hereafter executed by the other Borrowers and
delivered to the Agent and/or any Lender, (iv) the failure by the Agent
and/or any Lender to take any steps to perfect and maintain its
security interest in, or to preserve its rights to, any security or
Collateral for the Secured Obligations of the other Borrowers, (v) the
Agent's and/or any Lender's election, in any proceeding instituted
under the Bankruptcy Code, of the application of Section-1111(b)(2) of
the Bankruptcy Code, (vi) any borrowing or grant of a security interest
by the other Borrowers, as debtors-in-possession under Section 364 of
the Bankruptcy Code, (vii) the disallowance of all or any portion of
the Agent's and/or any Lender's claim(s) for the repayment of the
Secured Obligations of the other Borrowers under Section 502 of the
Bankruptcy Code, or (viii) any other circumstances which might
constitute a legal or equitable discharge or defense of any other
Borrowers.
(c) Waiver of Subrogation and Other Rights. With respect to each
Borrower's Secured Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Advances
or other extensions of credit made to any of the other Borrowers
hereunder, each Borrower waives, until the Secured Obligations shall
have been paid in full and the Agreement and the other Loan Documents
shall have been terminated, any right to enforce any right of
subrogation or any remedy which the Agent and/or any Lender now has or
may hereafter have against such Borrower, any endorser or any guarantor
of all or any part of the Secured Obligations, and any benefit of, and
any right to participate in, any security or collateral given to the
Agent and/or any Lender to secure payment of the Secured Obligations or
any other liability of the Borrowers to the Agent and/or any Lender.
(d) No Modification or Release of Obligations. No payment or payments made
by any of the Borrowers or any other Person or received or collected by
the Agent or any Lender from any of the Borrowers or any other Person
by virtue of any action or proceeding or any set-off-or appropriation
or application at any time or from time to time in reduction of or in
payment of the Secured Obligations shall be deemed (except to the
extent Secured Obligations are satisfied) to modify, release or
otherwise affect the liability of each Borrower under this Agreement,
which shall remain liable for the Secured Obligations until the Secured
Obligations are paid in full and the Revolving Credit Facility is
terminated.
SECTION 4.15 Waiver of Suretyship Defenses. Each Borrower agrees that the
joint and several liability of the Borrowers provided for in Section 4.14 shall
not be impaired or affected by any modification, supplement, extension or
amendment or any contract or Agreement to which the other Borrowers may
hereafter agree (other than an Agreement signed by the Agent and all of the
Lenders specifically releasing such liability), nor by any delay, extension of
time, renewal, compromise or the indulgence granted by the Agent with respect
to any of the Secured Obligations, nor by any other agreements or arrangements
whatever with any other Borrower or with anyone else, and each Borrower hereby
waives all notice of such delay, extension, release, substitution, renewal,
compromise or other indulgence, hereby consenting to be bound thereby as fully
and effectively as if it had expressly agreed thereto in advance. The
liability of each Borrower is direct and unconditional as to all of the Secured
Obligations, and may be enforced without requiring the Agent first to resort to
any other right, remedy or security. Each Borrower consents and agrees that
the Agent shall be under no obligation to marshal any assets in favor of such
Borrower or against or in payment of any or all of the Obligations. Each
Borrower hereby expressly waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Secured Obligations, the
Revolving Credit Notes, this Agreement, or any other Loan Document, and any
requirement that the Agent protect, secure, marshal, perfect or insure any
lien or any property subject thereto (except to the extent required by
Applicable Law or this Agreement) or exhaust any right or take any action
against any or all Borrowers or any other Person or any collateral, including
any rights which may be conferred under applicable law permitting any Person
after the Secured Obligations become due, to demand that the Agent first
commence proceedings against any other obligor to collect such amounts, the
failure of which by the Agent to commence such proceedings would discharge such
Person from its obligations.
SECTION 4.16
Contribution and Indemnification Among the Borrowers.
(a) Each Borrower is obligated to repay the Secured Obligations as joint
and several obligors under this Agreement. To the extent that any
Borrower shall, under this Agreement as a joint and several obligor,
repay any of the Secured Obligations constituting Advances made to
another Borrower hereunder or other Secured Obligations incurred
directly and primarily by any other Borrower (an "Accommodation
Payment"), then the Borrower making such Accommodation Payment shall be
entitled to contribution and indemnification from, and be reimbursed
by, each of the other Borrowers in an amount, for each of such other
Borrowers, equal to a fraction of such Accommodation Payment, the
numerator of which fraction is such other Borrower's "Allocable Amount"
(as defined below) and the denominator of which is the sum of the
Allocable Amounts of all of the Borrowers. As of any date of
determination, the "Allocable Amount" of each Borrower shall be equal
to the maximum amount of liability for Accommodation Payments which
could be asserted against such Borrower hereunder without (a) rendering
such Borrower "insolvent" within the meaning of Section 101(31) of the
Bankruptcy Code Section of the Uniform Fraudulent Transfer Act (the
"UFTA"), or Section 2 of the Uniform Fraudulent Conveyance Act (the
"UFCA"), (b) leaving such Borrower with unreasonably small capital or
assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such
Borrower unable to pay its debts as they become due within the meaning
of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or
Section 5 of the UFCA. All rights and claims of contribution,
indemnification and reimbursement under this Section shall be
subordinate in right of payment to the prior payment in full of the
Secured Obligations. Each agreement, consent, warranty, representation
or obligation of the Borrowers hereunder shall be deemed to be made or
to have been made by the Borrowers on a joint and several basis. The
provisions of this Section shall, to the extent expressly inconsistent
with any provision in any Loan Documents, supersede such inconsistent
provision.
(b) Each Borrower hereby agrees that to the extent that any individual
Borrower or entity obligated hereunder shall have paid an amount
hereunder or pursuant to this Agreement which would, but for this
provision, render such Borrower or entity insolvent for purposes of
state or federal fraudulent conveyance laws, such Borrower shall be
entitled to seek and receive contribution from and against any other
Borrower hereunder to the extent such contribution would not render
such other Borrower insolvent. The provisions of this Section 4.16
shall in no respect limit the obligations and liabilities of any
Borrower to Agent and Lenders and each Borrower shall remain liable to
Agent and Lenders for the full amount of such Borrower's Secured
Obligations hereunder.
SECTION 4.17 Subordination. Each Borrower hereby subordinates any claims
(including, without limitation, any right of payment, subrogation, contribution
and indemnity) that it may have from or against any other Borrower, and any
successor or assign of any other Borrower, including, without limitation, any
trustee, receiver or debtor-in-possession, howsoever arising, due or owing and
whether heretofore, now or hereafter existing, to the payment in full of the
Secured Obligations. Notwithstanding the provisions of this Section 4.17 to
the contrary, for so long as no Default or an Event of Default shall exist,
each Borrower may pay to the other Borrower Indebtedness validly owed to such
other Borrower which arises in the ordinary course of such Borrower's business.
SECTION 4.18 Super Priority; Nature of Secured Obligations and the Agent's
Liens.
(a) The priority of the Agent's Liens on the Collateral for the benefit of
the Lenders shall be set forth in the Interim Order and the Final Order;
(b) All Secured Obligations shall constitute administrative expenses of the
Borrowers in the Chapter 11 Cases, with administrative priority and
senior secured status under Sections 364(c) and 364(d) of the
Bankruptcy Code. Subject to the Carve-Out Amount, such administrative
claims shall have priority over all other costs and expenses of the
kinds specified in, or ordered pursuant to, Sections 105, 326, 330,
331, 503(b), 506(c) (to the extent and as provided in the Orders),
507(a), 507(b), 726 or any other provision of the Bankruptcy Code and
shall at all times be senior to the rights of the Borrowers, the
Borrowers' estates and any successor trustee or estate representative
in the Chapter 11 Cases or any subsequent proceeding or case under the
Bankruptcy Code. The Liens and security interests granted to the Agent
on the Collateral for the benefit of the Lenders, and the priorities
accorded to the Secured Obligations, shall have the priority and senior
secured status afforded by Sections 364(c) and 364(d)(1) of the
Bankruptcy Code (all as more fully set forth in the Interim Order and
the Final Order), senior to all claims and interest other than the
Carve-Out Expenses up to the Carve-Out Amount.
(c) The Agent's Liens on the Collateral for the benefit of the Lenders and
its administrative claims under Sections 364(c)(1) and 364(d) of the
Bankruptcy Code granted in respect of the Secured Obligations shall
also have priority over any claims arising under Section 506(c) of the
Bankruptcy code (to the extent and as provided in the Orders), subject
and subordinate only to: (x) fees pursuant to 28 ▇.▇.▇.▇▇. 1930 and to
the Clerk of the Court, and (y) unpaid and outstanding fees and
disbursements actually incurred on or after the Petition Date by the
Debtors' professionals and professionals for any Committee appointed in
the Chapter 11 Cases (collectively, the "Professionals") and allowed by
order of the Bankruptcy Court pursuant to sections 326, 328, 330, or
331 of the Bankruptcy Code (collectively, the "Allowed Professional
Fees"), less the amount of any retainers held by any such Professionals
(the "Carve-Out") in an aggregate amount not to exceed $1,000,000 (the
"Carve-Out Amount"); provided, however, that the Carve-Out shall not
include, apply to, or be available for any fees or expenses incurred by
any party, including the Debtors or any Committee, in connection with
any of the following: (a) an assertion, a joinder in, or the support of
(but excluding any investigation conducted prior to the assertion or
joinder in) the initiation or prosecution of any claims, causes of
action, adversary proceedings, or other litigation against the Agent,
the Lenders, the Pre-petition Agent, or the Pre-petition Lenders,
including, without limitation, challenging the amount, legality,
validity, extent, perfection, priority, or enforceability of, or
asserting any defense, counterclaim, or offset to, (i) the Secured
Obligations or the security interests and liens of the Agent in respect
thereof, and/or (ii) the Pre-petition Revolving Credit Loans,
Pre-Petition Loan Agreement or the security interests and liens of the
Pre-petition Agent and Pre-petition Lenders in respect thereof, or
asserting any claims or causes of action, including, without
limitation, any actions under chapter 5 of the Bankruptcy Code, against
the Agent, the Lenders, the Pre-petition Agent, or the Pre-petition
Lenders, (b) a request to use Cash Collateral (as defined in Section
363 of the Bankruptcy Code) without the prior written consent of the
Lenders, (c) a request for authorization to obtain post-petition loans
or other financial accommodations pursuant to Section 364(c) or (d) of
the Bankruptcy Code other than from the Lenders without the prior
written consent of the Lenders, or (e) any act or omission to act
adverse to the Agent, the Lenders, or their rights and remedies under
this Agreement or their interests in the Collateral that would,
individually or in the aggregate, have a Material Adverse Effect
(collectively, the "Carve-Out Expenses"). Except as set forth herein
or in the Final Order, no other claims having a priority superior or
pari passu to that granted to the Agent and Lenders by the Final Order
shall be granted or approved while any Secured Obligations under this
Agreement remain outstanding.
SECTION 4.19 Waiver. Upon the Effective Date, and on behalf of themselves
and their estates, and for so long as any Secured Obligations shall be
outstanding, the Borrowers hereby irrevocably waive any right, pursuant to
Sections 364(c) or 364(d) of the Bankruptcy Code or otherwise, to grant any
Lien of equal or greater priority than the Lien securing the Secured
Obligations, or to approve a claim of equal or greater priority than the
Secured Obligations.
ARTICLE V.
CONDITIONS PRECEDENT
SECTION 5.1 Conditions Precedent to Revolving Credit Loans and Letters of
Credit. Notwithstanding any other provision of this Agreement, the initial
Advance will not be made, nor will any initial Letter of Credit be issued or
Letter of Credit Obligations be incurred, until the fulfillment of each of the
following conditions prior to or contemporaneously with the making of such
Advance or issuance (unless waived in writing by the Agent):
(a) Fees and Expenses. The Borrowers shall have paid all of the fees and
all expenses payable on the Effective Date referred to herein,
including, without limitation, the Facility Fee and all out-of-pocket
costs and expenses incurred in connection with the preparation,
negotiation, execution and closing of this Agreement and the
transactions contemplated herein.
(b) Closing Documents. The Agent shall have received each of the following
documents, all of which shall be satisfactory in form and substance to
the Agent and its counsel and to the Lenders:
(i) Loan Agreement. This Agreement, duly executed and delivered by
each Borrower and each Lender;
(ii) Secretary's Certificate. A certificate of the Secretary or
Assistant Secretary of each corporate Borrower (or other
similar officer for other entities), in form and substance
satisfactory to the Agent, which shall include (A) amendments,
if any, to each such Borrower's articles or certificate of
incorporation or other documents of formation or organization
since the effective date of the Pre-Petition Loan Agreement,
(B) amendments, if any, to each such Borrower's bylaws,
partnership or operating agreement since the effective date of
the Pre-Petition Loan Agreement, (C) each such Borrower' Board
of Director (and if required, stockholder), Board of Manager
or partnership resolutions, approving and authorizing the
transactions to be consummated in connection herewith and (D)
the signature and incumbency certificates of its officers
executing any of the Loan Documents, all certified as of the
Effective Date as being true, accurate, correct and complete;
(iii) Insurance. Certificates or binders of insurance relating to
each of the policies of insurance covering any of the
Collateral together with a loss payable endorsement, in form
and substance reasonably satisfactory to the Agent, and/or
additional insured clauses or endorsements, which comply with
the terms of Section 8.6;
(iv) Officers' Certificate. A certificate of the President or a
Financial Officer of each Borrower stating that, to the best
of his knowledge and based on an examination sufficient to
enable him to make an informed statement, (A) all of the
representations and warranties made or deemed to be made under
this Agreement and the other Loan Documents are true and
correct as of the Agreement Date and the Effective Date, after
giving effect to the Initial Loans to be made at such time and
the application of the proceeds thereof, and (B) no Default or
Event of Default exists;
(v) Borrowing Base Certificates. An Accounts Borrowing Base
Certificate and an Inventory Borrowing Base Certificate each
prepared as of the Effective Date or such earlier date
acceptable to the Agent, duly executed and delivered by a
Financial Officer;
(vi) Power of Attorney. An original of the Power of Attorney
substantially in the form attached hereto as Exhibit C, as
executed by each Borrower in favor of the Agent;
(vii) Cash Management Agreements. Evidence satisfactory to the Agent
of the existence, as of the Effective Date, of a cash
management system that complies with Section 8.1(a) hereof
and that is otherwise satisfactory to the Agent, in it's sole
discretion, including, without limitation, Lockbox Agreements
with respect to the Blocked Accounts, duly executed by the
Borrowers and the applicable Clearing Bank;
(viii) Schedules of Accounts and Inventory. A Schedule of Accounts
and a Schedule of Inventory prepared as of the Effective Date
or a recent prior date in accordance with Sections 8.8(a) and
(c);
(ix) Budget. The Agent and the Lenders shall have reviewed and
approved the initial Budget;
(x) Bankruptcy Conditions.
(A) The Interim Order shall have been entered by the Bankruptcy
Court in form and substance satisfactory to the Agent,approving
the transactions contemplated hereby and granting a first
priority perfected Lien and security interest in the Collateral
subject only to the Carve-Out Expenses up to the Carve-Out
Amount;
(B) The Borrowers shall have obtained appropriate orders from the
Bankruptcy Court approving and ratifying the continued use of
the cash management system used by the Borrowers and described
in the Pre-Petition Loan Agreement and this Agreement
(including account number 3752211759 maintained at Bank of
America, N.A., to the extent not a component of the cash
management system described in the Pre-Petition Loan
Agreement); and
(C) The "first day" orders described on Schedule 5.1 in form and
substance satisfactory to the Agent shall have been entered
in the Chapter11 Cases and the Agent shall have received copies
of such orders (including a certified copy of the Interim
Order).
(xi) General. Such other documents and instruments as the Agent or
any Lender may reasonably request.
(c) Notes. Each Lender shall have received a Note duly executed and
delivered by each Borrower, in the form attached hereto as Exhibit A,
and complying with the terms of Sections 2.4.
SECTION 5.2 All Advances; Letters of Credit. At the time of making of
each Advance, including the initial Advance and all subsequent Advances and the
issuance of each Letter of Credit:
(a) all of the representations and warranties made or deemed to be made
under this Agreement shall be true and correct at such time both with
and without giving effect to such Advance and the Letters of Credit to
be made at such time and the application of the proceeds thereof;
(b) no event shall have occurred and be continuing, or would result from
the making of any Advance or the incurrence of any Letter of Credit
Obligation, as the case may be, which constitutes a Default or an Event
of Default;
(c) each of the conditions set forth in Section 5.1(a) through (c) shall
continue to be satisfied by the Borrowers as of such date;
(d) the corporate actions of each Borrower, including shareholder approval
if necessary, to authorize the execution, delivery and performance of
this Agreement, the other Loan Documents and the borrowings hereunder
shall remain in full force and effect and the incumbency of officers
shall be as stated in the certificates of incumbency delivered pursuant
to Section 5.1(b)(ii) or as subsequently modified and reflected in a
certificate of incumbency delivered to the Agent;
(e) (i) the Bankruptcy Court shall have entered the Final Order on or
before the date that is 45 days after the Petition Date, (ii) the
Bankruptcy Court shall have entered the Final Order following the
expiration of the Interim Order, (iii) no Order shall have been
vacated, reversed, modified or amended without the Lenders' consent,
(iv) no motion for reconsideration of any such order shall have been
timely filed (unless waived in writing by the Agent), (v) no appeal of
any such order shall have been timely filed, or if timely filed, such
appeal has been dismissed (unless the Agent and the Lenders waive such
requirement);
(f) the Advance request or request for issuance of a Letter of Credit would
not cause the aggregate outstanding amount of the Revolving Credit
Loans and/or Letter of Credit Obligations to exceed the amount then
authorized by the Interim Order or the Final Order, as the case may be;
(g) each request and deemed request for any Advance or for the incurrence
of any Letter of Credit Obligation hereunder shall be deemed to be a
certification by each Borrower to the Agent and the Lenders as to the
matters set forth in Section 5.2(a) and (d) and the Agent may, without
waiving either condition, consider the conditions specified in Sections
5.2(a) and (d) fulfilled and a representation by such Borrower to such
effect made, if no written notice to the contrary is received by the
Agent prior to the making of the Advance then to be made.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BORROWERS
SECTION 6.1 Representations and Warranties. Each Borrower represents and
warrants to the Agent and to the Lenders as follows:
(a) Organization; Power; Qualification; FEIN. Schedule 6.1(a) lists for
each Borrower and its Subsidiaries as of the Agreement Date (i) the
exact name of the entity as it appears in the official filings relating
thereto, the type of entity, and the jurisdiction in which each
Borrower and its Subsidiaries is incorporated, registered or formed,
(ii) the jurisdictions in which they are qualified to do business as
foreign entities, (ii) the organization or registration number of each
Borrower and its Subsidiaries as fixed by their respective
jurisdictions of incorporation, registration or formation and (iii) the
federal employer identification number of such Borrower and its
Subsidiaries. Each Borrower and each of its Subsidiaries is duly
organized or formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, subject to
the entry of the Interim Order (or the Final Order, when applicable)
has the legal power and authority to own its properties and to carry on
its business as now being and hereafter proposed to be conducted and is
duly qualified and authorized to do business in each jurisdiction in
which failure to be so qualified and authorized would have a Materially
Adverse Effect.
(b) Subsidiaries and Ownership of each Borrower. Each Borrower's
Subsidiaries, and its ownership interests therein, are set forth on
Schedule 6.1(b). Except as set forth on Schedule 6.1(b), each Borrower
owns 100% of all such Subsidiaries. The outstanding stock of each
corporate Borrower and each of its corporate Subsidiaries has been duly
and validly issued and is fully paid and non-assessable by each
corporate Borrower and such corporate Subsidiary and the number and
owners of such shares of capital stock of each corporate Borrower are
set forth on Schedule 6.1(b). Except as set forth on Schedule 6.1(b),
there are no outstanding rights to purchase, options, warrants or
similar rights or agreements pursuant to which any Borrower may be
required to issue, sell, repurchase or redeem any of its stock or other
equity securities or any stock or other equity securities of its
Subsidiaries. Except for Subsidiaries which are Borrowers, no
Subsidiary of any Borrower, except as set forth in Schedule 6.1(b), (i)
owns any assets or property (A) having a value in excess of $10,000, or
(B) otherwise material to the operation of the business of any
Borrower, or (ii) engages in any operations which are material to the
business of any Borrower.
(c) Authorization of Agreement, Notes, Loan Documents and Borrowing. Upon
the entry by the Bankruptcy Court of the Interim Order (or the Final
Order, when applicable) to the extent provided therein, each Borrower
has the right and power and has taken all necessary action to authorize
the execution, delivery and performance of each of the Loan Documents
to which it is a party in accordance with their respective terms. Each
of the Loan Documents to which it is a party have been duly executed
and delivered by the duly authorized officers of each Borrower, and,
subject to the entry of the Interim Order and the Final Order, as
applicable, each is, or when executed and delivered in accordance with
this Agreement will be, a legal, valid and binding obligation of such
Borrower, enforceable in accordance with its terms.
(d) Compliance of Agreement, Notes, Loan Documents and Borrowing with Laws,
Etc. The execution, delivery and performance of each of the Loan
Documents to which each Borrower is a party in accordance with its
respective terms and the borrowings hereunder do not and will not, by
the passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval (other than the approval of
the Bankruptcy Court) or violate any applicable law, regula-
tion, judgment, injunction, order or decree relating to
such Borrower or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute a default
under (A) the articles or certificate of incorporation or
formation, the by-laws, the limited liability company operating
agreement, partnership agreement or other similar organizational
documents of such Borrower, (B) any indenture, material
agreement or other instrument to which such Borrower is a
party or by which any of its property may be bound or (C) any
Governmental Approval relating to such Borrower, or,
(iii) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter
acquired by such Borrower other than the Security Interest.
(e) Business. Each Borrower is engaged principally in the business
described on Schedule 6.1(e).
(f) Compliance with Law; Governmental Approvals.
(i) Except as set forth in Schedule 6.1(f), each Borrower
(A) has all material Governmental Approvals, including permits
relating to federal, state and local Environmental Laws,
ordinances and regulations, required by any Applicable Law for
it to conduct its business, each of which is in full force and
effect, is final and not subject to review on appeal and
is not the subject of any pending or, to the knowledge of such
Borrower, threatened attack by direct or collateral proceeding,
and
(B) is in compliance with each material Governmental Approval
applicable to it and in compliance with all other material
Applicable Laws relating to it, including, without being
limited to, all material Environmental Laws and all material
occupational health and safety laws applicable to such
Borrower or its properties,
except for instances of noncompliance which would not, singly or in the
aggregate, cause a Default or Event of Default or have a Materially Adverse
Effect on such Borrower and its Subsidiaries as a whole and in respect of which
reserves in respect of such Borrower's or its Subsidiary's reasonably
anticipated liability therefore have been established on the books of such
Borrower or such Subsidiary, as applicable.
(ii) Without limiting the generality of the above, except as
disclosed on a report delivered pursuant to Section 5.1(b)(xv)
or with respect to matters which could not reasonably be
expected to have, singly or in the aggregate, a Materially
Adverse Effect on such Borrower:
(A) the operations of such Borrower and each of its Subsidiaries
complies in all material respects with all applicable
environmental, health and safety requirements of Applicable
Law;
(B) such Borrower and each of its Subsidiaries has obtained all
environmental, health and safety permits necessary for its
operation and all permits are in good standing and such
Borrower and each of its Subsidiaries is in compliance in all
material respects with all terms and conditions of such
permits;
(C) neither such Borrower nor any of its Subsidiaries nor any of
their respective present or past property or operations are
subject to any order from or agreement with any public
authority or private party respecting (x) any environmental,
health or safety requirements of Applicable Law, (y) any
Remedial Action, or (z) any liabilities and costs arising
from the Release or threatened Release of a Contaminant into
the environment or otherwise arising from the environmental,
health or safety requirements of any Applicable Law;
(D) none of the operations of such Borrower or of any of its Subsi-
diaries is subject to any judicial or administrative proceed-
ing alleging a violation of any environmental, health or
safety requirement of Applicable Law;
(E) none of the present nor past operations of such Borrower or any
of its Subsidiaries is the subject of any investigation by any
public authority evaluating whether any Remedial Action is
needed to respond to a Release or threatened Release of a
Contaminant into the environment;
(F) neither such Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Applicable Law indicating
past or present treatment, storage or disposal of a hazardous
waste, as that term is defined under 40 CFR Part 261 or any
state equivalent;
(G) neither such Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Applicable Law reporting a
Release of a Contaminant into the environment;
(H) except in compliance with applicable Environmental Laws, during
the course of such Borrower's or any of its Subsidiaries'
ownership of or operations on the Real Estate there have been
no (1) generation, treatment, recycling, storage or disposal
of hazardous waste, as that term is defined under 40 CFR Part
261 or any state equivalent, (2) use of underground storage
tanks or surface impoundments, (3) use of asbestos-containing
materials, or (4) use of polychlorinated biphenyls (PCB) used
in hydraulic oils, electrical transformers or other equipment
on the Real Estate;
(I) neither such Borrower nor any of its Subsidiaries has entered
into any negotiations or agreements with any Person (including,
without limitation, any prior owner of any of the Real Estate
or other property of such Borrower or any of its Subsidiaries)
relating to any Remedial Action or environmentally-related
claim;
(J) neither such Borrower nor any of its Subsidiaries has
received any notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or threatened
Release of a Contaminant into the environment;
(K) neither such Borrower nor any of its Subsidiaries has any
contingent liability in connection with any Release or
threatened Release of any Contaminant into the environment;
(L) no Environmental Lien has attached to any of the owned Real
Estate or other property of such Borrower or of any of its
Subsidiaries, or, to the knowledge of any Borrower or any
Subsidiary thereof, any of the leased Real Estate;
(M) the presence and condition of all asbestos-containing material
which is on or part of the owned Real Estate or, to the
knowledge of any Borrower or any Subsidiary thereof, on or
part of any of the leased Real Estate (excluding any raw
materials used in the manufacture of products or products
themselves) do not violate any currently applicable requirement
of Applicable Law;
(N) neither such Borrower nor any of its Subsidiaries
manufactures, distributes or sells, and has not, in the past
twenty (20) years, manufactured, distributed or sold,
products which contain asbestos-containing material; and
(O) such Borrower hereby acknowledges and agrees that Agent (i) is
not now, and has not ever been, in control of any of the Real
Estate or any of such Borrower's affairs, and (ii) does not
have the capacity through the provisions of the Loan
Documents or otherwise to influence such Borrower's conduct
with respect to the ownership, operation or management of
any of its Real Estate or compliance with Environmental Laws or
Environmental Permits.
(iii) Schedule 6.1(f) sets forth each notice received by any
Borrower or Subsidiary of a material violation of any
Environmental Laws and occupational health and safety laws
applicable to such Borrower, any of its respective Subsidiaries
or any of their respective properties.
(g) Real Estate; Leases. Schedule 6.1(g) sets forth, as of the Agreement
Date, a correct and complete list of all Real Estate owned by the
Borrowers, all leases and subleases of real or personal property held
by the Borrowers as lessee or sublessee, and all leases and subleases
of real or personal property held by the Borrowers as lessor, or
sublessor, in each case, as to which the interests of the relevant
Borrower has a book value or estimated fair market value in excess of
$100,000. Each of such leases and subleases is valid and enforceable
in accordance with its terms and is in full force and effect, and no
material default by any Borrower to any such lease or sublease exists.
The Borrowers have good and marketable title in fee simple to the Real
Estate identified on Schedule 6.1(g) as owned by the Borrowers, or
valid leasehold interests in all Real Estate designated therein as
"leased" by the Borrowers and the Borrowers have good, indefeasible,
and merchantable title to all of their other property reflected on the
Financial Statements delivered to the Agent and the Lenders, except as
disposed of in the ordinary course of business since the date thereof,
free of all Liens except Permitted Liens.
(h) Liens. Except as set forth in Schedule 6.1(h), none of the properties
and assets owned by any Borrower or any Subsidiary, including, without
limitation, the Collateral, is subject to any Lien, except Permitted
Liens. Other than the Financing Statements, no financing statement
under the UCC of any state which names any Borrower or any Subsidiary
as debtor and which has not been terminated has been filed in any state
or other jurisdiction, and no Borrower or any of their respective
Subsidiaries has signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such
financing statement, except to perfect those Liens listed in Schedule
6.1(h).
(i) Indebtedness and Guaranties. Set forth on Schedule 6.1(i) is a
complete and correct listing of all of each Borrower's and each of its
Subsidiaries' (i) Indebtedness for Money Borrowed and (ii) Guaranties.
Each Borrower and each of its Subsidiaries has performed and is in
compliance with all of the terms and provisions of such Indebtedness
and Guaranties and all instruments and agreements relating thereto and
no default or event of default or event or condition which, with notice
or lapse of time or both, would constitute such a default or event of
default, exists with respect to such Indebtedness or Guaranties or
related instruments or agreements.
(j) Litigation. Except as set forth on Schedule 6.1(j), there are no
actions, suits or proceedings pending (nor, to the knowledge of any
Borrower, are there any actions, suits or proceedings threatened, nor
is there any basis therefor) against or in any other way relating
adversely to or affecting any Borrower or any Subsidiary or any of
their respective properties, or which challenge any Borrower's right or
power to enter into or perform any of its obligations under the Loan
Documents to which it is a party, or the validity or enforceability of
any Loan Document or any action taken thereunder, in any court or
before any arbitrator of any kind or before or by any governmental
body, which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on any Borrower and its
Subsidiaries, as a whole.
(k) Tax Returns and Payments. Except as set forth on Schedule 6.1(k), all
United States federal, state and local as well as foreign national,
provincial and local and other tax returns of each Borrower and each of
its Subsidiaries required by Applicable Law to be filed have been duly
filed, and all United States federal, state and local and foreign
national, provincial and local and other taxes, assessments and other
governmental charges or levies upon such Borrower and each of its
Subsidiaries and such Borrower's and any of its Subsidiaries' property,
income, profits and assets which are due and payable have been paid,
except any such nonpayment which is at the time permitted under Section
9.6. The charges, accruals and reserves on the books of each Borrower
and each of its Subsidiaries in respect of United States federal, state
and local and foreign national, provincial and local taxes for all
fiscal years and portions thereof since the organization of such
Borrower are in the judgment of such Borrower adequate, and such
Borrower knows of no reason to anticipate any additional assessments
for any of such years which, singly or in the aggregate, could
reasonably be expected to have a Materially Adverse Effect on such
Borrower. Proper and accurate amounts have been withheld by each
Borrower from its respective employees for all periods in full
compliance with all applicable federal, state, local and foreign law
and such withholdings have been timely paid to the respective
Governmental Authorities. Schedule 6.1(k) sets forth as of the
Effective Date those taxable years for which any Borrower's tax returns
are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except
as described on Schedule 6.1(k), as of the Effective Date, no Borrower
has executed or filed with the IRS or any other Governmental Authority
any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges.
Except as disclosed in Schedule 6.1(k) hereto, no Borrower or any of
its respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to any
Borrower's knowledge, as a transferee. As of the Effective Date, no
Borrower has agreed or been requested to make any adjustment under Code
Section 481(a), by reason of a change in accounting method or
otherwise, which would have a Materially Adverse Effect.
(l) Burdensome Provisions. No Borrower or any of its respective
Subsidiaries is a party to any indenture, agreement, lease or other
instrument, or subject to any charter or corporate restriction,
Governmental Approval or Applicable Law compliance with the terms of
which could reasonably be expected to have a Materially Adverse Effect
on any Borrower and its Subsidiaries, taken as a whole.
(m) Financial Statements. The Borrowers have furnished to the Agent and
the Lenders a copy of (A) Borrowers' Consolidated Balance Sheet and
Consolidating Balance Sheet as at September 27, 2003, and the related
statements of income, cash flow and retained earnings for the Fiscal
Year then ended, and (B) its unaudited balance sheet as at October 2,
2004, and the related unaudited statement of income for the one (1)
Fiscal Month then ended. Such financial statements are complete and
correct and present fairly and in all material respects in accordance
with GAAP, the financial position of the Borrowers, as at the dates
thereof and the results of operations thereof, for the periods then
ended on a consolidated and consolidating basis (except with respect to
interim financial statements, for the omission of footnotes and normal
year-end adjustments). Except as disclosed or reflected in such
financial statements, no Borrower has any material liabilities,
contingent or otherwise, and there were no material unrealized or
anticipated losses of such Borrower required to be accrued, reserved
for, or disclosed in the foregoing financial statements
(n) Adverse Change. Since the date of the financial statements described
in clause (i) of Section 6.1(m) and other than as disclosed in the
unaudited financial statements described in clause (ii) of Section
6.1(m), (i) no change in the business, assets, liabilities, condition
(financial or otherwise), results of operations or business prospects
of any Borrower has occurred that has had, or may have, a Materially
Adverse Effect, and (ii) no event has occurred or failed to occur which
has had, or may have, a Materially Adverse Effect.
(o) Benefit Plans; ERISA. No Borrower or any Related Company maintains or
contributes to any Benefit Plan other than those listed on Schedule
6.1(o). Each Benefit Plan is in substantial compliance with ERISA to
the extent that ERISA is applicable, and no Borrower or any Related
Company has received any notice asserting that a Benefit Plan is not in
compliance with ERISA. No material liability to the PBGC or to a
Multiemployer Plan has been, or is expected by any Borrower to be,
incurred by such Borrower or any Related Company. Copies of all such
listed Benefit Plans, together with a copy of the latest form 5500 (if
any) for each such Benefit Plan, have been delivered to Agent. No
Borrower or any Related Company has failed to make any contribution or
pay any amount due as required by either Section 412 of the Code or
Section 302 of ERISA or the terms of any such Benefit Plan. No
Borrower or any Related Company has engaged in a prohibited
transaction, as defined in Section 4975 of the Code, in connection with
any Benefit Plan, which would subject such Borrower to a material tax
on prohibited transactions imposed by Section 4975 of the Code. Except
as set forth in Schedule 6.1(o): (i) no Title IV Plan has any Unfunded
Vested Accrued Benefits; (ii) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred
or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Borrower, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits,
asserted or instituted against any Benefit Plan or any Person as
fiduciary or sponsor of any Benefit Plan; (iv) no Borrower or any
Related Company has incurred or reasonably expects to incur any
liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan
with Unfunded Vested Accrued Benefits has been transferred outside of
the "controlled group" (within the meaning of Section 4001(a)(14) of
ERISA) of such Borrower or any Related Company; and (vi) no liability
under any Title IV Plan has been satisfied with the purchase of a
contract from an insurance company that is not rated AAA by the
Standard & Poor's Corporation or the equivalent by another nationally
recognized rating agency.
(p) Absence of Defaults. No Borrower or any of its Subsidiaries is in
default under its articles or certificate of incorporation or under its
by-laws or other equivalent organic documents and no event has
occurred, which has not been remedied, cured or waived, which
constitutes a Default or an Event of Default, or which constitutes, or
which with the passage of time or giving of notice or both would
constitute, a default or event of default (except for defaults
occasioned by the Chapter 11 Cases or occurring prior to the Petition
Date) by any Borrower or any of its Subsidiaries under any material
agreement (other than this Agreement) or judgment, decree or order to
which any Borrower or any of its Subsidiaries is a party or by which
any Borrower, any of its Subsidiaries or any Borrower's or any of its
Subsidiaries' properties may be bound or which would require any
Borrower or any of its Subsidiaries to make any payment under any of
the foregoing prior to the scheduled maturity date therefor.
(q) Accuracy and Completeness of Information. All Schedules hereto and all
material written information, reports and other papers and data
produced by or on behalf of each Borrower and furnished to the Agent or
any Lender were, at the time the same were so furnished, complete and
correct in all material respects, to the extent necessary to give the
recipient a true and accurate knowledge of the subject matter. None of
the representations and warranties made by any Borrower in any of the
Loan Documents as of the date such representations and warranties are
made or deemed made and no document furnished or written statement made
to the Agent or any Lender by any Borrower in connection with the
negotiation, preparation or execution of this Agreement or any of the
Loan Documents contains or will contain any untrue statement of a fact
material to the creditworthiness of any Borrower or omits or will omit
to state a material fact necessary in order to make the statements
contained therein not misleading.
(r) Reserved.
(s) Inventory. All Inventory included in any Inventory Borrowing Base
Certificate delivered to the Agent pursuant to Section 8.8(d) meets the
criteria enumerated in the definitions of Eligible Inventory, except as
disclosed in such Inventory Borrowing Base Certificate or in a
subsequent Inventory Borrowing Base Certificate or as otherwise
specifically disclosed in writing to the Agent. All Eligible Inventory
is in good condition, meets all standards imposed by any governmental
agency or department or division thereof having regulatory authority
over such goods, their use or sale, and is currently either usable or
saleable in the normal course of a Borrower's business, except to the
extent reserved against in the financial statements delivered pursuant
to Section 6.1(m) and Article 10 or as disclosed on a Schedule of
Inventory delivered to the Agent pursuant to Section 8.8(c). The Agent
may rely on all statements, warranties or representations made in any
Schedule of Inventory in determining which items of Inventory listed in
such Schedule are to be deemed Eligible Inventory. Set forth on
Schedule 6.1(s) is the (i) address (including street, city, county and
state) of each facility at which Inventory is located, (ii) the
approximate Cost value of the Inventory located at each such facility,
(iii) if the facility is leased or is a third party warehouse or
processor location, the name of the landlord or such third party
warehouseman or processor, and (iv) if the Inventory is consigned, all
outstanding consignment and memo contract agreements to which such
Borrower is a party. All Inventory is located on the premises set
forth on Schedule 6.1(s) or is in transit to one of such locations,
except as otherwise disclosed in writing to the Agent; no Borrower has
located Inventory at premises other than those set forth on
Schedule 6.1(s) at any time during the four months immediately
preceding the Agreement Date. No Inventory is subject to any Liens
other than Permitted Liens.
(t) Accounts.
(i) Each Account reflected in the computations included in any
Accounts Borrowing Base Certificate meets the criteria
enumerated in the definition of "Eligible Accounts," except as
disclosed in such Accounts Borrowing Base Certificate or as
disclosed in a timely manner in a subsequent Accounts
Borrowing Base Certificate or otherwise in writing to the
Administrative Agent.
(ii) No Borrower has any knowledge of any fact or circumstance not
disclosed to the Agent in an Accounts Borrowing Base
Certificate or otherwise in writing which would impair the
validity or collectibility of any otherwise Eligible Account
of $50,000 or more.
(u) Chief Executive Office. The chief executive office and principal place
of business of each Borrower and the books and records relating to the
Collateral are located at the address or addresses set forth on
Schedule 6.1(u). Except as set forth on Schedule 6.1(u) no Borrower
has maintained its chief executive office or books and records relating
to the Collateral at any other address at any time during the five
years immediately preceding the Agreement Date.
(v) Transfer Pricing Between Affiliates. Each Borrower is in compliance
with and utilizes the arms-length standard for course of dealing
transactions applicable to Affiliates as contemplated in Section 482 of
the Code, as amended and the regulations promulgated thereunder, such
that no material amount of taxes are due and owing and unpaid as a
result of any such transaction or series of transactions.
(w) Corporate and Fictitious Names. Except as otherwise disclosed on
Schedule 6.1(w), during the five-year period preceding the Agreement
Date, no Borrower or any predecessor thereof has been known as or used
any corporate or fictitious name other than the corporate name of each
Borrower on the Effective Date.
(x) Use of Proceeds; Federal Reserve Regulations. The proceeds of the
Revolving Credit Loans are to be used solely for the purposes described
in Section 9.8. No Borrower or any of its Subsidiaries is engaged and
none will engage, principally or as one of its important activities, in
the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" (as each of the quoted terms is defined
or used in Regulation U of the Board of Governors of the Federal
Reserve System). No Borrower owns any Margin Stock and no part of the
proceeds of any of the Advances will be used for so purchasing or
carrying margin stock or, in any event, for any purpose which violates,
or which would be inconsistent with, the provisions of Regulation T, U
or X of such Board of Governors. If requested by the Agent or any
Lender, each Borrower will furnish to the Agent and the Lenders a
statement or statements in conformity with the requirements of said
Regulation T, U or X to the foregoing effect.
(y) Government Regulation. No Borrower is an "investment company" or a
company "controlled" by an "investment company" (as each of the quoted
terms is defined or used in the Investment Company Act of 1940, as
amended). No Borrower is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any
other federal or state statute that restricts or limits its ability to
incur Indebtedness or to perform its obligations hereunder. Assuming
the accuracy of the representations set forth in Section 13.3
hereunder, the making of Advances and the incurrence of Letter of
Credit Obligations, the application of the proceeds thereof and
repayment thereof and the consummation of the related transactions will
not violate any provision of any such statute or any rule, regulation
or order issued by the Securities and Exchange Commission.
(z) Employee Relations. Each Borrower and each of its Subsidiaries has
adequate relations with its employees and is not, except as set forth
on Schedule 6.1(z), party to any collective bargaining agreement nor
has any labor union been recognized as the representative of any
Borrower's or any of its Subsidiaries' employees, and no Borrower is
aware of any pending, threatened or contemplated strikes, work stoppage
or other material labor disputes involving such Borrower's or any of
its Subsidiaries' employees.
(aa) Intellectual Property. Schedule 6.1(aa) sets forth a correct and
complete list of all Intellectual Property owned by each Borrower or
which any Borrower has the right to use. Each Borrower owns or
possesses all Intellectual Property required to conduct its business as
now and presently planned to be conducted. None of the Intellectual
Property is subject to any licensing agreement or similar arrangement
except as set forth on Schedule 6.1(aa) or as entered into in the sale
or distribution of the applicable Borrower's Inventory in the ordinary
course of business. To the best of each Borrower's knowledge, none of
the Intellectual Property infringes on or conflicts with any other
Person's property, and no other Person's property infringes on or
conflicts with the Intellectual Property.
(bb) Trade Names. All trade names under which any Borrower sells Inventory,
creates Accounts, to which instruments in payment of Accounts are made
payable, or under which it owns or leases the other Collateral
(collectively, "Trade Names") are listed on Schedule 6.1(bb). The
Trade Names are merely trade names or divisions of a Borrower. All
Inventory and other Collateral held under the Trade Names is owned
solely and exclusively by a Borrower, and no other Person has any Lien
or other interest in any of the Inventory or other Collateral,
including, without limitation, any sales or proceeds thereof, whether
such sales of Inventory are made in the name of a Borrower or in the
name of any of the Trade Names.
(cc) Brokers. Except as disclosed on Schedule 6.1 (cc), no broker or finder
acting on behalf of any Borrower brought about the obtaining, making or
closing of the Revolving Credit Facility or any Advances hereunder or
the related transactions, and no Borrower has any obligation to any
Person in respect of any finder's or brokerage fees in connection
herewith.
(dd) Insurance. Schedule 6.1(dd) lists all insurance policies of any nature
maintained, as of the Effective Date, for current occurrences by each
Borrower, as well as a summary of the material terms of each such
policy.
(ee) Deposit and Disbursement Accounts. Schedule 6.1(ee) lists all banks
and other financial institutions at which any Borrower maintains
deposits and/or other accounts as of the Effective Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name,
address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the
complete account number.
(ff) Government Contracts. Except as set forth in Schedule 6.1(ff), as of
the Effective Date, no Borrower is a party to any contract or agreement
with the federal government or any state or municipal government and
the Accounts are not subject to the Federal Assignment of Claims Act,
as amended (31 U.S.C. Section 3727) or any similar state or local law.
(gg) Trade Relations. Except as set forth in Schedule 6.1(gg), there exists
no actual or, to the knowledge of any Borrower, threatened termination
or cancellation of, or any material adverse modification or change in
the business relationship of any Borrower with any supplier material to
its operations.
(hh) Agreements and Other Documents.
(i) As of the Effective Date, each Borrower has made available to
the Agent or its counsel, on behalf of Lenders, for their
review, accurate and complete copies (or summaries) of all
Material Contracts,each of which are listed on Schedule 6.1(hh);
(ii) Each Borrower that is a party to any Material Contract has
performed and is in compliance with all of the terms of such
Material Contract, and no default or event of default, or
event or condition which with the giving of notice, the lapse
of time, or both, would constitute such a default or event of
default, exists with respect to any such Material Contract
except for defaults occasioned by the Chapter 11 Cases or
occurring prior to the Petition Date.
(iii) as of the Effective Date, each Borrower has made available to
the Agent or its counsel, on behalf of Lenders, accurate and
complete copies of (A) licenses and permits held by such
Borrower, the absence of which could be reasonably likely to
have a Materially Adverse Effect; (B) instruments or
documents evidencing Indebtedness of such Borrower and any
security interest granted by such Borrower with respect
thereto; and (C) instruments and agreements evidencing the
issuance of any equity securities, warrants, rights or options
to purchase equity securities of such Borrower (except with
respect to GFC).
(ii) Full Disclosure. None of the representations or warranties made by any
Borrower in the any Loan Documents as of the date such representations
and warranties are made or deemed made, and none of the statements
contained in any exhibit, report, statement or certificate furnished by
or on behalf of any Borrower in connection with the Loan Documents
(including the materials delivered by or on behalf of the Borrowers to
the Lenders prior to the Closing Date), contains any untrue statement
of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the
time when made or delivered.
(jj) Survival of Representation and Warranties, Etc. All representations
and warranties set forth in this Article 6 and all statements contained
in any certificate, financial statement, or other agreements or
documents, delivered by or on behalf of any Borrower pursuant to or in
connection with this Agreement or any of the Loan Documents (and any
such representation, warranty or statement made in or in connection
with any amendment thereto) shall constitute representations and
warranties made under this Agreement. All representations and
warranties made under this Agreement shall be made or deemed to be made
at and as of the Agreement Date, at and as of the Effective Date and at
and as of the date of each Advance, except that representations and
warranties which, by their terms are applicable only to one such date
shall be deemed to be made only at and as of such date. All
representations and warranties made or deemed to be made under this
Agreement shall survive and not be waived by the execution and delivery
of this Agreement, any investigation made by or on behalf of the
Lenders or any borrowing hereunder.
(kk) Reorganization Matters. The Chapter 11 Cases were commenced on the
Petition Date in accordance with Applicable Law, and proper notice
thereof and the proper notice for the hearing for the approval of the
Interim Order has been given and proper notice for the hearing of the
Final Order will be given.
ARTICLE VII.
SECURITY INTEREST
SECTION 7.1 Security Interest.
(a) To secure the payment, observance and performance of the Secured
Obligations, each Borrower hereby mortgages, pledges and assigns all of
the Collateral of such Borrower to the Agent, for the benefit of itself
as Agent, the Lenders and Fleet National Bank as issuer of the Existing
Letters of Credit after the entry of the Final Order, and grants to the
Agent, for the benefit of itself as Agent and the Lenders, a continuing
first priority security interest in, and a continuing Lien upon, the
Collateral.
(b) As additional security for all of the Secured Obligations, each
Borrower grants to the Agent, for the benefit of itself and the
Lenders, a security interest in, and assigns to the Agent, for the
benefit of itself as Agent and the Lenders, all of each and every
Borrower's right, title and interest in and to, any deposits or other
sums at any time credited by or due from each Lender and each Affiliate
of a Lender to a Borrower, or credited by or due from any participant
of any Lender to a Borrower, with the same rights therein as if the
deposits or other sums were credited by or due from such Lender. Each
Borrower hereby authorizes each Lender and each Affiliate of such
Lender and each participant to pay or deliver to the Agent, for the
account of the Lenders, without any necessity on the Agent's or any
Lender's part to resort to other security or sources of reimbursement
for the Secured Obligations, at any time during the continuation of any
Event of Default or in the event that the Agent, on behalf of the
Lenders, should make demand for payment hereunder and without further
notice to such Borrower (such notice being expressly waived), any of
the aforesaid deposits (general or special, time or demand, provisional
or final) or other sums for application to any Secured Obligation,
irrespective of whether any demand has been made or whether such
Secured Obligation is mature, and the rights given the Agent, the
Lenders, their Affiliates and participants hereunder are cumulative
with such Person's other rights and remedies, including other rights of
set-off. The Agent will promptly notify the Borrowers of its receipt
of any such funds for application to the Secured Obligations, but
failure to do so will not affect the validity or enforceability
thereof. The Agent may give notice of the above grant of a security
interest in and assignment of the aforesaid deposits and other sums,
and authorization, to, and make any suitable arrangements with, any
Lender, any such Affiliate of any Lender or participant for
effectuation thereof, and each Borrower hereby irrevocably appoint
Agent as its attorney to collect any and all such deposits or other
sums to the extent any such payment is not made to the Agent or any
Lender by such Lender, Affiliate or participant.
SECTION 7.2 Continued Priority of Security Interest.
(a) The Security Interest granted by each Borrower shall at all times be
valid, perfected and enforceable against such Borrower and all third
parties in accordance with the terms of this Agreement, as security for
the Secured Obligations, and the Collateral shall not at any time be
subject to any Liens that are prior to, on a parity with or junior to
the Security Interest, other than Permitted Liens.
(b) Each Borrower shall, at its cost and expense, take all action that may
be necessary or desirable, or that the Agent may reasonably request, so
as at all times to maintain the validity, perfection, enforceability
and rank of the Security Interest in the Collateral in conformity with
the requirements of Section 7.2(a), to enable the Agent and the Lenders
to exercise or enforce their rights hereunder, and to obtain the full
benefits of this Agreement including, but not limited to:
(i) paying all taxes, assessments and other claims lawfully levied or
assessed on any of the Collateral, except to the extent that
such taxes, assessments and other claims constitute Permitted
Liens, or are being contested in good faith in appropriate
proceedings and have been adequately reserved for in such
Borrower's financial statements,
(ii) using all reasonable efforts to obtain the Waivers and Consents and any
other Lien releases, subordinations or waivers, including,
without limitation, any mechanic's lien releases, if required
pursuant to the terms hereof,
(iii) delivering to the Agent, for the benefit of the Lenders, endorsed or
accompanied by such instruments of assignment as the Agent may
specify, and stamping or marking, in such manner as the Agent
may specify, any and all Chattel Paper, Instruments,
Supporting Obligations and Documents evidencing or forming a
part of the Collateral,
(iv) executing and delivering financing statements, pledges, Control
Agreements, designations, hypothecations, notices and
assignments in each case in form and substance satisfactory to
the Agent relating to the creation, validity, perfection,
maintenance or continuation of the Security Interest under the
UCC or other Applicable Law; and
(v) using its best efforts to secure all consents and approvals necessary
or appropriate for the assignment to or for the benefit of
Agent of any License or Contract held by such Borrower
(c) Each Borrower shall ▇▇▇▇ its books and records as directed by the Agent
and as may be necessary or appropriate to evidence, protect and perfect
the Security Interest and shall cause its financial statements to
reflect the Security Interest.
(d) The Borrowers hereby collectively authorize the Agent to, at any time
and from time to time, pursuant to the provisions of this Agreement and
the other Loan Documents, file in any filing office financing
statements, continuation statements and amendments thereto that (i)
identify the Collateral (A) as all assets of the Borrowers or words of
similar effect, regardless of whether any particular asset comprised in
the Collateral falls within the scope of the UCC, or (B) as being of an
equal or lesser scope or with greater detail, and (ii) contain any
other information required by part 5 of Article 9 of the Code of the
State of North Carolina or other applicable jurisdiction for the
sufficiency or filing office acceptance of any financing statement or
amendment, including (A) whether such Borrower is an organization, the
type of organization and any organization identification number issued
to such Borrower, and (B) in the case of a financing statement filed as
a fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to which
the Collateral relates. Each Borrower agrees to furnish any such
information to the Agent promptly upon request. Each Borrower also
agrees that any such financing statements, continuation statements or
amendments may be signed by Agent on behalf of the Borrower, as
provided in this Agreement and the other Loan Documents, and ratifies
its authorization for the Agent to have filed in any jurisdiction, any
like initial financing statements or amendments thereto if filed prior
to the date hereof.
(e) Borrowers shall at any time and from time to time, take such steps as
Agent requests for Agent (i) to obtain a Waiver and Consent, in form
and substance satisfactory to Agent, from any bailee or warehouseman
having possession of any of the Collateral that the bailee or
warehouseman holds such Collateral for Agent, (ii) to obtain "control"
of any Investment Property, Deposit Accounts, Letter-of-Credit Rights,
electronic Chattel Paper, or transferable records (as such terms are
defined under the UCC and as "transferable records" is defined in the
Uniform Electronic Transactions Act), pursuant to a Control Agreement
or such other agreements establishing control, in form and substance
satisfactory to Agent, (iii) to enter into a tri-party agreement with
the issuer and/or confirmation bank with respect to any Letter-of
Credit Rights that such Borrower has acquired, and thereby directing
all payments under such Letter-of Credit Rights to the Collection
Account, (iv) to promptly notify Agent, in a writing signed by
Borrower, of any commercial tort claim (as defined under the UCC)
acquired by it and unless otherwise consented by Agent, to enter into a
supplement to this Agreement, granting to Agent a Lien in such
commercial tort claim and in the proceeds thereof, and (v) otherwise to
ensure the continued perfection and priority of Agent's security
interest in any of the Collateral and of the preservation of its rights
therein.
(f) Nothing contained in this Section 7.3 shall be construed to narrow the
scope of Agent's security interest in any of the Collateral or the
perfection or priority thereof or to impair or otherwise limit any of
the rights, powers, privileges or remedies of Agent or any other Lender
hereunder except as (and then only to the extent) mandated by the UCC.
SECTION 7.3 Liens Under Orders. The Liens and security interests granted
to the Agent for the benefit of the Lenders pursuant to the provisions of
Section 7.1 shall be in addition to all Liens conferred upon the Agent for the
benefit of the Lenders pursuant to the terms of the Orders.
SECTION 7.4 Pledged Collateral. To the extent the Agent or any Lender is
in possession of Collateral that was originally pledged as collateral security
for the Pre-Petition Indebtedness , the Agent or such Lender shall continue to
hold such Collateral as collateral security for both the Pre-Petition
Indebtedness and the Secured Obligations.
ARTICLE VIII.
COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner provided in Section 15.9:
SECTION 8.1 Collections; Payments.
(a) Blocked Accounts/Lockboxes.
(i) Borrowers have established and shall continue to establish and
maintain, at their sole cost and expense, lockboxes and
related blocked accounts (each, a "Blocked Account") with
respect to those Deposit Accounts of the Borrowers as Agent
shall request and with such banks as are reasonably acceptable
to Agent. Borrowers have directed and shall continue to
direct their Account Debtors to directly remit for deposit
therein all payments on Accounts and all payments constituting
proceeds of Inventory and other Collateral in the form in
which such payments are made, whether by cash, check, credit
card sales drafts, credit card sales, charge slips or any
other manner whatsoever (collectively, "Receipts"). All
Receipts shall be held in trust for the Agent as the property
of the Agent, for the ratable benefit of the Lenders.
(ii) Each Lockbox Agreement shall be in a form reasonably acceptable to the
Agent and shall provide for, among other things, (A) that the
Receipts and any and all other funds on deposit in the Blocked
Account subject to such Lockbox Agreement are the collateral
of Agent and are held by such Clearing Bank as agent or
bailee-in-possession for Agent, on behalf of itself and
Lenders, (B) that such bank has no lien upon, or right to
setoff against, the Blocked Account subject to such Lockbox
Agreement, the Receipts, or any other funds from time to time
on deposit therein, other than for its service fees and other
charges relating to such account and for returned checks or
other items of payment, and (C) that such bank will wire, or
otherwise transfer, in available funds on a daily basis, all
Receipts and other funds on deposit in such accounts, into the
Collection Account for application on account of the Secured
Obligations. Subject to the rights of the Borrowers hereunder,
Borrowers agree that all deposits made in, and payments made
to, a Blocked Account and other funds received and collected
by Agent, whether on the Accounts or as proceeds of Inventory
or other Collateral or otherwise shall be the collateral of
Agent, subject to the sole dominion and control of the Agent.
(b) For purposes of (i) calculating the amount of Excess Availability to
Borrowers and (ii) calculating interest on Secured Obligations,
Receipts and other payments and funds received in the Collection
Account will be applied (conditioned upon final collection) to the
Secured Obligations three (3) Business Day(s) after receipt in the
Collection Account.
(c) Borrowers and all of their affiliates, subsidiaries, shareholders,
directors, employees or agents shall, acting as trustee for Agent,
receive, as the property of Agent, any monies, checks, notes, drafts,
credit card sales drafts, credit card sales or charge slips or
receipts, or any other payment relating to and/or proceeds of Accounts
or other Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall deposit or cause
the same to be deposited in the Blocked Accounts, or remit the same or
cause the same to be remitted, in kind, to Agent. In no event shall
the same be commingled with Borrowers' own funds. Borrowers agree to
reimburse Agent on demand for any amounts owed or paid to any Clearing
Bank or any other bank or person involved in the transfer of funds to
or from the Blocked Accounts arising out of Agent's payments to or
indemnification of such bank or person. The obligation of Borrowers to
reimburse Agent, for such amounts pursuant to this Section 8.1 shall
survive the termination of this Agreement.
(d) It is expressly agreed by each Borrower that, anything herein to the
contrary notwithstanding, such Borrower shall remain liable under each
of its Contracts, licenses and other agreements, documents and
instruments evidencing Inventory, Accounts and the other Collateral to
observe and perform all the conditions and obligations to be observed
and performed by it thereunder. Neither Agent nor any Lender shall
have any obligation or liability under any such Contract, license or
agreement by reason of or arising out of this Agreement or the granting
herein of a security interest therein or the receipt by Agent or any
Lender of any payment relating to any such Contract, license or
agreement pursuant hereto. Neither Agent nor any Lender shall be
required or obligated in any manner to perform or fulfill any of the
obligations of any Borrower under or pursuant to any such Contract,
license or agreement, or to make any payment, or to make any inquiry as
to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any such Contract,
license or agreement, or to present or file any claims, or to take any
action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(e) All Chattel Paper shall be marked with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to
the security interest of The CIT Group/Commercial Services, Inc., as
Agent for the benefit of itself as a Lender and certain other
Lenders." For Agent's further security, each Borrower agrees that
Agent shall have a security interest in all of such Borrower's books
and records pertaining to the Collateral and, upon the occurrence and
during the continuance of any Event of Default, such Borrower shall
deliver and turn over any such books and records to Agent or to its
representatives at any time on demand of Agent. Prior to the
occurrence of a Default or Event of Default and upon notice from Agent,
each Borrower shall permit any representative of Agent to inspect such
books and records and shall provide photocopies thereof to Agent, for
the benefit of Agent and Lenders, as more specifically set forth in
this Agreement.
SECTION 8.2 Inspection, Verification and Notification. The Agent and each
Lender (by any of their officers, employees or agents) shall have the right at
any time or times upon reasonable notice (the requirement for reasonable notice
to apply only so long as no Default or Event of Default has occurred and is
continuing) to (a) visit the properties of each Borrower and its Subsidiaries,
inspect the Collateral and the other assets of such Borrower and its
Subsidiaries and inspect and make extracts from the books and records of such
Borrower and its Subsidiaries, including but not limited to management letters,
prepared by independent accountants, all during customary business hours at
such premises; (b) discuss such Borrower's and its Subsidiaries' business,
assets, liabilities, financial condition, results of operations and business
prospects, insofar as the same are reasonably related to the rights of the
Agent or the Lenders hereunder or under any of the Loan Documents, with such
Borrower's and its Subsidiaries' (i) principal officers, (ii) independent
accountants, and (iii) any other Person (except that any such discussion with
any third parties shall be conducted in accordance with the Agent's or such
Lender's standard operating procedures relating to the maintenance of the
confidentiality of confidential information of borrowers); (c) verify the
validity, amount, quantity, value and condition of, or any other matter
relating to, the Accounts, Inventory or any of the other Collateral in person
or by mail, telephone, telegraph or otherwise and in this connection to review,
audit and make extracts from all records and files related to any of the
Collateral; and (d) on and after an Event of Default, to notify the Account
Debtors or obligors under any Accounts, of the assignment of such Collateral to
the Agent, for the benefit of the Lenders, and to direct such Account Debtor or
obligors to make payment of all amounts due or to become due thereunder
directly to the Agent, for the account of the Lenders, and, upon such
notification and at the expense of such Borrower, to enforce collection of any
such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Borrower might have
done. Each Borrower will deliver to the Agent, for the benefit of the Lenders,
any instrument necessary for it or any Lender to obtain records from any
service bureau maintaining records on behalf of such Borrower
SECTION 8.3 Inventory Covenants.
(a) All sales of Inventory will be made in compliance with all requirements
of Applicable Law.
(b) Each Borrower shall notify the Agent in writing promptly upon, but in
no event later than three (3) Business Days after, learning of any
Eligible Inventory with a value in excess of $250,000 that becomes, or
such Borrower believes will become, ineligible, and of the cause of
such ineligibility, except for any such circumstance occurring in the
ordinary course of business which has been appropriately reserved
against, as reflected in financial statements previously delivered to
the Agent and the Lenders pursuant to Section 6.1(m) or Article 10.
(c) No Borrower shall consign Inventory to any Person except as disclosed
in the Schedule of Inventory delivered immediately after such
consignment.
(d) Each Borrower shall permit the Agent or an agent or representative
thereof, to conduct appraisals of the Inventory at the cost and expense
of the Borrowers at such times as Agent determines to be necessary in
its discretion.
(e) Each Borrower shall maintain a perpetual method of Inventory control
and will at all times keep complete and accurate records of Inventory
on a basis consistent with past practices of such Borrower, itemizing
and describing the kind, type and quantity of Inventory and such
Borrower's Cost therefor and a current price list for such Inventory.
(f) Each Borrower will take a physical count of Inventory, wherever
located, at least annually and shall reconcile the results of such
physical Inventory counts to each Borrower's Inventory records;
provided, that, if the Borrowers take regular cycle counts supervised
by the Borrowers' internal audit function and such counts are relied
upon by the Borrowers' external auditors, then the Borrowers will not
be required to perform physical counts.. Upon the request of the
Agent, each Borrower shall deliver to the Agent, copies of the results
of any physical Inventory count showing in reasonable detail the
locations of and values for specific items of Inventory and such other
information and supporting documents regarding Inventory that the Agent
deems necessary
SECTION 8.4 Returned Inventory. The Security Interest in the Inventory
shall, without further act, attach to the cash and non-cash proceeds resulting
from the sale or other disposition thereof and to all Inventory which is
returned to any Borrower by customers or is otherwise recovered.
SECTION 8.5
Ownership and Defense of Title.
(a) Except for Permitted Liens, each Borrower shall at all times be the
sole owner or lessee of each and every item of Collateral and shall not
create any lien on, or sell, lease, exchange, assign, transfer, pledge,
hypothecate, grant a security interest or security title in or
otherwise dispose of, any of the Collateral or any interest therein,
except for sales of Inventory in the ordinary course of business, for
cash or on open account or on terms of payment ordinarily extended to
its customers, and except as otherwise expressly permitted under this
Agreement. The inclusion of "proceeds" of the Collateral under the
Security Interest shall not be deemed a consent by the Agent or the
Lenders to any other sale or other disposition of any part or all of
the Collateral.
(b) Each Borrower shall defend its title, and use commercially reasonable
efforts to defend its leasehold interest in and to, and the Security
Interest in, the Collateral against the claims and demands of all
Persons.
SECTION 8.6 Insurance.
(a) The Borrowers shall maintain insurance against loss or damage by fire
with extended coverage; theft, burglary, pilferage and loss in transit;
public liability and third party property damage; larceny, embezzlement
or other criminal liability; business interruption; public liability
and third party property damage; and such other hazards or of such
other types as is customary for Persons engaged in the same or similar
business, as the Agent, in its discretion, shall specify, in amounts,
and under policies reasonably acceptable to Agent.
(b) All insurance policies required under Section 8.6(a) shall be
maintained with financially sound and reputable insurers having at
least an A+ or better rating from Best Rating Guide, and shall name the
Agent, for the benefit of the Lenders, as an additional insured and
shall contain loss payable clauses in form and substance reasonably
satisfactory to the Agent, naming the Agent, for the benefit of the
Lenders, as loss payee, as its interests may appear, and providing that:
(i) all proceeds thereunder relating to Collateral shall be payable
to the Agent, for the benefit of the Lenders;
(ii) no such insurance shall be affected by any act or neglect of
the insurer or owner of the property described in such policy,
and
(iii) such policy and loss payable clauses may not be canceled,
amended or terminated unless at least thirty (30) days prior
written notice is given to the Agent (or such lesser notice
period with respect to non-payment of premiums, but in no event
less than ten (10) days).
(c) Any proceeds of insurance referred to in this Section 8.6 which are
paid to the Agent in connection with the Collateral, for the account of
the Lenders shall be applied at the election of the Required Lenders,
in their sole discretion, (i) to the payment or prepayment of the
Secured Obligations or (ii) to rebuild, restore or replace the damaged
or destroyed property.
(d) Each Borrower irrevocably makes, constitutes and appoints Agent (and
all officers, employees or agents designated by Agent), so long as any
Event of Default shall have occurred and be continuing as such
Borrower's true and lawful agent and attorney-in-fact for the purpose
of making, settling and adjusting claims under such "All Risk" policies
of insurance, endorsing the name of such Borrower on any check or other
item of payment for the proceeds of such "All Risk" policies of
insurance and for making all determinations and decisions with respect
to such "All Risk" policies of insurance; provided, however, that in
the event that any claim which is or could be made under any of such
insurance policies exceeds $500,000 no such claim shall be settled,
compromised or finally determined, except with the prior written
consent of Agent. Agent shall have no duty to exercise any rights or
powers granted to it pursuant to the foregoing power-of-attorney. Each
Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $500,000 or more,
whether or not covered by insurance. After deducting from such
insurance proceeds the expenses, if any, incurred by Agent in the
collection or handling thereof, Agent shall apply such proceeds as set
forth in Section 8.6(c). If Agent permits such insurance proceeds to
be applied to the replacement, repair, restoration or rebuilding of the
damaged Collateral, and no Event of Default has occurred and is
continuing, then Agent shall first apply the proceeds to reduce the
outstanding principal balance of the Revolving Credit Loans (which
application shall not result in a permanent reduction of the Revolving
Credit Facility Amount) and upon such application, Agent shall
establish a reserve against the Borrowing Base in an amount equal to
the amount of such proceeds so applied (the "Insurance Reserve").
Thereafter, such funds shall be made available to such Borrower to
provide funds to replace, repair, restore or rebuild the Collateral as
follows: (i) such Borrower shall request an Advance in the amount
requested to be released; (ii) so long as the conditions set forth in
Article 2 and Section 5.2 have been met, the Lenders shall make such
Advance; and (iii) the Insurance Reserve established with respect to
such insurance proceeds shall be reduced by the amount of such
Advance. To the extent not used to replace, repair, restore or rebuild
the Collateral, such proceeds shall be applied to the reduction of the
Secured Obligations in accordance with Section 4.3(c).
SECTION 8.7 Records Relating to Collateral; Location of Offices and
Collateral.
(a) Each Borrower will at all times keep complete and accurate records of
all Collateral.
(b) No Borrower will use, represent or hold out the Trade Names in a
corporate manner or use any designation that would identify the Trade
Names as a corporation or other separate entity or organization (i.e.
"Inc.", "Corp." or "Limited" shall not be used) but shall only use such
names so that it will be clearly understood that they are merely Trade
Names of such Borrower.
(c) No Borrower will change its jurisdiction of incorporation, registration
or formation, the location of its chief executive office or the place
where it keeps its books and records relating to the Collateral or
change its name, its identity or corporate structure in any manner
which might make any Financing Statement or other UCC amendment,
assignment or continuation statement filed in connection herewith
seriously misleading within the meaning of Sections 9-506 and 9-507 of
the Uniform Commercial Code or any other then applicable provision of
the Uniform Commercial Code of any other relevant jurisdiction, without
giving the Agent sixty (60) days prior written notice thereof and
complying with the requirements and conditions of Section 8.7(f).
(d) All Inventory, other than Inventory in transit to any such location,
will at all times be kept by each Borrower at one of the locations set
forth in Schedule 6.1(s) and shall not, without giving the Agent at
least thirty (30) days prior written notice and complying with the
requirements and conditions of Section 8.7(f) hereof, be removed
therefrom except (i) to another location on Schedule 6.1(s), or (ii)
for sales of Inventory permitted under Section 8.5(a).
(e) If any Inventory is in the possession or control of any of any
Borrower's agents or processors, each Borrower shall notify such agents
or processors of the Security Interest and, upon the occurrence of an
Event of Default, shall instruct them (and cause them to acknowledge
such instruction) to hold all such Inventory for the account of the
Agent, for the benefit of the Lenders, subject to the instructions of
the Agent.
(f) After Agent's written acknowledgment that any reasonable action
requested by Agent in connection with any changes covered by Sections
8.7(c) or (d), including continuation of the perfection of any Liens in
favor of Agent, on behalf of the Agent and the Lenders, in any
Collateral, has been completed or taken, each Borrower may change its
jurisdiction of incorporation, registration or formation, the location
of its Collateral or the location where it keeps its books and records
relating to the Collateral, provided that any such new location shall
be in the continental United States, or change its name, its identity
or its corporate structure. No Borrower shall change its fiscal year
to a year ending in any day other than the Fiscal Year end of the
Borrowers.
SECTION 8.8 Information and Reports.
(a) Schedule of Accounts; Sales Journal: Each Borrower shall deliver to
the Agent on or before the Effective Date and no later than five (5)
Business Days after the end of each Fiscal Month thereafter a Schedule
of Accounts which (i) shall be as of the last Business Day of the
immediately preceding month, (ii) shall be reconciled to the Accounts
Borrowing Base Certificate as of such last Business Day; and (iii)
shall set forth a detailed aged trial balance of all then existing
Accounts for such Borrower. Each Borrower shall deliver to the Agent
no later than five (5) Business Days after the end of each Fiscal Month
such Borrower's sales journal for the immediately preceding Fiscal
Month in form and substance satisfactory to the Agent.
(b) Collection Reports. Each Borrower shall deliver to the Agent no later
than five (5) Business Days after the end of each Fiscal Month of such
Borrower, a Collection Report containing information, as of the last
Business Day of such Borrower's immediately preceding Fiscal Month,
regarding Receipts, deposits and expenditures on and with respect to
each Business Day of such Fiscal Month and such other information as
the Agent may request including, without limitation, credit memos
issued by any Borrower, deductions taken by any Account Debtor and
information pertaining to any other reduction in Eligible Accounts.
Upon request of the Agent, each Borrower shall deliver to the Agent
copies of bank statements and checks, drafts or other items of payment
deposited by or on behalf of such Borrower in any Deposit Account,
including, without limitation, the Blocked Accounts and the
Disbursement Accounts, together with copies of deposit slips for each
deposit, and such other information regarding Receipts, expenditures
and Deposit Account balances as the Agent may request. Each Borrower
shall immediately (i) notify the Agent of any changes, additions or
deletions to Schedule 6.1(ee), and (ii) prepare and deliver a new
Schedule 6.1(ee) reflecting such changes, additions and deletions.
(c) Schedule of Inventory. Each Borrower shall deliver to the Agent, no
later than ten (10) Business Days after the end of each Fiscal Month of
such Borrower, a Schedule of Inventory as of the last Business Day of
the immediately preceding Fiscal Month of such Borrower. Each Schedule
of Inventory shall itemize and describe the kind, type, quantity and
location of Inventory and the cost thereof, and shall be reconciled to
the balance of Inventory as set forth in the Consolidated Balance Sheet
as of such date.
(d) Borrowing Base Certificates. The Borrowers shall deliver to the Agent,
(i) a daily Accounts Borrowing Base Certificate prepared as of the
close of business of the previous Business Day and (ii) not later than
ten (10) Business Days after the end of each Fiscal Month of Borrowers,
an Inventory Borrowing Base Certificate prepared as of the close of
business of the last Business Day of the previous Fiscal Month.
(e) Notice of Diminution of Value. Each Borrower shall give prompt notice
to the Agent of any matter or event which has resulted in, or may
result in, the diminution in excess of $500,000 with respect to
Inventory and any other Collateral, except for any such diminution in
the value of any Accounts or Inventory in the ordinary course of
business which has been appropriately reserved against, as reflected in
financial statements previously delivered to the Agent and the Lenders
pursuant to Section 6.1(m) or Article 10.
(f) Accounts Payable Report. Each Borrower shall deliver to the Agent no
later than five (5) Business Days after the end of each Fiscal Month a
detailed aged balance as of the last Business Day of the immediately
preceding month of all then existing accounts payable for such Borrower
in form and substance satisfactory to the Agent.
(g) Additional Information. The Agent may in its reasonable discretion
from time to time request that the Borrowers deliver the schedules,
certificates or reports described in Sections 8.8(a) through (f) more
or less often and on different schedules than specified in such
sections. The Borrowers shall also furnish to the Agent and each
Lender such other information with respect to the Collateral as the
Agent or such Lender may from time to time reasonably request.
(h) Certification. Each of the schedules delivered to the Agent pursuant
to this Section 8.8 shall be certified by a Financial Officer of the
Borrowers to be true, correct and complete as of the date indicated
thereon.
SECTION 8.9
Covenants Regarding Intellectual Property Collateral.
(a) Each Borrower shall notify Agent immediately if it knows that any
application or registration relating to any Intellectual Property (now
or hereafter existing) may become abandoned or dedicated, or of any
adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office
or any court) regarding such Borrower's ownership of any Intellectual
Property, its right to register the same, or to keep, use and maintain
the same.
(b) Promptly after the date on which any Borrower acquires any Intellectual
Property, such Borrower shall execute and deliver any and all security
agreements with respect to such Intellectual Property as Agent may
request to evidence Agent's security interest, for the benefit of
itself and the Lenders, in such Intellectual Property, and the General
Intangibles of such Borrower relating thereto or represented thereby.
(c) Each Borrower shall take all actions necessary or requested by Agent to
maintain and pursue each application, to obtain the relevant
registration and to maintain the registration with respect to all of
its Intellectual Property (now or hereafter existing), including the
filing of applications for renewal, affidavits of use, affidavits of
non-contestability and opposition and interference and cancellation
proceedings.
(d) In the event that any of the Intellectual Property is infringed upon,
or misappropriated or diluted by a third party, each Borrower shall
notify Agent promptly after such Borrower learns thereof. Each
Borrower shall promptly ▇▇▇ for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as
Agent shall deem appropriate under the circumstances to protect such
Intellectual Property.
SECTION 8.10 Landlord and Other Waivers. Each Borrower shall timely and
fully pay and perform its obligations under all leases and other agreements
with respect to each third party location where any Collateral is or may be
located. On or prior to the Effective Date, and after the Effective Date prior
to locating Collateral at any third party location, each Borrower shall use its
best efforts to obtain from each landlord and mortgagee of, and bailee (with
respect to any warehouse, processor, converter or other storage facility) at, a
location where Collateral is, or is to be, stored or held, an agreement or
letter which shall contain a waiver or subordination of all Liens or claims
that such landlord, mortgagee or bailee may assert against the Collateral at
such location, a consent to enter or use such location for sale or removal of
the Collateral, and which shall otherwise be satisfactory in form and substance
to the Agent (each, a "Waiver and Consent"). If the Borrowers are unable to
obtain a Waiver and Consent with respect to a location where Collateral is
stored or held, Agent may, at its option, remove such Collateral from the
Borrowing Base, if applicable, or establish a reserve against the Borrowing
Base sufficient, based upon the determination of the Agent in its sole
discretion, to insure that there will be no impairment of the Collateral.
Nothing contained in this Section 8.10 shall impair or otherwise modify any of
Agent's rights under this Agreement, including, without limitation, Agent's
rights pursuant to the respective definitions of "Eligible Inventory" and
"Borrowing Base."
SECTION 8.11 Control Agreements. On or before the Effective Date and,
after the Effective Date, prior to establishing a securities, commodities,
credit card processing or other financial account (individually, a "Financial
Account", and collectively, "Financial Accounts"), each Borrower shall obtain
from each financial institution where a Financial Account is held by such
Borrower, a Control Agreement reasonably satisfactory in form and substance to
Agent. If any Borrower is unable to obtain a Control Agreement with respect to
such account or program, Agent may, at its option, establish a reserve against
the Borrowing Base sufficient, based upon the determination of the Agent in its
sole discretion, to insure that there will be no impairment of the Collateral.
Nothing contained in this Section 8.11 shall impair or otherwise modify any of
Agent's rights under this Agreement, including, without limitation, Agent's
rights pursuant to the definition of "Borrowing Base."
SECTION 8.12 Real Estate and Fixtures. The Borrowers shall deliver to the
Agent, for the benefit of itself as Agent and the Lenders, with respect to any
Borrower's acquisition of any interest in any Real Estate, an executed Mortgage
in form and substance satisfactory to the Agent, conveying to the Agent, for
the benefit of itself and the Lenders, a first priority Lien on such Real
Estate and the Fixtures thereon, subject only to Permitted Liens and such prior
Liens as the Agent shall consent to in writing. The Borrowers shall also
deliver to the Agent at the Borrowers' expense (i) a mortgagee title insurance
policy in favor of the Agent and the Lenders insuring such Mortgage to create
and convey such Lien, subject only to such exceptions consented to by the Agent
and (ii) such other agreements, instruments, certificates and documents with
respect to such Real Estate and Fixtures as the Agent may request, all in form
and substance satisfactory to the Agent.
ARTICLE IX.
AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner provided for in Section 15.9, each
Borrower will, and will cause each of its Subsidiaries to:
SECTION 9.1 Preservation of Corporate Existence and Similar Matters.
Preserve and maintain its legal existence, rights, franchises, licenses and
privileges in the jurisdiction of its incorporation or formation and qualify
and remain qualified as a foreign entity and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the failure
to do so would not have a Materially Adverse Effect on such Borrower and its
Subsidiaries taken as a whole.
SECTION 9.2 Compliance with Applicable Law. Comply in all material
respects with all Applicable Laws relating to such Borrower or any Subsidiary.
SECTION 9.3 Maintenance of Property. In addition to, and not in
derogation of, the requirements of the Security Documents,
(a) protect and preserve all properties material to its business,
including, without limitation, Equipment and Intellectual Property,
maintain all tangible properties in good repair, working order and
condition in all material respects, with reasonable allowance for wear
and tear, and exercise proper custody over all such property;
(b) from time to time make or cause to be made all needed and appropriate
repairs, renewals, replacements and additions to such properties
necessary for the conduct of its business, so that the business carried
on in connection therewith may be properly and advantageously conducted
at all times; and
(c) obtain and maintain all patents, trademarks, licenses, permits,
franchises, and governmental authorizations necessary to own its
property and to conduct its business as conducted on the Agreement Date
or as otherwise permitted under Section 9.4.
SECTION 9.4 Conduct of Business. At all times engage only in the same
types and lines of business of such Borrower as the businesses conducted on the
Effective Date.
SECTION 9.5 Insurance. Maintain, in addition to the coverage required by
Section 8.6 and the Security Documents, insurance with responsible insurance
companies against such risks and in such amounts as is customarily maintained
by similar businesses or as may be required by Applicable Law, including,
without limitation, public liability, product liability, third party property
damage and business interruption insurance, and from time to time deliver to
the Agent or any Lender upon its request a detailed list of the insurance then
in effect, stating the names of the insurance companies, the amounts and rates
of the insurance, the dates of the expiration thereof and the properties and
risks covered thereby.
SECTION 9.6 Payment of Taxes and Claims. Except as nonpayment is
permitted or payment is prohibited by the Bankruptcy Code or the Bankruptcy
Court, pay or discharge when due (a) all Charges and other taxes, assessments
and governmental levies imposed upon it or upon its income or profits or upon
any properties belonging to it, except that real property ad valorem taxes
shall be deemed to have been so paid or discharged if the same are paid before
they become delinquent, and (b) all lawful claims of materialmen, mechanics,
carriers, warehousemen and landlords for labor, materials, supplies and rentals
which, if unpaid, might become a Lien on any properties of such Borrower;
except that this Section 9.6 shall not require the payment or discharge of any
Charge which is being contested in good faith by appropriate proceedings and
for which reserves in respect of the reasonably anticipated liability therefor
have been appropriately established.
SECTION 9.7 Accounting Methods and Financial Records. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete), as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP consistently
applied.
SECTION 9.8 Use of Proceeds.
(a) Use the proceeds of the Advances under the Revolving Credit Facility
(i) for the payment of the Pre-Petition Indebtedness and (ii) working
capital purposes or as is otherwise expressly authorized herein;
(b) Not use any part of such proceeds to purchase or, to carry or reduce or
retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System) or, in any event, for any
purpose which would involve a violation of such Regulation U or of
Regulation T or X of such Board of Governors, or for any purpose
prohibited by law or by the terms and conditions of this Agreement; and
(c) Not use any part of such proceeds to (i) make any distribution under a
plan or reorganization in the Chapter 11 Cases or (ii) finance in any
way any action, suit, arbitration, proceeding, application, motion or
other litigation of any type adverse to the interests of the Agent,
the Lenders, the Pre-Petition Agent, the Pre-Petition Lenders or their
rights and remedies under this Agreement, the other Loan Documents, the
Pre-Petition Loan Agreement, the Interim Order or the Final Order.
SECTION 9.9 Hazardous Waste and Substances; Environmental Requirements.
(a) In addition to, and not in derogation of, the requirements of Section
9.2 and of the Security Documents, substantially comply with all
Environmental Laws and all Applicable Laws relating to occupational
health and safety (except for instances of noncompliance that are being
contested in good faith by appropriate proceedings if reserves in
respect of such Borrower's or such Subsidiary's reasonably anticipated
liability therefor have been appropriately established), promptly
notify the Agent of its receipt of any written notice of a violation of
any such Environmental Laws or other such Applicable Laws and indemnify
and hold the Agent and the Lenders harmless from all Environmental
Liabilities incurred by or imposed upon the Agent or any Lender on
account of such Borrower's failure to perform its obligations under
this Section 9.9.
(b) Such Borrower shall not cause or permit a Release of any Contaminant
on, at, in, under, above, to, from or about any of the Real Estate
where such Release would (a) violate in any respect, or form the basis
for any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other
than such violations or impacts which could not reasonably be expected
to have a Materially Adverse Effect on such Borrower.
SECTION 9.10 Further Assurances. Upon the request of the Agent, to duly
execute and deliver, or cause to be duly executed and delivered, to the Agent
such further instruments and do and cause to be done such further acts as may
be necessary in the reasonable opinion of the Agent to carry out the express
provisions of this Agreement or any other Loan Document.
ARTICLE X.
INFORMATION
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner set forth in Section 15.9, the Borrowers
will furnish to the Agent and to each Lender at the offices then designated for
such notices pursuant to Section 15.1:
SECTION 10.1
Financial Statements.
(a) Reserved.
(b) Monthly Financial Statements. As soon as available, but in any event
within thirty (30) days after the end of each Fiscal Month, copies of
the unaudited Consolidated Balance Sheet and Consolidating Balance
Sheet as at the end of such Fiscal Month and the related unaudited
income statement for such Fiscal Month and for the portion of the
Fiscal Year through such Fiscal Month, together with consolidating
statements for the Borrowers and their subsidiaries, in each case
setting forth in comparative form the figures for the previous Fiscal
Year (including, without limitation, a comparison to the then current
projected budget figures for the current Fiscal Year), certified by the
Financial Officer as presenting fairly the financial condition and
results of operations of the Borrowers and their Subsidiaries as at the
date thereof and for the periods ended on such date, subject to normal
quarterly and year end adjustments. Such financial statements shall be
complete and correct in all material respects and prepared in
accordance with GAAP (except for the omission of footnotes and normal
year-end adjustments) applied consistently throughout the periods
reflected therein.
(c) Reserved.
SECTION 10.2 Reserved.
SECTION 10.3 Officer's Certificate. Together with each delivery of
financial statements required by Section 10.1(a), (b) and (c), a certificate of
the Chief Executive Officer, President or a Financial Officer of the Borrowers
(a) stating that, based on an examination sufficient to enable him to make an
informed statement, no Default or Event of Default exists or, if such is not
the case, specifying such Default or Event of Default and its nature, when it
occurred, whether it is continuing and the steps being taken by the Borrowers
with respect to such Default or Event of Default, (b) setting forth the
calculations necessary to establish whether or not the Borrowers were in
compliance with the covenants contained in Section 11.5, as of the date of such
statements, and (c) stating whether the financial covenants contained in
Section 11.1 are applicable and, if they are, setting forth the calculations
necessary to establish whether or not the Borrowers were in compliance with
such covenants.
SECTION 10.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of any management letters and any
other reports disclosing any internal control or deficiencies or
weaknesses with respect to the Borrowers submitted to any Borrower or
its Board of Directors by its independent public accountants.
(b) As soon as practicable, copies of all financial statements and reports
that any Borrower shall send to its shareholders generally and of all
registration statements and all regular or periodic reports which any
Borrower shall file with the Securities and Exchange Commission or any
successor commission.
(c) From time to time and as soon as reasonably practicable following each
request, such forecasts, data, certificates, reports, statements,
opinions of counsel, documents or further information regarding the
business, assets, liabilities, financial condition, results of
operations or business prospects of the Borrowers and their
Subsidiaries as the Agent or any Lender may reasonably request. The
rights of the Agent and the Lenders under this Section 10.4 are in
addition to and not in derogation of their rights under any other
provision of this Agreement or of any other Loan Document.
(d) If requested by the Agent or any Lender, such Borrower will furnish to
the Agent and the Lenders statements in conformity with the
requirements of Federal Reserve Form G-3 or U-1 referred to in
Regulation U of the Board of Governors of the Federal Reserve System.
SECTION 10.5 Notice of Litigation and Other Matters. Prompt notice of:
(a) the commencement, to the extent the Borrowers are aware of the same, of
all proceedings and investigations by or before any governmental or
non-governmental body and all actions and proceedings in any court or
before any arbitrator against or in any other way relating to or
affecting any Borrower, any of its Subsidiaries or any of any
Borrower's or any of its Subsidiaries' properties, assets or
businesses, which might, singly or in the aggregate, result in the
occurrence of a Default or an Event of Default, or have a Material
Adverse Effect on such Borrower and its Subsidiaries, taken as a whole,
(b) without in any way limiting subsection (a) hereof, the commencement
against any Borrower or any of their respective Subsidiaries of any
involuntary bankruptcy proceeding, immediately upon receipt by any of
them of notice of commencement thereof or pleadings with respect
thereto,
(c) any amendment of the articles of incorporation, by-laws or other
similar organizational documents of such Borrower or any of its
Subsidiaries,
(d) any change in the business, assets, liabilities, financial condition,
results of operations or business prospects of any Borrower or any of
its Subsidiaries which has had or is reasonably likely to have, singly
or in the aggregate, a Materially Adverse Effect on such Borrower or
its Subsidiaries, taken as a whole, and any change in the Chief
Executive Officer, President or Chief Financial Officer of such
Borrower, and
(e) any Default or Event of Default or any event which constitutes or which
with the passage of time or giving of notice or both would constitute a
default or event of default by such Borrower or any of its Subsidiaries
under any material agreement to which such Borrower or any of its
Subsidiaries is a party or by which such Borrower, any of its
Subsidiaries or any of such Borrower's or any of its Subsidiaries'
properties may be bound.
SECTION 10.6 ERISA. As soon as possible and in any event within five (5)
days after such Borrower knows, or has reason to know, that:
(a) any Termination Event with respect to a Plan has occurred or will
occur, or
(b) the aggregate present value of the Unfunded Vested Accrued Benefits
under all Plans is equal to an amount in excess of $0, or
(c) such Borrower or any of its Subsidiaries is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan required by reason of such Borrower's or such
Subsidiary's complete or partial withdrawal (as described in Section
4203 or 4205 of ERISA) from such Multiemployer Plan, a certificate of
the President or a Financial Officer of such Borrower setting forth the
details of such event and the action which is proposed to be taken with
respect thereto, together with any notice or filing which may be
required by the PBGC or other agency of the United States government
with respect to such event.
SECTION 10.7 Accuracy of Information. All written information, reports,
statements and other papers and data furnished to the Agent or any Lender,
whether pursuant to this Article 10 or any other provision of this Agreement or
of any other Loan Document, shall be, at the time the same is so furnished,
complete and correct in all material respects to the extent necessary to give
the Agent and the Lenders true and accurate knowledge of the subject matter.
SECTION 10.8 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, such Borrower
shall deliver to the Agent and the Lenders as part of the officer's certificate
required pursuant to Section 10.3 such revisions or updates to such Schedule(s)
as may be necessary or appropriate to update or correct such Schedule(s),
provided that no such revisions or updates to any Schedule(s) shall be deemed
to have amended, modified or superseded such Schedule(s) as originally attached
hereto, or to have cured any breach of warranty or representation resulting
from the inaccuracy or incompleteness of any such Schedule(s), unless and until
the Agent in the exercise of its reasonable credit judgment, shall have
accepted in writing such revisions or updates to such Schedule(s).
SECTION 10.9 The Chapter 11 Cases. As soon as available, copies of all
pleadings, motions, applications, judicial information, financial information,
and other documents filed on or behalf of any Borrower with the Bankruptcy
Court or the United States Trustee in the Chapter 11 Cases, or distributed by
or on behalf of any Borrower to any Committee (except to the extent any such
information is subject to a confidentiality agreement between such Borrower and
any such Committee).
SECTION 10.10 Budget. On or before the third Business Day of every week
after the Effective Date, a rolling thirteen week Budget (on a cash basis) for
the Borrowers and their Subsidiaries, detailing (a) for the period covered by
such Budget, among other things, projected financial and operating performance
on a line item and week-by-week basis and (b) for the period of time actually
elapsed since the Petition Date, among other things, a comparison of actual to
budgeted financial and operating performance on a line item and week-by-week
basis, all in form and substance satisfactory to the Agent and the Lenders. No
Budget shall be revised once approved by the Agent and the Lenders without
their consent, it being understood and agreed that each new Budget shall
contain revised projected figures subject to approval of the Agent and the
Lenders as provided in the immediately preceding sentence.
ARTICLE XI.
NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and
all the Secured Obligations have been paid in full, unless the Required Lenders
shall otherwise consent in the manner set forth in Section 15.9, no Borrower
will directly or indirectly:
SECTION 11.1 Financial Covenants. Breach the following financial covenants:
(a) Minimum EBITDA. The Borrower shall not permit EBITDA for each
of the following respective periods to be less than the EBITDA set
forth opposite each such period:
------------------------------------------------------- ------------------------
Period Minimum EBITDA
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
Fiscal Month ended January 1, 2005 $-1,250,000
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
Two consecutive Fiscal Months ended January 29, 2005 $-2,250,000
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
Three consecutive Fiscal Months ended February 26, 2005 $-2,500,000
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
Four consecutive Fiscal Months ended April 2, 2005 $-2,750,000
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
Five consecutive Fiscal Months ended April 30, 2005 $-3,000,000
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
Six consecutive Fiscal Months ended May 28, 2005 $-3,500,000
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
Seven consecutive Fiscal Months ended July 2, 2005; eight $-3,750,000
consecutive Fiscal Months ended July 30, 2005; and nine
consecutive Fiscal Months ended August 27, 2005
------------------------------------------------------- ------------------------
(b) Adjustments to Financial Covenants Based on Excess Availability.
Notwithstanding anything contained in this Agreement to the contrary,
until the occurrence of a Financial Covenant Applicability Date, the
financial covenant in Section 11.1(a) shall not apply or be tested for
any periods described in Section 11.1(a). After the occurrence of a
Financial Covenant Applicability Date, and until the occurrence of a
Financial Covenant Inapplicability Date, the financial covenant in
Section 11.1(a) shall apply and be tested (i) retroactively for the
most recently ended period described in Section 11.1(a) and (ii)
thereafter for any periods described in Section 11.1(a). To avoid
misunderstanding, it is understood and agreed that the occurrence of a
Financial Covenant Inapplicability Date shall not result in the waiver
or cure of an Event of Default that exists as a result of the testing
of a financial covenant prior to such Financial Covenant
Inapplicability Date.
SECTION 11.2 Indebtedness for Money Borrowed. Create, assume, or otherwise
become or remain obligated in respect of, or permit or suffer to exist or to be
created, assumed or incurred or to be outstanding any Indebtedness for Money
Borrowed, except for Permitted Indebtedness for Money Borrowed.
SECTION 11.3 Guaranties. Become or remain liable with respect to any
Guaranty of any obligation of any other Person, except for Permitted Guaranties.
SECTION 11.4 Restricted Investments. Make or have any Restricted
Investment.
SECTION 11.5 Capital Expenditures. Make any Capital Expenditures during
the following period that exceed in the aggregate the following amount:
------------------------------------------- ----------------------------
Period Maximum Capital Expenditure
------------------------------------------- ----------------------------
Ten Fiscal Months ending October 1, 2005 $2,000,000
------------------------------------------- ----------------------------
SECTION 11.6 Restricted Distributions and Payments. Declare or make any
Restricted Distribution or Restricted Payment.
SECTION 11.7 Merger, Consolidation and Sale of Assets. Merge or
consolidate with any other Person or sell, lease or transfer or otherwise
dispose of its assets to any Person, including its stock or the capital stock
of any of its Subsidiaries, other than to the extent not prohibited by the
Bankruptcy Code or any Order of the Bankruptcy Court (i) sales of Inventory in
the ordinary course of business; (ii) sales of any other Collateral to the
extent approved by the Bankruptcy Court on terms consented to by the Agent; or
(iii) transfer of assets between Borrowers in the ordinary course of business.
SECTION 11.8 Transactions with Affiliates. Effect any transaction with any
Affiliate or Subsidiary (other than transactions between or among the
Borrowers) on a basis less favorable to any Borrower than would be the case if
such transaction had been effected with a Person not an Affiliate or
Subsidiary, without the express prior written consent of the Agent.
SECTION 11.9 Liens. Create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of the Collateral, other than Permitted
Liens. The prohibition provided for in this Section 11.9 specifically
includes, without limitation, any effort by any Borrower, any Committee, or any
other party-in-interest in the Chapter 11 Cases to prime or create pari passu
to any claims or interest of the Agent or the Lenders any Lien (other than the
Carve-Out Expenses up to the Carve-Out Amount) irrespective of whether such
claims or interest may be "adequately protected."
SECTION 11.10 Operating Leases. Enter into any lease other than a
Capitalized Lease (an "Operating Lease"), which would cause the aggregate
amount of the Borrowers' payment obligations under its Operating Lease
Obligations to exceed $500,000 in the aggregate during any Fiscal Year during
the term hereof.
SECTION 11.11 Benefit Plans. Permit any condition to exist in connection
with any Benefit Plan which might constitute grounds for the PBGC to institute
proceedings to have such Benefit Plan terminated or a trustee appointed to
administer such Benefit Plan, and any other condition, event or transaction
with respect to any Benefit Plan which could result in the incurrence by such
Borrower of any material liability, fine or penalty, including, without
limitation, failure to pay when due any required minimum funding or other
payment with respect to any Benefit Plan.
SECTION 11.12 Sales and Leasebacks. Enter into any synthetic lease or any
arrangement with any Person providing for such Borrower's leasing from such
Person any real or personal property which has been or is to be sold, conveyed
or transferred, directly or indirectly, by such Borrower to such Person.
SECTION 11.13 Capital Structure and Business. (a) Make any material changes
in any of its business objectives, purposes or operations which could
reasonably be expected to materially and adversely affect the repayment of the
Revolving Credit Loans or any of the other Secured Obligations or could
reasonably be expected to result in a Materially Adverse Effect on such
Borrower and its Subsidiaries as a whole, (b) change its Fiscal Year, (c) amend
its charter, bylaws, limited liability company operating agreement, partnership
agreement or other similar organizational documents in a manner which would
adversely affect Agent or Lenders or such Borrower's duty or ability to repay
the Secured Obligations or (d) directly or indirectly, create, organize,
acquire or permit to exist any Subsidiary other than those existing on the
Agreement Date.
SECTION 11.14 No Impairment of Intercompany Transfers. Directly or
indirectly enter into or become bound by any agreement, instrument, indenture
or other obligation (other than this Agreement and the other Loan Documents)
which could directly or indirectly restrict, prohibit or require the consent of
any Person with respect to (a) the payment of dividends or distributions to any
Borrower, (b) the payment of any Indebtedness or other obligation owed to any
Borrower or (c) the making or repayment of intercompany loans by a Subsidiary
of any Borrower to such Borrower.
SECTION 11.15 No Speculative Transactions. Engage in any transaction
involving commodity options, futures contracts or similar transactions, except
solely to hedge against fluctuations in the prices of commodities owned or
purchased by it and the values of foreign currencies receivable or payable by
it and interest swaps, caps or collars.
SECTION 11.16 Subordinated Indebtedness.
(a) Make any payment of all or any part of any Subordinated Indebtedness or
take any other action or omit to take any other action in respect of
any Subordinated Indebtedness, except in accordance with the
subordination agreement relative thereto or, in the case of the Senior
Subordinated Notes, in accordance with the Senior Subordinated
Documents.
(b) Change, amend, modify or supplement (collectively, "Change") the terms
of any Subordinated Indebtedness (or any indenture or agreement in
connection therewith) if the effect of such Change is to: (i) increase
the interest rate on such Subordinated Indebtedness; (ii) change the
dates upon which payments of principal or interest are due on such
Subordinated Indebtedness other than to extend such dates; (iii) change
any default or event of default other than to delete or make less
restrictive any default provision therein, or add any covenant with
respect to such Subordinated Indebtedness; (iv) change the redemption
or prepayment provisions of such Subordinated Indebtedness other than
to extend the dates thereof or to reduce the premiums payable in
connection therewith; (v) grant any security or collateral to secure
payment of such Subordinated Indebtedness; or (vi) change any other
term if such change would materially increase the obligations of the
obligor or confer additional material rights to holder of such
Subordinated Indebtedness in a manner adverse to such Borrower, Agent
or any Lender.
(c) Renew, refinance or extend any Subordinated Indebtedness without the
prior written consent of the Agent. Such Borrower shall notify Agent,
at least three (3) months prior to the maturity, expiration or
termination date of any Subordinated Indebtedness, of such Borrower's
intent to renew, refinance or extend such indebtedness (collectively, a
"Refinancing"), which notice shall include the proposed terms and
conditions of the Refinancing and the proposed documentation thereof.
SECTION 11.17 Terminations; Amendments Not Authorized. File any financing
statement or amendment or termination statement with respect to any financing
statement without the prior written consent of Agent, subject to such
Borrower's rights under Section 9-509(d)(2) of the Uniform Commercial Code.
SECTION 11.18 No Restriction on Payments to Agent. Enter into any Contract
that restricts or prohibits the grant of a security interest in Accounts,
Chattel Paper, Instruments, payment intangibles or other Collateral or the
proceeds of any of the foregoing to Agent.
SECTION 11.19 Prepetition Indebtedness. Consent to any amendment,
supplement or other modification of any of the terms or provisions contained
in, or applicable to, (a) any Order or (b) the Prepetition Indebtedness.
Except for (i) claims of employees for unpaid wages, bonuses, accrued vacation,
tuition reimbursement and personal time, business expenses and contributions to
employee benefit plans for the period immediately preceding the Petition Date
and prepetition severance obligations, in each case to the extent permitted to
be paid by order of the Bankruptcy Court, (ii) cure payments made in accordance
with Section 365(b)(1)(A) of the Bankruptcy Code, (iii) claims of "Utilities"
(within the meaning of Section 366 of the Bankruptcy Code) for services
provided prior to the Petition Date and in the ordinary course of the
Borrowers' (other than any disputed claims or any disputed portions thereof) and
the Utilities' businesses, respectively, and utility deposits, if any, made in
accordance with Section 366 of the Bankruptcy Code, and (iv) payments to
"Critical Vendors" approved by the Bankruptcy Court, no Borrower shall make any
payment in respect of, or repurchase, redeem, retire or defease any Prepetition
Indebtedness.
SECTION 11.20 Repayment of Indebtedness. Except pursuant to a confirmed
reorganization plan and except as specifically permitted hereunder, no Borrower
shall, without the express prior written consent of the Agent and the Lenders
or pursuant to an order of the Bankruptcy Court after notice and hearing, make
any payment or transfer with respect to any Lien or Indebtedness incurred or
arising prior to the filing of the Chapter 11 Cases that is subject to the
automatic stay provisions of the Bankruptcy Code whether by way of "adequate
protection" under the Bankruptcy Code or otherwise.
SECTION 11.21 Chapter 11 Claims. Incur, create, assume, suffer to exist or
permit any other superpriority administrative claim which is pari passu with or
senior to the claims of the Agent and the Lenders against the Borrowers, except
as set forth in Section 4.18(c).
ARTICLE XII.
DEFAULT
SECTION 12.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Default in Payment. Any Borrower shall default in any payment of
principal of or interest on any Revolving Credit Loans or any Note when
and as due (whether at maturity, by reason of acceleration or
otherwise).
(b) Other Payment Default. Any Borrower shall default in the payment, as
and when due, of principal of or interest on, any other Secured
Obligation, and such default shall continue for a period of ten (10)
days after written notice thereof has been given to such Borrower by
the Agent.
(c) Misrepresentation. Any representation or warranty made or deemed to be
made by any Borrower under this Agreement or any other Loan Document,
or any amendment hereto or thereto, shall at any time prove to have
been incorrect or misleading in any material respect when made.
(d) Default in Performance. Any Borrower shall default in the performance
or observance of any term, covenant, condition or agreement to be
performed by such Borrower, contained in,
(i) Articles 7 or 11 and Sections 8.8(a)-(d), 10.1, 10.3, 10.9 and 10.10;
(ii) Articles 8 (except Section 8.8(a)-(d)), 9, or 10 (except Sections 10.1,
10.3, 10.9 and 10.10) and such default, if such default is
capable of being cured, shall continue for a period of fifteen
(15) days after the sooner to occur of written notice of such
default having been given to such Borrower by Agent or such
default first becoming known to any Section 16 reporting
officer; or
(iii) any other provision of this Agreement (other than as specifically
provided for otherwise in this Section 12.1) and such default,
if capable of being cured, shall continue for a period of
thirty (30) days after the sooner to occur of written notice
of such default having been given to such Borrower by Agent or
such default first becoming known to any Section 16 reporting
officer.
(e) Indebtedness Cross-Default. With respect to Permitted Indebtedness for
Money Borrowed, and except for defaults occasioned by the filing of the
Chapter 11 cases and defaults resulting from obligations with respect
to which the Bankruptcy Code prohibits any Borrower from complying or
permits any Borrower not to comply:
(i) Any Borrower or any Subsidiary thereof shall fail to pay when due and
payable the principal of or interest on any Indebtedness
(other than the Revolving Credit Facility) in an amount
outstanding in excess of $500,000, or
(ii) the maturity of any such Indebtedness, individually or in the aggregate
with other such Indebtedness, in a principal amount exceeding
$500,000 shall have (A) been accelerated in accordance with
the provisions of any indenture, contract or instrument
providing for the creation of or concerning such Indebtedness,
or (B) been required to be prepaid prior to the stated
maturity thereof.
(f) Other Cross-Defaults. Any Borrower or any of its Subsidiaries shall
default in the payment when due, or in the performance or observance,
of any obligation or condition of any agreement, contract or lease
(other than this Agreement, the Security Documents or any such
agreement, contract or lease relating to Permitted Indebtedness for
Money Borrowed) if the existence of any such defaults, singly or in the
aggregate, could in the reasonable judgment of the Agent have a
Materially Adverse Effect.
(g) Loan Documents. Any event of default or Event of Default under any
other Loan Document shall occur or any Borrower shall default in the
performance or observance of any material term, covenant, condition or
agreement contained in, or the payment of any other sum covenanted to
be paid by such Borrower under, any such Loan Document or any provision
of this Agreement, or of any other Loan Document after delivery thereof
hereunder, shall for any reason cease to be valid and binding, other
than a nonmaterial provision rendered unenforceable by operation of
law, or such Borrower or other party thereto (other than the Agent or a
Lender) shall so state in writing, or this Agreement or any other Loan
Document, after delivery thereof hereunder, shall for any reason (other
than any action taken independently by the Agent or a Lender and except
to the extent permitted by the terms thereof) cease to create a valid,
perfected and, except as otherwise expressly permitted herein, first
priority Lien on, or security interest in, any of the Collateral
purported to be covered thereby.
(h) Judgment. Any judgment or order for the payment of money warrant, writ
of attachment, execution or similar process shall have been entered
against any Borrower which exceeds in amount or value $500,000 either
individually or in the aggregate with any other judgments that have
been entered against any Borrowers by any court and such judgment,
order, warrant, writ of attachment, execution or similar process shall
continue undischarged or unstayed for thirty (30) days.
(i) Governmental Action. The indictment by any Governmental Authority, or
as the Agent may reasonably and in good faith determine, the threatened
indictment by any Governmental Authority, of any Borrower of which such
Borrower or the Agent receives notice, in either case, as to which
there is, in the good faith determination of the Agent, a reasonable
possibility of an adverse outcome under any criminal statute, or
commencement or threatened commencement of criminal or civil
proceedings against such Borrower, pursuant to which statute or
proceedings the penalties or remedies sought or available include
forfeiture of (i) any of the Collateral having a value in excess of
$500,000 or (ii) any other property of any Borrower which is necessary
or material to the conduct of its business; or
(j) Material Loss or Damage. There shall occur (i) any material damage to,
or loss, theft or destruction of, any material assets of any of the
Borrowers, (ii) any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty, which in
any such case causes, for more than ten (10) consecutive days, the
cessation or substantial curtailment of revenue producing activities at
any facility of any of the Borrowers or (iii) any loss, suspension or
revocation of, or failure to renew, any license or permit,
qualification or contract right now held or hereafter acquired by any
of the Borrowers, if such event or circumstance is not covered by
business interruption insurance and would have a Material Adverse
Effect.
(k) ERISA. (i) Any Termination Event with respect to a Benefit Plan shall
occur that, after taking into account the excess, if any, of (A) the
present value on such day of all vested nonforfeitable benefits under
such other Plan, over (B) the fair market value of the assets of any
other Benefit Plan with respect to which a Termination Event occurs on
the same day (but only to the extent that such excess is the property
of a Borrower), results in an Unfunded Vested Accrued Benefit in excess
of $0.00, or (ii) any Plan shall incur an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA) for which a waiver has not been obtained in accordance with the
applicable provisions of the Code and ERISA, or (iii) any Borrower is
in "default" (as defined in Section 4219(c)(5) of ERISA) with respect
to payments to a Multiemployer Plan resulting from such Borrower's
complete or partial withdrawal (as described in Section 4203 or 4205 of
ERISA) from such Multiemployer Plan.
(l) Change of Control. If any Change of Control shall occur.
(m) Related to the Chapter 11 Cases. The occurrence of any of the
following in any Chapter 11 Case:
(i) the bringing of a motion (or the support thereof), taking of any action
or the filing of any plan of reorganization or disclosure
statement attendant thereto by a Borrower in any Chapter 11
Case: (A) to obtain additional financing under Section 364(c)
or (d) of the Bankruptcy Code not otherwise permitted pursuant
to this Agreement (other than with respect to a financing
used, in whole or in part, to repay in full the Obligations);
(B) to grant any Lien other than Permitted Encumbrances upon
or affecting any Collateral; (C) except as provided in the
Interim Order or Final Order, as the case may be, to use cash
collateral of the Agent under Section 363(c) of the Bankruptcy
Code without the prior written consent of the Agent and the
Required Lenders; or (D) to authorize any other action or
actions adverse to the Agent or the Lenders, or their rights
and remedies hereunder or their interests in the Collateral
that would, individually or in the aggregate, have a Material
Adverse Effect;
(ii) the filing of any plan or reorganization or disclosure statement
attendant thereto by a Borrower or any other Person to which
the Agent or the Lenders do not consent or otherwise agree to
the treatment of their claims;
(iii) the entry of an order in any of the Chapter 11 Cases confirming a plan
or plans of reorganization that does not contain a provision
for termination of the Commitments and repayment in full in
cash of all of the Secured Obligations under this Agreement on
or before the effective date of such plan or plans;
(iv) the entry of an order amending, supplementing, staying, vacating or
otherwise modifying the Loan Documents or the Interim Order of
the Final Order without the written consent of all the Lenders
or the entry of an order granting, or granting in part, a
motion for reconsideration with respect to the Interim Order
or the Final Order;
(v) the Final Order is not entered immediately following the expiration of
the Interim Order;
(vi) the payment of, or application for authority to pay, a pre-petition
claim without the Required Lenders' prior written consent or
pursuant to an order of the Bankruptcy Court after notice and
hearing unless otherwise permitted under this Agreement;
(vii) the allowance of any claim or claims under Section 506(c) of the
Bankruptcy Code against or with respect to any of the
Collateral upon the entry of the Final Order;
(viii) the appointment of an interim or permanent trustee in the Chapter 11
Cases or the appointment of a receiver or an examiner in any
Chapter 11 Case with expanded powers to operate or manage the
financial affairs, the business, or reorganization of a
Borrower; or the sale without the Required Lenders' consent,
of all or substantially all of a Borrower's assets either
through a sale under Section 363 of the Bankruptcy Code,
through a confirmed plan or reorganization in any Chapter 11
Case, or otherwise that does not provide for payment in full
of the Obligations and termination of the Commitments;
(ix) the dismissal of any of the Chapter 11 Cases, or the conversion of any
of the Chapter 11 Cases to one under Chapter 7 of the
Bankruptcy Code or any Borrower shall file a motion or other
pleading seeking the dismissal of any of the Chapter 11 Cases
under Section 1112 of the Bankruptcy Code or otherwise;
(x) the entry of an order by the Court granting relief from or modifying
the automatic stay of Section 362 of the Bankruptcy Code (x)
to allow any creditor to execute upon or enforce a Lien on any
Collateral, or (y) with respect to any Lien of or the granting
of any Lien on any Collateral to any state or local
environmental or regulatory agency or authority, which in
either case would have a Material Adverse Effect;
(xi) the entry of an order in any Chapter 11 Case avoiding or requiring
repayment of any portion of the payments made on account of
the Secured Obligations owing under this Agreement;
(xii) the failure in any material respect of any Borrower to perform any of
its obligations under the Interim Order or the Final Order; or
(xiii) the entry of an order in any of the Chapter 11 Cases granting any other
super priority administrative claim or Lien equal or superior
to that granted to the Agent, on behalf of itself and the
Lenders.
(n) Related to Asset Dispositions. The occurrence of any of the following:
(i) The failure of a Borrower to repay immediately the Revolving Credit
Loans as provided in Section 2.5 hereof;
(ii) The failure of the Borrowers, within one hundred twenty (120) days
after the Petition Date, to close a sale of substantially all
of the Borrowers' assets that results in the payment to the
Agent, for the account of the Lenders, of all Secured
Obligations and other amounts described in Section 4.5 and
Cash Collateral as provided in Section 3.3;
(iii) the filing of a motion to approve auction procedures for a sale of a
portion or substantially all of the assets of the Borrowers
pursuant to Section 363 of the Bankruptcy Code on terms and
conditions that are not reasonably satisfactory to the Agent
or the Lenders; and
(iv) the filing of a motion to approve a sale of a portion or substantially
all of the assets of the Borrowers pursuant to Section 363 of
the Bankruptcy Code on terms and conditions that are not
reasonably satisfactory to the Agent or the Lenders.
SECTION 12.2 Remedies.
(a) Remedies. If any Event of Default shall have occurred, and during the
continuance of any such Event of Default, the Agent may without notice,
and at the direction of the Required Lenders in their sole and absolute
discretion shall, do any of the following, but subject at all times to
any limitations in the Financing Orders:
(i) declare the principal of and interest on the Revolving Credit Loans and
any Note at the time outstanding, and all other amounts owed
to the Agent or the Lenders under this Agreement or any of the
Loan Documents and all other Secured Obligations, to be
forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the Loan
Documents to the contrary notwithstanding;
(ii) terminate any obligation of the Lenders or the Agent to make Advances
or incur Letter of Credit Obligations, and any other right of
the Borrowers to request the same hereunder;
(iii) without prior notice to any Borrower, notify, or at Agent's election
request, the Borrowers to notify Account Debtors and other
Persons obligated on the Collateral that Agent has a security
interest therein, and that payments shall be made directly to
Agent. Once any such notice has been given to any Account
Debtor or other Person obligated on the Collateral, the
affected Borrower shall not give any contrary instructions to
such Account Debtor or other Person without Agent's prior
written consent. If, notwithstanding the giving of any
notice, any Account Debtor or other such obligor shall make
payments to any Borrower, such Borrower shall hold all such
payments it receives in trust for the Agent, for the account
of the Lenders, without commingling the same with other funds
or property of, or held by, such Borrower, and shall deliver
the same to the Agent or any such agent or designee of the
Agent immediately upon receipt by such Borrower in the
identical form received, together with any necessary
endorsements.
(iv) settle or adjust disputes and claims directly with Account Debtors and
other obligors on Accounts for amounts and on terms which the
Agent reasonably considers advisable and in all such cases
only the net amounts received by the Agent, for the account of
the Lenders, in payment of such amounts, after deductions of
costs and reasonable attorneys' fees, shall constitute
Collateral and no Borrower shall have any further right to
make any such settlements or adjustments or to accept any
returns of merchandise;
(v) through self-help, without notice, demand or judicial or other process,
enter upon any premises in which Collateral including without
limitation, any Inventory, may be located and, without
resistance or interference by any Borrower, take physical
possession of any or all thereof and maintain such possession
on such premises or move the same or any part thereof to such
other place or places as the Agent shall choose, without being
liable to such Borrower on account of any loss, damage or
depreciation that may occur as a result thereof, so long as
the Agent shall act reasonably and in good faith;
(vi) require each Borrower to and each Borrower shall, at its own cost and
expense and without charge to the Agent or any Lender,
assemble the Collateral including without limitation, the
Inventory, and maintain or deliver it into the possession of
the Agent or any agent or representative of the Agent at such
place or places as the Agent may designate and as are
reasonably convenient to both the Agent and such Borrower;
(vii) at the expense of each Borrower, cause any of the Collateral to be
placed in a public or field warehouse, and the Agent shall not
be liable to such Borrower on account of any loss, damage or
depreciation that may occur as a result thereof, so long as
the Agent shall act reasonably and in its reasonable credit
judgment;
(viii) through self-help and without notice, demand or judicial or other
process, and without payment of any rent or any other charge,
enter any or all of each Borrower's premises and, without
breach of the peace, until the Agent, on behalf of the
Lenders, completes the enforcement of its rights in the
Collateral, take possession of such premises or place
custodians in exclusive control thereof, remain on such
premises and use the same and any of such Borrower's
Collateral, for the purpose of (A) preparing any Inventory for
disposition and disposing thereof and (B) collecting any
Account, and the Agent, for the benefit of the Lenders, is
hereby granted a license or sublicense and all other rights as
may be necessary, appropriate or desirable to use the
proprietary rights in connection with the foregoing, and the
rights of such Borrower under all licenses, sublicenses and
franchise agreements shall inure to the Agent for the benefit
of the Lenders (provided, however, that any use of any
federally registered trademarks as to any goods shall be
subject to the control as to the quality of such goods of the
owner of such trademarks and the goodwill of the business
symbolized thereby);
(ix) exercise any and all of its rights under any and all of the Security
Documents;
(x) apply any Collateral consisting of cash to the payment of the Secured
Obligations in accordance with Section 12.3 hereof or in any
order in which the Agent, on behalf of the Lenders, may elect
or use such cash in connection with the exercise of any of its
other rights hereunder or under any of the Security Documents;
(xi) establish or cause to be established one or more Lockboxes or other
arrangement for the deposit of proceeds of Accounts, and, in
such case, each Borrower shall cause to be forwarded to the
Agent at the Agent's Office, on a daily basis, copies of all
checks and other items of payment and deposit slips related
thereto deposited in such Lockboxes, together with Collection
Reports in accordance with Section 8.8(b), in form and
substance satisfactory to the Agent; and
(xii) exercise all of the rights and remedies of a secured party under the
Uniform Commercial Code and under any other Applicable Law,
including, without limitation, the right, without notice
except as specified below and with or without taking the
possession thereof, to sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any
location chosen by the Agent, for cash, on credit or for
future delivery, and at such price or prices and upon such
other terms as are commercially reasonable. Each Borrower
agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days notice to such Borrower of the
time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable
notification, but notice given in any other reasonable manner
or at any other reasonable time shall constitute reasonable
notification. The Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.
SECTION 12.3 Application of Proceeds. All proceeds from each sale of, or
other realization upon, all or any part of the Collateral following an Event of
Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in connection
with such sale or other realization, including attorneys' fees and
expenses actually incurred (including, without limitation, the expenses
and other allocated costs of internal counsel),
(b) Second: to the payment of the Secured Obligations in accordance with
the priorities set forth in Section 4.3(c) hereof (with each Borrower
remaining liable for any deficiency), or any order that Agent may elect,
(c) Third: the balance (if any) of such proceeds shall be paid to the
Borrowers, subject to any duty imposed by law, or otherwise to
whomsoever shall be entitled thereto.
Each Borrower shall remain liable, jointly and severally, and will pay, on
demand, any deficiency remaining in respect of the Secured Obligations,
together with interest thereon at a rate per annum equal to the highest rate
then payable hereunder on such Secured Obligations, which interest shall
constitute part of the Secured Obligations.
SECTION 12.4 Miscellaneous Provision Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Agent and the
Lenders under this Agreement, the Notes and each of the Loan Documents
shall be cumulative and not exclusive of any rights or remedies which
it or they would otherwise have. In exercising such rights and
remedies the Agent and the Lenders may be selective and no failure or
delay by the Agent or any Lender in exercising any right shall operate
as a waiver of it, nor shall any single or partial exercise of any
power or right preclude its other or further exercise or the exercise
of any other power or right.
(b) Marshaling. Neither the Agent nor the Lenders shall be required to
marshal the Collateral or any guarantee of any obligation arising under
this Agreement or any other Loan Document or to resort to the
Collateral or any such guarantee in any particular order and each
Borrower hereby waives any right to require any marshaling of assets or
any other similar right.
(c) Limitation of Liability. Nothing contained in this Article 12 or
elsewhere in this Agreement or in any of the other Loan Documents shall
be construed as requiring or obligating the Agent, any Lender or any
agent or designee of the Agent or any Lender to (i) make any demand
upon, or pursue or exhaust any of their rights or remedies against, any
Borrower, any other obligor, guarantor, pledgor or any other Person
with respect to the payment of any Letter of Credit Obligation, Secured
Obligation, or any other obligation arising under this Agreement or any
of the other Loan Documents, or the monies due or to become due
thereunder, including by making an inquiry as to the nature or
sufficiency of any payment received by it, (ii) to pursue or exhaust
any of their rights or remedies, such as by filing a claim or notice,
with respect to any Collateral, the monies due or to become due
thereunder, or any direct or indirect guarantee thereof, and (iii) to
take any steps necessary to preserve any rights against prior parties.
To the extent it may lawfully do so, each Borrower absolutely and
irrevocably waives and relinquishes the benefit and advantage of, and
covenants not to assert against the Agent or any Lender, any valuation,
stay, appraisement, extension, redemption or similar laws and any and
all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to the sale
of any Collateral made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this
Agreement, or otherwise. Without limiting the generality of the
foregoing, each Borrower (A) agrees that it will not invoke or utilize
any law which might prevent, cause a delay in or otherwise impede the
enforcement of the rights of the Agent or any Lender in the Collateral,
(B) waives its rights under all such laws, and (C) agrees that it will
not invoke or raise as a defense to any enforcement by the Agent or any
Lender of any rights and remedies relating to the Collateral, the
Letter of Credit Obligations, the Secured Obligations, or any other
obligations hereunder, any legal or contractual requirement with which
the Agent or any Lender may have in good faith failed to comply. The
Agent, the Lenders and their agents or designees shall have no
liability to any Borrower for actions taken pursuant to this Article
12, any other provision of this Agreement or any of the other Loan
Documents so long as the Agent or such Lender shall act reasonably and
in its reasonable credit judgment.
(d) Power of Attorney. On the Effective Date each Borrower shall execute
and deliver to Agent the Power of Attorney. The power of attorney
granted pursuant to the Power of Attorney is a power coupled with an
interest and shall be irrevocable until the Termination Date. The
powers conferred on Agent, for the benefit of Agent and Lenders, under
the Power of Attorney are solely to protect Agent's interests (for the
benefit of Agent and Lenders) in the Collateral and shall not impose
any duty upon Agent or any Lender to exercise any such powers. Agent
agrees that (i) except for the powers granted in clause (i) of the
Power of Attorney, it shall not exercise any power or authority granted
under the Power of Attorney unless an Event of Default has occurred and
is continuing, and (ii) Agent shall account for any moneys received by
Agent in respect of any foreclosure on or disposition of Collateral
pursuant to the Power of Attorney provided that none of Agent or any
Lender shall have any duty as to any Collateral, and Agent and Lenders
shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers. NONE OF AGENT, LENDERS OR THEIR
RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY BORROWER FOR ANY ACT OR
FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN
RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.
(e) Commercially Reasonable Remedies. To the extent that Applicable Law
imposes duties on the Agent to exercise remedies in a commercially
reasonable manner, each Borrower acknowledges and agrees that it is not
commercially unreasonable for the Agent (i) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for
disposition or otherwise to complete raw material or work in process
into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be
disposed of, or to obtain or, if not required by other law, to fail to
obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail
to exercise collection remedies against Account Debtors or other
Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral, (iv) to exercise collection remedies against
Account Debtors and other Persons obligated on Collateral directly or
through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as such Borrower, for expressions
of interest in acquiring all or any portion of such Collateral, (vii)
to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the Collateral is of a
specialized nature, (viii) to dispose of Collateral by utilizing
internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (ix) to dispose
of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Agent
against risks of loss, collection or disposition of Collateral or to
provide to the Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by
the Agent, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral. Each Borrower
acknowledges that the purpose of this Section 12.4(f) is to provide
non-exhaustive indications of what actions or omissions by the Agent
would not be commercially unreasonable in the Agent's exercise of
remedies against the Collateral and that other actions or omissions by
the Agent shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section 12.4(f). Without
limitation upon the foregoing, nothing contained in this Section
12.4(f) shall be construed to grant any rights to any Borrower or to
impose any duties on Agent that would not have been granted or imposed
by this Agreement or by Applicable Law in the absence of this Section
12.4(f).
SECTION 12.5 Trademark License. Each Borrower hereby grants to the Agent,
for the benefit of the Lenders, to the extent of such Borrower's rights therein
and to the extent permitted by the various license agreements relating thereto,
the nonexclusive right and license to use the trademarks and tradenames or
other Intellectual Property set forth on Schedules 6.1(aa) and 6.1(bb) and any
other such trademark, tradename or property then used by such Borrower, for the
purposes set forth in Section 12.2(b)(viii) and for the purpose of enabling the
Agent to realize on the Collateral and to permit any purchaser of any portion
of the Collateral through a foreclosure sale or any other exercise of the
Agent's rights and remedies under the Loan Documents to use, sell or otherwise
dispose of the Collateral bearing any such trademark. Such right and license
is granted free of charge, without the requirement that any monetary payment
whatsoever be made to such Borrower or any other Person by the Agent. Each
Borrower hereby represents, warrants, covenants and agrees that, except as set
forth in the license agreements, it presently has, and shall continue to have,
the right, without the approval or consent of others, to grant the license set
forth in this Section 12.5.
ARTICLE XIII.
ASSIGNMENTS
SECTION 13.1 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of each Borrower, the Lenders, the Agent, all future
holders of the Notes, and their respective successors and assigns, except that
no Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender, and any such
attempted assignment or transfer by any Borrower except in strict compliance
with the provisions hereof shall be null and void, and of no force or effect.
SECTION 13.2 Assignments; Participations.
(a) Each Lender may assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Revolving
Credit Loans at the time owing to it and the Notes held by it);
provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Lender's
rights and obligations under this Agreement, (ii) the amount of the
Commitment of the assigning Lender that is subject to each such
assignment (determined as of the date the Assignment and Transfer with
respect to such assignment is delivered to the Agent) shall in no event
be less than $5,000,000 (the "Minimum Commitment"), (iii) in the case
of a partial assignment, the amount of the Commitment that is retained
by the assigning Lender (determined as of the date the Assignment and
Transfer with respect to such assignment is delivered to the Agent)
shall in no event be less than the Minimum Commitment, (iv) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as hereinafter defined) an
Assignment and Transfer, together with any Note or Notes subject to
such assignment and such assignee's commitment percentage of the
Agent's syndication expenses, (v) such assignment shall not, without
the consent of each Borrower, require any Borrower to file a
registration statement with the Securities and Exchange Commission or
apply to or qualify the Revolving Credit Loans or the Notes under the
blue sky laws of any state, (vi) the representation contained in
Section 13.3 hereof shall be true with respect to any such proposed
assignee and (vii) such Lender provides notice to each Borrower of the
identity of the Eligible Assignee. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified
in each Assignment and Transfer, which effective date shall be at least
five (5) Business Days after the execution thereof, (x) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Transfer, have the rights and obligations of a Lender
hereunder, and (y) the Lender assignor thereunder shall, to the extent
provided in such assignment, be released from its obligations under
this Agreement.
(b) By executing and delivering an Assignment and Transfer, the Lender
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 Lender 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 the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such Lender
assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower
or the performance or observance by any Borrower of any of its
obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the
financial statements referred to in Section 6.1(m) 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
Transfer; (iv) such assignee will, independently and without reliance
upon the Agent, such Lender assignor or any other Lender, 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 confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it
as a Lender.
(c) The Agent shall maintain a copy of each Assignment and Transfer
delivered to it and a register for the recordation of the names and
addresses of the Lenders and the Commitment Percentage of, and
principal amount of the Revolving Credit Loans owing to, each Lender
from time to time (the "Register"). The entries in the Register shall
be conclusive, in the absence of manifest error, and each Borrower, the
Agent and the Lenders may treat each person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrowers or any
Lender at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of an Assignment and Transfer executed by an assigning
Lender and an Eligible Assignee together with any Note or Notes subject
to such assignment and the written consent to such assignment, the
Agent shall, if such Assignment and Transfer has been completed and is
in the form of Exhibit D, (i) accept such Assignment and Transfer, (ii)
record the information contained therein in the Register, (iii) give
prompt notice thereof to the Lenders and each Borrower, and (iv)
promptly deliver a copy of such Assignment and Transfer to each
Borrower. Within five (5) Business Days after receipt of notice, each
Borrower shall execute and deliver to the Agent in exchange for the
surrendered Note or Notes, a new Note or Notes to the order of such
Eligible Assignee in amounts equal to the Commitment Percentage assumed
by such Eligible Assignee pursuant to such Assignment and Transfer and
a new Note or Notes to the order of the assigning Lender in an amount
equal to the Commitment retained by it hereunder. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Transfer and shall otherwise be
in substantially the form of the assigned Notes delivered to the
assignor Lender. Assignor Lenders shall cancel and return the old Note
or Notes to the Borrowers' promptly after delivery of the new Note or
Notes to the applicable Lenders.
(e) Each Lender may, without the consent of any Borrower, sell
participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its commitments hereunder and
the Revolving Credit Loans owing to it and the Notes held by it);
provided, however, that (i) each such participation shall be in an
amount not less than the Minimum Commitment, (ii) such Lender's
obligations under this Agreement (including, without limitation, its
commitments hereunder) shall remain unchanged, (iii) such Lender shall
remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) such Lender shall remain the
holder of the Notes held by it for all purposes of this Agreement, (v)
each Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement; provided, that such Lender
may agree with any participant that such Lender will not, without such
participant's consent, agree to or approve any waivers or amendments
which would reduce the principal of or the interest rate on any
Revolving Credit Loans, extend the term or increase the amount of the
commitments of such participant, reduce the amount of any fees to which
such participant is entitled, extend any scheduled payment date for
principal or release Collateral securing the Revolving Credit Loans
(other than Collateral disposed of pursuant to the terms of this
Agreement or the Security Documents), and (vi) any such disposition
shall not, without the consent of such Borrower, require such Borrower
to file a registration statement with the Securities and Exchange
Commission to apply to qualify the Revolving Credit Loans or the Notes
under the blue sky law of any state.
(f) Any Lender may, in connection with any assignment, proposed assignment,
participation or proposed participation pursuant to this Section 13.2,
disclose to the assignee, participant, proposed assignee or proposed
participant, any information relating to each Borrower furnished to
such Lender by or on behalf of such Borrower; provided that, prior to
any such disclosure, each such-assignee, proposed assignee, participant
or proposed participant shall agree with such Borrower or such Lender
(which in the case of an agreement with only such Lender, such Borrower
shall be recognized as a third party beneficiary thereof) to preserve
the confidentiality of any confidential information relating to such
Borrower received from such Lender.
(g) Each Borrower shall assist any Lender permitted to sell assignments or
participations under this Section 13.2 as reasonably required to enable
the assigning or selling Lender to effect any such assignment or
participation, including, without limitation, (i) prompt assistance in
the preparation of an information memorandum and the verification of
the completeness and accuracy of the information contained therein;
(ii) preparation of offering materials and projections by such Borrower
and its advisors; (iii) providing the Agent with all information
reasonably deemed necessary by Agent to successfully complete the
syndication, assignment or participation, including, without
limitation, financial information, evaluations and projections; (iv)
confirmation as to the accuracy and completeness of such offering
materials, information and projections; (v) participation of such
Borrower's senior management in meetings and conference calls with
potential lenders at such times and places as Agent may reasonable
request; and (vi) the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested.
SECTION 13.3 Representation of Lenders. Each Lender hereby represents that
it will make each Advance hereunder as a commercial loan for its own account in
the ordinary course of its business; provided, however, that subject to Section
13.2 hereof, the disposition of the Notes or other evidence of the Secured
Obligations held by any Lender shall at all times be within its exclusive
control.
ARTICLE XIV.
THE AGENT
SECTION 14.1 Appointment of Agent. Each of the Lenders hereby irrevocably
designates and appoints The CIT Group/Commercial Services, Inc. as the Agent of
such Lender under this Agreement and the other Loan Documents. Each such
Lender irrevocably authorizes Agent, as the Agent for such Lender to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and such other Loan
Documents, including, without limitation, to make determinations as to the
eligibility of Accounts and Inventory and to adjust the advance ratios
contained in the definition of "Borrowing Base" (so long as such advance
ratios, as adjusted, do not exceed those set forth in the definition of
"Borrowing Base"), together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.
SECTION 14.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
SECTION 14.3 Exculpatory Provisions. Neither the Agent nor any of its
trustees, officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable to any Lender (or any Lender's participants) for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for its
or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any Lender (or any Lender's participants) for any
recitals, statements, representations or warranties made by any Borrower or any
officer thereof contained in this Agreement or the other Loan Documents or in
any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement or
the other Loan Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the other Loan
Documents or for any failure of any Borrower to perform its obligations
hereunder or thereunder. The Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement, or to inspect
the properties, books or records of any Borrower.
SECTION 14.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrowers), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless such
Note shall have been transferred in accordance with Section 13.2. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement and the other Loan Documents unless it shall first receive such
advice or concurrence of the Required Lenders (or the unanimous consent of the
Lenders with respect to the matters set forth in Section 15.9(b)) as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement and the Notes in accordance with a request of the Required Lenders,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Notes.
SECTION 14.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or a Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) continue making Advances to any
Borrower on behalf of the Lenders in reliance on the provisions of Section 4.6
and take such other action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 14.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of each Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of each Borrower and made its own decision to make its
Advances hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of each Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder or by the other Loan Documents, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of each Borrower which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates.
SECTION 14.7 Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by a Borrower and without
limiting the obligation of each Borrower to do so), ratably according to their
respective Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement or the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's gross negligence or willful
misconduct or resulting solely from transactions or occurrences that occur at a
time after such Lender has assigned all of its interests, rights and
obligations under this Agreement pursuant to Section 13.2 or, in the case of a
Lender to which an assignment is made hereunder pursuant to Section 13.2, at a
time before such assignment. The agreements in this subsection shall survive
the payment of the Notes, the Secured Obligations and all other amounts payable
hereunder and the termination of this Agreement.
SECTION 14.8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with each Borrower and its Subsidiaries as though it was not
the Agent hereunder. With respect to its Commitment, and the Advances made or
renewed by it and any Note issued to it and any Letter of Credit issued by it,
the Agent shall have and may exercise the same rights and powers under this
Agreement and the other Loan Documents and is subject to the same obligations
and liabilities as and to the extent set forth herein and in the other Loan
Documents for any other Lender. The terms "Lenders" or "Required Lenders" or
any other term shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity as a Lender or one of the Required Lenders.
SECTION 14.9 Successor Agent. The Agent may resign as Agent by providing
thirty (30) days written notice to the Lenders. If the Agent shall resign or
be removed as Agent under this Agreement, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall, so long as no Default or Event of Default shall have
occurred, be subject to the approval of the Borrowers (which approval shall not
be unreasonably withheld), whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent" shall mean such
successor agent effective upon its appointment, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or further
act or deed on the part of such former Agent or any of the parties to this
Agreement or any holders of the Notes. After any Agent's resignation or
removal hereunder as Agent, the provisions of Section 14.7 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 14.10 Notices from Agent to Lenders. The Agent shall promptly, upon
receipt thereof, forward to each Lender copies of any written notices, reports
or other information supplied to it by any Borrower (but which such Borrower is
not required to supply directly to the Lenders).
SECTION 14.11 Agency for Perfection. Agent and each Lender hereby appoints
each other Lender as agent for the purpose of perfecting Agent's Liens in
assets which, in accordance with Article IX of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
ARTICLE XV.
MISCELLANEOUS
SECTION 15.1 Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the
communications hereunder and thereunder shall be in writing or by
telephone, subsequently confirmed in writing. Notices in writing shall
be delivered personally or sent by e-mail, certified or registered
mail, postage pre-paid, or by overnight courier, telex or facsimile
transmission and shall be deemed received in the case of personal
delivery, when delivered, in the case of mailing, when receipted for,
in the case of overnight delivery, on the next Business Day after
delivery to the courier, and in the case of e-mail, telex and facsimile
transmission, upon transmittal, provided that in the case of notices to
the Agent, notice shall be deemed to have been given only when such
notice is actually received by the Agent. A telephonic notice to the
Agent, as understood by the Agent, will be deemed to be the controlling
and proper notice in the event of a discrepancy with or failure to
receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address of which all the other
parties are notified in writing
If to any Borrower: Tropical Sportswear Int'l Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Akerman Senterfitt
Citrus Center - 17th Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn:▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
If to the Agent: The CIT Group/Commercial Services, Inc.
Two Wachovia Center
Suite 2500
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Account Executive -
Tropical Sportswear Int'l Corporation
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Hunton & ▇▇▇▇▇▇▇▇, LLP
Bank of America Plaza
Suite 3500
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: 704-378-4890
If to a Lender: At the address of such Lender set forth
on the signature page hereof.
(c) Agent's Office. The Agent hereby designates its office located at Two
Wachovia Center, Suite 2500, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or any subsequent office which shall have been
specified for such purpose by written notice to the Borrowers, as the
office to which payments due are to be made and at which Advances will
be disbursed.
SECTION 15.2 Expenses. Each Borrower, jointly and severally, agrees to pay
or reimburse on demand all reasonable costs and expenses incurred by the Agent
or any Lender, including, without limitation, the reasonable fees and
disbursements of counsel, including, without limitation, the reasonably
allocated costs and expenses of internal legal services of the Agent, in
connection with (a) the negotiation, preparation, execution, delivery,
administration, enforcement and termination of any proposal and commitment
letter, this Agreement and each of the other Loan Documents (collectively, the
"Transaction Documents"), whenever the same shall be executed and delivered,
including, without limitation (i) the out-of-pocket costs and expenses incurred
in connection with the administration and interpretation of the Transaction
Documents; (ii) the costs and expenses of appraisals of the Collateral; (iii)
the costs and expenses of lien and title searches and title insurance; (iv) the
costs and expenses of environmental reports with respect to the Real Estate;
(v) taxes, fees and other charges for recording the Mortgages, filing the
Financing Statements and continuations and the costs and expenses of taking
other actions to perfect, protect, and continue the Security Interests
including, without limitation, the filing of any such financing or continuation
statements as Agent deems necessary in its sole discretion in order to comply
with the Uniform Commercial Code in other jurisdictions where Collateral is
located; (b) the preparation, execution and delivery of any waiver, amendment,
supplement or consent by the Agent and the Lenders relating to the Transaction
Documents; (c) sums paid or incurred to pay any amount or take any action
required of the Borrowers under the Transaction Documents that any Borrower
fails to pay or take; (d) the reasonable out-of-pocket costs of field audits,
inspections and verifications of the Collateral by the Agent and the Lenders
relating to travel, meals, lodging and other incidental expenses and the
Agent's and Lenders' standard per diem fee of $850 for each auditor in
connection the foregoing, including, without limitation, for those audits,
inspections and verifications on or prior to the date on which a Person becomes
a Lender; (e) costs and expenses of forwarding loan proceeds, collecting checks
and other items of payment, and establishing and maintaining any and all
Disbursement Accounts, Blocked Accounts, lockboxes and any other arrangements
with third parties relating to the Collateral; (f) costs and expenses of
preserving and protecting the Collateral; (g) consulting with one or more
Persons, including appraisers, accountants and lawyers, concerning the value of
any Collateral for the Secured Obligations or related to the nature, scope or
value of any right or remedy of the Agent or any Lender hereunder or under any
of the Transaction Documents, including any review of factual matters in
connection therewith, which expenses shall include the fees and disbursements
of such Persons; (h) reasonable costs and expenses paid or incurred to obtain
payment of the Secured Obligations, enforce the Security Interests, sell or
otherwise realize upon the Collateral, and otherwise enforce the provisions of
the Transaction Documents, or to prosecute or defend any claim in any way
arising out of, related to or connected with, this Agreement or any of the
Transaction Documents, which expenses shall include the reasonable fees and
disbursements of counsel and of experts and other consultants retained by the
Agent or any Lender; and (i) the preparation and review of pleadings, documents
and reports related to the Chapter 11 Cases and any subsequent cases under
chapter 7 of the Bankruptcy Code, attendance at meetings, court hearings or
conferences related to the Chapter 11 Cases and any subsequent cases under
chapter 7 of the Bankruptcy Code, and general monitoring of the Chapter 11
Cases and any subsequent cases under chapter 7 of the Bankruptcy Code.
The foregoing shall not be construed to limit any other
provisions of the Transaction Documents regarding costs and expenses to be paid
by a Borrower. Each Borrower hereby authorizes the Agent and the Lenders to
debit the Borrower's Loan Accounts (by increasing the principal amount of the
Revolving Credit Loans) in the amount of any such costs and expenses owed by
such Borrower when due.
SECTION 15.3 Stamp and Other Taxes. Each Borrower will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Agent and the Lenders against any and all liabilities with
respect to or resulting from any delay in the payment or omission to pay any
such taxes, fees or charges, which may be payable or determined to be payable
in connection with the execution, delivery, performance or enforcement of this
Agreement and any of the Loan Documents or the perfection of any rights or
security interest thereunder, including, without limitation, the Security
Interest.
SECTION 15.4 Setoff; Pro Rata Participation.
(a) In addition to any rights now or hereafter granted under Applicable Law
and not by way of limitation of any such rights, during the continuance
of any Event of Default, each Lender, any participant with such Lender
in the Revolving Credit Loans and each Affiliate of each Lender are
hereby authorized by each Borrower at any time or from time to time,
without notice to such Borrower or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or
owing by any Lender or any Affiliate of any Lender or any participant
to or for the credit or the account of such Borrower against and on
account of the Secured Obligations irrespective or whether or not the
Agent or such Lender shall have made any demand under this Agreement or
any of the Loan Documents, or the Agent or such Lender shall have
declared any or all of the Secured Obligations to be due and payable as
permitted by Section 12.2 and although such Secured Obligations shall
be contingent or unmatured.
(b) If any Lender shall obtain payment of any principal of or interest on
any Revolving Credit Loans made by it or on any other Secured
Obligation owing to such Lender through the exercise of any right of
set-off, banker's lien or counterclaim or similar right or otherwise,
it shall promptly so notify the Agent (which shall promptly notify the
other Lenders). If, as a result of such payment, such Lender shall
have received a greater percentage of the principal of or interest on
any Revolving Credit Loans than such Lender's Commitment Percentage
thereof, then it shall, at the request of such other Lender or Lenders,
promptly purchase from such other Lender or Lenders participations in
(or, if and to the extent specified by such first Lender, direct
interests in) the principal of or interest on any Revolving Credit
Loans, as the case may be, owing to such other Lenders in such amounts,
and make such other adjustments from time to time as shall be
equitable, to the end that such first Lender and such other Lender or
Lenders (such first Lender and such other Lender or Lenders being
collectively referred to as the "Sharing Lenders") shall share the
benefit of such excess payment (net of any expenses which may be
incurred by such first Lender in obtaining or preserving such excess
payment) ratably in accordance with the unpaid amounts of such
obligations owing to each of the Sharing Lenders and their respective
Commitment Percentages of the Revolving Credit Facility. To such end
all the Sharing Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored.
(c) Each Borrower agrees that any Lender so purchasing a participation in
obligations hereunder of such Borrower to another Lender or other
Lenders may exercise any and all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as
fully as if such first Lender were a direct holder of obligations of
such Borrower in the amount of such participation. Nothing contained
herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or
obligation of such Borrower.
(d) If under any applicable bankruptcy, insolvency or other similar law,
any Lender receives a secured claim in lieu of a set-off to which
Section 15.4(b) hereof applies, such Lender shall to the extent
practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this
Section 15.4 to share in the benefits of any recovery on such secured
claim.
SECTION 15.5 Litigation. EACH BORROWER, THE AGENT AND EACH LENDER HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST ANY BORROWER, THE AGENT AND SUCH LENDER ARISING OUT OF
THIS AGREEMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY
OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN ANY BORROWER AND THE AGENT OR ANY
LENDER OF ANY KIND OR NATURE. EACH BORROWER, THE AGENT AND THE LENDERS HEREBY
AGREE THAT THE FEDERAL COURT OF THE WESTERN DISTRICT OF NORTH CAROLINA SHALL
HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN ANY BORROWER AND THE AGENT OR SUCH LENDER, PERTAINING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING
THEREFROM. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS, HEREBY
WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR
PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH SUMMONS AND COMPLAINT
OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH BORROWER AT THE ADDRESS OF SUCH BORROWER SET FORTH IN SECTION
15.1. SHOULD SUCH BORROWER FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT,
PROCESS OR PAPERS SO SERVED WITHIN THIRTY (30) DAYS AFTER THE RECEIPT THEREOF
(AS THE TERM RECEIPT IS DEFINED IN SECTION 15.1 HEREOF), IT SHALL BE DEEMED IN
DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE RENDERED AGAINST IT AS DEMANDED OR
PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE NONEXCLUSIVE
CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.
SECTION 15.6 Reserved.
SECTION 15.7 Reversal of Payments. The Agent and each Lender shall have
the continuing and exclusive right to apply, reverse and re-apply any and all
payments to any portion of the Secured Obligations in a manner consistent with
the terms of this Agreement. To the extent a Borrower makes a payment or
payments to the Agent, for the account of the Lenders, or any Lender receives
any payment or proceeds of the Collateral for such Borrower's benefit, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of
such payment or proceeds received, the Secured Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and
effect, as if such payment or proceeds had not been received by the Agent or
such Lender, and shall constitute an Advance.
SECTION 15.8 Injunctive Relief. Each Borrower recognizes that, in the
event such Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy at law may prove to
be inadequate relief to the Agent and the Lenders; therefore, such Borrower
agrees that if any Event of Default shall have occurred and be continuing, the
Agent and the Lenders, if the Agent or any Lender so requests, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damages.
SECTION 15.9 Amendments.
(a) Except as set forth in subsection (b) below, any term, covenant,
agreement or condition of this Agreement or any of the Loan Documents
may be amended or waived, and any departure therefrom may be consented
to by the Required Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Required Lenders and, in the case
of an amendment (other than an amendment described in Section 15.9(d)),
by the Borrowers, and in any such event, the failure to observe,
perform or discharge any such term, covenant, agreement or condition
(whether such amendment is executed or such waiver or consent is given
before or after such failure) shall not be construed as a breach of
such term, covenant, agreement or condition or as a Default or an Event
of Default. Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given. In the
event that any such waiver or amendment is requested by the Borrowers,
the Agent and the Lenders may require and charge a fee in connection
therewith and consideration thereof in such amount as shall be
determined by the Agent and the Required Lenders in their reasonable
discretion.
(b) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall affect the amount or extend the
time of the obligation of the Lenders to make Advances or
extend the originally scheduled time or times of payment of
the principal of any Revolving Credit Loans or alter the time
or times of payment of interest on any Revolving Credit Loans,
the Revolving Credit Facility Amount, the Commitment or
Commitment Percentage of any Lender or the rate of interest
thereon or the amount of any fee payable hereunder or permit
any subordination of the principal or interest on such loans,
permit the subordination of the Security Interests in any
material Collateral or amend the provisions of Article 12 or
of this Section 15.9(b),
(ii) no Collateral shall be released by the Agent other than as specifically
permitted in this Agreement,
(iii) except to the extent expressly provided herein, the definition
"Borrowing Base" shall not be amended, and
(iv) neither the Agent nor any Lender shall consent to any amendment to or
waiver of the amortization, deferral or subordination
provisions of any instrument or agreement evidencing or
relating to obligations of any Borrower that are expressly
subordinate to any of the Secured Obligations if such
amendment or waiver would be adverse to the Lenders in their
capacities as Lenders hereunder;
provided, however, that anything herein to the contrary notwithstanding,
Required Lenders shall have the right to waive any Default or Event of Default
and the consequences hereunder of such Default or Event of Default, provided
that such Default or Event of Default does not arise out of a breach of, or
failure to perform or observe any term, covenant or condition of this Agreement
or any other Loan Document (other than the provisions of Article 12 of this
Agreement), the amendment of which requires the unanimous consent of the
Lenders. The Required Lenders shall have the right, with respect to any Default
or Event of Default that may be waived by them, to enter into an agreement with
the Borrowers providing for the forbearance from the exercise of any remedies
provided hereunder or under the other Loan Documents without waiving any
Default or Event of Default.
(c) The making of Advances hereunder by the Lenders during the existence of
a Default or Event of Default shall not be deemed to constitute a
waiver of such Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or the other Loan
Documents to the contrary, no consent, written or otherwise, of the
Borrowers shall be necessary or required in connection with any
amendment to Article 14 (except to the extent provided in Section 14.9)
or Section 4.7; provided, however, Agent shall provide copies of such
amendment to the Borrowers.
SECTION 15.10 Performance of each Borrower's Duties. Each Borrower's
obligations under this Agreement and each of the Loan Documents shall be
performed by such Borrower at its own cost and expense. Upon the occurrence of
a Default or Event of Default hereunder or under any of the Loan Documents, if
a Borrower shall fail to do any act or thing which they have covenanted to do
under this Agreement or any of the Loan Documents, the Agent, on behalf of the
Lenders, may (but shall not be obligated to) do the same or cause it to be
done, at such Borrower's cost and expense, either in the name of the Agent or
the Lenders or in the name and on behalf of such Borrower, and such Borrower
hereby irrevocably authorizes the Agent so to act.
SECTION 15.11 Indemnification. Each Borrower agrees to reimburse the Agent
and the Lenders for all costs and expenses, including, without limitation,
reasonable counsel fees and disbursements, incurred, and to indemnify and hold
the Agent and the Lenders harmless from and against all losses suffered by, the
Agent or any Lender in connection with (i) the exercise by the Agent or any
Lender of any right or remedy granted to it under any of the Transaction
Documents, (ii) any claim, and the prosecution or defense thereof, arising out
of or in any way connected with any of the Transaction Documents, and (iii) the
collection or enforcement of the Secured Obligations or any of them, in each
case, other than such costs, expenses and liabilities solely and directly from
the Agent's or any Lender's gross negligence or willful misconduct.
SECTION 15.12 All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to the Agent and the Lenders and any Persons
designated by the Agent or the Lenders pursuant to any provisions of this
Agreement or any of the Transaction Documents shall be deemed coupled with an
interest and shall be irrevocable so long as any of the Secured Obligations
remain unpaid or unsatisfied.
SECTION 15.13 Survival. Notwithstanding any termination of this Agreement,
(a) until all Secured Obligations have been irrevocably paid in full or
otherwise satisfied, the Agent, for the benefit of the Lenders, shall retain
its Security Interest and shall retain all rights under this Agreement and each
of the Security Documents with respect to such Collateral as fully as though
this Agreement had not been terminated, (b) the indemnities to which the Agent
and the Lenders are entitled under the provisions of this Article 15 and any
other provision of this Agreement and the Loan Documents shall continue in full
force and effect and shall protect the Agent and the Lenders against events
arising after such termination as well as before, and (c) in connection with
the termination of this Agreement and the release and termination of the
Security Interests, the Agent, on behalf of itself as agent and the Lenders,
may require such assurances and indemnities as it shall reasonably deem
necessary or appropriate to protect the Agent and the Lenders against loss on
account of such release and termination, including, without limitation, with
respect to credits previously applied to the Secured Obligations that may
subsequently be reversed or revoked.
SECTION 15.14 Severability of Provisions. Any provision of this Agreement
or any Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remainder of such
provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 15.15 Governing Law. This Agreement and the Notes shall be
construed in accordance with and governed by the law of the State of North
Carolina.
SECTION 15.16 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
SECTION 15.17 Reproduction of Documents. This Agreement, each of the Loan
Documents and all documents relating thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Agent or any Lender, and (c) financial statements,
certificates and other information previously or hereafter furnished to the
Agent or any Lender, may be reproduced by the Agent or such Lender by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and such Person may destroy any original document so
produced. Each party hereto stipulates that, to the extent permitted by
Applicable Law, any such reproduction shall be as admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original shall be in existence and whether or not such reproduction was
made by the Agent or such Lender in the regular course of business), and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 15.18 Term of Agreement. This Agreement shall remain in effect from
the Agreement Date through the Termination Date and thereafter until all
Secured Obligations shall have been irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
SECTION 15.19 Confidentiality.
(a) Provided the Borrowers have given their permission, the Agent and each
Lender may issue and disseminate to the public general information
describing the credit accommodation entered into pursuant to this
Agreement, including the name and address of the Borrowers and a
general description of the Borrower's business and may use the
Borrower's name in advertising and other promotional material.
(b) Subject to the provisions of the following sentence, each Lender
severally agrees to take normal and reasonable precautions and exercise
due care to maintain the confidentiality of all information identified
as "confidential" or "secret" by each Borrower and provided to the
Agent or such Lender by or on behalf of such Borrower, under this
Agreement or any other Loan Document, except to the extent that such
information (i) was or becomes generally available to the public other
than as a result of disclosure by the Agent or such Lender, or (ii) was
or becomes available on a nonconfidential basis from a source other
than the Borrowers, provided that such source is not bound by a
confidentiality agreement with the Borrowers known to the Agent or such
Lender; provided, however, that the Agent and any Lender may disclose
such information (A) at the request or pursuant to any requirement of
any Governmental Authority to which the Agent or such Lender is subject
or in connection with an examination of the Agent or such Lender by any
such Governmental Authority; (B) pursuant to subpoena or other court
process; (C) when required to do so in accordance with the provisions
of any Applicable Law; (D) to the extent reasonably required in
connection with any litigation or proceeding (including, but not
limited to, any bankruptcy proceeding) to which the Agent, any Lender
or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (F) to the Agent's or such
Lender's independent auditors, accountants, attorneys and other
professional advisors; (G) to any prospective Participant or Assignee
under any Assignment and Acceptance, actual or potential, provided that
such prospective Participant or Assignee agrees to keep such
information confidential to the same extent required of the Agent and
the Lenders hereunder; and (H) to its Affiliates.
SECTION 15.20 Pre-Petition Loan Agreement. The Borrowers hereby agree that
(a) this Agreement is separate and distinct from the Pre-Petition Loan
Agreement and (ii) the Pre-Petition Loan Agreement is in full force and effect
against the Borrowers. Borrowers further agree that by entering into this
Agreement, the Agent and the Lenders do not waive any "Default" or "Event of
Default" that may exist under the Pre-Petition Loan Agreement.
SECTION 1.1
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers in several
counterparts all as of the day and year first written above.
BORROWERS:
TROPICAL SPORTSWEAR INT'L CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President Corporate Administration and Secretary
TROPICAL SPORTSWEAR COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Secretary
SAVANE INTERNATIONAL CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President Corporate Administration and Secretary
APPAREL NETWORK CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Secretary
TSI BRANDS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Secretary
TSIL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Secretary
AGENT:
THE CIT GROUP/COMMERCIAL
SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
LENDERS:
Commitment Amount: $33,333,333.33
THE CIT GROUP/COMMERCIAL
SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
Commitment Amount: $16,666,666.67
FLEET CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President