AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
by and among
▇▇▇▇▇▇ CORPORATION
as Borrower
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders
and
THE CIT GROUP/COMMERCIAL SERVICES, INC.
as Agent
Dated: May 11, 1999
TABLE OF CONTENTS
Page
RECITALS.............................................................................................. 1
SECTION 1. DEFINITIONS..........................................................................2
SECTION 2. ACKNOWLEDGEMENT AND RESTATEMENT.....................................................21
Section 2.1 Existing Obligations.......................................................21
Section 2.2 Acknowledgement of Security Interests......................................21
Section 2.3 Acknowledgement of Existing Agreement......................................22
Section 2.4 Restatement................................................................22
Section 2.5 Release....................................................................22
SECTION 3. CREDIT FACILITY.....................................................................23
Section 3.1 Loans......................................................................23
Section 3.2 Letter of Credit Accommodations............................................25
Section 3.3 Reserves...................................................................27
Section 3.4 Commitments................................................................28
Section 3.5 Mandatory Prepayments......................................................28
Section 3.6 Interest...................................................................29
Section 3.7 Unused Line Fee............................................................30
Section 3.8 Collateral Management Fee..................................................31
Section 3.9 Agency Fee.................................................................31
Section 3.10 Changes in Laws and Increased Costs of Revolving
Loans......................................................................31
Section 3.11 Authorization to Make Loans and Provide Letter
of Credit Accommodations...................................................32
Section 3.12 Settlement Procedures......................................................32
Section 3.13 Use of Proceeds............................................................34
SECTION 4. CONDITIONS PRECEDENT TO LOANS AND OTHER
FINANCIAL ACCOMMODATIONS...................................................35
Section 4.1 Conditions Precedent to Initial Loans and Letter of
Credit Accommodations......................................................35
Section 4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations.............................................................40
SECTION 5. COLLATERAL..........................................................................41
Section 5.1 Security Interests in Borrower's Assets....................................41
Section 5.2 Security Interests in Guarantors' Assets...................................42
SECTION 6. REPRESENTATIONS AND WARRANTIES......................................................43
Section 6.1 Organization and Qualification.............................................43
Section 6.2 Corporate Power and Authority..............................................44
Section 6.3 Capitalization.............................................................44
Section 6.4 Compliance with Other Agreements and Applicable Law........................45
Section 6.5 Governmental Approval......................................................46
Section 6.6 Chief Executive Office; Collateral Locations...............................46
Section 6.7 Priority of Liens; Title to Properties.....................................46
Section 6.8 Tax Returns................................................................46
Section 6.9 Litigation.................................................................47
Section 6.10 Intellectual Property......................................................47
Section 6.11 Accounts...................................................................47
Section 6.12 Employee Benefits..........................................................48
Section 6.13 Environmental Compliance...................................................49
Section 6.14 Bank Accounts..............................................................50
Section 6.15 Investment Company.........................................................50
Section 6.16 Regulation G; Regulation U; Securities Exchange Act of
1934.......................................................................50
Section 6.17 No Material Adverse Change.................................................50
Section 6.18 Financial Statements.......................................................50
Section 6.19 Disclosure.................................................................51
Section 6.20 Labor Disputes.............................................................51
Section 6.21 Corporate Name; Prior Transactions.........................................52
Section 6.22 Material Contracts.........................................................52
Section 6.23 Year 2000 Compliance.......................................................52
SECTION 7. ADDITIONAL COVENANTS................................................................52
Section 7.1 Tradenames.................................................................52
Section 7.2 New Collateral Locations. .................................................53
Section 7.3 Subsidiaries...............................................................53
Section 7.4 Indebtedness...............................................................54
Section 7.5 Limitation on Liens........................................................56
Section 7.6 Loans, Investments, Guaranties, Etc........................................57
Section 7.7 Transactions with Affiliates...............................................58
Section 7.8 Restricted Payments........................................................58
Section 7.9 Maintenance of Existence...................................................58
Section 7.10 Sale and Leasebacks........................................................58
Section 7.11 Sale of Assets, Consolidation, Merger,
Dissolution, Etc...........................................................59
Section 7.12 Compliance with Laws, Regulations, Etc.....................................59
Section 7.13 Payment of Taxes and Claims................................................60
Section 7.14 Properties in Good Condition; Covenants as to
Inventory, Real Property and Equipment.....................................60
Section 7.15 Appraisals.................................................................61
Section 7.16 Insurance..................................................................61
Section 7.17 Compliance with ERISA......................................................62
Section 7.18 Additional Bank Accounts...................................................63
Section 7.19 Notice of Default..........................................................63
Section 7.20 Financial Statements and Other Information.................................63
Section 7.21 Consolidated Tangible Net Worth............................................67
Section 7.22 Maximum Pre-Tax Loss/Minimum Pre-Tax Income................................67
Section 7.23 Minimum Interest Coverage Ratio............................................68
Section 7.24 Capital Expenditures.......................................................68
Section 7.25 After Acquired Real Property...............................................68
Section 7.26 Further Assurances.........................................................69
SECTION 8. EVENTS OF DEFAULT AND REMEDIES......................................................70
Section 8.1 Events of Default..........................................................70
Section 8.2 Remedies...................................................................72
SECTION 9. COLLECTION AND ADMINISTRATION.......................................................75
Section 9.1 Collections; Management of Collateral......................................75
Section 9.2 Payments...................................................................76
Section 9.3 Sharing of Payments, Etc...................................................77
Section 9.4 Borrower's Loan Account....................................................78
Section 9.5 Statements.................................................................78
Section 9.6 Right of Inspection; Access................................................79
Section 9.7 Accounts Documentation.....................................................79
Section 9.8 Specific Powers............................................................79
SECTION 10. EFFECTIVE DATE; TERMINATION; COSTS.........................................80
Section 10.1 Term.......................................................................80
Section 10.2 Expenses and Additional Fees...............................................82
Section 10.3 Survival of Agreement......................................................83
Section 10.4 No Waiver; Cumulative Remedies.............................................84
Section 10.5 Notices....................................................................84
Section 10.6 Entire Agreement...........................................................84
Section 10.7 Confidentiality............................................................84
Section 10.8 Partial Invalidity.........................................................85
Section 10.9 Headings...................................................................85
Section 10.10 [Intentionally Omitted]....................................................85
Section 10.11 Counterparts...............................................................85
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW...............86
Section 11.1......Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver..........................................................86
Section 11.2 Waiver of Notices..........................................................87
Section 11.3 Amendments and Waivers.....................................................87
Section 11.4 Waiver of Counterclaims....................................................89
Section 11.5 Indemnification............................................................89
Section 11.6 Assignments; Participations................................................90
Section 11.7 Successors and Assigns.....................................................92
SECTION 12. THE AGENT..................................................................92
Section 12.1 Appointment................................................................92
Section 12.2 Nature of Duties...........................................................93
Section 12.3 Delegation of Duties.......................................................94
Section 12.4 Rights, Exculpation, Etc...................................................94
Section 12.5 Reliance...................................................................94
Section 12.6 Notice of Event of Default.................................................95
Section 12.7 Credit Decision............................................................96
Section 12.8 Indemnification............................................................96
Section 12.9 CIT in its Individual Capacity.............................................96
Section 12.10 Successor Agent............................................................97
Section 12.11 Withholding Tax............................................................97
Section 12.12 Collateral Matters.........................................................99
Section 12.13 Agency for Perfection.....................................................100
Section 12.14 [Intentionally Omitted]...................................................100
Section 12.15 Concerning the Collateral and the Related Financing
Agreements................................................................100
Section 12.16 Field Audit and Examination Reports; Disclaimer by
Lenders...................................................................101
====================================================================================================================
EXHIBITS
==================================== ===============================================================================
Exhibit A Form of Assignment and Acceptance
==================================== ===============================================================================
Exhibit B Form of Revolving Credit Note
==================================== ===============================================================================
Exhibit C Form of Amended and Restated Letter of Credit
==================================== ===============================================================================
Exhibit D Form of Amended and Restated Trademark Collateral Assignment and Security
Agreement
==================================== ===============================================================================
Exhibit E Form of Special Power of Attorney [Borrower]
==================================== ===============================================================================
Exhibit F Form of Amended Restated Collateral Assignment of Licenses
==================================== ===============================================================================
Exhibit G Form of Inventory Confirmation
==================================== ===============================================================================
Exhibit H Form of Amended and Restated Guarantee
==================================== ===============================================================================
Exhibit I-(1) Form of Amended and Restated General Security Agreement
==================================== ===============================================================================
Exhibit I-(2) Form of Amended and Restated Hypothec
==================================== ===============================================================================
Exhibit J Form of Amended and Restated Trademark Collateral Assignment and Security
Agreement [Guarantor]
==================================== ===============================================================================
Exhibit K Form of Special Power of Attorney [Guarantor]
==================================== ===============================================================================
Exhibit L Form of Amended and Restated Collateral Assignment of Licenses [Guarantor]
==================================== ===============================================================================
Exhibit M Form of UCC-1 Financing Statement
==================================== ===============================================================================
Exhibit N Consent of Guarantors
====================================================================================================================
SCHEDULES
==================================== ===============================================================================
Schedule 1.37 List of Existing Letters of Credit
==================================== ===============================================================================
Schedule 1.61 List of Real Property Subject to Existing Mortgages
==================================== ===============================================================================
Schedule 1.73 ▇▇▇▇▇ ▇▇▇▇▇ Licenses
==================================== ===============================================================================
Schedule 3.2(b) Letter of Credit Fees
==================================== ===============================================================================
Schedule 6.1(a) Jurisdictions of Qualification
==================================== ===============================================================================
Schedule 6.1(b) Subsidiaries
====================================================================================================================
SCHEDULES (continued)
==================================== ===============================================================================
Schedule 6.4(c) Permits
==================================== ===============================================================================
Schedule 6.6 Chief Executive Office and Locations of Collateral
==================================== ===============================================================================
Schedule 6.7 Existing Liens
==================================== ===============================================================================
Schedule 6.8 Tax Returns
==================================== ===============================================================================
Schedule 6.9 Pending Litigation
==================================== ===============================================================================
Schedule 6.12 Employee Benefit Matters
==================================== ===============================================================================
Schedule 6.13 Environmental Claims and Proceedings
==================================== ===============================================================================
Schedule 6.14 Bank Accounts of Borrower and its Subsidiaries
==================================== ===============================================================================
Schedule 6.20 Collective Bargaining Agreements
==================================== ===============================================================================
Schedule 6.21 Corporate Name; Tradenames; Prior Transactions
==================================== ===============================================================================
Schedule 6.22 Material Contract Defaults
==================================== ===============================================================================
Schedule 7.4 Existing Indebtedness
==================================== ===============================================================================
Schedule 7.6 Loans, Investments and Guarantees
==================================== ===============================================================================
Schedule 7.20(a)(ix) Collateral and Financial Reports
==================================== ===============================================================================
Schedule 8.1(g) Certain ▇▇▇▇▇ ▇▇▇▇▇ Licenses
==================================== ===============================================================================
AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT dated
May 11, 1999 is entered into by and among ▇▇▇▇▇▇ CORPORATION, a Delaware
corporation ("Borrower" as hereinafter further defined), the financial
institutions from time to time parties hereto as lenders, whether by execution
of this Agreement or an Assignment and Acceptance (individually, a "Lender" and
collectively, the "Lenders" as hereinafter further defined) and THE CIT
GROUP/COMMERCIAL SERVICES, INC., a New York corporation ("CIT" as hereinafter
further defined), in its capacity as administrative agent and collateral agent
for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, CIT and Borrower entered into a Revolving Credit, Factoring
and Security Agreement dated September 20, 1993 (as amended, modified or
supplemented from time to time, the "Existing Agreement") pursuant to which CIT
has made loans and provided other financial accommodations to Borrower; and
WHEREAS, on December 29, 1998 Borrower filed a voluntary petition for
relief under chapter 11 of the Bankruptcy Code (as hereinafter defined) with the
United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"); and
WHEREAS, pursuant to an Interim Order and a Final Order of the
Bankruptcy Court, dated December 29, 1998 and January 19, 1999, respectively,
Authorizing Interim and Post-Petition Financing, Granting Senior Liens and
Priority Administrative Expense, Modifying the Automatic Stay, and Authorizing
Debtor to Enter into Agreements with The CIT Group/Commercial Services, Inc. and
Authorizing the Assumption of the Existing Financing Agreements with Debtor, CIT
and Borrower entered into debtor-in-possession financing arrangements under the
Existing Agreement pursuant to which CIT continued to make loans and provide
financial accommodations to Borrower as Debtor and Debtor-in-Possession; and
WHEREAS, Borrower's First Amended Chapter 11 Plan of Reorganization
dated February 3, 1999 (the "Plan") was confirmed by order of the Bankruptcy
Court entered on April 16, 1999; and
WHEREAS, in connection with implementation of the Plan and the
satisfaction of Borrower's working capital requirements, Borrower has requested
CIT to continue to make financial accommodations to Borrower and to extend,
amend and restate the Existing Agreement pursuant to which Agent on behalf of
Lenders will make loans and provide other financial accommodations to Borrower
to fund the Plan and for working capital; and
WHEREAS, CIT is willing to extend, amend and restate the Existing
Agreement in its entirety and Lenders are willing to make loans and provide
other financial accommodations to Borrower on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
For the purposes of this Agreement and the other Financing Agreements,
the following terms shall have the respective meanings given to them below:
1.1 "Account Debtor" shall mean each debtor or obligor in any way
obligated on or in connection with any Account.
1.2 "Accounts" shall mean all present and future rights of Borrower to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-hundredth (1/100) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
1.4 "Affiliate" shall mean, with respect to a specified Person, a
partnership, corporation or any other person which directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with such Person, and without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds ten (10%)
percent or more of any class of voting securities of such Person or other equity
interests in such Person and (b) any Person of which such Person beneficially
owns or holds ten (10%) percent or more of any class of voting securities or in
which such Person beneficially owns or holds ten (10%) percent or more of the
equity interests. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
1.5 "Agent Advances" shall have the meaning set forth in Section 12.12
hereof.
--------------
1.6 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to the Agent in connection with an assignment
of a Lender's interest hereunder in accordance with the provisions of Section
11.6 below.
1.7 "Bankruptcy Code" shall mean title 11 of the United States Code as
enacted in 1978, as the same may have heretofore been or may hereafter be
amended, recodified, modified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.8 "Bankruptcy Court" shall have the meaning set forth in the recitals
hereto.
1.9 "Blocked Accounts" shall have the meaning set forth in Section 9.1
hereof.
----------------
1.10 "Board" shall mean the Board of Governors of the Federal Reserve
System or any successor thereto.
1.11 "Borrower" shall mean ▇▇▇▇▇▇ Corporation, a Delaware corporation,
and its successors and assigns.
1.12 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York, and a day on which the Lenders and Agent are
open for the transaction of business.
1.13 "Capital Expenditures" shall mean, for any Person, all
expenditures for any fixed assets or improvements, or for replacements,
substitutions or additions thereto, of such Person that under GAAP are
capitalized and not expenses in the year in which they are incurred.
1.14 "Capitalized Lease Obligations" shall mean any obligation to pay
rent or other amounts under a lease of (or other agreement conveying the right
to use) any property (whether real, personal or mixed) that is required to be
classified and accounted for as a capital lease obligation under GAAP, and, for
the purposes of this Agreement, the amount of such obligation at any date shall
be the capitalized amount thereof at such date, determined in accordance with
GAAP.
1.15 "Capital Stock" shall mean any and all shares, interests,
participations, or other equivalents (however designated) of corporate stock,
partnership interests or limited liability company interests and any options or
warrants with respect to any of the foregoing.
1.16 "Cash Equivalents" shall mean (a) marketable direct obligations
issued by, 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 two (2) years from the date of
acquisition thereof; (b) marketable direct obligations issued by any State of
the United States of America or any political subdivision of any such State or
any public instrumentality thereof maturing within two (2) years from the date
of acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc. ("S&P") or ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's"); (c) commercial paper maturing no more than two (2)
years from the date of creation thereof and, at the time of acquisition, having
a rating of at least A-1 from S&P or at least P-1 from Moody's; (d) certificates
of deposit or bankers' acceptances maturing within two (2) years from the date
of acquisition 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 or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $500,000,000; (e) repurchase
obligations with a term of not more than seven (7) days for underlying
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (d) above; and (f) investments in
money market funds which invest substantially all their assets in securities of
the types described in clauses (a) through (e) above.
1.17 "CIT" shall mean The CIT Group/Commercial Services, Inc., a New
York corporation, in its individual capacity, and its successors and assigns.
1.18 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.19 "Collateral" shall have the meaning set forth in Section 5 hereof.
----------
1.20 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Agent, from any lessor of premises to
Borrower, or any other person to whom any Inventory is consigned or who has
custody, control or possession of any Inventory or Equipment or is otherwise the
owner or operator of any premises on which any Inventory or Equipment is
located, pursuant to which such lessor, consignee or other person, inter alia,
acknowledges the first priority security interest of Agent (for itself and the
ratable benefit of Lenders) in such Inventory or Equipment, agrees to waive any
and all claims such lessor, consignee or other person may, at any time, have
against such Inventory or Equipment, whether for processing, storage or
otherwise, and agrees to permit Agent access to, and the right to remain on, the
premises of such lessor, consignee or other person so as to exercise Agent's
rights and remedies and otherwise deal with the Collateral.
1.21 "Commitment" shall have the meaning set forth in Section 3.4
hereof.
----------
1.22 "Commitment Percentage" shall mean, as to each Lender, the
percentage of the Maximum Credit provided for hereunder represented by such
Lender's Commitment. The Commitment Percentage of each Lender signing this
Agreement is set forth on the signature pages hereto below each Lender's
respective signature.
1.23 "Confirmation Order" shall have the meaning set forth in Section
4.1 hereof.
------------------
1.24 "Consolidated Tangible Net Worth" shall mean, as of any date,
stockholders' equity less the aggregate book value of intangible assets, all
determined on a consolidated basis for Borrower and its Subsidiaries in
accordance with GAAP.
1.25 "Credit Facility" shall mean, collectively, the secured Loans and
Letter of Credit Accommodations provided for hereunder and under the other
Financing Agreements.
1.26 "Effective Date" shall have the meaning set forth in the Plan.
1.27 "Eligible Accounts" shall mean each of those Accounts that, at any
time when eligibility is to be determined, meet all of the following
requirements:
(a) The Account complies in all material respects with all
representations, warranties, covenants and other applicable provisions of this
Agreement and the other Financing Agreements;
(b) The Account is due and payable not more than sixty (60)
days from the date of the invoice evidencing such Account and is not more than
sixty (60) days past due, or the Account is due and payable not more than ninety
(90) days from the date of the invoices evidencing such Account and is not more
than thirty (30) days past due;
(c) In the case of an Account with respect to which Borrower
has given terms of sale beyond 90 days from the date of the invoice, Borrower
has obtained the prior written consent of Agent to such terms of sale and such
Account is not more than 30 days past due;
(d) The Account is subject to the first perfected security
interest of Agent and is not subject to any lien or security interest except as
permitted by this Agreement;
(e) The goods, the sale of which gave rise to the Account,
were at the time of sale not subject to any lien, except as permitted by this
Agreement;
(f) The Account does not arise out of a guaranteed sale, sale
or return, sale on approval, consignment sale or other kind of sale under which
payment by the Account Debtor may be conditional or contingent;
(g) The Account does not arise from the sale to an Affiliate
of the Borrower;
(h) The Account arises out of a sale to an Account Debtor
whose chief executive office or principal place of business is located in the
United States;
(i) The Account Debtor obligated on the Account is not the
United States, a state or a political subdivision thereof or any department,
agency or instrumentality of the United States, any state or political
subdivision thereof, unless there has been compliance with the Assignment of
Claims Act of 1940, as amended (31 U.S.C. ss. 3727, et seq.) or any similar
state or local law, if applicable;
(j) There is no contra relationship, setoff, counterclaim or
dispute existing with respect to the invoice evidencing such Account and there
are no other facts existing which would reasonably be expected to materially
impair or delay the collectibility of all or any portion thereof;
(k) Borrower has delivered to Agent such documents as Agent
may have requested pursuant to Section 9.7 hereof in connection with the Account
and Agent shall have received verification of such Account, reasonably
satisfactory to it, if sent to the Account Debtor obligated on such Account
pursuant to Section 9.8 hereof;
(l) Except for Accounts arising from post-petition shipments
to debtors-in-possession for which CIT is generally approving credit, the
Account Debtor obligated on the Account has not filed a petition for relief
under the Bankruptcy Code or any other bankruptcy or insolvency law and has not
made an assignment for the benefit of creditors, no petition or other
application for relief under the Bankruptcy Code or any other bankruptcy or
insolvency law has been filed against the Account Debtor, the Account Debtor has
not terminated or suspended its business operations in whole or material part,
the Account Debtor has not suspended payment of its debts generally, has not
become insolvent, and has not suffered a receiver or a trustee to be appointed
for any of its assets or affairs;
(m) The Account is owing by a single Account Debtor (or a
single group of affiliated Account Debtors) and less than fifty (50%) percent of
the balance of all Accounts then owing by such Account Debtor (or affiliated
Account Debtors) remains unpaid sixty (60) or more days after the due date
thereof;
(n) The Account is not evidenced by chattel paper or
instruments;
(o) The Account, together with all other Accounts owing from
the same Account Debtor does not represent more than twenty-five (25%) percent
of all otherwise Eligible Accounts except that Accounts owing from each of
Federated Department Stores, Inc., May Department Stores, Inc., The Marmaxx
Group or ▇▇▇▇▇▇▇ Department Stores, Inc., respectively, (or any of their
respective Affiliates) do not each represent more than fifty percent (50%) of
all otherwise Eligible Accounts. (Accounts excluded from Eligible Account solely
by reason of this Section shall nevertheless be considered Eligible Accounts to
the extent of the amount of such Accounts which does not exceed fifty percent
(50%) of all otherwise Eligible Accounts owing from each of Federated Department
Stores, Inc., May Department Stores, Inc., The Marmaxx Group or ▇▇▇▇▇▇▇
Department Stores, Inc. (or any of their respective Affiliates) or from any
other Account Debtors twenty-five (25%) percent of all otherwise Eligible
Accounts); and
(p) If the Account is an Account with respect to which payment
is due more than ninety (90) days from the date of the invoice evidencing such
Account, such Account together with all other Accounts with respect to which
payment is due more than ninety (90) days from the date of the invoices
evidencing such Accounts, does not represent more than twenty-five (25%) percent
of all otherwise Eligible Accounts. (Accounts excluded from Eligible Accounts
solely by reason of this Section shall nevertheless be considered Eligible
Accounts to the extent of the amount of such Accounts which does not exceed
twenty-five (25%) percent of all such Accounts.)
Any account that is not an Eligible Account at any time shall
nevertheless remain at all times part of the Collateral.
1.28 "Eligible Inventory" shall mean that Inventory consisting of first
quality finished goods held for resale in the ordinary course of business of
Borrower and domestic raw materials (including linings) and work-in-process for:
(i) ▇▇▇▇▇ ▇▇▇▇▇ Inventory; (ii) Private Line Inventory; (iii) neckwear and
private label belts not sold under the ▇▇▇▇▇ ▇▇▇▇▇ name; and (iv) through, but
not after August 31, 1999, Borrowers Texas Apparel Division and Menswear
Division (excluding, in each case, such raw materials (including linings) and
work-in-process held for more than six (6) months and excluding trim, resin,
supplies and samples) that, at any time when eligibility is to be determined,
meets all of the following requirements:
(a) Inventory that complies in all material respects with all
representations, warranties, covenants and other applicable provisions of this
Agreement and the other Financing Agreements;
(b) Inventory that is subject to the first perfected security
interest of Agent and no other liens or security interests except as permitted
by this Agreement;
(c) Inventory that is merchantable and fit for sale;
(d) Inventory that is not consigned to Borrower;
(e) Inventory that meets the following criteria (and all other
requirements for Eligible Inventory):
Made for Sale
In Season Indicated Eligibility
Spring Eligible through the last
day of the September fiscal
month of the year for which
it was produced; ineligible
thereafter.
Transition/Summer Eligible through the last
day of the December fiscal
month of the year for which
it was produced; ineligible
thereafter.
Fall Eligible through the last
day of the March fiscal
month of the year
subsequent to the year for
which produced; ineligible
thereafter.
Holiday Eligible through the last
day of the June fiscal
month of the year
subsequent to the year for
which produced; ineligible
thereafter.
Notwithstanding the foregoing all childrenswear inventory is
ineligible. All Non-▇▇▇▇▇ ▇▇▇▇▇ Inventory/Non-Private Line is
ineligible after 8/31/99.
(f) Inventory that does not consist of packaging or shipping
materials, except to the extent that packaging is included in finished goods;
(g) Inventory that meets all standards imposed by any
Governmental Authority having regulatory authority over such Inventory, its use
or sale;
(h) Inventory that does not consist of ▇▇▇▇ and hold goods
and/or defective goods; and
(i) Inventory located at premises in the United States that
are owned or leased and operated by Borrower; provided; however, any Inventory
which would otherwise be Eligible Inventory but for its failure to meet the
requirements of clause (i) of this Section, as a result of its failure to be
located at premises owned or leased and operated by Borrower, shall nevertheless
be considered Eligible Inventory if Agent shall have received a Collateral
Access Agreement from the holder of such Inventory or the owner and/or operator
of such location, as the case may be.
Any Inventory that is not Eligible Inventory shall nevertheless be and remain
at all times part of the Collateral.
1.29 "Environmental Laws" shall mean all Federal, State and local laws,
rules, regulations, ordinances, and consent decrees relating to health, safety,
hazardous substances, pollution and environmental matters, as now or at any time
hereafter in effect, applicable to the business and facilities of Borrower and
its Subsidiaries (whether or not owned by it or any of them), including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contamination, chemicals, or hazardous, toxic or dangerous
substances, materials or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or hazardous or toxic substances, materials
or wastes. Such laws and regulations include, but are not limited to, the
Resource Conservation and Recovery Act of 1976, as amended; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended; the
Superfund Amendments and Reauthorization Act; the Water Pollution Control Act of
1972; the Solid Waste Disposal Act; the Insecticide, Fungicide and Rodenticide
Act; the Safe Drinking Water Act of 1974; the Toxic Substances Control Act, as
amended; the Clean Water Act, as amended; the Clean Air Act, as amended; the
Hazardous Materials Transportation Act, as amended; U.S. Department of
Transportation and Environmental Protection Agency regulations; and applicable
state counterparts to any of such laws and any common law or equitable doctrine
that may impose liability or obligations for injuries or damages due to the
presence of or exposure to any Hazardous Materials.
1.30 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment and fixtures, of every kind and description, wherever
located, including, without limitation, any and all machinery used in connection
with the manufacture, sale, exchange or lease of goods or rendition of services,
machinery, tooling, tools, telephone equipment, computers, computer hardware and
related computer equipment and accessories (including software and records),
vehicles, furniture, trade fixtures and fixtures, all attachments, components,
parts, accessions and property now or hereafter affixed thereto, installed
thereon or used in connection therewith, and all additions to and substitutions
and replacements thereof and all existing and future leasehold interests in
equipment and fixtures, wherever located, whether now owned or hereafter
acquired and all licenses and other rights of Borrower relating thereto, whether
in the possession and control of Borrower or in the possession and control of a
third person for the account of Borrower and all claims to the proceeds of
insurance thereon and all maintenance and warranty records relating thereto.
1.31 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.32 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.33 "Eurodollar Rate" shall mean with respect to each day during each
Interest Period pertaining to a Eurodollar Rate Loan, the rate of interest
published in The Wall Street Journal, Eastern Edition, two business days prior
to the first day of such Interest Period as the highest rate in the range of
rates quoted for one, two or three month "London Late Eurodollars". In the event
that The Wall Street Journal, Eastern Edition, is not published or such rate
does not appear in The Wall Street Journal, Eastern Edition, the "Eurodollar
Rate" shall be the rate determined by Agent to be the rate at which deposits in
United States dollars are offered by the Reference Bank to first class banks in
the interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its eurodollar loans are then being conducted
at approximately 11:00 a.m., New York City time, two Business Days prior to the
beginning of such Interest Period, in an amount approximately equal to the
principal amount of the Eurodollar Rate Loan to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
1.34 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.35 "Event of Default" shall have the meaning set forth in Section
8.1 hereof.
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1.36 "Existing Agreement" shall have the meaning set forth in the
recitals hereto.
1.37 "Existing Letters of Credit" shall mean, collectively, Letter of
Credit Accommodations arranged for by Agent for the benefit of Borrower or its
Subsidiaries under the Existing Agreement set forth on Schedule 1.37 hereto.
1.38 "Financing Agreements" shall mean, collectively, this Agreement,
together with all other agreements (including, without limitation, security
agreements and mortgages), documents and instruments now or at any time
hereafter executed and/or delivered by Borrower or any other person, with, to or
in favor of Agent or any Lender in connection herewith or related hereto, as
this Agreement and such other agreements, documents or instruments now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced in accordance with the terms and conditions set forth herein and
therein.
1.39 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination.
1.40 "General Intangibles" shall mean all of Borrower's general
intangibles, rights, interests, choses in action, causes of action and all other
intangible personal property of every kind and nature (other than Accounts) now
owned or licensed or hereafter acquired or licensed, including, without
limitation, corporate or other business records, loans and other obligations
receivable, inventions, designs, patents, patent applications, service marks,
trademarks, trademark applications, trade names, trade secrets, goodwill,
registrations, copyrights, licenses, royalties, leasehold interests in real and
personal property, rights under any future contracts, customer lists, supplier
contracts, firm sale orders, partnerships and joint ventures, other contracts
and contract rights, federal, state and local tax refund claims of all kinds,
duty refund claims of all kinds, rights to indemnification, reversionary,
beneficial, and residual interests in trusts.
1.41 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.42 "Guarantees" shall have the meaning set forth in Section 5.2(a)
hereof.
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1.43 "Guarantors" shall mean Clantexport Inc., a New York corporation,
▇▇▇▇▇▇ ▇▇▇▇▇, Inc., a Delaware corporation, Frost Bros. Enterprises, Inc., a
Texas corporation, SLT Sourcing, Inc., a New York corporation, ▇▇▇▇ Licensing,
Inc., a Nevada corporation, ▇▇▇▇ Linen Manufacturing, Inc., a Delaware
corporation, ▇.▇. ▇▇▇▇▇▇ Clothing Inc., a Canadian corporation, and ▇▇▇▇▇▇
Canada Inc., a Canadian corporation, and each of their respective successors and
assigns.
1.44 "Guarantor Collateral" shall have the meaning set forth in
Section 5.2 (c) hereof.
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1.45 "Hazardous Materials" shall mean any hazardous or toxic substances
or materials and wastes, including, without limitation, hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including, without
limitation, materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or other substances, materials, or wastes that are
or became regulated under any Environmental Laws (including, without limitation,
any that are or become classified as hazardous or toxic under any Environmental
Laws.)
1.46 "Indebtedness" shall mean, as to any Person, without duplication,
any liability in respect of (a) all indebtedness of such Person for money
borrowed (including all indebtedness evidenced by notes, bonds, debentures or
other securities); (b) reimbursement obligations relating to letters of credit
or similar documents or instruments issued for the account of such Person and
drawn upon; (c) the balance deferred and unpaid of the purchase price of any
property or services (except accounts payable to trade creditors created,
assumed or guaranteed by such Person in the ordinary course of business in
connection with obtaining materials or services); (d) all indebtedness incurred
by such Person in the acquisition (whether by way of purchase, merger,
consolidation or otherwise) of any business, real property or other assets
(except assets, other than capital assets, acquired in the ordinary course of
the conduct of the acquirer's business); (e) Capitalized Lease Obligations of
such Person (f) all obligations with respect to redeemable stock and redemption
or repurchase obligations under any Capital Stock or other equity securities
issued by such Person; (g) guarantees by such Person of indebtedness or
obligations described in clauses (a), (b), (c), (d), (e), or (f) of any Person
and (h) renewals, extensions, refundings, deferrals, restructurings, amendments
and modifications of any such indebtedness, obligations or guarantees.
Indebtedness shall not include (i) any liability for accounts payable or accrued
expenses incurred in the ordinary course of business and owed or owing by the
Person; (ii) any liability for state, local or other taxes owed or owing by the
Person; or (iii) obligations of the Person to employees in respect of stock
appreciation rights or (iv) obligations of Borrower under its employment
agreement with ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in effect on the Effective Date.
1.47 "Interest Period" shall mean, for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
Borrower may not elect an Interest Period which will end after the last day of
the then-current term of this Agreement.
1.48 "Interest Rate" shall mean as to Prime Rate Loans, a rate of one
quarter (.25%) percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of two and one-quarter (2.25%) percent per annum
in excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by Borrower as in effect three (3)
Business Days after the date of receipt by Agent of the request of Borrower for
such Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to Borrower); provided,
that; the Interest Rate shall be one-half (.50%) percent in excess of the Prime
Rate, with no Eurodollar Rate option, if on the date of this Agreement, after
giving effect to the consummation of the Plan, but prior to the making of any
Loans or Letter of Credit Accommodations, the aggregate amount of Loans and
Letter of Credit Accommodations available to Borrower under the Lending Formulas
prior to the making of any Loans or Letter of Credit Accommodations is less than
$38,000,000; provided, further, that the Interest Rate shall be increased by one
and one-half (1.50%) in excess of the Interest Rate otherwise payable, at
Agent's option, without notice, (a) for the period on and after (i) the date of
termination or non-renewal hereof and until such time as all Obligations are
indefeasibly paid in full (notwithstanding entry of any judgment against
Borrower), or (ii) the date of the occurrence of any Event of Default and for so
long as such Event of Default is continuing and (b) on the Loans at any time
outstanding in excess of the amounts available to Borrower under Section 2
(whether or not such excess(es) arise or are made with or without Agent's
knowledge or consent and whether made before or after an Event of Default).
1.49 "Interest Rate Protection Obligations" shall mean the obligations
of any Person pursuant to any arrangement with any other Person whereby,
directly or indirectly, such Person is entitled to receive from time to time
periodic payments calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic payments made by
such Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
1.50 "Inventory" shall mean all of Borrower's inventory, of every kind
and description, now or hereafter owned or acquired by or in the custody or
possession, actual or constructive, of, Borrower, wherever located, including,
without limitation, all raw materials, work-in-process, and finished inventory
of any kind, nature or description, including, without limitation, men's,
women's and children's apparel and accessories and any other personal property
held for sale, exchange or lease or furnished or to be furnished under a
contract of service or an exchange arrangement or used or consumed in the
business or in connection with the manufacturing, packing, shipping,
advertising, selling or finishing of such goods, inventory, merchandise and
other personal property, and all names or marks affixed to or to be affixed
thereto for purposes of selling the same by the seller, manufacturer, lessor or
licensor thereof and all right, title and interest therein and thereto, wherever
located, whether now owned or hereafter acquired.
1.51 "Lenders" shall mean the financial institutions who are
signatories hereto as lenders and other persons made a party to this Agreement
as lenders in accordance with Section 11.6 hereof, and their respective
successors and assigns.
1.52 "Lending Formulas" shall mean the percentages set forth in Section
3.1 hereof, subject to the limits set forth therein, with respect to Eligible
Accounts and Eligible Inventory.
1.53 "Letter of Credit Accommodations" shall mean with respect to the
Credit Facility, the letters of credit or other guaranties which are from time
to time either (a) issued or opened by Agent for the account of Borrower or any
Obligor or (b) with respect to which Agent or any Lender has agreed to indemnify
the issuer or guaranteed to the issuer the performance by Borrower of its
obligations to such issuer (including, without limitation, the Existing Letters
of Credit).
1.54 "Letter of Credit Facility Limit" shall mean $35,000,000, plus
$2,250,000 for the PBGC L/C.
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1.55 "Loans" shall mean the loans made to or for the benefit of
Borrower by Lenders or, at Agent's option, by Agent for the ratable account of
Lenders, on a revolving basis (involving advances, repayments and readvances) as
set forth in Section 3.1 hereof.
1.56 "Lock Box Agreement" shall have the meaning set forth in Section
9.1(a) hereof.
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1.57 "Majority Lenders" shall mean, as of any date of determination
thereof, Lenders holding more than fifty (50%) percent of the aggregate
outstanding principal amount of Loans and outstanding Letter of Credit
Accommodations, or, if there are no Loans or Letter of Credit Accommodations
outstanding, then such term shall mean Lenders having aggregate Commitment
Percentages of more than fifty (50%) percent.
1.58 "Material Adverse Effect" shall mean a material adverse effect on
(a) the condition (financial or otherwise), business, performance, operations or
properties of Borrower; (b) the legality, validity or enforceability of this
Agreement or any of the other Financing Agreements; (c) the legality, validity,
enforceability, perfection or priority of the security interests and liens of
Agent or any Lender upon the Collateral or any other property which is security
for the Obligations; (d) the Collateral or any other property which is security
for the Obligations taken in their entirety, or the value of the Collateral or
such other property taken in their entirety; (e) the ability of Borrower to
repay the Obligations or of Borrower to perform its obligations under this
Agreement or any of the other Financing Agreements; or (f) the ability of Agent
or any Lender to enforce the Obligations or realize upon the Collateral solely
with respect to the rights and remedies of Agent or any Lender under this
Agreement or any of the other Financing Agreements.
1.59 "Material Contract" shall mean any contract or other arrangements
(other than the Financing Agreements), whether written or oral, to which
Borrower or its Subsidiaries is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto could be reasonably
expected to have a Material Adverse Effect.
1.60 "Maximum Credit" shall mean $85,000,000.
1.61 "Mortgages" shall mean, individually and collectively, the deeds
of trust, mortgages and other security agreements with respect to the Real
Property listed on Schedule 1.61 hereto, as the same now exist or may
hereinafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.62 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) rebates, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.
1.63 "Net Cash Proceeds" shall mean (a) proceeds received by Borrower
in cash or Cash Equivalents from the sale, assignment or other disposition of
any of its assets or property (other than sales of Inventory in the ordinary
course of business), net of payments of Indebtedness secured by such assets or
properties (including any fees or prepayment penalties required to be paid as a
result of such sale, assignment or other disposition) and the reasonable cash
costs of sale, assignment or other disposition, provided, that, evidence of such
costs reasonably satisfactory to Agent is provided to Agent upon Agent's
request; (b) proceeds of insurance in cash or Cash Equivalents on account of the
loss of or damage to any such assets or property, and payments of compensation
in cash or Cash Equivalents for any such assets or property taken by
condemnation or eminent domain; and (c) proceeds received after the date hereof
by Borrower or any of its Subsidiaries in cash or Cash Equivalents from (i) the
issuance of any Capital Stock by Borrower or any other additions to the equity
of Borrower (other than retained earnings) or any contributions to capital of
Borrower or (ii) issuance of any Indebtedness by Borrower, in each case net of
reasonable underwriting discounts and commissions and reasonable costs incurred
in connection with such transaction; provided, that, evidence of such costs
reasonably satisfactory to Agent is provided to Agent upon Agent's request.
1.64 "Non-▇▇▇▇▇ ▇▇▇▇▇/Non-Private Line Eligible Inventory" shall mean
all Eligible Inventory other than ▇▇▇▇▇ ▇▇▇▇▇ Eligible Inventory and Private
Line Eligible Inventory.
1.65 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower and/or any Obligor to Agent or
any Lender, including principal, interest, charges, fees, costs and expenses,
including, but not limited to, reasonable attorney's fees and disbursements,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, arising under or in connection with the Existing Agreement, this
Agreement, any of the other Financing Agreements or by operation of law in
connection therewith, whether now existing or hereafter arising, whether arising
before, during or after the initial or any renewal term of this Agreement, after
the commencement of any case with respect to Borrower or any Obligor under the
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated or
secured and expressly including all indebtedness of Borrower to CIT as a Lender
on accounts arising from the sale of goods or services purchased by Borrower
from any Person whose accounts are factored or financed by CIT.
1.66 "Obligor" shall mean any guarantor, endorser, acceptor, surety, or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.
1.67 "Participant" shall mean any financial institution that acquires
and holds participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
11.6 of this Agreement governing participations.
1.68 "Payment Account" shall have the meaning set forth in Section 9.1
hereof.
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1.69 "PBGC L/C" shall mean the letter of credit issued in accordance
with Section 3(a) of that certain agreement between Borrower and the Pension
Benefit Guaranty Corporation entered into in connection with the Plan.
1.70 "Permits" shall have the meaning set forth in Section 6.4 hereof.
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1.71 "▇▇▇▇▇ ▇▇▇▇▇ Inventory" shall mean Inventory subject to any
license agreement between ▇▇▇▇▇ ▇▇▇▇▇ International Inc. and Borrower,
including, without limitation, Inventory bearing any trademark licensed to
Borrower by ▇▇▇▇▇ ▇▇▇▇▇ International Inc.
1.72 "▇▇▇▇▇ ▇▇▇▇▇ Eligible Inventory" shall mean (i) Eligible Inventory
subject to any license agreement between ▇▇▇▇▇ ▇▇▇▇▇ International Inc. and
Borrower including, without limitation, Eligible Inventory bearing any trademark
licensed to Borrower by ▇▇▇▇▇ ▇▇▇▇▇ International Inc. and Eligible Inventory
consisting of domestic raw materials and work-in-process for ▇▇▇▇▇ ▇▇▇▇▇
Inventory and (ii) Eligible Inventory consisting of neckwear and private label
belts not sold under the ▇▇▇▇▇ ▇▇▇▇▇ name.
1.73 "▇▇▇▇▇ ▇▇▇▇▇ Licenses" shall mean the licensing agreements and the
settlement agreements relating thereto between Borrower and ▇▇▇▇▇ ▇▇▇▇▇
International, Inc. as set forth on Scheduled 1.73 hereto and any such license
agreements or settlement agreements entered into after the date of this
Agreement as the same may from time to time be amended, restated, modified,
supplemented, renewed, extended or replaced in accordance with the terms
thereof.
1.74 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Code), limited liability
company, limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity or
any government or any agency or instrumentality or political subdivision
thereof.
1.75 "Plan" shall have the meaning set forth in the recitals hereto.
1.76 "Prime Rate" shall mean the rate from time to time publicly
announced by The Chase Manhattan Bank, or its successors as its prime rate,
whether or not such announced rate is the best rate available at such bank,
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed, which rate shall increase or decrease by an amount equal to each
increase or decrease effective on the date of the change in such prime rate. The
Prime Rate is one of several base rates that serve as a basis upon which
effective rates of interest are calculated for loans making reference thereto
and may not be the lowest of The Chase Manhattan Bank's rates.
1.77 "Private Line" and "Private Line Inventory" shall mean Inventory
made and held for any of Borrower's private line and all non-▇▇▇▇▇ ▇▇▇▇▇
designer programs.
1.78 "Private Line Eligible Inventory" shall mean Eligible Inventory
made and held for any of Borrower's private line and all non-▇▇▇▇▇ ▇▇▇▇▇
designer programs.
1.79 "Pro Rata Share" shall mean, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the amount
of such Lender's Commitment and the denominator of which shall be the aggregate
amount of all of the Lenders' Commitments, as adjusted from time to time in
accordance with the provisions of Section 11.6 hereof, provided, that, if the
Commitments have been terminated, the numerator shall be the unpaid amount of
such Lender's Loans and its interest in the Letter of Credit Accommodations and
the denominator shall be the aggregate amount of all unpaid Loans and Letter of
Credit Accommodations.
1.80 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether federal, state or local, and
whether foreign or domestic, that are paid or payable by any Person and its
Subsidiaries in respect of such fiscal year on a consolidated basis in
accordance with GAAP.
1.81 "Real Property" shall mean all now owned real property of Borrower
and, to the extent Borrower is required to grant Agent a mortgage, for the
ratable benefit of Lenders, on hereafter acquired real property pursuant to
Section 7.25 hereof, hereafter acquired real property of Borrower, including,
leasehold interests, together with all buildings, structures, fixtures and other
improvements relating thereto, and all licenses, easements and appurtenances
relating thereto, wherever located, including, without limitation, the real
property and related assets of Borrower more particularly described in the
Mortgages.
1.82 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
1.83 "Reference Bank" shall mean The Chase Manhattan Bank or such other
bank as Agent may designate from time to time.
1.84 "Register" shall have the meaning set forth in Section 11.6
hereof.
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1.85 "Renewal Date" shall have the meaning set forth in Section 10.1
hereof.
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1.86 "Report" shall have the meaning set forth in Section 12.16 hereof.
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1.87 "Revolving Credit Notes" shall mean the promissory notes issued by
Borrower in favor of each Lender evidencing the Obligations of Borrower to each
Lender with respect to the Loans made by or on behalf of Lenders with each such
note being in a principal amount of up to the respective Lender's Commitment.
1.88 "Senior Note Indenture" shall mean the Indenture, dated September
20, 1993, as amended, by and between Borrower and the Senior Note Trustee
pursuant to which the Senior Notes were issued.
1.89 "Senior Notes" shall mean, individually and collectively, each and
all of the 10 1/2% Senior Secured Notes due December 31, 1998.
1.90 "Senior Note Trustee" shall mean Bankers Trust Company, and its
successors and assigns, and any replacement or other trustee under the Senior
Note Indenture.
1.91 "Subsidiary" or "subsidiary" shall mean any corporation,
association or organization, active or inactive, as to which more than fifty
(50%) percent of the outstanding voting stock or shares or interests shall now
or hereafter be owned or controlled, directly or indirectly, by Borrower, any
subsidiary of Borrower, or any subsidiary of such subsidiary.
1.92 "Termination Date" shall have the meaning set forth in Section
10.1 hereof.
1.93 "Tradename" shall have the meaning set forth in Section 7.1
hereof.
1.94 "Value" or "value" shall mean, as determined by Agent, with
respect to the Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP or (b) market value, as determined in good faith
by Agent.
1.95 "Wholly-Owned Subsidiary" shall mean any Subsidiary of such Person
to the extent all of the Capital Stock or other ownership interests in such
Subsidiary (other than (a) directors' qualifying shares and (b) an immaterial
interest owned by other Persons solely to comply with applicable law) is owned
directly or indirectly by such Person or a Wholly-Owned Subsidiary of such
Person.
All accounting terms used in this Agreement which are not specifically
defined herein shall be construed in accordance with GAAP consistently applied,
except as otherwise stated herein. The words "hereof", "herein", "hereunder",
"this Agreement" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. All terms used herein
which are not specifically defined herein which are defined or used in the
Uniform Commercial Code as in effect in the State of New York (the "UCC") shall
have the meanings as defined or used in the UCC. For purposes of this Agreement,
unless the context otherwise requires, all other terms hereinbefore or
hereinafter defined, including but not limited to those terms defined in the
recitals hereto, shall have the meanings herein assigned to such terms. All
references to Borrower and other Persons pursuant to the definitions set forth
in the recitals hereto or otherwise herein shall include their respective
successors and assigns. All references to any term in the plural shall include
the singular and all references to any term in the singular shall include the
plural. The words "ratable" or "ratably" or words of similar import when used in
this agreement shall refer to a sharing or allocation based on the respective
Pro Rata Shares of Lenders.
SECTION 2. ACKNOWLEDGEMENT AND RESTATEMENTSECTION
Section 2.1 Existing Obligations. Borrower hereby acknowledges, confirms
and agrees that Borrower is indebted to CIT for loans to Borrower under the
Existing Agreement, as of the close of business on May 10, 1999, in the
approximate aggregate principal amount of ($14,459,062) (i.e. credit balance),
plus the approximate aggregate amount of $24,917,015 in respect of Existing
Letters of Credit, together with all interest accrued and accruing thereon, and
all fees, costs, expenses and other charges relating thereto, all of which are
unconditionally owing by Borrower to CIT, without defense, offset or
counterclaim of any kind, nature or description whatsoever.
Section 2.2 Acknowledgement of Security Interests
-------------------------------------
*
(a) Borrower hereby acknowledges, confirms and agrees that CIT has, and
that Agent, for the ratable benefit of CIT and the other Lenders, shall continue
to have, a security interest in and lien upon the Collateral (as defined in the
Existing Agreement) heretofore granted to CIT pursuant to the Existing Agreement
to secure the Obligations, as well as any Collateral granted to or held by Agent
or any Lender under this Agreement or any of the other Financing Agreements. CIT
hereby assigns to Agent, and Agent, for the ratable benefit of CIT and the other
Lenders, hereby accepts from CIT, all of CIT's liens upon and security interests
in the Collateral (as defined in the Existing Agreement).
(b) The liens and security interests of Agent, for itself and the ratable
benefit of Lenders, in the Collateral shall be deemed continuously granted and
perfected from the earliest date of the granting and perfection of such liens
and security interests, whether under the Existing Agreement, this Agreement or
any of the other Financing Agreements.
Section 2.3 Acknowledgement of Existing Agreement. Borrower hereby
acknowledges, confirms and agrees that: (a) the Existing Agreement has been duly
executed and delivered by Borrower and is in full force and effect as of the
date hereof and (b) the agreements and obligations of Borrower contained in the
Existing Agreement constitute the legal, valid and binding obligations of
Borrower enforceable against it in accordance with their respective terms and
Borrower has no valid defense to the enforcement of such obligations.
Section 2.4 Restatement. Except as otherwise stated in Section 2.2
hereof and this Section 2.4, as of the date hereof, the terms, conditions,
agreements, covenants, representations and warranties set forth in the Existing
Agreement are hereby amended and restated in their entirety, and as so amended
and restated are replaced and superseded by the terms, conditions, agreements,
covenants, representations and warranties set forth in this Agreement and the
other Financing Agreements, except that nothing herein or in the other Financing
Agreements shall impair or adversely affect the continuation of the liability of
Borrower for its Obligations heretofore incurred to Agent or any Lender. The
amendment and restatement contained herein shall not, in any manner, be
construed to constitute the payment of, or impair, limit, cancel or extinguish,
or constitute a novation in respect of, the Indebtedness or any other
obligations or liabilities of Borrower evidenced by or arising under the
Existing Agreement, and the liens and security interests securing such
Indebtedness and such other obligations and liabilities shall not in any manner
be impaired, limited, terminated, waived or released.
Section 2.5 Release. Borrower and each of the Guarantors, for itself
and its successors and assigns, does hereby remise, release, discharge and hold
Agent and each Lender, its officers, directors, agents and employees and their
respective predecessors, successors and assigns harmless from all claims,
demands, debts, sums of money, accounts, damages, judgments, financial
obligations, actions, causes of action, suits at law or in equity, of any kind
or nature whatsoever, whether or not now existing or known, which Borrower or
its successors or assigns has had or may now or hereafter claim to have against
Agent or any Lender or its officers, directors, agents and employees and their
respective predecessors, successors and assigns in any way arising from or
connected with the Existing Agreement or the arrangements set forth therein or
transactions thereunder up to and including the date hereof.
SECTION 3. CREDIT FACILITYSECTION 3. CREDIT FACILITY
Section 3.1 LoansSection 3.1 Loans.
(a) Subject to and upon the terms and conditions contained
herein, each of the Lenders severally (and not jointly) agrees to fund its Pro
Rata Share of the Loans from time to time requested by Borrower up to an amount
at any one time outstanding equal to the sum of:
(i) eighty-five percent (85%) of the Net Amount
of Eligible Accounts, plus
(ii) the lesser of:
A. the sum of:
(1) (i) sixty percent (60%) of the Value
of ▇▇▇▇▇ ▇▇▇▇▇ Eligible Inventory,
plus (ii) the lesser of (x) sixty
percent (60%) of the Value of
Private Line Eligible Inventory and
(y) $5,000,000, and not to exceed
$1,000,000 in the aggregate at any
time outstanding with respect to
domestic raw materials and
work-in-process attributable to
Eligible Inventory described in this
clause (1) and clause (2) below,
plus
(2) fifty percent (50%) of Non-▇▇▇▇▇
▇▇▇▇▇/Non-Private Line Eligible
Inventory through and including
August 31, 1999 and zero percent
(0%) thereafter, not to exceed
$4,000,000 at any time outstanding
from the date hereof through and
including June 30, 1999 and
$1,000,000 at any time outstanding
from July 1, 1999 through and
including August 31, 1999, and,
subject to the foregoing limitations
in this clause (2), not to exceed
$1,000,000 in the aggregate at any
time outstanding with respect to
domestic raw materials and
work-in-process attributable to
Eligible Inventory described in this
clause (2) and clause (1) above, or
B. (1) from the date of this Agreement
to, but not including, the first
anniversary of this Agreement,
$25,000,000,
(2) from, and including, the first
anniversary of this Agreement to,
but not including, the second
anniversary of this Agreement,
$27,500,000, and
(3) on and after the second anniversary
of this Agreement, $30,250,000.
Borrower may from time to time borrow, repay and reborrow Loans in accordance
with the terms hereof.
(b) The Loans shall be (i) evidenced by Revolving Credit Notes
duly executed and delivered by Borrower to each Lender, (ii) repaid, together
with interest and other amounts, in accordance with this Agreement, the
Revolving Credit Notes and the other Financing Agreements and (iii) secured by
the Collateral. A Revolving Credit Note for each Lender, duly authorized,
executed and delivered by Borrower, shall be delivered by Borrower to Agent on
the date of the execution and delivery of this Agreement.
(c) Except in Agent's discretion with the consent of all of
the Lenders, notwithstanding anything to the contrary contained in Section
3.1(a) above, but subject to Section 3.5(a) below, the aggregate principal
amount of the Loans and the Letter of Credit Accommodations shall not exceed the
Maximum Credit.
(d) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, at the request of Borrower,
Agent may, as it may deem necessary or advisable in its discretion, subject to
the Maximum Credit, from time to time make Loans and Letter of Credit
Accommodations to Borrower on behalf of Lenders in excess of the aggregate
amount available under the Lending Formulas ("Overadvance"), which Overadvance
shall be repayable to Agent on demand, provided, that: (a) the aggregate amount
of any such Overadvance which Agent may make without the consent of all of the
Lenders shall not exceed the lesser of (x) ten (10%) percent of the aggregate
amount available at the time under the Lending Formulas without reduction for
Loans and Letter of Credit Accommodations then outstanding, or (y) $2,500,000 in
the aggregate outstanding at any time, and (b) without the consent of all of the
Lenders, Agent shall not make any such additional Loans or Letter of Credit
Accommodations for more than sixty (60) days from the date of the first such
additional Loans or Letter of Credit Accommodations in respect of such
Overadvance. Each Lender shall be obligated to pay Agent the amount of its Pro
Rata Share of any such additional Loans or Letter of Credit Accommodations
provided that Agent is acting in accordance with the terms of this Section
3.1(f).
Section 3.2 Letter of Credit AccommodationsSection
--------------------------------------
(a) Subject to and upon the terms and conditions contained
herein, at the request of Borrower, Agent agrees, for the ratable risk of each
Lender according to its Pro Rata Share, to provide or arrange for Letter of
Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Agent and the issuer thereof. Letter of Credit
Accommodations for the purchase of Inventory shall be made only for the purchase
of Eligible Inventory. Any payments made by Agent, for the ratable risk of each
Lender according to its Pro Rata Share, to any issuer thereof and/or related
parties in connection with the Letter of Credit Accommodations shall constitute
additional Loans to Borrower pursuant to this Section 3.2(a).
(b) In addition to any customary charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations, Borrower shall pay to Agent, for the ratable benefit of Lenders,
letter of credit fees as set forth on Schedule 3.2(b) hereto. All letter of
credit fees shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed and the obligation of Borrower to pay such fees
shall survive termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available
unless on the date of the proposed issuance of any Letter of Credit
Accommodations the amount of the Loans available to Borrower (subject to the
Maximum Credit) are equal to or greater than (i) if the proposed Letter of
Credit Accommodation is for the purpose of purchasing Eligible Inventory
consisting of finished goods, an amount equal to the percentage equal to one
hundred percent (100%) minus the then applicable percentage set forth in Section
3.1(a)(ii)A(1) above multiplied by the face amount of such Letter of Credit
Accommodation; and (ii) if the proposed Letter of Credit Accommodation is for
any other purpose, an amount equal to one hundred percent (100%) of the face
amount thereof. Effective on the issuance of each Letter of Credit
Accommodation, a reserve shall be established in the applicable amount set forth
in, and computed in accordance with, Section 3.2(c)(i) or Section 3.2(c)(ii).
(d) Except in Agent's discretion, the amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Agent or any Lender in connection therewith
shall not at any time exceed $35,000,000, plus $2,250,000 for the PBGC L/C. At
any time an Event of Default exists or has occurred and is continuing, upon
Agent's request, Borrower shall either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Agent, for the ratable benefit of
Lenders, for the Letter of Credit Accommodations, and in either case, the Loans
otherwise available to Borrower shall not be reduced as provided in Section
3.2(c) to the extent of such cash collateral.
(e) Borrower shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including, but not limited to, any losses, claims,
damages, liabilities, costs and expenses due to any action taken by or an error
or omission by any issuer or correspondent with respect to any Letter of Credit
Accommodation, except resulting from the gross negligence or wilful misconduct
of Agent or any Lender as determined pursuant to a final non-appealable order of
a court of competent jurisdiction. Borrower assumes all risks with respect to
the acts or omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
Borrower's agent. Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder, except resulting from the gross negligence or wilful
misconduct of Agent or any Lender as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. Borrower hereby
releases and holds Agent and Lenders harmless from and against any acts,
waivers, errors, delays or omissions, whether caused by Borrower, by any issuer
or correspondent or otherwise with respect to or relating to any Letter of
Credit Accommodation, except resulting from the gross negligence or wilful
misconduct of Agent or any Lender as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. The provisions of
this Section 3.2(e) shall survive the payment of Obligations and the termination
or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Agent or any
Lender in any manner. Agent and Lenders shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent, unless Agent has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to such
Letter of Credit Accommodation. Borrower shall be bound by any interpretation
made in good faith by Agent, or any other issuer or correspondent under or in
connection with any Letter of Credit Accommodation or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of Borrower. Agent shall have the sole and
exclusive right and authority to, for the ratable benefit of Lenders, and
Borrower shall not, at any time an Event of Default exists or has occurred and
is continuing, (i) approve or resolve any questions of non-compliance of
documents, (ii) give any instructions as to acceptance or rejection of any
documents or goods or (iii) execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders. At all times, Borrower shall
not, without the prior written consent of Agent, grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents or agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral.
Agent may take such actions either in its own name or in Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Agent, for the ratable benefit of
Lenders. Any rights, remedies duties or obligations undertaken by Agent to any
issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been undertaken by Borrower to Agent, for the ratable benefit of Lenders,
and to apply in all respects to Borrower.
Section 3.3 Reserves. Agent may, in its discretion, from time to time,
establish a reserve reducing the amount of Loans and Letters of Credit otherwise
available to Borrower under the Lending Formulas if Agent determines in good
faith that the dilution with respect to Accounts for any twelve month period
immediately preceding or at any time from and after the date hereof (based on
the ratio of (a) the aggregate amount of chargebacks, returns, allowances,
credits issued by Borrower against Accounts (excluding credits evidencing
inter-company transfers) and write-offs which reduce the amount of Accounts to
(b) the aggregate amounts of Accounts) exceeds 15%. In the event that said
dilution exceeds 15% (such excess, the "Excess Dilution Percentage"), Agent may
establish a reserve in an amount equal to the Excess Dilution Percentage but in
no event to exceed 15%, of the amount of Accounts from time to time outstanding.
Section 3.4 Commitments. The aggregate amount of each Lender's share of the
Loans and Letter of Credit Accommodations shall not exceed the amount set forth
below such Lender's signature on the signature pages hereto, as the same may
from time to time be amended with the written acknowledgment of Agent in
connection with the Assignment and Acceptance executed and delivered to evidence
permitted assignments by any Lender as provided in Section 11.6 hereof. Such
amount for each Lender is referred to herein as such Lender's "Commitment".
Section 3.5 Mandatory Prepayments
(a) In the event that the outstanding amount of any component
of the Loans or the outstanding aggregate amount of the Loans and Letter of
Credit Accommodations exceeds the amounts available under the Lending Formulas,
the sublimit for Letter of Credit Accommodations set forth in Section 3.2(d) or
the Maximum Credit, as applicable, such event shall not limit, waive or
otherwise affect any rights of Agent and Lenders in that circumstance or on any
future occasions and Borrower shall, upon demand by Agent, which may be made at
any time or from time to time, immediately repay to Agent, for the ratable
benefit of Lenders, the entire amount of any such excess(es) for which payment
is demanded, or in the case of Letter of Credit Accommodations, provide cash
collateral to Agent (for itself and the ratable benefit of Lenders) in such
amount.
(b) Immediately after the receipt by Borrower or any of its
Subsidiaries of any Net Cash Proceeds on account of (i) the sale, assignment or
other disposition of assets of Borrower or any of its Subsidiaries (other than
(A) sales of Inventory in the ordinary course of Borrower's and its
Subsidiaries' business, or (B) so long as no Event of Default exists or has
occurred, sales of worn-out or obsolete Equipment to the extent permitted under
Section 7.14 in the aggregate amount of up to $750,000 for all such sales of
such Equipment), or (ii) the loss of or damage to all or any portion of the
assets of Borrower or any of its Subsidiaries, Borrower shall absolutely and
unconditionally, without notice or demand, make a payment to Agent, for the
ratable benefit of Lenders, as a mandatory prepayment of the then outstanding
principal amount of the Loans, in an amount equal to one hundred (100%) percent
of all such Net Cash Proceeds, provided, that, Borrower or such Subsidiary shall
not be required to make such mandatory prepayment with the proceeds of sales of
worn-out or obsolete Equipment as provided in clause (i) above prior to an Event
of Default, so long as all of such proceeds are used within one hundred twenty
(120) days after the date of receipt thereof to purchase new Equipment free and
clear of any security interest, lien, claim or other encumbrance.
(c) All such payments in respect of the Loans pursuant to this
Section 3.5 shall be without premium or penalty. All interest accrued on the
principal amount of the Loans paid pursuant to this Section 3.5 shall be paid,
or may be charged by Agent to the loan account(s) of Borrower, at Agent's
option, on the date of such payment.
Section 3.6 Interest
(a) Borrower shall pay to Agent, for the ratable benefit of
Lenders, interest on the outstanding principal amount of the Loans and other
non-contingent Obligations at the Interest Rate. All interest accruing hereunder
on and after the date of any Event of Default or termination or non-renewal
hereof shall be payable on demand.
(b) Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from Borrower
shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Agent of
such a request from Borrower, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case
may be, provided, that, as of such date each of the following conditions is
satisfied as determined by Agent: (i) no Event of Default has occurred and is
continuing, (ii) no party hereto shall have sent any notice of termination or
non-renewal of this Agreement, (iii) Borrower shall have complied with such
customary procedures as are established by Agent and specified by Agent to
Borrower in writing from time to time for requests by Borrower for Eurodollar
Rate Loans, (iv) no more than three (3) Interest Periods may be in effect at any
one time, (v) the aggregate amount of the Eurodollar Rate Loans must be in an
amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof and (vi) Agent shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to Agent through the Reference Bank and
can be readily determined as of the date of the request for such Eurodollar Rate
Loan by Borrower. Any request by Borrower to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, Agent,
Lenders and Reference Bank shall not be required to purchase United States
Dollar deposits in the London interbank market or other applicable Eurodollar
Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall
be deemed to apply as if Agent, Lenders and Reference Bank had purchased such
deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Agent has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by
Agent to Borrower, convert to Prime Rate Loans in the event that (i) an Event of
Default has occurred and is continuing, (ii) this Agreement shall terminate or
not be renewed, or (iii) the aggregate principal amount of the Prime Rate Loans
which have previously been converted to Eurodollar Rate Loans or existing
Eurodollar Rate Loans continued, as the case may be, at the beginning of an
Interest Period shall at any time during such Interest Period exceed either (A)
the aggregate principal amount of Loans then outstanding, or (B) Loans then
available to Borrower under this Section 3 hereof. Borrower shall pay to Agent,
for the ratable benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of Borrower) any amounts required to compensate
Agent, Lenders, the Reference Bank or any Participant for any loss (including
loss of anticipated profits), cost or expense incurred by such person, as a
result of the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant
to any of the foregoing.
(d) All interest shall be payable by Borrower to Agent, for
the ratable benefit of Lenders, monthly in arrears not later than the first day
of each calendar month and shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall charges constituting interest
payable by Borrower to Agent exceed the maximum amount or the rate permitted
under any applicable law or regulation, and if any such part or provision of
this Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
Section 3.7 Unused Line Fee. Borrower shall pay to Agent, for the ratable
benefit of Lenders, monthly an unused line fee at a rate equal to one-quarter of
one percent (.25%) per annum calculated upon the amount by which the Maximum
Credit exceeds the average daily principal balance of the outstanding Loans and
Letter of Credit Accommodations during the immediately preceding month (or part
thereof) while this Agreement is in effect, which fee shall be payable on the
first day of each month in arrears.
Section 3.8 Collateral Management FeeSection 3.8 Collateral Management
Fee. Borrower shall pay to Agent monthly, for its own account, a collateral
management fee in an amount equal to $8,333 for each month (or part thereof)
while this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding, which fee shall be fully earned as of and payable
in advance on the date hereof and on the first day of each month hereafter.
Section 3.9 Agency Fee. Borrower shall pay to Agent, for its own account,
an agency fee in an amount equal to $100,000 on each of the first and second
anniversary of the dates of this Agreement for acting as Agent and administering
the Credit Facility for the benefit of Borrower and Lenders.
Section 3.10 Changes in Laws and Increased Costs of Revolving
LoansSection 3.10 Changes in Laws and Increased Costs of Revolving Loans.
(a) Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Agent to Borrower, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Agent, any Lender, Reference Bank or any Participant to
make or maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) shall result in the increase
in the costs to Agent, Lenders, Reference Bank or any Participant of making or
maintaining any Eurodollar Rate Loans by an amount reasonably deemed by Agent to
be material, or (C) reduce the amounts received or receivable by Agent, for the
ratable benefit of Lenders, in respect thereof, by an amount reasonably deemed
by Agent to be material or (ii) the cost to Agent, Lenders, Reference Bank or
any Participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount reasonably deemed by Agent to be material.
Borrower shall pay to Agent, for the ratable benefit of Lenders, upon demand by
Agent (or Agent may, at its option, charge any loan account of Borrower) any
amounts required to compensate Agent, Lenders, the Reference Bank or any
Participant for any loss (including loss of anticipated profits), cost or
expense incurred by such person as a result of the foregoing, including, without
limitation, any such loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such person to make or
maintain the Eurodollar Rate Loans or any portion thereof. A certificate of
Agent setting forth the basis for the determination of such amount necessary to
compensate Agent as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the
Eurodollar Rate Loans are received by Agent other than on the last day of the
applicable Interest Period (whether pursuant to acceleration, upon maturity or
otherwise), including any payments pursuant to the application of collections
under Section 9.1 or any other payments made with the proceeds of Collateral,
Borrower shall pay to Agent upon demand by Agent (or Agent may, at its option,
charge any loan account of Borrower) any amounts required to compensate Agent,
Lenders, the Reference Bank or any Participant for any additional loss
(including loss of anticipated profits), cost or expense incurred by such person
as a result of such prepayment or payment, including, without limitation, any
loss, cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
Section 3.11 Authorization to Make Loans and Provide Letter of Credit
AccommodationsSection 3.11 Authorization to Make Loans and Provide Letter of
Credit Accommodations. Agent, for the ratable benefit of Lenders, is authorized
to make the Loans and provide the Letter of Credit Accommodations for the
account and risk of Lenders based upon telephonic or other instructions received
from anyone purporting to be an officer of Borrower or other authorized person
or, at the discretion of Agent, if such Loans are necessary to satisfy any
Obligations. All requests for Loans or Letter of Credit Accommodations hereunder
shall specify the date on which the requested Loan is to be made or Letter of
Credit Accommodation established (which day shall be a Business Day) and the
amount of the requested Loan and Letter of Credit Accommodation. Requests
received after 11:00 a.m. New York City time on any day shall be deemed to have
been made as of the opening of business on the immediately following Business
Day. All Loans and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for the
benefit of, Borrower when deposited to the credit of Borrower or otherwise
disbursed or established in accordance with the instructions of Borrower or in
accordance with the terms and conditions of this Agreement.
Section 3.12 Settlement Procedures.
(a) Notwithstanding any other provision of this Agreement, and
in order to administer the Credit Facility in an efficient manner and to reduce
the number of fund transfers between Lenders and Agent, Borrower, Lenders and
Agent agree that Agent may (but shall not be obligated to), and Borrower and
Lenders hereby irrevocably authorize the Agent to, fund, on behalf of the
Lenders, Loans pursuant to Section 3.1 and Letter of Credit Accommodations
pursuant to Section 3.2, subject to the procedures for settlement set forth in
this Section 3.12; provided, that, (i) other than to fund Revolving Loans to
make payments to the issuer of any of the Letter of Credit Accommodations or for
costs and expenses as provided for herein, Agent shall in no event fund such
Loans if the Agent shall have received written notice from the Majority Lenders
on the Business Day prior to the day of the proposed Loan that one or more of
the conditions precedent contained in Section 4.2 will not be satisfied on the
day of the proposed Loan, and (ii) Agent shall not otherwise be required to
determine that the conditions precedent in Section 4.2 have been satisfied.
(b) With respect to all periods for which the Agent has funded
Loans pursuant to Section 3.12(a) above, the amount of each Lender's Pro Rata
Share in the outstanding Loans and Letter of Credit Accommodations shall be
computed weekly, and shall be adjusted upward or downward on the basis of the
average amount of the outstanding Loans for the Business Days of the week
immediately preceding the date of each settlement computation; provided, that,
Agent retains the absolute right at any time or from time to time to make the
above described adjustments at intervals more frequent than weekly. Agent shall
deliver to each of Lenders after the end of each week, or such lesser period or
periods as Agent shall determine, a summary statement of the amount of
outstanding Loans for such period (such week or lesser period or periods being
hereinafter referred to as a "Settlement Period"). If the summary statement is
sent by Agent and received by a Lender prior to 12:00 noon (New York City time)
then such Lender shall make the settlement transfer described in this Section by
no later than 2:00 p.m. (New York City time) on the day such summary statement
was sent, and if such summary statement is sent by Agent and received by a
Lender after 12:00 noon (New York City time), such Lender shall make such
settlement transfer by no later than 2:00 p.m. (New York City time) on the next
Business Day following the date of the receipt of such summary statement. If, as
of the end of any Settlement Period, the amount of a Lender's Pro Rata Share of
the outstanding Loans is more than such Lender's Pro Rata Share of the
outstanding Loans as of the end of the previous Settlement Period, then such
Lender shall forthwith (but in no event later than the time set forth in the
preceding sentence) transfer to Agent by wire transfer in immediately available
funds the amount of the increase. If the amount of a Lender's Pro Rata Share of
the outstanding Loans in any Settlement Period is less than the amount of such
Lender's Pro Rata Share of the outstanding Loans for the previous Settlement
Period, Agent shall forthwith transfer to such Lender by wire transfer in
immediately available funds the amount of the decrease. The obligation of each
of the Lenders to transfer such funds and effect such settlement shall be
irrevocable and unconditional and without recourse to or warranty by Agent. Each
of Agent and Lenders agrees to ▇▇▇▇ its books and records at the end of each
Settlement Period to show at all times the dollar amount of its Pro Rata Share
of the outstanding Loans and Letter of Credit Accommodations. Each Lender shall
only be entitled to receive interest on its Pro Rata Share of the Loans which
have been funded by such Lender.
(c) To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrower, Agent may apply such amounts repaid directly
to any amounts made available by Agent pursuant to this Section 3.12. In lieu of
weekly or more frequent settlements, Agent may at any time require each Lender
to provide Agent with immediately available funds representing its Pro Rata
Share of each Loan, prior to Agent's disbursement of such Loan to or for the
benefit of Borrower. In such event, all Loans under this Agreement shall be made
by the Lenders simultaneously and proportionately to their Pro Rata Shares. No
Lender shall be responsible for any default by any other Lender in the other
Lender's obligation to make a Loan requested hereunder nor shall the Commitment
of any Lender be increased or decreased as a result of the default by any other
Lender in the other Lender's obligation to make a Loan requested hereunder.
(d) If Agent is not funding a particular Loan pursuant to
Section 3.12(a) above on any day, Agent may assume that each Lender will make
available to Agent such Lender's Pro Rata Share of the Loan requested or
otherwise made on such day and Agent may, in its discretion, but shall not be
obligated to, cause a corresponding amount to be made available to Borrower on
such day. If Agent makes such corresponding amount available to a Borrower and
such corresponding amount is not in fact made available to Agent by such Lender,
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon for each day from the date such payment
was due until the date such amount is paid to Agent at the Interest Rate. During
the period in which such Lender has not paid such corresponding amount to Agent,
notwithstanding anything to the contrary contained in this Agreement or any of
the other Financing Agreements, the amount so advanced by Agent to Borrower
shall, for all purposes hereof, be a Loan made by Agent for its own account.
(e) Nothing in this Section 3.12 or otherwise in this
Agreement or the other Financing Agreements shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights that
Agent or Borrower may have against any Lender as a result of any default by such
Lender hereunder.
Section 3.13 Use of ProceedsSection 3.13 Use of Proceeds. All Loans and
Letter of Credit Accommodations made or provided by Agent on behalf of Lenders
or made or provided by Lenders to or for the account of Borrower pursuant to
this Agreement and the other Financing Agreements shall be used by Borrower for
general operating and working capital purposes of Borrower and such other
purposes as permitted by the terms hereof, provided that the proceeds of the
initial Loans may only be used by Borrower to (i) fund payments to consummate
the Plan, and (ii) pay for costs, fees and expenses incurred in connection with
the negotiation, documentation and closing of the Credit Facility.
SECTION 4. CONDITIONS PRECEDENT TO LOANS AND OTHER
FINANCIAL ACCOMMODATIONS
Section 4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to the initial
Loans and Letter of Credit Accommodations pursuant to this Agreement and the
other Financing Agreements which shall be satisfied in a manner acceptable to
Agent (any of which may be waived, in whole or in part, only by Agent and all of
Lenders in writing):
(a) Agent shall have received, in form and substance
reasonably satisfactory to Agent, a copy of a final order of the Bankruptcy
Court confirming the Plan (the "Confirmation Order") which order is no longer
appealable or, if appealed, has been affirmed in all respects by the highest
court to which such appeal has been taken.
(b) The existing and projected liquidity of Borrower and its
Subsidiaries and their ability to fund their ongoing working capital
requirements and to consummate the Plan shall be reasonably satisfactory to
Agent.
(c) Agent shall have received a certificate of the chief
financial officer of Borrower certifying to Agent that, concurrent with the
initial Loans and Letter of Credit Accommodations under this Agreement, the Plan
shall be consummated in accordance with its terms.
(d) The amount of Loans available to Borrower on the Effective
Date shall be sufficient to fund the Plan and to satisfy Borrower's current
working capital needs.
(e) Agent shall have received executed copies of the
following:
(i) The Information Certificate of Borrower and each
Guarantor;
(ii) This Agreement;
(iii) A Revolving Credit Note in the form attached
hereto as Exhibit B for each Lender in the principal amount of its Commitment;
(iv) An Amended and Restated Letter of Credit
Agreement of even date herewith between Agent and Borrower in the form attached
hereto as Exhibit C;
(v) An Amended and Restated Trademark Collateral Assignment and Security
Agreement of even date herewith between Agent and Borrower in the form attached
hereto as Exhibit D;
(vi) A Special Power of Attorney (in quintuplicate) of even date herewith
executed by Borrower pursuant to said Amended and Restated Trademark Collateral
Agreement and Security Agreement in the form attached hereto as Exhibit E;
(vii) An Amended and Restated Collateral Assignment of Licenses of even
date herewith between Agent and Borrower in the form attached hereto as Exhibit
F;
(viii) An Inventory Confirmation of even date
herewith executed by Borrower in the form attached hereto as Exhibit G;
(ix) An Amended and Restated Guarantee of even date herewith executed by
each of the Guarantors in the form attached hereto as Exhibit H;
(x) An Amended and Restated General Security Agreement of even date
herewith executed by each of the Guarantors other than ▇▇▇▇▇▇ Canada Inc. and
▇.▇. ▇▇▇▇▇▇ Clothing Inc. in the form attached hereto as Exhibit I-(1) and an
Amended and Restated Hypothec of even date herewith executed by each of ▇▇▇▇▇▇
Canada Inc. and ▇.▇. ▇▇▇▇▇▇ Clothing Inc. in the form attached hereto as Exhibit
I-(2);
(xi) An Amended and Restated Trademark Collateral Assignment and Security
Agreement of even date herewith between Agent and each of the Guarantors in the
form attached hereto as Exhibit J;
(xii) A Special Power of Attorney (in quintuplicate) of even date herewith
executed by each of the Guarantors in the form attached hereto as Exhibit K;
(xiii) An Amended and Restated Collateral Assignment of Licenses of even
date herewith between Agent and each of the Guarantors in the form attached
hereto as Exhibit L;
(xiv) Stamped acknowledgment copies of UCC financing statements executed by
Borrower and each of the Guarantors and filed in those jurisdictions necessary
to perfect Agent's security interest in all of the Collateral and the Guarantor
Collateral which can be perfected by filing under the UCC in the form attached
hereto as Exhibit M, it being understood and agreed that neither Borrower nor
any Guarantor shall be required to take any action to perfect Agent's security
interest in any of their respective licensed or registered vehicles;
(xv) a Consent of Guarantors in the form attached hereto as Exhibit H; and
(xvi) an Agreement modifying, in accordance with the terms of this
Agreement, each Mortgage covering the Real Property listed on Schedule 1.61
hereto in a form reasonably satisfactory to Agent, together with all documents
reasonably requested to be delivered to Agent in connection therewith.
Notwithstanding anything to the contrary set forth in this
Section 4.1, a Guarantor who does not own as of the date hereof any Guarantor
Collateral consisting of "Trademarks" (as defined in the Amended and Restated
Trademark Collateral Assignment and Security Agreement attached hereto as
Exhibit J) or constituting "Licenses" (as defined in the Amended and Restated
Collateral Assignment of Licenses attached hereto as Exhibit M) shall not be
obligated to execute and deliver to Agent as of the date hereof a Trademark
Collateral Assignment and Security Agreement or a Amended and Restated
Collateral Assignment of Licenses (as the case may be), it being understood and
agreed that if subsequent to the date hereof, such Guarantor becomes the owner
of any Guarantor Collateral consisting of Trademarks or Licenses, such Guarantor
shall be obligated to execute and deliver to Agent a Amended and Restated
Trademark Collateral Assignment and Security Agreement or a Amended and Restated
Collateral Assignment and Security Agreement or an Amended and Restated
Collateral Assignment of Licenses, as the case may be.
(f) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all consents, waivers, acknowledgments and
other agreements from third persons which Lender may deem necessary in order to
permit, protect and perfect its security interests in and liens upon the
Collateral and the Guarantor Collateral or to effectuate the provisions or
purposes of this Agreement and the other Financing Agreements, including,
without limitation, (i) acknowledgments by lessors, mortgagees and warehousemen
of Agent's security interests in the Collateral and the Guarantor Collateral,
waivers by such persons of any security interest, liens or other claims by such
persons to the Collateral or Guarantor Collateral, and agreements permitting
Agent access to, and the right to remain on, the premises to exercise its rights
and remedies and otherwise deal with the Collateral or Guarantor Collateral,
(ii) acknowledgments by processors and consignees at any time in possession of
Collateral or Guarantor Collateral of Agent's security interests and liens
therein, waivers by such persons of any security interests, liens or other
claims by such persons in and to the Collateral or Guarantor Collateral, and
agreements by such persons to follow Agent's directions with respect to the
release and delivery of any Collateral or Guarantor Collateral at any time in
their possession and (iii) agreements from licensors of trademarks and other
intellectual property to the Borrower or its Subsidiaries, including, but not
limited to, ▇▇▇▇▇ ▇▇▇▇▇ International Inc., permitting Agent to use, in a manner
and for a period satisfactory to Agent, the marks, logos or other intellectual
property licensed by such parties to the Borrower or its Subsidiaries to
exercise Agent's rights and remedies and otherwise deal with the Collateral and
Guarantor Collateral.
(g) Agent shall have received, in form and substance
reasonably satisfactory to Agent and its counsel, title insurance policies or,
if feasible, endorsements to the existing title insurance policies issued to CIT
pursuant to the Existing Agreement (i) insuring the priority, amount and
sufficiency of the Mortgages, in each case as modified as required by the terms
hereof, in favor of Agent with respect to the Real Property, (ii) insuring
against matters that would be disclosed by surveys and (iii) containing any
endorsements, assurances or affirmative coverage reasonably requested by Agent
for protection of its interests.
(h) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance reasonably satisfactory to Agent, and certificates of
insurance policies and endorsements naming Agent, for the ratable benefit of
Lenders, as loss payee as its interest may appear.
(i) Borrower shall have established a lockbox and the Blocked
Accounts for its collections and the transfer thereof to Agent, which shall be
in form and substance reasonably satisfactory to Agent, in accordance with
Section 9.1 hereof.
(j) Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that Borrower has (i) directed the banks at
which Borrower maintains deposit accounts for the initial receipt of cash,
checks and other items from Borrower to transfer all immediately available funds
deposited in such bank only to the Blocked Accounts as required pursuant to
Section 9.1 hereof or as otherwise directed by Agent and (ii) notified such
banks of the security interests of Agent in such funds and the other Collateral
(k) Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that Agent has valid perfected and first
priority security interests in and liens upon the Collateral and the Guarantor
Collateral and any other property which is intended to be security for the
Obligations or the liability of any Obligor in respect thereof, subject only to
the security interests and liens permitted herein or in the other Financing
Agreements.
(l) Agent shall have completed a field review of the Records
and such other information with respect to the Collateral as Agent may require
to determine the amount of Loans available to Borrower including, without
limitation, current agings of receivables, current perpetual inventory records
and/or roll-forwards of Accounts and Inventory through the date of closing,
together with such supporting documentation as may be necessary or appropriate,
and other documents and information that will enable Agent to accurately
identify and verify the Collateral, the results of which shall be satisfactory
to Agent, not more than three (3) Business Days prior to the date hereof.
(m) Agent shall have received, in form and substance
reasonably satisfactory to Agent and its counsel, an opinion letter of Fried,
Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to Borrower and Guarantors, with
respect to the Financing Agreements and such other matters as Agent may request.
(n) Agent shall have received, in form and substance
reasonably satisfactory to Agent and its counsel, certified copies of the
certificate of incorporation of Borrower as amended and restated pursuant to the
Plan, resolutions, good standing certificates, incumbency certificates and other
documents evidencing the due organization and good standing of Borrower and each
of the Guarantors to execute each of the Financing Agreements to which they are
a party and the due authorization and execution of this Agreement and such other
Financing Agreements.
(o) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all of the other Financing Agreements required
to be delivered to Lender in accordance with the terms of this Agreement or the
other Financing Agreements as a condition precedent to Agent making the Loans
and the Letter of Credit Accommodations.
(p) Agent shall have received, in form and substance
reasonably satisfactory to Agent, such other Financing Agreements as Agent shall
reasonably request to further evidence or secure the Obligations or otherwise
effectuate the purpose and intent of this Agreement.
(q) All representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects as of the date made.
(r) No Event of Default shall have occurred hereunder and no
event or condition shall have occurred or shall exist, which, with notice or
passage of time or both, would constitute an Event of Default hereunder.
(s) Agent shall have received, in form and substance
satisfactory to Agent, all releases, terminations and such other documents as
Agent may request to evidence and effectuate full and complete satisfaction of
all Indebtedness and other liabilities and obligations of Borrower and
Guarantors to the holders of the Senior Notes and the termination and release by
the Indenture Trustee for holders of the Senior Notes of any security interest
in and lien upon any assets and properties of Borrower and each Obligor, duly
authorized, executed and delivered by it, including, but not limited to, (i) UCC
termination statements for all UCC financing statements previously filed by the
Indenture Trustee, as secured party, against Borrower or any Obligor, as debtor
and (ii) satisfactions and discharges of any mortgages, deeds of trust or deeds
to secure debt by Borrower or any Obligor in favor of the Indenture Trustee, in
form acceptable for recording in the appropriate governmental office.
(t) No material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of Agent's latest field
examination and no change or event shall have occurred which would materially
impair the ability of Borrower or any Obligor to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or of Agent to enforce the Obligations or realize upon the Collateral.
Section 4.2 Conditions Precedent to All Loans and Letter of Credit
AccommodationsSection 4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
the Loans and Letter of Credit Accommodations to Borrower, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all respects with
the same effect as though such representations and warranties had been made on
and as of the date of the making of each such Loan or providing each such Letter
of Credit Accommodation and after giving effect thereto, except to the extent
that such representation and warranties expressly relate solely to an earlier
date (in which case such representations and warranties shall have been true and
accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall, and Agent shall not have received any notice that
any action, suit, investigation, litigation or proceeding is pending or
threatened in any court or before any arbitrator or Governmental Authority which
(i) purports to enjoin, prohibit, restrain or otherwise materially and adversely
affect (A) the making of the Loans or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or could reasonably be expected to have a Material Adverse Effect; and
(c) no Event of Default and no act, condition or event which,
with notice or passage of time or both, would constitute an Event of Default,
shall exist or have occurred and be continuing on and as of the date of the
making of such Loan or providing each such Letter of Credit Accommodation and
after giving effect thereto.
SECTION 5. COLLATERAL
Section 5.1 Security Interests in Borrower's Assets
---------------------------------------
(a) As collateral security for the prompt performance,
observance and payment in full of all of the Obligations, Borrower hereby
grants, pledges and assigns to Agent, for itself and the ratable benefit of
Lenders continuing security interests in, liens upon, and rights of setoff
against, all of the following assets and properties of Borrower, now owned and
hereafter acquired and arising, except as otherwise provided in Section 5.1(b)
hereof (which assets and properties, together with all other collateral security
for the Obligations heretofore, now or hereafter granted to or otherwise held or
acquired by Agent or any Lender are referred to herein as the "Collateral"):
(i) (A) all Accounts; (B) all right, title and interest in, to and in
respect of all goods relating to Accounts, including, without limitation, all
goods described in invoices, documents, contracts or instruments with respect
to, or otherwise representing or evidencing, any Account or other Collateral,
including, without limitation, all returned, reclaimed or repossessed goods; (C)
all right, title and interest, and all enforcement and other rights, remedies,
and security and liens, in, to and in respect of the Accounts and other
Collateral, including, without limitation, rights of stoppage in transit,
replevin, repossession and reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, guaranties or other contracts of
suretyship with respect to the Accounts, deposits or other security for the
obligation of any Account Debtor and credit and other insurance with respect to
Accounts; (D) all deposit accounts; (E) all securities and other investment
property; (F) all monies, securities and other property and the proceeds
thereof, now or hereafter held or received by, or in transit to, Agent or any
Lender or any Participant from or for Borrower, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all of Borrower's deposits
(general or special), balance, reserves, sums and credits with Agent or any
Lender or Participant at any time existing;
(ii) all of Borrower's now owned or hereafter
acquired Chattel Paper, Instruments and
Documents;
(iii) all General Intangibles;
(iv) all Inventory;
(v) all Equipment located in the United States;
(vi) all Real Property located in the United
States;
(vii) all present and future books and records
relating to any of the above, including,
without limitation, all ledgers, books of
account, records, tapes, cards, computer
programs, computer disks or tape files,
computer printouts, computer runs, computer
data and other computer prepared information
in possession or control of Borrower, any
computer service bureau or other third
person; and
(viii) all products and proceeds of the foregoing,
in any form, including, without limitation,
any insurance proceeds and any claims
against third persons for loss or damage to
or destruction of any or all of the
foregoing.
(b) Notwithstanding anything to the contrary set forth in
Subsection 5.1(a)(i) above or in the other Financing Agreements, the types or
items of Collateral described in such subsection shall not include any rights
under any contract, lease or license agreement covering personal property in
respect of which the valid grant of a security interest requires the consent of
the other party to the contract, lease or license agreement which has not been
or is not obtained, provided, that, the foregoing exclusion shall in no way be
construed so as to limit or impair Agent's unconditional continuing security
interests in and liens upon any rights or interests of Borrower to monies due or
to become due under any such contract, lease or license agreement.
Section 5.2 Security Interests in Guarantors' Assets
----------------------------------------
(a) Concurrently herewith, in order to induce Agent and
Lenders to enter into this Agreement and the other Financing Agreements and make
the Loans and provide the Letter of Credit Accommodations as set forth herein,
each of the Guarantors shall execute and deliver to Agent, for itself and the
ratable benefit of Lenders, an absolute and unconditional Amended and Restated
Guarantee of payment of the Obligations in the form attached as Exhibit G hereto
as from time to time amended, modified, supplemented, extended, renewed,
restated or replaced, collectively, the "Guarantees").
(b) Concurrently herewith, each of the Guarantors is granting
to Agent, for itself and the ratable benefit of Lenders, security interests in
and liens upon certain now owned and hereafter acquired properties and assets of
such Guarantor as more fully set forth in the Amended and Restated General
Security Agreement executed and delivered by such Guarantor to Agent
concurrently herewith, which security interests and liens shall secure all
existing and hereafter arising obligations, liabilities and indebtedness of such
Guarantor to Agent and Lenders pursuant to such Guarantor's Guarantee.
(c) The Guarantees and the collateral security described in
Section 5.2(b) and any other collateral security now or hereafter pledged or
granted to Lender by any of the Guarantors or any third person are collectively
sometimes referred to herein as the "Guarantor Collateral".
SECTION 6. REPRESENTATIONS AND WARRANTIESSECTION 6. REPRESENTATIONS AND
WARRANTIES. Borrower hereby represents and warrants to Agent and Lenders as
follows, which representations and warranties are continuing and shall survive
the execution and delivery hereof, and the truth and accuracy of each, together
with the representations and warranties in the other Financing Agreements, being
a continuing condition of each Loan and Letter of Credit Accommodation:
Section 6.1 Organization and Qualification.
(a) Each of Borrower and Guarantors is a duly organized and
validly existing corporation in good standing under the laws of its state or
jurisdiction of incorporation, and has the corporate power and authority to own
its properties and to transact the business in which it is engaged or presently
proposes to engage. Borrower has qualified to do business as a foreign
corporation in the states and other jurisdictions listed on Schedule 6.1(a)
hereto, which constitute all states or other jurisdictions in which failure to
so qualify could have a Material Adverse Effect on Borrower. No Guarantor has
failed to qualify to do business as a foreign corporation in any state or other
jurisdiction in which the failure to so qualify has a Material Adverse Affect.
(b) Borrower and Guarantors do not have any Subsidiaries as of
the date hereof, except as set forth on Schedule 6.1(b) hereto.
Section 6.2 Corporate Power and AuthoritySection 6.2 Corporate Power
and Authority. Borrower has the corporate power and authority to borrow and each
of Borrower and Guarantors has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and the other
Financing Agreements and all other agreements, instruments and documents
delivered by Borrower and Guarantors pursuant hereto and thereto applicable to
it, and each of Borrower and Guarantors has taken or caused to be taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement, the other Financing Agreements and the other agreements
relating hereto or thereto to which it is a party, the present and future
borrowings by Borrower hereunder and thereunder and the execution, delivery and
performance of the instruments and documents delivered and to be delivered by it
pursuant hereto and thereto. This Agreement and the other Financing Agreements
to which it is a party constitute and will constitute legal, valid and binding
obligations of Borrower and Guarantors, enforceable in accordance with their
respective terms.
Section 6.3 Capitalization.
(a) All of the issued and outstanding shares of Capital Stock
of Borrower hereto and have been duly authorized and are fully paid and
nonassessable, free and clear of all claims, liens, pledges and encumbrances of
any kind. All of the issued and outstanding shares of Capital Stock of each of
the Guarantors are directly and beneficially owned and held by Borrower and have
been duly authorized and are fully paid and non-assessable, free and clear of
all claims, liens, pledges and encumbrances of any kind.
(b) After the creation of the Obligations and the security
interests of Agent, for itself and the ratable benefit of Lenders, and
consummation of the transactions contemplated under the Plan, Borrower will
continue to be able to pay its debts as they mature and has (and has reason to
believe it will continue to have) sufficient capital (and not unreasonably small
capital) to carry on its business and all businesses in which it now engages or
proposes to engage. The assets and properties of Borrower at a fair valuation
and at their present fair salable value are, and will be, greater than the
Indebtedness and other liabilities of Borrower, and including contingent
liabilities computed in the amount which, to the best of Borrower's knowledge,
represents an amount which can reasonably be expected to become an actual or
matured liability. Borrower has sufficient capital to carry on all businesses
and transactions in which it now engages or proposes to engage in, is solvent
and will, in the reasonable, good faith determination of Borrower as of the date
hereof, continue to be solvent after the creation of the Obligations and the
security interests in favor of Agent, for itself and the ratable benefit of
Lenders, and is able to pay its debts as they mature.
Section 6.4 Compliance with Other Agreements and Applicable Law
(a) Each of Borrower and Guarantors is not in default under,
in violation of or in contravention of, in any respect, any indenture, mortgage,
deed of trust, deed to secure debt, material agreement or instrument to which it
is a party or by which it or any of its assets or properties may be or are
bound.
(b) Neither the execution and delivery of this Agreement, the
other Financing Agreements, or any of the instruments and documents to be
delivered pursuant hereto or thereto, nor the consummation of the transactions
herein or therein contemplated, nor compliance with the provisions hereof or
thereof, has violated any law or regulation or any order or decree of any court
or Governmental Authority in any respect or does or will conflict with or result
in the breach of, or constitute a default in any respect under, any indenture,
mortgage, deed of trust, material agreement or instrument to which Borrower or
any Guarantor is a party or may be bound, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property of
Borrower or any Guarantor (except as specifically contemplated hereunder or
under the other Financing Agreements) or violate any provision of the
Certificate of Incorporation or By-Laws of Borrower or any Guarantor.
(c) Borrower and each of the Guarantors has obtained all
material permits, licenses, approvals, consents, certificates, orders or
authorizations of any Governmental Authority required for the lawful conduct of
its business and is in compliance in all material respects with the requirements
of all applicable laws, rules, regulations and orders of any Governmental
Authority relating to Borrower's or such Guarantor's business, as the case may
be, (including, but not limited to, those set forth in or promulgated pursuant
to ERISA, the Occupational Safety and Health Act of 1970, as amended, the Fair
Labor Standards Act of 1938, as amended, the Code, and the Environmental Laws).
Schedule 6.4(c) hereto sets forth all material permits, licenses, approvals,
consents, certificates, orders or authorizations (collectively, "Permits")
issued to or held by Borrower as of the date hereof by any Federal, State or
local Governmental Authority. The Permits constitute all permits, licenses,
approvals, consents, certificates, orders or authorizations necessary for
Borrower and Guarantor to own and operate their respective businesses as
presently conducted or proposed to be conducted where the failure to have such
Permits would have a Material Adverse Effect. Except as described on Schedule
6.4(c) hereto, all of the Permits are valid and subsisting and in full force and
effect and there are no actions, claims or proceedings pending or threatened
that seek the revocation, cancellation, suspension or modification of any of the
Permits.
Section 6.5 Governmental ApprovalSection 6.5 Governmental Approval. No
consent, approval or other action of, or filing with, or notice to any
Governmental Authority is required in connection with the execution, delivery
and performance of this Agreement, the other Financing Agreements or any of the
instruments or documents to be delivered pursuant hereto or thereto, except for
the filing of UCC financing statements and the recording of other instruments
required to perfect security interests or liens in certain of the Collateral,
including, but not limited to, the recording of the modification agreements with
respect to the existing Mortgages.
Section 6.6 Chief Executive Office; Collateral LocationsSection 6.6
Chief Executive Office; Collateral Locations. The address of the principal place
of business, the chief executive office and the location of books and records
relating to the Accounts of Borrower is as set forth on Schedule 6.6 hereto,
which address is the mailing address for such principal place of business and
chief executive office. Subject to Section 7.2 below, as of the date hereof, the
Collateral is located only at the locations set forth on Schedule 6.6.
Section 6.7 Priority of Liens; Title to Properties.
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(a) The security interests and liens granted to Agent for
itself and the ratable benefit of Lenders under this Agreement and the other
Financing Agreements constitute valid and perfected liens and security interests
in and upon the Collateral subject only to the liens indicated on Schedule 6.7
hereto and the liens permitted under Section 7.5 hereof.
(b) Each of Borrower and Guarantors has good and marketable
title to all of its properties and assets, subject to no liens, mortgages,
pledges, security interests, encumbrances or charges of any kind, except those
directly in favor of or assigned to Agent and such others as are specifically
permitted under the provisions of this Agreement as listed on Schedule 6.7
hereto or under Section 7.5 hereof and the other Financing Agreements. Each of
Borrower and Guarantors has peaceful and undisturbed possession of all Real
Property and Equipment and such other assets as may be necessary for its
business as presently conducted or proposed to be conducted and under all
leases, licenses and easements necessary for the operation of its properties and
business as presently conducted or proposed to be conducted.
Section 6.8 Tax ReturnsSection 6.8 Tax Returns. Except as set forth on
Schedule 6.8, each of Borrower and Guarantors has filed, or caused to be filed
all Federal, State, county, local, foreign and other tax returns, reports and
declarations which are required to be filed by it and as to which an extension
has not been granted and has paid or caused to be paid all taxes shown to be due
and payable on said returns and reports or in any assessment received by it, to
the extent that such taxes have become due and payable, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower or such Guarantor and with respect
to which adequate reserves have been set aside on its books in accordance with
GAAP. Adequate provision has been made in accordance with GAAP for the payment
of all material accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
Section 6.9 LitigationSection 6.9 Litigation. Except as set forth on
Schedule 6.9 hereto, there is no present investigation by any Governmental
Authority pending or, to the best of the knowledge of Borrower or Guarantors,
threatened against or affecting Borrower or any Guarantor or their respective
properties or business and there is no present action, suit, proceeding or claim
by any Person pending or, to the best of the knowledge of Borrower or any
Guarantor, threatened against Borrower or any Guarantor or its assets or
goodwill, or affecting any transactions contemplated by this Agreement, the
other Financing Agreements, or other instruments, agreements or documents
delivered in connection herewith or therewith, which if adversely determined
with respect to it, would have a Material Adverse Effect.
Section 6.10 Intellectual PropertySection 6.10 Intellectual Property.
Each of Borrower and Guarantor owns or licenses all patents, trademarks,
servicemarks, logos, tradenames, trade secrets, know-how, copyrights, or
licenses and other rights with respect to any of foregoing, which are necessary
for the operation of its business as presently conducted or proposed to be
conducted. No claim or litigation is pending or threatened against or affecting
Borrower or any Guarantor contesting its right to sell or use any product,
process, method, substance, part or other material.
Section 6.11 AccountsSection 6.11 Accounts. Each Account represents a
valid and legally enforceable indebtedness based upon an actual and bona fide
sale and delivery of goods or rendition of services in the ordinary course of
the business of Borrower which has been finally accepted by the Account Debtor
and for which the Account Debtor is unconditionally liable to make payment of
the amount stated in each invoice, document or instrument evidencing the Account
in accordance with the terms thereof, without offset, defense or counterclaim,
except where such offset, defense of counterclaim would not have a Material
Adverse Effect. All statements made and all unpaid balances appearing in the
invoices, documents and instruments evidencing each Account, in each case made
by Borrower, are true and correct in all material respects and are in all
material respects what they purport to be and all signatures and endorsements
that appear thereon that have been made by Borrower are genuine and all
signatories and endorsers have full capacity to contract. None of the
transactions underlying or giving rise to any Account violates any Federal,
State or foreign laws or regulations applicable to Borrower where any such
violation would have a Material Adverse Effect, and all documents relating to
the Accounts are legally sufficient under such laws or regulations and shall be
legally enforceable in accordance with their terms and all recording, filing and
other requirements of giving public notice under any applicable law have been
duly complied with in all material respects.
Section 6.12 Employee Benefits.
(a) Each of Borrower and its Subsidiaries has not engaged in
any transaction in connection with which Borrower and its Subsidiaries or any of
its or their ERISA Affiliates, could be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Code.
(b) No liability to the Pension Benefit Guaranty Corporation
(other than liability for premiums in the ordinary course of the business of
Borrower) has been or is expected by Borrower or any Subsidiary to be incurred
with respect to any employee pension benefit plan of Borrower or its
Subsidiaries or any of its or their ERISA Affiliates. There has been no
reportable event (within the meaning of Section 4043(b) of ERISA) or any other
event or condition with respect to any employee pension benefit plan of Borrower
or any of its Subsidiaries or any of its or their ERISA Affiliates which
presents a risk of termination of any such plan by the Pension Benefit Guaranty
Corporation except as set forth on Schedule 6.12 hereto.
(c) Full payment has been made of all amounts which Borrower
and its Subsidiaries or any of its or their ERISA Affiliates is required under
Section 302 of ERISA and Section 412 of the Code to have paid under the terms of
each employee pension benefit plan as contributions to such plan as of the last
day of the most recent fiscal year of such plan ended prior to the date hereof,
except as set forth on Schedule 6.12 hereto, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any employee pension benefit plan
except as set forth on Schedule 6.12 hereto.
(d) The current value of all vested accrued benefits under all
employee pension benefit plans maintained by Borrower or its Subsidiaries that
are subject to Title IV of ERISA does not exceed the current value of the assets
of such plans allocable to such vested accrued benefits, except as set forth on
Schedule 6.12 hereto. The terms "current value" and "accrued benefit" have the
meanings specified in Section 4062(b)(1)(A) and Section 3 of ERISA,
respectively.
(e) Neither Borrower nor any of its Subsidiaries nor any of
its or their ERISA Affiliates is or has ever been obligated to contribute to any
"multi-employer plan" (as such term is defined in Section 4001(a)(3) of ERISA)
that is subject to Title IV of ERISA, except as set forth on Schedule 6.12
hereto.
Section 6.13 Environmental Compliance.
(a) Except as set forth on Schedule 6.13 hereto, neither
Borrower nor any of its Subsidiaries have generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in any manner
which at any time materially violates any applicable Environmental Law or any
license, permit, certificate, approval or similar authorization thereunder in
any material respect and the operations of Borrower and its Subsidiaries comply
in all material respects with all Environmental Laws and all licenses, permits,
certificates, approvals and similar authorizations thereunder.
(b) Except as set forth on Schedule 6.13 hereto, there has
been no investigation, proceeding, complaint, order, directive, claim, citation
or notice by any Governmental Authority or any other person nor is any pending
or, to the best of Borrower's knowledge, threatened, with respect to any
material noncompliance with or violation of the requirements of any
Environmental Law by Borrower or any of its Subsidiaries in any material respect
or the release, spill or discharge, threatened or actual, of any Hazardous
Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which materially affects Borrower
or its Subsidiaries or their businesses, operations or assets or any properties
at which Borrower or its Subsidiaries transported, stored or disposed of any
Hazardous Materials.
(c) Except as set forth on Schedule 6.13 hereto, neither
Borrower nor its Subsidiaries have any material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials.
(d) Borrower and its Subsidiaries have all material licenses,
certificates, approvals and other Permits required to be obtained or filed in
connection with the operations of Borrower and its Subsidiaries under any
Environmental Law and all of such licenses, permits, certificates, approvals and
other Permits are valid and in full force and effect.
Section 6.14 Bank AccountsSection 6.14 Bank Accounts. All of the
deposit accounts, investment accounts or other accounts in the name of or used
by Borrower or its Subsidiaries maintained at any bank or other financial
institution are set forth on Schedule 6.14 hereto, subject to the right of
Borrower to establish new accounts in accordance with Section 7.18 below.
Section 6.15 Investment CompanySection 6.15 Investment Company.
Borrower and its Subsidiaries are not an "investment company", or an "affiliated
person" or "promoter" or "principal underwriter", as such terms are defined in
the Investment Company Act of 1940, as amended. The making of the Loans by Agent
on behalf of Lenders, the application of the proceeds and the repayment thereof
by Borrower and the performance of the transactions contemplated herein will not
violate any provision of the Investment Company Act of 1940, as amended, or any
rule, regulation or order issued pursuant thereto.
Section 6.16 Regulation G; Regulation U; Securities Exchange Act of
1934Section 6.16 Regulation G; Regulation U; Securities Exchange Act of 1934.
Borrower does not own any "margin security" or "margin stock" as such term is
defined in Regulation G and Regulation U, respectively, each as amended by the
Board. The proceeds of the borrowings made pursuant to this Agreement and the
other Financing Agreements will be used by Borrower only for the purposes
contemplated hereunder. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or
margin stock or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any margin security or margin stock
or for any other purpose which might cause any of the Loans to be considered a
"purpose credit" within the meaning of Regulation G or U of the Board, each as
amended. Borrower will not take, nor will Borrower permit any agent acting in
its behalf to take, any action which might cause this Agreement or the other
Financing Agreements, or instruments delivered pursuant hereto or thereto, to
violate any regulation of the Board or to violate the Securities Exchange Act of
1934 or any state or other securities laws, in each case as in effect on the
date hereof or as amended hereafter.
Section 6.17 No Material Adverse ChangeSection 6.17 No Material Adverse
Change. There has been no material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of Borrower and its
Subsidiaries (taken as a whole) since the date of the most recent financial
statements with respect thereto submitted to Agent or the date of the most
recent field examination with respect thereto conducted by Agent.
Section 6.18 Financial Statements.
(a) None of the financial statements, reports and other
information furnished or to be furnished by Borrower to Agent or any Lender with
respect to Borrower and its Subsidiaries contain, as of their respective dates,
any untrue statement of material fact or (taken as a whole) omit to state any
material fact necessary to make the information therein not misleading. Such
financial statements and reports were and will be prepared in accordance with
GAAP consistently applied, and shall fairly present the consolidated and
consolidating financial condition and results of operations of the applicable
Persons, as of the dates and for the periods indicated thereon.
(b) The opening consolidated balance sheet as of the Effective
Date of the Plan and future consolidated cash flow projections for Borrower and
its Subsidiaries (together with summaries of assumptions and projected
assumptions, based on historical performance with respect thereto) furnished by
Borrower to Agent represent the reasonable good faith opinion of Borrower and
its management as to the subject matter thereof and based on assumptions which
Borrower has determined to be fair and reasonable in view of current and
reasonably foreseeable business conditions.
Section 6.19 Disclosure.
(a) The information contained in the representations and
warranties of Borrower and Guarantors set forth in this Agreement, the other
Financing Agreements, or in any other instrument, document, list, certificate,
statement, schedule or exhibit heretofore delivered or to be delivered to Agent
or any Lender, as contemplated in this Agreement or in the other Financing
Agreements, does not contain and will not contain any untrue statement of a
material fact and (taken as a whole) does not omit and will not omit to state a
material fact necessary in order to make the information contained herein or
therein not misleading.
(b) After giving effect to the transactions contemplated by
this Agreement, the other Financing Agreements, and the other instruments or
documents delivered in connection herewith and therewith, there does not exist
and there has not occurred any act, condition or event which constitutes an
Event of Default or which, with notice or passage of time or both would
constitute an Event of Default.
Section 6.20 Labor DisputesSection 6.20Labor Disputes. There is no
collective bargaining agreement or other labor contract covering employees of
Borrower or its Subsidiaries, except as set forth on Schedule 6.20 hereto. To
the best of Borrower's knowledge, no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of Borrower or any of its Subsidiaries. There is no pending or
threatened strike, work stoppage, material unfair labor practice claim, or other
material labor dispute against or affecting Borrower or its Subsidiaries or
their respective employees, except as set forth on Schedule 6.20 hereto.
Section 6.21 Corporate Name; Prior TransactionsSection 6.21 Corporate
Name; Prior Transactions. Borrower has not, during the past five years, been
known by or used any other corporate or fictitious name or been a party to any
merger or consolidation, or acquired all or substantially all of the assets of
any Person, or acquired any of its property or assets out of the ordinary course
of business, except as set forth on Schedule 6.21 hereto.
Section 6.22 Material Contracts. Borrower is not in breach of or in
default under any Material Contract, except as set forth on Schedule 6.22
hereto.
Section 6.23 Year 2000 Compliance. In regard to each material hardware,
software, and firmware computer piece of equipment which is owned, leased or
licensed and used by Borrower in connection with the operation of Borrower's
business, Borrower is taking appropriate action designed to ensure that such
computer equipment will be able to accurately process date/time data (including,
but not limited to, calculating, comparing and sequencing) from, into, and
between the twentieth and twenty-first centuries, the years 1999 and 2000, and
leap year calculations and, after September 30, 1999, shall be able to
accurately process date/time data (including, but not limited to, calculating,
comparing and sequencing) from, into, and between the twentieth and twenty-first
centuries, the years 1999 and 2000, and leap year calculations except where the
inability to do so would not have a Material Adverse Effect.
SECTION 7. ADDITIONAL COVENANTS. In addition to the covenants set forth in
the other Financing Agreements, Borrower hereby covenants to and agrees with
Agent and Lenders that Borrower shall comply with the following covenants or
cause the same to be complied with, unless Agent shall otherwise consent in
writing:
Section 7.1 TradenamesSection 7.1 Tradenames. Each invoice issued by
Borrower shall bear the name of Borrower in such manner so as to indicate that
Borrower is the issuer thereof. Some of Borrower's invoices may from time to
time be rendered to customers under the tradenames listed on Schedule 6.21
hereto (which, together with any new tradenames used after the date hereof are
referred to collectively as the "Tradenames" and individually, as a
"Tradename"). As to the Tradenames used by it, and the related Accounts,
Borrower hereby agrees that:
(a) Each Tradename is a tradename (and not an independent
corporation or other legal entity) by which Borrower may identify and sell or
lease certain of its goods or services and conduct a portion of its business.
(b) All Accounts and proceeds thereof (including any returned
merchandise) which arise from the sale or lease of goods or rendition of
services invoiced under the Tradename shall be owned solely by Borrower and
shall be subject to the security interests of Agent and other terms of this
Agreement and the other Financing Agreements.
(c) All assignments or confirmatory schedules of Accounts
delivered to Agent by Borrower, whether in the name of any of the Tradenames or
of Borrower, shall be executed by Borrower as owner of such assigned Accounts.
(d) New Tradenames may be used by Borrower, but only if (i)
Agent is given at least thirty (30) days prior written notice of the intended
use of any new Tradename and (ii) such supplemental financing statements or
similar instruments as Agent may request shall be executed and delivered to
Agent by Borrower for filing or recording by Agent, prior to the use of such new
Tradename.
Section 7.2 New Collateral LocationsSection 7.2New Collateral
Locations. Borrower may open any new location within the continental United
States provided it (i) gives Agent thirty (30) days prior written notice of the
intended opening of any such new location and (ii) executes and delivers, or
causes to be executed and delivered, to Agent such agreements, documents, and
instruments consistent with the other then existing Financing Agreements to the
extent applicable or otherwise as Agent may deem reasonably necessary or
desirable to protect its interests in the Collateral to be located in such
location, including, without limitation, UCC financing statements and Collateral
Access Agreements from appropriate Persons.
Section 7.3 Subsidiaries. Borrower shall not form or acquire, and shall
not permit any Subsidiary to form or acquire, any Subsidiary without the prior
written consent of Agent. In the event Agent so consents, promptly upon such
formation or acquisition, (a) such Subsidiary shall be subject to the terms of
this Agreement and bound by the terms and conditions hereof applicable to the
Subsidiaries of Borrower; (b) Borrower shall cause any such Subsidiary to
execute and deliver to Agent, in form and substance satisfactory to Agent and
its counsel: (i) an absolute and unconditional guarantee of payment of any and
all present and future Obligations of Borrower to Agent and Lenders containing
terms substantially similar to those guarantees entered into by the existing
Subsidiaries of Borrower in favor of Agent and Lenders as of the date hereof,
(ii) a security agreement granting to Agent for itself and the ratable benefit
of Lenders a first security interest and lien (except as otherwise consented to
in writing by Agent) upon all of the assets of such Subsidiary containing terms
substantially similar to the security agreements entered into by the existing
Subsidiaries of Borrower in favor of Agent and Lenders as of the date hereof,
(iii) related Uniform Commercial Code Financing Statements, and (iv) such other
agreements, documents and instruments as Agent may require, including, but not
limited to, supplements and amendments hereto and other loan agreements or
instruments evidencing Indebtedness of such new Subsidiary to Agent and Lenders.
Section 7.4 IndebtednessSection 7.4 Indebtedness. Borrower shall not,
and shall not permit any Subsidiary to, create, incur, assume or permit to
exist, contingently or otherwise, any Indebtedness, except:
(a) the Obligations;
(b) Indebtedness consisting of trade obligations and normal
accruals in the ordinary course of business not yet due and payable, or with
respect to which Borrower is contesting in good faith the amount or validity
thereof by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books;
(c) Indebtedness incurred in the ordinary course of its
business secured only by liens permitted under Section 7.5(b) hereof;
(d) Indebtedness of Borrower or its Subsidiaries to the
extent permitted under Section 7.5(d) hereof;
(e) contingent Indebtedness permitted under Section 7.6
hereof;
(f) Indebtedness incurred in the ordinary course of business
consisting of unsecured non-current accruals and deferred liabilities relating
to deferred compensation and taxes, environmental liabilities, post-employment
benefits for health care, pensions, life insurance and long term disability
benefits and similar items;
(g) Indebtedness of Borrower in respect of Interest Rate
Protection Obligations incurred in the ordinary course of business;
(h) unsecured Indebtedness of Borrower to any Subsidiaries
arising after the date hereof pursuant to loans by such Subsidiaries to
Borrower, provided, that, (i) such Indebtedness is subject to, and subordinate
in right of payment to, the right of Agent and Lenders to receive the prior
indefeasible payment and satisfaction in full of all of the Obligations on terms
and conditions acceptable to Agent, (ii) Agent shall have received, in form and
substance satisfactory to Agent, a subordination agreement providing for, inter
alia, the terms of the subordination in right of payment of such Indebtedness of
Borrower to the prior indefeasible payment and satisfaction in full of all of
the Obligations, duly authorized, executed and delivered by such Subsidiaries
and Borrower, (iii) Borrower shall not, directly or indirectly make, or be
required to make, any payments in respect of such Indebtedness so long as any of
the Obligations are outstanding and unpaid and this Agreement has not been
terminated, (iv) Borrower shall not, directly or indirectly, (A) amend, modify,
alter or change any terms of such Indebtedness or any agreement, document or
instrument related thereto, or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest
any sums for such purpose, and (v) Borrower shall furnish to Agent all notices,
demands or other materials in connection with such Indebtedness either received
by Borrower or on its behalf, promptly after receipt thereof, or sent by
Borrower or on its behalf, concurrently with the sending thereof, as the case
may be;
(i) unsecured Indebtedness of Subsidiaries of Borrower to
Borrower arising after the date hereof pursuant to loans by Borrower to such
Subsidiaries to the extent such loans by Borrower are permitted under Section
7.6 below, provided, that, such Indebtedness shall not be evidenced by any
promissory note or other instrument, unless the original of such note or other
instrument is pledged and delivered to Agent (with such endorsement thereof as
Agent may require);
(j) Indebtedness, the proceeds of which are used to refinance
(or which represents an amendment, renewal, extension or refunding of)
outstanding Indebtedness of Borrower or any of its Subsidiaries other than the
Obligations, which is subordinated to the Obligations to the same extent as the
Indebtedness so refinanced and, in the case of Indebtedness which is
subordinated to the Obligations, with an average life to maturity equal to or
greater than the remaining term of this Agreement; provided, that to the extent
the principal amount of the new Indebtedness exceeds the principal amount of the
Indebtedness to be refinanced, such excess must be used to reduce the
outstanding Obligations.
(k) Indebtedness of Borrower or any Guarantor existing on the
date hereof which is described on Schedule 7.4 hereto, provided, that, except
for prepayments incident to refinancings permitted under Section 7.4 hereof: (i)
Borrower may, and shall cause any such Guarantor to, only make regularly
scheduled payments of principal and interest as set forth in Schedule 7.4, and
(ii) Borrower shall not, and shall cause any such Guarantor not to, directly or
indirectly, (A) make any prepayments or other non-mandatory payments in respect
of such Indebtedness or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose or (C) amend, modify, alter or change the terms of the
arrangements related thereto, or any agreement or instrument evidencing such
Indebtedness, and (iii) Borrower shall furnish to Lender all notices or demands
received concerning such Indebtedness promptly after receipt thereof or sent by
Borrower, concurrently with the sending thereof, as the case may be.
(l) Any other Indebtedness in an amount not to exceed $1,000,000 in the
aggregate at any one time.
Section 7.5 Limitation on Liens. Borrower will not, and will not permit any
Guarantor to, create, incur, assume, or permit to exist any mortgage, pledge,
security interest, lien, encumbrance of any nature whatsoever on any of its
respective assets or properties (including, without limitation, the Collateral),
whether now owned or hereafter acquired, except:
(a) the security interests and liens upon the Collateral and
the Guarantor Collateral in favor of Agent and Lenders;
(b) tax, mechanics and other non-consensual statutory liens
arising in the ordinary course of Borrower's or any Guarantors' business to the
extent: (i) such liens secure Indebtedness which is not overdue or (ii) until
foreclosure or similar proceedings shall have been commenced, such liens secure
Indebtedness relating to claims or liabilities which are (A) fully insured and
being defended at the sole cost and expense and at the sole risk of the insurer
or (B) being contested in good faith by appropriate proceedings available to
Borrower or any such Guarantor prior to the commencement of foreclosure or other
similar proceedings and are adequately escrowed for or reserved against in the
reasonable judgment of Agent;
(c) liens arising in connection with worker's compensation,
unemployment insurance, surety, insurance or financial responsibility, appeal
and release bonds upon securities pledged as collateral for any of the
foregoing;
(d) purchase money mortgages or other purchase money liens or
security interests upon any specific fixed assets hereafter acquired, or
mortgages, liens, or security interests existing on any such future fixed assets
at the time of acquisition thereof (including, without limitation, Capitalized
Lease Obligations) or in connection with the refinancing of existing capitalized
leases with respect to specific fixed assets, provided, that (i) the aggregate
amount of all Indebtedness secured by such purchase money mortgages or other
purchase money liens or security interests shall not exceed $10,000,000
outstanding at any time, (ii) no such purchase money mortgage, lien or security
interest (or capitalized or finance lease, as the case may be) with respect to
specific future fixed assets or as refinanced shall extend to or cover any other
property, other than the specific fixed assets so acquired, or acquired or
refinanced subject to such mortgage, lien or security interest (or lease) and
the proceeds thereof, (iii) such mortgage, lien or security interest secures the
obligation to pay the purchase price of such specific fixed assets only (or the
Capitalized Lease Obligations), or existed on such assets at the time of
Borrower's acquisition thereof, and (iv) except for mortgages, liens and
security interests which existed on assets at the time of Borrower's acquisition
thereof, the principal amount secured thereby shall not exceed one hundred
(100%) percent of the cost of the fixed assets so acquired (it being agreed that
for purposes of this Section 7.5(d), purchase money financing of a fixed asset
shall include such financing (including, without limitation, sale-leaseback
financing) that is consummated with respect to any such fixed asset within
ninety (90) days after Borrower's acquisition of such fixed asset) and (v) at
the time of the granting of such mortgage, lien or security interest, no Event
of Default or act condition, or event which with notice or passage of time or
both would constitute and Event of Default, shall exist or have occurred and be
continuing.
(e) the liens, encumbrances or security interests listed on
Schedule 6.7 hereto, permitted under the other Financing Agreements, if any, or
set forth on the title insurance policy(ies) issued to Lender with respect to
the Real Property, provided, that, such liens, encumbrances or security
interests with respect to the Real Property: (i) do not materially interfere
with the use of the Real Property or the ordinary conduct of Borrower's business
as presently conducted or proposed to be conducted thereon and (ii) do not
materially impair the value of the affected Real Property.
Section 7.6 Loans, Investments, Guaranties, Etc.Section 7.6 Loans,
Investments, Guaranties, Etc. Borrower will not, and will not permit any
Guarantor to, directly or indirectly, make any loans or advance money or
property to any Person, or invest in (by capital contribution, dividend or
otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all or
a substantial part of the assets or property of any Person, or guarantee,
assume, endorse, or otherwise become responsible (directly or indirectly) for
the Indebtedness, performance, obligations or dividends of any Person or agree
to do any of the foregoing, except:
(a) the Guarantee by each of the Guarantors of the Obligations
in favor of Lender or by any other Subsidiary of Borrower in favor of Lender;
(b) the endorsement of instruments for collection or deposit
in the ordinary course of business;
(c) loans to, or investments in, by Borrower to (i) Birdhill
Limited, a Hong Kong corporation and Manhattan Industries (Far East) Limited, a
Hong Kong corporation not to exceed $3,000,000 in the aggregate at any time
outstanding, (ii) ▇▇▇▇▇▇ Caribbean, a Guatemalan corporation, not to exceed
$1,000,000 in the aggregate at any time outstanding and (iii) ▇▇▇▇▇▇ Canada Inc,
a Canadian corporation, not to exceed $500,000 at any time outstanding on or
before January 31, 2000 and zero ($0) dollars thereafter;
(d) investments in the stock of any guaranteeing Subsidiary,
which Subsidiary is permitted in accordance with Section 7.3 hereof, and
Guarantees by such Subsidiary in favor of Agent of the Obligations of Borrower
to Agent and Lenders;
(e) advances to officers and employees in the ordinary course
of business not to exceed, in the aggregate for the Borrower and the Guarantors
at any one time outstanding, the sum of (i) $1,000,000 plus (ii) amounts
outstanding as of the Effective Date;
(f) investments in Cash Equivalents, which shall be pledged
and delivered to Agent upon Agent's request;
(g) the additional capital investments (which for this purpose
shall not include Capital Expenditures), guarantees, insurance bonds,
performance or surety bonds described on Schedule 7.6 annexed hereto, which sets
forth the parties, amounts, time periods and key terms with respect thereto.
Section 7.7 Transactions with AffiliatesSection 7.7 Transactions with
Affiliates. Borrower will not, and will not permit any Guarantor to, directly or
indirectly purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any shareholder, officer, director, agent, employee or
Affiliate, except on prices or terms no less favorable than would have been
obtained in an arm's length transaction with a non-affiliated Person.
Section 7.8 Restricted PaymentsSection 7.8 Restricted Payments.
Borrower shall not, directly or indirectly, (i) declare or pay any cash
dividends or dividends payable in property other than stock on account of any
shares of any class of Capital Stock of Borrower now or hereafter outstanding,
or set apart any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class of Capital Stock of Borrower (or set
aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than stock or apply or set apart any sums, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing, (ii) pay to any shareholder,
officer, director, agent, employee or other Affiliate of Borrower any
management, consulting or other fees or any amount for any management assistance
or services rendered by such persons to Borrower or (iii) make any payments in
respect of Indebtedness owing to any shareholder, officer, director or other
Affiliate of Borrower.
Section 7.9 Maintenance of Existence. Borrower will, and will cause each
Guarantor to, at all times preserve, renew and keep in full force and effect its
corporate existence and rights and franchises with respect thereto and maintain
in full force and effect all material Permits, licenses, trademarks, tradenames,
approvals, authorizations, leases and contracts necessary to carry on its
business as presently or proposed to be conducted; provided, however, that this
Section 7.9 shall not prohibit the merger or consolidation of any Guarantor into
(i) Borrower or (ii) another Subsidiary of Borrower that is or becomes a
Guarantor.
Section 7.10 Sale and LeasebacksSection 7.10 Sale and Leasebacks.
Except as permitted in Section 7.5(d), Borrower will not and will not permit any
Guarantor to enter into any arrangement, directly or indirectly, with any Person
whereby Borrower or any Guarantor shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property which it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred.
Section 7.11 Sale of Assets, Consolidation, Merger, Dissolution,
Etc.Section 7.11 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Borrower will not, and will not permit any Guarantor to, directly or indirectly,
merge into or with or consolidate with any other Person or permit any other
Person to merge into or with or consolidate with Borrower or any Guarantor, or
sell, assign, lease, transfer, abandon or otherwise dispose of any Capital Stock
or Indebtedness to any other Person or any of its property or assets to any
other Person (other than (i) sales of Inventory in the ordinary course of
business, and (ii) Equipment as permitted under Section 7.14) or wind up,
liquidate or dissolve or agree to do any of the foregoing.
Section 7.12 Compliance with Laws, Regulations, Etc.
---------------------------------------
(a) Borrower shall, and shall cause each Guarantor to, at all
times comply in all material respects with all applicable provisions of laws,
rules, regulations, licenses, Permits, approvals and orders and duly observe all
requirements, of any foreign, Federal, State or local Governmental Authority,
including, without limitation, ERISA, the Code, the Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended
and the rules and regulations thereunder and all other statutes, rules,
regulations, orders, permits and stipulations relating to environmental matters
and employee health and safety, including, without limitation, all of the
Environmental Laws, except for such noncompliance that would not result in
fines, penalties, injunctive relief or other liabilities which, in the
aggregate, would result in a Material Adverse Effect with respect to Borrower
and the Guarantors.
(b) Borrower shall take prompt and appropriate action to
respond to any material non-compliance with any of the Environmental Laws and
shall regularly report to Agent on such response. If Borrower receives any
notice of (i) the happening of any event involving the use, spill, discharge or
clean-up of any Hazardous Material or (ii) any complaint, order, citation or
notice with regard to air emissions, water discharges, noise emissions or any
other environmental, health or safety matter affecting Borrower from any Person,
including, but not limited to, the United States Environmental Protection Agency
or any state or local environmental agency or authority, then Borrower shall
within five (5) business days of such reciept give written notice of same to
Agent and Lenders. Without limiting the generality of the foregoing, whenever
there is material non-compliance, or any condition which requires any action by
or on behalf of Borrower in order to avoid any such non-compliance, with any
Environmental Law, and such non-compliance could result in fines, penalties,
injunctive relief or other liabilities, which, in the aggregate, would result in
a Material Adverse Effect with respect to Borrower and the Guarantors, Borrower
shall, at Lender's request and Borrower's expense: (i) cause an independent
environmental engineer acceptable to Agent to conduct an assessment of the site
where Borrower's noncompliance or alleged non-compliance with Environmental Laws
has occurred and prepare and deliver to Agent and Lenders a report setting forth
the results of such assessment, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs thereof;
and (ii) provide to Agent and Lenders a supplemental report of such engineer
whenever the scope of the environmental problems, or Borrower's response thereto
or the estimated costs thereof, shall materially change.
Section 7.13 Payment of Taxes and ClaimsSection 7.13 Payment of Taxes
and Claims. Borrower shall, and shall cause each Guarantor to, duly pay and
discharge all taxes, assessments, contributions and governmental charges upon or
against them or their properties or assets, except for taxes which are being
contested in good faith and by appropriate proceedings and which are adequately
reserved against in accordance with GAAP, prior to the date on which penalties
attach thereto. Borrower shall be liable for any sales, transfer, documentary,
stamp or similar tax or penalty imposed upon any transaction under this
Agreement or any of the other Financing Agreements or giving rise to the
Accounts or any other Collateral, provided, that, nothing contained herein shall
be construed to require Borrower to pay or indemnify Lenders and Agent from and
against any income or withholding tax attributable to the income of Agent, any
Lender or Participant from any amounts charged or paid hereunder to Agent, any
Lender or Participant.
Section 7.14 Properties in Good Condition; Covenants as to Inventory,
Real Property and Equipment
(a) Borrower shall keep its properties, and shall cause each
Guarantor to keep its properties, in good repair, working order and condition
(reasonable wear and tear excepted) and, from time to time, make and cause each
Guarantor to make all necessary and proper repairs, renewals, replacements,
additions and improvements thereto, so that the business carried on may be
properly conducted at all times in accordance with prudent business management.
(b) All of the Inventory is and will be held for sale or
lease, or to be furnished in connection with the rendition of services, in the
ordinary course of Borrower's business, and is and will be fit for such
purposes. Borrower will keep the Inventory in good and marketable condition, at
its own expense. Borrower will not, without prior written notice to Lender,
acquire or accept any Inventory on consignment or approval and any such
Inventory shall at all times be clearly identified on the books and records of
Borrower as Inventory held on consignment or approval and such Inventory shall
be separately reported to Agent and not included in the Inventory of Borrower as
reported to Agent. Borrower agrees that all Inventory will be produced in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations, and orders thereunder. Borrower will conduct a physical
count of the Inventory at least once per fiscal year, and at such other times as
Agent reasonably requests, but not to exceed, prior to the occurrence and
continuance of an Event of Default, two (2) times during any calendar year, and
shall promptly supply Lender with a copy of such count accompanied by a report
of the Value of such Inventory. Borrower will not, without Agent's written
consent, sell any material portions of Borrower's Inventory on a ▇▇▇▇-and-hold,
sale and return, sale on approval, or other repurchase or return basis.
(c) The Equipment, other than any Equipment constituting
fixtures as of the date hereof, is now and shall remain personal property and
Borrower shall not permit any of such Equipment to be or become a part of or
affixed to real property without (i) prior written notice to Lender and (ii)
using Borrower's best efforts to deliver or cause to be delivered to Agent such
agreements and other documentation as are reasonably requested by Lender for the
protection and preservation of its security interests and liens, in form and
substance reasonably satisfactory to Lender, including, without limitation,
waivers and subordination agreements by any landlords or mortgagees of statutory
and non-statutory liens and rights of distraint.
(d) Borrower will not, without Lender's prior written consent,
alter or remove any identifying symbol or number on the Equipment. Borrower
shall not, without Agent's prior written consent, sell, lease as a lessor, or
otherwise dispose of any of the Real Property or Equipment; provided, however,
that, without Agent's consent, subject to the conditions set forth below, (i)
Borrower may dispose of obsolete or unusable Equipment used in Borrower's ▇▇▇▇▇
▇▇▇▇▇ or Private Line business having a book value no greater than $250,000
individually, and $750,000 in the aggregate in any fiscal year, and (ii) upon at
least five (5) Business Days prior written notice to Agent, Borrower may dispose
of Real Property and/or Equipment not used in Borrower's ▇▇▇▇▇ ▇▇▇▇▇ and/or
Private Line business, provided that each sale transaction pursuant to which any
such property is sold is arms-length, Borrower receives fair market value for
such property. In the event any of the Real Property and/or Equipment is sold,
transferred or otherwise disposed of with the Lender's prior written consent or
as otherwise permitted hereby, Borrower shall deliver all of the Net Cash
Proceeds of any such sale, transfer or disposition to Agent, which proceeds
shall be applied to the repayment of the Obligations in such order and manner as
Agent shall determine,
(e) Borrower assumes all responsibility and liability arising
from or relating to the use, sale or other disposition of the Inventory and the
Equipment except to the extent of any sale or other disposition thereof by Agent
in the exercise of its remedies after an Event of Default as set forth in
Section 8.2 hereof.
Section 7.15 AppraisalsSection 7.15 Appraisals. Upon the request of
Agent or the Majority Lenders, Borrower shall, at Borrower's expense, no more
than once in any twelve (12) month period, but at any time or times as Agent or
the Majority Lenders may request on or after an Event of Default, deliver, or
cause to be delivered, to Agent and Lenders written reports or appraisals of
Borrower's Inventory in form, scope and methodology, and by an appraiser
acceptable to Agent. Such reports or appraisals shall list all items and
categories thereof, describing the condition of same and setting forth the lower
of cost (calculated on a first-in-first-out basis) or fair market value, in such
form as is satisfactory to Agent.
Section 7.16 InsuranceSection 7.16 Insurance. Borrower shall, and shall
cause each Guarantor to, at all times maintain with financially sound and
reputable insurers, insurance with respect to the Collateral and Guarantor
Collateral against loss or damage of a kind and in the amounts customarily
insured against by corporations of established reputation engaged in the same or
similar business and similarly situated as Borrower and Borrower shall, and
shall cause each Guarantor to, maintain public liability insurance against
claims for personal injury, death or property damage occurring upon, in, about
or in connection with the use of any properties owned, occupied or controlled by
it and occurring in connection with the use (or otherwise) of any products
manufactured or sold by it, workmen's compensation insurance, and business
interruption insurance. Borrower shall, and shall cause each Guarantor to,
furnish copies of certificates, policies or endorsements to Agent as proof of
such insurance, and, if it fails to do so, Agent is authorized, but not
required, to obtain such insurance at the expense of Borrower. All policies
shall provide for at least thirty (30) days' prior written notice to Agent of
any cancellation or reduction of coverage and that Agent may act as attorney for
Borrower or Guarantor, as the case may be, in obtaining, and at any time
following, and during the continuance of an Event of Default, adjusting,
settling, amending and canceling such insurance. Borrower will, and will cause
each Guarantor to, obtain non-contributory lender's loss payable endorsements to
all property and casualty insurance policies in form and substance satisfactory
to Agent specifying that the proceeds of such insurance shall be payable to
Agent as its interests may appear and further specifying that Agent shall be
paid regardless of any act or omission by Borrower or Guarantor, as the case may
be. At its option, Agent may, with the consent of the Majority Lenders, and upon
the direction of the Majority Lenders shall, apply any insurance proceeds
received by Agent at any time to the cost of repairs or replacement of
Collateral or Guarantor Collateral and/or after the occurrence and during the
continuance of an Event of Default to payment of the Obligations, whether or not
then due, in any order and in such manner as Agent, in its discretion, may
determine, or as directed by the Majority Lender or Agent may hold such
insurance proceeds as cash collateral for the Obligations as Agent may determine
or as directed by the Majority Lenders, except as otherwise specifically
provided in any mortgage or deed of trust executed and delivered by Borrower in
favor of Agent.
Section 7.17 Compliance with ERISA. Borrower shall not, with respect to
all employee pension benefit plans maintained by the Borrower or any Subsidiary:
(a) (i) terminate any of such employee pension benefit plans
so as to incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, (ii) allow or suffer to exist any prohibited
transaction involving any of such employee pension benefit plans or any trust
created thereunder that would subject the Borrower or any Subsidiary to a tax or
penalty or other liability on prohibited transactions imposed under section 4975
of the Code or ERISA, (iii) fail to pay to any such employee pension benefit
plan any contribution that it is required to pay to such plan, (iv) allow or
suffer to exist any accumulated funding deficiency, whether or not waived, with
respect to any such employee pension benefit plan, (v) allow or suffer to exist
any occurrence of a reportable event or any other event or condition that
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such employee pension benefit plan that is a single employer
plan, which termination could result in any liability to the Pension Benefit
Guaranty Corporation or (vi) incur any withdrawal liability with respect to any
multi-employer pension plan which is not fully bonded if, in each case, such
action or inaction would materially and adversely affect the business,
properties, operations or condition, financial or otherwise, of Borrower.
(b) As used in this Section 7.17, the term "employee pension
benefit plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
section 4975 of the Code and ERISA.
Section 7.18 Additional Bank AccountsSection 7.18 Additional Bank
Accounts. Borrower shall not, and shall not permit any Guarantor to, directly or
indirectly, open, establish or maintain any deposit account, investment account
or any other account with any bank or other financial institution, other than
the Blocked Accounts and the accounts set forth in Schedule 6.14 hereto, except:
(a) as to any new or additional Blocked Accounts and other such new or
additional accounts which contain any Collateral or Guarantor Collateral or
proceeds thereof, with the prior written consent of Agent and subject to such
conditions thereto as Agent may establish and (b) as to any accounts used by
Borrower or any Guarantor to make payments of payroll, taxes or other
obligations to third parties, after prior written notice to Agent.
Section 7.19 Notice of DefaultSection 7.19 Notice of Default. Promptly
upon becoming aware of the existence of any condition or event that constitutes
an Event of Default pursuant to the provisions of this Agreement or the other
Financing Agreements, Borrower shall give Agent written notice thereof
specifying the nature of such condition or event and the actions that Borrower
has taken, is taking and/or proposes to take to remedy such Event of Default.
Section 7.20 Financial Statements and Other Information.
(a) Borrower shall promptly furnish to Agent and Lenders all
such financial and other information as Agent shall reasonably request relating
to the Collateral and the Guarantor Collateral and the assets, businesses and
operations of Borrower, and notify the auditors and accountants of Borrower that
Agent is authorized to obtain such information directly from them. Without
limiting the foregoing, Borrower shall furnish to Agent and Lenders, in such
detail as Agent shall request, the following:
(i) As soon as available, but in any event not later than one hundred five
(105) days after the close of each fiscal year, audited consolidated balance
sheet, consolidated statement of operations and consolidated statement of cash
flows for Borrower and its Subsidiaries for such fiscal year, and the
accompanying notes thereto, and, (x) if there is material business activity by
any Subsidiary, (y) if the assets of ▇▇▇▇▇▇ Canada Inc. are $2,000,000 or more
at any time during Borrower's 1999 fiscal year or $1,000,000 or more at any time
thereafter or (z) if the assets of any other Subsidiary are at any time
$1,000,000 or more, unaudited consolidating balance sheets, statements of
operations and statements of cash flows for Borrower and any such Subsidiary for
such fiscal year, and the accompanying notes thereto, setting forth in
comparative form figures for the previous fiscal year, all in reasonable detail,
fairly presenting the financial position and the results of operations of
Borrower and any such Subsidiary as at the date thereof and for the fiscal year
then ended, and prepared in accordance with GAAP consistently applied. Such
audited consolidated statements of Borrower and its Subsidiaries shall be
examined in accordance with generally accepted auditing standards by and
accompanied by a report thereon unqualified as to scope of independent certified
public accountants selected by Borrower and satisfactory to Agent.
(ii) As soon as available, but in any event not later than sixty (60) days
after the close of each fiscal quarter other than the fourth quarter of a fiscal
year (which shall be delivered within one hundred five (105) days), consolidated
and consolidating unaudited balance sheets of Borrower and its Subsidiaries as
at the end of such quarter, and consolidated and consolidating unaudited
statements of operations and statements of cash flow for Borrower and its
Subsidiaries for such quarter and for the period from the beginning of the
fiscal year to the end of such quarter, together with the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position and
results of operation of Borrower and its Subsidiaries as at the date thereof and
for such periods, prepared in accordance with GAAP consistently applied (subject
to normal year-end adjustments) provided, however, that consolidating statements
shall be provided only with respect to Borrower and any Subsidiary which has
material business activity or assets in the amount of $1,000,000 or more, except
in the case of ▇▇▇▇▇▇ Canada Inc. such amount shall be $2,000,000 or more at any
time during Borrower's 1999 fiscal year and $1,000,000 or more thereafter. Such
statements shall be certified to be correct by the chief financial officer of
Borrower, subject to normal year-end adjustments.
(iii) As soon as available, but in any event no later than sixty (60) days
after the close of each fiscal quarter other than the fourth quarter of each
fiscal year, the Form 10-Q filed by Borrower with the Securities and Exchange
Commission.
(iv) As soon as available, but in any event not later than seventy-five
(75) days after the end of each January, sixty (60) days after the end of each
February, and thirty (30) days after the end of each other month, consolidated
unaudited balance sheets of Borrower and its Subsidiaries as at the end of such
month, and consolidated unaudited statements of operations for Borrower and its
Subsidiaries for such month and for the period from the beginning of the fiscal
year to the end of such month, all in reasonable detail, fairly presenting the
financial position and results of operation of Borrower and its Subsidiaries as
at the date thereof and for such periods, and prepared in accordance with GAAP
consistently applied (except that such interim financial statements shall not
include accompanying notes and shall be subject to normal year-end adjustments).
Such statements shall be certified to be correct by the chief financial officer
of Borrower, subject to normal year-end adjustments.
(v) With each of the audited financial statements delivered pursuant to
Section 7.19(a)(i) above, a certificate of the independent certified public
accountants that examined such statements to the effect that they have reviewed
and are familiar with the Financing Agreements and that, in examining such
financial statements, they did not become aware of any fact or condition which
then constituted an Event of Default, except for those, if any, described in
reasonable detail in such certificate.
(vi) Simultaneously with the delivery of each of the annual audited
financial statements and quarterly Form 10-Q's as set forth herein, Agent and
Lenders shall receive a certificate of the chief financial officer of Borrower
(A) setting forth in reasonable detail the calculations required to establish
that Borrower was in compliance with the covenants set forth in Sections 7.19,
7.20, 7.25 and 7.26 hereof during the period covered in such financial
statements or Form 10-Q, as the case may be; and (B) stating that, except as
explained in reasonable detail in such certificate, (1) all of the
representations, warranties and covenants of Borrower contained in this
Agreement and the other Financing Agreements are correct and complete as at the
date of such certificate and (2) no Event of Default then exists or existed
during the period covered by such financial statements or Form 10-Q, as the case
may be. If such certificate discloses that a representation or warranty is not
correct or complete, or that a covenant has not been complied with, or that an
Event of Default existed or exists, such certificate shall set forth what action
Borrower has taken or proposes to take with respect thereto.
(vii) No sooner than ninety (90) days and no later than fifteen (15) days
prior to the beginning of each fiscal year of Borrower, projected consolidated
balance sheets, consolidated statements of operations, and consolidated
statements of cash flow for Borrower and its Subsidiaries as at the end of and
for each month of such fiscal year.
(viii) Promptly after delivery thereof, any management letters and reports
by such independent certified public accountants to Borrower containing
financial information with respect to Borrower and/or its Subsidiaries or any
summary or analysis thereof.
(ix) Collateral and financial reports and schedules to be delivered by
Borrower as and when set forth on Schedule 7.20(a)(ix) hereto, together with any
further financial and other information regarding the Collateral, as Agent may
reasonably request from time to time.
(b) Borrower shall deliver, or cause to be delivered, on or
before June 30, 1999, an opening consolidated balance sheet for the Borrower and
its Subsidiaries as of April 30, 1999 giving effect to the reorganization
transactions contemplated by the Plan which shall be prepared by the chief
financial officer of Borrower and which shall contain all normal and recurring
adjustments necessary to present fairly the financial position of Borrower and
its Subsidiaries.
(c) Borrower will, and will cause each Guarantor to, promptly
notify Lender in writing of any investigation, action, suit, proceeding or claim
which if adversely determined could reasonably be expected to have a Material
Adverse Effect.
(d) Borrower will, and will cause each Guarantor to, promptly
provide Lender with any material information, notices, requests or reports filed
with, or furnished to, or received from any governmental or regulatory authority
or furnished to the shareholders of Borrower.
(e) Borrower shall promptly notify Agent of any of the
following events: (i) any Material Contract of Borrower or any of its
Subsidiaries is terminated or any new Material Contract is entered into (in
which event such Borrower shall provide Agent with a copy of such Material
Contract); or (ii) any of the material terms (other than price) upon which
material suppliers of Borrower or any of its Subsidiaries do business with
Borrower or Subsidiary are changed or amended in any manner adverse to such
Borrower or Subsidiary in any material respect; or (iii) any notification of
violation of any law or regulation shall have been received by Borrower or any
of its Subsidiaries from any Governmental Authority the results of which are
reasonably likely to have a Material Adverse Effect.
(f) Borrower shall promptly provide Agent and Lenders such
budgets, forecasts, projections and other information respecting the business
operations and financial or other condition of Borrower and its Subsidiaries, as
Agent may, from time to time, reasonably request.
(g) Agent and Lenders are hereby authorized to deliver a copy
of any financial statement or any other information relating to the business,
operations or financial condition of Borrower or its Subsidiaries, which may be
furnished to it hereunder or otherwise, to any regulatory body or agency or
other Governmental Authority having jurisdiction over Agent or Lenders or upon
notice to Borrower (to the extent permitted under applicable law), to any court
or to any other Person which shall, or shall have any right or obligation to,
succeed to all or any part of Agent or any Lender's interests in any of the
Loans, this Agreement, the other Financing Agreements or the Collateral or the
Guarantor Collateral, including, without limitation, any assignee pursuant to
Section 11.6 hereof or any Participant who shall have agreed to treat such
information as confidential to the extent provided in Section 10.7 hereof.
(h) Borrower hereby irrevocably authorizes and directs all
accountants, auditors or other third parties to deliver to Agent upon Agent's
reasonable request, at Borrower's expense, copies of the financial statements,
and other accounting records relating to Borrower and its Subsidiaries of any
nature in their possession and to disclose to Agent and any Lender any
information they may have regarding the business affairs and financial condition
of Borrower and its Subsidiaries.
Section 7.21 Consolidated Tangible Net Worth. Borrower shall maintain as of
the end of each fiscal quarter during each period set forth below Consolidated
Tangible Net Worth in an amount not less than the amount set forth below
opposite each such period:
========================================================= ==========================================================
Minimum Consolidated
Period Tangible Net Worth
========================================================= ==========================================================
Effective Date through the end of the third fiscal
quarter of 2000 $52,000,000
========================================================= ==========================================================
Beginning of the fourth fiscal quarter of 2000 through
the end of the third fiscal quarter of 2001 $55,000,000
========================================================= ==========================================================
Beginning of the fourth quarter of 2001 and thereafter $60,000,000
========================================================= ==========================================================
Section 7.22 Maximum Pre-Tax Loss/Minimum Pre-Tax Income. Borrower
shall not incur in any fiscal quarter commencing with the third fiscal quarter
of 1999, a pre-tax loss of $5,000,000 or more. In addition, Borrower shall not
incur a cumulative pre-tax loss in excess of the amount set forth below for the
period set forth below and Borrower shall achieve cumulative income of at least
the amounts set forth below for the periods set forth below:
==================================================================== ===============================================
Period Maximum Pre-Tax Loss
==================================================================== ===============================================
Six month period through the end of the fourth fiscal quarter of
1999 $ 500,000
==================================================================== ===============================================
Minimum Pre-Tax Income
==================================================================== ===============================================
Nine month period through the end of the first fiscal quarter of
2000 $1,000,000
==================================================================== ===============================================
Twelve month period through the end of the second fiscal quarter
of 2000 $1,500,000
==================================================================== ===============================================
Twelve month period through the end of the third fiscal quarter of
2000 $2,250,000
==================================================================== ===============================================
Twelve month period through the end of the fourth fiscal quarter
of 2000 and thereafter $5,000,000
==================================================================== ===============================================
Notwithstanding anything to the contrary contained in this Section 7.22,
write-offs by Borrower for intangible assets (including, without limitation,
trademarks and goodwill) which Borrower would otherwise be required to include
in the determination of Borrower's pre-tax loss or income under this Section
7.22 shall be excluded from such determinations.
Section 7.23 Minimum Interest Coverage Ratio. Borrower shall not permit
the ratio of (a) the sum of (i) the consolidated net income (including royalty
income) from continuing operations (excluding any unusual or non recurring items
of income or expense) before interest and taxes and (ii) the consolidated
depreciation and amortization expenses of Borrower and its Subsidiaries for such
computation period to (b) the consolidated interest expense (including all
imputed interest on Capitalized Lease Obligations) of Borrower and its
Subsidiaries during the computation period, to be less than the ratio set forth
below opposite the period set forth below:
===================================================================== ===========================================
Period Ratio
===================================================================== ===========================================
Three month period through the end of the third fiscal quarter of
1999 1.0:1.0
===================================================================== ===========================================
Six month period through the end of the fourth fiscal quarter of
1999 1.0:1.0
===================================================================== ===========================================
Nine month period through the end of the first fiscal quarter of
2000 2.0:1.0
===================================================================== ===========================================
Twelve month period through the end of the second fiscal quarter of
2000 2.0:1.0
===================================================================== ===========================================
Twelve month period through the end of the third fiscal quarter of
2000 3.0:1.0
===================================================================== ===========================================
Twelve month period through the end of the fourth quarter of 2000
and thereafter 5.0:1.0
===================================================================== ===========================================
Section 7.24 Capital Expenditures. Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly, make, whether through
purchase, capital leases or otherwise, Capital Expenditures on a limited
cumulative basis in fiscal 1999 or in any fiscal year thereafter in excess of
(i) $8,000,000, plus (ii) in each year after fiscal 1999, fifty percent (50%) of
the $8,000,000 of Capital Expenditures permitted and not made in the fiscal year
immediately preceding such fiscal year; provided, that, in no event shall any
Capital Expenditures permitted and not made in one fiscal year be carried
forward and used in any fiscal year pursuant to clause (ii) hereof other than in
the immediately succeeding fiscal year.
Section 7.25 After Acquired Real Property. If Borrower or any of its
Subsidiaries hereafter acquires any Real Property, fixtures or any other
property that is of the kind or nature described in the Mortgages and such Real
Property, fixtures or other property at any one location has a fair market value
in an amount equal to or greater than $500,000 (or if an Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an event which with notice or passage of time or both would
constitute an Event of Default exists, then regardless of the fair market value
of such assets), or without limiting any other rights of Agent or Lenders, or
duties or obligations of Borrower, upon Agent's request, Borrower shall, or
shall cause its Subsidiary, to execute and deliver to Agent a mortgage, deed of
trust or deed to secure debt, as Agent may reasonably determine, in form and
substance substantially similar to the Mortgages and as to any provisions
relating to specific state laws satisfactory to Agent and in form appropriate
for recording in the real estate records of the jurisdiction in which such Real
Property or other property is located granting to Agent a first lien, mortgage
and security interest in such Real Property (except as Borrower would otherwise
be permitted to incur hereunder or under the Mortgages or as otherwise consented
to in writing by Agent or as otherwise permitted herein) and such other
agreements, documents and instruments as Agent may reasonably require in
connection therewith.
Section 7.26 Further Assurances. Borrower has executed or will
contemporaneously herewith execute and deliver to Agent such of the other
Financing Agreements to which it is a party and financing statements pursuant to
the UCC, in form and substance reasonably satisfactory to Agent. Borrower shall,
and shall cause each Guarantor to, at Borrower's expense, at any time or times
duly execute and deliver, or shall cause to be duly executed and delivered, (a)
such further agreements, instruments and documents, including, without
limitation, additional security agreements, mortgages, deeds of trust, deeds to
secure debt, collateral assignments, Uniform Commercial Code financing
statements or amendments or continuations thereof, and (b) on a best efforts
basis, Collateral Access Agreements with respect to the Collateral and the
Guarantor Collateral. In addition, Borrower shall, and shall cause each
Guarantor to, do or cause to be done such further acts as may be necessary in
Agent's reasonable opinion to evidence, perfect, maintain and enforce its
security interests in the Collateral and Guarantor Collateral (other than that
portion of the Collateral and Guarantor Collateral consisting of registered or
licensed motor vehicles) and the priority thereof and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Where permitted by law, Borrower hereby authorizes Agent to execute
and file one or more Uniform Commercial Code financing statements covering the
Collateral and the Guarantor Collateral signed only by Agent. Upon the request
of Agent, at any time and from time to time, Borrower shall, and shall cause
each Guarantor to, at its cost and expense, do, make, execute, deliver and
record, register or file, financing statements, mortgages, deeds of trust, deeds
to secure debt, and other instruments, acts, pledges, assignments and transfers
(or cause the same to be done) and will deliver to Agent such instruments
evidencing items of Collateral or Guarantor Collateral as may be reasonably
requested by Agent.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
Section 8.1 Events of Default
-----------------
The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
(a) Borrower shall fail to pay any of the Obligations when due;
or
(b) any representation, warranty or material statement of
fact, other than as set forth in Section 6.11 above, when made by or on behalf
of Borrower or any Guarantor to Agent or any Lender is false or misleading in
any material respect; or
(c) any representation, warranty or material statement of fact
made by Borrower as set forth in Section 6.11 above when made by or on behalf of
Borrower is false or misleading (any of the foregoing being hereinafter referred
to as a "Misrepresentation") and the actual facts and/or circumstances with
respect to which the Misrepresentation was made materially and adversely affect
the business, properties, operations or condition, financial or otherwise, of
Borrower taken as a whole; or
(d) Borrower or any Guarantor shall fail to observe or perform
any covenant or agreement contained in this Agreement, the other Financing
Agreements or in any other document or instrument referred to herein or therein
other than as described in Section 8.1(a) above; provided that if such failure
is capable of being remedied, such failure continues unremedied for thirty (30)
days after Agent has notified Borrower thereof; or
(e) an "event of default" (as defined in any of the other
Financing Agreements) shall occur; or
(f) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ceases to be Chief Executive Officer of
Borrower and within ninety (90) days thereof a replacement Chief Executive
Officer reasonably satisfactory to Agent is not appointed; or
(g) an event of default shall occur and be continuing under
any of the ▇▇▇▇▇ ▇▇▇▇▇ Licenses that would enable ▇▇▇▇▇ ▇▇▇▇▇ International Inc.
to terminate any one of the agreements set forth on Schedule 8.1(g); or
(h) Borrower or any Guarantor shall default in the payment of
any amounts at any time due on any Indebtedness in excess of $1,000,000 at any
time owing to any one person other than Lenders or in the performance of any
other material term or covenant in respect of such Indebtedness or other
agreement relating thereto or securing same if the effect thereof is to
accelerate, or permit the holder(s) of such Indebtedness to accelerate the
maturity of such Indebtedness; or
(i) a judgment not covered by insurance of the Borrower is
rendered against Borrower or any Guarantor in excess of $300,000 in any one case
or in excess of $1,000,000 in the aggregate and the same shall remain
undischarged for a period in excess of forty-five (45) days or execution shall
at any time not be effectively stayed; or
(j) Borrower or any Guarantor shall be generally unable to pay
its debts as they mature, suspend or discontinue doing business for any reason,
become insolvent, call a meeting of creditors or have a creditors' committee
appointed, or shall admit in writing its inability to pay its debts as they
become due or shall commence any action or proceeding for the appointment of any
trustee, receiver, custodian or liquidator of Borrower or such Guarantor of all
or any part of their respective properties and assets; or
(k) Borrower or any Guarantor shall commence any action or
proceeding for relief under the Bankruptcy Code or any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the Bankruptcy Code or any other present or future statute, law or
regulation or shall take any corporate action to authorize any of such actions
or proceedings; or
(l) Borrower or any Guarantor shall have commenced against it
any action or proceeding for relief under the Bankruptcy Code or any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the Bankruptcy Code or any other present or future
statute, law or regulation, or any action or proceeding for the appointment of
any trustee, receiver, custodian or liquidator of any of Borrower or any
Guarantor or all or any part of their respective properties or assets, which is
not dismissed within sixty (60) days of its commencement, or Borrower or any
Guarantor shall file any answer admitting or not contesting the allegations of a
petition filed against it in any such proceeding or by any act or omission
indicates its consent to, acquiescence in or approval of, any such action or
proceeding or if the relief requested is granted sooner; or
(m) any Guarantee or any other guarantee of the Obligations
shall at any time cease to be in full force and effect, or shall be declared
void or invalid or the validity or enforceability thereof shall be contested by
any Guarantor or any Guarantor shall deny it has any further liability or
obligation, or shall fail to perform its obligations, under any Guarantee; or
(n) any disputed claim as of the date of this Agreement of an
unsecured creditor that relates to litigation commenced against Borrower prior
to the filing of Borrower's chapter 11 bankruptcy case and (x) that is allowed
in Borrower's chapter 11 bankruptcy case pursuant to a final order of the
Bankruptcy Court in an amount which is $3,000,000 or more than the insurance
coverage, if any, that has been agreed to by, or required to be paid by the
applicable insurance carrier for any such claim and (y) that requires payment in
the amount of $3,000,000 or more; or
(o) there shall be a material adverse change in the business,
properties, operations or condition, financial or otherwise, of Borrower and
Guarantors taken as a whole after the date hereof.
Section 8.2 Remedies.
(a) Without limiting Agent's rights to demand payment sooner,
for the ratable benefit of Lenders, as provided in this Agreement, upon or at
any time after the occurrence and continuance or existence of any one or more of
such Events of Default, upon termination of this Agreement or the other
Financing Agreements, or if this Agreement and the other Financing Agreements
are not renewed, in addition to any other rights Agent or any Lender may have
under the Financing Agreements or otherwise:
(i) Agent shall at the request, or may with the consent, of the Majority
Lenders, declare the Commitments of each Lender terminated, whereupon the
Commitment of each Lender will terminate immediately (such that no more Loans
shall be made or Letter of Credit Accommodations provided hereunder), without
presentment for payment, demand, notice of dishonor or notice of protest or any
other or further notice, all of which are hereby expressly waived by Borrower;
and/or
(ii) Agent shall at the request, or may with the consent, of the Majority
Lenders, declare any or all of the Obligations to be immediately due and
payable, together with interest at the highest rate of interest hereunder until
fully and indefeasibly paid, without presentment for payment, demand, notice of
dishonor or protest or any or other further notice, all of which are hereby
expressly waived by Borrower (provided, that, upon the occurrence of any Events
of Default described in Sections 8.1(k) or 8.1(l), all Obligations shall
automatically become immediately due and payable); and
(iii) without further notice to Borrower, Agent, for the ratable benefit of
Lenders, may appropriate, set off and apply to the payment of any or all of the
Obligations, any or all Collateral, in such manner as Agent shall determine,
enforce payment of any Collateral, settle, compromise or release in whole or in
part, any amounts owing on the Collateral, make allowances and adjustments with
respect thereto, issue credits in Agent's or Borrower's name, sell, assign and
deliver the Collateral (or any part thereof), at public or private sale, at
broker's board, for cash, upon credit or otherwise, at Agent's option and
discretion, and Agent may bid or become purchaser at any such sale, if public,
free from any right of redemption which is hereby expressly waived;
(iv) without limiting the generality of the foregoing, Agent and Lenders
are hereby authorized at any time and from time to time, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other Indebtedness at any time owing by Agent or any Lender
to or for the credit or the account of Borrower against any and all of the
Obligations, whether or not then due and payable;
(v) Agent, for the ratable benefit of Lenders, shall have the right,
without notice to Borrower (except as otherwise expressly provided herein), at
any time and from time to time in its discretion, with or without judicial
process or the aid or assistance of others and without cost to Agent or Lenders
(A) to enter upon any premises on or in which any of the Inventory or Equipment
may be located and, without resistance or interference by Borrower, take
possession of the Inventory or Equipment, (B) to complete processing,
manufacturing and repair of all or any portion of the Inventory or Equipment,
(C) to sell, foreclose or otherwise dispose of any part or all of the Inventory
or Equipment on or in any premises of Borrower or premises of any other party,
(D) to require Borrower, at its expense, to assemble and make available to Agent
any part or all of the Inventory or Equipment at any reasonable place and time
designated by Agent, and (E) to remove any or all of the Inventory or Equipment
from any premises on or in which the same may be located, for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose.
(b) Agent, for the ratable benefit of Lenders, shall have all
of the rights and remedies of a secured party under the UCC or applicable law of
any State in which any Collateral may be situated, in addition to all of the
rights and remedies set forth in this Agreement and the other Financing
Agreements, and in any instrument or document referred to herein or therein,
and/or under any other applicable law relating to this Agreement, the other
Financing Agreements, the Obligations or the Collateral.
(c) Borrower agrees that the giving of ten (10) days notice to
Borrower by Agent at Borrower's address set forth below, designating the place
and time of any public sale or of the time after which any private sale or other
intended disposition of the Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice with respect
thereto.
(d) The net cash proceeds resulting from the exercise of any
of the foregoing rights or remedies shall be applied by Agent, for the ratable
benefit of Lenders, to the payment of the Obligations in such order as Agent may
elect, and Borrower shall remain liable to Agent and Lenders for any deficiency.
Without limiting the generality of the foregoing, if Agent, for the ratable
benefit of Lenders, enters into any credit transaction, directly or indirectly,
in connection with the disposition of any Collateral, it shall have the option,
at any time, in its discretion, to reduce the Obligations by the principal
amount of such credit transaction or to defer the reduction thereof until actual
receipt by Agent, for the ratable benefit of Lenders, of cash or other
immediately available funds in connection therewith.
(e) In the event Agent, for the ratable benefit of Lenders,
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy or otherwise, Borrower hereby
irrevocably waives (i) the posting of any bond, surety or security with respect
thereto which might otherwise be required, (ii) any demand for possession prior
to the commencement of any suit or action to recover the Collateral, and (iii)
any requirement that Agent retain possession and not dispose of any Collateral
until after trial or final judgment.
(f) Agent may, at its option, cure any default by Borrower
under any agreement with any Person, which constitutes, or with notice or
passage of time or both would constitute, an Event of Default hereunder or under
any of the other Financing Agreements, or pay or bond on appeal any judgment
entered against Borrower (irrespective of the amount of said judgment or the
time elapsed since entry thereof), and charge Borrower's account(s) therefor,
such amounts to be repayable by Borrower on demand, together with interest
thereon at the highest rate of interest payable hereunder; provided, however,
Agent shall be under no obligation to effect such cure, payment or bonding and
shall not, by making any payment for Borrower's account(s), be deemed to have
assumed any obligation or liability of Borrower.
(g) The enumeration of the foregoing rights and remedies is
not intended to be exclusive, and such rights and remedies are in addition to
and not by way of limitation of any other rights or remedies Agent may have
under the UCC or other applicable law. Agent shall have the exclusive right to
determine which rights and remedies, and in which order any of the same, are to
be exercised, and to determine which Collateral is to be proceeded against and
in which order, and the exercise of any right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative.
(h) No act, failure or delay by Agent or any Lender shall
constitute a waiver of any of the rights and remedies of Agent and Lenders. No
single or partial waiver by Agent or Lenders of any provision of this Agreement
or any of the other Financing Agreements, or breach or default thereunder, or of
any right or remedy which Agent and Lenders may have shall operate as a waiver
of any other provision, breach, default, right or remedy or of the same
provision, breach, default, right or remedy on a future occasion.
(i) Borrower waives presentment, notice of dishonor, protest
and notice of protest of all instruments included in or evidencing any of the
Obligations or the Collateral and any and all notices or demands whatsoever
(except as expressly provided herein). Agent may, at all times, for the ratable
benefit of Lenders, proceed directly against Borrower to enforce payment of the
Obligations and shall not be required to take any action of any kind to
preserve, collect or protect any rights in the Collateral
SECTION 9. COLLECTION AND ADMINISTRATION
Section 9.1 Collections; Management of Collateral
-------------------------------------
(a) All invoices evidencing Accounts shall indicate that
remittances with respect thereto are to be made to Borrower at the address of a
lock box controlled by the Agent pursuant to an agreement between Agent and the
Reference Bank (as it may be amended, the "Lock Box Agreement"), of which
address if different from the address of such lock box to which remittances are
currently made, Agent shall notify Borrower in writing. All such remittances
shall be deposited in Agent's account with the Reference Bank pursuant to the
Lock Box Agreement (the "Payment Account").
(b) Any checks or other forms of remittance which may be
received directly by Borrower in respect of the Accounts and other Collateral
shall not be commingled with Borrower's property, but shall be segregated, held
by Borrower in trust for Agent as the exclusive property of Agent, for the
ratable benefit of Lenders, and immediately deposited by Borrower, in the
identical form received, with proper endorsements, into such account or accounts
as Agent may designate from time to time. All funds received by Agent in respect
of Accounts or other Collateral by wire transfer of federal funds or in other
immediately available funds will be credited to the Payment Account upon receipt
of such funds. All amounts received by Agent in respect of Accounts or other
Collateral in remittances which are not immediately available, will be credited
to the Payment Account as and when such remittances have become immediately
available. All bank fees and expenses relating to the Payment Account, the Lock
Box Agreement and the Blocked Accounts (as defined below) shall be charged to
any of Borrower's account(s) maintained by Agent. Borrower shall indemnify and
hold Agent harmless from and against any and all losses, costs, damages and
expenses (including reasonable attorneys' fees and disbursements) incurred by
Agent in connection with the Lock Box Agreement, the Blocked Accounts or the
ownership or maintenance of such lock box or the deposit, collection or
processing of any item deposited therein.
(c) In addition to, and not in limitation of the provisions
contained in Sections 9.1(a) and (b) hereof, Borrower shall, at its expense, in
the manner requested by Agent from time to time, direct that all proceeds of
Accounts, letters of credit, banker's acceptances and other proceeds of
Collateral (i) be payable to a lock box or post office box designated by Agent
and under its control and/or deposited into an account maintained in Agent's
name and under its control and in connection therewith shall execute such lock
box and other agreement as Agent in its discretion shall specify, and/or (ii) be
remitted to blocked accounts ("Blocked Accounts") with such banks as are
acceptable to Agent. The banks at which the Blocked Accounts are established
shall enter into an agreement, in form and substance satisfactory to Agent,
providing that all items received or deposited in the Blocked Accounts are the
property of Agent and Lenders according to their interests hereunder, that the
depository bank has no lien upon, or right to setoff against, the Blocked
Accounts, the items received for deposit therein, or the funds from time to time
on deposit therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all funds received
or deposited into the Blocked Accounts to such bank account of Agent as Agent
may from time to time designate for such purpose. Borrower agrees that all
payments made to such Blocked Accounts or other funds received and collected by
Agent, whether on the Accounts or as proceeds of Inventory, Equipment or other
Collateral or otherwise shall be the property of Agent and Lenders according to
their interests hereunder.
Section 9.2 Payments.
(a) All Obligations shall be payable to the Payment Account as
designated under Section 9.1 or such other place as Agent may designate from
time to time. The Obligations shall be payable upon the effective date of
termination or non-renewal or maturity of the Credit Facility, or earlier upon
an Event of Default, or otherwise as provided elsewhere herein or in the other
Financing Agreements. Agent may apply payments received or collected from
Borrower or for the account of Borrower (including, without limitation, the
monetary proceeds of collections or of realization upon any Collateral) to such
of the Obligations in respect of the Loans, whether or not then due, and to such
other Obligations then due, in each case in such order and manner as Agent
determines. Agent shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Obligations. Upon the request of Agent, Borrower shall execute and deliver to
Agent one or more promissory notes, in form and substance satisfactory to Agent,
to evidence further the Loans, or any portion thereof.
(b) Except as otherwise provided in this Section 9.2(b),
aggregate principal and interest payments shall be apportioned among all
outstanding Loans to which such payments relate and payments of the fees
required to be paid by Borrower to Agent for the account of the Lenders
hereunder shall, as applicable, be apportioned ratably among the Lenders, in
each case according to their Pro Rata Shares. All payments shall be remitted to
Agent. Agent shall distribute to each Lender at its primary address set forth on
the appropriate signature page hereof, or at such other address as such Lender
may designate in writing to Agent, such funds as it may be entitled to receive
in the manner provided in Section 3.12. The foregoing apportionment of payments
is solely for the purpose of determining the obligations of Borrower hereunder
and, notwithstanding such apportionment, any Lender may on its books and records
allocate payments received by it in a manner different from that contemplated
hereby. No such different allocation shall alter the rights and obligations of
Borrower under this Agreement determined in accordance with the apportionments
contemplated by this Section 9.2(b).
(c) If after receipt of any payment of, or proceeds applied to
the payment of, all or any part of the Obligations, Agent or any Lender is for
any reason required to surrender such payment or proceeds to any Person, because
such payment or proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, or a diversion of trust
funds, or for any other reason, then the Obligations or any part thereof
intended to be satisfied shall be revived, reinstated and continue and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by Agent or such Lender and Borrower shall be liable to pay to
Agent or such Lender, and hereby does indemnify Agent and Lenders and hold them
harmless for the amount of such payment or proceeds surrendered. The provisions
of this Section 9.2(c) shall be and remain effective notwithstanding any
contrary action which may have been taken by Agent or any Lender in reliance
upon such payment or proceeds, and any such contrary action so taken shall be
without prejudice to the rights of Agent and Lenders under this Agreement and
shall be deemed to have been conditioned upon such payment or proceeds having
become final and irrevocable. The provisions of this Section 9.2(c) shall
survive the termination of this Agreement and the other Financing Agreements.
(d) At Agent's option, all principal, interest, fees,
commissions, costs, expenses, or other charges hereunder, under the other
Financing Agreements or in connection herewith or therewith, and any and all
Loans, may be charged directly to any account(s) of Borrower maintained by
Agent.
(e) Borrower shall make all payments in respect of the
Obligations free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholdings, restrictions or conditions of any kind or nature
whatsoever.
Section 9.3 Sharing of Payments, Etc.
(a) Borrower agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it for the account of Borrower at any of its offices, in
dollars or in any other currency, against any principal of or interest on any
Loans owed to such Lender or any other amount payable to such Lender hereunder,
that is not paid when due (regardless of whether such balances are then due to
Borrower), in which case it shall promptly notify Borrower and Agent thereof;
provided, that, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from Borrower
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement or any other Financing Agreement through
the exercise of any right of setoff, banker's lien or counterclaim or similar
right or otherwise (other than from Agent as provided herein), and, as a result
of such payment, such Lender shall have received more than its Pro Rata Share of
the principal of or interest on the Loans or such other amounts then due
hereunder by Borrower to such Lender, it shall promptly pay to Agent, for the
benefit of Lenders, the amount of such excess and simultaneously purchase from
such other Lenders a participation in the Loans or such other amounts,
respectively, owing to such other Lenders (or in interest due thereon, as the
case may be) in such amounts, and make such other adjustments from time to time
as shall be equitable, to the end that all Lenders shall share the benefit of
such excess payment (net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) in accordance with their respective
Pro Rata Shares. Amounts received by Agent under this Section 9.3 shall be
treated as payments received from Borrower under Section 9.2 hereof. To such end
all Lenders shall make appropriate adjustments among themselves (by the resale
of participation sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) Borrower agrees that any Lender so purchasing such a
participation (or direct interest) may exercise, in a manner consistent with
this Section 9.3, all rights of setoff, banker's lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Loans or other amounts (as the case may be) owing to such
Lender in the amount of such participation.
(d) 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 Borrower. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 9.3 applies, such Lender shall, to the extent
practicable, assign such rights to Agent for the benefit of Lenders and, in any
event, exercise its rights in respect of such secured claim in a manner
consistent with the rights of Lenders entitled under this Section 9.3 to share
in the benefits of any recovery on such secured claim.
Section 9.4 Borrower's Loan Account. Agent shall maintain one or more
loan account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Agent's customary practices as in effect from time to
time. All Collateral or other collateral security held by or granted to Agent or
Lenders by Borrower or any third persons shall be security for the payment and
performance of any and all Obligations of Borrower to Agent and Lenders
(including, but not limited to, the Loans), notwithstanding the maintenance of
separate accounts for Borrower or third persons or the existence of the
Revolving Credit Notes or any other notes.
Section 9.5 Statements. Agent shall render to Borrower each month a
statement setting forth the balance in Borrower's loan account(s) maintained by
Agent for Borrower pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Agent but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrower and
conclusively binding upon Borrower as an account stated except to the extent
that Agent receives a written notice from Borrower of any specific exceptions of
Borrower thereto within sixty (60) days after the date such statement has been
mailed by Agent. Until such time as Agent shall have rendered to Borrower a
written statement as provided above, the balance in Borrower's loan account(s)
shall be presumptive evidence of the amounts due and owing by Borrower to Agent
and Lenders.
Section 9.6 Right of Inspection; Access. Agent, Lenders and their
representatives shall, at any time during regular business hours after
reasonable notice to Borrower prior to an Event of Default and at any time and
without notice on or after an Event of Default, have free access to and right of
inspection of the Collateral and have full access to and the right to examine
and make copies of the books and records of Borrower to confirm and verify all
Accounts, to perform general audits and to do whatever else Agent or any Lender
deems necessary to protect the interests of Agent and Lenders. Agent may at any
time after the declaration by Agent of an Event of Default, and during the
continuance thereof, remove from the premises of Borrower or require Borrower or
any accountants and auditors employed by Borrower to deliver any books and
records and Agent and Lenders may, without cost or expense to any of them, use
such of Borrower's personnel, supplies, computer equipment and space at its
places of business as may be necessary for the handling of collections.
Section 9.7 Accounts Documentation. Borrower shall maintain its
shipping forms, invoices and other related documents in a form satisfactory to
Agent and Borrower shall maintain its books, records and accounts in accordance
with GAAP consistently applied. Borrower shall keep and maintain, at its cost
and expense, satisfactory and complete books and records of all Accounts, all
payments received or credits granted thereon, and all other dealings therewith.
At such times as Agent may request, Borrower shall deliver to Agent, all
original documents evidencing the sale and delivery of goods or the performance
of services which created any Accounts, including, but not limited to, all
contracts, orders, invoices, bills of lading, warehouse receipts, delivery
tickets and shipping receipts, together with schedules describing the Accounts
and/or written confirmatory assignments to Agent of each Account, in form and
substance satisfactory to Agent and duly executed by Borrower, together with
such other information as Agent may request. In no event shall the making or the
failure to make or the content of any schedule or assignment or Borrower's
failure to comply with the provisions hereof be deemed or construed as a waiver,
limitation or modification of the security interest in, lien upon and assignment
of the Collateral or the representations, warranties or covenants under this
Agreement or the other Financing Agreements.
Section 9.8 Specific Powers. Borrower hereby constitutes Agent and its
designees, as Borrower's attorney-in-fact, with power of substitution, at the
cost and expense of Borrower, to exercise at any time all or any of the
following powers which appointment, being coupled with an interest, shall be
irrevocable until all Obligations have been indefeasibly paid in full: (a) to
receive, take, endorse, assign, deliver, accept and deposit, in the name of
Agent or Borrower, any and all checks, notes, drafts, remittances and other
instruments and documents or chattel paper relating to the Collateral; (b) on or
after the occurrence of an Event of Default, or an act, condition or event which
with notice, passage of time or both would constitute an Event of Default, to
receive, open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as Agent
designates; (c) to transmit to Account Debtors notice of Agent's interest
therein and to request from such Account Debtors at any time, in the name of
Agent or Borrower or that of Agent's designee, information concerning the
Collateral and the amounts owing thereon; (d) on or after the occurrence of an
Event of Default, or an act, condition or event which with notice, passage of
time or both would constitute an Event of Default, to notify Account Debtors to
make payment directly to Agent; (e) on or after the occurrence of an Event of
Default, or an act, condition or event which with notice, passage of time or
both would constitute an Event of Default, to take or bring, in the name of
Agent or Borrower, all steps, actions, suits or proceedings deemed by Agent
necessary or desirable to effect collection of the Collateral; and (f) to
execute in Borrower's name and on its behalf any UCC financing statements or
amendments thereto. Borrower hereby releases Agent and its officers, employees
and designees, from any liability arising from any act or acts under this
Agreement or in furtherance thereof, whether of omission or commission, and
whether based upon any error of judgment or mistake of law or fact, except for
acts of gross negligence or wilful misconduct of Agent as determined pursuant to
a final non-appealable order of a court of competent jurisdiction.
(d) Borrower agrees to issue credit memoranda promptly upon
accepting returns or granting allowances, and may continue to do so until (i)
the occurrence and during the continuance of an Event of Default and (ii) Agent
has notified Borrower that such credits or allowances are to be made only after
Agent's prior written approval. Upon the occurrence and during the continuance
of an Event of Default and on notice from Agent, Borrower agrees that all
returned, reclaimed or repossessed merchandise or goods shall be set aside by
Borrower, marked with Agent's name and held by Borrower for Agent's account as
owner and assignee for the ratable benefit of Lenders. If Agent so requests,
Borrower agrees promptly to pay Agent the fair market value thereof, or if Agent
so elects, Borrower will deliver such merchandise or goods to Agent or sell same
for Borrower's account; provided, however, that prior to the occurrence of an
Event of Default, Borrower shall have the right to sell or otherwise dispose of
such goods on terms acceptable to Borrower without notice to Agent.
SECTION 10 EFFECTIVE DATE; TERMINATION; COSTS
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Section 10.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date hereof and shall continue in full force and
effect for a term ending on the date three (3) years from the date hereof (the
"Renewal Date") and from year to year thereafter, unless sooner terminated
pursuant to the terms hereof; provided, that, Agent, any Lender (as to such
Lender), or Borrower may terminate this Agreement and the other Financing
Agreements effective on the Renewal Date or on the anniversary of the Renewal
Date in any subsequent year by giving to the other parties hereto at least
forty-five (45) days prior written notice; provided that, upon payment of the
early termination fee provided for in Section 10.1(e) hereof, Borrower may
terminate this Agreement and the other Financing Agreements at any time by
giving the other parties hereto at least forty-five (45) days prior written
notice of such termination; provided, that, in the event any one Lender shall
send a notice of its intention to terminate this Agreement as to such Lender,
any of the other Lenders may upon receipt of such notice purchase the Commitment
of the Lender sending such notice of termination. Upon the exercise of the
option to purchase such Commitment by any Lender and upon payment in full to the
terminating Lender of the amounts owing to it by the purchasing Lender in
accordance with Section 11.6, the Lender sending such notice of termination
shall assign its rights and obligations under this Agreement and the other
Financing Agreements to the Lender exercising such option in accordance with
Section 11.6 hereof. This Agreement and all other Financing Agreements must be
terminated simultaneously.
(b) In addition, Agent may, upon the consent of the Majority
Lenders, and upon the direction of the Majority Lenders shall, terminate this
Agreement and the other Financing Agreements, or terminate only the provisions
of this Agreement as to future Loans and Letter of Credit Accommodations,
immediately at any time upon the occurrence of an Event of Default or an act,
condition or event which with notice or passage of time or both would constitute
an Event of Default.
(c) Upon the effective date of termination or non-renewal of
the Financing Agreements (the "Termination Date"), Borrower shall pay to Agent
for the account of Lenders in full, all outstanding and unpaid Obligations
(including, but not limited to, the Loans and all interest, fees charges,
expenses and other amounts provided for hereunder, under the other Financing
Agreements or otherwise) and shall furnish cash collateral to Agent in such
amounts as Agent determines are reasonably necessary to secure Agent and Lenders
from loss, cost, damage or expense, including reasonable attorneys' fees and
legal expenses, in connection with any contingent Obligations, including Letter
of Credit Accommodations and any checks or other payments provisionally credited
to the Obligations and/or as to which Agent or any Lender has not yet received
full and final payment. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Agent, as Agent may, in its discretion, designate in writing to
Borrower for such purpose. Interest at the Interest Rate shall be due until and
including the next Business Day, if the amounts so paid by Borrower to the bank
account designated by Agent are received in such bank account later than 12:00
noon, New York, New York time.
(d) No termination of the Financing Agreements or the
Commitments shall relieve or discharge any of Borrower or Guarantors of their
respective duties, obligations and covenants under the Financing Agreements
until all Obligations have been fully discharged and paid, and the continuing
security interests of Agent in the Collateral shall remain in effect until all
such Obligations have been fully discharged and paid.
(e) If this Agreement terminates upon the occurrence of an
Event of Default or at the request of Borrower prior to the Renewal Date, in
view of the impracticality and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of the
lost profits of Agent and Lenders as a result thereof, Borrower hereby agrees to
pay to Agent for the ratable benefit of Lenders, upon the effective date of such
termination, an early termination fee in an amount equal to:
(i) three (3%) percent of the average aggregate
daily balance of Loans and Letter of Credit
Accommodations outstanding prior to the
Termination Date, or $1,000,000, whichever
is greater, if such termination is effective
on or prior to the first anniversary of the
date of this Agreement; or
(ii) two (2%) percent of the average aggregate
daily balance of Loans and Letter of Credit
Accommodations outstanding for the twelve
(12) month period prior to the Termination
Date, if such termination is effective after
the first anniversary of this Agreement but
on or prior to the second anniversary of the
date of this Agreement; or
(iii) one (1%) percent of the average aggregate
daily balance of Loans and Letter of Credit
Accommodations outstanding for the twelve
(12) month period prior to the Termination
Date, if such termination is effective after
the second anniversary of the date of this
Agreement but prior to the third anniversary
of this Agreement.
Such early termination fee shall be presumed to be the amount of damages
sustained by said early termination and Borrower agrees that it is reasonable
under the circumstances currently existing. The early termination fee provided
for in this Section 10.1 shall be deemed included in the Obligations.
Section 10.2 Expenses and Additional Fees
----------------------------
(a) Borrower shall pay to Agent on demand all reasonable costs
and expenses that Agent or any Lender may pay or incur in connection with the
negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement and the other Financing Agreements, including,
without limitation: (i) reasonable attorneys' and paralegals' fees and
disbursements of counsel to Agent, Lenders and any Participant; (ii) costs and
expenses (including reasonable attorneys' and paralegals' fees and
disbursements), and for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Financing Agreements and the
transactions contemplated thereby; (iii) costs and expenses of lien and title
searches and title insurance; (iv) taxes, fees and other charges for recording
any agreements or documents with the Office of Patents and Trademarks, the
Copyright Office or any other governmental authority, and the filing of UCC
financing statements and continuations, and other actions to perfect, protect,
and continue the security interests and liens of Lenders in the Collateral; (v)
sums paid or incurred to pay any amount or take any action required of Borrower
under the Financing Agreements that Borrower fails to pay or take; (vi) costs of
appraisals, environmental audits, inspections, and verifications of the
Collateral, including, without limitation, travel, lodging, and meals for
inspections of the Collateral and Borrower's operations by Agent, any Lender or
their agents, plus a charge of $750 per person per day for the field examiners
of Agent and any Lender; (vii) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
payment accounts and lock boxes; (viii) costs and expenses of preserving and
protecting the Collateral; and (ix) costs and expenses (including reasonable
attorneys' and paralegals' fees and disbursements) paid or incurred to obtain
payment of the Obligations, enforce the security interests and liens of Agent,
sell or otherwise realize upon the Collateral, and otherwise enforce the
provisions of this Agreement and the other Financing Agreements, or to defend
any claims made or threatened against Agent or any Lender arising out of the
transactions contemplated hereby (including, without limitation, preparations
for and consultations concerning any such matters). The foregoing shall not be
construed to limit any other provisions of the Financing Agreements regarding
costs and expenses to be paid by Borrower.
(b) Borrower shall pay to Agent all of its customary charges
and fees in connection with (i) any payment, claim or refund relating to the
dishonor of any checks or other items of Borrower or Account Debtors, and (ii)
wire transfers to Borrower.
(c) All sums provided for in this Section 10.2 shall be part
of the Obligations, shall be payable on demand, and shall accrue interest after
demand for payment thereof at the applicable rate of interest then payable
hereunder. Agent is hereby irrevocably authorized to charge any amounts payable
hereunder directly to any of the account(s) maintained by Agent with respect to
Borrower.
Section 10.3 Survival of Agreement. All agreements, representations and
warranties contained herein or made in writing by the parties hereto in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement, the other Financing Agreements and the
consummation of the transactions contemplated herein or therein regardless of
any investigation made by or on behalf of Agent or any Lender.
Section 10.4 No Waiver; Cumulative Remedies. No failure to exercise, and no
delay in exercising on the part of Agent or any Lender any right, power or
privilege under this Agreement or under any of the other Financing Agreements or
other documents referred to herein or therein shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power and privilege. No notice to or demand on
Borrower or Guarantors not required hereunder or any of the other Financing
Agreements shall entitle Borrower or Guarantors to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of Agent or any Lender to any other or further action in any circumstances
without notice or demand. The rights and remedies of Agent and Lenders under
this Agreement, the other Financing Agreements and any other present and future
agreements between Agent and/or Lenders and Borrower or Agent and/or Lenders and
Guarantors are cumulative and not exclusive of any rights or remedies provided
by law or under any of the Financing Agreements or such other agreements and all
such rights and remedies may be exercised successively or concurrently.
Section 10.5 Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to the applicable party at its address set forth on the
signature page hereof, or to such other address as either party may designate by
written notice to the other in accordance with this provision, and (b) deemed to
have been given or made: if delivered in person, immediately upon delivery; if
by telex, telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, ten (10) days after
mailing.
10.6 Entire Agreement. This Agreement(which amends and restates the
Existing Agreement in its entirety), the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represent the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and, except for (i) existing UCC-1 Financing Statements
heretofore filed by CIT against Borrower and Guarantors and (ii) the Mortgages
supersede all other prior and contemporaneous agreements, understandings,
negotiations and discussions, representations, warranties, commitments, offers
and contracts concerning the subject matter hereof and thereof, whether oral or
written.
10.7 Confidentiality.
(a) Agent and each Lender shall use all reasonable efforts to
keep confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by Borrower to Agent and Lenders, provided, that, nothing contained
herein shall limit the disclosure of any such information: (i) to the extent
required by statute, rule, regulation, subpoena or court order, (ii) to bank
examiners and other regulators, auditors and/or accountants, (iii) in connection
with any litigation to which Agent or any Lender is a party, (iv) to any
Affiliate of Agent or any Lender, (v) to any assignee or Participant (or
prospective assignee or Participant) so long as such assignee or Participant (or
prospective assignee or Participant) shall have first agreed in writing to treat
such information as confidential in accordance with this Section 10.7, or (vi)
to counsel for Agent or any Lender or any Participant or assignee (or
prospective Participant or assignee).
(b) In no event shall this Section 10.7 or any other provision
of this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by Borrower or any
third party without breach of this Section 10.7 or otherwise becomes generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender on a non-confidential basis from a
person other than Borrower, (iii) require Agent or any Lender to return any
materials furnished by Borrower to Agent or such Lender or (iv) prevent Agent or
any Lender from responding to routine informational requests in accordance with
the Code of Ethics for the Exchange of Credit Information promulgated by The
▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates or other applicable industry standards relating to the
exchange of credit information. The obligations of Agent and Lenders under this
Section 10.7 shall supersede and replace the obligations of (i) CIT under the
Existing Agreement and (ii) Agent and Lenders under any confidentiality letter
signed prior to the date hereof.
Section 10.8 Partial Invalidity. If any provision of this Agreement or the
other Financing Agreements is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Agreement or the other
Financing Agreements as a whole but this Agreement or the particular Financing
Agreement, as the case may be, shall be construed as though it did not contain
the particular provision or provisions held to be invalid or unenforceable and
the rights and obligations of the parties shall be construed and enforced only
to such extent as shall be permitted by law.
Section 10.9 Headings. The headings used herein are for convenience only
and do not constitute matters to be considered in interpreting this Agreement.
Section 10.10 [Intentionally Omitted]
Section 10.11 Counterparts. This Agreement may be executed in any number of
counterparts, and by Agent, Lenders and Borrower in separate counterparts, each
of which shall be an original, but all of which shall together constitute one
and the same agreement.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
Section 11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (other than the Mortgages to the
extent otherwise specifically provided therein) and any dispute arising out of
the relationship between the parties hereto, whether in contract, tort, equity
or otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Borrower, Agent and Lenders irrevocably consent and submit
to the non-exclusive jurisdiction of the Supreme Court of the State of New York
in New York County and the United States District Court for the Southern
District of New York and the courts of any jurisdiction in which any of the
Collateral is located and waive any objection based on venue or forum non
conveniens with respect to any action instituted therein arising under this
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above.
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
registered mail, postage prepaid, directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed ten
(10) days after the same shall have been so deposited in the U.S. mails,
registered mail, postage prepaid, or, at Agent's option, by service upon
Borrower in any other manner provided under the rules of any of the foregoing
courts. Within thirty (30) days after such service, Borrower shall appear in
answer to such process, failing which Borrower shall be deemed in default and
judgment may be entered by Agent against Borrower for the amount of the claim
and other relief requested.
(d) BORROWER, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT BORROWER OR AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY
OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Agent nor any Lender shall have any liability to
Borrower or Guarantors (whether in tort, contract, equity or otherwise) for
losses suffered by Borrower or Guarantors in connection with, arising out of, or
in any way related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment by a court of
competent jurisdiction that the losses were the result of such party's own acts
or omissions constituting gross negligence or willful misconduct. In any such
litigation, Agent and each of Lenders shall be entitled to the benefit of the
rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.
Section 11.2 Waiver of NoticesSection 11.2 Waiver of Notices. Borrower
hereby expressly waives demand, presentment, protest and notice of protest and
notice of dishonor with respect to any and all instruments and commercial paper,
included in or evidencing any of the Obligations or the Collateral, and any and
all other demands and notices of any kind or nature whatsoever with respect to
the Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Borrower which Agent may elect to
give shall entitle Borrower to any other or further notice or demand in the
same, similar or other circumstances. Without limiting the generality of the
foregoing, Borrower waives (a) notice prior to Agent's taking possession or
control of any of the Collateral or any bond or security which might be required
by any court prior to allowing Agent to exercise any of Agent's remedies,
including the issuance of an immediate writ of possession and (b) the benefit of
all valuation, appraisement and exemption laws.
Section 11.3 Amendments and Waivers.
(a) No amendment or modification of any provision of this
Agreement or of any of the other Financing Agreements shall be effective without
the written agreement of the Majority Lenders and Borrower and no termination or
waiver of any provision of this Agreement or of any of the Financing Agreements,
or consent to any departure by Borrower therefrom, shall in any event be
effective without the written concurrence of the Majority Lenders, which the
Majority Lenders shall have the right to grant or withhold at their discretion;
except that any amendment, modification, or waiver (i) of any provision of
Section 3 hereof, which amendment, modification or waiver increases the
Commitment of any Lender, reduces the principal of, or interest on, the Loans or
the Letter of Credit Accommodations, reduces the amount of any fee payable for
the account of any Lender, or postpones or extends any date fixed for any
payment of principal of, or interest or fees on the Loans or Letter of Credit
Accommodations payable to any Lender, (ii) that increases the aggregate amount
of the Commitments of the Lenders, (iii) that increases the advance percentages
for Eligible Accounts or Eligible Inventory provided for in Section 3.1(a)
hereof or the amount set forth in Section 3.1(a)(ii)(B), (iv) that increases the
limit on Letter of Credit Accommodations set forth in Section 3.2(d) hereof or
that increases the Maximum Credit, (v) of the definitions of "Renewal Date",
"Majority Lenders" or "Pro Rata Shares", (vi) of the definitions of "Eligible
Accounts" or "Eligible Inventory" if the effect of such amendment, modification
or waiver is to increase the amount of the Loans and/or Letter of Credit
Accommodations available to Borrower under the Lending Formulas, (vii) of any
provision of this Agreement or any of the Financing Agreements that would permit
security interests in or liens upon on the Collateral or release any Collateral
(except as set forth in Section 12.12 hereof or except as otherwise permitted
herein) or release any guarantee of the Obligations, (viii) of the provisions
contained in this Section 11.3, shall be effective only if evidenced by a
writing signed by or on behalf of (A) any Lender affected thereby in the case of
the amendments, modifications or waivers described in clause (i) above or (B)
all Lenders in the case of the amendments to definitions or waivers described in
clauses (ii) through (viii) above. No amendment, modification, termination or
waiver of any provision of Section 11 or any other provision referring to Agent
shall be effective without the written concurrence of Agent. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, waiver or consent effected in
accordance with this Section 11.3 shall be binding on each Lender, each future
Lender, and, if signed by Borrower, on the Borrower.
(b) Notwithstanding anything to the contrary contained in
Section 11.3(a), in the event that Borrower requests that this Agreement or any
other Financing Agreements be amended or otherwise modified in a manner which
would require the unanimous consent of all of the Lenders and such amendment or
other modification is agreed to by the Majority Lenders, then, with the consent
of Borrower and the Majority Lenders, Borrower and the Majority Lenders may
amend this Agreement without the consent of the Lender or Lenders which did not
agree to such amendment or other modification (collectively, the "Minority
Lenders") to provide for (i) the termination of the Commitment of each of the
Minority Lenders, (ii) the addition to this Agreement of one or more other
Lenders, or an increase in the Commitment of one or more of the Majority
Lenders, so that the Commitments, after giving effect to such amendment, shall
be in the same aggregate amount as the Commitments immediately before giving
effect to such amendment, (iii) if any Loans are outstanding at the time of such
amendment, the making of such additional Loans by such new Lenders or Majority
Lenders, as the case may be, as may be necessary to repay in full the
outstanding Loans of the Minority Lenders immediately before giving effect to
such amendment and (iv) the payment of all interest, fees and other Obligations
payable or accrued in favor of the Minority Lenders and such other modifications
to this Agreement as Borrower and the Majority Lenders may determine to be
appropriate.
(c) Agent and Lenders shall not, by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of the rights,
powers and/or remedies of Agent or Lenders unless such waiver shall be in
writing and signed as provided in Section 11.3(a) above. Any such waiver shall
be enforceable only to the extent specifically set forth therein. Neither this
Agreement nor any provision hereof shall be amended, modified, waived or
discharged orally or by course of conduct, but only by a written agreement
approved as required under this Section 11.3. A waiver by Agent or Lenders of
any right, power and/or remedy on any one occasion shall not be construed as a
bar to or waiver of any such right, power and/or remedy which Agent or any
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.
Section 11.4 Waiver of Counterclaims. Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
than compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
Section 11.5 Indemnification. Borrower shall indemnify and hold Agent,
Lenders and their respective officers, directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including, without limitation, amounts paid in
settlement, court costs, and the fees and expenses of counsel except to the
extent resulting directly from the gross negligence or wilful misconduct of
Agent or Lenders as determined pursuant to a final non-appealable order of a
court of competent jurisdiction, provided, that, such gross negligence or wilful
misconduct of any one Lender shall not affect the obligations of Borrower
hereunder as to Agent or any other Lender. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum
portion which it is permitted to pay under applicable law to Agent and/or the
affected Lender(s) in satisfaction of indemnified matters under this Section.
The foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
Section 11.6 Assignments; Participations.
(a) Each Lender may with the written consent of the Agent,
which consent shall not be unreasonably withheld, and after prior notice to
Borrower, assign to one or more commercial banks or other financial institutions
a portion of its rights and obligations under this Agreement (including, without
limitation, a portion of its Commitment, the Loans owing to it and its rights
and obligations as a Lender with respect to the Letter of Credit Accommodations)
and the other Financing Agreements; provided, that, (i) each such assignment
shall be in a principal amount of not less than $10,000,000 and in integral
multiples of $1,000,000 in excess thereof (or the remainder of such Lender's
Commitment), and (ii) the parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the Register an Assignment
and Acceptance.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and (ii)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assignor and assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower, Guarantors or any of their
Subsidiaries or the performance or observance by Borrower or Guarantors of any
of the Obligations; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Financing Agreements, together with such other
documents and information it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (iv) such
assignee will, independently and without reliance upon the assigning Lender, 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 decisions in
taking or not taking action under this Agreement and the other Financing
Agreements, (v) such assignee appoints and authorizes Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement and the
other Financing Agreements as are delegated to Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto, and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Financing Agreements are required to be performed by it as a Lender. Agent and
Lenders may furnish any information concerning Borrower, Guarantors or their
Subsidiaries in the possession of Agent or any Lender from time to time to (x)
assignees and (y) Participants who have entered into a confidentiality agreement
with Borrower in form and substance reasonably satisfactory to Borrower.
(d) Agent shall maintain at its address referred to on the
signature page hereto, a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
Lenders and the Commitment of each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and Borrower, Agent and Lenders shall 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 Borrower and
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee Lender, together with the Revolving
Credit Note subject to such assignment, Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (i) accept such Assignment and Acceptance, (ii) give prompt notice
thereof to Borrower and (iii) record the information contained therein in the
Register. Within five (5) Business Days after its receipt of such notice,
Borrower, at its expense, shall execute and deliver to Agent in exchange for the
surrendered Revolving Credit Note, a new Revolving Credit Note to the order of
such assignee Lender in an aggregate principal amount equal to the Commitment
assumed by it pursuant to such Assignment and Acceptance, and a new Revolving
Credit Note to the order of the assigning Lender in an aggregate principal
amount equal to the Commitment retained by it hereunder, in each case prepared
by or on behalf of the Agent. Such new Revolving Credit Note(s) shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Revolving Credit Note, shall be dated the date of Agent's acceptance
of such assignment and acceptance and shall otherwise be in substantially the
form of the Revolving Credit Notes as in effect on the date hereof.
(f) Each Lender may sell participations to one or more
commercial banks or other financial institutions in or to all or a portion of
its rights and obligations under this Agreement and the other Financing
Agreements (including, without limitation, all or a portion of its Commitments
and the Loans owing to it and its participation in the Letter of Credit
Accommodations); provided, that, (i) such Lender's obligations under this
Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, and (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and Borrower, 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 and the other Financing Agreements.
Each Lender shall inform Agent of the persons who have purchased such
participations.
Section 11.7 Successors and Assigns. This Agreement, the other Financing
Agreements and any other document referred to herein or therein shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of the
Majority Lenders.
SECTION 12. THE AGENT
Section 12.1 Appointment.
(a) Each Lender hereby irrevocably appoints and authorizes
Agent as its agent to exercise on such Lender's behalf the following, and Agent
shall have the sole and exclusive right to take the following actions on behalf
of Lenders: (i) to receive on behalf of each Lender any payment of principal of
or interest on the Revolving Credit Notes outstanding hereunder and all other
amounts accrued hereunder for the account of the Lenders and paid to Agent, and,
subject to Section 3.12 of this Agreement, to distribute promptly to each Lender
its Pro Rata Share of all payments so received, (ii) to distribute to each
Lender copies of all material notices and agreements received by the Agent and
not required to be delivered to each Lender pursuant to the terms of this
Agreement, provided, that, the Agent shall not have any liability to Lenders for
the Agent's failure to distribute any such notice or agreements to Lenders and
(iii) subject to Section 11.3 of this Agreement, to take such action as Agent
deems appropriate on its behalf to administer the Loans, Letter of Credit
Accommodations and this Agreement and the other Financing Agreements and to
exercise such other powers delegated to Agent by the terms hereof and the other
Financing Agreements (including, without limitation, the power to give or to
refuse to give notices, waivers, consents, approvals and instructions and the
power to make or to refuse to make determinations and calculations) together
with such powers as are reasonably incidental thereto to carry out the purposes
hereof and thereof. As to any matters not expressly provided for by this
Agreement and the other Financing Agreements (including, without limitation,
enforcement or collection of the Revolving Credit Notes), Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions of the Majority Lenders shall be binding upon all Lenders;
provided, that, Agent shall not be required to take any action which, in the
reasonable opinion of the Agent, exposes the Agent to liability or which is
contrary to this Agreement, any of the other Financing Agreements or applicable
law. The provisions of this Section 12 are solely for the benefit of Agent and
Lenders. Borrower and Guarantors shall not have any rights as a third party
beneficiary of any of the provisions contained in this Section 12.
Notwithstanding anything to the contrary contained in Section 11.3 hereof, no
amendments to this Section 12 shall require the written agreement of Borrower or
Guarantors.
(b) Without limiting the generality of the foregoing, or of
any other provision of this Agreement or the other Financing Agreements that
provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (i) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Loans, the Letter of Credit
Accommodations, the Collateral, and related matters; (ii) execute and/or file
any and all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to this Agreement and the other Financing Agreements;
(iii) make Loans for itself or on behalf of Lenders as provided herein; (iv)
exclusively receive, apply and distribute proceeds of the Collateral as provided
herein; (v) open and maintain such bank accounts and lock boxes as Agent deems
necessary and appropriate in accordance with this Agreement and the other
Financing Agreements for the foregoing purposes and with respect to the
Collateral and proceeds thereof; (vi) perform, exercise and enforce any and all
other rights and remedies of the Lenders with respect to Borrower, Guarantors,
the Loans and the Collateral, or otherwise related to any of same as provided
herein and in the other Financing Agreements; and (vii) incur and pay such costs
and expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to this Agreement and the other
Financing Agreements.
Section 12.2 Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
other Financing Agreements. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement or
any of the other Financing Agreements a fiduciary relationship in respect of any
Lender. Nothing in this Agreement or any of the other Financing Agreements,
express or implied, is intended to or shall be construed to impose upon Agent
any obligations in respect of this Agreement or any of the other Financing
Agreements except as expressly set forth herein or therein. Each Lender shall
make its own independent investigation of the financial condition and affairs of
Borrower, Guarantors and any other Obligor in connection with the making and the
continuance of the Loans hereunder and the issuance of the Letter of Credit
Accommodations and shall make its own appraisal of the creditworthiness of
Borrower, Guarantors and any other Obligor and the value of the Collateral, and
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the date hereof or at any
time or times hereafter, provided, that, upon the reasonable request of a
Lender, Agent shall provide to such Lender any documents or reports delivered to
Agent by Borrower pursuant to the terms of this Agreement or any of the other
Financing Agreements. If Agent seeks the consent or approval of the Majority
Lenders to the taking or refraining from taking any action hereunder, Agent
shall send notice thereof to each Lender. Agent shall promptly notify each
Lender any time that the Majority Lenders have instructed Agent to act or
refrain from acting pursuant hereto.
Section 12.3 Delegation of Duties. Except as otherwise provided in this
section, Agent may execute any of its duties under this Agreement or any of the
other Financing Agreements by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects as long as such selection was made
in compliance with this Section and without gross negligence or willful
misconduct.
Section 12.4 Rights, Exculpation, Etc. Agent and its directors, officers,
agents or employees shall not be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement or any of the
other Financing Agreements, except for their own gross negligence or willful
misconduct as determined by a final non-appealable order of a court of competent
jurisdiction. Without limiting the generality of the foregoing, Agent (a) may
treat the payee of any Revolving Credit Note as the holder thereof until Agent
receives written notice of the assignment or transfer thereof, pursuant to
Section 11.6 hereof, signed by such payee and in form satisfactory to the Agent;
(b) may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, certificates,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or any of the other Financing Agreements; (e)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any
of the other Financing Agreements on the part of any Person, the existence or
possible existence of any Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default, or
to inspect the Collateral or other property (including, without limitation, the
books and records) of any Person; (f) shall not be responsible to any Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements or any other
instrument or document furnished pursuant hereto or thereto; and (g) shall not
be deemed to have made any representation or warranty regarding the existence,
value or collectibility of the Collateral, the existence, priority or perfection
of the security interest in, or mortgage or lien upon, any of the Collateral, or
the Loans available to Borrower or any certificate prepared by Borrower or any
Guarantor in connection therewith, nor shall Agent be responsible or liable to
the Lenders for any failure to monitor or maintain availability of Loans
hereunder or any portion of the Collateral. Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith pursuant to
Section 9.2, and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Lender to whom
payment was due but not made, shall be to recover from other Lenders any payment
in excess of the amount which they are determined to be entitled. Agent may at
any time request instructions from the Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the other Financing
Agreements Agent is permitted or required to take or to grant, and if such
instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval hereunder or under
any of the other Financing Agreements until it shall have received such
instructions from the Majority Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting under this Agreement or any of the other
Financing Agreements in accordance with the instructions of the Majority
Lenders.
Section 12.5 Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement 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, independent accountants and
other experts selected by Agent. Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any of the other Financing
Agreements unless it shall first receive such advice or concurrence of the
Lenders as it deems appropriate and until such instructions are received, Agent
shall act, or refrain from acting, as it deems advisable so long as it is not
grossly negligent or guilty of wilful misconduct. If Agent so requests, it shall
first be indemnified to its reasonable satisfaction by 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. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any of the
other Financing Agreements in accordance with a request or consent of the
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
Section 12.6 Notice of Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default, except with
respect to defaults in the payment of principal, interest, fees, and expenses
required to be paid to Agent for the account of the Lenders and with respect to
Events of Default of which Agent has actual knowledge, unless Agent shall have
received written notice from a Lender or Borrower referring to this Agreement,
describing such Event of Default, and stating that such notice is a "notice of
default." Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has, or is deemed to have,
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any.
Section 12.7 Credit Decision. Each Lender acknowledges that the Agent has
not made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Borrower and its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by Agent to any Lender. Each Lender represents to Agent that it has,
independently and without reliance upon Agent and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financing and
other condition and creditworthiness of Borrower and any other Person (other
than any Lender) party to any of the other Financing Agreements, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrower. Each Lender also represents that it will, independently and
without reliance upon Agent 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
any of the other Financing Agreements, and to make such investigations as it
deems necessary to inform itself as to the business, prospects, operations,
property, financing and other condition and creditworthiness of Borrower and any
other Person (other than any Lender) party to this Agreement or any of the other
Financing Agreements. Except for notices, reports and other documents expressly
herein required to be furnished to the Lenders by Agent, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower and any other Person party
to this Agreement or any of the other Financing Agreements that may come into
the possession of Agent.
Section 12.8 Indemnification. To the extent that Agent is not reimbursed
and indemnified by Borrower, the Lenders will reimburse and indemnify the Agent
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against Agent in any way relating to or arising out of this Agreement
or any of the other Financing Agreements or any action taken or omitted by Agent
under this Agreement or any of the other Financing Agreements, in proportion to
each Lender's Pro Rata Share, provided, that, no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, advances or disbursements for which there has
been a final non-appealable order of a court of competent jurisdiction that such
resulted from Agent's gross negligence or willful misconduct. The obligations of
the Lenders under this Section 12.8 shall survive the payment in full of the
Obligations and the termination or non-renewal of this Agreement.
12.9 CIT in its Individual Capacity. With respect to its Pro Rata Share of
the Commitments hereunder, the Loans made by it and the Revolving Credit Note
issued to or held by it, CIT shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and liabilities as and
to the extent set forth herein as any other Lender or holder of a Revolving
Credit Note. The terms "Lenders" or "Majority Lenders" or any similar terms
shall, unless the context clearly otherwise indicates, include CIT in its
individual capacity as a Lender or one of the Majority Lenders. CIT and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with Borrower, Guarantors or any of its
or their Subsidiaries or Affiliates as if it were not acting as Agent pursuant
hereto without any duty to account to Lenders.
Section 12.10 Successor Agent.
(a) Agent may resign from the performance of all its functions
and duties hereunder and under the other Financing Agreements at any time by
giving at least thirty (30) Business Days' prior written notice to Borrower and
each Lender. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to Sections 12.10(b) and 12.10(c) below
or as otherwise provided below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Agent. The successor Agent must be reasonably
satisfactory to Borrower. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Financing Agreements. After any
Agent's resignation hereunder as the Agent, the provisions of this Section 12
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Financing Agreements.
(c) If a successor Agent shall not have been so appointed
within such thirty (30) Business Day period, the retiring Agent, with the
consent of Borrower, shall then appoint a successor Agent who shall serve as
Agent until such time, if any, as the Majority Lenders, with the consent of the
Borrower, appoint a successor Agent as provided above.
Section 12.11 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code (or is otherwise not a United States
Person within the meaning of Section 7701(a)(30) of the Code) and such Lender
claims exemption from, or a reduction of, U.S. withholding tax under Sections
1441 or 1442 of the Code, such Lender agrees with and in favor of Agent and
Borrower, to deliver to Agent and Borrower:
(i) if such Lender claims an exemption from, or a reduction of, withholding
tax under a United States tax treaty, properly completed IRS Forms 1001 and W-8
or applicable successor forms before the payment of any interest in the first
calendar year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement, or at such
earlier time as may be necessary to ensure the continuing validity of such form;
(ii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly completed
and executed copies of IRS Form 4224 or applicable successor forms before the
payment of any interest is due in the first taxable year of such Lender and in
each succeeding taxable year of such Lender during which interest may be paid
under this Agreement or at such earlier time as may be necessary to ensure the
continuing validity of such form, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding tax.
Such Lender agrees to promptly notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender is entitled to a reduction in the applicable
withholding tax, Borrowers and Agent may, without duplication, withhold from any
interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other
documentation required by subsection (a) of this Section are not delivered to
Borrower and Agent, then Borrower and Agent may, without duplication, withhold
from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(c) If the Internal Revenue Service or any other Governmental
Authority of the United States of America or other jurisdiction asserts a claim
that Borrower or Agent did not properly withhold tax from amounts paid to or for
the account of any Lender or Participant (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Borrower or Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify Borrower and Agent fully for all amounts paid,
directly or indirectly, by Borrower or Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to Borrower or Agent under this Section, together with all
costs and expenses (including attorneys' fees and expenses). The obligations of
the Lenders under this subsection shall survive the payment of all Obligations
and the resignation or replacement of Agent.
12.12 Collateral Matters.
(a) In addition to, and not in limitation of the provisions of
Section 3.1(f) above, Agent may from time to time, at any time on or after the
occurrence of an Event of Default and for so long as the same is continuing,
make such disbursements and advances ("Agent Advances") which Agent, in its sole
discretion, deems necessary or desirable either (i) to preserve or protect the
Collateral or Guarantor Collateral or any portion thereof, (ii) to enhance the
likelihood or maximize the amount of repayment by Borrower and Guarantors of the
Loans and other Obligations or (iii) to pay any other amount chargeable to
Borrower pursuant to the terms of this Agreement, including, without limitation,
costs, fees and expenses as described in Section 10.2 and payments to any issuer
of Letter of Credit Accommodations. Agent Advances shall be repayable on demand
and be secured by the Collateral. Agent Advances shall not constitute Loans but
shall otherwise constitute Obligations hereunder. Agent shall notify each Lender
and Borrower in writing of each such Agent Advance, which notice shall include a
description of the purpose of such Agent Advance. Without limitation of its
obligations pursuant to Section 12.5, each Lender agrees that it shall make
available to Agent, upon Agent's demand, in immediately available funds, the
amount equal to such Lender's Pro Rata Share of each such Agent Advance. If such
funds are not made available to Agent by such Lender, Agent shall be entitled to
recover such funds, on demand from such Lender together with interest thereon,
for each day from the date such payment was due until the date such amount is
paid to Agent, at the Interest Rate.
(b) Lenders hereby irrevocably authorize Agent, at its option
and in its discretion to release any security interest in, mortgage or lien
upon, any of the Collateral upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral as
provided in Section 10.1 above; or constituting property being sold or disposed
of if Borrower certifies to Agent that the sale or disposition is made in
compliance with Section 7.11 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry); or constituting property in which
Borrower owned no interest at the time the security interest, mortgage or lien
was granted or at any time thereafter; or if approved, authorized or ratified in
writing by the Majority Lenders. Except as provided above, Agent will not
release any security interest in, mortgage or lien upon, any of the Collateral
without the prior written authorization of the Majority Lenders; provided, that,
Agent may not release such security interests in, mortgage or lien upon, any of
the Collateral having a value in excess of $5,000,000, without the prior written
authorization of all of the Lenders. Upon request by Agent at any time, the
Lenders will confirm in writing Agent's authority to release particular types or
items of Collateral pursuant to this Section 12.12.
(c) Without in any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Majority
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section 12.12.
So long as no Event of Default is then continuing, upon receipt by Agent of
confirmation from the Majority Lenders of its authority to release any
particular item or types of Collateral, and upon at least five (5) Business
Day's prior written request by Borrower, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the security interest, mortgage or liens granted to Agent for the
benefit of the Lenders upon such Collateral; provided, that, (i) Agent shall not
be required to execute any such document on terms which, in Agent's opinion,
would expose Agent to liability or create any obligations or entail any
consequence other than the release of such security interest, mortgage or liens
without recourse or warranty and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any security interest, mortgage
or lien upon (or obligations of Borrower in respect of) the Collateral retained
by Borrower.
(d) Agent shall have no obligation whatsoever to any Lender to
assure that the Collateral exists or is owned by Borrower, any Guarantor or any
Obligor (as the case may be) or is cared for, protected or insured or has been
encumbered or that the security interest, mortgage or lien granted to Agent
pursuant to any of the Financing Agreements has been properly or sufficiently or
lawfully created, perfected, protected or enforced or is entitled to any
particular priority, or to exercise at all or in particular manner or under any
duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this Section 12
or in any of the other Financing Agreements, it being understood and agreed that
in respect of the Collateral, or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its sole discretion,
given Agent's own interest in the Collateral as one of the Lenders and that
Agent shall have no duty or liability whatsoever to any other Lender.
Section 12.13 Agency for Perfection. Agent and each Lender hereby appoints
each other Lender as agent for the purpose of perfecting the security interests
in and liens upon the Collateral of Agent for itself and the ratable benefit of
Lenders in assets which, in accordance with Article 9 of the UCC, can be
perfected only by possession. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
Section 12.14 Section 12.14 [Intentionally Omitted.]
Section 12.15 Concerning the Collateral and the Related Financing
Agreements. Each Lender authorizes and directs Agent to enter into this
Agreement and the other Financing Agreements relating to the Collateral, for the
ratable benefit of Lenders and Agent. Each Lender agrees that any action taken
by Agent or Majority Lenders in accordance with the terms of this Agreement or
the other Financing Agreements relating to the Collateral, and the exercise by
the Agent or Majority Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
Section 12.16 Field Audit and Examination Reports; Disclaimer by
Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent;
(b) expressly agrees and acknowledges that Agent (c) does not
make any representation or warranty as to the accuracy of any Report, or (d)
shall not be liable for any information contained in any Report;
(e) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon Borrower's books and records, as well as on
representations of Borrower's personnel; and
(f) agrees to keep all Reports confidential and strictly for
its internal use in accordance with the terms of Section 10.7 hereof, and not to
distribute or use any Report in any other manner.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantor
have caused these presents to be duly executed as of the day and year first
above written.
AGENT BORROWER
THE CIT GROUP/COMMERCIAL ▇▇▇▇▇▇ CORPORATION
SERVICES, INC., as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President Title: Executive Vice President
and CFO
Address Chief Executive Office:
1211 Avenue of the Americas ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
LENDERS
THE CIT GROUP/COMMERCIAL
SERVICE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Commitment:
$85,000,000
Commitment Percentage:
100%