EXHIBIT 10.4
DEBTOR IN POSSESSION REVOLVING CREDIT AGREEMENT
dated as of
December 14, 2004
by and among
DATATEC SYSTEMS, INC.,
a Delaware corporation
and
DATATEC INDUSTRIES, INC.,
a New Jersey corporation
as "BORROWERS"
and
ALPINE ASSOCIATES, A LIMITED PARTNERSHIP,
a New Jersey limited partnership
as "LENDER"
TABLE OF CONTENTS
Page
ARTICLE 1
DIP FACILITY
Section 1.1 Revolving Advances.................................................1
Section 1.2 Notes..............................................................2
Section 1.3 Use of Proceeds....................................................2
ARTICLE 2
INTEREST, FEES AND CHARGES
Section 2.1 Interest...........................................................2
Section 2.2 Computation of Interest and Fees...................................3
Section 2.3 Reimbursement Obligations..........................................3
Section 2.4 Fees...............................................................4
Section 2.5 Maximum Interest...................................................4
ARTICLE 3
LOAN ADMINISTRATION
Section 3.1 Manner of Borrowing and Funding Revolving Advances.................4
ARTICLE 4
PAYMENTS
Section 4.1 General Payment Provisions.........................................5
Section 4.2 Repayment of Revolving Advances....................................5
Section 4.3 Payment of Other Obligations.......................................5
Section 4.4 Marshalling; Payments Set Aside....................................5
Section 4.5 Application of Payments and Collections............................6
Section 4.6 Receipt of Payments and Collections................................6
Section 4.7 Prepayments........................................................6
ARTICLE 5
DIP TERM AND TERMINATION OF COMMITMENT
Section 5.1 Term of Commitment.................................................7
Section 5.2 Termination........................................................7
ARTICLE 6
COLLATERAL SECURITY AND GUARANTEE
Section 6.1 Grant of Security Interest in Collateral...........................7
Section 6.2 Other Collateral...................................................8
Section 6.3 Lien on Deposit Accounts...........................................9
Section 6.4 Lien Perfection; Further Assurances................................9
Section 6.5 Lien Priority......................................................9
ARTICLE 7
COLLATERAL ADMINISTRATION
Section 7.1 General Provisions.................................................9
Section 7.2 Administration of Accounts........................................10
Section 7.3 Administration of Inventory.......................................11
Section 7.4 Administration of Equipment.......................................11
Section 7.5 Pledged Securities................................................12
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ARTICLE 8
REPRESENTATIONS AND WARRANTIES
Section 8.1 General Representations and Warranties............................13
Section 8.2 Reaffirmation of Representations and Warranties...................15
ARTICLE 9
COVENANTS AND CONTINUING AGREEMENTS
Section 9.1 Affirmative Covenants.............................................15
Section 9.2 Negative Covenants................................................17
ARTICLE 10
CONDITIONS PRECEDENT
Section 10.1 Conditions Precedent to Initial Credit Extension.................18
Section 10.2 Conditions Precedent to Subsequent Credit Extension..............19
Section 10.3 Limited Waiver of Conditions Precedent...........................19
ARTICLE 11
EVENTS OF DEFAULT;
RIGHTS AND REMEDIES ON DEFAULT
Section 11.1 Events of Default................................................20
Section 11.2 Acceleration of the Obligations..................................22
Section 11.3 Remedies.........................................................22
Section 11.4 Licenses and Sale of Collateral..................................23
Section 11.5 Setoff...........................................................24
Section 11.6 Pledged Securities...............................................24
Section 11.7 Remedies Cumulative; No Waiver...................................25
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
Section 12.1 Successors and Assigns..........................................26
Section 12.2 Participations..................................................26
Section 12.3 Assignments.....................................................27
ARTICLE 13
MISCELLANEOUS
Section 13.1 Power of Attorney...............................................27
Section 13.2 General Indemnity...............................................28
Section 13.3 Survival of All Indemnities.....................................28
Section 13.4 Indulgences Not Waivers.........................................29
Section 13.5 Modification of Agreement.......................................29
Section 13.6 Severability....................................................29
Section 13.7 Cumulative Effect; Conflict of Terms............................29
Section 13.8 Execution in Counterparts.......................................29
Section 13.9 Lender's Consent................................................29
Section 13.10 Notices.........................................................29
Section 13.11 Performance of Borrowers' Obligations...........................30
Section 13.12 Time of Essence.................................................30
Section 13.13 Entire Agreement; Appendix A, Exhibits and Schedules............30
Section 13.14 Interpretation..................................................30
Section 13.15 Governing Law...................................................30
Section 13.16 Waivers by Borrowers............................................31
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Section 13.17 Release.........................................................31
Section 13.18 Joint and Several Liability of Borrowers........................31
APPENDIX A
GENERAL DEFINITIONS
SCHEDULES AND EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - IBM Facility
Exhibit D - Palladin Facility
Exhibit E - Alpine Pre-Petition Note
Exhibit F - Budget for First 13 Weeks
Schedule 7.1(a) Location of Collateral
Schedule 8.1(d) Liens
Schedule 8.1(o) Pledged Securities
Schedule 8.1(p) Subsidiaries of Borrowers
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THIS DEBTOR IN POSSESSION REVOLVING CREDIT AGREEMENT, dated as of
December 14, 2004, by and among DATATEC SYSTEMS, INC., a Delaware corporation
and a Chapter 11 debtor-in-possession ("SYSTEMS" and a "BORROWER"), DATATEC
INDUSTRIES, INC., a New Jersey corporation and a Chapter 11 debtor-in-possession
("INDUSTRIES", a "BORROWER" and together with Systems, the "BORROWERS") and
ALPINE ASSOCIATES, A LIMITED PARTNERSHIP, a New Jersey limited partnership
(together with its successors and assigns, "LENDER"). Capitalized terms used in
this Agreement and not otherwise defined in this Agreement have the meanings
assigned to them in APPENDIX A, General Definitions.
R E C I T A L S:
A. Borrowers are debtors-in-possession under Chapter 11 of the
Bankruptcy Code in cases (the "CHAPTER 11 CASE") pending in the United States
Bankruptcy Court for the District of Delaware (the "BANKRUPTCY COURT").
Borrowers have requested that Lender extend financing on a secured basis to
Borrowers in connection with the Chapter 11 Case in accordance with the
provisions of this Agreement.
B. Lender is willing to make loans and other extensions of credit to
Borrowers on a joint and several basis, subject to the terms and conditions of
this Agreement and subject to the terms and conditions set forth in the
Financing Orders.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
DIP FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other DIP
Financing Documents, Lender agrees to make the DIP Facility available to
Borrowers on a joint and several basis, as follows:
Section 1.1 REVOLVING ADVANCES.
(a) GENERAL. The DIP Facility shall consist of a revolving credit
loan facility in the amount of up to $2,500,000 (the "COMMITMENT") made
available to Borrowers upon the entry by the Bankruptcy Court of an Interim
Financing Order and composed of advances (each, a "REVOLVING ADVANCE" and,
collectively, "REVOLVING Advances") made from time to time by Lender to either
Borrower in accordance with, and subject to, the terms and conditions of this
Agreement; PROVIDED that the Bankruptcy Court shall have entered an Interim
Financing Order no later than close of business on December 21, 2004; and
PROVIDED FURTHER that the additional conditions precedent described elsewhere in
this Agreement shall have been fulfilled. Prior to the Commitment Termination
Date, Revolving Advances that are repaid or prepaid may be reborrowed; PROVIDED,
HOWEVER, that at no time shall the Aggregate Advances exceed the lesser of (i)
the Commitment and (ii) the Borrowing Base.
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(b) ENTRY OF FINANCING ORDERS BY THE BANKRUPTCY COURT. As soon as
practicable after the Bankruptcy Court enters an Interim Financing Order
approving the terms of the DIP Facility (in form and substance acceptable to
Lender in its sole and absolute discretion) and the satisfaction of the
additional conditions precedent set forth in Article 10 of this Agreement Lender
shall extend credit, in an amount approved by the Bankruptcy Court; PROVIDED
that the Aggregate Advances shall at no time exceed the lesser of (i) the
Commitment and (ii) the Borrowing Base; and PROVIDED FURTHER that Lender shall
not be obligated to extend any credit if an Event of Default has occurred and is
continuing, or the Bankruptcy Court shall not have entered an Interim Financing
Order on or before December 21, 2004.
Section 1.2 NOTES. At the option of Lender, the Revolving Advances
shall be evidenced by one or more promissory notes (each a "NOTE" and
collectively the "NOTES") of the applicable Borrower in the form of Exhibit A
hereto, dated as of the Closing Date, payable to the order of Lender and
otherwise duly completed. The original aggregate principal amount of the Notes,
if any, will be not more than $2,500,000.
Section 1.3 USE OF PROCEEDS. Notwithstanding anything to the
contrary contained herein, in no event shall proceeds of Revolving Advances or
any of the Collateral be used to pay any expenses (including Professional
Expenses) incurred in connection with the investigation, formulation or
assertion of or joinder in any claim, counterclaim, action, contested matter,
objection, defense or other proceeding, the purpose of which is to seek or the
result of which would be to obtain any order, judgment, declaration, or similar
relief 1. invalidating, setting aside, avoiding or subordinating, in whole or in
part, any of the Obligations or Liens and security interests in any of the
Collateral granted to Lender under the DIP Financing Documents or the Alpine
Pre-Petition Note Documents; 1. declaring any of the DIP Financing Documents or
the Alpine Pre-Petition Note Documents to be invalid, not binding or
unenforceable in any respect, 1. preventing, enjoining, hindering or otherwise
delaying Lender's enforcement of any of the DIP Financing Documents or the
Alpine Pre-Petition Note Documents or any realization upon any Collateral; or 1.
declaring any Liens granted or purported to be granted under any of the DIP
Financing Documents or the Alpine Pre-Petition Note Documents to have a priority
other than the priority set forth therein. Nothing in this Section 1.3 shall be
construed to waive Lender's right to object to any requests, motions or
applications made in or filed with the Bankruptcy Court, including any
applications for interim or final allowances of Professional Expenses. The
proceeds of the Revolving Advances shall be available, and each Borrower agrees
that it shall use such proceeds, solely (a) for the short-term working capital
liquidity needs of such Borrower, (b) the general corporate purposes of such
Borrower, (c) to pay the Origination Fee and other items as permitted by the
Budget and (d) to repay or prepay any amounts in respect of the Alpine
Pre-Petition Note Documents.
ARTICLE 2
INTEREST, FEES AND CHARGES
Section 2.1. INTEREST.RATES OF INTEREST. Borrowers agree, on a joint
and several basis, to pay interest in respect of all unpaid principal amounts of
the Revolving Advances from the respective dates such principal amounts are
advanced until paid (whether at stated maturity, on acceleration or otherwise)
at a rate per annum (determined monthly in accordance with Section 4.2(b)
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hereof) equal to the greater of (i) ten percent (10.00%) or (ii) LIBOR plus
seven percent (7.00%) (the "INTEREST RATE").
(b) DEFAULT RATE OF INTEREST. From and after the occurrence of any
Event of Default, but only so long as such Event of Default is continuing, the
outstanding principal amount of the Obligations (and, to the extent permitted by
Applicable Law, all past due interest) shall bear interest at the Default Rate.
Section 2.2 REIMBURSEMENT OBLIGATIONS. Borrowers shall, on a joint
and several basis, reimburse Lender for all reasonable legal, accounting,
appraisal and other fees and expenses incurred by Lender (without duplication)
in connection with 1. the negotiation and preparation of any of the DIP
Financing Documents and the Alpine Pre-Petition Note Documents, any amendment or
modification to any of the DIP Financing Documents and the Alpine Pre-Petition
Note Documents, any waiver of any Default or Event of Default thereunder, or any
restructuring or forbearance with respect thereto; 1. the administration of the
DIP Financing Documents and the Alpine Pre-Petition Note Documents and the
transactions contemplated thereby; 1. any action taken to perfect or maintain
the perfection or priority of any of Lender's Liens with respect to any of the
Collateral; 1. any inspection of or audits conducted with respect to Borrowers'
books and records or any of the Collateral (which shall not, in the absence of a
continuing Event of Default, occur more frequently than one time in any
three-month period); 1. any effort to verify, protect, preserve, or restore any
of the Collateral or to collect, sell, liquidate or otherwise dispose of or
realize upon any of the Collateral; 1. any litigation, contest, dispute, suit,
proceeding or action (whether instituted by or against Lender, either Borrower
or any other Person) in any way arising out of or relating to any of the
Collateral (or the validity, perfection or priority of any of Lender's Liens
thereon), any of the DIP Financing Documents, the Alpine Pre-Petition Note
Documents or the validity, allowance or amount of any of the Obligations; 1. the
protection or enforcement of any rights or remedies of Lender under the DIP
Financing Documents or the Alpine Pre-Petition Note Documents; (viii) monitoring
the Chapter 11 Case; and (ix) any other action taken by Lender to enforce any of
the rights or remedies of Lender against either Borrower or any Account Debtor
to enforce collection of any of the Obligations or payments with respect to any
of the Collateral. All amounts chargeable to Borrowers, on a joint and several
basis, under this Section 2.2 shall constitute Obligations that are secured by
all of the Collateral and shall be payable to Lender on demand. Borrowers shall
also reimburse Lender for reasonable out-of-pocket expenses incurred by Lender
in its administration of any of the Collateral to the extent and in the manner
provided in Article 7 hereof or in any of the other DIP Financing Documents or
the Alpine Pre-Petition Note Documents. The foregoing shall be in addition to,
and shall not be construed to limit, any other provision of any of the DIP
Financing Documents or the Alpine Pre-Petition Note Documents regarding the
reimbursement by Borrowers of costs, expenses or liabilities suffered or
incurred by Lender. Notwithstanding the foregoing, Borrowers' obligation to
reimburse Lender for fees and expenses incurred by Lender prior to the Closing
Date in connection with preparation and negotiation of this Agreement, the other
DIP Financing Documents and the Alpine Pre-Petition Note Documents shall not
exceed $75,000.
Section 2.3 FEES.ORIGINATION FEE. Borrowers shall pay to Lender, on
the Closing Date, the Origination Fee.
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(b) UNUSED FACILITY FEE. Borrowers shall pay to Lender, monthly, in
arrears, an unused facility fee (the "UNUSED FACILITY FEE") for the period
commencing on the Closing Date and terminating on the Commitment Termination
Date (computed on the basis of the actual number of days elapsed over a year of
360 days) equal to one-quarter of one percent (0.25%) per annum of the daily
Unused Commitment.
(c) EARLY TERMINATION FEE. Borrowers shall pay the Early Termination
Fee in accordance with Section 5.2(b) hereof.
Section 2.4 MAXIMUM INTEREST. In no event whatsoever shall the
aggregate of all amounts deemed interest hereunder and charged or collected
pursuant to the terms of this Agreement exceed the Maximum Rate, nor shall any
provisions hereof be construed as a contract to pay for the use, forbearance or
detention of money with interest at a rate or in an amount in excess of the
Maximum Rate. If any provisions of this Agreement contravene any Applicable Law,
such provisions shall be deemed amended to conform to such Applicable Law.
Notwithstanding anything to the contrary contained herein, no provision of this
Agreement shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this Agreement or
otherwise in connection with this loan transaction, the provisions of this
paragraph shall govern and prevail, and neither Borrower nor the sureties,
guarantors, successors or assigns of either Borrower shall be obligated to pay
the excess amount of such interest, or any other excess sum paid for the use,
forbearance or detention of sums loaned pursuant hereto. If for any reason
interest in excess of the Maximum Rate shall be deemed charged, required or
permitted by any court of competent jurisdiction, any such excess shall be
applied as a payment and reduction of the principal of indebtedness evidenced by
this Agreement; and, if the principal amount hereof has been paid in full, any
remaining excess shall forthwith be paid to Borrowers. In determining whether or
not the interest paid or payable exceeds the Maximum Rate, Borrowers shall, to
the extent permitted by Applicable Law, 1. characterize any non-principal
payment as an expense, fee, or premium rather than as interest, 1. exclude
voluntary prepayments and the effects thereof, and 1. amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the indebtedness evidenced by this
Agreement so that the interest for the entire term does not exceed the Maximum
Rate.
ARTICLE 3
LOAN ADMINISTRATION
Section 3. MANNER OF BORROWING AND FUNDING REVOLVING ADVANCES.
Revolving Advances under the DIP Facility shall be made and funded as follows:
(a) NOTICE OF BORROWING. Whenever either Borrower desires to make a
Borrowing under this Agreement, such Borrower shall give Lender prior written
notice of such Borrowing request (a "NOTICE OF BORROWING"), which shall be in
the form of EXHIBIT B annexed hereto and signed by a Senior Officer. Each such
Notice of Borrowing shall be given by such Borrower no later than 11:00 a.m.,
New York City time, at the office of Lender, as designated by Lender from time
to time, on the requested funding date of such Borrowing. Notices received after
11:00 a.m. shall be deemed received on the next Business Day. Each Notice of
Borrowing shall be irrevocable and shall specify, in addition to everything set
4
forth on Exhibit B, 1. the principal amount of the Borrowing, 1. the date of the
Borrowing (which shall be a Business Day), 1. the proposed use of the proceeds
thereof and (D) a calculation of the Borrowing Base as of the date of such
Notice of Borrowing. Each Borrowing shall be composed of one or more Revolving
Advances and Lender shall endorse the date and amount of each such Revolving
Advance on the schedule attached to the corresponding Note, if any. Borrowers
shall, collectively, make no more than three (3) Borrowings in any seven
consecutive days.
(b) FUNDINGS BY LENDER. Subject to its receipt of a Notice of
Borrowing as provided in Section 3.1(a), and in compliance with the terms and
conditions hereof, Lender shall make the proceeds of each Revolving Advance
available to the applicable Borrower by disbursing such proceeds in accordance
with such Borrower's disbursement instructions set forth in the applicable
Notice of Borrowing.
ARTICLE 4
PAYMENTS
Section 4.1 GENERAL PAYMENT PROVISIONS. All payments (including all
prepayments) of principal of and interest on the Revolving Advances and other
Obligations that are payable to Lender shall be made to Lender's Account, or
such other account as Lender may specify to Borrowers in writing, in Dollars,
without any offset or counterclaim and free and clear of (and without deduction
for) any present or future Taxes, by wire transfer of immediately available
funds not later than 2:00 p.m., New York City time, on the due date therefor.
Section 4.2 REPAYMENT OF REVOLVING ADVANCES.PAYMENT OF PRINCIPAL.
The outstanding principal amounts of all Revolving Advances shall be due and
payable on the Maturity Date.
(b) PAYMENT OF INTEREST. Interest accrued on each Revolving Advance
shall be computed monthly based on the actual number of days elapsed over a year
of 360 days and shall be due and payable on the first Business Day of each month
(for the immediately preceding month), computed through the last calendar day of
the preceding month. Accrued but unpaid interest shall also be paid by Borrowers
on the Maturity Date. The Interest Rate applicable to all outstanding Revolving
Advances shall be determined by Lender on the first Business Day of each month.
Section 4.3 PAYMENT OF OTHER OBLIGATIONS. The balance of the
Obligations requiring the payment of money, including Extraordinary Expenses
incurred by Lender, shall be repaid by Borrowers to Lender as and when provided
in the DIP Financing Documents or the Alpine Pre-Petition Note Documents, as
applicable, or, if no date of payment is otherwise specified in the DIP
Financing Documents or the Alpine Pre-Petition Note Documents, on demand.
Section 4.4 MARSHALLING; PAYMENTS SET ASIDE. Lender shall not be
under any obligation to marshal any assets in favor of either Borrower or
against or in payment of any or all of the Obligations. To the extent that
Borrowers make a payment or payments to Lender or Lender receives payment from
the proceeds of any Collateral or exercises its right of setoff, and such
payment or payments or the proceeds of Collateral or setoff or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party, then
5
to the extent of such recovery, the Obligations or part thereof originally
intended to be satisfied, and all Liens, rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred. The provisions of the
immediately preceding sentence of this Section 4.4 shall survive the Commitment
Termination Date, the Maturity Date and Full Payment of the Obligations.
Section 4.5 APPLICATION OF PAYMENTS AND COLLECTIONS. All monies to
be applied to the Obligations, whether such monies represent voluntary payments
by Borrowers or are received pursuant to demand for payment or realized from any
disposition of Collateral, shall be applied as follows: 1. first, to pay the
amount of Extraordinary Expenses and amounts owing to Lender pursuant to Section
13.11 hereof that have not been reimbursed to Lender by Borrowers, together with
interest accrued thereon at the Interest Rate; 1. second, to pay any Indemnified
Amount that has not been paid to Lender by Borrowers, together with interest
accrued thereon; 1. third, to pay any fees due and payable to Lender (including
fees and expenses payable under the Alpine Pre-Petition Note Documents); 1.
fourth, in payment of accrued and unpaid interest in respect of the Alpine
Pre-Petition Note; (v) fifth, in payment of the unpaid principal amount of the
Alpine Pre-Petition Note; (vi) sixth, in payment of accrued and unpaid interest
in respect of the Revolving Advances; (vii) seventh, in payment of the unpaid
principal of the Revolving Advances; and (viii) eighth, in payment of any other
Obligations then outstanding.
Section 4.6 RECEIPT OF PAYMENTS AND COLLECTIONS. All payments
received by Lender by 12:00 noon, New York City time, on any Business Day shall
be deemed received on that Business Day. All Payment Items received by Lender
after 12:00 noon, New York City time, on any Business Day shall be deemed
received on the next Business Day. Except to the extent that the manner of
application to the Obligations of payments or proceeds of Collateral is
expressly governed by other provisions of this Agreement, Borrowers irrevocably
waive the right to direct the application of any and all payments and Collateral
proceeds at any time or times received by Lender from or on behalf of Borrowers,
and Borrowers hereby irrevocably agree that Lender shall have the continuing
exclusive right to apply and reapply any and all such payments and Collateral
proceeds received at any time or times hereafter by Lender or its agent against
the Obligations, in such manner as Lender may deem advisable, notwithstanding
any entry by Lender upon any of its books and records.
Section 4.7 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. From and after the date on which all
amounts in respect of the Alpine Pre-Petition Note shall have been repaid in
full, Borrowers may prepay the Revolving Advances at any time without premium or
penalty.
(b) MANDATORY PREPAYMENTS. A mandatory prepayment of the Revolving
Advances shall be due on any date 1. either Borrower shall receive Net Proceeds
from any Asset Disposition in an amount equal to such Net Proceeds (not to
exceed the Aggregate Advances, plus accrued and unpaid interest thereon), 1.
either Borrower shall receive any Tax Refund in an amount equal to such Tax
Refund (not to exceed the Aggregate Advances, plus accrued and unpaid interest
thereon) and (iii) the Aggregate Advances shall exceed the lesser of the (i)
Commitment and (ii) the Borrowing Base, in an amount equal to such excess.
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ARTICLE 5
DIP TERM AND TERMINATION OF COMMITMENT
Section 5.1 TERM OF COMMITMENT. Subject to Lender's right to cease
making Revolving Advances to Borrowers when any Default exists and is continuing
or upon the Commitment Termination Date, the Commitment shall be in effect for
the DIP Term. The DIP Term may be extended by written agreement between
Borrowers and Lender without further notice or hearing or order by the
Bankruptcy Court.
Section 5.2 TERMINATION.TERMINATION BY LENDER. Lender may terminate
the DIP Facility at any time, without notice to Borrowers, after the occurrence
and during the continuance of an Event of Default.
(b) TERMINATION BY BORROWERS. Borrowers may voluntarily terminate
the DIP Facility at any time upon (i) 10 days prior written notice to Lender and
(ii) payment of the Early Termination Fee, which shall accompany such notice;
PROVIDED, HOWEVER, no such termination by Borrowers shall be effective until
Full Payment of the Obligations. Unless Lender otherwise agreed in writing, any
notice of termination given by Borrowers shall be irrevocable and any payment of
the Early Termination Fee made by Borrowers shall be non-refundable. Borrowers
may elect to terminate the DIP Facility in its entirety only.
(c) EFFECT OF TERMINATION. On the Commitment Termination Date, all
of the Obligations shall be immediately due and payable, and Lender shall have
no further obligation to make any Revolving Advances. Immediately upon the
occurrence of the Commitment Termination Date (other than the occurrence of the
Maturity Date pursuant to clause (c) of the definition of Maturity Date), the
Early Termination Fee shall become fully earned and immediately due and payable
to Lender. All undertakings, agreements, covenants, warranties and
representations of Borrowers contained in the DIP Financing Documents shall
survive any such termination and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the DIP Financing Documents
notwithstanding such termination until Full Payment of the Obligations. The
provisions of Section 2.2, Section 4.4, and this Section 5.2(c) and all
obligations of Borrowers to indemnify Lender pursuant to this Agreement shall in
all events survive any termination of the Commitment.
ARTICLE
COLLATERAL SECURITY AND GUARANTEE
Section 6.1 GRANT OF SECURITY INTEREST IN COLLATERAL. To secure the
prompt and Full Payment and performance of all of the Obligations, each Borrower
hereby grants to Lender, pursuant to Section 364(d) of the Bankruptcy Code, a
priming, first priority (except as otherwise provided in the Section 6.5),
fully-perfected security interest in and Lien upon all of the following Property
and interests in Property of such Borrower, whether now owned or existing or
hereafter created, acquired or arising (irrespective of whether the same existed
on or was created or acquired after the Closing Date):
(a) all Accounts;
(b) all Inventory;
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(c) all Equipment;
(d) all General Intangibles (including all Intellectual Property);
(e) all Instruments;
(f) all Chattel Paper;
(g) all Documents;
(h) all Investment Property (including all Pledged Securities);
(i) all other goods and personal property, whether tangible or
intangible, wherever located, including money, deposit accounts, securities
accounts, letters of credit, all rights of payment or performance under letters
of credit and insurance policies;
(j) all Real Property;
(k) all Avoidance Claims (upon Court approval of the Final Financing
Order);
(l) all money and other Property of any kind, whether or not in the
possession or under the control of Lender or a bailee of Lender;
(m) all cash and non-cash proceeds of (a) through (l) above,
including proceeds of and unearned premiums with respect to insurance policies
insuring any of the Collateral; and
(n) all books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs, and other computer
materials and records) of each Borrower pertaining to any of (a) through (m)
above.
Furthermore, all Obligations of Borrowers shall constitute superpriority
administrative claims under Section 364(c) of the Bankruptcy Code, senior to (i)
all other administrative claims in the Chapter 11 Case (or the case of any
Borrower), (ii) all claims under Sections 506(c) and 507 of the Bankruptcy Code,
and (iii) all obligations of any Borrower under the Pre-Petition Loan Agreements
(and any claims or obligations arising under any order of the Bankruptcy Court
in favor or the lenders in respect of such Pre-Petition Loan Agreements) and any
other secured or unsecured debt or other obligations of either Borrower existing
on the date hereof. For the avoidance of doubt, as provided in the Financing
Orders, the Liens securing the Obligations shall be senior to Liens securing the
obligations under the Pre-Petition Loan Agreements and any other secured debt of
either Borrower existing on the date hereof or granted under any order of the
Bankruptcy Court (including any adequate protection liens granted in respect of
the Pre-Petition Loan Agreements) notwithstanding the time of attachment or
perfection or any other event or occurrence.
Section 6.2 OTHER COLLATERAL. In addition to the items of Property
referred to in Section 6.1 above, the Obligations shall also be secured by all
of the other items of Property from time to time described in the Financing
Orders or any of the Security Documents as security for all of the Obligations.
8
Section 6.3 LIEN ON DEPOSIT ACCOUNTS. As additional security for the
Full Payment and performance of the Obligations, and without limiting the other
provisions of this Article 6 or the Financing Orders, each Borrower hereby
grants to Lender a continuing security interest in and Lien upon, and hereby
collaterally assigns to Lender, all of such Borrower's right, title and interest
in and to any deposits or other sums at any time credited to each Deposit
Account. In connection with the foregoing, each Borrower hereby authorizes and
directs each bank or other depository to pay or deliver to Lender upon its
written demand therefor made at any time upon the occurrence and during the
continuation of an Event of Default and without further notice to Borrowers
(such notice being hereby expressly waived), all balances in each Deposit
Account maintained by Borrowers with such depository for application to the
Obligations then outstanding, and the rights given Lender in this Section 6.3
shall be cumulative with and in addition to Lender's other rights and remedies
in regard to the foregoing Property as proceeds of Collateral. Each Borrower
hereby irrevocably appoints Lender as its attorney-in-fact to collect any and
all such balances to the extent any such payment is not made to Lender by such
bank or other depository after demand thereon is made by Lender pursuant hereto.
Section 6.4 LIEN PERFECTION; FURTHER ASSURANCES. Promptly after
Lender's request therefor, Borrowers shall execute or cause to be executed and
deliver to Lender such instruments, assignments, title certificates, mortgages,
control agreements or other documents as are necessary under the UCC or other
Applicable Law (including any motor vehicle certificates of title) to perfect
(or continue the perfection of) Lender's Lien upon the Collateral, and shall
take such other action as may be requested by Lender to give effect to or carry
out the intent and purposes of this Agreement. Each Borrower hereby authorizes
Lender to file any financing statement which may be necessary or desirable under
the UCC without the signature of such Borrower. The parties agree that a carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
Section 6.5 LIEN PRIORITY. The Liens and security interests granted
to Lender pursuant to the provisions of this Article 6 and pursuant to any of
the DIP Financing Documents shall be first priority Liens and security interests
in the Collateral owned by each Borrower, subject only to the Carve-Out, and
except as expressly provided otherwise in the Financing Orders. Until the Full
Payment of the Obligations, the right to enforce remedies in the Collateral
shall be exclusive to Lender and no other person having a security interest in
the Collateral shall be entitled to enforce any remedies in the Collateral until
Full Payment of the Obligations without the written consent of Lender.
ARTICLE 7
COLLATERAL ADMINISTRATION
Section 7.1 GENERAL PROVISIONS.LOCATIONS OF COLLATERAL. All tangible
items of Collateral, other than Inventory in transit, shall at all times be kept
by Borrowers at one or more of the business locations of Borrowers described in
Schedule 7.1(a) hereof and shall not be moved therefrom, without the prior
written approval of Lender, except that prior to the occurrence of an Event of
Default, Borrowers may 1. make sales or other dispositions of any Collateral to
the extent authorized by Section 7.4(b) hereof, 1. move Inventory or any record
relating to any Collateral to a location in the United States other than those
described in Schedule 7.1(a), so long as Borrowers have given Lender at least 10
9
days prior written notice of such new location, and (iii) use Equipment at other
locations in the United States in the Ordinary Course of Business.
(b) INSURANCE OF COLLATERAL; CONDEMNATION PROCEEDS. Borrowers shall
maintain and pay for insurance upon all Collateral, wherever located, covering
casualty, hazard, public liability, and such other risks in such amounts and
with such insurance companies as are reasonably satisfactory to Lender. Lender
acknowledges that Borrowers' existing insurance coverage and insurance companies
are satisfactory. All proceeds payable under each such policy shall be payable
to Lender for application to the Obligations. Borrowers shall deliver the
originals or certified copies of such policies to Lender with loss payable
endorsements reasonably satisfactory to Lender, naming Lender as sole loss
payee, assignee or additional insured, as appropriate. Each policy of insurance
or endorsement shall contain a clause requiring the insurer to give not less
than 30 days prior written notice to Lender in the event of cancellation of the
policy for any reason. If Borrowers fail to provide and pay for such insurance,
Lender may, at its option, but shall not be required to, procure the same and
charge Borrowers therefor. Borrowers agree to deliver to Lender, promptly as
rendered, true copies of all reports made in any reporting forms to insurance
companies. For so long as no Event of Default exists and is continuing,
Borrowers shall have the right to settle, adjust and compromise any claim with
respect to any insurance maintained by Borrowers provided that all proceeds
thereof are applied in the manner specified in this Agreement, and Lender agrees
promptly to provide any necessary endorsement to any checks or drafts issued in
payment of any such claim. At any time that a Default or Event of Default exists
and is continuing, only Lender shall be authorized to settle, adjust and
compromise such claims. Lender shall have all rights and remedies with respect
to such policies of insurance as are provided for in this Agreement and the
other DIP Financing Documents.
(c) PROTECTION OF COLLATERAL. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes imposed under any Applicable Law on any of the Collateral or in respect of
the sale thereof, and all other payments required to be made by Lender to any
Person to realize upon any Collateral shall be borne and paid by Borrowers. If
Borrowers fail to pay promptly any portion thereof when due, Lender may, at its
option, but shall not be required to, pay the same and charge Borrowers
therefor. Lender shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Lender's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever, but the same shall be at Borrowers' sole risk.
(d) DEFENSE OF TITLE TO COLLATERAL. Borrowers shall at all times
defend its title to the Collateral and Lender's Liens therein against all
Persons and all claims and demands whatsoever.
Section 7.2 ADMINISTRATION OF ACCOUNTS.
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(a) RECORDS AND SCHEDULES OF ACCOUNTS. Each Borrower shall keep
accurate and complete records of its Accounts1 and all payments and collections
thereon and shall submit to Lender on such periodic basis as Lender shall
request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the 20th day of each month from and after
the date hereof, Borrowers shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed, and, upon Lender's request therefor, copies of proof of delivery and a
copy of all documents, including repayment histories and present status reports
relating to the Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as Lender shall reasonably
request. At the request of Lender made at any time, Borrowers shall deliver to
Lender copies of invoices or invoice registers related to all of its Accounts.
(b) ACCOUNT VERIFICATION. Whether or not a Default or an Event of
Default exists, Lender shall have the right at any time, in the name of Lender,
any designee of Lender or any Borrower, to verify the validity, amount or any
other matter relating to any Accounts of Borrowers by mail, telephone, telegraph
or otherwise. Borrowers shall cooperate fully with Lender in an effort to
facilitate and promptly conclude any such verification process.
Section 7.3 ADMINISTRATION OF INVENTORY
(a) RECORDS AND REPORTS OF INVENTORY. Each Borrower shall keep
accurate and complete records of its Inventory and shall furnish Lender periodic
inventory reports 2in form and detail reasonably satisfactory to Lender and
certified to be true and correct by the chief financial officer (or any other
officer acceptable to Lender in its sole discretion) of such Borrower.
(b) RETURNS OF INVENTORY. Neither Borrower shall return any of its
Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless 1. such return is in the ordinary course of business of such Borrower and
such Person; 1. no Event of Default exists or would result therefrom; 1.
Borrowers promptly notifies Lender thereof if the aggregate value of all
Inventory returned in any month exceeds $50,000; and 1. such return is not made
for the purpose of allowing such Person to credit its claim against such
Borrower arising prior to the Closing Date.
Section 7.4 ADMINISTRATION OF EQUIPMENT.
(a) RECORDS AND SCHEDULES OF EQUIPMENT. Each Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
cost of its Equipment and all dispositions made in accordance with Section
7.4(b) hereof, and shall, if requested by Lender, furnish Lender with a current
schedule3 containing the foregoing information on at least a monthly basis and
more often if requested by Lender. Promptly after request therefor by Lender,
_________________
(1) Please provide current list
(2) Please provide.
(3) Please provde.
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such Borrower shall deliver to Lender any and all evidence of ownership, if any,
of any of the Equipment.
(b) DISPOSITIONS OF EQUIPMENT. Neither Borrower will sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; PROVIDED, HOWEVER, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to 1. dispositions of Equipment in the Ordinary Course of
Business, 1. dispositions of Equipment of Borrowers which, in the aggregate have
a fair market value or book value, whichever is less, of $50,000 or less,
provided that all Net Proceeds thereof are remitted to Lender for application to
the Obligations, or 1. replacements of Equipment that is substantially worn,
damaged or obsolete with Equipment of like kind, function and value, provided
that the replacement Equipment shall be acquired prior to or concurrently with
any disposition of the Equipment that is to be replaced, the replacement
Equipment shall be free and clear of Liens, and Borrowers shall have given
Lender at least 10 days prior written notice of such disposition.
(c) CONDITION OF EQUIPMENT. The Equipment shall be in good operating
condition and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved, reasonable wear and tear excepted. Neither Borrower
will permit any of the Equipment to become affixed to any Real Property leased
to such Borrower so that an interest arises therein under the real estate laws
of the applicable jurisdiction unless the landlord of such real Property has
executed a landlord waiver or leasehold mortgage in favor of and in form
acceptable to Lender, and such Borrower will not permit any of the Equipment to
become an accession to any personal Property that is subject to a Lien.
Section 7.5 PLEDGED SECURITIES
(a) DELIVERY OF CERTIFICATES. Borrowers will use reasonable efforts
to deliver to Lender on or before the Closing Date, or as soon as reasonably
practicable thereafter, all certificates or instruments representing or
evidencing any Pledged Securities, whether now existing or hereafter acquired,
in suitable form for transfer by delivery or, as applicable, accompanied by
Borrowers' endorsement or duly executed instruments of transfer in blank, all in
form and substance satisfactory to Lender; PROVIDED that in the event either
Borrower, at any time prior to Full Payment of the Obligations, shall gain
possession of any such certificates or instruments, such Borrower shall
immediately deliver such certificates and instruments to Lender.
(b) CERTAIN DISTRIBUTIONS. Any sums paid upon or in respect of any
of the Pledged Securities upon liquidation or dissolution of any issuer of any
of the Pledged Securities, any distribution of capital made on or in respect of
any of the Pledged Securities, or any property distributed upon or with respect
to any of the Pledged Securities pursuant to the recapitalization or
reclassification of the capital of any issuer of Pledged Securities or pursuant
to the reorganization thereof shall be delivered to Lender to be held by it
hereunder as additional security for the Obligations. If any sums of money or
property so paid or distributed in respect of any of the Pledged Securities
shall be received by either Borrower, such Borrower shall, until such money or
property is paid or delivered to Lender, hold such money or such property in
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trust for Lender, segregated from other funds of such Borrower, as additional
security for the Obligations.
(c) VOTING RIGHTS. Except as provided in Section 11.6, Borrowers
will be entitled to exercise all voting, consensual and corporate rights with
respect to the Pledged Securities; PROVIDED, HOWEVER, that no vote shall be
cast, consent given or right exercised or other action taken by Borrowers which
would impair the Collateral or which would be inconsistent with or result in any
violation of any provision of this Agreement or any other DIP Financing Document
or, without prior written consent of Lender, to enable or take any action to
permit any issuer of Pledged Securities to issue any Equity Interest of any
nature or issue any other securities convertible into or granting the right to
purchase or exchange for any Equity Interest securities of any nature of such
issuer.
(d) CONTROL. Borrowers shall not grant control over any Investment
Property (including deposit accounts, securities accounts and uncertificated
securities) to any Person other than Lender.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
Section 8.1 GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender
to enter into this Agreement and to make available the Commitment, each Borrower
warrants and represents to Lender that:
(a) ORGANIZATION AND QUALIFICATION. It is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the power to own its Properties and to
transact the business in which it is presently engaged or proposed to be engaged
and is duly qualified and in good standing in each jurisdiction in which it
presently is, or proposes to be, engaged in business, other than failures to be
so qualified and in good standing that could not reasonably be expected to have
a Material Adverse Effect.
(b) POWER AND AUTHORITY. The execution, delivery and performance by
such Borrower of the DIP Financing Documents are within such Borrower's
corporate power, have been duly authorized by all necessary or proper corporate
action and, on the date of initial funding of Revolving Advances hereunder, will
be authorized by an Interim Financing Order pursuant to Section 364 of the
Bankruptcy Code; are not in contravention of any provision of its own
Organizational Documents; will not violate any Applicable Law (following entry
of an Interim Financing Order); does not require the consent or approval of any
Governmental Authority or any other Person other than the entry by the
Bankruptcy Court of an Interim Financing Order and thereafter a Final Financing
Order.
(c) ENFORCEABLE AGREEMENTS. Each of the DIP Financing Documents has
been duly executed and delivered by such Borrower and constitutes a legal, valid
and binding obligation of such Borrower, enforceable against such Borrower in
accordance with its terms, subject to the Financing Orders.
(d) LIENS. (i) Upon entry of an Interim Financing Order, and
thereafter upon entry of a Final Financing Order, the security interests granted
pursuant to the DIP Financing Documents will constitute valid, enforceable,
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perfected and first priority Liens on the Collateral owned by such Borrower,
except to the extent otherwise expressly provided in the Financing Orders. (ii)
As of the Closing Date, there shall be no Liens on the Collateral other than the
Liens listed on Schedule 8.1(d) hereto.
(e) PLACES OF BUSINESS. It has no office or place of business, nor
does such Borrower store any Collateral, at any location other than those
identified in SCHEDULE 7.1(A).
(f) COMPLIANCE WITH LAWS. All of such Borrower's business,
operations and Properties are conducted, maintained and owned in accordance with
Applicable Law, including all Environmental Laws, except to the extent that any
such noncompliance could not reasonably be expected to have a Material Adverse
Effect.
(g) GOVERNMENTAL APPROVALS. It has obtained and holds in full force
and effect all Governmental Approvals necessary for the operation of its
business as presently and proposed to be conducted to the extent that the
failure to obtain same could not reasonably be expected to have a Material
Adverse Effect.
(h) NO ADVERSE CHANGES. Since the date of the last internally
prepared, unaudited financial statements of Borrowers delivered to Lender, no
event has occurred that has or could reasonably be expected to have a Material
Adverse Effect, other than the filing of the Chapter 11 Case.
(i) TAXES. Such Borrower has filed all federal, state and local tax
returns and other reports that it is required by Applicable Law to file and has
paid, or made for provision of the payment of, all Taxes upon it, its income and
properties as and when such Taxes are due and payable, except to the extent
being Properly Contested and except for amounts not to exceed $25,000 in the
aggregate.
(j) BROKERS. There are no claims for brokerage commissions, finders'
fees or investment banking fees in connection with the transactions contemplated
by this Agreement or any of the other DIP Financing Documents.
(k) NO DEFAULT. No Default or Event of Default exists at the time,
or would result from the funding, of any Revolving Advance or other extension of
credit hereunder;
(l) ERISA. Each Borrower and each of its Subsidiaries are in full
compliance with the requirements of ERISA and the regulations promulgated
thereunder with respect to each Plan. No fact or situation that is reasonably
likely to result in a material adverse change in the financial condition of each
Borrower or any of its Subsidiaries exists in connection with any Plan. Neither
Borrower nor any of their respective Subsidiaries has any withdrawal liability
in connection with a Multiemployer Plan.
(m) NOT A REGULATED ENTITY. Such Borrower is not 1. an "investment
company" or a "person directly or indirectly controlled by or acting on behalf
of an investment company" within the meaning of the Investment Company Act of
1940; or (ii) a "holding company," or a "subsidiary company" of a "holding
14
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935.
(n) MARGIN STOCK. Neither Borrower nor any of its Subsidiaries is
engaged, principally or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock.
(o) PLEDGED SECURITIES. All Pledged Securities of any Borrower as of
the date hereof are listed on SCHEDULE 8.1(O), and all of such Pledged
Securities are owned by such Borrower free and clear of any Lien. The Pledged
Securities pledged hereunder by any Borrower constitute that percentage of the
issued and outstanding Equity Interests of each issuer thereof as set forth on
SCHEDULE 8.1(O). All of the Pledged Securities have been duly and validly issued
and are fully paid and nonassessable. Except as set forth on SCHEDULE 8.1(O),
all certificates or instruments evidencing the Pledged Securities have been
delivered to Lender.
(p) SUBSIDIARIES. All of the direct and indirect Subsidiaries of any
Borrower are listed on SCHEDULE 8.1(P). Each such Subsidiary has no material
assets.
(q) INFORMATION. As of date hereof, no written information, report,
financial statement or schedule furnished by any Borrower in connection with
this Agreement or any other DIP Financing Document, taken as a whole, as of the
date made or furnished, contains any material misstatement of fact or fails to
state any material fact (as of the date made or furnished) necessary to make the
statements therein, in light of the circumstances under which they were made at
the time, not misleading.
8.2 REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. All of the
foregoing representations and warranties made by Borrowers in this Agreement or
in any of the other DIP Financing Documents shall survive the execution and
delivery of this Agreement and such other DIP Financing Documents, and shall
(with the exception of clause (h) of Section 8.1) be deemed to have been remade
and reaffirmed on each day that any Obligations are outstanding or that any
Borrower requests or is deemed to have requested the funding of a Revolving
Advance under the DIP Facility.
ARTICLE 9
COVENANTS AND CONTINUING AGREEMENTS
Section 9.1 AFFIRMATIVE COVENANTS. Each Borrower hereby covenants to
Lender as follows:
(a) The covenants contained in Sections 7.1(C)(i), 7.1(F), 7.1(G),
7.1(H), 7.1(I), 7.1(J), and 7.1(M), 7.3, 7.4, 7.5, 7.6, 7.7, 7.9 (in respect of
all Taxes payable by Borrower after the date hereof), 7.10 (except where such
failure to meet the terms thereof could not reasonably be expected to result in
a Material Adverse Effect), 7.11, 7.12, 7.14, and 7.15 of the IBM Facility are
hereby incorporated herein by reference as though each Borrower herein were
named as "Customer" therein and Lender herein were named as "IBM Credit"
therein, MUTATIS MUTANDIS.
15
(b) Borrowers shall, to the extent having applicability to any
Borrower, comply with the Financing Orders and all other orders entered by the
Bankruptcy Court in the Chapter 11 Case.
(c) Borrowers shall, as soon as available, and in any event within
two (2) Business Days after the filing thereof, provide to Lender a copy of each
report filed by Borrowers with the office of the United States Trustee.
(d) Borrowers shall, promptly (and in any event within five (5)
Business Days) after any request of Lender, deliver to Lender such additional
financial or other information concerning the acts, conduct, properties, assets,
liabilities, operations, businesses, financial condition or transactions of any
Borrower, or concerning any matter which may affect the administration of any
Borrower Estate, as Lender may from time to time reasonably request.
(e) Borrowers shall, promptly upon receipt thereof, provide notice
to Lender that Borrowers have received information that in any way relates to a
written solicitation, offer, or proposed sale or disposition of any material
amount of real or personal Property of any Borrower, including letters of
inquiry, solicitations, letters of intent or asset purchase agreements or any
proposals relating to the restructuring or reorganization of any Borrower or any
sale of assets outside the Ordinary Course of Business. Upon the request of
Lender and subject to the execution and delivery by Lender of a confidentiality
agreement in form and substance reasonably acceptable to Lender, copies of all
such information described in the foregoing sentence; PROVIDED, HOWEVER that
Borrowers shall have no obligation to provide any such notice or documentation
to Lender pursuant to this Section 9.1(e) if (i) Lender shall have presented
Borrowers with any offer to purchase any material portion of Borrowers' Property
or shall have offered to finance the acquisition by any Person of such Property
or any portion thereof and (ii) Borrowers shall determine in their reasonable
discretion that providing such notice or documents to Lender would adversely
affect Borrowers' ability to solicit bids from other Persons in respect of such
Property. For purposes of this clause (e) the term "Lender" shall include any
Affiliate of Lender.
(f) Borrowers shall, promptly upon the request of Lender, at any
time and from time to time, do, execute, acknowledge, deliver, record, rerecord,
file, refile, register and reregister, any and all further acts, conveyances,
security agreements, pledge agreements, mortgage debentures, assignments,
control agreements, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments as Lender, may reasonably require
from time to time in order to (i) subject any of the properties, assets, rights
or interests of Borrowers included or intended to be included in the Collateral
to the Liens created or now or hereafter intended to be created under any of the
DIP Financing Documents and (ii) perfect and maintain the validity,
effectiveness and priority of any of the DIP Financing Documents or any of the
Liens created or intended to be created thereunder.
(g) Borrowers shall deliver to Lender on the Closing Date and the
first Monday that is a Business Day, of each month thereafter, a Budget in
respect of such month.
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(h) Borrowers shall maintain in effect their existing cash
management arrangements and Lender shall obtain appropriate agreements with
Borrowers' existing banker relating to Lender's first priority lien on
Borrowers' deposit accounts; PROVIDED that at the request of Lender, each
Borrower will transfer its deposit accounts to an institution acceptable to
Lender. All collections and proceeds from sales of Collateral (including credit
card collections) will be deposited either directly into such deposit accounts
or into deposit account at an institution for which Lender has in place an
agency agreement reasonably satisfactory to Lender in its sole discretion.
Section 9.2 NEGATIVE COVENANTS. Each Borrower hereby covenants to
Lender as follows:
(a) The covenants contained in Sections 8.3, 8.4, 8.5, 8.6, 8.7,
8.8, 8.9, 8.10 (other than as disclosed on Schedule 8.1(d) hereof) and 8.12 of
the IBM Facility are hereby incorporated herein by reference as though each
Borrower herein were named as "Customer" therein and Lender herein were named as
"IBM Credit" therein, MUTATIS MUTANDIS.
(b) No Borrower shall, directly or indirectly, make any payment of
principal or interest on account of any Claim against such Borrower that arose
prior to the Closing Date other than to certain critical vendors and employees
in an amount not to exceed $800,000 and except as explicitly permitted by the
Financing Orders or other order of the Bankruptcy Court entered with Lender's
consent.
(c) None of Borrowers shall apply to the Bankruptcy Court for
authority to 1. take any action that is prohibited by the terms of any of the
DIP Financing Documents, 1. refrain from taking any action that is required to
be taken by the terms of any of the DIP Financing Documents or the Financing
Orders, 1. permit any Debt or Claim to be pari passu with or senior to any of
the Obligations, except as provided in the Financing Orders or any Lien to be
pari passu with or senior to any Lien securing the Obligations 1. use any cash
proceeds of the Collateral other than in payment of the Obligations or as
otherwise expressly authorized herein or in the Financing Orders.
(d) No Borrower shall seek or consent to any amendment, supplement
or any other modification of any of the terms of the Financing Orders without
Lender's consent.
(e) Borrowers shall not after the Petition Date (i) incur or become
liable on any Debt or other obligations other than (1) amounts payable to
vendors, lessors and employees in the Ordinary Course of Business, (2) the
obligations under the Financing Orders in respect of the the Pre-Petition Loan
Agreements, (3) the Obligations, (4) amounts payable to Professional Persons in
accordance with this Agreement, the Financing Orders or other order of the
Bankruptcy Court entered with Lender's consent and (5) other obligations in
amount not to exceed $100,000 at any time outstanding, (ii) make any loan,
advance or investment in any Person other than transfers among and between
Borrowers, (iii) make any dividend or distribution in respect of its equity
interests other than a distribution from Industries to Systems; (iv) sell,
transfer or otherwise dispose of any material portion of its assets outside the
ordinary course of business unless concurrently with such transaction there
shall occur Full Payment of all Obligations, including the Early Termination
Fee, and termination of the DIP Facility; or (v) grant any lien on any part of
17
the Collateral, other than the lien granted to Lender hereunder and pursuant to
the Financing Orders.
(f) For any calendar month, Borrowers shall not permit (i) their
aggregate monthly cash receipts (on a cumulative basis) for such month to be
more than ten percent less than the revenue amount specified in Borrower's
Budget as to such month, or (ii) their aggregate monthly expenses (on a
cumulative basis) to exceed by more than ten percent the expense amount
specified in Borrowers' Budget as of such month.
ARTICLE 10
CONDITIONS PRECEDENT
Section 10.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Notwithstanding any other provision of this Agreement or any of the other DIP
Financing Documents, and without affecting in any manner the rights of Lender
under other sections of this Agreement, Lender shall not be required to fund the
initial Revolving Advance requested by Borrowers, unless each of the following
conditions has been satisfied on or by the date of an Interim Financing Order
that is an Effective Final Order (or such other date as may be specified below)
and continues thereafter to be satisfied:
(a) All of the DIP Financing Documents shall have been executed in
form and substance satisfactory to Lender by each of the signatories thereto and
accepted by Lender, and Borrowers shall be in compliance with all of the terms
thereof, and all representations and warranties contained therein shall be true
and correct in all respects.
(b) No Default or Event of Default shall exist at the time of, and
would not result from the funding of, any requested Revolving Advance, and no
event shall have occurred and no condition shall exist since the date of the
last audited financial statements of Borrowers delivered to Lender that has had
or could reasonably be expected to have a Material Adverse Effect.
(c) An Interim Financing Order shall have been entered, no later
than December 21, 2004, shall be in full force and effect and shall not have
been vacated, reversed, modified or stayed in any respect and shall otherwise be
an Effective Final Order.
(d) Lender shall have received satisfactory proof of insurance by
Borrowers, in accordance with the terms of this Agreement, and evidence of loss
payable endorsements naming Lender as loss payee with respect to each policy and
certified copies of each Borrower's liability insurance policies, together with
endorsements naming Lender as an additional insured.
(e) All representations and warranties in the Agreement shall be
true and correct in all material respects, and there shall be no Default or
Event of Default in existence at the time of, or after giving effect to the
making of, any Revolving Advance under the Agreement.
(f) Lender shall have received such legal opinions, documents and
other instruments as it may request.
(g) All fees and other amounts and required to be paid by Borrowers
hereunder on or before the Closing Date shall have been paid in full and Lender
shall have received all other documents and instruments requested by it in
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connection with this Agreement or any other DIP Financing Document.
(h) Lender shall have received the Budget applicable to the month in
which such initial Revolving Advance shall be made by Lender.
(i) Lender shall have received each Borrower's internally prepared
unaudited financial statement for the period ending October 31, 2004.
Section 10.2 CONDITIONS PRECEDENT TO ALL REVOLVING ADVANCES.
Notwithstanding any other provision of this Agreement or any of the other DIP
Financing Documents, and without affecting in any manner the rights of Lender
under other sections of this Agreement, Lender shall not be required to fund any
Revolving Advance, unless each of the following conditions has been and
continues to be satisfied:
(a) No Default or Event of Default exists at the time, or would
result from the funding, of any Revolving Advance or other extension of credit.
(b) No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court or
Governmental Authority to enjoin, restrain or prohibit any of the DIP Financing
Documents or the consummation of any of the transactions contemplated thereby.
(c) No event shall have occurred and no condition shall exist that
could reasonably be expected to have a Material Adverse Effect.
(d) For any Revolving Advance after January 28, 2005, a Final
Financing Order that is an Effective Final Order shall have been entered no
later than January 28, 2005 and shall be in full force and effect and shall not
have been vacated, reversed, modified or stayed in any respect (and, if such
order is the subject of a pending appeal, no performance of any obligation of
any party shall have been stayed pending such appeal).
(e) All representations and warranties contained within the
Agreement shall be true and correct in all material respects.
(f) Lender shall have received such other information or documents
regarding the requested Revolving Advance as Lender may reasonably request.
(g) Lender shall have received the Budget applicable to the month in
which such Revolving Advance shall be made by Lender.
Section 10.3 LIMITED WAIVER OF CONDITIONS PRECEDENT. If Lender shall
make any Revolving Advance or otherwise extend any credit to Borrowers under
this Agreement at a time when any of the foregoing conditions precedent are not
satisfied (regardless of whether the failure of satisfaction of any of such
conditions precedent is known or unknown to Lender), the funding of such
Revolving Advance shall not operate as a waiver of the right of Lender to insist
upon the satisfaction of all conditions precedent with respect to each
subsequent Borrowing requested by Borrowers or as a waiver of any Default or
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Event of Default as a consequence of the failure of any such conditions to be
satisfied.
ARTICLE 11
EVENTS OF DEFAULT;
RIGHTS AND REMEDIES ON DEFAULT
Section 11.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an "EVENT OF DEFAULT":
(a) PAYMENT OF OBLIGATIONS. Any Borrower shall fail to pay 1. the
principal of or accrued interest with respect to any Revolving Advance on the
due date thereof (whether due at stated maturity, on demand, upon acceleration
or otherwise) or 1. any of the other Obligations on the due date thereof
(whether due at stated maturity, upon acceleration or otherwise), but if no due
date is specified therefor, within three Business Days after demand for payment
of such Obligation.
(b) MISREPRESENTATIONS. Any warranty, representation, or other
statement made or furnished to Lender by or on behalf of any Borrower or in any
instrument, certificate or financial statement furnished in compliance with or
in reference to this Agreement or any of the DIP Financing Documents proves to
have been false or misleading in any material respect when made or furnished.
(c) BREACH OF SPECIFIC COVENANTS. Except as provided in Section
11.1(a) ,any Borrower shall fail or neglect to perform, keep or observe (i) any
covenant contained herein (other than those covenants in Section 9.1 hereof) or
in any other DIP Financing Document on the date that such Borrower is required
to perform, keep or observe such covenant or (ii) any covenant contained in
Section 9.1 hereof on the date that such Borrower is required to perform, keep
or observe such covenant which failure is not cured within the 10 days of the
earlier of (a) written notice or (b) knowledge of such failure by any Senior
Officer of any Borrower.
(d) DEFAULT UNDER OTHER DIP FINANCING DOCUMENTS. Any event of
default shall occur under, or either Borrower shall default in the performance
or observance of any term, covenant, condition or agreement contained in, any of
the other DIP Financing Documents and such default shall continue 1. beyond any
applicable period of grace, or 1. if no grace period is specified within such
DIP Financing Documents, within 10 days after the sooner to occur of any Senior
Officer's receipt of notice of such breach from Lender or the date on which such
failure or neglect first becomes known to any Senior Officer.
(e) DEFAULT UNDER ALPINE PRE-PETITION NOTE DOCUMENTS. Any event of
default shall occur under, or either Borrower shall default in the performance
or observance of any term, covenant, condition or agreement contained in, any
Alpine Pre-Petition Note Document and such default shall continue beyond any
applicable period of grace.
(f) UNINSURED LOSSES; UNAUTHORIZED DISPOSITIONS. There shall occur
any material loss, theft, damage or destruction not fully covered by insurance
(as required by this Agreement and subject to such deductibles as Lender shall
have agreed to in writing), or any sale, lease or encumbrance of any of the
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Collateral or the making of any levy, seizure, or attachment thereof or thereon,
except as may be specifically permitted by other provisions of this Agreement.
(g) CERTAIN BANKRUPTCY EVENTS. Borrowers shall fail to comply with
any of the provisions of the Financing Orders in any material respect; a trustee
shall be appointed in any Chapter 11 Case; an examiner shall be appointed in any
Chapter 11 Case with enlarged powers (powers beyond those set forth in Section
1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code; any Chapter 11 Case shall be dismissed or converted to a case
under Chapter 7; any Borrower shall obtain Bankruptcy Court approval of a
disclosure statement for a Reorganization Plan other than an Acceptable Plan, or
a Confirmation Order shall be entered with respect to a Reorganization Plan
proposed by a Person other than Borrowers if such Reorganization Plan is not an
Acceptable Plan; any Borrower shall, without Lender's consent, file any motion
to sell all or a substantial part of the Collateral on terms that do not provide
for the termination of the DIP Facility and the Full Payment of the Obligations
(including the Early Termination Fee) concurrently with the closing of such
transaction; the Final Financing Order is not entered by January 28, 2005; any
Borrower shall, without Lender's consent, file any motion to alter, amend,
vacate, supplement, modify, or reconsider, in any respect, either of the
Financing Orders or, without Lender's prior written consent, either of the
Financing Orders is amended, vacated, stayed, reversed or otherwise modified;
the Bankruptcy Court shall enter an order granting to any Person (other than
Lender) relief from the automatic stay to foreclose upon a Lien with respect to
any Property of any Borrower that has an aggregate book value in excess of
$50,000 or to terminate or otherwise exercise remedies under any material
agreement, document or instrument which is entered into after the Closing Date,
whether or not it relates to any Debt; any Borrower shall file a motion or other
request with the Bankruptcy Court seeking authority to use any cash proceeds of
the Collateral or to obtain any financing under Section 364(c) or Section 364(d)
of the Bankruptcy Code or otherwise secured by a Lien upon any Collateral (in
each case 1. without Lender's prior written consent and 1. if such motion fails
to contemplate payment in full of the Obligations (including the Early
Termination Fee) and termination of the DIP Facility); any other security
interest, Lien, claim or encumbrance shall be granted which is PARI PASSU with
or senior to the claims of Lender in Borrowers' Chapter 11 Case, excepted as
contemplated by the Financing Orders; the grant of any super priority
administrative expense claim or any lien which is PARI PASSU with or senior to
those of Lender; any payment of pre-petition debt except as
explicitly contemplated by the Financing Orders with respect to the Pre-Petition
Loan Agreements; the sale of all or substantially all of the assets of any of
Borrowers to any Person; there shall be any challenge to the extent, validity,
priority or unavoidability of any liens of Lender securing the DIP Facility or
any of the obligations thereunder; an Acceptable Plan, shall not have been filed
with the Bankruptcy Court by May 31, 2005; an order shall be entered reversing,
amending, supplementing, staying, vacating or otherwise modifying any Financing
Order; there shall occur a post-petition event which causes or would cause a
material adverse change or a material adverse effect on the ability of any
Borrower to perform its obligations under the DIP Facility or to continue the
operation of its business; without Lender's consent, any Borrower shall
discontinue or suspend all or any material part of its business operations or
commence an orderly wind-down or liquidation of any material part of the
Collateral; any application shall be filed by any Borrower for the approval of
any other super-priority claim in the Chapter 11 Cases which is PARI PASSU with
or senior to the claims of Lender against Borrowers or there shall arise such
claim, except for such application which provides that as a condition precedent
21
to such action the Full Payment of the Obligations hereunder and the termination
of the Commitment hereunder; an order shall be entered which provides relief
from the automatic stay otherwise imposed pursuant to Section 362 of the
Bankruptcy Code, which order permits any creditor other than Lender to realize
upon or to exercise any right or remedy with respect to the Collateral (other
than any such right or remedy exercised in respect of those Liens listed on
Schedule 8.1(d) hereof which do not relate to the Pre-Petition Loan Agreements)
or to terminate any license, franchise, lease or similar arrangement, where such
relief could have a Material Adverse Effect; or any order of adequate protection
is provided by the Bankruptcy Court in the Chapter 11 Case in favor of any of
Borrowers' pre-petition creditors without the consent of Lender or any such
adequate protection is modified or expanded without the consent of Lender
(except for adequate protection paid to equipment owners, lienholders and
lessors pursuant to an order of the Bankruptcy Court after notice to Lender not
to exceed amounts set forth in the Budget under "Lease Payments" PLUS $75,000 in
the aggregate).
(h) FAILURE OF DIP FINANCING DOCUMENTS. Any material covenant,
agreement or obligation of any Borrower contained in or evidenced by any of the
DIP Financing Documents shall cease to be enforceable or shall be determined to
be unenforceable in accordance with its terms; any Borrower shall deny or
disaffirm its obligations under any of the DIP Financing Documents or Liens
granted in connection therewith; Borrowers shall initiate or support any other
Person's opposition of or challenge to the enforceability, validity and priority
of the DIP Financing Documents or the Liens granted thereby; or the Liens
granted in any of the Collateral owned by Borrowers shall be determined to be
voidable, invalid or subordinated or shall be determined, with respect to any
material part of the Collateral owned by Borrowers, to be unperfected or not to
have the priority contemplated by this Agreement.
(i)MATERIAL CONTRACTS. Any Material Contract shall be terminated or
amended in any material respect without the prior written consent of Lender,
unless said contract is concurrently replaced with a comparable agreement on
comparable terms.
Section 11.2 ACCELERATION OF THE OBLIGATIONS. Without in any way
limiting the right of Lender to demand payment of any portion of the Obligations
payable on demand in accordance with this Agreement, upon or at any time after
the occurrence of an Event of Default as above provided, Lender may, in its
discretion, without the need to seek relief from the automatic stay or provide
any other notice except as provided for in the Financing Orders 1. declare the
principal of and any accrued interest on the Revolving Advances and all other
Obligations owing under any of the DIP Financing Documents to be, whereupon the
same shall become, without further notice or demand (all of which notice and
demand Borrowers expressly waives), forthwith due and payable and Borrowers
shall forthwith pay to Lender the entire principal of and accrued and unpaid
interest on the Revolving Advances and other Obligations plus reasonable
attorneys' fees and expenses if such principal and interest are collected by or
through an attorney-at-law; and 1. terminate the Commitment. Borrowers shall
fully cooperate with Lender in connection with prompt realization upon the
Collateral.
Section 11.3 REMEDIES. Upon or at any time after the occurrence of
an Event of Default, Lender may, in its discretion, without the need for relief
from the automatic stay or any other notice except as provided for in the
Financing Orders, exercise from time to time the following rights and remedies
22
to enforce collection of the Obligations (without prejudice to the rights of
Lender to enforce its Claims against Borrowers in any other matter permitted by
law):
(a) All of the rights and remedies of a secured party under the UCC
or under other Applicable Law, and all other legal and equitable rights to which
Lender may be entitled under any of the DIP Financing Documents or the Financing
Orders, all of which rights and remedies shall be cumulative and shall be in
addition to any other rights and remedies contained in this Agreement or any of
the other DIP Financing Documents, and none of which shall be exclusive.
(b) The right to collect Accounts, Chattel Paper, Instruments and
General Intangibles and all other rights of Borrowers to the payment of money
from any Person obligated therefor.
(c) The right to take immediate possession of all tangible items of
the Collateral and 1. to require Borrowers to assemble such Collateral, at
Borrowers' expense, and make it available to Lender at a place designated by
Lender that is reasonably convenient to both parties and 1. to enter any of the
premises of Borrowers or wherever any of the Collateral shall be located, and to
keep and store the same on said premises until sold (and if said premises be the
Property of Borrowers, Borrowers agrees not to charge Lender for storage
thereof).
(d) The right to sell or otherwise dispose of all or any Inventory
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Lender, in its sole
discretion, may deem advisable; Borrowers agrees that 10 days written notice to
Borrowers of any public or private sale or other disposition of such Collateral
shall be reasonable notice thereof, and such sale shall be at such locations as
Lender may designate in said notice. Lender shall have the right to conduct such
sales on Borrowers' premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with Applicable Law; Lender may sell,
lease or otherwise dispose of such Collateral, or any part thereof, for cash,
credit or any combination thereof, and Lender may purchase all or any part of
such Collateral at public or, if permitted by Applicable Law, private sale and,
in lieu of actual payment of such purchase price, may set off the amount of such
price against the Obligations
(e) The right to exercise control over Investment Property
(including deposit accounts, securities accounts and uncertificated securities).
Section 11.4 LICENSES AND SALE OF COLLATERAL. Lender is hereby
irrevocably granted a license or other right to use, without charge, which
license or right can only be exercised upon an Event of Default, Borrowers'
labels, patents, copyrights, rights of use of any name, trade secrets,
tradenames, trademarks and advertising matter, or any Property of a similar
nature, as it pertains to the Collateral, in advertising for sale and selling
any Collateral and Borrowers' rights under all licenses and all franchise
agreements shall inure to Lender's benefit, to the extent permissible under the
applicable agreement(s) and Applicable Law. Any proceeds realized from the sale
of any Collateral may be applied to the Obligations, after allowing two (2)
Business Days for collection, to principal, interest, fees and expenses
(including Extraordinary Expenses) in such order and manner as Lender, in its
sole discretion, may determine.
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Section 11.5 SETOFF. In addition to any Liens granted under any of
the DIP Financing Documents and any rights now or hereafter available under
Applicable Law, Lender (and each of its Affiliates) is hereby authorized by
Borrowers at any time that an Event of Default exists, without notice (except as
required by the Financing Orders) to Borrowers or any other Person (any such
notice being hereby expressly waived) to set off and to appropriate and to apply
any and all deposits, general or special (including Debt evidenced by
certificates of deposit whether matured or unmatured (but not including trust
accounts)) and any other Debt at any time held or owing by Lender, such Lender
or any of its Affiliates to or for the credit or the account of Borrowers
against and on account of the Obligations of Borrowers arising under the DIP
Financing Documents to Lender, or any of its Affiliates, including all Revolving
Advances and all claims of any nature or description arising out of or in
connection with this Agreement, irrespective of whether or not 1. Lender shall
have made any demand hereunder, 1. Lender shall have declared the principal of
and interest on the Revolving Advances and other amounts due hereunder to be due
and payable as permitted by this Agreement and even though such Obligations may
be contingent or unmatured or 1. the Collateral for the Obligations is adequate.
Section 11.6 PLEDGED SECURITIES.
(a) After the occurrence of an Event of Default, if Lender shall
have given notice of its intent to exercise such rights to Borrowers, (i) Lender
shall have the right to receive any and all cash dividends, payments or other
proceeds paid in respect of the Pledged Securities and make application thereof
to the Obligations in the order set forth herein, and (ii) Lender or its nominee
may exercise (A) all voting, consensual, corporate and other rights pertaining
to the Pledged Securities at any meeting of shareholders, partners or members,
as the case may be, of the relevant issuers of Pledged Securities or otherwise
and (B) any and all rights of conversion, exchange and subscription and any
other rights, privileges or options pertaining to the Pledged Securities as if
it were the absolute owner thereof (including the right to exchange at its
discretion any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any issuer of Pledged Securities, the right to deposit and deliver
any and all of the Pledged Securities with any committee, depository, transfer
agent, registrar or other designated agency upon such terms and conditions as
Lender may determine), all without liability except to account for Property
actually received by it, but Lender shall have no duty to Borrowers to exercise
any such right, privilege or option and shall not be responsible for any failure
to do so or delay in so doing.
(b) In order to permit Lender to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions which it may be entitled to
receive hereunder, (i) Borrowers shall promptly execute and deliver (or cause to
be executed and delivered) to Lender all such proxies, dividend payment orders
and other instruments as Lender may from time to time reasonably request and
(ii) without limiting the effect of clause (i) above, Borrowers hereby grants to
Lender an irrevocable proxy to vote all or any part of the Pledged Securities
and to exercise all of the rights, powers, privileges and remedies to which a
holder of the Pledged Securities would be entitled, which proxy shall be
effective, automatically and without the necessity of any action (including any
transfer of any Pledged Securities on the record books of the issuer thereof) by
any other Person (including the issuer of such Pledged Securities or any officer
or agent thereof), after the occurrence of an Event of Default and which proxy
24
shall only terminate upon the Full Payment of the Obligations.
(c) Borrowers hereby expressly authorizes and instructs each issuer
of any Pledged Securities pledged hereunder by Borrowers to (i) comply with any
instruction received by it from Lender in writing that (a) states that an Event
of Default has occurred and is continuing and (b) is otherwise in accordance
with the terms of this Agreement, without any other or further instructions from
Borrowers, and Borrowers agrees that such issuer shall be fully protected in so
complying and (ii) unless otherwise expressly permitted hereby, pay any
dividends or other payments with respect to the Pledged Securities directly to
Lender.
Section 11.7 REMEDIES CUMULATIVE; NO WAIVER.
(a) All covenants, conditions, provisions, warranties, guaranties,
indemnities, and other undertakings of Borrowers contained in this Agreement and
the other DIP Financing Documents, or in any document referred to herein or
contained in any agreement supplementary hereto or in any schedule given to
Lender or contained in any other agreement between Lender and Borrowers,
heretofore, concurrently, or hereafter entered into, shall be deemed cumulative
to and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of Borrowers herein contained. The rights and remedies
of Lender under this Agreement and the other DIP Financing Documents shall be
cumulative and not exclusive of any rights or remedies that Lender would
otherwise have.
(b) The failure or delay of Lender to require strict performance by
Borrowers of any provision of any of the DIP Financing Documents or to exercise
or enforce any rights, Liens, powers or remedies under any of the DIP Financing
Documents or with respect to any Collateral shall not operate as a waiver of
such performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Revolving Advances and all other Obligations owing or to become owing
from Borrowers to Lender shall have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of Borrowers
contained in this Agreement or any of the other DIP Financing Documents and no
Event of Default by Borrowers under this Agreement or any other DIP Financing
Documents shall be deemed to have been suspended or waived by Lender, unless
such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Lender
and directed to Borrowers.
(c) If Lender shall accept performance by Borrowers, in whole or in
part, of any obligation that Borrowers is required by any of the DIP Financing
Documents to perform only when a Default or Event of Default exists, or if
Lender shall exercise any right or remedy under any of the DIP Financing
Documents that may not be exercised other than when a Default or Event of
Default exists, Lender's acceptance of such performance by Borrowers or Lender's
exercise of any such right or remedy shall not operate to waive any such Event
of Default or to preclude the exercise by Lender of any other right or remedy,
unless otherwise expressly agreed in writing by Lender, as the case may be.
25
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
Section 12.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Borrowers, Lender and their respective
successors and assigns, except that Borrowers shall not have any right to assign
its rights or delegate performance of any of its obligations under any of the
DIP Financing Documents. Any assignee or transferee of any portion of the DIP
Facility agrees by acceptance thereof to be bound by all the terms and
provisions of the DIP Financing Documents. Any request, authority or consent of
any Person, who at the time of making such request or giving such authority or
consent is Lender or its assignee or transferee or holder of a Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of any
portion of the DIP Facility or such Note or of any Note or Notes issued in
exchange therefor.
Section 12.2 PARTICIPATIONS.
(a) PERMITTED PARTICIPANTS; EFFECT. Lender may, in accordance with
Applicable Law, at any time sell to one or more commercial banks, savings and
loan associations, savings banks, finance companies, investment funds or other
financial institutions (whether a corporation, partnership, or other entity), or
Affiliates of Lender (each a "PARTICIPANT") a participating interest in any of
the Obligations owing to Lender, any Commitment of Lender or any other interest
of Lender under any of the DIP Financing Documents. In the event of any such
sale by Lender of participating interests to a Participant, Lender's obligations
under the DIP Financing Documents shall remain unchanged, Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, Lender shall remain the oblige hereunder and holder of any Note for
all purposes under the DIP Financing Documents, all amounts payable by Borrowers
under this Agreement and any Note shall be determined as if Lender had not sold
such participating interests, and Borrowers shall continue to deal solely and
directly with Lender in connection with Lender's rights and obligations under
the DIP Financing Documents. If Lender sells a participation to a Person other
than an Affiliate of Lender, then Lender shall give prompt written notice
thereof to Borrowers.
(b) VOTING RIGHTS. Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the DIP Financing Documents other than an amendment,
modification or waiver with respect to any Revolving Advances or Commitment in
which such Participant has an interest which forgives principal, interest or
fees or reduces the stated interest rate or the stated rates at which fees are
payable with respect to any such Revolving Advance or Commitment, postpones the
Commitment Termination Date, or any date fixed for any regularly scheduled
payment of interest or fees on such Revolving Advance or Commitment, or releases
from liability Borrowers or releases any substantial portion of any of the
Collateral.
(c) BENEFIT OF SET-OFF. Borrowers agrees that each Participant shall
be deemed to have the right of set-off provided in Section 11.5 hereof in
respect of its participating interest in amounts owing under the DIP Financing
Documents to the same extent and subject to the same requirements under this
Agreement as if the amount of its participating interest were owing directly to
it as Lender under the DIP Financing Documents, provided that Lender shall
retain the right of set-off provided in Section 11.5 hereof with respect to the
amount of participating interests sold to each Participant. Lender agrees to
26
share with each Participant, and each Participant by exercising the right of
set-off provided in Section 11.5 agrees to share with Lender, any amount
received pursuant to the exercise of its right of set-off.
Section 12.3 ASSIGNMENTS
(a) PERMITTED ASSIGNMENTS. Lender may, in accordance with Applicable
Law, at any time assign to any Eligible Assignee all of its rights and
obligations under the DIP Financing Documents. The assignee shall be deemed to
have consented and be subject to, and to be bound by the terms of, all of the
DIP Financing Documents.
(b) EFFECT; EFFECTIVE DATE. On and after the effective date of any
assignment, such Eligible Assignee shall for all purposes be the Lender party to
this Agreement and any other DIP Financing Document executed by Lender and shall
have all the rights and obligations of Lender under the DIP Financing Documents
to the same extent as if it were an original party thereto, and no further
consent or action by Borrowers shall be required to release the transferor
Lender with respect to the Commitment (or portion thereof) of such Lender and
Obligations assigned to such Eligible Assignee. The transferring Lender shall
continue to be entitled to the benefits of all indemnities applicable to the
period prior to the effective date of the assignment.
(c) DISSEMINATION OF INFORMATION. Borrowers authorizes Lender to
disclose to any Participant, any Eligible Assignee or any other Person acquiring
an interest in the DIP Financing Documents by operation of law (each a
"TRANSFEREE"), and any prospective Transferee, any and all information in
Lender's possession concerning Borrowers, the Subsidiaries of Borrowers or the
Collateral, subject to appropriate confidentiality undertakings on the part of
such Transferee.
ARTICLE 13
MISCELLANEOUS
Section 13.1 POWER OF ATTORNEY. Each Borrower hereby irrevocably
designates, makes, constitutes and appoints Lender (and all Persons designated
by Lender) as such Borrower's true and lawful attorney (and Lender-in-fact) and
Lender, or Lender's designee, may, without notice to such Borrower and in either
Borrower's or Lender's name, if an Event of Default has occurred and is
continuing, but at the cost and expense of Borrowers, on a joint and several
basis:
(a) At such time or times as Lender or said designee, in its sole
discretion, may determine, endorse such Borrower's name on any Payment Item or
proceeds of the Collateral which come into the possession of Lender or under
Lender's control.
(b) Subject to any notice or other action required under the
Financing Orders: (i) demand payment of the Accounts from the Account Debtors,
enforce payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of Borrowers' rights and remedies with respect to the collection of
the Accounts; (ii) settle, adjust, compromise, discharge or release any of the
Accounts or other Collateral or any legal proceedings brought to collect any of
the Accounts or other Collateral; (iii) sell or assign any of the Accounts and
other Collateral upon such terms, for such amounts and at such time or times as
Lender deems advisable; (iv) take control, in any manner, of any item of payment
27
or proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of Lien or similar
document in connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to Borrowers and to notify postal authorities to
change the address for delivery thereof to such address as Lender may designate;
(vii) endorse the name of such Borrower upon any of the items of payment or
proceeds relating to any Collateral and deposit the same to the account of
Lender on account of the Obligations; (viii) endorse the name of such Borrower
upon any chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement relating to any Accounts or Inventory of
such Borrower and any other Collateral; (ix) use such Borrower's stationery and
sign the name of such Borrower to verifications of the Accounts and notices
thereof to Account Debtors; (x) use the information recorded on or contained in
any data processing equipment and computer hardware and software relating to the
Accounts, Inventory and any other Collateral; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in
Lender's determination, to fulfill such Borrower's obligations under this
Agreement.
Section 13.2 GENERAL INDEMNITY. Borrowers hereby agree, on a joint
and several basis, to indemnify and defend the Indemnitees and to hold the
Indemnitees harmless from and against any Claim ever suffered or incurred by any
of the Indemnitees arising out of or related to this Agreement or any of the
other DIP Financing Documents, the performance by Lender of its duties or the
exercise of any of its rights or remedies hereunder, or the result of Borrowers'
failure to observe, perform or discharge any of Borrowers' duties hereunder.
Borrowers shall also indemnify and defend, on a joint and several basis, the
Indemnitees against and save the Indemnitees harmless from all Claims of any
Person arising out of, related to, or with respect to any transactions entered
into pursuant to this Agreement or Lender's Lien arising from the DIP Financing
Documents upon the Collateral. Without limiting the generality of the foregoing,
these indemnities shall extend to any Claims asserted against any of the
Indemnitees by any Person under any Environmental Laws or similar laws by reason
of Borrowers' or any other Person's failure to comply with laws applicable to
Hazardous Materials. Additionally, if any Taxes (excluding Taxes imposed upon or
measured solely by the net income of Lender, but including, any intangibles tax,
stamp tax, recording tax or franchise tax) shall be payable by Lender, or
Borrowers on account of the execution or delivery of this Agreement, or the
execution, delivery, issuance or recording of any of the other DIP Financing
Documents, or the creation or repayment of any of the Obligations hereunder, by
reason of any Applicable Law now or hereafter in effect, Borrowers shall pay (or
will promptly reimburse Lender for the payment of) all such Taxes, including any
interest and penalties thereon, and will indemnify and hold Indemnitees harmless
from and against liability in connection therewith. The foregoing indemnities
shall not apply to protect any of the Indemnitees for the consequences of their
own gross negligence or willful misconduct.
Section 13.3 SURVIVAL OF ALL INDEMNITIES. Notwithstanding anything
to the contrary in this Agreement or any of the other DIP Financing Documents,
the obligation of Borrowers and Lender with respect to each indemnity given by
it in this Agreement shall survive the Full Payment of the Obligations and the
termination of any of the Commitment.
28
Section 13.4 INDULGENCES NOT WAIVERS. Lender's failure at any time
or times hereafter to require strict performance by Borrowers of any provision
of this Agreement shall not waive, affect or diminish any right of Lender
thereafter to demand strict compliance and performance therewith.
Section 13.5 MODIFICATION OF AGREEMENT. This Agreement may not be
modified, altered or amended, except by an agreement in writing signed by
Borrowers and Lender.
Section 13.6 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 13.7 CUMULATIVE EFFECT; CONFLICT OF TERMS. To the fullest
extent permitted by Applicable Law, the provisions of the Security Documents are
hereby made cumulative with the provisions of this Agreement. Except as
otherwise provided in any of the other DIP Financing Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other DIP Financing Documents (other than the
Financing Orders), the provision contained in this Agreement shall govern and
control; in the event that any provision in this Agreement is in direct conflict
with, or inconsistent with, any provisions of the Financing Orders, the
provisions of the Financing Orders shall govern and control.
Section 13.8 EXECUTION IN COUNTERPARTS. This Agreement and any
amendments hereto may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.
Section 13.9 LENDER'S CONSENT. Whenever Lender's consent is required
to be obtained under this Agreement or any of the other DIP Financing Documents
as a condition to any action, inaction, condition or event, Lender shall be
authorized to give or withhold its consent in its sole and absolute discretion,
unless expressly stated otherwise.
Section 13.10 NOTICES. All notices, requests and demands to or upon
a party hereto shall be in writing and shall be sent by certified or registered
mail, return receipt requested, personal delivery against receipt or by
telecopier or other facsimile transmission and shall be deemed to have been
validly served, given or delivered when delivered against receipt or 3 Business
Days after deposit in the U.S. mail, certified mail postage prepaid, or, in the
case of facsimile transmission, when received (if on a Business Day and, if not
received on a Business Day, then on the next Business Day after receipt) at the
office where the noticed party's telecopier is located, in each case addressed
to the noticed party at the address shown for such party on the signature page
hereof. Notwithstanding the foregoing, no notice to or upon Lender pursuant to
Section 3.1 or Section 5.2(b) shall be effective until actually received by the
individual to whose attention at Lender such notice is required to be sent. Any
written notice or demand that is not sent in conformity with the provisions
hereof shall nevertheless be effective on the date that such notice is actually
received by the noticed party.
29
Section 13.11 PERFORMANCE OF BORROWERS' OBLIGATIONS. If Borrowers
shall fail to discharge any covenant, duty or obligation hereunder or under any
of the other DIP Financing Documents, Lender may, in its sole discretion at any
time or from time to time, for Borrowers' account and at Borrowers' expense, pay
any amount or do any act required of Borrowers hereunder or under any of the DIP
Financing Documents or otherwise lawfully requested by Lender to enforce any of
the DIP Financing Documents or Obligations, preserve, protect, insure or
maintain any of the Collateral, or preserve, defend, protect or maintain the
validity or priority of Lender's Liens in any of the Collateral, including the
payment of any judgment against Borrowers, any insurance premium, any warehouse
charge, any finishing or processing charge, any landlord claim, any other Lien
upon or with respect to any of the Collateral. All payments that Lender may make
under this Section and all out-of-pocket costs and expenses (including
Extraordinary Expenses) that Lender pays or incurs in connection with any action
taken by it hereunder shall be reimbursed to Lender by Borrowers on demand with
interest from the date such payment is made or such costs or expenses are
incurred to the date of payment thereof at the Default Rate applicable for
Revolving Advances. Any payment made or other action taken by Lender under this
Section shall be without prejudice to any right to assert, and without waiver
of, an Event of Default hereunder and to proceed thereafter as provided herein
or in any of the other DIP Financing Documents.
Section 13.12 TIME OF ESSENCE. Time is of the essence of this
Agreement and the Security Documents.
Section 13.13 ENTIRE AGREEMENT; APPENDIX A, EXHIBITS AND SCHEDULES.
This Agreement and the other DIP Financing Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written. Appendix A, each of
the Exhibits and each of the Schedules attached hereto are incorporated into
this Agreement and by this reference made a part hereof.
Section 13.14 INTERPRETATION. No provision of this Agreement or any
of the other DIP Financing Documents shall be construed against or interpreted
to the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having, or being deemed to have,
structured, drafted or dictated such provision.
Section 13.15 GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance, with the laws of the State of New York.
30
Section 13.16 NO THIRD PARTY BENEFICIARIES. The agreements of the
parties hereto are solely for the benefit of Borrowers and Lender and its
successors and assigns and no other Person.
Section 13.17 RULES OF CONSTRUCTION. This Agreement shall be subject
to the rules of construction set forth in Appendix A.
Section 13.18 JOINT AND SEVERAL LIABILITY OF BORROWERS. Borrowers
shall be jointly and severally liable for all Obligations under the DIP
Financing Documents, including fees, indemnities and expenses of Lender.
[The remainder of this page is intentionally left blank. Signature pages follow.]
31
IN WITNESS WHEREOF, this Agreement has been duly executed on the day
and year specified at the beginning of this Agreement.
BORROWERS:
DATATEC SYSTEMS, INC., a Delaware corporation
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
DATATEC INDUSTRIES, INC., a New Jersey
corporation
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Signature Page
LENDER:
ALPINE ASSOCIATES, A LIMITED PARTNERSHIP,
a New Jersey limited partnership
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Signature Page
APPENDIX A
GENERAL DEFINITIONS
ACCEPTABLE PLAN - a Reorganization Plan which provides for Full Payment of
all Obligations on the effective date of such Reorganization Plan, provides for
an effective date thereof no later than 20 days after the date of entry of the
Confirmation Order and otherwise contains provisions which, individually or in
the aggregate, could not reasonably be expected to be materially adverse to
Lender, as determined by Lender in its good faith discretion.
ACCOUNT - shall have the meaning ascribed to "account" in the UCC as such
definition may be amended from time to time and shall include a right to payment
for goods sold or leased or for services rendered that is not evidenced by an
Instrument or Chattel Paper, whether or not any such right to payment has been
earned by performance.
ACCOUNT DEBTOR - any Person who is or may become obligated under or on
account of an Account.
AFFILIATE - a Person: (a) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
another Person; (b) which beneficially owns or holds 10% or more of any class of
the Equity Interests of another Person; or (c) 10% or more of the Equity
Interests of which is beneficially owned or held by another Person or a
Subsidiary of another Person.
AGGREGATE ADVANCES - at any time, the sum of (a) the aggregate outstanding
principal amount at such time of the Revolving Advances made to Systems PLUS (b)
the aggregate outstanding principal amount at such time of the Revolving
Advances made to Industries PLUS (c) the Outstanding Alpine Pre-Petition
Indebtedness.
AGREEMENT - the Debtor In Possession Revolving Credit Agreement referred to
in the Preamble hereof, all Exhibits and Schedules thereto and this Appendix A.
ALPINE PRE-PETITION NOTE - the Senior Secured Note in the original
principal amount of $585,000, dated December 13, 2004, made by Borrowers in
favor of Lender, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
ALPINE PRE-PETITION NOTE DOCUMENTS - the collective reference to (a) the
Alpine Pre-Petition Note, (b) the Security and Pledge Agreement, dated as of
December 13, 2004, among Borrowers and Lender and (c) the Subordination
Agreement, dated as of December 13, 2004, among Borrowers, Eagle and Lender, in
each case as the same may be amended, restated, supplemented or otherwise
modified from time to time.
APPLICABLE LAW - all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant or DIP Financing Documents in question, including
all applicable common law and equitable principles; all provisions of all
applicable state and federal constitutions, statutes, rules, regulations and
orders of governmental bodies; and orders, judgments and decrees of all
Bankruptcy Courts and arbitrators.
1
ASSET DISPOSITION - any sale, issuance, conveyance, transfer, lease or
other disposition by Borrowers in one or a series of related transactions, of
any Property including, without limitation, any Collateral or Equity Interests
of Borrowers to any Person (other than to Borrowers).
AVOIDANCE CLAIM - any claim or right that could be asserted by or on behalf
of any Borrower or its respective Estate against a Person under 11 U.S.C. ▇▇.▇▇.
544, 546, 547, 548, 549, 550 or 553.
BANKRUPTCY CODE - means Title 11 of the United States Code entitled
"Bankruptcy" as now and hereafter in effect, or any successor statute.
BANKRUPTCY COURT - as defined in the Recitals to the Agreement.
BORROWERS - as defined in the Preamble to the Agreement.
BORROWER'S ESTATE - means, in respect of each Borrower, the Property of
such Borrower that became subject to the jurisdiction of the Bankruptcy Court
pursuant to Section 541(a) of the Bankruptcy Code upon filing of the Chapter 11
Case.
BORROWING - a borrowing consisting of one or more Revolving Advances made
or deemed made on the same day by Lender.
BORROWING BASE - has the meaning given to such term in the IBM Facility;
PROVIDED that provisions referring to the discretion of IBM shall, for the
purposes of this Agreement, be deemed to be to the discretion of Lender;
PROVIDED FURTHER that the terms of such Borrowing Base shall apply to Borrowers
on a consolidated basis.
BUDGET - (a) for the first 4 weeks after the Closing Date, the budget
attached hereto as Exhibit F and (b) thereafter, a supplemental monthly cash
expense budget detailing, (i) on a weekly basis, the anticipated cash receipts
and expenditures and permitted cumulative variances, including Professional
Expenses, of Borrowers and (ii) Borrowing Base information as set forth in the
collateral management report as set forth in Attachment F to the IBM Facility
for such month, as amended or supplemented from time to time with Lender's prior
written consent, which budget (and any amendments thereto), in the case of this
clause (b), shall be in form and substance acceptable to Lender and shall be
incorporated into the Financing Orders.
BUSINESS DAY - any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are required to be closed.
CAPITAL EXPENDITURES - expenditures made for the acquisition of any fixed
assets or improvements, replacements, substitutions or additions thereto which
have a useful life of more than one year, including the total principal portion
of Capitalized Lease Obligations.
CAPITALIZED LEASE OBLIGATION - any Debt represented by obligations under a
lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.
2
CARVE-OUT - means the (a) fees payable to the United States Trustee
pursuant to 28 U.S.C. ss. 1930(a) and the fees payable to the Clerk of thE
Bankruptcy Court in respect of the Chapter 11 Case; and (b) fees and expenses of
professionals retained by Borrowers pursuant to Section 327 or 1103 of the
Bankruptcy Code incurred, accrued, or invoiced from the Closing Date through the
date of an Event of Default, not in excess of the amounts provided for in the
Budget for such items plus an additional $200,000 for fees and expenses incurred
after the date of such Event of Default.
CERCLA - the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. ss. 9601 et seq. and its implementing regulations.
CHAPTER 11 CASE - as defined in the Recitals to the Agreement.
CHATTEL PAPER - shall have the meaning ascribed to the term "chattel paper"
in the UCC, as such definition may be amended from time to time.
CLAIMS - any and all claims, demands, liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, awards, remedial response costs,
expenses or disbursements of any kind or nature whatsoever (including reasonable
attorneys', accountants', consultants' or paralegals' fees and expenses),
whether arising under or in connection with the DIP Financing Documents, any
Applicable Law (including any Environmental Laws) or otherwise, that may now or
hereafter be suffered or incurred by a Person and whether suffered or incurred
in or as a result of any investigation, litigation, arbitration or other
judicial or non-judicial proceeding or any appeals related thereto.
CLOSING DATE - December 14, 2004.
COLLATERAL - all of the Property and interests in Property of Borrowers
that are described in Article 6 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and performance
of any of the Obligations, whether or not such Property or interest in Property
was in existence on or acquired by Borrowers prior to or after the Closing Date.
COMMITMENT - shall have the meaning ascribed thereto in Section 1.1 of the
Agreement.
COMMITMENT TERMINATION DATE - the date that is the earliest to occur of:
(a) the Maturity Date, (b) the effective date of any Acceptable Plan or the date
of entry of a Confirmation Order with respect to any other Reorganization Plan,
(c) the event of closing with respect to any sale, transfer or other disposition
of any material assets of any Borrower outside of the ordinary course of
business, (d) the date Lender terminates the DIP Facility pursuant to Section
5.2 or Sections 11.2 of the Agreement, (e) the date on which Borrowers elects to
terminate the Agreement pursuant to Section 5.2(b) of the Agreement, (f) the
date that is 40 days after the entry of the Interim Order, if a Final Financing
Order has not been entered and is not an Effective Final Order on or before such
date, (g) the date on which Secured Creditor asserts its rights to declare the
use of Cash Collateral terminated pursuant to the Interim Financing Order, and
(h) the date on which an order of the Bankruptcy Court terminates the use of
Cash Collateral.
3
COMPLIANCE CERTIFICATE - the compliance certificate attached to the IBM
Facility as Attachment C thereto.
CONFIRMATION ORDER - an order entered by the Bankruptcy confirming a
Reorganization Plan.
CONTINGENT OBLIGATION - with respect to any Person, any obligation of such
Person arising from any guaranty, indemnity or other assurance of payment or
performance of any Debt, lease, dividend or other obligation ("PRIMARY
OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including (a) the direct or indirect guaranty
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (b) the obligation to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (c) any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
Property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligations or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase Property, Securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term "CONTINGENT OBLIGATION" shall not include any
product warranties extended in the ordinary course of business. The amount of
any Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation with respect to which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.
DEBT - as applied to a Person means, without duplication: (a) all items
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person on the date as
of which Debt is to be determined, including Capitalized Lease Obligations; (b)
all obligations of other Persons which such Person has guaranteed; (c) all
reimbursement obligations in connection with letters of credit or letter of
credit guaranties issued for the account of such Person; and (d) in the case of
Borrowers (without duplication), the Obligations.
DEFAULT - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
DEFAULT RATE - for any day, the Interest Rate otherwise applicable to such
day, plus four percent (4%) per annum.
4
DEPOSIT ACCOUNT - a demand, time, savings, passbook, money market or other
depository account, or a certificate of deposit, maintained by any Borrower with
any bank, savings and loan association, credit union or other depository
institution.
DIP FACILITY - the revolving credit facility established by Lender in favor
of Borrowers under Article 1 of the Agreement.
DIP FINANCING DOCUMENTS - this Agreement, the Notes, the Security
Documents, the Financing Orders, and any and all other agreements, instruments
and documents now or hereafter executed by either Borrower in favor of Lender
with respect to any of the transactions contemplated by this Agreement.
DIP TERM - a period commencing on the date of entry of an Interim Financing
Order that is an Effective Final Order and ending on the Maturity Date.
DOCUMENT - shall have the meaning ascribed to the term "document" in the
UCC, as such definition may be amended from time to time.
DOLLARS AND THE SIGN "$" - lawful money of the United States of America.
EARLY TERMINATION FEE - One and one-half percent (1.5%) of the Commitment.
EAGLE - Eagle Acquisition Partners, Inc.
EFFECTIVE FINAL ORDER - an order of the Bankruptcy Court that shall be in
full force and effect and not subject to any outstanding appeal, writ of
mandamus, or other request for reconsideration or modification.
ELIGIBLE ASSIGNEE - any commercial bank, savings and loan association,
savings bank, finance company, investment fund or other financial institution
(whether a corporation, partnership, or other entity), or any Affiliate of
Lender; PROVIDEd, HOWEVER that, so long as no Event of Default shall have
occurred and be continuing, no direct competitor of a Borrower shall be an
Eligible Assignee.
ENVIRONMENTAL LAWS - any and all laws, statutes, rules, regulations,
orders, ordinances, codes, legal directives, notices, legal requirements and
rules of common law of any effect as of the date hereof in any and all
jurisdictions in which any Borrower is conducting or at any time has conducted
business or where the Collateral is or was located, and any judicial or
administrative interpretation thereof including, but not limited to, any
judicial or administrative order, consent decree, judgment or settlement
relating to the environment, Hazardous Materials or exposure to Hazardous
Materials.
EQUIPMENT - shall have the meaning ascribed to the term "equipment" in the
UCC, as such definition may be amended from time to time.
EQUITY INTEREST - the interest of (a) a shareholder in a corporation, (b) a
partner (whether general or limited) in a partnership (whether general, limited
or limited liability), (c) a member in a limited liability company, or (d) any
5
other Person having any other form of equity security in any form of entity.
ERISA - the Employee Retirement Income Security Act of 1974 and all rules
and regulations from time to time promulgated thereunder.
ESTATE - the estate created in the Chapter 11 Case pursuant to 11 U.S.C.
ss. 541(a).
EVENT OF DEFAULT - shall have the meaning ascribed in Article 11 of the
Agreement.
EXTRAORDINARY EXPENSES - all reasonable out-of-pocket costs, expenses, fees
(including fees incurred by Lender Professionals) or advances that Lender may
suffer or incur, whether prior to or after the occurrence of an Event of
Default, and whether prior to, after or during the pendency of an Insolvency
Proceeding of Borrowers, on account of or in connection with (a) the audit,
inspection, repossession, storage, repair, appraisal, insuring, completion of
the manufacture of, preparing for sale, advertising for sale, selling,
collecting or otherwise preserving or realizing upon any Collateral; (b) the
defense of Lender's Lien upon any Collateral or the priority thereof or any
adverse claim with respect to the Revolving Advances, the DIP Financing
Documents or the Collateral asserted by Borrowers, any receiver or trustee for
Borrowers or any creditor or representative of creditors of Borrowers; (c) the
settlement or satisfaction of any Liens upon any Collateral; (d) the collection
or enforcement of any of the Obligations; (e) the negotiation, documentation,
and closing of any restructuring or forbearance agreement with respect to the
DIP Financing Documents or Obligations; (f) amounts advanced by Lender pursuant
to Section 7.1(c) of the Agreement; or (g) the enforcement of any of the
provisions of any of the DIP Financing Documents. Such costs, expenses and
advances may include transfer fees, taxes, storage fees, insurance costs, permit
fees, utility reservation and standby fees, legal fees, appraisal fees, brokers'
fees and commissions, auctioneers' fees and commissions, consultants' fees,
accountants' fees, environmental study fees, wages and salaries paid to
employees of any Borrower or independent contractors in liquidating any
Collateral, travel expenses, all other fees and expenses payable or reimbursable
by Borrowers under any of the DIP Financing Documents, and all other fees and
expenses associated with the enforcement of rights or remedies under any of the
DIP Financing Documents, but excluding compensation paid to employees (including
inside legal counsel who are employees) of Lender.
FINAL FINANCING ORDER - an order which is entered by the Bankruptcy Court
pursuant to Section 364 of the Bankruptcy Code and Bankruptcy Rule 4001(c),
which is in form and substance reasonably acceptable to Lender in all respects,
and which authorizes the incurrence by Borrowers of post-petition secured
(including a lien on Avoidance Actions and a waiver by the Borrowers of any
rights either or both Borrower may have to seek to recover from any part of the
Collateral, pursuant to section 506(c) of the Bankruptcy Code or otherwise, any
costs, expenses, fees, or charges incurred by the Debtors, any statutory
committee, or any other person, party, or entity in connection with (i) the
administration of this Chapter 11 Case or any superseding chapter 7 cases to
which such cases may be converted, or (ii) the preservation or disposition of
any part of the Collateral, whether incurred in connection with this Chapter 11
Case or any superseding chapter 7 case to which these cases may be converted)
and superpriority indebtedness under the DIP Facility in accordance with the DIP
Financing Documents on a final basis.
6
FINANCING ORDERS - any Interim Financing Order and any Final Financing
Order.
FULL PAYMENT - full, final and indefeasible payment of all Obligations
which are then due and payable in cash or immediately available funds and, in
the case of any Obligation that is, at the time in question, contingent, upon
Lender's receipt of either cash or a direct pay letter of credit naming Lender
as beneficiary and in form and substance, and from an issuing bank, acceptable
to Lender, in each case in an amount not less than 105% of each such contingent
Obligation.
GAAP - generally accepted accounting principles and practices in effect in
the United States of America from time to time.
GENERAL INTANGIBLE - shall have the meaning ascribed to the term "general
intangible" in the UCC, as such definition may be amended from time to time, and
shall include all interests in Intellectual Property.
GOVERNMENTAL APPROVALS - all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
GOVERNMENTAL AUTHORITY - any federal, state, municipal, national or other
governmental department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case whether
associated with a state of the United States, the District of Columbia or a
foreign entity or government.
HAZARDOUS MATERIALS - any "waste," "hazardous waste," "industrial waste,"
"solid waste," "hazardous material," "hazardous substance," "toxic substance,"
"hazardous material," "pollutant," or "contaminant" as those or similar terms
are defined, identified, or regulated under any Environmental Laws; any
asbestos, polychlorinated biphenyls, or radon; any petroleum, petroleum
hydrocarbons, petroleum products, crude oil and any components, fractions or
derivatives thereof; and any substance that, whether by its nature or its use,
is subject to regulation under any Environmental Law or results in any
Governmental Authority requiring any environmental investigation, remediation,
or monitoring thereof.
IBM - means IBM Credit Corporation.
IBM FACILITY - that certain Inventory and Working Capital Financing
Agreement, dated November 10, 2000 (as amended, supplemented, or otherwise
modified up to the Closing Date), among Borrower and IBM Credit Corporation,
attached as Exhibit C hereto.
INDEMNIFIED AMOUNT - the amount of any loss, cost, expenses or damages
suffered or incurred by Indemnitees and against which Borrowers have agreed to
indemnify such Indemnitees pursuant to the terms of the Agreement or any of the
other DIP Financing Documents.
7
INDEMNITEE - Lender in its capacity as a lender under the Agreement and its
present and future officers, directors and agents, including all Lender
Professionals and all Affiliates of Lender.
INDUSTRIES - as defined in the Preamble to the Agreement.
INSOLVENCY PROCEEDING - any action, case or proceeding commenced by or
against a Person, or any agreement of such Person, for (a) the entry of an order
for relief under any chapter of the Bankruptcy Code or other insolvency or debt
adjustment law (whether state, federal or foreign), (b) the appointment of a
receiver, trustee, liquidator or other custodian for such Person or any part of
its Property, (c) an assignment or trust mortgage for the benefit of creditors
of such Person, or (d) the liquidation, dissolution or winding up of the affairs
of such Person.
INSTRUMENT - shall have the meaning ascribed to the term "instrument" in
the UCC, as such definition may be amended from time to time.
INTELLECTUAL PROPERTY - means all United States and foreign (i) patents,
patent applications, utility models or statutory invention registrations
(whether or not filed), and invention disclosures; (ii) trademarks, service
marks, logos, designs, trade names, trade dress, domain names and corporate
names and registrations and applications for registration thereof (whether or
not filed) and the goodwill associated therewith; (iii) copyrights, whether
registered or unregistered, and registrations and applications for registration
thereof (whether or not filed) and other works or authorship, whether or not
published; (iv) trade secrets, proprietary information, formulas, inventions,
know-how, procedures, customer lists, supplier lists, manufacturer lists,
manufacturing and production processes and techniques, manuals, formulas,
hardware, software, firmware, databases; and (v) moral rights relating to any of
the foregoing.
INTEREST RATE - shall have the meaning ascribed thereto in Section 2.1(a)
of the Agreement.
INTERIM FINANCING ORDER - an order that is entered by the Bankruptcy Court
pursuant to Section 364 of the Bankruptcy Code and Bankruptcy Rule 4001(c),
which is in form and substance reasonably satisfactory to Lender, which
authorizes Borrowers to incur, during the Interim Period, post-petition secured
and superpriority Debt under the DIP Facility in accordance with the DIP
Financing Documents.
INTERIM PERIOD - the period commencing upon entry of an Interim Financing
Order and ending on the entry of the Final Financing Order.
INVENTORY - shall have the meaning ascribed to "inventory" in the UCC, as
such definition may be amended from time to time including, in the case of each
Borrower: (a) all goods intended for sale or lease by such Borrower, or for
display or demonstration; (b) all work in process; (c) all raw materials and
other materials and supplies of every nature and description used or which might
be used in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise used or
consumed in such Borrower's business; and (d) all Documents evidencing any
General Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by such Borrower.
8
INVESTMENT PROPERTY - shall have the meaning ascribed to "investment
property" in the UCC, as such definition may be amended from time to time.
LENDER - as defined in the Preamble to this Agreement.
LENDER PROFESSIONALS - attorneys, accountants, appraisers, business
valuation experts, environmental engineers or consultants, turnaround
consultants and other professionals or experts retained by Lender.
LENDER'S ACCOUNT - Bank of New York, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, ABA# 021 000 018, Acct# 866 1151 510, Account Name: Alpine Associates, LP
(or such other account as Lender may direct Borrowers in writing).
LIBOR - shall mean for the Closing Date and the first Business Day of each
month subsequent to the Closing Date, (a) the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the rate determined by Lender to be the offered
rate which appears on the page of the Telerate Screen which displays an average
British Bankers Association Interest Settlement Rate (such page currently being
page number 3740 or 3750, as applicable) for deposits (for delivery on the first
day of such period) with a term equivalent to one months in Dollars, determined
as of approximately 11:00 a.m. (London, England time) on such date, or (b) in
the event the rate referenced in the preceding clause (a) does not appear on
such page or service or if such page or service shall cease to be available, the
rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined
by Lender to be the offered rate on such other page or other service which
displays an average British Bankers Association Interest Settlement Rate for
deposits (for delivery on the first day of such period) with a term equivalent
to one month in Dollars, determined as of approximately 11:00 a.m. (London,
England time) on such date.
LIEN - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "LIEN" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, each Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
MATERIAL ADVERSE EFFECT - the effect of any event, condition, act, omission
or circumstance, which, alone or when taken together with other events,
conditions, acts, omissions or circumstances occurring or existing concurrently
therewith: (a) has, or could reasonably be expected to have, a material adverse
effect upon the business, operations, Properties, assets, liabilities,
obligations, prospects or condition (financial or otherwise) of Borrowers taken
as a whole; (b) has or may be reasonably expected to have any material adverse
effect whatsoever upon the validity or enforceability of the Agreement or any of
the other DIP Financing Documents; (c) has any material adverse effect upon the
value of the whole or any material part of the Collateral, the Liens of Lender
with respect to the Collateral or the priority of any such Liens; (d) materially
impairs the ability of any Borrower to perform its obligations under the
Agreement or any of the other DIP Financing Documents, including repayment of
any of the Obligations when due; or (e) materially impairs the ability of Lender
9
to enforce or collect the Obligations or realize upon any of the Collateral in
accordance with the DIP Financing Documents and Applicable Law.
MATERIAL CONTRACT - any agreement to which any Borrower is a party and
which, if terminated or breached, could reasonably be expected to have a
Material Adverse Effect.
MATURITY DATE - the date that is the earliest of (a) the Commitment
Termination Date, (b) the date on which any Obligation under the DIP Financing
Documents have been accelerated pursuant to Section 11.2 of the Agreement and
(c) the first anniversary of the Closing Date, subject to one six-month
extension to be granted at Lender' sole discretion.
MAXIMUM RATE - the maximum non-usurious rate of interest permitted by
Applicable Law that at any time, or from time to time, may be contracted for,
taken, reserved, charged or received on the Debt in question or, to the extent
that at any time Applicable Law may thereafter permit a higher maximum
non-usurious rate of interest, then such higher rate. Notwithstanding any other
provision hereof, the Maximum Rate shall be calculated on a daily basis
(computed on the actual number of days elapsed over a year of 365 or 366 days,
as the case may be).
▇▇▇▇▇'▇ - ▇▇▇▇▇'▇ Investors Services, Inc.
MULTIEMPLOYER PLAN- has the meaning set forth in Section 4001(a)(3) of
ERISA.
NET PROCEEDS - proceeds (including cash receivable (when received) by way
of deferred payment) received by any Borrower from the sale, lease, transfer or
other disposition of any Property (including, without limitation, any Asset
Disposition), including insurance proceeds and awards of compensation received
with respect to the destruction or condemnation of all or part of such Property,
net of the reasonable and customary costs of such sale, lease, transfer or other
disposition.
NOTES - the Note(s) and any other promissory note executed by either
Borrower at Lender's request to evidence any of the Obligations.
NOTICE OF BORROWING - shall have the meaning ascribed in Section 3.1(a) of
the Agreement.
OBLIGATIONS - in each case, whether now in existence or hereafter arising,
(a) the principal of, and interest on, the Revolving Advances; (b) the
Outstanding Alpine Pre-Petition Indebtedness and (c) all other Debts, covenants,
duties and obligations (including Contingent Obligations) now or at any time or
times hereafter owing by either Borrower to Lender under or pursuant to this
Agreement or any of the other DIP Financing Documents, whether evidenced by any
note or other writing, whether arising from any extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, expense reimbursement
obligation, indemnification or otherwise and whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, or joint or
several, including all interest, charges, expenses, fees or other sums
(including Extraordinary Expenses) chargeable to either or both Borrowers
hereunder or under any of the other DIP Financing Documents.
10
ORDINARY COURSE OF BUSINESS - with respect to any Person, the ordinary
course of such Person's business, as conducted by such Person in accordance with
past practices and undertaken by such Person in good faith and not for the
purpose of evading any covenant or restriction in any DIP Financing Document.
ORGANIZATIONAL DOCUMENTS - with respect to any Person, its charter,
certificate or articles of incorporation, bylaws, articles of organization,
operating agreement, members agreement, partnership agreement, voting trust, or
similar agreement or instrument governing the formation or operation of such
Person.
ORIGINATION FEE - One percent (1%) of the Commitment.
OUTSTANDING ALPINE PRE-PETITION INDEBTEDNESS - at any time, the sum of (a)
the aggregate outstanding principal amount of the Alpine Pre-Petition Note at
such time PLUS (b) all accrued and unpaid interest in respect of the Alpine
Pre-Petition Note PLUS (c) all other amounts (including fees and expenses) then
due and owing with respect to the Alpine Pre-Petition Note Documents.
PALLADIN FACILITY - (a) that certain Note Purchase Agreement, dated as of
July 3, 2003 by and among Datatec Systems, Inc. and each of the investors party
thereto (the "Investors"), as attached hereto as Exhibit D, and (b) each
security agreement executed in connection therewith.
PARTICIPANT - as defined in Section 12.2(a).
PAYMENT ITEMS - all checks, drafts, or other items of payment payable to
any Borrower, including proceeds of any of the Collateral.
PERSON - an individual, partnership, corporation, limited liability
company, limited liability partnership, joint stock company, land trust,
business trust, or unincorporated organization, or a Governmental Authority.
PLAN - an employee benefit plan now or hereafter maintained for employees
of any Borrower that is covered by Title IV of ERISA.
PLEDGED SECURITIES - all Equity Interests owned by any Borrower in any
Person.
PRE-PETITION LOAN AGREEMENTS - collectively, the IBM Facility and the
Palladin Facility.
PROFESSIONAL EXPENSES - the fees and reimbursable expenses of a
Professional Person.
PROFESSIONAL PERSON - a Person who is an attorney, accountant, appraiser,
auctioneer or other professional person and who is retained, with Bankruptcy
Court approval, by (a) Borrowers pursuant to Section 327 of the Bankruptcy Code
or (b) a Committee pursuant to Section 1103(a) of the Bankruptcy Code.
PROPERLY CONTESTED - in the case of any Debt of any Borrower (including any
Taxes) that is not paid as and when due or payable by reason of such Borrower's
bona fide dispute concerning its liability to pay same or concerning the amount
thereof: (a) such Debt is being properly contested in good faith by appropriate
11
proceedings promptly instituted and diligently conducted; (b) such Borrower has
established appropriate reserves as shall be required in conformity with GAAP;
(c) the non-payment of such Debt will not have a Material Adverse Effect and
will not result in a forfeiture of any assets of such Borrower; (d) no Lien is
imposed upon any of such Borrower's assets with respect to such Debt unless the
applicable Lien is at all times junior and subordinate in priority to the Liens
in favor of Lender (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such Lien is
stayed during the period prior to the final resolution or disposition of such
dispute; (e) if the Debt results from, or is determined by the entry, rendition
or issuance against such Borrower or any of its assets of a judgment, writ,
order or decree, enforcement of such judgment, writ, order or decree is stayed
pending a timely appeal or other judicial review; and (f) if such contest is
abandoned, settled or determined adversely (in whole or in part) to such
Borrower, such Borrower forthwith pays such Debt and all penalties, interest and
other amounts due in connection therewith.
PROPERTY - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
REAL PROPERTY - all of those plots, pieces or parcels of land now owned,
leased or hereafter acquired or leased by any Borrower (the "LAND"), wherever
located, together with the right, title and interest of such Borrower, if any,
in and to the streets, the land lying in the bed of any streets, roads or
avenues, opened or proposed, the air space and development rights pertaining to
the Land and the right to use such air space and development rights, all
rights-of-way, privileges, tenements, hereditaments and appurtenances belonging
or in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including all alley, vault, drainage, mineral, water, oil
and gas rights, together with all of the buildings and other improvements now or
hereafter erected on the Land, and any fixtures appurtenant thereto.
REORGANIZATION PLAN - a plan of reorganization proposed by any Borrower or
any other Person (including Lender) in Borrowers' Chapter 11 Case.
REVOLVING ADVANCES - shall have the meaning ascribed thereto in Section
1.1(a) of the Agreement.
S&P - Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc.
SECURED CREDITOR - Eagle, as assignee of the Pre-Petition Loan Agreements,
and any permitted successor or assign to Eagle.
SECURITY - shall have the same meaning as in Section 2(1) of the Securities
Act of 1933.
SECURITY DOCUMENTS - any and all security agreements, mortgages, pledge
agreements, control agreements, UCC filings, and any other instruments and
agreements now or at any time hereafter securing or evidencing the securing of
the whole or any part of the Obligations.
SENIOR OFFICER - the chairman of the board of directors, the president,
chief executive officer or the chief financial officer of Borrowers.
12
SYSTEMS - as defined in the Preamble to the Agreement.
SUBSIDIARY - any Person a majority of the Equity Interests of which is at
the time owned, directly or indirectly, by another Person or by one or more
other Subsidiaries or by such other Person and one or more other Subsidiaries.
TAX REFUND - any refund of Taxes received by any Borrower from any
Governmental Authority.
TAXES - any present or future taxes (including value added taxes), levies,
imposts, duties, fees, assessments, deductions, withholdings or other charges of
whatever nature, including income, receipts, excise, property, sales, use,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto, but excluding, in the case of
Lender, taxes imposed on or measured by the net income or overall gross receipts
of Lender.
UCC - the Uniform Commercial Code (or any successor statute) as adopted and
in force in the State of New York or, when the laws of any other state govern
the method or manner of the creation or perfection of any security interest in
any of the Collateral, the Uniform Commercial Code (or any successor statute) of
such state.
UNUSED COMMITMENT - At any time, the Commitment less the sum of the
aggregate outstanding principal amount of the Revolving Advances, at such time.
ACCOUNTING TERMS. Unless otherwise specified herein, all terms of an
accounting character used in the Agreement shall be interpreted, all accounting
determinations under the Agreement shall be made, and all financial statements
required to be delivered under the Agreement shall be prepared in accordance
with GAAP, applied on a basis consistent with the most recent audited
consolidated financial statement of Borrowers heretofore delivered to Lender and
using the same method for inventory valuation as used in such audited financial
statements, except for any change in which Borrowers' independent public
accountants concur or as required by GAAP unless (a) Borrowers shall have
objected to determining such compliance on such basis at the time of delivery of
such financial statements or (b) Lender shall so object in writing within 30
days after the delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made. In the event of any change in GAAP that occurs after the
date of the Agreement and that is material to Borrowers, Lender shall the right
to require either that conforming adjustments be made to any financial covenants
set forth in the Agreement, or the components thereof, that are affected by such
change or that Borrowers reports its financial condition based on GAAP as in
effect immediately prior to the occurrence of such change.
OTHER TERMS. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the UCC to the extent the
same are used or defined therein.
13
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations; to any of the DIP Financing
Documents shall include any and all amendment or modifications thereto and any
and all restatements, extensions or renewals thereof; to any Person shall mean
and include the successors and permitted assigns of such Person; to "including"
and "include" shall be understood to mean "including, without limitation;" to
the time of day shall mean the time of day on the day in question in New York,
New York, unless otherwise expressly provided in the Agreement; and to any
Property of any Borrower shall mean and include all Property of such Borrower's
Estate]. A Default or an Event of Default shall be deemed to exist at all times
during the period commencing on the date that such Default or Event of Default
occurs to the date on which such Default or Event of Default is waived in
writing pursuant to this Agreement or, in the case of a Default, is cured within
any period of cure expressly provided in this Agreement; and an Event of Default
shall "continue" or be "continuing" until such Event of Default has been waived
in writing by Lender.
[The remainder of this page is intentionally left blank.]
14
EXHIBIT A
FORM OF REVOLVING NOTE
U.S. $2,500,000.00 December 14, 2004
FOR VALUE RECEIVED, the undersigned [DATATEC SYSTEMS, INC., a Delaware
corporation][DATATEC INDUSTRIES, INC., a New Jersey corporation] ("BORROWER"),
hereby unconditionally promises to pay to the order of ALPINE ASSOCIATES, LP a
New Jersey limited partnership, (herein, together with any subsequent holder
hereof, called "LENDER"), on or prior to [________________], the principal sum
of TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($2,500,000.00), or such
lesser sum as may constitute the outstanding principal amount of all Revolving
Advances pursuant to the terms of the Credit Agreement referred to below.
Borrower likewise unconditionally promises to pay to Lender interest from and
after the date hereof on the outstanding principal amount of Revolving Advances
at such interest rates, payable at such times, and computed in such manner as
specified in the Credit Agreement, in strict accordance with the terms thereof.
This Revolving Note (this "NOTE") is issued pursuant to, and is the "Note"
referred to in, the Debtor in Possession Revolving Credit Agreement dated
December 14, 2004 among DataTec Systems, Inc. and DataTec Industries, Inc., as
Borrowers and Lender (as the same may be amended from time to time, the "CREDIT
AGREEMENT"), and Lender is and shall be entitled to all benefits thereof and of
all DIP Financing Documents executed and delivered in connection therewith. The
provisions of the Credit Agreement are incorporated herein by this reference.
All capitalized terms used herein, unless otherwise defined herein, shall have
the meanings ascribed to such terms in the Credit Agreement.
The holder of this Note is authorized to endorse on the schedule annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date and amount of each Revolving
Advance
The repayment of the principal balance of this Note is subject to the
provisions of Section 4.7 and Section 5.2(c) of the Credit Agreement. The entire
unpaid principal balance and all accrued interest on this Note shall be due and
payable immediately upon the Maturity Date as set forth in Section 5.2(c) of the
Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in Dollars in immediately available funds as specified in the Credit
Agreement.
Upon or after the occurrence of an Event of Default and for so long as such
Event of Default exists, the principal balance and all accrued and unpaid
interest of this Note may be declared due and payable in the manner and with the
effect provided in the Credit Agreement, and the unpaid principal balance hereof
shall bear interest at the Default Rate as provided in Section 2.1(b) of the
Credit Agreement. Borrower agrees to pay, and save Lender harmless against, any
liability for the payment of, all costs and expenses, including, but not limited
to, reasonable attorneys' fees, arising in connection with the enforcement by
Exhibit A - Page 1
Lender of any of its rights under this Note, the Credit Agreement or any of the
other DIP Financing Documents.
All principal amounts of Revolving Advances made by Lender to Borrower
pursuant to the Credit Agreement, and all accrued and unpaid interest thereon,
shall be deemed outstanding under this Note and shall continue to be owing by
Borrower in accordance with the terms of this Note and the Credit Agreement.
In no contingency or event whatsoever, whether by reason of advancement of
the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to
Lender for the use, forbearance or detention of money advanced hereunder exceed
the highest lawful rate permissible under any law which a court of competent
jurisdiction may deem applicable hereto; and, in the event of any such payment
inadvertently paid by Borrower or inadvertently received by Lender, such excess
sum shall be, at Borrower's option, returned to Borrower forthwith or credited
as a payment of principal, but shall not be applied to the payment of interest.
It is the intent hereof that Borrower not pay or contract to pay, and that
Lender not receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by Borrower under
Applicable Law.
Time is of the essence of this Note. To the fullest extent permitted by
Applicable Law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waives presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of acceleration and intent to accelerate, notice
of maturity, notice of protest, presentment for the purpose of accelerating
maturity, diligence in collection, and the benefit of any exemption or
insolvency laws.
Wherever possible each provision of this Note shall be interpreted in such
a manner as to be effective and valid under Applicable Law, but if any provision
of this Note shall be prohibited or invalid under Applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Lender in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Lender of any right or
remedy preclude any other right or remedy. Lender, at its option, may enforce
its rights against any Collateral securing this Note without enforcing its
rights against Borrower, any guarantor of the indebtedness evidenced hereby or
any other property or indebtedness due or to become due to Borrower. Borrower
agrees that, without releasing or impairing Borrower's liability hereunder,
Lender may at any time release, surrender, substitute or exchange any Collateral
securing this Note and may at any time release any party primarily or
secondarily liable for the indebtedness evidenced by this Note.
This Note shall be construed in accordance with, and governed by, the laws
of the State of New York.
Exhibit A - Page 2
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the date first written.
[DATATEC SYSTEMS, INC., a Delaware
corporation
By:
------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
[DATATEC INDUSTRIES, INC., a New Jersey
corporation
By:
------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Exhibit A - Page 3