Exhibit 10.1
FINANCING AGREEMENT
Dated as of August 14, 2003
by and among
GENERAL MEDIA, INC.,
as a debtor and a debtor-in-possession,
as Borrower
EACH SUBSIDIARY OF GENERAL MEDIA, INC.
LISTED AS A GUARANTOR ON THE SIGNATURE PAGES HERETO
as debtors and debtors in possession,
as Guarantors,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
as Lenders,
and
▇▇▇▇▇▇▇▇▇ L.L.C.,
as Agent
TABLE OF CONTENTS
Page
Article I DEFINITIONS; CERTAIN TERMS..........................................1
Section 1.01 Definitions...........................................1
Section 1.02 Terms Generally......................................13
Section 1.03 Accounting and Other Terms...........................14
Section 1.04 Time References......................................14
Article II THE LOANS.........................................................14
Section 2.01 Commitments..........................................14
Section 2.02 Making the Loans.....................................14
Section 2.03 Repayment of Loans; Evidence of Debt.................17
Section 2.04 Interest.............................................18
Section 2.05 Reduction of Commitment; Prepayment of Loans.........18
Section 2.06 Unused Line Fee......................................20
Section 2.07 Securitization.......................................20
Section 2.08 Taxes................................................21
Article III SECURITY AND ADMINISTRATIVE PRIORITY.............................22
Section 3.01 Collateral; Grant of Lien and Security Interest......22
Section 3.02 Administrative Priority..............................23
Section 3.03 Grants, Rights and Remedies..........................23
Section 3.04 No Filings Required..................................23
Section 3.05 Survival.............................................23
Article IV FEES, PAYMENTS AND OTHER COMPENSATION.............................24
Section 4.01 Audit and Collateral Monitoring Fees.................24
Section 4.02 Payments; Computations and Statements................24
Section 4.03 Sharing of Payments, Etc.............................25
Section 4.04 Apportionment of Payments............................26
Section 4.05 Increased Costs and Reduced Return...................26
Article V CONDITIONS TO LOANS................................................28
Section 5.01 Conditions Precedent to Interim
Facility Effectiveness...............................28
Section 5.02 Conditions Precedent to All Loans....................30
Section 5.03 Conditions Subsequent to All Loans...................31
Article VI REPRESENTATIONS AND WARRANTIES....................................32
Section 6.01 Representations and Warranties.......................32
Article VII COVENANTS OF THE LOAN PARTIES....................................37
Section 7.01 Affirmative Covenants................................37
Section 7.02 Negative Covenants...................................43
Article VIII CASH MANAGEMENT.................................................45
Section 8.01 Collection of Accounts Receivable;
Management of Collateral.............................45
Section 8.02 Accounts Receivable Documentation....................47
Section 8.03 Status of Accounts Receivable and Other Collateral...48
Section 8.04 Collateral Custodian.................................48
Article IX EVENTS OF DEFAULT.................................................49
Section 9.01 Events of Default....................................49
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Article X AGENT..............................................................49
Section 10.01 Appointment..........................................49
Section 10.02 Nature of Duties.....................................49
Section 10.03 Rights, Exculpation, Etc.............................49
Section 10.04 Reliance.............................................49
Section 10.05 Indemnification......................................49
Section 10.06 Agent Individually...................................49
Section 10.07 Successor Agent......................................49
Section 10.08 Collateral Matters...................................49
Section 10.09 Agency for Perfection................................49
Article XI GUARANTY..........................................................49
Section 11.01 Guaranty.............................................49
Section 11.02 Guaranty Absolute....................................49
Section 11.03 Waiver...............................................49
Section 11.04 Continuing Guaranty; Assignments.....................49
Section 11.05 Subrogation..........................................49
Article XII MISCELLANEOUS....................................................49
Section 12.01 Notices, Etc.........................................49
Section 12.02 Amendments, Etc......................................49
Section 12.03 No Waiver; Remedies, Etc.............................49
Section 12.04 Expenses; Taxes; Attorneys' Fees.....................49
Section 12.05 Right of Setoff......................................49
Section 12.06 Severability.........................................49
Section 12.07 Assignments and Participations.......................49
Section 12.08 Counterparts.........................................49
Section 12.09 GOVERNING LAW........................................49
Section 12.10 Consent to Jurisdiction; Service of Process
and Venue............................................49
Section 12.11 Waiver of Jury Trial, Etc............................49
Section 12.12 Consent by the Agent and Lenders.....................49
Section 12.13 No Party Deemed Drafter..............................49
Section 12.14 Reinstatement; Certain Payments......................49
Section 12.15 Indemnification......................................49
Section 12.16 Records..............................................49
Section 12.17 Binding Effect.......................................49
Section 12.18 Interest.............................................49
Section 12.19 Confidentiality......................................49
Section 12.20 Integration..........................................49
Section 12.21 Agent as Party-in-Interest...........................49
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SCHEDULE AND EXHIBITS
Schedule 1.01(A)..Lenders and Lenders' Commitments
Schedule 1.01(B)..Budget
Schedule 6.01(e)..Subsidiaries
Schedule 6.01(f)..Litigation
Schedule 6.01(i)..Taxes
Schedule 6.01(m)..Real Property
Schedule 6.01(o)..Insurance
Schedule 6.01(q)..Bank Accounts
Schedule 6.01(r)..Intellectual Property
Schedule 6.01(t)..Name; Jurisdiction of Organization; Organizational ID Number;
Chief Place of Business; Chief Executive Office; FEIN
Schedule 6.01(u)..Collateral Locations
Schedule 7.02(a)..Existing Liens
Schedule 7.02(e)..Existing Investments
Schedule 8.01(a)..Lockbox Account Banks
Exhibit A.........Form of Notice of Borrowing
Exhibit B.........Form of Opinion of Counsel
Exhibit C.........Form of Assignment and Acceptance
Exhibit D.........Form of Interim Bankruptcy Court Order
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FINANCING AGREEMENT
Financing Agreement, dated as of August 14, 2003, by and among General
Media, Inc., as a debtor and a debtor-in-possession, a Delaware corporation (the
"Borrower"), each Subsidiary of the Borrower listed as a "Guarantor" on the
signature pages hereto, each as a debtor and a debtor-in-possession (each a
"Guarantor" and collectively the "Guarantors"), the lenders from time to time
party hereto (each a "Lender" and collectively, the "Lenders"), and ▇▇▇▇▇▇▇▇▇
L.L.C., a New York limited liability company ("▇▇▇▇▇▇▇▇▇"), as agent for the
Lenders (in such capacity, the "Agent").
RECITALS
WHEREAS, on August 14, 2003, the Borrower and the Guarantors commenced
cases (the "Chapter 11 Cases") under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court"), and the Borrower and the
Guarantors have retained possession of their assets and are authorized under the
Bankruptcy Code to continue the operation of their businesses as
debtors-in-possession; and
WHEREAS, the Borrower and the Guarantors have asked the Lenders to make
post-petition loans and advances to the Borrower in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding (which loans and
advances shall be limited to $3,000,000 until the Final Bankruptcy Court Order
(as hereinafter defined) shall have been entered by the Bankruptcy Court) and,
subject to the terms and conditions set forth herein, the Lenders have agreed to
provide such loans and advances;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto agree as follows:
Article I
DEFINITIONS; CERTAIN TERMS
Section 1.01 Definitions. As used in this Agreement, the following terms shall
have the respective meanings indicated below, such meanings to be applicable
equally to both the singular and plural forms of such terms:
"Account Debtor" means each debtor, customer or obligor in any way
obligated on or in connection with any Account Receivable.
"Account Receivable" means, with respect to any Person, any and all
rights of such Person to payment for goods sold and/or services rendered,
including accounts, general intangibles and any and all such rights evidenced by
chattel paper, instruments or documents, whether due or to become due and
whether or not earned by performance, and whether now or hereafter acquired or
arising in the future, and any proceeds arising therefrom or relating thereto.
"Action" has the meaning specified therefor in Section 12.12.
"Adequate Protection Stipulation" means any stipulation entered into by
and among the Borrower, the Guarantors and the Trustee pursuant to which (A) the
Trustee consents to (i) the grant of senior liens to the Agent on behalf of the
Lenders and (ii) the use of Collateral, including, without limitation, cash
collateral, in which the Trustee has, for the benefit of the Noteholders, been
granted an interest by the Borrower and the Guarantors and (B) the Trustee, for
the benefit of the Noteholders, is granted adequate protection as that term is
defined in Section 361 of the Bankruptcy Code.
1
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (i) vote 10% or more of the Capital Stock having ordinary voting power
for the election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Agent" has the meaning specified therefor in the preamble hereto.
"Agent Advances" has the meaning specified therefor in Section
10.08(a).
"Agent's Account" means an account at a bank designated by the Agent
from time to time as the account into which the Loan Parties shall make all
payments to the Agent for the benefit of the Agent and the Lenders under this
Agreement and the other Loan Documents.
"Agreed Administrative Expense Priorities" means that administrative
expenses with respect to the Borrower and the Guarantors and, with respect to
sub-clause (ii) of clause "first", any official committee appointed by the
Bankruptcy Court, shall have the following order of priority:
first, (i) amounts payable pursuant to 28 U.S.C. ss.
1930(a)(6) and (ii) allowed fees and expenses of attorneys, accountants
and other professionals retained in the Chapter 11 Cases pursuant to
Sections 327, 328, 330, 331 and 1103 of the Bankruptcy Code, to the
extent that the amount entitled to priority under this sub-clause (ii)
of this clause first ("Priority Professional Expenses") does not exceed
$750,000 outstanding in the aggregate at any time (inclusive of any
holdbacks required by the Bankruptcy Court) (the "Professional Expense
Cap"); provided, however, that (A) during the continuance of an Event
of Default hereunder or a default by the Borrower or any Guarantor in
any of their obligations under any of the Bankruptcy Court Orders, any
payments actually made to such professionals during such continuance,
under Sections 327, 328, 330, 331 and 1103 of the Bankruptcy Code or
otherwise, shall reduce the Professional Expense Cap on a
dollar-for-dollar basis, and (B) for the avoidance of doubt, so long as
no Event of Default or a default by the Borrower or any Guarantor in
any of their obligations under any of the Bankruptcy Court Orders shall
have occurred and be continuing, the payment of administrative expenses
allowed and payable under Sections 327, 328, 330, 331 and 1103 of the
Bankruptcy Code or otherwise shall not reduce the Professional Expense
Cap,
second, all Obligations in accordance with Section 3.02, and
third, all other allowed administrative expenses.
"Agreement" means this Financing Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to the Agreement as the same may be in effect at the
time such reference becomes operative.
2
"Assignment and Acceptance" means an assignment and acceptance entered
into by an assigning Lender and an assignee, and accepted by the Agent, in
accordance with Section 12.07 hereof and substantially in the form of Exhibit C
hereto or such other form acceptable to the Agent.
"Authorized Officer" means, with respect to any Loan Party, the Chief
Restructuring Officer.
"Avoidance Actions" means all causes of action arising under Sections
542, 544, 545, 547, 548, 549, 550, 551, 553(b) or 724(a) of the Bankruptcy Code
and any proceeds therefrom.
"Bankruptcy Code" has the meaning specified therefor in the recitals
hereto.
"Bankruptcy Court" has the meaning specified therefor in the recitals
hereto.
"Bankruptcy Court Orders" means the Interim Bankruptcy Court Order and
the Final Bankruptcy Court Order.
"Board" means the Board of Governors of the Federal Reserve System of
the United States.
"Board of Directors" means, with respect to any Person, the board of
directors (or comparable managers) of such Person or any committee thereof duly
authorized to act on behalf of the board.
"Borrower" has the meaning specified therefor in the preamble hereto.
"Budget" means the three-month cash requirement forecast setting forth
cash receipts and disbursements of the Loan Parties and the Loans projected to
be outstanding on a weekly basis between August 12, 2003 and November 9, 2003,
satisfactory in form and substance to the Agent and attached as Schedule 1.01(B)
hereto, which Budget shall be updated, extended and delivered to the Agent in
accordance with Section 7.01(a)(iv). The Budget (i) shall provide for, among
other things, compensation to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ of not more than $41,667 per
month and compensation to ▇▇▇▇▇▇▇ ▇▇▇▇▇ of not more than $12,500 per month and
(ii) shall not include line items for any of ▇▇. ▇▇▇▇▇▇▇▇'▇ personal expenses.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required to close.
"Capital Expenditures" means, with respect to any Person for any
period, the sum of (i) the aggregate of all expenditures by such Person and its
Subsidiaries during such period that in accordance with GAAP are or should be
included in "property, plant and equipment" or in a similar fixed-asset account
on its balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period,
and (ii) to the extent not covered by clause (i) above, the aggregate of all
expenditures by such Person and its Subsidiaries during such period to acquire
by purchase or otherwise the business or fixed assets of, or the Capital Stock
of, any other Person.
3
"Capital Guideline" means any law, rule, regulation, policy, guideline
or directive (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) of any central bank or
Governmental Authority (i) regarding capital adequacy, capital ratios, capital
requirements, the calculation of a bank's capital or similar matters, or (ii)
affecting the amount of capital required to be obtained or maintained by any
Lender or any Person controlling any Lender or the manner in which any Lender or
any Person controlling any Lender allocates capital to any of its contingent
liabilities (including letters of credit), advances, acceptances, commitments,
assets or liabilities.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Capitalized Lease" means, with respect to any Person, any lease of
real or personal property by such Person as lessee which is (i) required under
GAAP to be capitalized on the balance sheet of such Person or (ii) a transaction
of a type commonly known as a "synthetic lease" (i.e., a lease transaction that
is treated as an operating lease for accounting purposes but with respect to
which payments of rent are intended to be treated as payments of principal and
interest on a loan for Federal income tax purposes).
"Capitalized Lease Obligations" means, with respect to any Person,
obligations of such Person and its Subsidiaries under Capitalized Leases, and,
for purposes hereof, the amount of any such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
"Carve-Out Expenses" means those amounts, fees, expenses and claims set
forth in clause "first" of the definition of the term "Agreed Administrative
Expense Priorities."
"Change of Control" means the Borrower shall cease to have beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of at least the same
percentage of the aggregate voting power of the Capital Stock of each Loan Party
that the Borrower had as of the Filing Date, free and clear of all Liens (other
than any Liens granted hereunder and Permitted Liens).
"Chapter 11 Cases" has the meaning specified therefor in the recitals
hereto.
"Chief Restructuring Officer" means the chief restructuring officer of
the Loan Parties as set forth in Section 5.01(i) or a successor thereto
acceptable to the Agent and the Required Lenders.
"Collateral" has the meaning specified therefor in Section 3.01(a).
"Collection Account" and "Collection Accounts" have the meanings
specified therefor in Section 8.01(a).
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans to the Borrower after the Interim Facility Effective Date,
as the case may be, in the amount set forth opposite such Lender's name in
Schedule 1.01(A) hereto, as such amount may be terminated or reduced from time
to time in accordance with the terms of this Agreement.
4
"Contingent Obligation" means, with respect to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, (i) 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, (ii) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement, (iii) any obligation of such Person,
whether or not contingent, (A) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (B) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (C) to
purchase property, assets, 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 (D) 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.
"Default" means an event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default.
"DIP Fee" has the meaning specified therefor in Section 2.06(b).
"Disposition" means any transaction, or series of related transactions,
pursuant to which any Person or any of its Subsidiaries sells, assigns,
transfers or otherwise disposes of any property or assets (whether now owned or
hereafter acquired) to any other Person, in each case, whether or not the
consideration therefor consists of cash, securities or other assets owned by the
acquiring Person.
"Dollar," "Dollars" and the symbol "$" each means lawful money of the
United States of America.
"Event of Default" means any of the events set forth in Section 9.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extraordinary Receipts" means any cash received by any Loan Party not in the
ordinary course of business (and not consisting of proceeds described in Section
2.05(c)(ii) hereof), including, without limitation, (i) foreign, United States,
state or local tax refunds, (ii) pension plan reversions, (iii) proceeds of
insurance, (iv) judgments, proceeds of settlements or other consideration of any
kind in connection with any cause of action, (v) condemnation awards (and
payments in lieu thereof), (vi) indemnity payments and (vii) any purchase price
adjustment received in connection with any purchase agreement.
5
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"Filing Date" means August 12, 2003, the date on which the Loan Parties
commenced the Chapter 11 Cases.
"Final Bankruptcy Court Order" means the final order of the Bankruptcy
Court with respect to the Borrower and the Guarantors, substantially in the form
of the Interim Bankruptcy Court Order, as the same may be amended, modified or
supplemented from time to time with the express written joinder or consent of
the Agent, the Required Lenders and the Borrower.
"Final Bankruptcy Court Order Entry Date" means the date on which the
Final Bankruptcy Court Order shall have been entered by the Bankruptcy Court.
"Final Maturity Date" means the date which is the earliest of (i)
February 11, 2004, (ii) the date of the substantial consummation (as defined in
Section 1101(2) of the Bankruptcy Code) of a plan of reorganization in the
Chapter 11 Cases that has been confirmed by an order of the Bankruptcy Court,
(iii) the date which is 30 days after the Interim Facility Effective Date if the
Final Bankruptcy Court Order has not been entered by the Bankruptcy Court on or
prior to such date, and (iv) such earlier date on which all Loans shall become
due and payable in accordance with the terms of this Agreement and the other
Loan Documents.
"Financial Consultant" has the meaning specified therefor in Section
5.01(j).
"Fiscal Year" means the fiscal year of the Borrower ending on December
31 of each year.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States, applied on a consistent basis.
"Governmental Authority" means any nation or government, any Federal,
state, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guaranteed Obligations" has the meaning specified therefor in Section
11.01.
"Guarantor" and "Guarantors" have the respective meanings specified for
such terms in the preamble hereto.
"Guaranty" means the guaranty of each Guarantor party hereto contained
in Article XI hereof.
6
"Hedging Agreement" means any interest rate, foreign currency,
commodity or equity swap, collar, cap, floor or forward rate agreement, or other
agreement or arrangement designed to protect against fluctuations in interest
rates or currency, commodity or equity values (including, without limitation,
any option with respect to any of the foregoing and any combination of the
foregoing agreements or arrangements), and any confirmation executed in
connection with any such agreement or arrangement.
"Highest Lawful Rate" means, with respect to the Agent or any Lender,
the maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Obligations under laws applicable to the Agent or such Lender which are
currently in effect or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher maximum non-usurious
interest rate than applicable laws now allow.
"Indebtedness" means, with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money; (ii) all obligations of
such Person for the deferred purchase price of property or services (other than
trade payables or other accounts payable incurred in the ordinary course of such
Person's business and not outstanding for more than 90 days after the date such
payable was created); (iii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest payments
are customarily made; (iv) all reimbursement, payment or other obligations and
liabilities of such Person created or arising under any conditional sales or
other title retention agreement with respect to property used and/or acquired by
such Person, even though the rights and remedies of the lessor, seller and/or
lender thereunder may be limited to repossession or sale of such property; (v)
all Capitalized Lease Obligations of such Person; (vi) all obligations and
liabilities, contingent or otherwise, of such Person, in respect of letters of
credit, acceptances and similar facilities; (vii) all obligations and
liabilities, calculated on a basis satisfactory to the Agent and in accordance
with accepted practice, of such Person under Hedging Agreements; (viii) all
Contingent Obligations; and (ix) all obligations referred to in clauses (i)
through (viii) of this definition of another Person secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) a Lien upon property owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
The Indebtedness of any Person shall include the Indebtedness of any partnership
of or joint venture in which such Person is a general partner or a joint
venturer.
"Indemnified Matters" has the meaning specified therefor in Section
12.15.
"Indemnitees" has the meaning specified therefor in Section 12.15.
"Indenture" means that certain Indenture dated December 21, 1993, among
the Borrower, the Subsidiaries of the Borrower party thereto and the Trustee, as
supplemented and amended by the First Supplemental Indenture dated as of May 19,
1999, the Second Supplemental Indenture dated as of March 29, 2001, the Third
Supplemental Indenture dated as of August 1, 2002 and the Fourth Supplemental
Indenture dated as of November 12, 2002.
"Indenture Documents" means the (i) Indenture, (ii) the Notes and (iii)
all other agreements, instruments, and other documents executed and delivered
pursuant to the Indenture, as the same are amended, restated, supplemented or
otherwise modified.
7
"Interim Bankruptcy Court Order" means the order of the Bankruptcy
Court with respect to the Borrower and the Guarantors, substantially in the form
of Exhibit D hereto, as the same may be amended, modified or supplemented from
time to time with the express written joinder or consent of the Agent, the
Required Lenders and the Borrower.
"Interim Bankruptcy Court Order Entry Date" means the date on which the
Interim Bankruptcy Court Order shall have been entered by the Bankruptcy Court.
"Interim Facility Effective Date" means the date, on or before August
19, 2003, on which all of the conditions precedent set forth in Section 5.01 are
satisfied and the initial Loans are made.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended (or any successor statute thereto) and the regulations thereunder.
"Lease" means any lease of real property to which any Loan Party or any
of its Subsidiaries is a party as lessor or lessee.
"Lender" and "Lenders" have the respective meanings specified therefor
in the preamble hereto.
"Liabilities" has the meaning specified therefor in Section 2.07.
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any Capitalized Lease and any
assignment, deposit arrangement or financing lease intended as, or having the
effect of, security.
"Loan" means a loan made by the Agent or a Lender to the Borrower
pursuant to Section 2.01 hereof.
"Loan Account" means an account maintained hereunder by the Agent on
its books of account at the Payment Office and, with respect to the Borrower, in
which the Borrower will be charged with all Loans made to, and all other
Obligations incurred by, the Borrower.
"Loan Document" means this Agreement, the Interim Bankruptcy Court
Order, the Final Bankruptcy Court Order, the Pledge Agreement and all other
agreements, instruments, and other documents executed and delivered pursuant
hereto or thereto or otherwise evidencing or securing any Loan or any other
Obligation.
"Loan Party" means the Borrower and any Guarantor.
"Lockbox Bank" has the meaning specified therefor in Section 8.01(a).
"Lockboxes" has the meaning specified therefor in Section 8.01(a).
"▇▇▇▇▇▇▇▇▇" has the meaning specified therefor in the preamble hereto.
"Material Adverse Deviation" means, as of any date of determination, a
deviation of more than 10%, either (i) on a weekly basis or (ii) on a cumulative
basis for the period from and after the Filing Date to and including such date,
in either case above any line item set forth in the Budget for such period.
8
"Material Adverse Effect" means a material adverse effect on any of (i)
the operations, business, assets, properties or condition (financial or
otherwise) of the Loan Parties taken as a whole, except for the commencement of
the Chapter 11 Cases and events (including defaults under pre-petition credit
facilities) that would typically result from the commencement of the Chapter 11
Cases, (ii) the ability of any Loan Party to perform any of its obligations
under any Loan Document to which it is a party, (iii) the legality, validity or
enforceability of this Agreement or any other Loan Document, (iv) the rights and
remedies of the Agent or any Lender under any Loan Document, or (v) the
validity, perfection or priority of a Lien in favor of the Agent for the benefit
of the Lenders on any of the Collateral.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor
thereto.
"Net Cash Proceeds" means, with respect to any Disposition by any
Person or any of its Subsidiaries, the amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment or disposition of deferred consideration) by or on behalf of such Person
or such Subsidiary, in connection therewith after deducting therefrom only (i)
the amount of any Indebtedness secured by any Permitted Priority Lien on any
asset (other than Indebtedness assumed by the purchaser of such asset) which is
required to be, and is, repaid in connection with such Disposition (other than
Indebtedness under this Agreement), (ii) reasonable expenses related thereto
incurred by such Person or such Subsidiary in connection therewith, (iii)
transfer taxes paid to any taxing authorities by such Person or such Subsidiary
in connection therewith, and (iv) net income taxes to be paid in connection with
such Disposition (after taking into account any tax credits or deductions and
any tax sharing arrangements).
"Notes" means the outstanding 15% Series C Notes due March 29, 2004
under the Indenture.
"Noteholders" means the holders of the Notes.
"Notice of Borrowing" has the meaning specified therefor in Section
2.02(a).
"Obligations" means all present and future indebtedness, obligations,
and liabilities of each Loan Party to the Agent and the Lenders under the Loan
Documents, whether or not the right of payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured, unsecured, and whether or not
such claim is discharged, stayed or otherwise affected by any proceeding
referred to in Section 9.01. Without limiting the generality of the foregoing,
the Obligations of each Loan Party under the Loan Documents include (a) the
obligation to pay principal, interest, charges, expenses, fees, reasonable
attorneys' fees and disbursements, indemnities and other amounts payable by such
Person under the Loan Documents, and (b) the obligation of such Person to
reimburse any amount in respect of any of the foregoing that the Agent or any
Lender (in its sole discretion) may elect to pay or advance on behalf of such
Person.
"Operating Lease Obligations" means all obligations for the payment of
rent for any real or personal property under leases or agreements to lease,
other than Capitalized Lease Obligations.
9
"Participant Register" has the meaning specified therefor in Section
12.07(b)(v).
"Payment Office" means the Agent's office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other office or offices of the Agent as may
be designated in writing from time to time by the Agent to the Borrower.
"Permitted Indebtedness" means:
(a) any Indebtedness owing to the Agent and any Lender under
this Agreement and the other Loan Documents;
(b) any Indebtedness existing on the Filing Date, including
the Indebtedness owing to the Noteholders under the Indenture
Documents;
(c) Indebtedness permitted under Section 7.02(e).
"Permitted Investments" means, in each case, as permitted by Section
345 of the Bankruptcy Code or pursuant to orders entered by the Bankruptcy
Court, (i) marketable direct obligations issued or unconditionally guaranteed by
the United States Government or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case, maturing within six
months from the date of acquisition thereof; (ii) commercial paper, maturing not
more than 270 days after the date of issue rated P-1 by Moody's or A-1 by
Standard & Poor's; (iii) certificates of deposit maturing not more than 270 days
after the date of issue, issued by commercial banking institutions and money
market or demand deposit accounts maintained at commercial banking institutions,
each of which is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than $500,000,000; (iv)
repurchase agreements having maturities of not more than 90 days from the date
of acquisition which are entered into with major money center banks included in
the commercial banking institutions described in clause (iii) above and which
are secured by readily marketable direct obligations of the United States
Government or any agency thereof; (v) money market accounts maintained with
mutual funds having assets in excess of $2,500,000,000; and (vi) tax exempt
securities rated A or better by Moody's or A+ or better by Standard & Poor's.
"Permitted Liens" means:
(a) Liens securing the Obligations;
(b) Liens for taxes, assessments and governmental charges the
payment of which is not required under Section 7.01(b);
(c) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and other similar Liens arising (provided
they are subordinate to the Agent's Liens on Collateral) in the
ordinary course of business and securing obligations (other than
Indebtedness for borrowed money) that are not overdue by more than 30
days or are being contested in good faith and by appropriate
proceedings promptly initiated and diligently conducted, or as to which
payment and enforcement is stayed under the Bankruptcy Code or pursuant
to orders of the Bankruptcy Court, and a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefor;
10
(d) existing Liens on the assets of the Loan Parties in favor
of the Trustee for the benefit of the Noteholders under the Indenture
Documents (including any replacement Liens granted pursuant to the
Adequate Protection Stipulation but excluding the Lien described in
clause (g) of this definition);
(e) other Liens existing on the Filing Date, as described on
Schedule 7.02(a), but not the extension of coverage thereof to other
property or the extension of maturity, refinancing or other
modification of the terms thereof or the increase of the Indebtedness
secured thereby;
(f) deposits and pledges of cash securing (i) obligations
incurred in respect of workers' compensation, unemployment insurance or
other forms of governmental insurance or benefits, (ii) the performance
of bids, tenders, leases, contracts (other than for the payment of
money) and statutory obligations or (iii) obligations on surety or
appeal bonds, but only to the extent such deposits or pledges are
incurred or otherwise arise in the ordinary course of business and
secure obligations not past due (or as to which payment and enforcement
is stayed under the Bankruptcy Code or pursuant to orders of the
Bankruptcy Court); and
(g) the charging Lien of the Trustee for its fees and expenses
in connection with Section 7.07 of the Indenture.
"Permitted Priority Lien" shall mean any valid, perfected non-avoidable
Permitted Lien existing on the Filing Date; provided, however, that the term
"Permitted Priority Lien" shall not include the Liens described in clauses (b),
(c) and (d) of the definition of the term "Permitted Liens".
"Person" means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.
"Post-Default Rate" means a rate of interest per annum equal to the
rate of interest otherwise in effect from time to time pursuant to the terms of
this Agreement plus 2%, or, if a rate of interest is not otherwise in effect,
the Reference Rate plus 2%.
"Priority Professional Expenses" means those expenses entitled to a
priority as set forth in sub-clause (ii) of the clause "first" of the definition
of the term "Agreed Administrative Expense Priorities".
"Pro Rata Share" means the percentage obtained by dividing (i) such
Lender's Commitment, by (ii) the Total Commitment, provided, that, if the Total
Commitment has been reduced to zero, the numerator shall be the aggregate unpaid
principal amount of such Lender's Loans (including Agent Advances) and the
denominator shall be the aggregate unpaid principal amount of all Loans
(including Agent Advances).
"Rating Agencies" has the meaning specified therefor in Section 2.07.
"Reference Bank" means JPMorgan Chase Bank, its successors or any other
commercial bank designated by the Agent to the Borrower from time to time.
11
"Register" has the meaning specified therefor in Section 12.07(b)(ii).
"Registered Loan" has the meaning specified therefor in Section
12.07(b)(ii).
"Regulation T", "Regulation U" and "Regulation X" mean, respectively,
Regulations T, U and X of the Board or any successor, as the same may be amended
or supplemented from time to time.
"Required Lenders" means the Agent and Lenders whose Pro Rata Shares
aggregate at least 51%.
"SEC" means the Securities and Exchange Commission or any other similar
or successor agency of the Federal government administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time.
"Securitization" has the meaning specified therefor in Section 2.07.
"Securitization Parties" has the meaning specified therefor in Section
2.07.
"Settlement Period" has the meaning specified therefor in Section
2.02(d)(i) hereof.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successor thereto.
"Subsidiary" means, with respect to any Person at any date, any
corporation, limited or general partnership, limited liability company, trust,
estate, association, joint venture or other business entity (i) the accounts of
which would be consolidated with those of such Person in such Person's
consolidated financial statements if such financial statements were prepared in
accordance with GAAP or (ii) of which more than 50% of (A) the outstanding
Capital Stock having (in the absence of contingencies) ordinary voting power to
elect a majority of the board of directors or other managing body of such
Person, (B) in the case of a partnership or limited liability company, the
interest in the capital or profits of such partnership or limited liability
company or (C) in the case of a trust, estate, association, joint venture or
other entity, the beneficial interest in such trust, estate, association or
other entity business is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by such Person.
"Total Commitment" means the sum of the amounts of the Lenders'
Commitments.
"Trustee" means HSBC Bank USA, as successor in interest to Bank of New
York.
"Uniform Commercial Code" has the meaning specified therefor in Section
1.03.
"Unused Line Fee" has the meaning specified therefor in Section
2.06(a).
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Section 1.02 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any right or interest in or to assets and properties of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
References in this Agreement to "determination" by the Agent include good faith
estimates by the Agent (in the case of quantitative determinations) and good
faith beliefs by the Agent (in the case of qualitative determinations).
13
Section 1.03 Accounting and Other Terms. Unless otherwise expressly provided
herein, each accounting term used herein shall have the meaning given it under
GAAP applied on a basis consistent with those used in preparing the Financial
Statements. All terms used in this Agreement which are defined in Article 8 or
Article 9 of the Uniform Commercial Code as in effect from time to time in the
State of New York (the "Uniform Commercial Code") and which are not otherwise
defined herein shall have the same meanings herein as set forth therein,
provided that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as the Agent may otherwise determine.
Section 1.04 Time References. Unless otherwise indicated herein, all references
to time of day refer to Eastern standard time or Eastern daylight saving time,
as in effect in New York City on such day. For purposes of the computation of a
period 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"; provided, however, that with respect to a computation of fees or
interest payable to the Agent or any Lender, such period shall in any event
consist of at least one full day.
Article II
THE LOANS
Section 2.01 Commitments. (a) Subject to the terms and conditions and relying
upon the representations and warranties herein set forth and subject to the
Bankruptcy Court Orders, each Lender severally agrees to make Loans to the
Borrower at any time and from time to time from the Interim Facility Effective
Date to the Final Maturity Date, or until the earlier reduction of its
Commitment to zero in accordance with the terms hereof, in an aggregate
principal amount of Loans at any time outstanding not to exceed the amount of
such Lender's Commitment.
(b) Notwithstanding the foregoing the aggregate principal amount of
Loans outstanding at any time to the Borrower shall not exceed the lesser of (i)
the Total Commitment, and (ii) for any week the principal amount of the Loans
projected to be outstanding at such time as set forth in the Budget for such
period. The Commitment of each Lender and the Total Commitment shall
automatically and permanently be reduced to zero on the Final Maturity Date.
Prior to the Final Bankruptcy Court Order Entry Date, the Lenders shall not be
obligated to make any Loans available to the Borrower in excess of $3,000,000 or
such lesser amount as the Bankruptcy Court may approve as set forth in the
Interim Bankruptcy Court Order. Within the foregoing limits, the Borrower may
borrow, repay and reborrow any Loan, on or after the Interim Facility Effective
Date and prior to the Final Maturity Date, subject to the terms, provisions and
limitations set forth herein.
Section 2.02 Making the Loans. The Borrower (acting through its Authorized
Officer) shall give the Agent prior telephonic notice (immediately confirmed in
writing, in substantially the form of Exhibit A hereto (a "Notice of
Borrowing")), not later than 12:00 noon (New York City time) on the date which
is five (5) Business Days prior to the date of the proposed Loan (or such
shorter period as the Agent is willing to accommodate from time to time, but in
no event later than 12:00 noon (New York City time) on the borrowing date of the
proposed Loan). Such Notice of Borrowing shall be irrevocable and shall specify
14
(i) the principal amount of the proposed Loan, and (ii) the proposed borrowing
date, which must be a Business Day. The Agent and the Lenders may act without
liability upon the basis of written, telecopied or telephonic notice believed by
the Agent in good faith to be from the Borrower (or from the Authorized Officer
thereof designated in writing purportedly from the Borrower to the Agent). The
Borrower hereby waives the right to dispute the Agent's record of the terms of
any such telephonic Notice of Borrowing. The Agent and each Lender shall be
entitled to rely conclusively on the Authorized Officer's authority to request a
Loan on behalf of the Borrower until the Agent receives written notice to the
contrary. The Agent and the Lenders shall have no duty to verify the
authenticity of the signature appearing on any written Notice of Borrowing.
(b) Each Notice of Borrowing pursuant to this Section 2.02 shall be
irrevocable and the Borrower shall be bound to make a borrowing in accordance
therewith. Each Loan shall be made in a minimum amount of $20,000.
(c) (i) Except as otherwise provided in this subsection 2.02(c), all
Loans under this Agreement shall be made by the Lenders simultaneously and
proportionately to their Pro Rata Shares of the Total Commitment, it being
understood that no Lender shall be responsible for any default by any other
Lender in that other Lender's obligations to make a Loan requested hereunder,
nor shall the Commitment of any Lender be increased or decreased as a result of
the default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder, and each Lender shall be obligated to make the Loans
required to be made by it by the terms of this Agreement regardless of the
failure by any other Lender.
(ii) Notwithstanding any other provision of this Agreement,
and in order to reduce the number of fund transfers among the Borrower,
the Agent and the Lenders, the Borrower, the Agent and the Lenders
agree that the Agent may (but shall not be obligated to), and the
Borrower and the Lenders hereby irrevocably authorize the Agent to,
fund, on behalf of the Lenders, Loans pursuant to Section 2.01, subject
to the procedures for settlement set forth in subsection 2.02(d);
provided, however, that (a) the Agent shall in no event fund any such
Loans if the Agent shall have received written notice from the Required
Lenders on the Business Day prior to the date of the proposed Loan that
one or more of the conditions precedent contained in Section 5.02 will
not be satisfied at the time of the proposed Loan, and (b) the Agent
shall not otherwise be required to determine that, or take notice
whether, the conditions precedent in Section 5.02 have been satisfied.
If the Borrower gives a Notice of Borrowing requesting a Loan and the
Agent elects not to fund such Loan on behalf of the Lenders, then
promptly after receipt of the Notice of Borrowing requesting such Loan,
the Agent shall notify each Lender of the specifics of the requested
Loan and that it will not fund the requested Loan on behalf of the
Lenders. If the Agent notifies the Lenders that it will not fund a
requested Loan on behalf of the Lenders, each Lender shall make its Pro
Rata Share of the Loan available to the Agent, in immediately available
funds, in the Agent's Account no later than 3:00 p.m. (New York City
time) (provided that the Agent requests payment from such Lender not
later than 1:00 p.m. (New York City time)) on the date of the proposed
Loan. The Agent will make the proceeds of such Loans available to the
Borrower on the day of the proposed Loan by causing an amount, in
immediately available funds, equal to the proceeds of all such Loans
received by the Agent in the Agent's Account or the amount funded by
the Agent on behalf of the Lenders to be deposited in an account
designated by the Borrower.
15
(iii) If the Agent has notified the Lenders that the Agent, on
behalf of the Lenders, will fund a particular Loan pursuant to
subsection 2.02(c)(ii), the Agent may assume that each such Lender has
made such amount available to the Agent on such day and the Agent, in
its sole discretion, may, but shall not be obligated to, cause a
corresponding amount to be made available to the Borrower on such day.
If the Agent makes such corresponding amount available to the Borrower
and such corresponding amount is not in fact made available to the
Agent by any such Lender, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest
thereon, for each day from the date such payment was due until the date
such amount is paid to the Agent, at the Federal Funds Rate for three
Business Days and thereafter at the Reference Rate. During the period
in which such Lender has not paid such corresponding amount to the
Agent, notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, the amount so advanced by the
Agent to the Borrower shall, for all purposes hereof, be a Loan made by
the Agent for its own account. Upon any such failure by a Lender to pay
the Agent, the Agent shall promptly thereafter notify the Borrower of
such failure and the Borrower shall immediately pay such corresponding
amount to the Agent for its own account.
(iv) Nothing in this subsection 2.02(c) shall be deemed to
relieve any Lender from its obligations to fulfill its Commitment
hereunder or to prejudice any rights that the Agent or the Borrower may
have against any Lender as a result of any default by such Lender
hereunder.
(d) With respect to all periods for which the Agent has funded Loans
pursuant to subsection 2.02(c), on Friday of each week, or if the applicable
Friday is not a Business Day, then on the following Business Day, or such
shorter period as the Agent may from time to time select (any such week or
shorter period being herein called a "Settlement Period"), the Agent shall
notify each Lender of the unpaid principal amount of the Loans outstanding as of
the last day of each such Settlement Period. In the event that such amount is
greater than the unpaid principal amount of the Loans outstanding on the last
day of the Settlement Period immediately preceding such Settlement Period (or,
if there has been no preceding Settlement Period, the amount of the Loans made
on the date of such Lender's initial funding), each Lender shall promptly (and
in any event not later than 2:00 p.m. (New York City time) if the Agent requests
payment from such Lender not later than 12:00 noon (New York City time) on such
day) make available to the Agent its Pro Rata Share of the difference in
immediately available funds. In the event that such amount is less than such
unpaid principal amount, the Agent shall promptly pay over to each Lender its
Pro Rata Share of the difference in immediately available funds. In addition, if
the Agent shall so request at any time when a Default or an Event of Default
shall have occurred and be continuing, or any other event shall have occurred as
a result of which the Agent shall determine that it is desirable to present
claims against the Borrower for repayment, each Lender shall promptly remit to
the Agent or, as the case may be, the Agent shall promptly remit to each Lender,
sufficient funds to adjust the interests of the Lenders in the then outstanding
Loans to such an extent that, after giving effect to such adjustment, each such
Lender's interest in the then outstanding Loans will be equal to its Pro Rata
Share thereof. The obligations of the Agent and each Lender under this
subsection 2.02(d) shall be absolute and unconditional. Each Lender shall only
be entitled to receive interest on its Pro Rata Share of the Loans which have
been funded by such Lender.
16
(ii) In the event that any Lender fails to make any payment
required to be made by it pursuant to subsection 2.02(d)(i), the Agent
shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon, for each day from the date
such payment was due until the date such amount is paid to the Agent,
at the Federal Funds Rate for three Business Days and thereafter at the
Reference Rate. During the period in which such Lender has not paid
such corresponding amount to the Agent, notwithstanding anything to the
contrary contained in this Agreement or any other Loan Document, the
amount so advanced by the Agent to the Borrower shall, for all purposes
hereof, be a Loan made by the Agent for its own account. Upon any such
failure by a Lender to pay the Agent, the Agent shall promptly
thereafter notify the Borrower of such failure and the Borrower shall
immediately pay such corresponding amount to the Agent for its own
account. Nothing in this subsection 2.02(d)(ii) shall be deemed to
relieve any Lender from its obligation to fulfill its Commitment
hereunder or to prejudice any rights that the Agent or the Borrower may
have against any Lender as a result of any default by such Lender
hereunder.
Section 2.03 Repayment of Loans; Evidence of Debt.
(a) The outstanding principal of all Loans shall be due and payable on
the Final Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the Indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Agent hereunder for
the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) in a form furnished
by the Agent and reasonably acceptable to the Borrower. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 12.07) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
17
Section 2.04 Interest. Loans. Each Loan shall bear interest on the principal
amount thereof from time to time outstanding, from the date of such Loan until
such principal amount becomes due, at a rate per annum equal to 13%.
(b) Default Interest. To the extent permitted by law, upon the
occurrence and during the continuance of an Event of Default, the principal of,
and all accrued and unpaid interest on, all Loans, fees, indemnities or any
other Obligations of the Loan Parties under this Agreement and the other Loan
Documents, shall bear interest, from the date such Event of Default occurred
until the date such Event of Default is cured or waived in writing in accordance
herewith, at a rate per annum equal at all times to the Post-Default Rate.
(c) Interest Payment. Interest on each Loan shall be payable monthly,
in arrears, on the first day of each month, commencing on the first day of the
month following the month in which such Loan is made and at maturity (whether
upon demand, by acceleration or otherwise). Interest at the Post-Default Rate
shall be payable on demand. Each Borrower hereby authorizes the Agent to, and
the Agent may, from time to time, charge the Loan Account pursuant to Section
4.02 with the amount of any interest payment due hereunder.
(d) General. All interest shall be computed on the basis of a year of
360 days for the actual number of days, including the first day but excluding
the last day, elapsed.
Section 2.05 Reduction of Commitment; Prepayment of Loans.
(a) Reduction of Commitments. The Total Commitment shall terminate on
the Final Maturity Date. The Borrower may, without premium or penalty, reduce
the Total Commitment to an amount (which may be zero) not less than the sum of
(A) the aggregate unpaid principal amount of all Loans then outstanding and (B)
the aggregate principal amount of all Loans not yet made as to which a Notice of
Borrowing has been given by the Borrower under Section 2.02. Each such reduction
shall be in an amount which is an integral multiple of $100,000 (unless the
Total Commitment in effect immediately prior to such reduction is less than
$100,000), shall be made by providing not less than five (5) Business Days'
prior written notice to the Agent and shall be irrevocable. Once reduced, the
Total Commitment may not be increased. Each such reduction of the Total
Commitment shall reduce the Commitment of each Lender proportionately in
accordance with its Pro Rata Share thereof.
(b) Optional Prepayment.
(i) The Borrower may prepay without penalty or premium the
principal of any Loan, in whole or in part.
(c) Mandatory Prepayment.
(i) The Agent shall on each Business Day apply all funds
transferred to or deposited in the Agent's Account, to the payment, in
whole or in part, of the outstanding principal amount of the Loans.
(ii) Immediately upon any Disposition by any Loan Party or its
Subsidiaries pursuant to Section 7.02(c), the Borrower shall prepay the
outstanding principal amount of the Loans in an amount equal to 100% of
the Net Cash Proceeds received by such Person in connection with such
Disposition. Nothing contained in this subsection (ii) shall permit any
Loan Party to make a Disposition of any property other than in
accordance with Section 7.02(c).
18
(iii) Upon the receipt by any Loan Party of any Extraordinary
Receipts the Borrower shall prepay the outstanding principal of the
Loans in an amount equal to 100% of such Extraordinary Receipts, net of
any reasonable expenses incurred in collecting such Extraordinary
Receipts.
(iv) Upon the loss, destruction or taking by condemnation of
any Collateral the Borrower shall prepay the outstanding principal of
the Loans in an amount equal to 100% of the proceeds received by any
Loan Party in connection therewith, net of (A) any Indebtedness secured
by a Permitted Priority Lien on such Collateral, and (B) any reasonable
expenses incurred in collecting such net proceeds.
(v) At any time when the aggregate principal amount of all
Loans exceeds the maximum principal amount of Loans projected to be
outstanding at such time as set forth in the Budget, the Borrower will
immediately prepay the Loans to the full extent of any such excess. On
each day that any Loans are outstanding and not prepaid, the Borrower
shall hereby be deemed to represent and warrant to the Agent and the
Lenders that the aggregate principal amount of all Loans outstanding on
such day does not exceed the maximum principal amount of Loans
projected to be outstanding at such time as set forth in the Budget.
(vi) At any time that the Chief Restructuring Officer or the
Financial Consultant shall cease to be retained by the Loan Parties in
accordance with Section 7.01(k) or shall no longer be involved in the
day to day operations and management of the business of the Loan
Parties, and a successor reasonably acceptable to the Agent and the
Required Lenders is not appointed within 3 Business Days of either such
event (provided that, during such 3 Business Day period arrangements
reasonably acceptable to the Agent and the Required Lenders are made
for the day to day management of the business of the Loan Parties) on
terms acceptable to the Agent and the Required Lenders, the Borrower
will immediately prepay the Loans in full.
(vii) Without limiting any other provision of this Agreement
or any other Loan Document permitting or requiring prepayment of any
Loan in whole or in part, the Borrower shall prepay the Loans in whole
without premium or penalty on the thirtieth (30th) day following the
Interim Facility Effective Date in the event the Final Bankruptcy Court
Order shall not have been entered on or before such date.
(d) Cumulative Prepayments. Except as otherwise expressly provided in
this Section 2.05, payments with respect to any subsection of this Section 2.05
are in addition to payments made or required to be made under any other
subsection of this Section 2.05.
Section 2.06 Fees.
(a) Unused Line Fee. From and after the Interim Facility Effective Date
and until the Final Maturity Date, the Borrower shall pay to the Agent for the
account of the Lenders, in accordance with a written agreement among such
Lenders, an unused line fee (the "Unused Line Fee"), which shall accrue at the
rate per annum of 0.5% on the excess, if any, of the Total Commitment over the
sum of the average principal amount of all Loans outstanding from time to time
and shall be deemed fully earned when paid and which shall be payable monthly in
arrears on the first day of each month commencing on the first day of the month
immediately following the Interim Facility Effective Date.
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(b) DIP Fee. Within 5 Business Days of the Interim Facility Effective
Date, the Borrower shall pay to the Agent for the account of the Lenders, a
non-refundable DIP fee (the "DIP Fee") equal to $142,000, which shall be deemed
fully earned when paid and which shall be charged by the Agent to the Loan
Account.
Section 2.07 Securitization. The Loan Parties hereby acknowledge that the
Lenders and their Affiliates may sell or securitize the Loans (a
"Securitization") through the pledge of the Loans as collateral security for
loans to the Lenders or their Affiliates or through the sale of the Loans or the
issuance of direct or indirect interests in the Loans, which loans to the
Lenders or their Affiliates or direct or indirect interests will be rated by
▇▇▇▇▇'▇, Standard & Poor's or one or more other rating agencies (the "Rating
Agencies"). The Loan Parties shall cooperate with the Lenders and their
Affiliates to effect the Securitization, including, without limitation, by (a)
amending this Agreement and the other Loan Documents, and executing such
additional documents, as reasonably requested by the Lenders in connection with
the Securitization, provided that (i) any such amendment or additional
documentation does not impose material additional costs on the Loan Parties and
(ii) any such amendment or additional documentation does not materially
adversely affect the rights, or materially increase the obligations, of the Loan
Parties under the Loan Documents or change or affect in a manner adverse to the
Loan Parties the financial terms of the Loans, (b) providing such information as
may be reasonably requested by the Lenders in connection with the rating of the
Loans or the Securitization, and (c) providing in connection with any rating of
the Loans a certificate (i) agreeing to indemnify the Lenders and their
Affiliates, any of the Rating Agencies, or any party providing credit support or
otherwise participating in the Securitization (collectively, the "Securitization
Parties") for any losses, claims, damages or liabilities (the "Liabilities") to
which the Lenders, their Affiliates or such Securitization Parties may become
subject insofar as the Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any Loan
Document or in any writing delivered by or on behalf of any Loan Party to the
Lenders in connection with any Loan Document or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and such
indemnity shall survive any transfer by the Lenders or their successors or
assigns of the Loans and (ii) agreeing to reimburse the Lenders and their
Affiliates for any legal or other expenses reasonably incurred by such Persons
in connection with defending the Liabilities.
Section 2.08 Taxes. (a) All payments made by any Loan Party hereunder or under
any other Loan Document shall be made without set-off, counterclaim, deduction
or other defense. All such payments shall be made free and clear of and without
deduction for any present or future income, franchise, sales, use, excise, stamp
or other taxes, levies, imposts, deductions, charges, fees, withholdings,
restrictions or conditions of any nature now or hereafter imposed, levied,
collected, withheld or assessed by any jurisdiction (whether pursuant to
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Federal, state, local or foreign law) or by any political subdivision or taxing
authority thereof or therein, and all interest, penalties or additional amounts,
excluding taxes on the net income of any Lender or the Agent imposed by the
jurisdiction in which such Lender or the Agent is organized or any political
subdivision thereof or taxing authority thereof or any jurisdiction in which
such Person's principal office is located or any political subdivision thereof
or taxing authority thereof (such nonexcluded taxes, levies, imposts,
deductions, charges, fees, withholdings, restrictions, conditions, interest,
penalties and additional amounts being hereinafter collectively referred to as
"Taxes"). If any Loan Party shall be required to deduct or to withhold any Taxes
from or in respect of any amount payable hereunder or under any other Loan
Document,
(i) the amount so payable shall be increased so that after
making all required deductions and withholdings (including Taxes on
amounts payable pursuant to this sentence) the Lenders or the Agent, as
the case may be, receive an amount equal to the sum they would have
received had no such deduction or withholding been made,
(ii) such Loan Party shall make such deduction or withholding,
(iii) such Loan Party shall pay the full amount deducted or
withheld to the relevant taxation authority in accordance with
applicable law, and
(iv) as promptly as possible thereafter, such Loan Party shall
send the Lenders and the Agent an official receipt (or, if an official
receipt is not available, such other documentation as shall be
satisfactory to the Lenders or the Agent, as the case may be)
evidencing payment of the amount or amounts so deducted or withheld. In
addition, each Loan Party agrees to pay any present or future taxes,
charges or similar levies which arise from any payment made hereunder
or from the execution, delivery, performance, recordation or filing of,
or otherwise with respect to, this Agreement or any other Loan Document
other than the foregoing excluded taxes (hereinafter referred to as
"Other Taxes").
(b) The Loan Parties hereby jointly and severally indemnify and agree
to hold the Lenders and the Agent harmless from and against Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.08) paid by any Lender or
the Agent and any liability (including penalties, interest and expenses for
nonpayment, late payment or otherwise) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Such indemnification shall be paid within 10 days from the date on
which any such Lender or the Agent makes written demand therefor, which demand
shall identify in reasonable detail the nature and amount of such Taxes or Other
Taxes.
(c) Each Lender that is organized in a jurisdiction outside the United
States hereby agrees that it shall, no later than the Interim Facility Effective
Date or, in the case of a Lender which becomes a party hereto pursuant to
Section 12.07 hereof after the Interim Facility Effective Date, the date upon
which such Lender becomes a party hereto (and from time to time thereafter upon
the reasonable request of the Borrower or the Agent, but only if such Lender is
legally able to do so), deliver to the Borrower and the Agent either (i) two
accurate, complete and signed copies of either (x) U.S. Internal Revenue Service
Form W-8ECI or successor form, or (y) U.S. Internal Revenue Service Form W-8BEN
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or successor form, in each case, indicating that such Lender is on the date of
delivery thereof entitled to receive payments of interest hereunder free from,
or subject to a reduced rate of, withholding of United States Federal income tax
or (ii) in the case of such a Lender that is entitled to claim exemption from
withholding of United States Federal income tax under Section 871(h) or Section
881(c) of the Internal Revenue Code, (x) a certificate to the effect that such
Lender is (A) not a "bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (B) not a "10 percent shareholder" of the Borrower within
the meaning of Section 881(c)(3)(B) of the Internal Revenue Code and (C) not a
controller foreign corporation receiving interest from a related person within
the meaning of Section 881(c)(3)(C) of the Internal Revenue Code and (y) two
accurate, complete and signed copies of U.S. Internal Revenue Service Form
W-8BEN or successor form.
(d) If any Loan Party fails to perform any of its obligations under
this Section 2.08, the Loan Parties shall indemnify the Lenders and the Agent
for any taxes, interest or penalties that may become payable as a result of any
such failure. The obligations of the Loan Parties under this Section 2.08 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
Article III
SECURITY AND ADMINISTRATIVE PRIORITY
Section 3.01 Collateral; Grant of Lien and Security Interest.
(a) As security for the full and timely payment and performance of all
of the Obligations, each Loan Party hereby as of the Interim Bankruptcy Court
Order Entry Date assigns, pledges and grants to the Agent, for the benefit of
the Lenders, a security interest in and to and Lien on all of the property,
assets or interests in property or assets of such Person, of any kind or nature
whatsoever, real or personal, now existing or hereafter acquired or created,
including, without limitation, all property of the "estate" (within the meaning
of the Bankruptcy Code), and all accounts, inventory, goods, contract rights,
instruments, documents, chattel paper, general intangibles, payment intangibles,
letters of credit, letter-of-credit rights, supporting obligations, machinery
and equipment, real property, fixtures, leases, 100% of the Capital Stock or
other equity interests in any Subsidiary, money, investment property, deposit
accounts, all commercial tort claims and all causes of action arising under the
Bankruptcy Code or otherwise (on and after the Final Bankruptcy Court Order
Entry Date including, without limitation, all Avoidance Actions), and all cash
and non-cash proceeds, rents, products and profits of any of the foregoing (all
property of the Loan Parties subject to the security interest referred to in
this Section 3.01(a) being hereafter collectively referred to as the
"Collateral").
(b) Upon entry of the Interim Bankruptcy Court Order or Final
Bankruptcy Court Order, as the case may be, the Liens and security interests in
favor of the Agent referred to in Section 3.01(a) hereof shall be valid and
perfected Liens and security interests in the Collateral, prior to all other
Liens and security interests in the Collateral, other than for the Permitted
Priority Liens. Such Liens and security interests and their priority shall
remain in effect until the Total Commitment shall have been terminated and all
Obligations shall have been repaid in cash in full.
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(c) Notwithstanding anything herein to the contrary (i) all proceeds
received by the Agent and the Lenders from the Collateral subject to the Liens
granted in this Section 3.01 and in each other Loan Document and by the
Bankruptcy Court Orders shall be subject to the prior payment of the Carve-Out
Expenses having priority of payment over the Obligations to the extent set forth
in the definition of Agreed Administrative Expense Priorities, and (ii) no
Person entitled to Carve-Out Expenses shall be entitled to sell or otherwise
dispose, or seek or object to the sale or other disposition, of any Collateral.
Section 3.02 Administrative Priority. The Borrower and each Guarantor agrees
that the Obligations of such Person shall constitute allowed administrative
expenses in the Chapter 11 Cases, having priority over all administrative
expenses of and unsecured claims against such Person now existing or hereafter
arising, of any kind or nature whatsoever, including, without limitation, all
administrative expenses of the kind specified in, or arising or ordered under,
Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b), 546(c), 726 and 1114 of
the Bankruptcy Code, subject, as to priority, only to Carve-Out Expenses having
priority of payment over the Obligations to the extent set forth in the
definition of Agreed Administrative Expense Priorities.
Section 3.03 Grants, Rights and Remedies. The Liens and security interests
granted pursuant to Section 3.01(a) hereof and the administrative priority
granted pursuant to Section 3.02 hereof may be independently granted by the Loan
Documents and by other Loan Documents hereafter entered into. This Agreement,
the Bankruptcy Court Orders and such other Loan Documents supplement each other,
and the grants, priorities, rights and remedies of the Agent and the Lenders
hereunder and thereunder are cumulative.
Section 3.04 No Filings Required. The Liens and security interests referred to
herein shall be deemed valid and perfected by entry of the Interim Bankruptcy
Court Order, and entry of the Interim Bankruptcy Court Order shall have occurred
on or before the date of the initial Loans hereunder. The Agent shall not be
required to file any financing statements, mortgages, notices of Lien or similar
instruments in any jurisdiction or filing office or to take any other action in
order to validate or perfect the Lien and security interest granted by or
pursuant to this Agreement, the Interim Bankruptcy Court Order and the Final
Bankruptcy Court Order, as the case may be, or any other Loan Document.
Section 3.05 Survival. The Liens, lien priority, administrative priorities and
other rights and remedies granted to the Agent and the Lenders pursuant to this
Agreement, the Bankruptcy Court Orders and the other Loan Documents
(specifically including, but not limited to, the existence, perfection and
priority of the Liens and security interests provided herein and therein, and
the administrative priority provided herein and therein) shall not be modified,
altered or impaired in any manner by any other financing or extension of credit
or incurrence of debt by the Borrower or any Guarantor (pursuant to Section 364
of the Bankruptcy Code or otherwise), or by any dismissal or conversion of any
of the Chapter 11 Cases, or by any other act or omission whatsoever. Without
limitation, notwithstanding any such order, financing, extension, incurrence,
dismissal, conversion, act or omission:
(a) except for the Carve-Out Expenses having priority of payment over
the Obligations to the extent set forth in the definition of Agreed
Administrative Expense Priorities as set forth in Section 3.02, no costs or
expenses of administration which have been or may be incurred in the Chapter 11
Cases or any conversion of the same or in any other proceedings related thereto,
and no priority claims, are or will be prior to or on a parity with any claim of
the Agent and the Lenders against the Borrower or any Guarantor in respect of
any Obligation;
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(b) the Liens in favor of the Agent and the Lenders set forth in
Section 3.01(a) hereof shall constitute valid and perfected first priority Liens
and security interests, subject only to Permitted Priority Liens, and shall be
prior to all other Liens and security interests (other than Permitted Priority
Liens), now existing or hereafter arising, in favor of any other creditor or any
other Person whatsoever; and
(c) the Liens in favor of the Agent and the Lenders set forth herein
and in the other Loan Documents shall continue to be valid and perfected without
the necessity that the Agent file financing statements, mortgages or otherwise
perfect its Lien under applicable non-bankruptcy law.
Article IV
FEES, PAYMENTS AND OTHER COMPENSATION
Section 4.01 Audit and Collateral Monitoring Fees. The Borrower acknowledges
that pursuant to Section 7.01(e), representatives of the Agent and the Lenders
may visit any or all of the Loan Parties and/or conduct audits, inspections,
valuations and/or field examinations of any or all of the Loan Parties at any
time and from time to time in a manner so as to not unduly disrupt the business
of the Loan Parties. The Borrower agrees to pay (i) the examiner's out-of-pocket
costs and reasonable expenses incurred in connection with all such visits,
audits, inspections, valuations and field examinations and (ii) the cost of all
visits, audits, inspections, valuations and field examinations conducted by a
third party on behalf of the Agent.
Section 4.02 Payments; Computations and Statements. (a) The Borrower will make
each payment under this Agreement not later than 12:00 noon (New York City time)
on the day when due, in lawful money of the United States of America and in
immediately available funds, to the Agent's Account. All payments received by
the Agent after 12:00 noon (New York City time) on any Business Day will be
credited to the Loan Account on the next succeeding Business Day. All payments
shall be made by the Borrower without set-off, counterclaim, deduction or other
defense to the Agent and the Lenders. Except as provided in Section 2.02, after
receipt, the Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal ratably to the Lenders in accordance with
their Pro Rata Shares and like funds relating to the payment of any other amount
payable to any Lender to such Lender, in each case to be applied in accordance
with the terms of this Agreement, provided that the Agent will cause to be
distributed all interest and fees received from or for the account of the
Borrower not less than once each month and in any event promptly after receipt
thereof. The Lenders and the Borrower hereby authorize the Agent to, and the
Agent may, from time to time, charge the Loan Account of the Borrower with any
amount due and payable by the Borrower under any Loan Document. Each of the
Lenders and the Borrower agrees that the Agent shall have the right to make such
charges whether or not any Default or Event of Default shall have occurred and
be continuing or whether any of the conditions precedent in Section 5.02 have
been satisfied. Any amount charged to the Loan Account of the Borrower shall be
deemed an Obligation under this Agreement and shall bear interest as provided
hereunder as if it had originally been part of the outstanding principal of the
Loans. The Lenders and the Borrower confirm that any charges which the Agent may
so make to the Loan Account of the Borrower as herein provided will be made as
an accommodation to the Borrower and solely at the Agent's discretion. Whenever
any payment to be made under any such Loan Document shall be stated to be due on
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a day other than a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be. All
computations of fees shall be made by the Agent on the basis of a year of 360
days for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such fees are payable. Each
determination by the Agent of an interest rate or fees hereunder shall be
conclusive and binding for all purposes in the absence of manifest error.
(b) The Agent shall provide the Borrower, promptly after the end of
each calendar month, a summary statement (in the form from time to time used by
the Agent) of the opening and closing daily balances in the Loan Account of the
Borrower during such month, the amounts and dates of all Loans made to the
Borrower during such month, the amounts and dates of all payments on account of
the Loans to the Borrower during such month and the Loans to which such payments
were applied, the amount of interest accrued on the Loans to the Borrower during
such month, and the amount and nature of any charges to the Loan Account made
during such month on account of fees, commissions, expenses and other
Obligations. All entries on any such statement shall be presumed to be correct
and, thirty (30) days after the same is sent, shall be final and conclusive
absent manifest error.
Section 4.03 Sharing of Payments, Etc. Except as provided in Section 2.02
hereof, if any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of any
Obligation in excess of its ratable share of payments on account of similar
obligations obtained by all the Lenders, such Lender shall forthwith purchase
from the other Lenders such participations in such similar obligations held by
them as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender of any interest or other amount paid by
the purchasing Lender in respect of the total amount so recovered). The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 4.03 may, to the fullest extent permitted by law,
exercise all of its rights (including the Lender's right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
Section 4.04 Apportionment of Payments. Subject to Section 2.02 hereof and to
any written agreement among the Agent and/or the Lenders:
(a) All payments of principal and interest in respect of outstanding
Loans, all payments of fees (other than the audit and collateral monitoring fees
provided for in Section 4.01) and all other payments in respect of any other
Obligations, shall be allocated by the Agent among such of the Lenders as are
entitled thereto, in proportion to their respective Pro Rata Shares or otherwise
as provided herein or, in respect of payments not made on account of Loans, as
designated by the Person making payment when the payment is made.
(b) After the occurrence and during the continuance of an Event of
Default, the Agent may, and upon the direction of the Required Lenders shall,
apply all payments in respect of any Obligations and all proceeds of the
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Collateral, subject to the provisions of this Agreement, (i) first, ratably to
pay the Obligations in respect of any fees, expense reimbursements, indemnities
and other amounts then due to the Agent until paid in full; (ii) second, ratably
to pay the Obligations in respect of any fees and indemnities then due to the
Lenders until paid in full; (iii) third, ratably to pay interest due in respect
of the Loans and Agent Advances until paid in full; (iv) fourth, ratably to pay
principal of the Loans and Agent Advances (or, to the extent such Obligations
are contingent, to provide cash collateral in respect of such Obligations) until
paid in full and (v) fifth, to the ratable payment of all other Obligations then
due and payable.
(c) In the event of a direct conflict between the priority provisions
of this Section 4.04 and other provisions contained in any other Loan Document,
it is the intention of the parties hereto that both such priority provisions in
such documents shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of this Section 4.04 shall control and govern.
Section 4.05 Increased Costs and Reduced Return. (a) If any Lender or the Agent
shall have determined that the adoption or implementation of, or any change in,
any law, rule, treaty or regulation, or any policy, guideline or directive of,
or any change in, the interpretation or administration thereof by, any court,
central bank or other administrative or Governmental Authority, or compliance by
any Lender or the Agent or any Person controlling any such Lender or the Agent
with any directive of, or guideline from, any central bank or other Governmental
Authority or the introduction of, or change in, any accounting principles
applicable to any Lender or the Agent or any Person controlling any such Lender
or the Agent (in each case, whether or not having the force of law), shall (i)
subject any Lender or the Agent, or any Person controlling any such Lender or
the Agent to any tax, duty or other charge with respect to this Agreement or any
Loan made by such Lender or the Agent, or change the basis of taxation of
payments to any Lender or the Agent or any Person controlling any such Lender or
the Agent of any amounts payable hereunder (except for taxes on the overall net
income of any Lender or the Agent or any Person controlling any such Lender or
the Agent), (ii) impose, modify or deem applicable any reserve, special deposit
or similar requirement against any Loan or against assets of or held by, or
deposits with or for the account of, or credit extended by, any Lender or the
Agent or any Person controlling any such Lender or the Agent or (iii) impose on
any Lender or the Agent or any Person controlling any such Lender or the Agent
any other condition regarding this Agreement or any Loan, and the result of any
event referred to in clauses (i), (ii) or (iii) above shall be to increase the
cost to any Lender or the Agent of making any Loan, or agreeing to make any
Loan, or to reduce any amount received or receivable by any Lender or the Agent
hereunder, then, upon demand by any such Lender or the Agent, the Borrower shall
pay to such Lender or the Agent such additional amounts as will compensate such
Lender or the Agent for such increased costs or reductions in amount.
(b) If any Lender or the Agent shall have determined that any Capital
Guideline or the adoption or implementation of, or any change in, any Capital
Guideline by the Governmental Authority charged with the interpretation or
administration thereof, or compliance by any Lender or the Agent or any Person
controlling such Lender or the Agent with any Capital Guideline or with any
request or directive of any such Governmental Authority with respect to any
Capital Guideline, or the implementation of, or any change in, any applicable
accounting principles (in each case, whether or not having the force of law),
26
either (i) affects or would affect the amount of capital required or expected to
be maintained by any Lender or the Agent or any Person controlling such Lender
or the Agent, and any Lender or the Agent determines that the amount of such
capital is increased as a direct or indirect consequence of any Loans made or
maintained, any Lender's or the Agent's or any such other controlling Person's
other obligations hereunder, or (ii) has or would have the effect of reducing
the rate of return on any Lender's or the Agent's or any such other controlling
Person's capital to a level below that which such Lender or the Agent or such
controlling Person could have achieved but for such circumstances as a
consequence of any Loans made or maintained, or any agreement to make Loans, or
such Lender's or Agent's or such other controlling Person's other obligations
hereunder (in each case, taking into consideration, such Lender's or the Agent's
or such other controlling Person's policies with respect to capital adequacy),
then, upon demand by any Lender or the Agent, the Borrower shall pay to such
Lender or the Agent from time to time such additional amounts as will compensate
such Lender or the Agent for such cost of maintaining such increased capital or
such reduction in the rate of return on such Lender's or the Agent's or such
other controlling Person's capital.
(c) All amounts payable under this Section 4.05 shall bear interest
from the date that is ten (10) days after the date of demand by any Lender or
the Agent until payment in full to such Lender or the Agent at the Reference
Rate. A certificate of such Lender or the Agent claiming compensation under this
Section 4.05, specifying the event herein above described and the nature of such
event shall be submitted by such Lender or the Agent to the Borrower, setting
forth the additional amount due and an explanation of the calculation thereof,
and such Lender's or the Agent's reasons for invoking the provisions of this
Section 4.05, and shall be final and conclusive absent manifest error.
Article V
CONDITIONS TO LOANS
Section 5.01 Conditions Precedent to Interim Facility Effectiveness. This
Agreement shall become effective as of the Business Day (the "Interim Facility
Effective Date") when each of the following conditions precedent shall have been
satisfied in a manner satisfactory to the Agent:
(a) Interim Bankruptcy Court Order. The Interim Bankruptcy Court Order
shall have been entered by the Bankruptcy Court and the Agent shall have
received a certified copy of such order, and such order shall be in full force
and effect and shall not have been reversed, modified, amended, stayed or
vacated absent prior written consent of the Agent, the Required Lenders and the
Borrower.
(b) Payment of Fees, Etc. The Borrower shall have paid on or before the
date of this Agreement all fees, costs, expenses and taxes then payable pursuant
to Section 2.06 and Section 12.04.
(c) Representations and Warranties; No Event of Default. The following
statements shall be true and correct: (i) the representations and warranties
contained in Article VI and in each other Loan Document, certificate or other
writing delivered to the Agent or any Lender pursuant hereto or thereto on or
prior to the Interim Facility Effective Date are true and correct on and as of
the Interim Facility Effective Date as though made on and as of such date and
(ii) no Default or Event of Default shall have occurred and be continuing on the
Interim Facility Effective Date or would result from this Agreement or the other
Loan Documents becoming effective in accordance with its or their respective
terms.
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(d) Legality. The making of any Loan shall not contravene any law, rule
or regulation applicable to the Agent or any Lender.
(e) Delivery of Documents. The Agent shall have received on or before
the Interim Facility Effective Date the following, each in form and substance
satisfactory to the Agent and, unless indicated otherwise, dated the Interim
Facility Effective Date:
(i) this Agreement, duly executed by each of the Loan Parties;
(ii) certified copies of request for copies of information on
Form UCC-11 listing all effective financing statements which name as
debtor any Loan Party and which are filed in the jurisdictions in which
any Loan Party is organized, has assets or property or maintains its
chief executive office, together with copies of such financing
statements, none of which, except as permitted herein or otherwise
agreed in writing by the Agent, shall cover any of the Collateral and
the results of searches for any tax Lien and judgment Lien filed
against such Loan Party or its property, which results, except as
otherwise agreed to in writing by the Agent, shall not show any such
Liens;
(iii) a copy of the resolutions of each Loan Party, certified
as of the Interim Facility Effective Date by an officer thereof,
authorizing (A) the borrowings hereunder and the transactions
contemplated by the Loan Documents to which such Loan Party is or will
be a party, (B) the execution, delivery and performance by such Loan
Party of each Loan Document to which such Loan Party is or will be a
party and the execution and delivery of the other documents to be
delivered by such Person in connection herewith and therewith, and (C)
the Authorized Officer to provide all Notices of Borrowing and other
notices under this Agreement and the Loan Documents;
(iv) a certificate of an officer of each Loan Party,
certifying the names and true signatures of the representatives of such
Loan Party authorized to sign each Loan Document to which such Loan
Party is or will be a party and the other documents to be executed and
delivered by such Loan Party in connection herewith and therewith,
together with evidence of the incumbency of such authorized officers;
(v) a copy of the charter and by-laws, limited liability
company agreement, operating agreement, agreement of limited
partnership or other organizational document of each Loan Party
organized in the United States, together with all amendments thereto,
certified as of the Interim Facility Effective Date by an officer of
such Loan Party;
(vi) an opinion of Pachulski, Stang, Ziehl, Young, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ P.C., counsel to the Loan Parties, substantially in the form
of Exhibit B and as to such other matters as the Agent may reasonably
request;
(vii) a certificate of an officer of each Loan Party,
certifying as to the matters set forth in subsection (c) of this
Section 5.01;
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(viii) a copy of the Budget, together with a certificate of
the Authorized Officer of the Borrower stating that the Budget has been
prepared on a reasonable basis and in good faith and is based on
assumptions believed by the Borrower to be reasonable at the time made
and from the best information then available to the Borrower, which
Budget shall be in form and substance satisfactory to the Agent; and
(ix) such other agreements, instruments, approvals, opinions
and other documents, each satisfactory to the Agent in form and
substance, as the Agent may reasonably request.
(f) Priority. The Agent shall be satisfied that it has been granted,
and holds, for the benefit of the Lenders, a perfected, first priority Lien on,
and security interest in, all of the Collateral, subject only to Permitted
Priority Liens.
(g) Approvals. All consents, authorizations and approvals of, and
filings and registrations with, and all other actions (including, without
limitation, obtaining and maintaining all licenses and permits) in respect of,
any Governmental Authority or other Person required in connection with the
making of the Loans or the conduct of the Loan Parties' business shall have been
obtained and shall be in full force and effect. Without limiting the foregoing,
no pending claim, investigation or litigation shall exist with respect to any
Loan Party, or the transactions contemplated hereby.
(h) Proceedings; Receipt of Documents. All proceedings in connection
with the making of the Loans and the other transactions contemplated by this
Agreement and the other Loan Documents, and all documents incidental hereto and
thereto, shall be satisfactory to the Agent and its counsel, and the Agent and
such counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents as the Agent or such
counsel may reasonably request.
(i) Chief Restructuring Officer. The Borrower shall have retained ▇▇▇▇▇
▇▇▇▇▇ as its Chief Restructuring Officer.
Section 5.02 Conditions Precedent to All Loans. The obligation of the Agent or
any Lender to make any Loan after the Interim Facility Effective Date is subject
to the fulfillment, in a manner satisfactory to the Agent, of each of the
following conditions precedent:
(a) Payment of Fees, Etc. The Borrower shall have paid all fees, costs,
expenses and taxes then payable by the Borrower pursuant to this Agreement and
the other Loan Documents, including, without limitation, Section 12.04 hereof.
(b) Representations and Warranties; No Event of Default. The following
statements shall be true and correct, and the submission by the Borrower to the
Agent of a Notice of Borrowing with respect to each such Loan, and the Borrower'
acceptance of the proceeds of such Loan shall each be deemed to be a
representation and warranty by each Loan Party on the date of such Loan that:
(i) the representations and warranties contained in Article VI and in each other
29
Loan Document, certificate or other writing delivered to the Agent or any Lender
pursuant hereto or thereto on or prior to the date of such Loan are true and
correct on and as of such date as though made on and as of such date, (ii) at
the time of and after giving effect to the making of such Loan and the
application of the proceeds thereof, no Default or Event of Default has occurred
and is continuing or would result from the making of the Loan to be made on such
date and (iii) the conditions set forth in this Section 5.02 have been satisfied
as of the date of such request.
(c) Legality. The making of such Loan shall not contravene any law,
rule or regulation applicable to the Agent or any Lender.
(d) Notices. The Agent shall have received a Notice of Borrowing
pursuant to Section 2.02 hereof.
(e) Delivery of Documents. The Agent shall have received such other
agreements, instruments, approvals, opinions and other documents, each in form
and substance satisfactory to the Agent, as the Agent may reasonably request.
(f) Proceedings; Receipt of Documents. All proceedings in connection
with the making of such Loan and the other transactions contemplated by this
Agreement and the other Loan Documents, and all documents incidental hereto and
thereto, shall be satisfactory to the Agent and its counsel, and the Agent and
such counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents, in form and substance
satisfactory to the Agent, as the Agent or such counsel may reasonably request.
(g) Final Bankruptcy Court Order. The Final Bankruptcy Court Order
shall have been signed and entered by the Bankruptcy Court within 30 days of the
Interim Facility Effective Date, and the Agent shall have received a certified
copy of such order, and such order shall be in full force and effect and shall
not have been reversed, modified, amended, stayed or vacated absent the prior
written consent of the Agent, the Lenders and the Borrower.
Section 5.03 Conditions Subsequent to All Loans. The obligation of the Agent or
any Lender to make any Loan after the Interim Facility Effective Date is subject
to the fulfillment, on or before the applicable date thereto, of each of the
conditions subsequent set forth below (the failure by Borrower to so perform or
cause or cause to be performed constituting an Event of Default):
(a) Within 30 days of the Interim Facility Effective Date, deliver to
the Agent a certificate of the appropriate official(s) of the state of
organization and each state of foreign qualification of each Loan Party
certifying as to the subsistence in good standing of, and the payment of taxes
by, such Loan Party in such states;
(b) Within 5 Business Days of the Interim Facility Effective Date,
deliver to the Agent evidence of the insurance coverage required by Section 7.01
and such other insurance coverage with respect to the business and operations of
the Loan Parties as the Agent may reasonably request, in each case, where
requested by the Agent, with such endorsements as to the named insureds or loss
payees thereunder as the Agent may request and providing that such policy may be
terminated or canceled (by the insurer or the insured thereunder) only upon 30
days' prior written notice to the Agent and each such named insured or loss
payee, together with evidence of the payment of all premiums due in respect
thereof for such period as the Agent may request;
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(c) Within 30 days of the Interim Facility Effective Date, a true and
complete copy of the charter, certificate of formation, certificate of limited
partnership or other publicly filed organizational document of each Loan Party
organized outside the United States certified as of a recent date not prior to
the Interim Facility Effective Date by an appropriate official of the state of
organization of such Loan Party which shall set forth the same complete name of
such Loan Party as is set forth herein and the organizational number of such
Loan Party, if an organized number is issued in such jurisdiction;
(d) Within 30 days of the Interim Facility Effective Date, copy of the
charter and by-laws, limited liability company agreement, operating agreement,
agreement of limited partnership or other organizational document of each Loan
Party organized outside the United States, together with all amendments thereto,
certified as of such date by an officer of such Loan Party; and
(e) Within 5 days of the Interim Facility Effective Date, a true and
complete copy of the charter, certificate of formation, certificate of limited
partnership or other publicly filed organizational document of each Loan Party
organized in the United States certified as of a recent date not more than 30
days prior to the Interim Facility Effective Date by an appropriate official of
the state of organization of such Loan Party which shall set forth the same
complete name of such Loan Party as is set forth herein and the organizational
number of such Loan Party, if an organizational number is issued in such
jurisdiction.
(f) Within 5 Business Days of the Interim Facility Effective Date, the
Borrower shall have filed a motion setting forth the scope of the retention of
the of the Chief Restructuring Officer, his duties and all other terms of such
retention in a written agreement materially consistent in substance to the
Agreement for Consulting Services dated as of July 21, 2003 between the Borrower
and Corporate Revitalization Partners, LLC.
Article VI
REPRESENTATIONS AND WARRANTIES
Section 6.01 Representations and Warranties. Each Loan Party hereby represents
and warrants to the Agent and the Lenders as follows:
(a) Organization, Good Standing, Etc. Each Loan Party (i) is a
corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of the state or
jurisdiction of its organization, (ii) subject to the entry and the terms of the
Bankruptcy Court Orders, has all requisite power and authority to conduct its
business as now conducted and as presently contemplated and, in the case of the
Borrower, to make the borrowings hereunder, and to execute and deliver each Loan
Document to which it is a party, and to consummate the transactions contemplated
thereby, and (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it
or in which the transaction of its business makes such qualification necessary
except where the failure to be so qualified and in good standing would not
reasonably be expected to have a Material Adverse Effect.
(b) Authorization, Etc. The execution, delivery and performance by each
Loan Party of each Loan Document to which it is or will be a party, (i) have
been duly authorized by all necessary action, (ii) do not and will not
contravene its charter or by-laws, its limited liability company or operating
31
agreement or its certificate of partnership or partnership agreement, as
applicable, or any applicable law, any contractual restriction binding on or
otherwise affecting it or any of its properties (other than conflicts, breaches
and defaults the enforcement of which will be stayed by virtue of the filing of
the Chapter 11 Cases), or any order or decree of any court or Governmental
Authority (including, without limitation, any order entered in the Chapter 11
Cases), (iii) do not and will not result in or require the creation of any Lien
(other than pursuant to any Loan Document) upon or with respect to any of its
properties, and (iv) do not and will not result in any default, noncompliance,
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to its operations or any of its
properties.
(c) Governmental Approvals. Except for the entry of the Bankruptcy
Court Orders, no authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required in connection with the
due execution, delivery and performance by any Loan Party of any Loan Document
to which it is or will be a party.
(d) Execution and Binding Effect. Subject to the entry of, and the
terms of the Bankruptcy Court Orders, each of the Loan Documents when delivered
hereunder is or will be duly and validly executed and delivered by each of the
Loan Parties which is a party thereto and constitutes legal, valid and binding
obligations of each of the Loan Parties which is a party thereto, enforceable in
accordance with the terms hereof or thereof.
(e) Subsidiaries. Schedule 6.01(e) is a complete and correct
description of the name, jurisdiction of incorporation and ownership of the
outstanding Capital Stock of such Subsidiaries of the Borrower in existence on
the date hereof. All of the issued and outstanding shares of Capital Stock of
such Subsidiaries have been validly issued and are fully paid and nonassessable,
and the holders thereof are not entitled to any preemptive, first refusal or
other similar rights. Except as indicated on such Schedule, all such Capital
Stock is owned by the Borrower or one or more of its wholly-owned Subsidiaries,
free and clear of all Liens. There are no outstanding debt or equity securities
of the Borrower or any of its Subsidiaries and no outstanding obligations of the
Borrower or any of its Subsidiaries convertible into or exchangeable for, or
warrants, options or other rights for the purchase or acquisition from the
Borrower or any of its Subsidiaries, or other obligations of any Subsidiary to
issue, directly or indirectly, any shares of Capital Stock of any Subsidiary of
the Borrower.
(f) Litigation; Commercial Tort Claims. Except as set forth in Schedule
6.01(f) and excluding pre-petition litigations which are stayed by 11 U.S.C. ss.
362, there is no pending or, to the best knowledge of any Loan Party, threatened
action, suit or proceeding affecting any Loan Party before any court or other
Governmental Authority or any arbitrator that (A) if adversely determined, could
have a Material Adverse Effect or (B) relates to this Agreement or any other
Loan Document or any transaction contemplated hereby or thereby.
(g) Financial Condition.
(i) No event or development has occurred since August 7, 2003
that has had or could have a Material Adverse Effect.
(ii) The Budget, when delivered, and as so updated, shall be
believed by the Borrower at the time furnished to be reasonable, shall
have been prepared on a reasonable basis and in good faith by the
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Borrower, and shall have been based on assumptions believed by the
Borrower to be reasonable at the time made and upon the best
information then reasonably available to the Borrower, and the Borrower
shall not be aware of any facts or information that would lead it to
believe that such Budget, as so updated, is incorrect or misleading in
any material respect.
(h) Compliance with Law, Etc. No Loan Party is in violation of its
organizational documents, any material law, rule, regulation, judgment or order
of any Governmental Authority applicable to it or any of its property or assets
binding on or otherwise affecting it or any of its properties, and no Default or
Event of Default has occurred and is continuing.
(i) Taxes, Etc. Except as set forth on Schedule 6.01(i) hereto, all
Federal, state and local tax returns and other reports required by applicable
law to be filed by any Loan Party have been filed, or extensions have been
obtained, and all taxes, assessments and other governmental charges imposed upon
any Loan Party or any property of any Loan Party and which have become due and
payable on or prior to the date hereof have been paid, except to the extent
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves have been set aside for the payment thereof on the
Financial Statements in accordance with GAAP or to the extent that such payment
or any enforcement action is stayed as a result of the Chapter 11 Cases.
(j) Regulations T, U and X. No Loan Party is or will be engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation T, U or X), and no proceeds of any Loan
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock.
(k) Nature of Business. No Loan Party is engaged in any business other
than the production and distribution of adult entertainment, including the
licensing of its trademark to third parties.
(l) Permits, Etc. Each Loan Party has, and is in compliance with, all
permits, licenses, authorizations, approvals, entitlements and accreditations
required for such Person lawfully to own, lease, manage or operate, or to
acquire, each business currently owned, leased, managed or operated, or to be
acquired, by such Person except for the failure to obtain and maintain
compliance with permits, licenses, authorizations, approvals, entitlements and
accreditations which is not reasonably likely to have a Material Adverse Effect.
No condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license,
authorization, approval, entitlement or accreditation, and there is no claim
that any thereof is not in full force and effect, except for the occurrence of
such conditions or events which is not reasonably likely to have a Material
Adverse Effect.
(m) Properties. (i) Each Loan Party has good and marketable title to,
valid leasehold interests in, or valid licenses to use, all property and assets
material to its business, free and clear of all Liens, except Permitted Liens.
All such properties and assets are in good working order and condition, ordinary
wear and tear excepted.
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(ii) Schedule 6.01(m) sets forth a complete and accurate list,
as of the Interim Facility Effective Date, of the location, by state
and street address, of all real property owned or leased by each Loan
Party.
(n) Full Disclosure. Each Loan Party has disclosed to the Agent all
agreements, instruments and corporate or other restrictions to which it is
subject, and all other matters known to it, that, individually or in the
aggregate, could result in a Material Adverse Effect. None of the other reports,
financial statements, certificates or other information furnished by or on
behalf of any Loan Party to the Agent in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which it was made, not misleading; provided that,
with respect to projected financial information, each Loan Party represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. There is no contingent liability or fact that may
have a Material Adverse Effect which has not been set forth in a footnote
included in the Financial Statements or a Schedule hereto.
(o) Insurance. On and after the date which is five (5) Business Days
after the Interim Facility Effective Date, each Loan Party keeps its property
adequately insured and maintains (i) insurance to such extent and against such
risks, including fire, as is customary with companies in the same or similar
businesses, (ii) workmen's compensation insurance in the amount required by
applicable law, (iii) public liability insurance, which shall include product
liability insurance, in the amount customary with companies in the same or
similar business against claims for personal injury or death on properties
owned, occupied or controlled by it, and (iv) such other insurance as may be
required by law or as may be reasonably required by the Agent (including,
without limitation, against larceny, embezzlement or other criminal
misappropriation). Schedule 6.01(o) sets forth a list of all insurance
maintained by each Loan Party on the Interim Facility Effective Date.
(p) Use of Proceeds. The proceeds of the Loans shall be used in
accordance with the expenditure line items in the Budget to (i) pay fees and
expenses in connection with the transactions contemplated hereby and (ii) fund
working capital of the Borrower and the Guarantors (including, without
limitation, payments of fees and expenses to professionals under Sections 330
and 331 of the Bankruptcy Code and administrative expenses of the kind specified
in Section 503(b) of the Bankruptcy Code incurred in the ordinary course of
business of the Borrower and the Guarantors or otherwise approved by the
Bankruptcy Court (and not otherwise prohibited under this Agreement), subject to
the priorities set forth in the definition of "Agreed Administrative Expense
Priorities" herein).
(q) Location of Bank Accounts. Schedule 6.01(q) sets forth a complete
and accurate list, as of the Interim Facility Effective Date, of all deposit,
checking and other bank accounts, all securities and other accounts maintained
with any broker dealer and all other similar accounts maintained by each Loan
Party, together with a description thereof (i.e., the bank or broker dealer at
which such deposit or other account is maintained and the account number and the
purpose thereof).
(r) Intellectual Property. Except as set forth on Schedule 6.01(r),
each Loan Party owns or licenses or otherwise has the right to use all licenses,
permits, patents, patent applications, trademarks, trademark applications,
service marks, tradenames, copyrights, copyright applications, franchises,
34
authorizations, non-governmental licenses and permits and other intellectual
property rights that are necessary for the operation of its business, without
infringement upon or conflict with the rights of any other Person with respect
thereto, except for such infringements and conflicts which, individually or in
the aggregate, could not have a Material Adverse Effect. Set forth on Schedule
6.01(r) is a complete and accurate list, as of the Interim Facility Effective
Date, of all such material licenses, permits, patents, patent applications,
trademarks, trademark applications, service marks, tradenames, copyrights,
copyright applications, franchises, authorizations, non-governmental licenses
and permits and other intellectual property rights of each Loan Party. No slogan
or other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by any Loan Party
infringes upon or conflicts with any rights owned by any other Person, and no
claim or litigation regarding any of the foregoing is pending or threatened,
except for such infringements and conflicts which could not have, individually
or in the aggregate, a Material Adverse Effect. To the best knowledge of each
Loan Party, no patent, invention, device, application, principle or any statute,
law, rule, regulation, standard or code is pending or proposed, which,
individually or in the aggregate, could have a Material Adverse Effect.
(s) Holding Company and Investment Company Acts. None of the Loan
Parties is (i) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or (ii) an
"investment company" or an "affiliated person" or "promoter" of, or "principal
underwriter" of or for, an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended.
(t) Name; Jurisdiction of Organization; Organizational ID Number; Chief
Place of Business; Chief Executive Office; FEIN. Schedule 6.01(t) sets forth a
complete and accurate list as of the date hereof of (i) the exact legal name of
each Loan Party, (ii) the jurisdiction of organization of each Loan Party, (iii)
the organizational identification number of each Loan Party (or indicates that
such Loan Party has no organizational identification number), (iv) each place of
business of each Loan Party, (v) the chief executive office of each Loan Party
and (vi) the federal employer identification number of each Loan Party.
(u) Locations of Collateral. There is no location at which any Loan
Party has any Collateral other than (i) those locations listed on Schedule
6.01(u) and (ii) any other locations approved in writing by the Agent from time
to time.
(v) Administrative Priority; Lien Priority.
(i) After the Interim Bankruptcy Court Order Entry Date or the
Final Bankruptcy Court Order Entry Date, as the case may be, the
Obligations of the Borrower and each Guarantor will constitute allowed
administrative expenses in the Chapter 11 Cases, having priority in
payment over all other administrative expenses and unsecured claims
against the Borrower and each Guarantor now existing or hereafter
arising, of any kind or nature whatsoever, including without limitation
35
all administrative expenses of the kind specified in, or arising or
ordered under, Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b),
546(c), 726 and 1114 of the Bankruptcy Code, subject, as to priority,
only to Carve-Out Expenses having priority of payment over the
Obligations to the extent set forth in the Agreed Administrative
Expense Priorities.
(ii) Upon entry of the Interim Bankruptcy Court Order or the
Final Bankruptcy Court Order, as the case may be, the Lien and security
interest of the Agent on the Collateral shall be a valid and perfected
first priority Lien, subject only to Permitted Priority Liens; and
(iii) On or after the Interim Bankruptcy Court Order Entry
Date and prior to the Final Bankruptcy Court Order Entry Date, the
Interim Bankruptcy Court Order is in full force and effect, and has not
been reversed, modified, amended, stayed or vacated absent the written
consent of the Agent, the Lenders and the Borrower, and after the Final
Bankruptcy Court Order Entry Date, the Final Bankruptcy Court Order is
in full force and effect, and has not been reversed, modified, amended,
stayed or vacated absent the written consent of the Agent, the Lenders
and the Borrower.
(w) Appointment of Trustee or Examiner; Liquidation. No order has been
entered in any Chapter 11 Case without the consent of the Agent and the Required
Lenders (i) for the appointment of a Chapter 11 trustee, (ii) for the
appointment of an examiner with enlarged powers (beyond those set forth in
Sections 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code or (iii) to convert any Chapter 11 Case to a Chapter 7 case or
to dismiss any Chapter 11 Case.
(x) Schedules. All of the information which is required to be scheduled
to this Agreement is set forth on the Schedules attached hereto, is correct and
accurate and does not omit to state any information material thereto.
(y) Representations and Warranties in Documents; No Default. All
representations and warranties set forth in this Agreement and the other Loan
Documents are true and correct in all respects at the time as of which such
representations were made and on the Interim Facility Effective Date. No Event
of Default has occurred and is continuing and no condition exists which
constitutes a Default or an Event of Default.
Article VII
COVENANTS OF THE LOAN PARTIES
Section 7.01 Affirmative Covenants. So long as any principal of or interest on
any Loan or any other Obligation (whether or not due) shall remain unpaid or any
Lender shall have any Commitment hereunder, each Loan Party will, unless the
Required Lenders shall otherwise consent in writing:
(a) Reporting Requirements. Furnish to the Agent and each Lender:
(i) as soon as available and in any event within 30 days after
the end of each fiscal quarter of the Borrower and its Subsidiaries
commencing with the first fiscal quarter of the Borrower and its
Subsidiaries ending after the Interim Facility Effective Date, (A)
consolidated balance sheets, consolidated statements of operations and
retained earnings and consolidated statements of cash flows of the
Borrower and its Subsidiaries, and (B) consolidating balance sheets,
36
consolidating statements of operations and retained earnings and
consolidating statements of cash flows of the Borrower and each of its
Subsidiaries, in each case, as at the end of such quarter, and for the
period commencing at the end of the immediately preceding Fiscal Year
and ending with the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding date or period of
the immediately preceding Fiscal Year, all in reasonable detail and
certified by the Authorized Officer of the Borrower as fairly
presenting, in all material respects, the financial position of the
Borrower and its Subsidiaries, as of the end of such quarter and the
results of operations and cash flows of the Borrower and its
Subsidiaries, for such quarter, in accordance with GAAP applied in a
manner consistent with that of the most recent audited financial
statements of the Borrower and its Subsidiaries, furnished to the Agent
and the Lenders, subject to normal year-end adjustments;
(ii) as soon as available, and in any event within 30 days
after the end of each fiscal month of the Borrower and its Subsidiaries
commencing with the first fiscal month of the Borrower and its
Subsidiaries ending after the Interim Facility Effective Date, (A)
internally prepared consolidated balance sheets, consolidated
statements of operations and retained earnings and consolidated
statements of cash flows of the Borrower and its Subsidiaries, and (B)
consolidating balance sheets, consolidating statements of operations
and retained earnings and consolidating statements of cash flows of the
Borrower and each of its Subsidiaries, in each case, as at the end of
such fiscal month, and for the period commencing at the end of the
immediately preceding Fiscal Year and ending with the end of such
fiscal month, all in reasonable detail and certified by the Authorized
Officer of the Borrower as fairly presenting, in all material respects,
the financial position of the Borrower and its Subsidiaries, as at the
end of such fiscal month and the results of operations, retained
earnings and cash flows of the Borrower and its Subsidiaries, for such
fiscal month, in accordance with GAAP applied in a manner consistent
with that of the most recent audited financial statements furnished to
the Agent and the Lenders, subject to normal year-end adjustments;
(iii) simultaneously with the delivery of the financial
statements of the Borrower and its Subsidiaries required by clauses (i)
and (ii) of this Section 7.01(a), a certificate of the Authorized
Officer of the Borrower stating that such Authorized Officer has
reviewed the provisions of this Agreement and the other Loan Documents
and has made or caused to be made under his or her supervision a review
of the condition and operations of the Loan Parties during the period
covered by such financial statements with a view to determining whether
the Loan Parties were in compliance with all of the provisions of this
Agreement and such Loan Documents at the times such compliance is
required hereby and thereby, and that such review has not disclosed,
and such Authorized Officer has no knowledge of, the existence during
such period of an Event of Default or Default or, if an Event of
Default or Default existed, describing the nature and period of
existence thereof and the action which the Loan Parties propose to take
or have taken with respect thereto;
(iv) on or before October 15, 2003, a Budget for the
three-month period following November 3, 2003, prepared on a weekly
basis and otherwise in form and substance satisfactory to the Agent and
37
the Required Lenders, which Budget, when delivered and as so updated,
shall be (A) consistent with the Budget delivered to the Agent on or
prior to the Interim Facility Effective Date, (B) believed by the
Borrower at the time furnished to be reasonable, (C) prepared on a
reasonable basis and in good faith, and (D) based on assumptions
believed by the Borrower to be reasonable at the time made and upon the
best information then reasonably available to the Borrower, and shall
be accompanied by a certificate of the Authorized Officer certifying as
to the matters set forth in subclauses (A), (B), (C) and (D) above;
(v) within 3 days after the end of each week, a
reconciliation, in form and substance acceptable to the Agent and the
Required Lenders, of the actual cash receipts and disbursements of the
Loan Parties for such week to the budgeted line item amounts set forth
in the Budget for such week;
(vi) promptly after the filing thereof, copies of all
pleadings, motions, applications, financial information and other
papers and documents filed by any Loan Party in the Chapter 11 Cases,
which papers and documents shall also be given or served on the Agent's
counsel;
(vii) promptly after the sending thereof, copies of all
written reports given by any Loan Party to any official or unofficial
creditors' committee in the Chapter 11 Cases, other than any such
reports subject to privilege, provided that such Person may redact any
confidential information contained in any such report if it provides a
summary of the nature of the information redacted to the Agent and the
Lenders;
(viii) promptly after submission to any Governmental
Authority, all documents and information furnished to such Governmental
Authority in connection with any investigation of any Loan Party other
than routine inquiries by such Governmental Authority;
(ix) as soon as possible, and in any event within three (3)
days after the occurrence of an Event of Default or Default or the
occurrence of any event or development that could have a Material
Adverse Effect, the written statement of the Authorized Officer of the
Borrower setting forth the details of such Event of Default or Default
or other event or development that could have a Material Adverse Effect
and the action which the affected Loan Party proposes to take with
respect thereto;
(x) promptly after the commencement thereof but in any event
not later than 5 days after service of process with respect thereto on,
or the obtaining of knowledge thereof by, any Loan Party, notice of
each action, suit or proceeding before any court or other Governmental
Authority or other regulatory body or any arbitrator which, if
adversely determined, could have a Material Adverse Effect;
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(xi) promptly after the sending or filing thereof, copies of
all statements, reports and other information any Loan Party sends to
any holders of its Indebtedness or its securities or files with the SEC
or any national (domestic or foreign) securities exchange;
(xii) promptly upon receipt thereof, copies of all financial
reports (including, without limitation, management letters), if any,
submitted to any Loan Party by its auditors in connection with any
annual or interim audit of the books thereof;
(xiii) promptly upon request, copies of all minutes of
meetings of the Board of Directors of any Loan Party and all other
statements, reports and other information sent by the Board of
Directors of any Loan Party to any Person or submitted by any Person to
the Board of Directors of any Loan Party; and
(xiv) promptly upon request, such other information concerning
the condition or operations, financial or otherwise, of any Loan Party
as the Agent may from time to time may reasonably request.
(b) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
(i) paying before the same become delinquent, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
upon any of its properties, and (ii) paying all lawful claims which if unpaid
might become a Lien or charge upon any of its properties, except to the extent
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves have been set aside for the payment thereof in
accordance with GAAP or to the extent that such compliance or payment or any
enforcement action is stayed as a result of the Chapter 11 Cases.
(c) Preservation of Existence, Etc. Maintain and preserve its
existence, rights and privileges, and become or remain duly qualified and in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary.
(d) Keeping of Records and Books of Account. Keep adequate records and
books of account, with complete entries made to permit the preparation of
financial statements in accordance with GAAP.
(e) Inspection Rights. Permit the agents and representatives of the
Agent and the Lenders at any time and from time to time during normal business
hours, at the expense of the Borrower, to examine and make copies of and
abstracts from its records and books of account, to visit and inspect its
properties, to verify materials, leases, notes, accounts receivable, deposit
accounts and its other assets, to conduct audits, physical counts, valuations,
appraisals, or examinations and to discuss its affairs, finances and accounts
with any of its directors, officers, managerial employees, independent
accountants or any of its other representatives. In furtherance of the
foregoing, each Loan Party hereby authorizes its independent accountants to
discuss the affairs, finances and accounts of such Person (independently or
together with representatives of such Person) with the agents and
representatives of the Agent and the Lenders in accordance with this Section
7.01(e).
(f) Maintenance of Properties, Etc. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct of its business,
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
or under which it occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.
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(g) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to its
properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks as is required by any Governmental
Authority having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses,
similarly situated and in any event in amount, adequacy and scope reasonably
satisfactory to the Agent. All policies covering the Collateral are to be made
payable to the Agent for the benefit of the Lenders, as its interests may
appear, in case of loss, under a standard non-contributory "lender" or "secured
party" clause and are to contain such other provisions as the Agent may require
to fully protect the Lenders' interest in the Collateral and to protect any
payments to be made under such policies. All certificates of insurance are to be
delivered to the Agent and the policies are to be premium prepaid, with the loss
payable and additional insured endorsement in favor of the Agent and such other
Persons as the Agent may designate from time to time, and shall provide for not
less than 30 days' prior written notice to the Agent of the exercise of any
right of cancellation. If any Loan Party or any of its Subsidiaries fails to
maintain such insurance, the Agent may arrange for such insurance, but at the
Borrower's expense and without any responsibility on the Agent's part for
obtaining the insurance, the solvency of the insurance companies, the adequacy
of the coverage, or the collection of claims. Upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the sole right, in the
name of the Lenders, any Loan Party and its Subsidiaries, to file claims under
any insurance policies, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.
(h) Obtaining of Permits, Etc. Obtain, maintain and preserve and take
all necessary action to timely renew, all permits, licenses, authorizations,
approvals, entitlements and accreditations which are necessary or useful in the
proper conduct of its business, except where the failure to obtain, maintain or
preserve such licenses, authorizations, approvals, entitlements and
accreditations is not reasonably likely to have a Material Adverse Effect..
(i) Further Assurances. Subject to the terms of the Bankruptcy Court
Orders, take such action and execute, acknowledge and deliver, at its sole cost
and expense, such agreements, instruments or other documents as the Agent may
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement and the other Loan Documents, (ii) to subject to
valid and perfected first priority Liens any of the Collateral or any other
property of any Loan Party, (iii) to establish and maintain the validity and
effectiveness of any of the Loan Documents and the validity, perfection and
priority of the Liens intended to be created thereby, and (iv) to better assure,
convey, grant, assign, transfer and confirm unto the Agent and each Lender the
rights now or hereafter intended to be granted to it under this Agreement or any
other Loan Document. In furtherance of the foregoing, to the maximum extent
40
permitted by applicable law and subject to the terms of the Bankruptcy Court
Orders, each Loan Party (i) authorizes the Agent to execute any such agreements,
instruments or other documents in such Loan Party's name and to file such
agreements, instruments or other documents in any appropriate filing office,
(ii) authorizes the Agent to file any financing statement required hereunder or
under any other Loan Document, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the signature of such
Loan Party, and (iii) ratifies the filing of any financing statement, and any
continuation statement or amendment with respect thereto, filed without the
signature of such Loan Party prior to the date hereof. The assurances
contemplated by this Section 7.01(j) shall be given under applicable
nonbankruptcy law (to the extent not inconsistent with the Bankruptcy Code and
the Bankruptcy Court Orders) as well as the Bankruptcy Code, it being the
intention of the parties that the Agent may request assurances under applicable
non-bankruptcy law, and such request shall be complied with (if otherwise made
in good faith by the Agent) whether or not any of the Bankruptcy Court Orders
are in force and whether or not dismissal of the Chapter 11 Cases or any other
action by the Bankruptcy Court is imminent, likely or threatened.
(j) Change in Collateral; Collateral Records; Collateral Locations. (i)
Give the Agent not less than 30 days' prior written notice of any change in the
location of any Collateral, other than to locations set forth on Schedule
6.01(u), (ii) advise the Agent promptly, in sufficient detail, of any material
adverse change relating to the type, quantity or quality of the Collateral or
the Lien granted thereon, (iii) execute and deliver to the Agent for the benefit
of the Lenders from time to time, solely for the Agent's convenience in
maintaining a record of Collateral, such written statements and schedules as the
Agent may reasonably require, designating, identifying or describing the
Collateral and (iv) upon the request of the Agent, move all Collateral to a
location owned or leased by the Borrower or to a warehouse or other secure
location satisfactory to the Agent.
(k) Chief Restructuring Officer; Financial Consultant. At all times
maintain the retention of the Chief Restructuring Officer and the Financial
Consultant retained by the Borrower pursuant to Sections 5.01(j) and (k). The
Borrower and the Guarantors shall provide the Chief Restructuring Officer and
the Financial Consultant with all assistance and cooperation necessary to fully
perform its duties under its respective retention agreement, and the Borrower
and the Guarantors shall make the Chief Restructuring Officer and the Financial
Consultant available to the Agent and the Lenders upon the Agent's request.
(l) Use of Proceeds. Use the proceeds of the Loans strictly in
accordance with the expenditure line items in the Budget.
(m) Plan of Reorganization.
(i) Within 60 days of the Filing Date, deliver to the Agent
and the Lenders a term sheet for a plan of reorganization of the
Borrowers and the Guarantors, in form and substance satisfactory to the
Agent and the Lenders, which term sheet shall have been accepted by the
Noteholders holding two-thirds in aggregate principal amount of the
outstanding Notes. Within 120 days of the Filing Date, file a proposed
plan and disclosure statement, the terms of which are acceptable to all
requisite creditor classes in the Chapter 11 cases, and all documents
incidental thereto. Within 150 days, obtain an order approving the
disclosure statement relating to such a plan. Within 180 days following
41
the Filing Date, obtain an order by the Bankruptcy Court confirming a
plan or plans of reorganization in the Chapter 11 Cases, the
substantial consummation (as defined in 11 U.S.C. ss. 1101(2)) of which
shall occur on or prior to such date and which plan (i) provides for
termination of the Commitment and payment in full in cash of all
Obligations of the Borrower hereunder and under the other Loan
Documents on or before the effective date of such plan or plans upon
entry thereof, (ii) provides for the continuation of the Liens and
security interests granted to the Agent and priorities until such plan
effective date and (iii) is otherwise acceptable to the Agent and the
Required Lenders.
Section 7.02 Negative Covenants. So long as any principal of or interest on any
Loan or any other Obligation (whether or not due) shall remain unpaid or any
Lender shall have any Commitment hereunder, each Loan Party shall not, unless
the Required Lenders shall otherwise consent in writing:
(a) Liens, Etc. Create, incur, assume or suffer to exist any Lien upon
or with respect to any of its properties, whether now owned or hereafter
acquired; file or suffer to exist under the Uniform Commercial Code or any
similar law or statute of any jurisdiction, a financing statement (or the
equivalent thereof) that names it as debtor; sign or suffer to exist any
security agreement authorizing any secured party thereunder to file such
financing statement (or the equivalent thereof); sell any of its property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable) with
recourse to it or assign or otherwise transfer any account or other right to
receive income; other than, as to all of the above, Permitted Liens.
(b) Indebtedness. Create, incur, assume, guarantee or suffer to exist,
or otherwise become or remain liable with respect to any Indebtedness other than
Permitted Indebtedness.
(c) Fundamental Changes; Dispositions. Wind-up, liquidate or dissolve,
or merge, consolidate or amalgamate with any Person, or convey, sell, lease or
sublease, transfer or otherwise dispose of, whether in one transaction or a
series of related transactions, all or any part of its business, property or
assets, whether now owned or hereafter acquired (or agree to do any of the
foregoing), or purchase or otherwise acquire, whether in one transaction or a
series of related transactions, all or substantially all of the assets of any
Person (or any division thereof) (or agree to do any of the foregoing);
provided, however, that any Loan Party may dispose of (i) obsolete or worn-out
equipment in the ordinary course of business and (ii) artwork under terms and
conditions acceptable to the Agent and the Required Lenders.
(d) Change in Nature of Business. Make any change in the nature of its
business as described in Section 6.01(k).
(e) Loans, Advances, Investments, Etc. Make or commit or agree to make
any loan, advance guarantee of obligations, other extension of credit or capital
contributions to, or hold or invest in or commit or agree to hold or invest in,
or purchase or otherwise acquire or commit or agree to purchase or otherwise
acquire any shares of the Capital Stock, bonds, notes, debentures or other
securities of, or make or commit or agree to make any other investment in, any
other Person, or purchase or own any futures contract or otherwise become liable
42
for the purchase or sale of currency or other commodities at a future date in
the nature of a futures contract, except for: (i) investments existing on the
date hereof, as set forth on Schedule 7.02(e) hereto, but not any increase in
the amount thereof as set forth in such Schedule or any other modification of
the terms thereof, (ii) loans and advances by it to its Subsidiaries and by such
Subsidiaries to it, made in the ordinary course of business, and (iii) Permitted
Investments.
(f) Lease Obligations. Create, incur or suffer to exist any obligations
as lessee (i) for the payment of rent for any real or personal property in
connection with any sale and leaseback transaction, or (ii) for the payment of
rent for any real or personal property under leases or agreements to lease other
than (A) Capitalized Lease Obligations which would not cause the aggregate
amount of all obligations under Capitalized Leases entered into after the
Interim Facility Effective Date owing by all Loan Parties in any Fiscal Year to
exceed the amounts set forth in subsection (g) of this Section 7.02, and (B)
Operating Lease Obligations which would not cause the aggregate amount of all
Operating Lease Obligations owing by all Loan Parties after the Filing Date to
exceed $100,000.
(g) Capital Expenditures. Make or commit or agree to make any Capital
Expenditure (by purchase made or Capitalized Lease entered into after the Filing
Date) that would cause the aggregate amount of all such Capital Expenditures
arising from purchases made or Capitalized Leases entered into after the Filing
Date by the Loan Parties to exceed $100,000.
(h) Restricted Payments. (i) Declare or pay any dividend or other
distribution, direct or indirect, on account of any Capital Stock of any Loan
Party now or hereafter outstanding, (ii) make any repurchase, redemption,
retirement, defeasance, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Capital Stock of any Loan
Party or any direct or indirect parent of any Loan Party, now or hereafter
outstanding, (iii) make any payment to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights for the purchase or
acquisition of shares of any class of Capital Stock of any Loan Party, now or
hereafter outstanding, (iv) return any Capital Stock to any shareholders or
other equity holders of any Loan Party or any of its Subsidiaries, or make any
other distribution of property, assets, shares of Capital Stock, warrants,
rights, options, obligations or securities thereto as such or (v) pay any
management fees or any other fees or expenses (including the reimbursement
thereof by any Loan Party) pursuant to any management, consulting or other
services agreement to any of the shareholders or other equityholders of any Loan
Party or other Affiliates, or to any other Subsidiaries or Affiliates of any
Loan Party; provided, however, any Subsidiary of the Borrower may pay dividends
to the Borrower.
(i) Federal Reserve Regulations. Permit any Loan or the proceeds of any
Loan under this Agreement to be used for any purpose that would cause such Loan
to be a margin loan under the provisions of Regulation T, U or X of the Board.
(j) Transactions with Affiliates. Enter into, renew, extend or be a
party to any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease, transfer or exchange of property or
assets of any kind or the rendering of services of any kind) with any Affiliate,
except (i) in the ordinary course of business in a manner and to an extent
consistent with past practice and necessary or desirable for the prudent
43
operation of its business, for fair consideration and on terms no less favorable
to it than would be obtainable in a comparable arm's length transaction with a
Person that is not an Affiliate thereof, (ii) transactions with another Loan
Party and (iii) transactions permitted by Section 7.02(e) hereof.
(k) Investment Company Act of 1940. Engage in any business, enter into
any transaction, use any securities or take any other action or permit any of
its Subsidiaries to do any of the foregoing, that would cause it or any of its
Subsidiaries to become subject to the registration requirements of the
Investment Company Act of 1940, as amended, by virtue of being an "investment
company" or a company "controlled" by an "investment company" not entitled to an
exemption within the meaning of such Act.
(l) Bankruptcy Court Orders; Administrative Priority; Lien Priority;
Payment of Claims.
(i) At any time, seek, consent to or suffer to exist any
reversal, modification, amendment, stay or vacation of any of the
Bankruptcy Court Orders or the Adequate Protection Stipulation, except
for modifications and amendments agreed to by the Agent and the
Required Lenders;
(ii) At any time, suffer to exist a priority for any
administrative expense or unsecured claim against the Borrower or any
Guarantor (now existing or hereafter arising of any kind or nature
whatsoever, including without limitation any administrative expenses of
the kind specified in, or arising or ordered under, Sections 105, 326,
328, 503(b), 506(c), 507(a), 507(b), 546(c) 726 and 1114 of the
Bankruptcy Code equal or superior to the priority of the Agent and the
Lenders in respect of the Obligations, except as provided in Section
3.02 and for the Carve-Out Expenses having priority of payment over the
Obligations to the extent set forth in the definition of Agreed
Administrative Expense Priorities;
(iii) At any time, suffer to exist any Lien on the Collateral
having a priority equal or superior to the Lien in favor of the Agent
and the Lenders in respect of the Collateral, except for Permitted
Priority Liens; and
(iv) Prior to the date on which the Obligations have been paid
in full in cash and the Total Commitment has been terminated, the
Borrower and the Guarantors shall not pay any administrative expense
claims except (i) Priority Professional Expenses and other payments
pursuant to sub-clause (i) of clause "first" of the definition of the
term "Agreed Administrative Expense Priorities", (ii) Obligations due
and payable hereunder, and (iii) other administrative expense claims
incurred in the ordinary course of the business of the Borrower and the
Guarantors or their respective Chapter 11 Cases, in each case to the
extent and having the order of priority set forth in the Agreed
Administrative Expense Priorities.
(m) Payments. Make any payment of principal or interest or otherwise on
account of any Indebtedness or trade payable incurred prior to the Filing Date,
other than in accordance with the Budget, in each case, after prior written
notice of such payment has been given by the Borrower to the Agent and subject
to approval of the Bankruptcy Court.
44
Article VIII
CASH MANAGEMENT
Section 8.01 Collection of Accounts Receivable; Management of Collateral. On or
prior to September 7, 2003, the Loan Parties shall assist the Agent in (i)
establishing, and, during the term of this Agreement, maintaining one or more
lockboxes in the name of the Agent and identified on Schedule 8.01 hereto
(collectively, the "Lockboxes") with the financial institutions set forth on
Schedule 8.01 hereto or such other financial institutions selected by the Loan
Parties and acceptable to the Agent in its sole discretion (each being referred
to as a "Lockbox Bank"), and (ii) establishing, and during the term of this
Agreement, maintaining an account (a "Collection Account" and, collectively, the
"Collection Accounts") in the name of the Agent with each Lockbox Bank. The Loan
Parties shall irrevocably instruct their Account Debtors, with respect to
Accounts Receivable of the Loan Parties, to remit all payments to be made by
checks or other drafts to the Lockboxes and to remit all payments to be made by
wire transfer or by Automated Clearing House, Inc. payment as directed by the
Agent and shall instruct each Lockbox Bank to deposit all amounts received in
its Lockbox to the Collection Account at such Lockbox Bank on the day received
or, if such day is not a Business Day, on the next succeeding Business Day.
Until the Agent has advised the Loan Parties to the contrary after the
occurrence and during the continuance of an Event of Default, the Loan Parties
may and will enforce, collect and receive all amounts owing on the Accounts
Receivable of the Loan Parties for the Agent's benefit and on the Agent's
behalf, but at the Loan Parties' expense; such privilege shall terminate, at the
election of any Agent, upon the occurrence and during the continuance of an
Event of Default. All checks, drafts, notes, money orders, acceptances, cash and
other evidences of Indebtedness received directly by the Loan Parties from any
of their Account Debtors, as proceeds from Accounts Receivable of the Loan
Parties, or as proceeds of any other Collateral, shall be held by the Loan
Parties in trust for the Agent and the Lenders and upon receipt be deposited by
the Loan Parties in original form and no later than the next Business Day after
receipt thereof into a Collection Account. The Loan Parties shall not commingle
such collections with the Loan Parties' own funds or the funds of any of their
Subsidiaries or Affiliates or with the proceeds of any assets not included in
the Collateral. The Agent shall charge the Loan Account on the last day of each
month with two (2) collection days for all such collections. All funds received
in the Collection Account shall be sent by wire transfer or Automated Clearing
House, Inc. payment to the Agent's Account for application at the end of each
Business Day to reduce the then principal balance of the Loans, conditional upon
final payment to the Agent. No checks, drafts or other instruments received by
the Agent shall constitute final payment to the Agent unless and until such
checks, drafts or instruments have actually been collected.
(b) After the occurrence and during the continuance of an Event of
Default, the Agent may send a notice of assignment and/or notice of the Lenders'
security interest to any and all Account Debtors or third parties holding or
otherwise concerned with any of the Collateral, and thereafter the Agent shall
have the sole right to collect the Accounts Receivable and/or take possession of
the Collateral and the books and records relating thereto. The Loan Parties
shall not, without prior written consent of the Agent, grant any extension of
time of payment of any Account Receivable, compromise or settle any Account
Receivable for less than the full amount thereof, release, in whole or in part,
any Person or property liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
45
(c) Each Loan Party hereby appoints each Agent or its designee on
behalf of such Agent as the Loan Parties' attorney-in-fact with power
exercisable during the continuance of an Event of Default to endorse any Loan
Party's name upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment relating to the Accounts Receivable, to sign any Loan
Party's name on any invoice or ▇▇▇▇ of lading relating to any of the Accounts
Receivable, drafts against Account Debtors with respect to Accounts Receivable,
assignments and verifications of Accounts Receivable and notices to Account
Debtors with respect to Accounts Receivable, to send verification of Accounts
Receivable, and to notify the Postal Service authorities to change the address
for delivery of mail addressed to any Loan Party to such address as such Agent
may designate and to do all other acts and things necessary to carry out this
Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission (other than acts of omission or commission constituting
gross negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction), or for any error of judgment or mistake of
fact or law; this power being coupled with an interest is irrevocable until all
of the Loans and other Obligations under the Loan Documents are paid in full and
all of the Loan Documents are terminated.
(d) Nothing herein contained shall be construed to constitute the Agent
as agent of any Loan Party for any purpose whatsoever, and the Agent shall not
be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (other than from acts of omission or commission
constituting gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction). The Agent shall not, under any
circumstance or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Accounts Receivable or any instrument received in payment thereof
or for any damage resulting therefrom (other than acts of omission or commission
constituting gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction). The Agent, by anything herein or
in any assignment or otherwise, does not assume any of the obligations under any
contract or agreement assigned to any Agent and shall not be responsible in any
way for the performance by any Loan Party of any of the terms and conditions
thereof.
(e) If any Account Receivable includes a charge for any tax payable to
any Governmental Authority, the Agent is hereby authorized (but in no event
obligated) in its discretion to pay the amount thereof to the proper taxing
authority for the Loan Parties' account and to charge the Loan Parties therefor.
The Loan Parties shall notify the Agent if any Account Receivable includes any
taxes due to any such Governmental Authority and, in the absence of such notice,
the Agent shall have the right to retain the full proceeds of such Account
Receivable and shall not be liable for any taxes that may be due by reason of
the sale and delivery creating such Account Receivable.
(f) Notwithstanding any other terms set forth in the Loan Documents,
the rights and remedies of the Agent and the Lenders herein provided, and the
obligations of the Loan Parties set forth herein, are cumulative of, may be
exercised singly or concurrently with, and are not exclusive of, any other
rights, remedies or obligations set forth in any other Loan Document or as
provided by law.
Section 8.02 Accounts Receivable Documentation. The Loan Parties will at such
intervals as the Agent may require, execute and deliver confirmatory written
assignments of the Accounts Receivable to the Agent and furnish such further
46
schedules and/or information as the Agent may require relating to the Accounts
Receivable. In addition, the Loan Parties shall notify the Agent of any
non-compliance in respect of the representations, warranties and covenants
contained in Section 8.03. The items to be provided under this Section 8.02 are
to be in form reasonably satisfactory to the Agent and are to be executed and
delivered to the Agent from time to time solely for their convenience in
maintaining records of the Collateral. The Loan Parties' failure to give any of
such items to the Agent shall not affect, terminate, modify or otherwise limit
the Agent's Lien on the Collateral. The Loan Parties shall not re-▇▇▇▇ any
Accounts Receivable without promptly disclosing the same to the Agent and
providing the Agent with a copy of such re-billing, identifying the same as
such. If the Loan Parties become aware of anything materially detrimental to any
of the Loan Parties' customers' credit, the Loan Parties will promptly advise
the Agent thereof.
Section 8.03 Status of Accounts Receivable and Other Collateral. With respect to
Collateral of any Loan Party at the time the Collateral becomes subject to the
Agent's Lien, each Loan Party covenants, represents and warrants: (a) such Loan
Party shall be the sole owner, free and clear of all Liens (except for the Liens
granted in the favor of the Agent for the benefit of the Lenders and Permitted
Liens), and shall be fully authorized to sell, transfer, pledge and/or grant a
security interest in each and every item of said Collateral; (b) each Account
Receivable shall be a good and valid account representing an undisputed bona
fide indebtedness incurred or an amount indisputably owed by the Account Debtor
therein named, for a fixed sum as set forth in the invoice relating thereto with
respect to an absolute sale and delivery upon the specified terms of goods sold
or services rendered by such Loan Party; (c) no Account Receivable shall be
subject to any defense, offset, counterclaim, discount or allowance except as
may be stated in the invoice relating thereto, discounts and allowances as may
be customary in such Loan Party's business and as otherwise disclosed to the
Agent, and each Account Receivable will be paid when due; (d) none of the
transactions underlying or giving rise to any Account Receivable shall violate
any applicable state or federal laws or regulations, and all documents relating
thereto shall be legally sufficient under such laws or regulations and shall be
legally enforceable in accordance with their terms; (e) no agreement under which
any deduction or offset of any kind, other than normal trade discounts, may be
granted or shall have been made by such Loan Party at or before the time such
Account Receivable is created; (f) all agreements, instruments and other
documents relating to any Account Receivable shall be true and correct and in
all material respects what they purport to be; (g) all signatures and
endorsements that appear on all material agreements, instruments and other
documents relating to any Account Receivable shall be genuine and all
signatories and endorsers shall have full capacity to contract; (h) such Loan
Party shall maintain books and records pertaining to said Collateral in such
detail, form and scope as the Agent shall reasonably require; (i) such Loan
Party will, immediately upon learning thereof, report to the Agent any material
loss or destruction of, or substantial damage to, any of the Collateral, and any
other matters affecting the value, enforceability or collectibility of any of
the Collateral; (j) if any amount payable under or in connection with any
Account Receivable is evidenced by a promissory note or other instrument, such
promissory note or instrument shall be immediately pledged, endorsed, assigned
and delivered to the Agent for the benefit of the Lenders as additional
Collateral; and (k) such Loan Party is not and shall not be entitled to pledge
the Agent's or any Lender's credit on any purchases or for any purpose
whatsoever.
47
Section 8.04 Collateral Custodian. Upon the occurrence and during the
continuance of any Default or Event of Default, the Agent may at any time and
from time to time employ and maintain on the premises of any Loan Party a
custodian selected by the Agent who shall have full authority to do all acts
necessary to protect the Agent's and the Lenders' interests. Each Loan Party
hereby agrees to, and to cause its Subsidiaries to, cooperate with any such
custodian and to do whatever the Agent may reasonably request to preserve the
Collateral. All costs and expenses incurred by the Agent by reason of the
employment of the custodian shall be the responsibility of the Borrower and
charged to the Loan Account.
Article IX
EVENTS OF DEFAULT
Section 9.01 Events of Default. If any of the following Events of Default shall
occur and be continuing:
(a) the Borrower shall fail to pay any principal of or interest on any
Loan, any Agent Advance, or any fee, indemnity or other amount payable under
this Agreement or any other Loan Document when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise);
(b) any representation or warranty made or deemed made by or on behalf
of any Loan Party or by any officer of the foregoing under or in connection with
any Loan Document or under or in connection with any report, certificate, or
other document delivered to the Agent or any Lender pursuant to any Loan
Document shall have been incorrect in any material respect when made or deemed
made;
(c) any Loan Party shall fail to perform or comply with any covenant or
agreement contained in Article VII or Article VIII;
(d) any Loan Party shall fail to perform or comply with any other term,
covenant or agreement contained in any Loan Document to be performed or observed
by it and, except as set forth in subsections (a), (b) and (c) of this Section
9.01, such failure, if capable of being remedied, shall remain unremedied for 15
days after the earlier of the date a senior officer of any Loan Party becomes
aware of such failure and the date written notice of such default shall have
been given by the Agent to such Loan Party;
(e) an order with respect to any of the Chapter 11 Cases shall be
entered by the Bankruptcy Court appointing, or any Loan Party shall file an
application for an order with respect to any Chapter 11 Case seeking the
appointment of, in either case without the consent of the Agent and the Required
Lenders (i) a trustee under Section 1104, or (ii) an examiner with enlarged
powers relating to the operation of the business (powers beyond those set forth
in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of
the Bankruptcy Code;
(f) an order with respect to any of the Chapter 11 Cases shall be
entered by the Bankruptcy Court converting such Chapter 11 Case to a Chapter 7
case;
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(g) an order shall be entered by the Bankruptcy Court confirming a plan
of reorganization in any of the Chapter 11 Cases which does not (i) contain a
provision for termination of the Total Commitment and payment in full in cash of
all Obligations of the Borrower hereunder and under the other Loan Documents on
or before the effective date of such plan or plans upon entry thereof and (ii)
provide for the continuation of the Liens and security interests granted to
Agent and priorities until such plan effective date;
(h) an order shall be entered by the Bankruptcy Court dismissing any of
the Chapter 11 Cases which does not contain a provision for termination of the
Total Commitment, and payment in full in cash of all Obligations of the Borrower
hereunder and under the other Loan Documents upon entry thereof;
(i) an order with respect to any of the Chapter 11 Cases shall be
entered by the Bankruptcy Court without the express prior written consent of the
Agent and the Lenders, (i) to revoke, reverse, stay, modify, supplement or amend
any of the Bankruptcy Court Orders, (ii) to permit any administrative expense or
any claim (now existing or hereafter arising, of any kind or nature whatsoever)
to have administrative priority as to the Borrower or any Guarantor equal or
superior to the priority of the Agent and the Lenders in respect of the
Obligations, except for allowed administrative expenses having priority over the
Obligations to the extent set forth in the Agreed Administrative Expense
Priorities, or (iii) to grant or permit the grant of a Lien on the Collateral
other than a Permitted Lien;
(j) an application for any of the orders described in clauses (e)
through (i) above shall be made by a Person other than the Loan Parties and such
application is not contested by the Loan Parties in good faith and the relief
requested is granted in an order that is not stayed pending appeal;
(k) an order shall be entered by the Bankruptcy Court that is not
stayed pending appeal granting relief from the automatic stay to any creditor of
any Loan Party with respect to any claim in an amount equal to or exceeding
$50,000 in the aggregate;
(l) (i) any Loan Party shall attempt to invalidate, reduce or otherwise
impair the Liens or security interests of Agent and the Lenders, claims or
rights against such Person or to subject any Collateral to assessment pursuant
to Section 506(c) of the Bankruptcy Code, (ii) any Lien or security interest
created by this Agreement, or the Bankruptcy Court Orders shall, for any reason,
cease to be valid or (iii) any action is commenced by any Loan Party which
contests the validity, perfection or enforceability of any of the Liens and
security interests of Agent and the Lenders created by this Agreement or any of
the Bankruptcy Court Orders;
(m) without the consent of the Agent and the Required Lenders, the
determination of any Loan Party, whether by vote of such Person's board of
directors or otherwise, to suspend the operation of such Person's business in
the ordinary course, liquidate all or substantially all of such Person's assets,
or employ an agent or other third party to conduct any sales of all or
substantially all of such Person's assets, or the filing of a motion or other
application in the Chapter 11 Cases, seeking authority to do any of the
foregoing;
(n) any provision of any Loan Document shall at any time for any reason
(other than pursuant to the express terms thereof) cease to be valid and binding
on or enforceable against any Loan Party intended to be a party thereto, or the
validity or enforceability thereof shall be contested by any party thereto, or a
49
proceeding shall be commenced by any Loan Party or any Governmental Authority
having jurisdiction over any of them, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party shall deny in writing that it has
any liability or obligation purported to be created under any Loan Document;
(o) this Agreement or any of the Bankruptcy Court Orders shall for any
reason fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien in favor of the
Agent for the benefit of the Lenders on any Collateral purported to be covered
thereby;
(p) any Loan Party is enjoined, restrained or in any way prevented by
the order of any court or any Governmental Authority from conducting all or any
material part of its business for more than fifteen (15) days;
(q) any cessation of a substantial part of the business of any Loan
Party for a period which materially and adversely affects the ability of such
Person to continue its business on a profitable basis;
(r) the loss, suspension or revocation of, or failure to renew, any
license, permit, now held or hereafter acquired by any Loan Party if such loss,
suspension, revocation or failure to renew could reasonably be expected to have
a Material Adverse Effect;
(s) a Change of Control shall have occurred;
(t) a Material Adverse Deviation shall have occurred;
(u) without the consent of the Agent and the Required Lenders, an order
with respect to any of the Chapter 11 Cases shall be entered by the Bankruptcy
Court granting, or any Loan Party shall file an application for an order with
respect to any Chapter 11 Case seeking, an extension of the 120 day exclusivity
period for the Loan Parties to file a Plan under Section 1121(d) of the
Bankruptcy Code for a period of more than 30 days;
(v) an event or development occurs which could reasonably be expected
to have a Material Adverse Effect; or
(w) the Borrower shall fail to deliver to the Agent and each Lender a
Budget in accordance with Section 5.01(e)(x) which is in form and substance
satisfactory to the Agent and the Required Lenders.
then, and in any such event, the Agent may, and shall at the request of the
Required Lenders, by notice to the Borrower, (i) terminate or reduce all
Commitments, whereupon all Commitments shall immediately be so terminated or
reduced, (ii) declare all or any portion of the Loans then outstanding to be due
and payable, whereupon all or such portion of the aggregate principal of all
Loans, all accrued and unpaid interest thereon, all fees and all other amounts
payable under this Agreement and the other Loan Documents shall become due and
payable immediately, without further order of, or application to, the Bankruptcy
Court, presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by each Loan Party and (iii) exercise any and all of
its other rights and remedies under applicable law (including, but not limited
to, the Bankruptcy Code and the Uniform Commercial Code), hereunder and under
the other Loan Documents.
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Article X
AGENT
Section 10.01 Appointment. Each Lender (and each subsequent maker of any Loan by
its making thereof) hereby irrevocably appoints and authorizes the Agent to
perform the duties of the Agent as set forth in this Agreement including: (i) to
receive on behalf of each Lender, any payment of principal of or interest on the
Loans outstanding hereunder and all other amounts accrued hereunder for the
account of the Lenders and paid to the Agent, and, subject to Section 2.02 of
this Agreement, to distribute promptly to each Lender its Pro Rata Share of all
payments so received; (ii) to distribute to each Lender copies of all material
notices and agreements received by the Agent and not required to be delivered to
each Lender pursuant to the terms of this Agreement, provided that the Agent
shall not have any liability to the Lenders for the Agent's inadvertent failure
to distribute any such notices or agreements to the Lenders; (iii) to maintain,
in accordance with its customary business practices, ledgers and records
reflecting the status of the Obligations, the Loans, and related matters and to
maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Collateral and related matters; (iv) to
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to this Agreement or any other
Loan Document; (v) to make the Loans and Agent Advances, for the Agent or on
behalf of the applicable Lenders as provided in this Agreement or any other Loan
Document; (vi) to perform, exercise, and enforce any and all other rights and
remedies of the Lenders with respect to the Loan Parties, the Obligations, or
otherwise related to any of same to the extent reasonably incidental to the
exercise by the Agent of the rights and remedies specifically authorized to be
exercised by the Agent by the terms of this Agreement or any other Loan
Document; (vii) to incur and pay such fees necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to this
Agreement or any other Loan Document; and (viii) subject to Section 10.03 of
this Agreement, to take such action as the Agent deems appropriate on its behalf
to administer the Loans and the Loan Documents and to exercise such other powers
delegated to the Agent by the terms hereof or the other Loan Documents
(including, without limitation, the power to give or to refuse to give notices,
waivers, consents, approvals and instructions and the power to make or to refuse
to make determinations and calculations) together with such powers as are
reasonably incidental thereto to carry out the purposes hereof and thereof. As
to any matters not expressly provided for by this Agreement and the other Loan
Documents (including, without limitation, enforcement or collection of the
Loans), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions of the Required Lenders shall be
binding upon all Lenders and all makers of Loans; provided, however, that the
Agent shall not be required to take any action which, in the reasonable opinion
of the Agent, exposes the Agent to liability or which is contrary to this
Agreement or any other Loan Document or applicable law.
Section 10.02 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. The duties of the Agent shall be mechanical and
administrative in nature. The Agent shall not have by reason of this Agreement
or any other Loan Document, a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any other Loan Document, express or implied, is
51
intended to or shall be construed to impose upon the Agent any obligations in
respect of this Agreement or any other Loan Document except as expressly set
forth herein or therein. Each Lender shall make its own independent
investigation of the financial condition and affairs of the Loan Parties in
connection with the making and the continuance of the Loans hereunder and shall
make its own appraisal of the creditworthiness of the Loan Parties and the value
of the Collateral, and the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the initial Loan hereunder or at any time or times thereafter, provided
that, upon the reasonable request of a Lender, the Agent shall provide to such
Lender any documents or reports delivered to the Agent by the Loan Parties
pursuant to the terms of this Agreement or any other Loan Document. If the Agent
seeks the consent or approval of the Required Lenders to the taking or
refraining from taking any action hereunder, the Agent shall send notice thereof
to each Lender. The Agent shall promptly notify each Lender any time that the
Required Lenders have instructed the Agent to act or refrain from acting
pursuant hereto.
Section 10.03 Rights, Exculpation, Etc. The Agent and its directors, officers,
agents or employees shall not be liable for any action taken or omitted to be
taken by them under or in connection with this Agreement or the other Loan
Documents, except for their own gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction. Without
limiting the generality of the foregoing, the Agent (i) may treat the payee of
any Loan as the owner thereof until the Agent receives written notice of the
assignment or transfer thereof, pursuant to Section 12.07 hereof, signed by such
payee and in form satisfactory to the Agent; (ii) may consult with legal counsel
(including, without limitation, counsel to the Agent or counsel to the Loan
Parties), independent public accountants, and other experts selected by any of
them and shall not be liable for any action taken or omitted to be taken in good
faith by any of them in accordance with the advice of such counsel or experts;
(iii) make no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, certificates, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Person, the existence
or possible existence of any Default or Event of Default, or to inspect the
Collateral or other property (including, without limitation, the books and
records) of any Person; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (vi) shall not be deemed to
have made any representation or warranty regarding the existence, value or
collectibility of the Collateral, the existence, priority or perfection of the
Agent's Lien thereon, or any certificate prepared by any Loan Party in
connection therewith, nor shall the Agent be responsible or liable to the
Lenders for any failure to monitor or maintain any portion of the Collateral.
The Agent shall not be liable for any apportionment or distribution of payments
made in good faith pursuant to Section 4.04, and if any such apportionment or
distribution is subsequently determined to have been made in error, the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders, any payment in excess of the amount which they are
determined to be entitled. The Agent may at any time request instructions from
the Lenders with respect to any actions or approvals which by the terms of this
Agreement or of any of the other Loan Documents the Agent is permitted or
52
required to take or to grant, and if such instructions are promptly requested,
the Agent shall be absolutely entitled to refrain from taking any action or to
withhold any approval under any of the Loan Documents until it shall have
received such instructions from the Required Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting under this Agreement
or any of the other Loan Documents in accordance with the instructions of the
Required Lenders.
Section 10.04 Reliance. The Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it.
Section 10.05 Indemnification. To the extent that the Agent is not reimbursed
and indemnified by any Loan Party, the Lenders will reimburse and indemnify the
Agent from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action taken or omitted by
the Agent under this Agreement or any of the other Loan Documents, in proportion
to each Lender's Pro Rata Share, including, without limitation, advances and
disbursements made pursuant to Section 10.08; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements for which there has been a final judicial determination that such
liability resulted from the Agent's gross negligence or willful misconduct. The
obligations of the Lenders under this Section 10.05 shall survive the payment in
full of the Loans and the termination of this Agreement.
Section 10.06 Agent Individually. With respect to its Pro Rata Share of the
Total Commitment hereunder and the Loans made by it, the Agent shall have and
may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender or maker of a Loan. The terms "Lenders" or "Required Lenders" or any
similar terms shall, unless the context clearly otherwise indicates, include the
Agent in its individual capacity as a Lender or one of the Required Lenders. The
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with any Loan Party as if
it were not acting as the Agent pursuant hereto without any duty to account to
the other Lenders.
Section 10.07 Successor Agent. (a) The Agent may resign from the performance of
all its functions and duties hereunder and under the other Loan Documents at any
time by giving at least thirty (30) Business Days' prior written notice to the
Borrower and each Lender. Such resignation shall take effect upon the acceptance
by a successor Agent of appointment pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Required Lenders shall
appoint a successor Agent. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
53
Agent, and the Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After the Agent's resignation
hereunder as the Agent, the provisions of this Article X shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Agent under this Agreement and the other Loan Documents.
(c) If a successor Agent shall not have been so appointed within said
thirty (30) Business Day period, the Agent shall then appoint a successor Agent
who shall serve as the Agent until such time, if any, as the Required Lenders
appoint a successor Agent as provided above.
Section 10.08 Collateral Matters.
(a) The Agent may from time to time make such disbursements and
advances ("Agent Advances") which the Agent, in its sole discretion, deems
necessary or desirable to preserve, protect, prepare for sale or lease or
dispose of the Collateral or any portion thereof, to enhance the likelihood or
maximize the amount of repayment by the Borrower of the Loans and other
Obligations or to pay any other amount chargeable to the Borrower pursuant to
the terms of this Agreement, including, without limitation, costs, fees and
expenses as described in Section 12.04. The Agent Advances shall be repayable on
demand, shall bear interest as set forth in Section 2.04(a) and shall be secured
by the Collateral. The Agent Advances shall constitute Obligations hereunder
which may be charged to the Loan Account in accordance with Section 4.02. The
Agent shall notify each Lender and the Borrower in writing of each such Agent
Advance, which notice shall include a description of the purpose of such Agent
Advance. Without limitation to its obligations pursuant to Section 10.05, each
Lender agrees that it shall make available to the Agent, upon the Agent's
demand, in Dollars in immediately available funds, the amount equal to such
Lender's Pro Rata Share of each such Agent Advance. If such funds are not made
available to the Agent by such Lender, the Agent shall be entitled to recover
such funds on demand from such Lender, together with interest thereon for each
day from the date such payment was due until the date such amount is paid to the
Agent, at the Federal Funds Rate for three Business Days and thereafter at the
Reference Rate.
(b) The Lenders hereby irrevocably authorize the Agent, at its option
and in its discretion, to release any Lien granted to or held by the Agent upon
any Collateral upon termination of the Total Commitment and payment and
satisfaction of all Loans and all other Obligations which have matured and which
the Agent has been notified in writing are then due and payable; or constituting
property being sold or disposed of in the ordinary course of any Loan Party's
business and in compliance with the terms of this Agreement and the other Loan
Documents; or constituting property in which the Loan Parties owned no interest
at the time the Lien was granted or at any time thereafter; or if approved,
authorized or ratified in writing by the Lenders. Upon request by the Agent at
any time, the Lenders will confirm in writing the Agent's authority to release
particular types or items of Collateral pursuant to this Section 10.08(b). (c)
Without in any manner limiting the Agent's authority to act without any specific
or further authorization or consent by the Lenders (as set forth in Section
10.08(b)), each Lender agrees to confirm in writing, upon request by the Agent,
the authority to release Collateral conferred upon the Agent under Section
10.08(b). Upon receipt by the Agent of confirmation from the Lenders of its
authority to release any particular item or types of Collateral, and upon prior
written request by any Loan Party, the Agent shall (and is hereby irrevocably
54
authorized by the Lenders to) execute such documents as may be necessary to
evidence the release of the Liens granted to the Agent for the benefit of the
Lenders upon such Collateral; provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligations or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Lien upon (or obligations of any Loan Party in respect of)
all interests in the Collateral retained by any Loan Party.
(d) The Agent shall have no obligation whatsoever to any Lender to
assure that the Collateral exists or is owned by the Loan Parties or is cared
for, protected or insured or has been encumbered or that the Lien granted to the
Agent pursuant to this Agreement or any other Loan Document has been properly or
sufficiently or lawfully created, perfected, protected or enforced or is
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Agent in this Section 10.08 or in any other Loan Document, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Agent's own interest in the Collateral as one
of the Lenders and that the Agent shall have no duty or liability whatsoever to
any other Lender, except as otherwise provided herein.
Section 10.09 Agency for Perfection. Each Lender hereby appoints the Agent and
each other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral in assets which, in accordance with
Article 9 of the Uniform Commercial Code, can be perfected only by possession or
control (or where the security interest of a secured party with possession or
control has priority over the security interest of another secured party) and
the Agent and each Lender hereby acknowledges that it holds possession of or
otherwise controls any such Collateral for the benefit of the Agent and the
Lenders as secured parties. Should any Lender obtain possession or control of
any such Collateral, such Lender shall notify the Agent thereof, and, promptly
upon the Agent's request therefor, shall deliver such Collateral to the Agent or
in accordance with the Agent's instructions. Each Loan Party by its execution
and delivery of this Agreement hereby consents to the foregoing.
Article XI
GUARANTY
Section 11.01 Guaranty. Each Guarantor hereby unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of the Borrower now or hereafter
existing under any Loan Document, whether for principal, interest, fees,
commissions, expense reimbursements, indemnifications or otherwise (such
obligations, to the extent not paid by the Borrower, being the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) incurred by the Agent and the Lenders in enforcing
any rights under the guaranty set forth in this Article XI. Without limiting the
generality of the foregoing, each Guarantor's liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
the Borrower to the Agent and the Lenders under any Loan Document but for the
fact that they are unenforceable or not allowable due to the existence of the
Chapter 11 Cases.
55
Section 11.02 Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent or
the Lenders with respect thereto. The obligations of each Guarantor under this
Article XI are independent of the Guaranteed Obligations, and a separate action
or actions may be brought and prosecuted against each Guarantor to enforce such
obligations, irrespective of whether any action is brought against any Loan
Party or whether any Loan Party is joined in any such action or actions. The
liability of each Guarantor under this Article XI shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now or hereafter have in any way relating to, any or all of
the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other amendment
or waiver of or any consent to departure from any Loan Document, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to any Loan Party or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations;
(d) any change, restructuring or termination of the corporate, limited
liability company or partnership structure or existence of any Loan Party; or
(e) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by the
Agent or the Lenders that might otherwise constitute a defense available to, or
a discharge of, any Loan Party or any other Guarantor or surety.
This Article XI shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent, the Lenders or any other Person, all
as though such payment had not been made.
Section 11.03 Waiver. Each Guarantor hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Article XI and any requirement that the Agent or the
Lenders exhaust any right or take any action against any Loan Party or any other
Person or any Collateral. Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated herein
and that the waiver set forth in this Section 11.03 is knowingly made in
contemplation of such benefits. Each Guarantor hereby waives any right to revoke
this Article XI, and acknowledges that this Article XI is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.
Section 11.04 Continuing Guaranty; Assignments. This Article XI is a continuing
guaranty and shall (a) remain in full force and effect until the later of the
cash payment in full of the Guaranteed Obligations (other than indemnification
56
obligations as to which no claim has been made) and all other amounts payable
under this Article XI and the Final Maturity Date, (b) be binding upon each
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Agent and the Lenders and their successors, pledgees,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may pledge, assign or otherwise transfer all or any portion of
its rights and obligations under this Agreement (including, without limitation,
all or any portion of its Commitments and its Loans to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted such Lender herein or otherwise, in each case as provided in
Section 12.07.
Section 11.05 Subrogation. No Guarantor will exercise any rights that it may now
or hereafter acquire against any Loan Party or any other Guarantor that arise
from the existence, payment, performance or enforcement of such Guarantor's
obligations under this Article XI, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Agent and the Lenders against
any Loan Party or any other Guarantor or any Collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from any Loan
Party or any other Guarantor, directly or indirectly, in cash or other property
or by setoff or in any other manner, payment or security solely on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Article XI shall have been paid in full
in cash and the Final Maturity Date shall have occurred. If any amount shall be
paid to any Guarantor in violation of the immediately preceding sentence at any
time prior to the later of the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Article XI and the Final
Maturity Date, such amount shall be held in trust for the benefit of the Agent
and the Lenders and shall forthwith be paid to the Agent and the Lenders to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Article XI, whether matured or unmatured, in accordance with the
terms of this Agreement, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Article XI thereafter arising.
If (i) any Guarantor shall make payment to the Agent and the Lenders of all or
any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations
and all other amounts payable under this Article XI shall be paid in full in
cash and (iii) the Final Maturity Date shall have occurred, the Agent and the
Lenders will, at such Guarantor's request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by such Guarantor.
Article XII
MISCELLANEOUS
Section 12.01 Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed, telecopied or delivered, if
to any Loan Party, at the following address:
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General Media, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Pachulski, Stang, Ziehl, Young, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: 212-561-7777
if to the Agent, to it at the following address:
▇▇▇▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Managing Director
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: 212-758-5305
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
if to the Mainstay Funds on behalf of its High Yield
Corporate Bond Fund, as Lender hereunder, to it at
the following address:
Mackay ▇▇▇▇▇▇▇ LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Director
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
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or, as to each party, at such other address as shall be designated by
such party in a written notice to the other parties complying as to delivery
with the terms of this Section 12.01. All such notices and other communications
shall be effective, (i) if mailed, when received or three days after deposited
in the mails, whichever occurs first, (ii) if telecopied, when transmitted and
confirmation received, or (iii) if delivered, upon delivery, except that notices
to the Agent pursuant to Article II shall not be effective until received by the
Agent.
Nothing in this Agreement or in any other Loan Document shall be
construed to limit or affect the obligation of the Borrower or any other Person
to serve upon the Agent and the Lenders in the manner prescribed by the
Bankruptcy Code any pleading or notice required to be given to the Agent and the
Lenders pursuant to the Bankruptcy Code.
Section 12.02 Amendments, Etc. No amendment or waiver of any provision of this
Agreement, and no consent to any departure by any Loan Party therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Required Lenders or by the Agent with the consent of the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given, provided, however, that no amendment,
waiver or consent shall (i) increase the Commitment of any Lender, reduce the
principal of, or interest on, the Loans payable to any Lender, reduce the amount
of any fee payable for the account of any Lender, or postpone or extend any date
fixed for any payment of principal of, or interest or fees on, the Loans payable
to any Lender, in each case without the written consent of any Lender affected
thereby, (ii) increase the Total Commitment without the written consent of each
Lender, (iii) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans that is required for the Lenders or any of
them to take any action hereunder, (iv) amend the definition of "Required
Lenders" or "Pro Rata Share", (v) release all or a substantial portion of the
Collateral (except as otherwise provided in this Agreement and the other Loan
Documents), subordinate any Lien granted in favor of the Agent for the benefit
of the Lenders, or release any Borrower or any Guarantor, (vi) amend, modify or
waive Section 4.04 or this Section 12.02 of this Agreement or (vii) modify,
waive, release or subordinate the super-priority claim status of the Obligations
(except as permitted in this Agreement and the Loan Documents), in each case,
without the written consent of each Lender. Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing and signed by the Agent,
affect the rights or duties of the Agent (but not in its capacity as a Lender)
under this Agreement or the other Loan Documents.
Section 12.03 No Waiver; Remedies, Etc. No failure on the part of the Agent or
any Lender to exercise, and no delay in exercising, any right hereunder or under
any other Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The rights and
remedies of the Agent and the Lenders provided herein and in the other Loan
Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the Agent and the Lenders
under any Loan Document against any party thereto are not conditional or
contingent on any attempt by the Agent and the Lenders to exercise any of their
rights under any other Loan Document against such party or against any other
Person.
Section 12.04 Expenses; Taxes; Attorneys' Fees. The Borrower will pay, on
demand, all costs and expenses incurred by or on behalf of the Agent and each
Lender, regardless of whether the transactions contemplated hereby are
consummated, including, without limitation, reasonable fees, costs, client
59
charges and expenses of counsel for the Agent and each Lender, accounting, due
diligence, periodic field audits, physical counts, valuations, investigations,
searches and filings, monitoring of assets, appraisals of Collateral, title
searches and reviewing environmental assessments, miscellaneous disbursements,
examination, travel, lodging and meals, arising from or relating to: (a) the
negotiation, preparation, execution, delivery, performance and administration of
this Agreement and the other Loan Documents (including, without limitation, the
review of any of the agreements, instruments and documents referred to in
Section 7.01(e), (b) any requested amendments, waivers or consents to this
Agreement or the other Loan Documents whether or not such documents become
effective or are given, (c) the preservation and protection of any of the
Lenders' rights under this Agreement or the other Loan Documents, (d) the
defense of any claim or action asserted or brought against the Agent or any
Lender by any Person that arises from or relates to this Agreement, any other
Loan Document, the Agent's or the Lenders' claims against any Loan Party, or any
and all matters in connection therewith, (e) the commencement or defense of, or
intervention in, any court proceeding arising from or related to this Agreement
or any other Loan Document, (f) the filing of any petition, complaint, answer,
motion or other pleading by the Agent or any Lender, or the taking of any action
in respect of the Collateral or other security, in connection with this
Agreement or any other Loan Document, (g) the protection, collection, lease,
sale, taking possession of or liquidation of, any Collateral or other security
in connection with this Agreement or any other Loan Document, (h) any attempt to
enforce any Lien or security interest in any Collateral or other security in
connection with this Agreement or any other Loan Document, (i) any attempt to
collect from any Loan Party, (j) all liabilities and costs arising from or in
connection with the past, present or future operations of any Loan Party
involving any damage to real or personal property or natural resources or harm
or injury alleged to have resulted from any Release of Hazardous Materials on,
upon or into such property, (k) any Environmental Liabilities and Costs incurred
in connection with the investigation, removal, cleanup and/or remediation of any
Hazardous Materials present or arising out of the operations of any facility of
any Loan Party, (l) any Environmental Liabilities and Costs incurred in
connection with any Environmental Lien; or (m) the receipt by the Agent or any
Lender of any advice from professionals with respect to any of the foregoing.
Without limitation of the foregoing or any other provision of any Loan Document:
(x) the Borrower agree to pay all stamp, document, transfer, recording or filing
taxes or fees and similar impositions now or hereafter determined by the Agent
or any Lender to be payable in connection with this Agreement or any other Loan
Document, and the Borrower agree to save the Agent and each Lender harmless from
and against any and all present or future claims, liabilities or losses with
respect to or resulting from any omission to pay or delay in paying any such
taxes, fees or impositions, (y) the Borrower agree to pay all broker fees that
may become due in connection with the transactions contemplated by this
Agreement and the other Loan Documents, and (z) if the Borrower fail to perform
any covenant or agreement contained herein or in any other Loan Document, the
Agent may itself perform or cause performance of such covenant or agreement, and
the expenses of the Agent incurred in connection therewith shall be reimbursed
on demand by the Borrower.
Section 12.05 Right of Setoff. Upon the occurrence and during the continuance of
any Event of Default, the Agent or any Lender may, and is hereby authorized to,
at any time and from time to time, without notice to any Loan Party (any such
notice being expressly waived by the Loan Parties) and to the fullest extent
permitted by law, set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other Indebtedness at
any time owing by the Agent or such Lender to or for the credit or the account
of any Loan Party against any and all obligations of the Loan Parties either now
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or hereafter existing under any Loan Document, irrespective of whether or not
the Agent or such Lender shall have made any demand hereunder or thereunder and
although such obligations may be contingent or unmatured. The Agent and each
Lender agrees to notify such Loan Party promptly after any such setoff and
application made by the Agent or such Lender provided that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of the Agent and the Lenders under this Section 12.05 are in addition to
the other rights and remedies (including other rights of setoff) which the Agent
and the Lenders may have under this Agreement or any other Loan Documents of law
or otherwise.
Section 12.06 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 12.07 Assignments and Participations. (a) This Agreement and the other
Loan Documents shall be binding upon and inure to the benefit of each Loan Party
and the Agent and each Lender and their respective successors and assigns
(including, except for the right to request Loans, any trustee succeeding to the
rights of the Borrower and the Guarantors pursuant to Chapter 11 of the
Bankruptcy Code or pursuant to any conversion to a case under Chapter 7 of the
Bankruptcy Code); provided, however, that none of the Loan Parties may assign or
transfer any of their rights hereunder, or under the other Loan Documents,
without the prior written consent of each Lender and any such assignment without
the Lenders' prior written consent shall be null and void.
(b) Each Lender may, with the written consent of the Agent, assign to
one or more other lenders or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments and the Loans made by it); provided, however, that
(i) such assignment is in an amount which is at least $1,000,000 or a multiple
of $100,000 in excess thereof (or the remainder of such Lender's Commitment)
(except such minimum amount shall not apply to an assignment by a Lender to an
Affiliate of such Lender or a fund or account managed by such Lender or an
Affiliate of such Lender), (ii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance, an Assignment and
Acceptance, together with any promissory note subject to such assignment and
such parties shall deliver to the Agent a processing and recordation fee of
$5,000 (except the payment of such fee shall not be required in connection with
an assignment by a Lender to an Affiliate of such Lender or a fund or account
managed by such Lender or an Affiliate of such Lender) and (iii) no written
consent of the Agent shall be required in connection with any assignment by a
Lender to an Affiliate of such Lender or a fund or account managed by such
Lender or an Affiliate of such Lender. Upon such execution, delivery and
acceptance, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least three Business Days after the
delivery thereof to the Agent (or such shorter period as shall be agreed to by
the Agent and the parties to such assignment), (A) the assignee thereunder shall
become a "Lender" hereunder and, in addition to the rights and obligations
hereunder held by it immediately prior to such effective date, have the rights
and obligations hereunder that have been assigned to it pursuant to such
Assignment and Acceptance and (B) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
61
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(i) By executing and delivering an Assignment and Acceptance,
the assigning Lender and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (A) other than
as provided in such Assignment and Acceptance, the assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any other Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any other Loan Document furnished
pursuant hereto; (B) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of any Loan Party or any of its Subsidiaries or the
performance or observance by any Loan Party of any of its obligations
under this Agreement or any other Loan Document furnished pursuant
hereto; (C) such assignee confirms that it has received a copy of this
Agreement and the other Loan Documents, together with such other
documents and information it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance; (D) such assignee will, independently and without reliance
upon the assigning Lender, the Agent or any Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents; (E) such
assignee appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Agent by the terms hereof
and thereof, together with such powers as are reasonably incidental
hereto and thereto; and (F) such assignee agrees that it will perform
in accordance with their terms all of the obligations which by the
terms of this Agreement and the other Loan Documents are required to be
performed by it as a Lender.
(ii) The Agent shall, on behalf of the Borrower, maintain, or
cause to be maintained at the Payment Office, a copy of each Assignment
and Acceptance delivered to and accepted by it and a register (the
"Register") for the recordation of the names and addresses of the
Lenders and the Commitments of, and principal amount of the Loans (the
"Registered Loans") owing to each Lender from time to time. Other than
in connection with an assignment by a Lender to an Affiliate of such
Lender, or a fund or account managed by such Lender or an Affiliate of
such Lender, the entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Agent and the Lenders shall treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower and any
Lender at any reasonable time and from time to time upon reasonable
prior notice. In the case of any assignment by a Lender to an Affiliate
of such Lender, or a fund or account managed by such Lender or an
Affiliate of such Lender, and in which such assignment is not recorded
in the Register, the assigning Lender shall maintain a comparable
register to the Register.
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(iii) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee, together with any
promissory notes subject to such assignment, the Agent shall, if the
Agent consents to such assignment and if such Assignment and Acceptance
has been completed (i) accept such Assignment and Acceptance and (ii)
record the information contained therein in the Register.
(iv) A Registered Loan (and the registered note, if any,
evidencing the same) may be assigned or sold in whole or in part only
by registration of such assignment or sale on the Register (and each
registered note shall expressly so provide). Any assignment or sale of
all or part of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by registration of such
assignment or sale on the Register, together with the surrender of the
registered note, if any, evidencing the same duly endorsed by (or
accompanied by a written instrument of assignment or sale duly executed
by) the holder of such registered note, whereupon, at the request of
the designated assignee(s) or transferee(s), one or more new registered
notes in the same aggregate principal amount shall be issued to the
designated assignee(s) or transferee(s). Prior to the registration of
assignment or sale of any Registered Loan (and the registered note, if
any, evidencing the same), the Agent shall treat the Person in whose
name such Registered Loan (and the registered note, if any, evidencing
the same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.
(v) In the event that any Lender sells participations in a
Registered Loan, such Lender shall maintain a register on which it
enters the name of all participants in the Registered Loans held by it
(the "Participant Register"). A Registered Loan (and the registered
note, if any, evidencing the same) may be participated, in whole or in
part, only by registration of such participation on the Participant
Register (and each registered note shall expressly so provide). Any
participation in such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
(vi) Any foreign Person who purchases or is assigned or
participates in any portion of such Registered Loan shall provide the
Agent and the Lender with a completed Internal Revenue Service Form
W-8BEN (Certificate of Foreign Status) or a substantially similar form
for such purchaser, participant or any other affiliate who is a holder
of beneficial interests in the Registered Loan.
(c) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of its Commitments and the Loans made by it); provided, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitments hereunder) and the other Loan Documents shall remain unchanged; (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, and the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents; and (iii) a participant shall not be entitled to
require such Lender to take or omit to take any action hereunder except (A)
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action directly effecting an extension of the maturity dates or decrease in the
principal amount of the Loans or (B) action directly effecting an extension of
the due dates or a decrease in the rate of interest payable on the Loans or the
fees payable under this Agreement, or (C) actions directly effecting a release
of all or a substantial portion of the Collateral or any Loan Party (except as
set forth in Section 10.08 of this Agreement or any other Loan Document). The
Loan Parties agree that each participant shall be entitled to the benefits of
Section 2.08 and Section 4.05 of this Agreement with respect to its
participation in any portion of the Commitments and the Loans as if it was a
Lender.
Section 12.08 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Agreement by telecopier shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telecopier also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.
Section 12.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK
EXCEPT AS GOVERNED BY THE BANKRUPTCY CODE AND EXCEPT AS EXPRESSLY PROVIDED TO
THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT.
Section 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE BANKRUPTCY COURT OR IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY
HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF NEW YORK AS
ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING AND
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER
AT ITS ADDRESS FOR NOTICES AS SET FORTH IN Section 12.01 AND TO THE SECRETARY OF
STATE OF THE STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS
AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT AND THE
LENDERS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY
OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY LOAN PARTY HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
64
Section 12.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY, THE AGENT AND EACH
LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR
OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION
THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN
PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT
OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY
LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK
TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO
THIS AGREEMENT.
Section 12.12 Consent by the Agent and Lenders. Except as otherwise expressly
set forth herein to the contrary, if the consent, approval, satisfaction,
determination, judgment, acceptance or similar action (an "Action") of the Agent
or any Lender shall be permitted or required pursuant to any provision hereof or
any provision of any other agreement to which any Loan Party is a party and to
which the Agent or any Lender has succeeded thereto, such Action shall be
required to be in writing and may be withheld or denied by the Agent or such
Lender, in its sole discretion, with or without any reason, and without being
subject to question or challenge on the grounds that such Action was not taken
in good faith.
Section 12.13 No Party Deemed Drafter. Each of the parties hereto agrees that no
party hereto shall be deemed to be the drafter of this Agreement.
Section 12.14 Reinstatement; Certain Payments. If any claim is ever made upon
the Agent or any Lender for repayment or recovery of any amount or amounts
received by the Agent or such Lender in payment or on account of any of the
Obligations, the Agent or such Lender shall give prompt notice of such claim to
each other Lender and the Borrower, and if the Agent or such Lender repays all
or part of such amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over the Agent or such Lender
or any of its property, or (ii) any good faith settlement or compromise of any
such claim effected by the Agent or such Lender with any such claimant, then and
in such event each Loan Party agrees that (A) any such judgment, decree, order,
settlement or compromise shall be binding upon it notwithstanding the
cancellation of any Indebtedness hereunder or under the other Loan Documents or
the termination of this Agreement or the other Loan Documents, and (B) it shall
be and remain liable to the Agent or such Lender hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by the Agent or such Lender.
Section 12.15 Indemnification.
(a) General Indemnity. In addition to each Loan Party's other
Obligations under this Agreement, each Loan Party agrees to, jointly and
severally, defend, protect, indemnify and hold harmless the Agent and each
Lender and all of their respective officers, directors, employees, attorneys,
consultants and agents (collectively called the "Indemnitees") from and against
any and all losses, damages, liabilities, obligations, penalties, fees,
reasonable costs and expenses (including, without limitation, reasonable
65
attorneys' fees, costs and expenses) incurred by such Indemnitees, whether prior
to or from and after the Interim Facility Effective Date, whether direct,
indirect or consequential, as a result of or arising from or relating to or in
connection with any of the following: (i) the negotiation, preparation,
execution or performance or enforcement of this Agreement, any other Loan
Document or of any other document executed in connection with the transactions
contemplated by this Agreement, (ii) the Agent's or any Lender's furnishing of
funds to the Borrower under this Agreement or the other Loan Documents,
including, without limitation, the management of any such Loans, (iii) any
matter relating to the financing transactions contemplated by this Agreement or
the other Loan Documents or by any document executed in connection with the
transactions contemplated by this Agreement or the other Loan Documents, or (iv)
any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto (collectively, the
"Indemnified Matters"); provided, however, that the Loan Parties shall not have
any obligation to any Indemnitee under this subsection (a) for any Indemnified
Matter caused by the gross negligence or willful misconduct of such Indemnitee,
as determined by a final judgment of a court of competent jurisdiction.
(b) The indemnification for all of the foregoing losses, damages, fees,
costs and expenses of the Indemnitees are chargeable against the Loan Account.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in this Section 12.15 may be unenforceable because it is violative of any law or
public policy, each Loan Party shall, jointly and severally, contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all Indemnified Matters incurred by the
Indemnitees. The indemnities set forth in this Section 12.15 shall survive the
repayment of the Obligations and discharge of any Liens granted under the Loan
Documents.
Section 12.16 Records. The unpaid principal of and interest on the Loans, the
interest rate or rates applicable to such unpaid principal and interest, the
duration of such applicability, the Commitments, and the accrued and unpaid fees
payable pursuant to this Agreement, including the Unused Line Fee, shall at all
times be ascertained from the records of the Agent, which shall be conclusive
and binding absent manifest error.
Section 12.17 Binding Effect. This Agreement shall become effective when it
shall have been executed by each Loan Party, the Agent and each Lender and when
the conditions precedent set forth in Section 5.01 hereof have been satisfied or
waived in writing by the Agent, and thereafter shall be binding upon and inure
to the benefit of each Loan Party, the Agent and each Lender, and their
respective successors and assigns (including, except for the right to request
Loans, any trustee succeeding to the rights of the Borrower and each Guarantor
pursuant to Chapter 11 of the Bankruptcy Code or pursuant to any conversion to a
case under Chapter 7 of the Bankruptcy Code), except no Borrower or Guarantor
shall have the right to assign its rights hereunder or any interest herein
without the prior written consent of each Lender, and any assignment by any
Lender shall be governed by Section 12.07 hereof.
Section 12.18 Interest. It is the intention of the parties hereto that the Agent
and each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby or by any other Loan
Document would be usurious as to the Agent or any Lender under laws applicable
to it (including the laws of the United States of America and the State of New
York or any other jurisdiction whose laws may be mandatorily applicable to the
66
Agent or such Lender notwithstanding the other provisions of this Agreement),
then, in that event, notwithstanding anything to the contrary in this Agreement
or any other Loan Document or any agreement entered into in connection with or
as security for the Obligations, it is agreed as follows: (i) the aggregate of
all consideration which constitutes interest under law applicable to the Agent
or any Lender that is contracted for, taken, reserved, charged or received by
the Agent or such Lender under this Agreement or any other Loan Document or
agreements or otherwise in connection with the Obligations shall under no
circumstances exceed the maximum amount allowed by such applicable law, any
excess shall be canceled automatically and if theretofore paid shall be credited
by the Agent or such Lender on the principal amount of the Obligations (or, to
the extent that the principal amount of the Obligations shall have been or would
thereby be paid in full, refunded by the Agent or such Lender, as applicable, to
the Borrower); and (ii) in the event that the maturity of the Obligations is
accelerated by reason of any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to the Agent or any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by the Agent or such Lender, as applicable, as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by the Agent or such Lender, as applicable, on the principal amount of
the Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by the Agent or such
Lender to the Borrower). All sums paid or agreed to be paid to the Agent or any
Lender for the use, forbearance or detention of sums due hereunder shall, to the
extent permitted by law applicable to the Agent or such Lender, be amortized,
prorated, allocated and spread throughout the full term of the Loans until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If
at an time and from time to time (x) the amount of interest payable to the Agent
or any Lender on any date shall be computed at the Highest Lawful Rate
applicable to the Agent or such Lender pursuant to this Section 12.18 and (y) in
respect of any subsequent interest computation period the amount of interest
otherwise payable to the Agent or such Lender would be less than the amount of
interest payable to the Agent or such Lender computed at the Highest Lawful Rate
applicable to the Agent or such Lender, then the amount of interest payable to
the Agent or such Lender in respect of such subsequent interest computation
period shall continue to be computed at the Highest Lawful Rate applicable to
the Agent or such Lender until the total amount of interest payable to the Agent
or such Lender shall equal the total amount of interest which would have been
payable to the Agent or such Lender if the total amount of interest had been
computed without giving effect to this Section 12.18.
For purposes of this Section 12.18, the term "applicable law" shall
mean that law in effect from time to time and applicable to the loan transaction
between the Borrower, on the one hand, and the Agent and the Lenders, on the
other, that lawfully permits the charging and collection of the highest
permissible, lawful non-usurious rate of interest on such loan transaction and
this Agreement, including laws of the State of New York and, to the extent
controlling, laws of the United States of America.
The right to accelerate the maturity of the Obligations does not
include the right to accelerate any interest that has not accrued as of the date
of acceleration.
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Section 12.19 Confidentiality. The Agent and each Lender agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature and in accordance with safe and sound practices of comparable
commercial finance companies, any non-public information supplied to it by the
Loan Parties pursuant to this Agreement or the other Loan Documents which is
identified in writing by the Loan Parties as being confidential at the time the
same is delivered to such Person (and which at the time is not, and does not
thereafter become, publicly available or available to such Person from another
source not known to be subject to a confidentiality obligation to such Person
not to disclose such information), provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for the Agent or any Lender,
(iii) to examiners, auditors, accountants or Securitization Parties, (iv) in
connection with any litigation to which the Agent or any Lender is a party or
(v) to any assignee or participant (or prospective assignee or participant) so
long as such assignee or participant (or prospective assignee or participant)
first agrees, in writing, to be bound by confidentiality provisions similar in
substance to this Section 12.19. The Agent and each Lender agrees that, upon
receipt of a request or identification of the requirement for disclosure
pursuant to clause (iv) hereof, it will make reasonable efforts to keep the Loan
Parties informed of such request or identification; provided that the each Loan
Party acknowledges that the Agent and each Lender may make disclosure as
required or requested by any Governmental Authority or representative thereof
and that the Agent and each Lender may be subject to review by Securitization
Parties or other regulatory agencies and may be required to provide to, or
otherwise make available for review by, the representatives of such parties or
agencies any such non-public information.
Section 12.20 Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
Section 12.21 Agent as Party-in-Interest. The Borrower and each Guarantor hereby
stipulate and agree that the Agent is and shall remain a party in interest in
the Chapter 11 Cases and shall have the right to participate, object and be
heard in any motion or proceeding in connection therewith. Nothing in this
Agreement or any other Loan Document shall be deemed to be a waiver of any of
the Agent's rights or remedies under applicable law or documentation. Without
limitation of the foregoing, the Agent shall have the right to make any motion
or raise any objection it deems to be in its interest (specifically including
but not limited to objections to use of proceeds of the Loans, to payment of
professional fees and expenses or the amount thereof, to sales or other
transactions outside the ordinary course of business or to assumption or
rejection of any executory contract or lease), provided that the Agent will not
exercise such right if the action or inaction by the Borrower or any Guarantor
which is the subject of such motion or objection is expressly permitted by any
covenant or provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
GENERAL MEDIA, INC.
By: /s/ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman
GUARANTORS:
GENERAL MEDIA ART HOLDING, INC.
GENERAL MEDIA COMMUNICATIONS, INC.
GENERAL MEDIA ENTERTAINMENT, INC.
GENERAL MEDIA (UK), LTD.
GMCI INTERNET OPERATIONS, INC.
GMI ON-LINE VENTURES, LTD.
PENTHOUSE IMAGES ACQUISITIONS, LTD.
PURE ENTERTAINMENT TELECOMMUNICATIONS, INC.
By: /s/ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman
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AGENT AND LENDER:
▇▇▇▇▇▇▇▇▇ L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
LENDER:
THE MAINSTAY FUNDS ON BEHALF OF ITS HIGH YIELD
CORPORATE BOND FUND SERIES
By: MacKay ▇▇▇▇▇▇▇ LLC, its Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇. Nisi
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. Nisi
Title: General Counsel
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SCHEDULE 1.01(A)
LENDERS AND LENDERS' COMMITMENTS
Lenders' Name and Address Commitment % of Total Commitment
------------------------- ---------- ---------------------
▇▇▇▇▇▇▇▇▇ L.L.C. $2,500,000 50%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
The Mainstay Funds on behalf of its
High Yield Corporate Bond Fund Series $2,500,000 50%
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
71