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Exhibit 10.1
POST-PETITION LOAN AND SECURITY AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS LENDERS AGENT)
AND
THE CIT GROUP/BUSINESS CREDIT, INC.
BNY FACTORING LLC
AND
ANY TRANSFEREE LENDERS REFERRED TO HEREIN
(AS LENDERS)
AND
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, INC.
(BORROWER)
DATED: JULY 15, 1999
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TABLE OF CONTENTS
Page
SECTION 1. Definitions............................................................................... 2
SECTION 2. Conditions Precedent...................................................................... 19
SECTION 3. Revolving Loans........................................................................... 25
SECTION 4. Term Loans................................................................................ 32
SECTION 5. Letters of Credit......................................................................... 35
SECTION 6. Collateral................................................................................ 38
SECTION 7. Representations and Warranties............................................................ 42
SECTION 8. Certain Covenants......................................................................... 50
SECTION 9. Interest, Fees, Expenses and Assignments.................................................. 60
SECTION 10. Powers................................................................................... 65
SECTION 11. Events of Default and Remedies........................................................... 66
SECTION 12. Termination.............................................................................. 71
SECTION 13. Indemnification.......................................................................... 71
SECTION 14. Miscellaneous............................................................................ 72
SECTION 15. Agency................................................................................... 77
SECTION 16. Participations........................................................................... 81
SECTION 17. Reaffirmation............................................................................ 84
EXHIBITS
Exhibit A1 - Form of Term Loan Note
Exhibit A2 - Form of Revolving Loans Promissory Note
Exhibit B - Form of Opinion of Counsel to the Borrower
Exhibit C - Form of Interim Order
Exhibit D - Form of Weekly Inventory Report
Exhibit E - Form of Assignment and Transfer Agreement
Exhibit F - Form of Final Order
Exhibit G - Form of Pledge Agreement by ▇▇. ▇▇▇▇▇▇▇
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Exhibit H - Form of Pledge Agreement by ▇▇. ▇▇▇▇▇
Exhibit I - Form of Guaranty by D.V. Associates L.P.
Exhibit J - Form of Trademark Security Agreement
Exhibit K - Form of Guaranty by ▇▇. ▇▇▇▇▇▇▇
Exhibit L - Form of Guaranty by ▇▇. ▇▇▇▇▇
Exhibit M - Financial Projections
SCHEDULES
Schedule 1(a) - Real Estate
Schedule 1(b) - Permitted Encumbrances
Schedule 1(c) - Permitted Indebtedness
Schedule 1(d) - Mortgages
Schedule 1(e) - Property Sales to Generate Asset Disposition Proceeds
Schedule 3.5 - Bank Accounts
Schedule 7.1 - Corporate Existence
Schedule 7.4 - Required Consents
Schedule 7.10 - Subordinated Debt
Schedule 7.12 - Assets Disposed of Other Than In Ordinary Course
Schedule 7.13 - Taxes
Schedule 7.14 - Intellectual Property
Schedule 7.18 - ERISA
Schedule 8.11(K) - Executive Officer Compensation
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THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation
(hereinafter "CITBC") with offices located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and BNY FACTORING LLC, a limited liability company with
offices located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as the
initial Lenders hereunder, and each of the other persons that may become a
Transferee hereunder as provided herein, are pleased to confirm the terms and
conditions under which each of them, severally, is willing to make term loans
and revolving loans, advances and other financial accommodations to
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., a Delaware corporation, a debtor and debtor-in-possession
in a case pending under Chapter 11 of the United States Bankruptcy Code (herein
the "Borrower"), with a principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇.,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and CITBC is pleased to confirm the terms under which it is
willing to act as agent for the Lenders in connection with such loans, advances
and other financial accommodations.
Introductory Statement
On July 15, 1999 (the "Filing Date"), the Borrower filed a
voluntary petition with the Bankruptcy Court initiating the Case (as defined
below) and has continued in the possession of its assets and in the management
of its businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower is a party to that certain Amended and Restated
Financing and Security Agreement dated January 17, 1997 among CITBC, as Lenders
Agent, and the Lenders identified therein and the Borrower, as amended and
supplemented from time to time and certain related security and mortgage or
other collateral documents and agreements relating thereto (collectively, the
"Pre-Petition Agreements").
On the Filing Date, the total amount due and owing to the
Lenders from the Borrower under the Pre-Petition Agreements was approximately
$26,108,000 (the "Pre-Petition Obligations") of which approximately $4,500,000
was and continues to be owing as Term Loans (as defined in the Pre-Petition
Agreements (the "Pre-Petition Term Loans") and approximately $21,608,000 was and
continues to be owing as Revolving Loans (as defined in the Pre-Petition
Agreements). On the Filing Date the contingent liabilities of CITBC on account
of Letter of Credit Guaranties made by it for the Borrower's benefit were, and
they continue to be, approximately $1,200,000 (the "Pre-Petition Contingent
Liabilities"). The Pre-Petition Obligations of the Borrower to the Lenders are
secured by valid, perfected liens on and security interests in substantially all
of the real and personal property and interests in such property that the
Borrower owned on the Filing Date and may own thereafter, and the products and
proceeds thereof, all as set forth in the Pre-Petition Agreements.
The Borrower has requested that the Lenders extend a line of
credit in an aggregate principal amount not to exceed $30,000,000 to the
Borrower. The Lenders have agreed to amend and restate the Pre-Petition
Agreements to provide for such a line of credit for the Borrower and to continue
to provide financing hereunder (the "Loans") through revolving loans, term loans
and assistance in respect of letters of credit, on the terms and conditions set
forth below, under a Total Commitment (as defined below) of
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$6,000,000 for loans and such assistance which may be made available after entry
of the Interim Order (as defined below) and prior to entry of the Final Order
(as defined below), or a Total Commitment of $30,000,000 for loans and such
assistance which may be made available after entry of the Final Order.
The proceeds of the Loans are to be used to provide working
capital to finance inventory purchases by, and for other general corporate
purposes of, the Borrower, subject to and only to the extent provided in the
Budget (as defined below), and, to the extent so provided herein, the repayment
of Borrower's Obligations under the Pre-Petition Agreements.
To provide security for the repayment of the Loans and payment
of the other obligations of the Borrower hereunder and under the other Loan
Documents (as defined below), the Borrower has agreed to provide or cause to be
provided to the Lenders Agent and the Lenders the following (each as more fully
described herein):
(a) with respect to the obligations of the Borrower under the
Loan Documents, an allowed administrative expense claim in the Case
pursuant to Section 364(c)(1) of the Bankruptcy Code having priority
over all administrative expenses of the kind specified in Sections
503(b), 507(b) and 546(c) of the Bankruptcy Code;
(b) a perfected first priority lien, pursuant to Sections
364(c)(2) and 364(d)(1) of the Bankruptcy Code, upon all of the
Collateral, including, without limitation, a first priority priming
lien senior to the Tax Liens (as defined below); and
(c) with respect to the Pre-Petition Agreements, an order of
the Bankruptcy Court authorizing the Borrower to affirm and continue
the Pre-Petition Agreements and to authorize the Loans under this
Financing Facility to be used to pay off in full the outstanding
Indebtedness under the Pre-Petition Agreements.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
ACCOUNTS shall mean all of the Borrower's now existing and
future: (a) accounts receivable (whether or not specifically listed on schedules
furnished to Lenders Agent), and any and all instruments, documents, contract
rights, chattel paper, general intangibles relating to such accounts receivable,
including, without limitation, all accounts created by or arising from all of
the Borrower's sales of goods or rendition of services to its customers, and all
accounts arising from sales or rendition of services made under any of the
Borrower's trade names or styles, or through any of the Borrower's divisions;
(b) unpaid seller's rights (including rescission, replevin, reclamation and
stoppage in transit) relating to the foregoing or arising therefrom; (c) rights
to any goods represented by any of the foregoing, including rights to returned
or repossessed goods; (d) reserves and credit balances arising thereunder; (e)
guarantees or collateral for any of
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the foregoing; (f) insurance policies or rights relating to any of the
foregoing; and (g) cash and noncash proceeds of any and all of the foregoing.
ADJUSTED COMMITMENT shall mean, in relation to each Lender,
the amount identified as such for such Lender on the signature pages hereof or
such portion thereof as remains or becomes the Adjusted Commitment of such
Lender as a result of any assignment to a Transferee pursuant to Section 9,
paragraph 13, of this Financing Agreement.
AGENT AND SYNDICATION FEE shall mean the fee due and payable
to Lenders Agent for the benefit of the Lenders on the Closing Date in the
amount of $150,000.
ASSET DISPOSITION PROCEEDS shall mean each amount, if any,
payable to the Borrower in respect of the sale of the property identified in
Schedule 1(e), which is property sold by the Borrower before the Filing Date
with, in certain cases, and in other cases, without, the consent of Lenders
Agent.
ASSIGNMENT AND TRANSFER AGREEMENT shall mean an Assignment and
Transfer Agreement substantially in the form of Exhibit E hereto, pursuant to
which a Lender assigns and a Transferee assumes rights and obligations in
accordance with Section 9, paragraph 13(a) of this Financing Agreement.
ASSIGNMENT OF CLAIMS ACT shall mean ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code
Annotated Section 3727 and all amendments and supplements thereto and all rules
and regulations promulgated thereunder.
AVAILABILITY shall mean at any time the excess, as determined
by Lenders Agent based upon the Borrower's most recent report to it, of (A) the
sum of (a) Eligible Accounts Receivable multiplied by the percentage provided
for in clause (B)(1) subparagraph (B) of Section 3, paragraph 1(b), of this
Financing Agreement plus (b) Eligible Unbilled Accounts Receivable multiplied by
the percentage provided for in clause (B)(2) of subparagraph (B) of Section 3,
paragraph 1(b) of this Financing Agreement but not to exceed the limitation set
forth therein, plus (c) Eligible Inventory multiplied by the percentage provided
for in clause (B)(3) of subparagraph (B) of Section 3, paragraph 1(b) of this
Financing Agreement but not to exceed the limitation set forth therein, over (B)
the sum of (y) the outstanding aggregate amount of all Revolving Loans of the
Borrower plus (z) the maximum amount drawable under the Letters of Credit and
the maximum amount guaranteed under the Letter of Credit Guaranties.
BALANCE SHEET shall mean a balance sheet for the Borrower
prepared in accordance with GAAP.
BANKRUPTCY CODE shall mean the United States Bankruptcy Code,
as heretofore and hereafter amended, and codified at 11 U.S.C. ▇▇.▇▇. 101 et
seq.
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BANKRUPTCY COURT shall mean the United States Bankruptcy Court
for the Northern District of Ohio, or any other court that may have jurisdiction
over the Case from time to time.
BORROWER shall mean ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., a Delaware
corporation and a debtor and debtor-in-possession.
BORROWING BASE shall have the meaning given to the term in
Section 3, paragraph 1(a)(C) of this Financing Agreement.
BUDGET shall mean the budget set forth (or to be set forth) in
the Business Plan, specifying the Borrower's projected operational cash flow for
the period covered (or to be covered) by the Business Plan, by month, on the
basis of projected Availability, cash, cash usage, inventory levels and other
relevant information, as required by the standard format used by Lenders Agent
as previously delivered to the Borrower.
BUSINESS DAY shall mean a day other than a Saturday, Sunday or
other day on which banking institutions are authorized or obligated to close in
New York, New York.
BUSINESS PLAN shall mean a business plan for the Borrower for
the period of six (6) months beginning on the Filing Date and including (i) the
Budget, (ii) the Borrower's projected balance sheet and profit and loss
statement and (iii) such other information as is required by the standard
business plan format used by Lenders Agent, as previously delivered to the
Borrower, all presented in such format.
CAPITAL EXPENDITURES shall mean, for any period, the aggregate
of all expenditures of the Borrower and its Subsidiaries during such period that
in conformity with GAAP are required to be included in or reflected by the
property, plant or equipment or a similar fixed asset account reflected in the
balance sheet of the Borrower and its Subsidiaries.
CAPITAL LEASE shall mean any lease of property (whether real,
personal or mixed) which, in conformity with GAAP, is accounted for as a capital
lease or a Capital Expenditure on the balance sheet of the Borrower.
CARVE-OUT shall have the meaning set forth in paragraph 2 of
Section 6.
CASE shall mean the case in respect of the Borrower pending in
the Bankruptcy Court under Chapter 11 of the Bankruptcy Code.
CHASE BANK RATE shall mean the rate of interest per annum
announced by The Chase Manhattan Bank from time to time as its prime rate in
effect at its principal office in the City of New York. (The prime rate is not
intended to be the lowest rate of interest charged by The Chase Manhattan Bank
to its borrowers.)
CLOSING DATE shall mean the date on which this Financing
Agreement has been executed and the conditions precedent to the Lenders'
obligations to make the initial
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Loans to be made by them hereunder (set forth in Section 2, paragraph 1) have
been satisfied or waived.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COLLATERAL shall mean all present and future Accounts,
Equipment, Inventory, Documents of Title, General Intangibles, Real Estate and
all other personal property of the Borrower and any other collateral delivered
to Lenders Agent or any Lender pursuant to any collateral agreement, including,
without limitation, this Financing Agreement, the Patent Security Agreement, the
Trademark Security Agreement, each pledge or security agreement to be delivered
pursuant to paragraph 1(j) of Section 2 and each other security agreement, if
any, requested pursuant to Section 8, paragraph 1 of this Financing Agreement,
the payment delivered by the Borrower pursuant to Section 9, paragraph 12(a) and
any reserve held as contemplated in Section 4, paragraph (b), of this Financing
Agreement and the proceeds of each of the foregoing.
COLLATERAL MANAGEMENT FEE shall mean the fee in the amount of
$60,000 per annum (for the first year, or portion of a year, of the term of this
Financing Agreement) payable to Lenders Agent in accordance with Section 9,
paragraph 8, hereof to offset the expenses and costs of Lenders Agent in
connection with record keeping, periodic examinations, analyzing and evaluating
the Collateral.
COLLECTION ACCOUNTS shall mean the Collection Accounts
described in Section 3, paragraph 5 of this Financing Agreement.
COLLECTION BANK(S) shall mean the Collection Bank(s) described
in Section 3, paragraph 5 of this Financing Agreement.
COMMITMENT shall, subject to the reductions of Commitment
provided for in this Financing Agreement, mean: (i) in relation to each Lender
that enters into this Financing Agreement on the date of its execution, (a) the
amount identified as the Initial Commitment for such Lender on the signature
pages of this Financing Agreement, from and including the date of the entry of
the Interim Order and to and including the date that the Final Order authorizes
this Financing Agreement and approves the security interests granted hereunder,
and grants a Superpriority Claim to secure Loans under this Financing Agreement
in an amount of up to $30,000,000 (for all financial accommodations contemplated
herein), and (b) from and after the time of such grant on such date, the amount
identified as the Adjusted Commitment for such Lender on the signature pages of
this Financing Agreement, in each case, subject to adjustment to reflect such
Lender's transfer of all or any portion of its Commitment pursuant to Section 9,
paragraph 13, of this Financing Agreement, and (ii) in relation to each other
Lender, such Lender's Share of the Total Commitment, subject to adjustments to
reflect any such transfer by such Lender.
COMMITMENT TERMINATION DATE shall mean the earliest of (a) the
Final Maturity Date, (b) the Early Termination Date, (c) the date of termination
of the Commitments pursuant to Section 11 of this Financing Agreement, (d) the
date that is 14
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days after the Filing Date, if the Interim Order has not been entered by the
Bankruptcy Court on or before such date, (e) the date that is 90 days after the
Filing Date, if the Lenders Agent has not received each of the agreements and
other documents identified in Section 8, paragraph 2, of this Financing
Agreement on or before such date in form and substance satisfactory to the
Lenders Agent, (f) August 6, 1999, if the Final Order has not been entered by
the Bankruptcy Court on or before such date and (g) the date the Final Order is
entered by the Bankruptcy Court, if the Obligations of the Borrower under the
Pre-Petition Agreements are not satisfied on such date through application of
the proceeds of Loans to be made hereunder to Borrower on such date as and to
the extent provided herein for any reason other than failure by the Lenders to
perform their obligations hereunder to make such Loans or the Lenders Agent's
determination that any portion of such proceeds should not be applied to such
Obligations under the Pre-Petition Term Loans.
CUSTOMARILY PERMITTED LIENS shall mean:
(a) liens of local or state authorities for franchise or other
like taxes provided the aggregate amounts of such liens shall not
exceed $500,000 in the aggregate at any one time;
(b) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen and other like liens imposed by
law, created in the ordinary course of business and for amounts not yet
due (or which are being contested in good faith by appropriate
proceedings or other appropriate actions which are sufficient to
prevent imminent foreclosure of such liens) and with respect to which
adequate reserves or other appropriate provisions are being maintained
in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary
course of business (including, without limitation, security deposits
for leases, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids contracts (other
than for the repayment or guarantee of borrowed money or purchase money
obligations), statutory obligations and other similar obligations
arising as a result of progress payments under government contracts;
and
(d) easements (including, without limitation, reciprocal
easement agreements and utility agreements), encroachments, minor
defects or irregularities in title, variation and other restrictions,
charges or encumbrances (whether or not recorded) affecting the
Borrower's Real Estate.
D.V. ASSOCIATES shall mean D.V. Associates, L.P.
DEFAULT shall mean any event specified in Section 11,
paragraph 1, hereof, whether or not any requirement for the giving of notice,
the lapse of time, or both, or any other condition, event or act, has been
satisfied.
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DEFAULT RATE OF INTEREST shall mean a rate of interest per
annum equal to the sum of: (a) two percent (2%) and (b) the Chase Bank Rate and
(c) the Term Loan Margin, in the case of interest on the principal amount of any
Term Loan, and the Revolving Loan Margin, in the case of interest on any
Revolving Loan and any other amount that is due and not paid when due hereunder,
which each Lender and Lenders Agent shall be entitled to charge the Borrower on
all Obligations due to such Lender or Lenders Agent, as the case may be, from
the Borrower to the extent provided in Section 2, paragraph 2(j), and Section
11, paragraph 2, of this Financing Agreement.
DEVLIEG shall mean ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., a Delaware
corporation, and a debtor and debtor-in-possession under the Bankruptcy Code.
DOCUMENTS OF TITLE shall mean all present and future warehouse
receipts, bills of lading, shipping documents, chattel paper, instruments and
similar documents, all whether negotiable or not and all goods and inventory
relating thereto and all cash and noncash proceeds of the foregoing.
DOLLAR(S) and the sign "$" means lawful money of the United
States of America.
EARLY TERMINATION DATE shall mean the date on which the
Borrower terminates this Financing Agreement or the Revolving Line of Credit if
such date is prior to the Final Maturity Date.
EARLY TERMINATION FEE shall mean the fee in the amount of
$300,000 that the Lenders are entitled to charge the Borrower in the event the
Borrower terminates the Revolving Line of Credit or this Financing Agreement on
a date prior to the Final Maturity Date.
EBIT shall mean, in any period, all earnings of the Borrower
before all interest and tax obligations of the Borrower for said period,
determined in accordance with GAAP consistently applied.
EBITDA shall mean, in any period, all earnings of the Borrower
before all interest expense, tax obligations, depreciation expense and
amortization expense, determined in accordance with GAAP, consistently applied.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of
the Borrower's accounts receivable that conform to the warranties contained
herein and at all times continue to be acceptable to Required Lenders in the
exercise of their reasonable business judgment, less, without duplication, the
sum of (a) any returns, discounts, claims, credits and allowances of any nature
(whether issued, owing, granted or outstanding) and (b) reserves for: (i) sales
to the United States of America or to any agency, department or division thereof
except where assignment of all resulting accounts receivable due or to become
due under a particular contract is made by the Borrower to Lenders Agent and
Required Lenders are satisfied that all requirements for compliance with the
Assignment of Claims Act and/or other applicable statutes, rules or regulations
have been fulfilled, provided that the aggregate amount of accounts receivable
described
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in this exception which shall be permitted to constitute Eligible Accounts
Receivable shall not exceed at any one time $1,000,000; (ii) foreign sales other
than sales (x) secured by standby letters of credit (in form and substance
satisfactory to Required Lenders) issued or confirmed by, and payable at, banks
having a place of business in the United States of America and payable in United
States currency, or (y) to customers residing in Canada provided such sales
otherwise comply with all of the other criteria for eligibility hereunder, are
payable in United States currency and such sales do not exceed $2,000,000 in the
aggregate at any one time; (iii) accounts that remain unpaid more than ninety
(90) days from invoice date; (iv) contras; (v) sales to any subsidiary, or to
any company affiliated with the Borrower in any way; (vi) ▇▇▇▇ and hold
(deferred shipment) or consignment sales; (vii) sales to any customer which is
(1) insolvent, (2) the debtor in any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or state
law, (3) negotiating, or has called a meeting of its creditors for purposes of
negotiating, a compromise of its debts or (4) financially unacceptable to
Required Lenders or has a credit rating unacceptable to the Required Lenders;
(viii) all sales to any customer if fifty percent (50%) or more of either (x)
all outstanding invoices or (y) the aggregate Dollar amount of all outstanding
invoices, are unpaid more than ninety (90) days from invoice date; (ix) any
other reasons deemed necessary by Required Lenders in their reasonable business
judgment and which are customary either in the commercial finance industry or in
the lending practices of the Required Lenders; and (x) an amount representing,
historically, returns, discounts, claims, credits and allowances.
ELIGIBLE INVENTORY shall mean (i) during the period of seven
weeks referred to in Section 3, paragraph 1(a) of this Financing Agreement,
work-in-process, to the extent set forth therein; and (ii) at all times, the
gross amount of the Borrower's inventory that conforms to the warranties
contained herein and which at all times continue to be acceptable to the
Required Lenders in the exercise of their reasonable business judgment less any
work-in-process, supplies (other than raw material), goods not present in the
United States of America, goods returned or rejected by the Borrower's customers
other than goods that are undamaged and resalable in the normal course of
business, goods to be returned to the Borrower's suppliers, goods in transit to
third parties (other than the Borrower's agents or warehouses) and less any
reserves required by Required Lenders in their reasonable discretion for special
order goods, market value declines and ▇▇▇▇ and hold (deferred shipment) or
consignment sales. Eligible Inventory shall be valued at the lower of cost or
market on a first in first out basis.
ELIGIBLE UNBILLED ACCOUNTS RECEIVABLE shall mean at any time
the then current amount of the Borrower's Unbilled Accounts Receivable where in
the case of each Unbilled Account Receivable at least sixty-five percent (65%)
of the work required to complete the manufacture of the machine upon which such
Unbilled Account Receivable is based is completed, less any Unbilled Accounts
Receivable due on account of purchase orders or other contracts entered into
before the Filing Date and which are not reconfirmed after the Filing Date by
the Borrower and the counterparty, and less any Unbilled Accounts Receivable
that either are not acceptable to the Required Lenders in the exercise of their
reasonable business judgment, and less any Unbilled Account Receivable that upon
completion of the sale of the particular machine creating the
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Unbilled Account Receivable such sale will not, for any reason, result in the
creation of an Eligible Account Receivable, and less any Unbilled Account
Receivable where for any reason the Borrower will be unable to complete the
manufacture and delivery of the machine creating such Unbilled Account
Receivable in accordance with the terms of the purchase order for such machine
any less any portion of any Unbilled Account Receivable in respect of which the
Borrower has received a deposit from the relevant customer.
EMPLOYEE BENEFIT PLAN shall mean any plan, agreement,
arrangement or commitment which is an employee benefit plan, as defined in
section 3(3) of ERISA, maintained by the Borrower or any ERISA Affiliate with
respect to which the Borrower or any ERISA Affiliate at any relevant time has
any liability or obligation to contribute.
EQUIPMENT shall mean all present and hereafter acquired
machinery, equipment, furnishings and fixtures owned by the Borrower, and all
additions, substitutions and replacements thereof, wherever located, together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto and all proceeds of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and the rules and regulations promulgated
thereunder from time to time.
ERISA AFFILIATE shall mean, with respect to the Borrower, any
entity required to be aggregated with the Borrower under Section 414(b), (c),
(m) or (o) of the Code.
EVENT(S) OF DEFAULT shall have the meaning provided for in
Section 11 of this Financing Agreement.
EXECUTIVE OFFICERS shall mean the Chairman, President, Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, Executive
Vice President(s), Senior Vice President(s), Treasurer, Controller and Secretary
of the Borrower and the Responsible Person.
FACILITY BORROWING BASE UTILIZATION shall have the meaning
given to the term in Section 3, paragraph 1(a) of this Financing Agreement.
FACILITY COMMITMENT UTILIZATION shall have the meaning given
to the term in Section 3, paragraph 1(a) of this Financing Agreement.
FILING DATE shall mean the date the Case was commenced in the
Bankruptcy Court.
FINAL ORDER shall have the meaning set forth in Section 2,
paragraph 2(d).
FINAL MATURITY DATE shall mean the first to occur of (a) 180
days after the Filing Date and (b) the date of consummation of a Plan of
Reorganization.
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FINANCING AGREEMENT shall mean this Post-Petition Loan and
Security Agreement as further amended, supplemented or modified from time to
time.
GAAP shall mean generally accepted accounting principles in
the United States of America as in effect from time to time and for the period
as to which such accounting principles are to apply.
GENERAL INTANGIBLES shall mean the Borrower's general
intangibles with such term having the meaning set forth in the Uniform
Commercial Code as in effect in the State of New York and shall include, without
limitation, all present and future right, title and interest in and to all
tradenames, trademarks (together with the goodwill associated therewith),
patents, licenses, engineers' drawings, customer lists, distribution agreements,
supply agreements and tax refunds, together with all monies and claims for
monies now or hereafter due and payable in connection with any of the foregoing
or otherwise, and all cash and noncash proceeds thereof.
HAZARDOUS SUBSTANCES shall have the meaning set forth in
Section 7, paragraph 19(b), of this Financing Agreement.
INDEBTEDNESS shall mean, without duplication, all liabilities,
contingent or otherwise, which are any of the following: (a) obligations in
respect of money (borrowed or otherwise) or for the deferred purchase price of
property, services or assets, other than Inventory, (b) lease obligations which,
in accordance with GAAP, have been, or which should be capitalized, (c)
obligations as guarantor or in any like capacity under any arrangement with
respect to liabilities for borrowed money or pursuant to take or pay contracts,
or (d) any other obligations (other than deferred taxes) which are required by
generally accepted accounting principles to be shown as liabilities on a balance
sheet and which are payable or remain unpaid more than one year from the date of
determination thereof.
INSOLVENCY shall mean, at any particular time, a Multiemployer
Plan which is insolvent within the meaning of section 4245 of ERISA.
INTERCREDITOR AGREEMENT shall mean the intercreditor agreement
dated October 23, 1995, among the Borrower, CITBC, Banc One Capital Partners
Corporation, PNC Capital Corp., ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, pursuant
to which the Subordinated Debt is subordinated to the prior payment and
satisfaction of the Borrower's Obligations under the Pre-Petition Agreements, as
such agreement may be amended from time to time.
INTERIM ORDER shall have the meaning set forth in Section 2,
paragraph 1(m).
INVENTORY shall mean all of the Borrower's present and
hereafter acquired merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods and materials used or usable in manufacturing, processing, packaging or
shipping same in all stages of production --
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from raw materials through work-in-process to finished goods -- and all
proceeds thereof of whatever sort.
ISSUING BANK shall mean any bank issuing a Letter of Credit
for the Borrower.
LENDER shall mean each Person identified as a Lender on the
signature pages of this Financing Agreement and any Transferee hereunder.
LENDERS AGENT shall mean CITBC, or any successor thereof,
acting as Agent for the Lender(s) pursuant to this Financing Agreement.
LETTER OF CREDIT OR LETTERS OF CREDIT shall mean all letters
of credit issued with the assistance of CITBC by any Issuing Bank for or on
behalf of the Borrower (whether before or after the Filing Date).
LETTER OF CREDIT GUARANTIES shall mean both the guaranties
delivered by CITBC to any Issuing Bank, providing for the guaranty of the
obligations of the Borrower to such Issuing Bank under the related letter of
credit application or reimbursement agreement (or other similar document)
between such Issuing Bank and the Borrower and the execution by CITBC as a
co-applicant of a letter of credit application or reimbursement agreement (or
other similar agreement) with the Borrower for delivery to an Issuing Bank with
regard to a Letter of Credit.
LETTER OF GUARANTY AGREEMENT shall mean the letter of guaranty
agreement dated January 11, 1996 between the Borrower and CITBC.
LETTER OF CREDIT GUARANTY FEE shall mean the fee payable to
CITBC by the Borrower under Section 9, paragraph 9, of this Financing Agreement
for (i) issuing the Letter of Credit Guaranties, or (ii) otherwise aiding the
Borrower in obtaining Letters of Credit.
LETTER OF CREDIT GUARANTY SHARE shall mean at any time, in
relation to each Lender other than CITBC, such Lender's Share of the aggregate
face amount of all outstanding Letter of Credit Guaranties at such time and, in
relation to CITBC, the aggregate face amount of all outstanding Letter of Credit
Guaranties less the sum of the Letter of Credit Guaranty Shares of all the other
Lenders at such time.
LINE OF CREDIT FEE shall: (i) mean the fee due to the Lenders
as provided in Section 9, paragraph 6, calculated in respect of each month for
the Revolving Line of Credit, (ii) be determined by multiplying (A) one-half of
one percent (0.5%) per annum for the number of days in said month by (B) the
amount calculated by (1) subtracting $7,000,000 from the Total Commitment for
such month (pro rating appropriately for any change during such month in the
Total Commitment) and (2) further subtracting from the result the average daily
Revolving Loans of the Borrower for such month, and (iii) be allocable to the
Lenders in accordance with their respective Shares during such month.
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LOAN OR LOANS shall mean, in the aggregate, the Revolving
Loans and the Term Loans, including payments made under the Letter of Credit
Guaranties which become Revolving Loans as provided herein.
LOAN DOCUMENTS shall mean each of this Financing Agreement,
each Note, the Mortgages, the Intercreditor Agreement, the Letters of Credit,
the Trademark Security Agreement, the Patent Security Agreement, each other
security agreement, if any, requested pursuant to Section 8, paragraph 1, of
this Financing Agreement, and each guaranty and security or other agreement to
be delivered pursuant to Section 2, paragraph 1(j) or Section 8, paragraph 2, of
this Financing Agreement.
LOAN FACILITY FEE shall mean the fee due and payable to
Lenders Agent on the Closing Date in the amount of $300,000 pursuant to Section
9, paragraph 7.
MANDATORY PREPAYMENT shall mean each amount of a Revolving
Loan or a Term Loan that the Borrower must prepay immediately upon demand as
provided in Section 3, paragraph 1(e) or Section 4, paragraph 1(b), of this
Financing Agreement.
MONTHLY DATE means the last Business Day of each month.
MORTGAGE shall mean each of the mortgages and spreaders, or
deeds of trust, deeds to secure debt or other similar documents, as the case may
be, identified in Schedule 1(d) on the Real Estate described on Schedule 1(a)
executed or to be executed by the Borrower or any Subsidiary of the Borrower, as
the case may be, to Lenders Agent at any time and in connection with the
Pre-Petition Agreements or this Financing Agreement, as the same may be amended,
supplemented or otherwise modified from time to time; collectively, "Mortgages."
MULTIEMPLOYER PLAN shall mean a plan which is a multiemployer
plan as defined in Section 3(37) of ERISA.
NOTE shall mean each Revolving Loan Promissory Note and each
Term Loan Promissory Note.
NOTICE OF BORROWING shall mean a notice described in Section
3, paragraph 1(c), of this Financing Agreement including all the information and
statements specified in that provision.
OBLIGATIONS shall mean all loans and advances made or to be
made by CITBC or any other Lender to the Borrower or to others for the
Borrower's account; any and all indebtedness and obligations which may at any
time be owing by the Borrower to Lenders Agent or CITBC or any other Lender
howsoever arising, whether now in existence or incurred by the Borrower from
time to time hereafter, whether secured by pledge, lien upon or security
interest in any of the Borrower's assets or property or the assets or property
of any other person, firm, entity or corporation; whether such indebtedness is
absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether the Borrower is liable to Lenders Agent or CITBC or any
other Lender for such indebtedness as principal, surety, endorser, guarantor or
otherwise.
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Obligations shall also include indebtedness owing to Lenders Agent or CITBC or
any other Lender by the Borrower under this Financing Agreement, the
Pre-Petition Agreements or under any other agreement or arrangement now or
hereafter entered into between the Borrower and Lenders Agent or CITBC or such
other Lender; indebtedness or obligations incurred by, or imposed on, Lenders
Agent or CITBC or any other Lender as a result of environmental claims (other
than as a result of actions of CITBC or such other Lender, as the case may be)
arising out of the Borrower's operation, premises or waste disposal practices or
sites; the Borrower's liability to Lenders Agent or CITBC or any other Lender as
maker or endorser on any promissory note or other instrument for the payment of
money; the Borrower's liability to Lenders Agent or CITBC or any other Lender
under any instrument of guaranty or indemnity, or arising under any guaranty,
endorsement or undertaking which Lenders Agent or CITBC or such other Lender may
make or issue to others for the Borrower's account, including any accommodation
extended with respect to applications for Letters of Credit entered into in
connection with this Financing Agreement, the Lenders Agent's or CITBC's or any
other Lender's acceptance of drafts or the Lenders Agent's or CITBC's or any
other Lender's endorsement of notes or other instruments for the Borrower's
account and benefit.
OFFICER'S CERTIFICATE shall mean a certificate signed in the
name of the Borrower by one of its Executive Officers satisfactory to Lenders
Agent.
OPERATING LEASES shall mean all leases of property (whether
real, personal or mixed) other than Capital Leases.
OUT-OF-POCKET EXPENSES shall mean all of the Lenders Agent's
or any Lender's present and future expenses incurred in connection with the
preparation and execution of and closing under this Financing Agreement and
amendments, supplements and modifications of or waivers of any condition of,
this Financing Agreement, the enforcement of any rights of Lenders Agent or any
Lender under this Financing Agreement and all other documents entered into in
connection with this Financing Agreement, the perfection and maintenance of
liens and security interests in favor of Lenders Agent or any Lender pursuant to
this Financing Agreement, the cost of record searches, all costs and expenses
incurred by Lenders Agent or any Lender in opening bank accounts, depositing
checks, receiving and transferring funds, and any charges imposed on Lenders
Agent or any Lender due to "insufficient funds" of deposited checks and Lenders
Agent's or any Lender's, as the case may be, standard fee relating thereto, any
amounts paid by Lenders Agent or any Lender, as the case may be, incurred by or
charged to Lenders Agent or any Lender by the Issuing Bank under any Letter of
Credit Guaranty or any of the Borrower's reimbursement agreements, application
for letter of credit or other like document which pertain either directly or
indirectly to such Letter of Credit, special counsel fees, local counsel fees,
title insurance premiums, real estate survey costs, fees and taxes relative to
the filing of financing statements, costs of preparing and recording
mortgages/deeds of trust against the Real Estate and all expenses, costs and
fees set forth in Section 9, paragraph 3, of this Financing Agreement, and all
expenses of each Lender and Lenders Agent incurred by such Lender or Lenders
Agent (including reasonable counsel fees) in connection with the enforcement of
any rights of such Lender or Lenders Agent under this Financing Agreement and
all other
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documents entered into in connection with this Financing Agreement, including,
without limitation, reasonable fees and expenses of Lenders Agent's counsel
retained to document these transactions, to appear in and monitor the Case, and
to enforce any rights hereunder, all of which shall be payable (a) to Lenders
Agent (for allocation as appropriate among Lenders Agent and the Lenders)
monthly by the Borrower as provided in Section 9, paragraph 5, and (b) at such
other times as the relevant Out-of-Pocket Expenses are incurred, upon demand.
OVERADVANCE shall mean, at any time, the aggregate principal
amount of (i) all Revolving Loans, (ii) all Pre-Petition Obligations other than
Pre-Petition Term Loans and (iii) all Letter of Credit Guaranties, to the extent
such aggregate principal amount exceeds the Borrowing Base at such time.
OVERADVANCE FACILITY shall mean the portion of the facility
provided by this Financing Agreement under which the Borrower may be entitled to
borrow or to continue to have outstanding any Overadvances.
PATENT SECURITY AGREEMENT shall mean the patent security
agreement identified in Schedule 7.14, which is one of the Pre-Petition
Agreements, as the same may be amended or modified from time to time.
PBGC shall mean Pension Benefit Guaranty Corporation.
PENSION PLAN shall mean any Employee Benefit Plan which is a
"pension plan" within the meaning of Section 3(2) of ERISA.
PERMITTED ENCUMBRANCES shall mean: (i) liens described on
Schedule 1(b) hereto existing on the Filing Date, and liens expressly permitted,
or consented to, by Required Lenders in writing; (ii) Customarily Permitted
liens; (iii) liens granted Lenders Agent, CITBC or any other Lender by the
Borrower; and (iv) liens for taxes not yet due and payable or which are being
diligently contested in good faith by the Borrower by appropriate proceedings
and which liens are not (x) senior to the liens of Lenders Agent, CITBC or any
other Lender or (y) for taxes due the United States of America; provided,
however, that in no event shall Permitted Encumbrances include the Tax Liens.
PERMITTED INDEBTEDNESS shall mean: (i) Indebtedness maturing
in less than one year and incurred in the ordinary course of business for raw
materials, supplies, equipment, services, taxes or labor; (ii) Indebtedness of
the Borrower which is subordinated to the prior payment and satisfaction of the
Borrower's Obligations to Lenders Agent, CITBC and any Transferees by means of
the Intercreditor Agreement; (iii) Indebtedness arising under this Financing
Agreement; (iv) deferred taxes and other expenses incurred in the ordinary
course of business; (v) other Indebtedness existing on the date of this
Agreement and listed in Schedule 1(c); (vi) Capital Leases, provided the amount
thereof shall not exceed $1,500,000 in the aggregate outstanding at any one
time.
PERSON shall mean and include an individual, a corporation, an
association, a partnership, a trust estate, a government or any department or
agency thereof.
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PLAN OF REORGANIZATION shall mean a plan of reorganization
filed in the Case.
POST-PETITION LOAN DOCUMENT means each Loan Document entered
into after the Filing Date.
PRE-PETITION AGREEMENTS shall have the meaning set forth in
the Introductory Statement to this Financing Agreement.
PRE-PETITION COLLATERAL shall mean any and all property of the
Borrower or any interest therein which, prior to the Filing Date, was assigned
and/or pledged to CITBC, as Lenders Agent under the Pre-Petition Agreements, as
security or on which CITBC, in that capacity, now has a lien, including, without
limitation, the items and types of real and personal property referred to in the
Pre-Petition Agreements.
PRE-PETITION CONTINGENT LIABILITIES shall have the meaning
given to such term in the Introductory Statement.
PRE-PETITION OBLIGATIONS shall have the meaning given to such
term in the Introductory Statement.
PRE-PETITION PAYMENT shall mean a payment prior to the Filing
Date (by way of adequate protection or otherwise) of principal or interest or
otherwise on account of any Indebtedness outstanding before the Filing Date or
trade payables arising from the purchase of Inventory not otherwise permitted to
be paid under this Financing Agreement.
PRE-PETITION TERM LOANS shall mean the Pre-Petition
Obligations identified as such in the Introductory Statement, to the extent they
remain outstanding from time to time.
PROCEEDS shall mean "proceeds", as such term is defined in the
UCC and, to the extent not included in such definition, shall include, without
limitation, (a) any and all proceeds of any insurance, indemnity, warranty,
guaranty or letter of credit payable to the Borrower, from time to time with
respect to any of the Collateral, (b) all payments (in any form whatsoever) paid
or payable to the Borrower from time to time in connection with any taking of
all or any part of the Collateral by any governmental authority or any Person
acting under color of governmental authority, (c) all judgments in favor of the
Borrower in respect of the Collateral and (d) all other amounts from time to
time paid or payable or received or receivable under or in connection with any
of the Collateral.
QUARTERLY DATE means each January 31, April 30, July 31 and
October 31.
REAL ESTATE shall mean all of the Borrower's fee and/or
leasehold interests in the real property which has been, or will be, encumbered,
mortgaged, pledged or assigned to Lenders Agent, CITBC or any other Lender or
its designee.
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REORGANIZATION shall mean with respect to any Multiemployer
Plan, the condition that such plan is in reorganization under section 4241 of
ERISA.
REPORTABLE EVENT shall mean an event described in section 4043
of ERISA or in the regulations thereunder.
REQUIRED LENDERS shall mean at any time the Lenders holding at
least 66-2/3% of the then aggregate unpaid principal amount of the Revolving
Loans and the Term Loans taken together or, if no Revolving Loans or Term Loans
are then outstanding, the Lenders having at least 66-2/3% of the aggregate of
the Commitments. In calculating the outstanding Revolving Loans, the Term Loans
and the Commitment of each Lender for purposes of this definition of "Required
Lenders," (1) each Lender (other than CITBC) shall be deemed to have a portion
of the total Revolving Loans of CITBC created as a result of payments under the
Letter of Credit Guaranties equal to that Lender's Share of all such payments
and CITBC shall be deemed to have a portion of such Revolving Loans created as a
result of payments under the Letter of Credit Guaranties equal to 100% minus the
sum of the Shares of the other Lenders.
RESPONSIBLE PERSON shall mean the Responsible Person
identified in Section 2, paragraph 1(s), of this Financing Agreement whose
appointment shall be approved by the Bankruptcy Court within five (5) days of
the Filing Date.
REVOLVING LINE OF CREDIT shall mean the commitments of the
Lenders to make loans and advances pursuant to Section 3 of this Financing
Agreement, on the terms and subject to the conditions set forth herein, to the
Borrower in a maximum outstanding principal amount of up to $30,000,000 or such
lower amount as may be applicable pursuant to Section 3 of this Financing
Agreement (whether in connection with outstanding Term Loans or otherwise).
REVOLVING LOAN MARGIN shall have the meaning given to such
term in Section 9, paragraph 1.
REVOLVING LOAN shall mean each loan or advance made (or, as
the context may require, to be made) to the Borrower from time to time pursuant
to Section 3, paragraph 1, of this Financing Agreement, including, without
limitation Overadvances, plus any amounts drawn on the Letter of Credit
Guaranties.
REVOLVING LOANS PROMISSORY NOTE shall mean, in relation to
each Lender, a promissory note, in the form of Exhibit A2 attached hereto,
delivered by the Borrower to the applicable Lender to evidence the Revolving
Loans of such Lender.
SHARE shall mean with respect to each Lender in relation to
any amount at any time, the portion of such amount determined by multiplying it
by a fraction, the numerator of which is such Lender's Commitment at such time
and the denominator of which is the Total Commitment at such time (or, if at
such time the Total Commitment has been reduced to zero, the portion of such
amount determined as provided above in this definition as of the time
immediately preceding the reduction).
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STATUTORY LIENS shall mean collectively the lien in favor of
the Pension Benefit Guaranty Corporation created by a filing on or about July 1,
1999, in Cuyahoga County, Ohio, to secure a claim in the amount of $1,060,739.00
and any other liens in respect of which any governmental entity or agency has
effected a filing at any time before the commencement of the Case.
SUBORDINATED DEBT shall mean (1) the debt of the Borrower due
pursuant to the Investment Agreement dated May 25, 1994 among Allied Investment
Corporation, Allied Investment Corporation II, Allied Capital Corporation II,
Banc One Capital Partners Corporation, and PNC Capital Corp., as amended by a
First Amendment to Investment Agreement dated as of October 23, 1995 and a
Second Amendment to Investment Agreement dated April 12, 1996, which has been
subordinated pursuant to the Intercreditor Agreement, to the prior payment and
satisfaction of the Obligations of the Borrower to the Lender, (2) such
Investment Agreement, as so amended by such First Amendment to Investment
Agreement dated as of October 23, 1995, and (3) the Credit Support Agreement
dated as of October 23, 1995, between the Borrower and CPS Holdings, Inc.
SUBSIDIARY shall mean, as to any Person, a corporation of
which shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation are at the time
owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person.
SUPERPRIORITY CLAIM shall mean a perfected first priority
claim pursuant to Section 364(c)(1) of the Bankruptcy Code.
TAX LIENS shall mean the Statutory Liens.
TERM LOAN shall mean each loan made (or, as the context may
require, to be made) to the Borrower pursuant to Section 4, paragraph 1(a).
TERM LOAN MARGIN shall have the meaning given to such term in
Section 9, paragraph 2.
TERM LOAN PROMISSORY NOTE shall mean, in relation to each
Lender, each promissory note, in the form of Exhibit A-1 attached hereto,
delivered by the Borrower to such Lender to evidence any of such Lender's Term
Loans.
TOTAL COMMITMENT shall mean the aggregate of the Initial
Commitments of the Lenders, until such time as the Lenders' respective
Commitments have increased to their Adjusted Commitments hereunder as
contemplated in the definition of the term "Commitment" in this Section 1 and,
thereafter, the aggregate of the Adjusted Commitments of the Lenders, in each
case as such Commitments may be reduced as provided herein. "Total Commitment"
shall be understood to include (and not to be in addition to) the Total
Overadvance Facility Commitment and the Total Term Loan Commitment.
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TOTAL OVERADVANCE FACILITY COMMITMENT shall mean a portion of
the Total Commitment, which is: (i) from the Closing Date to the earlier of (a)
the date the Bankruptcy Court enters the Final Order or (b) the Commitment
Termination Date, $4,100,000; and (ii) if the Final Order is entered on or
before August 6, 1999 (and so long as the Commitment Termination Date has not
occurred): (a) from the time the Final Order is entered by the Bankruptcy Court
through August 30,1999, $2,000,000; (b) from August 31, 1999 through September
29, 1999, $1,000,000; (c) from September 30, 1999 through October 30, 1999,
$750,000; (d) from October 31, 1999 through November 29, 1999, $500,000; and (e)
from November 30, 1999 through December 30, 1999, $250,000.
TOTAL TERM LOAN COMMITMENT shall mean the amount determined by
subtracting the aggregate principal amount of the Pre-Petition Term Loans
outstanding at the time of such determination from: (i) beginning on the date
that the Bankruptcy Court enters the Final Order through the time when the
initial Term Loans are made, $7,000,000, and (ii) thereafter, at any time, such
lesser amount as remains after subtracting from $7,000,000 the aggregate
principal amount of all Term Loans previously made hereunder.
TRADEMARK SECURITY AGREEMENT shall meaning the agreement
identified as such term in Section 8, paragraph 2 of this Financing Agreement,
as the same may be amended or modified from time to time.
TRANSFEREE shall have the meaning set forth in Section 9,
paragraph 13(b) to this Financing Agreement.
UCC shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
UNBILLED ACCOUNT RECEIVABLE means, once at least twenty-five
percent (25%) of work required to complete the manufacture of a machine subject
to a specific purchase order for such machine has been completed, an amount
equal to the gross account receivable that will be generated upon completion of
such particular machine multiplied by a fraction the numerator of which is a
percentage (expressed as a decimal) equal to the percentage of work that has
been completed on such machine at the time of determining such Unbilled Account
Receivable and the denominator of which is one less any offsetting accrual or
liability.
WEEKLY INVENTORY REPORT shall mean the report in the form of
Exhibit D hereto, to be (i) delivered by the Borrower to Lenders Agent on or
before the second Business Day of each week in respect of the prior week or (ii)
if a Notice of Borrowing is delivered on a Monday, to be delivered at or before
the time of delivery of such Notice of Borrowing.
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SECTION 2. CONDITIONS PRECEDENT. The obligation of each Lender
to make loans hereunder on any date shall be subject to satisfaction of each of
the applicable conditions precedent set forth in paragraph 1 and paragraph 2 of
this Section 2. References below in any part of this Section 2 to sufficient
copies of any document shall be understood to mean one copy each for Lenders
Agent, counsel for Lenders Agent and each of the Lenders, and whether or not so
specified below in any part of this Section 2, all documents to be delivered and
other conditions to be met pursuant to this Section 2 must be so delivered or
met in form and substance satisfactory to Lenders Agent.
1. CONDITIONS PRECEDENT TO LOANS ON THE CLOSING DATE. The
obligation of each Lender to make loans hereunder on the Closing Date is subject
to the satisfaction of, or waiver of, immediately prior to or concurrently with
the making of such loans, the following conditions precedent (at the respective
times specified below, where applicable).
(a) EXAMINATION & VERIFICATION. Required Lenders shall have
completed to the satisfaction of Required Lenders an examination and
verification of the Accounts, Inventory, books and records of the Borrower as to
matters that Lenders Agent learns of after its execution of this Financing
Agreement.
(b) OPINIONS. Lenders Agent shall have received opinions of
counsel for the Borrower, substantially in the appropriate form set forth in
Exhibit B, addressed to Lenders Agent and the Lenders and satisfactory to
Lenders Agent, opining, inter alia, that, subject to the (a) filing, priority
and remedies provisions of the Uniform Commercial Code, (b) the equity powers of
a court of law and (c) such other matters as may be agreed to by Lenders Agent:
this Financing Agreement, the other Loan Documents to which the Borrower is a
party, and the Pre-Petition Agreements of the Borrowers (x) are valid, binding
and enforceable according to their terms, (y) are duly authorized and (z) do not
violate any terms, provisions, representations or covenants in the charter or
bylaws of the Borrower or, to the best knowledge of such counsel, of any loan
agreement, mortgage, deed of trust, note, security or pledge agreement or
indenture to which the Borrower is a signatory or by which the Borrower or its
assets are bound, except for a limit on Indebtedness that the Borrower may incur
without the consent of the holders of certain Subordinated Debt, as previously
disclosed to Lenders Agent and the Lenders.
(c) ADDITIONAL DOCUMENTS. The Borrower shall have executed and
delivered to Lenders Agent all Loan Documents and such other documents as may be
necessary to consummate the lending arrangement contemplated herein between the
Borrower and the Lenders in a form satisfactory in all respects to Lenders Agent
and its counsel.
(d) BOARD RESOLUTION. Lenders Agent shall have received
sufficient copies of the resolutions of the Board of Directors of the Borrower
authorizing (i) the commencement of the Case and all other transactions in
connection therewith and (ii) the execution, delivery and performance of this
Financing Agreement, the other Loan Documents to which the Borrower is a party,
and any other related agreements to which the Borrower is a party, in each case
certified by the Secretary or Assistant Secretary of the
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Borrower as of the date hereof, together with a certificate of the Secretary or
Assistant Secretary of the Borrower as to the incumbency and signature of the
officers of the Borrower executing this Financing Agreement or who may execute
any such other Loan Document or related agreement and any certificate or other
documents to be delivered by it pursuant hereto or thereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary.
(e) CORPORATE ORGANIZATION. Lenders Agent shall have received
(i) sufficient copies of the certificate of incorporation of the Borrower
certified by the Secretary of State of its incorporation, and (ii) a copy of the
bylaws (as amended through the Closing Date) of the Borrower certified by the
Secretary or Assistant Secretary of the Borrower.
(f) OFFICER'S CERTIFICATE. Lenders Agent shall have received
sufficient copies of an executed Officer's Certificate of the Borrower,
satisfactory in form and substance to Lenders Agent, certifying that (i) the
representations and warranties contained herein are true and correct on and as
of the Closing Date; (ii) the Borrower is in compliance with all of the terms
and provisions set forth herein and in the other Loan Documents to which it is a
party; and (iii) no Event of Default, or event which, with the giving of notice
or the passage of time or both would constitute an Event of Default, has
occurred.
(g) DISBURSEMENT AUTHORIZATION. The Borrower shall have
delivered to Lenders Agent all information necessary for Lenders Agent to issue
wire transfer instructions on behalf of the Borrower for the initial and
subsequent loans and/or advances to be made under this Financing Agreement,
including, but not limited to, disbursement authorizations in form acceptable to
Lenders Agent.
(h) FEES AND EXPENSES. On the Closing Date, the Borrower shall
have reimbursed Lenders Agent and the Lenders for all Out-of-Pocket Expenses for
which a request for payment shall have been made on or prior to the Closing Date
and shall have paid the Collateral Management Fee, the Loan Facility Fee and the
Agent and Syndication Fee.
(i) THE REVOLVING LOANS PROMISSORY NOTES. Lenders Agent shall
have received for each Lender the Revolving Loans Promissory Notes that are to
evidence the Revolving Loans to be made by such Lender, each duly executed and
delivered by the Borrower with all blanks appropriately filled in.
(j) PLEDGE REAFFIRMATIONS. Lenders Agent shall have received
the following:
(i) a reaffirmation of pledge agreement of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇., in the form of the agreement annexed hereto as Exhibit G, executed
by ▇▇. ▇▇▇▇▇▇▇, and
(ii) a reaffirmation of pledge agreement of ▇▇▇▇ ▇. ▇▇▇▇▇, in
the form of the agreement annexed hereto as Exhibit H, executed by ▇▇.
▇▇▇▇▇,
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all securing or supporting the pre-petition and post-petition Obligations due
Lenders Agent and the Lenders.
(k) PROJECTIONS. Lenders Agent shall not have received notice
from the Borrower of any changes in the financial projections annexed hereto as
Exhibit M.
(l) PROCEEDINGS. On or prior to the Closing Date, if any
corporate or other proceedings other than the resolution referred to in
subparagraph (d) above in this Section 2, paragraph 1, have been taken or are
required to be taken in connection with the transactions contemplated hereby and
by the other Loan Documents to which the Borrower is, or is to be, a party,
Lenders Agent shall have received sufficient copies of counterpart originals or
certified or other copies of evidence that such proceedings have occurred,
satisfactory in form and substance to Lenders Agent. Whether or not any such
other proceedings have been taken or are required will be determined by
reference to the Officer's Certificate and legal opinions to be delivered as
provided above in this Section 2, paragraph 1.
(m) INTERIM ORDER. By the time of the making of the initial
Loans Lenders Agent shall have received a certified copy (or other evidence
satisfactory to it) of an order of the Bankruptcy Court entered substantially in
the form of Exhibit C (the "Interim Order") among other things approving the
Loan Documents and granting the Superpriority Claim status and liens described
in Section 6, paragraph 2, including, without limitation, a first priority
priming lien senior to the Tax Liens pursuant to Bankruptcy Code section
364(d)(1), and granting protection to Lenders Agent and each Lender under
Bankruptcy Code section 364(e), which (i) shall have been entered upon an
application of the Borrower satisfactory in form and substance to Lenders Agent,
on such notice as the Bankruptcy Court may require, (ii) shall be in full force
and effect, and (iii) shall not have been stayed, reversed, modified or amended
in any respect and, if the Interim Order is the subject of a pending appeal in
any respect, neither the making of such Loans nor the performance by the
Borrower of any of its obligations hereunder or under any of the other Loan
Documents or under any other instrument or agreement referred to herein shall be
the subject of a presently effective stay pending appeal.
(n) LOCK BOX AGREEMENTS. The Borrower's current lock box
agreement and related arrangements for each of its cash concentration accounts
shall remain in effect to the satisfaction of Lenders Agent.
2. CONDITIONS PRECEDENT TO EACH LOAN TO BE MADE ON OR AFTER
THE CLOSING DATE. The obligations of each Lender to make each Loan hereunder
shall be subject to the satisfaction of, or waiver of, immediately prior to or
concurrently with the making of such Loan, the following further conditions
precedent; provided, however, that the conditions set forth in the subparagraphs
of this Section 2, paragraph 2, indicated below in this proviso shall apply only
to Loans with scheduled or requested funding dates after or, where so indicated,
on, the dates indicated below, or to the specific Loans indicated, at the times
indicated: subparagraph d -- Loans on or after August 6, 1999; subparagraph f
and, to the extent related to the documents required in subparagraph f,
subparagraph h -- Loans on or after the date that is 90 days after the Filing
Date;
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subparagraph i -- Loans on or after the date that is one week after the Filing
Date; subparagraph j -- Loans after July 15, 1999; subparagraph k --Loans after
the date that is two weeks after the Filing Date; subparagraph p --Term Loans,
before their respective borrowing dates; subparagraph q -- Loans on or after the
date on which the Bankruptcy Court enters the Final Order.
(a) REPRESENTATIONS AND WARRANTIES. All the representations
and warranties contained in this Financing Agreement and in each other Loan
Document or other agreement entered into in connection herewith shall be true
and correct in all material respects on and as of the date of providing such
Loan as though made on and as of such date, except representations and
warranties made with respect to a specified earlier date in which case such
representation and warranty shall be correct on and as of such specified earlier
date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing, or could result from providing such Loan.
(c) INTERIM ORDER. The Interim Order shall be in full force
and effect and shall not have been stayed, revised, modified or amended in any
respect.
(d) FINAL ORDER. A Final Order approving the financing
contemplated in this Financing Agreement (the "Final Order"), in substantially
the form attached hereto as Exhibit F, shall have been entered by the Bankruptcy
Court no later than August 6, 1999. On the date of funding of such Loan, the
Final Order shall be in full force and effect and shall not have been revised,
stayed, modified or amended except for such modifications and amendments agreed
to by Lenders Agent. Unless Lenders Agent shall have joined in or expressly
consented in writing to the same, there shall be no motion pending: (i) to
revise, modify or amend the Final Order or (ii) to permit any administrative
expense or unsecured claim against the Borrower existing or hereafter arising,
of any kind or nature whatsoever, to have administrative priority as to the
Borrower equal or superior to the priority of Lenders Agent and the Lenders in
respect of the Obligations, except for the Carve-Out, or (iii) to grant or
permit the grant of a lien on any property or assets of the Borrower.
(e) OFFICER'S CERTIFICATE. Upon the request of any Lender, the
Borrower shall have executed and delivered to Lenders Agent sufficient copies of
an Officer's Certificate of the Borrower stating that the conditions set forth
in this Section 2, paragraphs 2(a) and 2(b), have been satisfied as of the date
of the requested Loan.
(f) DELIVERY OF GUARANTIES AND SECURITY DOCUMENTS. Lenders
Agent shall have received each of the agreements and other documents referred to
in Section 8, paragraph 2, of this Financing Agreement, as well as the
collateral (if any) to be delivered thereunder, together with such evidence of
the power and authority to execute such agreement, in the case of any agreement
executed by D.V. Associates, and a specimen of the signature of each person
executing any such agreement on behalf of D.V. Associates and an opinion of
counsel for D.V. Associates addressed to Lenders Agent and the
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Lenders relating to such agreement as to such matters as Lenders Agent may
request, all in form and substance satisfactory to Lenders Agent.
(g) DAILY POSITION REPORTS; WEEKLY INVENTORY REPORTS. The
Borrower shall have delivered to Lenders Agent, before the time for funding of
each Loan, (1) in respect of the last day preceding the proposed funding day
which was not a Saturday, a Sunday or a business holiday for the Borrower, in
the format and with the detail required by Lenders Agent, information regarding
sales for such preceding day and data and changes affecting Availability; and
(2) the most recent Weekly Inventory Report due from the Borrower as indicated
in the definition of that term, to enable the Lenders to determine whether the
requested Loan from each Lender may be made consistent with the limitations in
this Financing Agreement. Required Lenders shall have completed to the
satisfaction of Required Lenders an examination and verification of the
Accounts, Inventory, books and records of the Borrower as to matters that
Lenders Agent learns of after the time of making of the then most recently made
Loans.
(h) PROCEEDINGS. To the extent not already taken on or prior
to the Closing Date, all corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby and by the other Loan
Documents (including the Loan Documents referred to in Section 2, paragraph f),
and all documents incident thereto shall be satisfactory in form and substance
to Required Lenders, and each of Lenders Agent and Lenders shall have received
all such counterpart originals or certified or other copies of such documents as
each of them may reasonably request.
(i) PROJECTIONS. If the projections delivered to Lenders Agent
by the Borrower on or before the Closing Date do not include all the projections
required to be included in the Business Plan, Lenders Agent shall have received
the Business Plan setting forth all such financial projections as well as all
other information required hereunder to be set forth in the Business Plan, not
later than one week after the Filing Date.
(j) LOCK BOX AGREEMENTS. The Borrower's lock box agreement and
related arrangements in effect on the Filing Date for each of its cash
concentration accounts shall have been modified or replaced so as to be in form
and substance satisfactory to Lenders Agent, with the bank currently maintaining
such accounts or another financial institution satisfactory to Lenders Agent,
not later than July 15, 1999. In the event the Borrower is unable or fails to
comply with this requirement, it shall be deemed an Event of Default hereunder,
and Lenders Agent may in its discretion charge the Default Rate of Interest.
(k) LIEN SEARCHES. Lenders Agent shall have received tax and
judgment searches satisfactory to Lenders Agent for all locations presently
occupied or used by the Borrower not later than the date that is two weeks after
the Filing Date.
(l) UCC FILINGS AND MORTGAGES. Any documents (including
without limitation, financing statements and/or Mortgages) which Lenders Agent,
in its reasonable judgment, deems necessary to be filed in order to create or
continue, in favor of Lenders
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Agent, a first and exclusive perfected security interest in the Collateral for
its benefit and the benefit of the Lenders with respect to which a security
interest may be perfected by a filing under the Uniform Commercial Code or with
respect to Mortgages, applicable state and local law, shall have been properly
filed in each office in each jurisdiction Lenders Agent deems necessary in order
to create or continue in favor of Lenders Agent a perfected lien on the
Collateral. Lenders Agent shall have received acknowledgment copies of all such
filings (or, in lieu thereof, Lenders Agent shall have received other evidence
satisfactory to Lenders Agent that all such filings have been made); and Lenders
Agent shall have received evidence that all necessary filing fees and all taxes
or other expenses related to such filings have been paid in full. As of the date
of execution of this Financing Agreement, Lenders Agent acknowledges that no
such documents are required (without prejudice to its right subsequently to
determine that any such documents may be required in connection with a change in
circumstances or disclosure to it of facts not known by it on the date of this
Financing Agreement).
(m) TITLE INSURANCE POLICIES. The existing mortgagee's title
policy or marked-up unconditional binder for insurance under such a policy in
respect of each Mortgage or deed of trust constituting a Pre-Petition Agreement
shall continue to (i) provide the amount of coverage provided on the date of
this Financing Agreement, (ii) insure that the Mortgage or deed of trust insured
thereby creates a valid first lien on the property covered by such Mortgage or
deed of trust, free and clear of all defects and encumbrances except those
acceptable to Lenders Agent; (iii) name Lenders Agent as the insured thereunder;
and (iv) contain such endorsements and effective coverage as they do on the date
of this Financing Agreement. Lenders Agent acknowledges that this condition does
not require the delivery by the Borrower of any documentation.
(n) CASUALTY INSURANCE. The casualty insurance policies
listing Lenders Agent as loss payee or mortgagee, as the case may be, previously
delivered to Lenders Agent in connection with the Pre-Petition Agreements shall
remain in full force and effect, all as set forth in paragraph 6(a) of Section
8. As of the date of execution of this Financing Agreement, Lenders Agent
acknowledges that this condition is satisfied (without prejudice to its right
subsequently to determine that this condition has ceased to be satisfied in
connection with a change in circumstances or disclosure to it of facts not known
by it on the date of this Financing Agreement).
(o) RESPONSIBLE PERSON. On or before the Closing Date the
Bankruptcy Court shall have entered an order authorizing the appointment of ▇▇▇▇
▇▇▇▇▇▇▇▇ of Argus Management Corporation, or another Person satisfactory to
Lenders Agent, as a Responsible Person to operate the Borrower's business under
the supervision of the Bankruptcy Court and such Responsible Person shall have
been appointed and retained by the Borrower not later than the date indicated in
the definition of "Responsible Person" in Section 1 of this Financing Agreement;
and thereafter, at the proposed time for any Loan hereunder, a Responsible
Person appointed and retained by Borrower pursuant to an order of the Bankruptcy
Court (whether or not the initial such order) shall continue to be operating the
Borrower's business under the supervision of the Bankruptcy Court.
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(p) THE TERM LOAN PROMISSORY NOTES. At or before the time at
which any of the Term Loans are to be made hereunder, Lenders Agent shall have
received for each Lender the Term Loan Promissory Note that is to evidence the
Term Loan to be made by such Lender on such date, each duly executed and
delivered by the Borrower with all blanks appropriately filled in, provided the
amount of such Term Loan has been identified by notice given to the Borrower not
later than the Business Day before the date such Loan is to be made. (Any Term
Loan Promissory Notes that the Borrower is not required by this provision to
deliver on the date of the making of such Term Loan shall be delivered by the
Borrower promptly after it receives notice from Lenders Agent of how such Notes
shall be completed.)
(q) OPINIONS. Lenders Agent shall have received, on the date
the Final Order is entered by the Bankruptcy Court, opinions of counsel for the
Borrower in the appropriate form set forth in Exhibit B, addressed to Lenders
Agent and the Lenders and satisfactory to Lenders Agent.
3. DEEMED REPRESENTATION. Each delivery of a Notice of
Borrowing by the Borrower requesting a Loan (and the making of each Loan made
pursuant to Section 3, paragraph g, and Section 4, paragraph (a)) shall
constitute a representation and warranty that the statements contained in
Section 2, paragraph 2(a) hereof are true and correct both on the date of such
delivery and, unless the Borrower otherwise notifies Lenders Agent prior to the
receipt of such Loan, as of the date of the providing of such Loan.
SECTION 3. REVOLVING LOANS.
1. (a) Each Lender agrees, subject to the terms and conditions
of this Financing Agreement, from time to time from and including the Closing
Date to and including the Commitment Termination Date to make loans and advances
to the Borrower in Dollars, in the amounts and on the borrowing dates specified
by Notice of Borrowing given in accordance with paragraph 1(c) of this Section 3
and as provided in paragraph 1(g) of this Section 3, in an aggregate principal
amount at any time outstanding that, subject to subparagraph b of this Section
3, paragraph 1, shall not exceed such Lender's Share of the lesser of
(i) the amount determined by subtracting the Facility
Commitment Utilization at such time from such Lender's Commitment at
such time and
(ii) the amount determined by subtracting the Facility
Borrowing Base Utilization at such time from such Lender's Share of the
sum of the Borrowing Base at such time and the Total Overadvance
Facility Commitment.
For this purpose,
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first:
(A) the "Facility Commitment Utilization" at any time in
relation to each Lender and the proposed making of a Revolving
Loan pursuant to this Section 3, paragraph 1(a), shall (subject to
the remainder of this paragraph 1(a)) be determined to be the sum
of the following:
(1) such Lender's Letter of Credit Guaranty Share at such
time; plus
(2) the aggregate principal amount outstanding at such
time of such Lender's Revolving Loans, and, if the Facility
Commitment Utilization is being determined after such Lender's
Commitment has become its Adjusted Commitment, the aggregate
principal amount of all Pre-Petition Obligations owing at the time
to such Lender; plus
(3) such Lender's Term Loans and, if the Facility
Commitment Utilization is being determined at a time when such
Lender's Commitment has become its Adjusted Commitment and any
Total Term Loan Commitment remains, its Share of the Total Term
Loan Commitment (but without double counting any amount already
included as a Pre-Petition Term Loan covered by the preceding
subparagraph); plus
(4) such Lender's Share of the principal amount of any
other loans or advances that are the subject of a Notice of
Borrowing which has been delivered by the Borrower at or before
the time of determination requesting funding at or after that
time;
(B) the "Facility Borrowing Base Utilization" at any time
in relation to each Lender and the proposed making of a Revolving
Loan pursuant to this Section 3, paragraph 1(a), shall (subject to
the remainder of this paragraph 1(a)) be determined to be the sum
of the following:
(1) such Lender's Letter of Credit Guaranty Share at such
time; plus
(2) the aggregate principal amount outstanding at such
time of such Lender's Revolving Loans and the aggregate principal
amount of all Pre-Petition Obligations owing at the time to such
Lender other than in respect of Pre-Petition Term Loans; plus
(3) such Lender's Share of the principal amount of any
other Revolving Loans that are the subject of a Notice of
Borrowing which has been delivered by the Borrower at or before
the time of determination requesting funding at or after that
time; and
(C) the "Borrowing Base" at any time shall be the sum of
the following: (1) eighty-five percent (85%) of the outstanding
Eligible Accounts Receivable of the Borrower; (2) the lesser of $
1,000,000 and forty percent (40%) of the existing Eligible
Unbilled Accounts Receivable of the Borrower;
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and (3) the lesser of $16,000,000 and fifty percent (50%) of the
aggregate value of Eligible Inventory of the Borrower; and
second:
(i) for purposes of determining the outstanding principal
amount of Revolving Loans created as a result of payments under Letter
of Credit Guaranties, the principal amount of each such Loan of CITBC
shall be 100% of its principal amount outstanding less the Shares
thereof represented by Participations of the other Lenders created
pursuant to Section 16 of this Financing Agreement, and the principal
amount of each such Revolving Loan of each Lender other than CITBC
shall be such Lender's Share of such Revolving Loan made by CITBC
covered by the Participation therein acquired by such Lender pursuant
to Section 16 of this Financing Agreement; and
(ii) during the period beginning on the Closing Date and
ending on November 12, 1999 (whether or not a Business Day), "Eligible
Inventory" shall include work-in-process to the extent of the lesser of
(A) ten percent (10%) of work-in-process and (B) $700,000, through and
including 0ctober 1, 1999; $600,000, thereafter and through and
including October 8, 1999; $500,000, thereafter and through and
including October 15, 1999; $400,000, thereafter and through and
including October 22, 1999; $300,000, thereafter and through and
including October 29, 1999; $200,000, thereafter and through and
including November 5, 1999; and $100,000, thereafter and through and
including November 12, 1999.
Except as otherwise expressly provided in paragraph 1(e) of
this Section 3 or elsewhere in this Financing Agreement, the Borrower shall
repay the Revolving Loans (including any Overadvances) on the Final Maturity
Date.
(b) Notwithstanding paragraph 1(a) of this Section 3, if the
sum of (i) the aggregate principal amount of the Pre-Petition Obligations other
than Pre-Petition Term Loans plus (ii) the aggregate amount of the Revolving
Loans plus (iii) the aggregate amount of the Letter of Credit Guaranties is such
that the Lenders are not required pursuant paragraph 1(a) of this Section 3 at
any time to advance an amount requested by the Borrower in a Notice of Borrowing
delivered as provided herein solely because of the level at such time of the
Borrowing Base, each Lender nonetheless agrees, subject to the terms and
conditions of this Financing Agreement, to advance such Lender's Share of the
requested borrowing, as an Overadvance to the Borrower, in Dollars, to the
extent that, after doing so, such Lender's Share of the Overadvances would not
exceed its Share of the Total Overadvance Facility Commitment.
(c) Subject to paragraph 1(g) of this Section 3, all requests
for loans and advances to be made pursuant to this Section 3 must be made
pursuant to a Notice of Borrowing delivered by the Borrower and received by an
officer of Lenders Agent no later than 1:00 p.m., New York time, of the day on
which such loans or advances are required. The Notice of Borrowing shall
specify: (1) the proposed date of funding
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(which shall be a Business Day); (2) the amount of Revolving Loans requested;
(3) whether or not a Default has occurred and is continuing; and (4) that no
Event of Default has occurred and is continuing. In lieu of delivering the above
described Notice of Borrowing, the Borrower may give Lenders Agent telephonic
notice by the required time specified above of the proposed borrowing; provided,
however, that such notice shall be promptly, and in any event within one
Business Day, confirmed in writing by delivery of a Notice of Borrowing to
Lenders Agent; Lenders Agent shall not incur any liability to the Borrower for
acting upon any telephonic notice that Lenders Agent believes in good faith to
have been given by a duly authorized officer or other Person authorized to
borrow on behalf of the Borrower or for otherwise acting in good faith under
this paragraph 1(c). The making of a loan or advance pursuant to telephonic
notice shall constitute a Revolving Loan under this Financing Agreement. Except
as expressly provided otherwise in this Financing Agreement, each advance to the
Borrower of a Revolving Loan shall, on the date of funding, be deposited, in
immediately available funds, in such account as the Borrower may from time to
time designate to Lenders Agent in writing.
(d) Each repayment of a Revolving Loan shall be deemed a
repayment of the oldest then outstanding of the advances hereunder made as
Revolving Loans, except that, if a repayment under the Overadvances is due on
any day pursuant to paragraph 1(e) and has not been made, to the extent
necessary for such repayment, all amounts repaid in respect of Revolving Loans
shall be applied first to such repayment of the Overadvances. The principal
amounts of the Revolving Loans that are repaid from time to time may be
reborrowed, on the terms and subject to the conditions set forth in this
Financing Agreement. All repayments of Revolving Loans shall be made pro rata
among the Revolving Loans of all the Lenders. Repayment of the principal of the
Revolving Loans, in whole or in part, on the Final Maturity Date or otherwise,
shall be made together with interest accrued on the principal amount being
repaid to but excluding the date of repayment.
(e) If the aggregate principal amount of the Overadvances
outstanding on any day exceeds the Total Overadvance Facility Commitment on such
day, the Borrower shall, immediately upon demand from Lenders Agent, repay such
portion of the outstanding principal amount of the Revolving Loans as may be
necessary to reduce the aggregate principal amount of the Overadvances
outstanding to the Total Overadvance Facility Commitment on such day, and if any
Overadvances remain outstanding on December 31, 1999, the aggregate principal
amount of the Overadvances then outstanding shall be repaid by the Borrower on
such day. If the aggregate principal amount of the Revolving Loans outstanding
on any day, other than Overadvances permitted to remain outstanding on such day
hereunder, exceeds the Borrowing Base on such day, the Borrower shall,
immediately upon demand from the Lenders Agent, repay such portion of the
outstanding principal amount of such Revolving Loans as may be necessary to
reduce the aggregate principal amount of such Revolving Loans outstanding to the
Borrowing Base. In the event this Financing Agreement and the Revolving Line of
Credit are terminated by either the Lender or the Borrower for any reason
whatsoever, the Revolving Loans shall become due and payable on the effective
date of such termination
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notwithstanding any provision to the contrary in any Revolving Loans Promissory
Note or this Financing Agreement.
(f) The Borrower shall execute and deliver to each Lender a
Revolving Loans Promissory Note, in the form of Exhibit A2, to evidence the
Revolving Loans to be extended by or owing to each Lender under this Financing
Agreement. Each such Revolving Loans Promissory Note shall be delivered not
later than the Business Day before the Closing Date, except as otherwise
provided in Section 9, paragraph 13(c).
(g) In order to repay all Obligations of the Borrower under
the Pre-Petition Agreements in respect of principal together with interest
accrued thereon on the date the Bankruptcy Court enters the Final Order (but, in
the case of Obligations in respect of the Pre-Petition Term Loans, only to the
extent Lenders Agent determines that they shall be repaid pursuant to this
paragraph on such date), the Borrower hereby agrees to borrow from the Lenders
as Revolving Loans hereunder (in accordance with the respective Commitment
shares of each Lender) such amount as is necessary, without regard to the
Borrowing Base at the time, to effect such repayments and interest payments,
after giving effect to the application of proceeds of the Term Loans to be made
on such date pursuant to Section 4. The Borrower hereby irrevocably instructs
and authorizes the Lenders to make such Revolving Loans available to the
Borrower on such date by applying the proceeds of such Loans in full to
repayment of such Obligations owing by the Borrower to the Lenders, and the
Lenders hereby agree, on the terms and subject to the conditions of this
Financing Agreement, to make such Revolving Loans to the Borrower on such date,
without need for delivery by the Borrower of a Notice of Borrowing. The Borrower
acknowledges that it shall have no right to receive any funds from the Lenders
on account of the Revolving Loans to be made by them under this subparagraph
otherwise than through application of the proceeds of such Loans as expressly
provided for in this subparagraph, and the Lenders will be deemed to have made
such Revolving Loans to the Borrower by applying the proceeds thereof in
accordance with this subparagraph.
(h) In order to provide for payment of all Out-of-Pocket
Expenses and fees (the Loan Facility Fee, the Collateral Management Fee and the
Agent and Syndication Fee) payable to Lenders Agent pursuant to Section 9 of
this Financing Agreement (for distribution by it as provided therein) on or
before the Closing Date, the Borrower hereby agrees that the proceeds of its
initial borrowing or borrowings hereunder of Revolving Loans shall be applied,
first, to payment of those expenses and fees and hereby irrevocably instructs
and authorizes the Lenders to make such Revolving Loans available to the
Borrower by applying the proceeds of such Loans first, to payment of such fees
and expenses in full and, after such payment, otherwise as provided in this
Financing Agreement for disbursements to the Borrower. The Borrower acknowledges
that it shall have no right otherwise to receive any funds from the Lenders on
account of the Revolving Loans to be made by the Lenders until all such expenses
and fees have been paid in full, and that the Lenders will be deemed to have
made such Revolving Loans to the Borrower by applying the proceeds thereof in
accordance with this subparagraph.
2. In furtherance of the continuing assignment and security
interest in the Borrower's Accounts, the Borrower will, upon the creation of
Accounts, execute and
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deliver to Lenders Agent in such form and manner as Lenders Agent may reasonably
require, solely for Lenders Agent's convenience in maintaining records of
collateral, such confirmatory schedules of Accounts as Lenders Agent may
reasonably request, and such other appropriate reports designating, identifying
and describing the Accounts as Lenders Agent may reasonably require. In
addition, upon Lenders Agent's request the Borrower shall provide Lenders Agent
with copies of agreements with, or purchase orders from, the Borrower's
customers, and copies of invoices to customers, proof of shipment or delivery
and such other documentation and information relating to said Accounts and other
collateral as Lenders Agent may reasonably require. Failure to provide Lenders
Agent with any of the foregoing shall in no way affect, diminish, modify or
otherwise limit the security interests granted herein. The Borrower hereby
authorizes Lenders Agent to regard the Borrower's printed name or rubber stamp
signature on assignment schedules or invoices as the equivalent of a manual
signature by one of the Borrower's authorized officers or agents.
3. The Borrower hereby represents and warrants as to itself
that: each Account is based on an actual and bona fide sale and delivery of
goods or rendition of services to customers, made by the Borrower in the
ordinary course of its business; the goods and inventory being sold and the
Accounts created are the exclusive property of the Borrower and are not and
shall not be subject to any lien, consignment arrangement, encumbrance, security
interest or financing statement whatsoever, other than the Permitted
Encumbrances and the Tax Liens (as to which, from and after entry of the Interim
Order, the Borrower represents and warrants that the liens granted under this
Financing Agreement shall at all times be senior to and shall prime the Tax
Liens); the invoices evidencing such Accounts are in the name of the Borrower;
and the customers of the Borrower have accepted the goods or services, owe and
are obligated to pay the full amounts stated in the invoices according to their
terms, without dispute, offset, defense, counterclaim or contra, except for
disputes and other matters arising in the ordinary course of business of which
the Borrower has advised Lenders Agent pursuant to paragraph 4 of this Section
3. The Borrower confirms to Lenders Agent and each Lender that any and all taxes
or fees relating to its business, its sales, the Accounts or goods relating
thereto, are its sole responsibility and that same will be paid by the Borrower
when due and that none of said taxes or fees represent a lien on or claim
against the Accounts. The Borrower also warrants and represents that it is a
duly and validly existing corporation and is qualified in all states where the
failure to so qualify would have a adverse effect on the business of the
Borrower or the ability of the Borrower to enforce collection of Accounts due
from customers residing in that state. The Borrower agrees to maintain such
books and records regarding Accounts as Lenders Agent may reasonably require and
agrees that the books and records of the Borrower will reflect Lenders Agent's
and the Lenders' interest in the Accounts. All of the books and records of the
Borrower will be available to Lenders Agent and each Lender at normal business
hours, including any records handled or maintained for the Borrower by any other
company or entity.
4. The Borrower agrees to notify Lenders Agent promptly of any
matters materially affecting the value, enforceability or collectability of any
Account or Accounts in excess of $250,000 in the aggregate outstanding at any
time and of all
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material customer disputes, offsets, defenses, counterclaims, returns,
rejections and all reclaimed or repossessed merchandise or goods. The Borrower
agrees to issue credit memoranda promptly (with duplicates to Lenders Agent upon
request after the occurrence of an Event of Default) upon accepting returns or
granting allowances, and may continue to do so until Lenders Agent has notified
the Borrower that an Event of Default has occurred and that all future credits
or allowances are to be made only after Lenders Agent's prior written approval.
Upon the occurrence and during the continuance of an Event of Default and on
notice from Lenders Agent, the Borrower agrees that all returned, reclaimed or
repossessed merchandise or goods shall be set aside by the Borrower, marked with
Lenders Agent's name and held by the Borrower for Lenders Agent's account as
owner and assignee for the benefit of Lenders Agent and the Lenders.
5. The Borrower shall maintain the bank accounts listed on
Schedule 3.5 hereto in the name of the Borrower for the purpose of, inter alia,
receiving proceeds relating to the Accounts with the banks specified therein
(the "Collection Bank(s)") hereby designated as the "Collection Accounts." The
Borrower agrees that it will not designate any other bank account as a
Collection Account without the prior written consent of Lenders Agent. Any
checks, cash, notes or other instruments or property received by the Borrower
with respect to any Accounts shall be held by the Borrower in trust for Lenders
Agent separate from the Borrower's own property and funds and immediately turned
over to Lenders Agent with proper assignments or endorsements by deposit to the
Collection Account. All amounts received by Lenders Agent in payment of Accounts
will be credited to the Borrower's accounts on the next Business Day after
Lenders Agent's receipt of "collected funds" at Lenders Agent's bank account on
the Business Day of receipt if received no later than 1:00 p.m. or on the second
succeeding Business Day if received after 1:00 p.m. No checks, drafts or other
instrument received by Lenders Agent shall constitute final payment to Lenders
Agent or any Lender unless and until such instruments have actually been
collected. Until Lenders Agent has advised the Borrower to the contrary after
the occurrence of an Event of Default, the Borrower may and will enforce,
collect and receive all amounts owing on the Accounts for the benefit of Lenders
Agent and the Lenders and on their behalf, but at the Borrower's expense; such
privilege shall terminate at the election of Lenders Agent, upon the occurrence
and during the continuance of any Event of Default.
6. During the period beginning on the Filing Date and ending
on the earlier of the date the Final Order is entered or the Commitment
Termination Date, Lenders Agent may, in its sole discretion, apply any and all
amounts on deposit in the Collection Accounts at any time to Out-of-Pocket
Expenses and fees due and payable hereunder which have not been paid and to the
repayment of all outstanding Indebtedness under the Pre-Petition Agreements and,
thereafter, first, to any amounts that remain outstanding as Overadvances and,
second, to repayment of the Borrower's remaining Obligations under this
Financing Agreement (subject to such other application as may be permitted
hereunder in connection with any continuing Default or Event of Default). Any
transfers of funds held in the Collection Accounts from Lenders Agent to the
Borrower shall constitute new Loans (which, if appropriate, shall be
Overadvances) made under this Financing Agreement by each of the Lenders in an
amount equal to such Lender's Share of the amount of funds so transferred.
Without limiting the reference above to the
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discretion of the Lenders Agent regarding application of amounts in deposit in
the Collection Accounts, it is expressly understood that Lenders Agent, in its
sole discretion, shall be entitled from time to time to determine whether such
amounts should be applied to any or all of the Pre-Petition Obligations in
respect of the Pre-Petition Term Loans before application to the Borrower's
Obligations under this Financing Agreement.
7. Lenders Agent shall maintain a separate account on its
books in the name of the Borrower in which the Borrower will be charged with
loans and advances made by the Lenders to it or for its account, and with any
other Obligations, including any and all costs, expenses and reasonable
attorney's fees which the Lender or Lenders Agent may incur in connection with
the exercise by or for the Lender or Lenders Agent of any of the rights or
powers herein conferred upon the Lender or Lenders Agent, or in the prosecution
or defense of any action or proceeding to enforce or protect any rights of the
Lender or Lenders Agent in connection with this Financing Agreement or the
Collateral assigned hereunder, or any Obligations owing to the Lender or Lenders
Agent by the Borrower. The Borrower will be credited with all amounts received
by Lenders Agent from the Borrower or from others for the Borrower's account,
including, as above set forth, all amounts received by Lenders Agent in payment
of assigned Accounts and such amounts will be applied to payment of the
Obligations. In no event shall prior recourse to any Accounts or other security
granted to or by the Borrower be a prerequisite to the Lenders' or Lenders
Agent's right to demand payment of any Obligation. Further, it is understood
that neither the Lenders nor the Lenders Agent shall have any obligation
whatsoever to perform in any respect any of the Borrower's contracts or
obligations relating to the Accounts.
8. After the end of each month, Lenders Agent shall promptly
send the Borrower a statement showing the accounting for the charges, loans,
advances and other transactions occurring between each Lender and the Borrower
during that month. The monthly statements shall be deemed correct and binding
upon the Borrower and shall constitute an account stated between the Borrower
and such Lender unless Lenders Agent receives a written statement of the
exceptions within thirty (30) days of the date of the monthly statement.
9. In the event this Financing Agreement or the Revolving Line
of Credit is terminated by the Lenders in accordance with the provisions hereof
or the Borrower for any reason whatsoever, the Revolving Loans shall become due
and payable on the effective date of such termination, notwithstanding any
provision to the contrary in the Revolving Loans Promissory Notes or this
Financing Agreement.
SECTION 4. TERM LOANS.
1. (a) (i) Each Lender agrees, subject to the terms and
conditions of this Financing Agreement, to make a loan to the Borrower, in
Dollars, on the day on which the Final Order is entered by the Bankruptcy Court,
in an amount equal to such Lender's Share of the First Pre-Petition Obligation
Payment (as defined below), provided the aggregate amount of the Loans
outstanding after making these Term Loans, when added to then outstanding Loans
and the aggregate amount outstanding of the Letter of Credit
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Guaranties would not exceed the Total Commitment. For this purpose, "First
Pre-Petition Obligation Payment" means the sum of (i) the Pre-Petition
Obligations other than those that relate to the Pre-Petition Term Loans plus
(ii) such portion of the Pre-Petition Obligations relating to the Pre-Petition
Term Loans as Lenders Agent determines shall be repaid on such day pursuant to
this provision.
(ii) Thereafter, if Lenders Agent determines at any time (from
time to time) that all or any portion of the outstanding Pre-Petition
Obligations relating to the Pre-Petition Term Loans (the "Further Pre-Petition
Obligation Payment") shall be paid with further Term Loans pursuant to this
Financing Agreement, each Lender agrees, subject to the terms and conditions of
this Financing Agreement, to make a loan to the Borrower, in Dollars, on the day
specified for the purpose by advance notice from Lenders Agent to the Lenders
and the Borrower, in an amount equal to such Lender's Share of such Further
Pre-Petition Obligation Payment, provided the aggregate amount of the Loans
outstanding after making these Term Loans, when added to then outstanding Loans
and the aggregate amount outstanding of the Letter of Credit Guaranties would
not exceed the Total Commitment.
(iii) The Borrower hereby agrees to borrow an amount equal to
the First Pre-Petition Obligation Payment on the day on which the Final Order is
entered by the Bankruptcy Court and hereby agrees, thereafter, from time to time
to borrow additional amounts equal to each Further Pre-Petition Obligation
Payment, on the date specified for the purpose by Lenders Agent by the notice
referred to in the preceding paragraph, in each case, from the Lenders in
accordance with their respective Commitments. The Borrower also agrees, prior to
the date on which the Final Order is entered by the Bankruptcy Court, to make
such prepayments of Revolving Loans as may be necessary to enable it to make the
Term Loan borrowings contemplated in this provision and hereby irrevocably
instructs and authorizes the Lenders to make the Term Loans to be made by them
hereunder on the dates specified above available to the Borrower by applying the
proceeds of the Term Loans in full to repayment of the Obligations owing by the
Borrower to the Lenders under the Pre-Petition Agreements on account of
principal and, to the extent possible, interest (but, in the case of Obligations
in respect of the Pre-Petition Term Loans, only to the extent Lenders Agent
determines that they shall be repaid pursuant to this paragraph on such date).
Except as otherwise provided in this Financing Agreement, the Borrower shall
repay the Term Loans made by the Lenders pursuant to this provision as follows:
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(i) in five (5) consecutive, successive monthly
installments each in the amount of $50,000 (to be
distributed among the respective Term Loans of the
Lenders in accordance with their Shares), with the
first installment due on the last day of July 1999
and with subsequent installments due on each Monthly
Date thereafter to and including the last day of
November 1999; and
(ii) in one (1) final installment equal to the remaining
principal amount outstanding of each such Loan,
payable on the Final Maturity Date,
subject to such adjustment of those repayment installments as Lenders Agent may
specify if any portion of the principal of the Term Loans has been prepaid
pursuant to subparagraph (b) of this Section 4, paragraph 1, and subject to the
following: if any Term Loans are made. after the date on which the Bankruptcy
Court enters the Final Order, such Term Loans shall be repaid in repayment
installments in such amounts, and on such dates, as shall be identified by
notice from Lenders Agent to the Lenders and the Borrower and as shall be set,
to the extent possible, so that such Term Loans amortize at the same or
approximately the same speed as the Term Loans made on the date on which the
Bankruptcy Court enters the Final Order.
(b) If (and each time) the Borrower receives the proceeds of
sale or other disposition of any property (including, without limitation, any
Asset Disposition Proceeds), upon receipt thereof the Borrower shall pay such
proceeds to Lenders Agent for application (subject to the remainder of this
paragraph ) to pay or prepay the Borrower's Obligations under the Pre-Petition
Agreements and under this Financing Agreement in such order as Lenders Agent, in
its sole discretion, shall determine (and, without limiting the foregoing, no
such proceeds shall be applied to repayment of the Pre-Petition Term Loan
Obligations at any time unless Lenders Agent shall have determined that such
application shall then be made). In addition, all payments and other amounts
received from the Borrower or otherwise for application to the Pre-Petition Term
Loan Obligations shall, regardless of the proposed application of such payments
or other amounts, be applied to the payment or prepayment of the Pre-Petition
Obligations and the Borrower's Obligations under this Financing Agreement at the
time outstanding in such order as Lenders Agent, in its sole discretion, shall
determine. If Lenders Agent has received any amount from the disposition of any
of the Borrower's property that, at the time and in its sole discretion, it
determines should be applied to repay the Pre-Petition Term Loan Obligations at
a future time, Lenders Agent shall hold such amount in reserve as Collateral for
such future application, or for such other application to the Borrower's
Obligations under this Financing Agreement or the Pre-Petition Obligations as
Lenders Agent may subsequently determine shall be made.
(c) The principal amounts of the Term Loans that are repaid
from time to time may not be reborrowed.
2. The Borrower hereby agrees to execute and deliver to
Lenders Agent, to evidence each Term Loan to be made by each Lender, a Term Loan
Promissory Note in the form of Exhibit A1, as provided in Section 2, paragraph
2(p).
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3. The Borrower acknowledges that it shall have no right to
receive any funds from the Lenders on account of the Term Loans to be made by
them hereunder otherwise than through application of the proceeds of the Terms
Loans as expressly provided for in paragraph 1 of this Section 4, and the
Lenders will be deemed to have made the Term Loans to be made by them hereunder
to the Borrower by applying the proceeds thereof in accordance with such
provision.
4. The Borrower may prepay the Term Loans in whole or in part
at any time, at its option. Each optional prepayment of any portion of the Term
Loans made pursuant to this paragraph 4 shall be applied to the last maturing
installment(s) of principal on the Term Loans. All prepayments of Term Loans
shall be made pro rata among the Term Loans made by all the Lenders. Repayment
of the principal of the Term Loans, in whole or in part, on any scheduled
repayment date or otherwise, shall be made together with interest accrued on the
principal amount being repaid to but excluding the date of repayment.
5. In the event this Financing Agreement and the Revolving
Line of Credit are terminated by the Lenders or the Borrower for any reason
whatsoever, the Term Loans shall become due and payable on the effective date of
such termination notwithstanding any provision to the contrary in any Term Loan
Promissory Note or this Financing Agreement.
6. The Borrower hereby authorizes Lenders Agent to charge its
account with the amount of all amounts due under this Section 4 as such amounts
become due. The Borrower confirms that any charges which Lenders Agent may so
make to its account as herein provided will be made as an accommodation to the
Borrower and solely at Lenders Agent's discretion.
SECTION 5. LETTERS OF CREDIT.
In order to assist the Borrower in establishing or opening
Letters of Credit with an Issuing Bank to cover the purchase of inventory,
equipment or otherwise, the Borrower has requested CITBC to join in the
applications for such Letters of Credit, and/or guarantee payment or performance
of such Letters of Credit and any drafts or acceptances thereunder through the
issuance of the Letter of Credit Guaranties, thereby lending CITBC's credit to
the Borrower and CITBC has agreed to do so. These arrangements shall be handled
by CITBC subject to the terms and conditions set forth below.
1. (a) The amount, purpose and extent of the Letters of Credit
and changes or modifications by the Borrower and/or the Issuing Bank of the
terms and conditions thereof shall in all respects be subject to the prior
approval of CITBC in the exercise of its reasonable discretion; provided,
however, that: (a) in no event may the aggregate amount of all such outstanding
Letters of Credit exceed, in the aggregate, at any one time $1,200,000, and (b)
the Letters of Credit and all documentation in connection therewith shall be in
form and substance satisfactory to the Borrower, CITBC and the Issuing Bank and
(c) in no event may the aggregate amount of all such
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outstanding Letters of Credit plus outstanding Loans of CITBC (adjusted downward
for the sum of the Letter of Credit Guaranty Shares of other Lenders represented
by Participations in such Loans) exceed, in the aggregate, at any one time
CITBC's Commitment at such time.
2. CITBC shall have the right, without notice to the Borrower,
to charge the Borrower's account on CITBC's books with the amount of any and all
indebtedness, liability or obligation of any kind incurred by CITBC under the
Letter of Credit Guaranties at the earlier of (a) payment by CITBC under the
Letter of Credit Guaranties, or (b) the occurrence of an Event of Default. Any
amount charged to Borrower's loan account shall be deemed a Revolving Loan
hereunder of CITBC and shall incur interest at the rate provided in Section 9,
paragraph 1 of this Financing Agreement (subject to Section 11, paragraph 2).
3. The Borrower unconditionally agrees to indemnify Lenders
and Lenders Agent and holds them harmless from any and all loss, claim or
liability incurred by them arising from any transactions or occurrences relating
to Letters of Credit established or opened for the Borrower's account, the
collateral relating thereto and any drafts or acceptances thereunder, and all
Obligations thereunder, including any such loss or claim due to any action taken
by any Issuing Bank, other than for any such loss, claim or liability arising
out of the gross negligence or willful misconduct by CITBC under the Letter of
Credit Guaranties. The Borrower further agrees to hold CITBC harmless from any
errors or omission, negligence or misconduct by the Issuing Bank. The Borrower's
unconditional obligation to CITBC hereunder shall not be modified or diminished
for any reason or in any manner whatsoever, other than as a result of CITBC's
gross negligence or willful misconduct. The Borrower agrees that any charges
incurred by Lenders for the Borrower's account as a result of claims by any
Issuing Bank shall be conclusive on Lenders and may be charged to the Borrower's
account.
4. Lenders shall not be responsible for: the existence,
character, quality, quantity, condition, packing, value or delivery of the goods
purporting to be represented by any documents; any difference or variation in
the character, quality, quantity, condition, packing, value or delivery of the
goods from that expressed in the documents; the validity, sufficiency or
genuineness of any documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; the time, place, manner or order in which
shipment is made; partial or incomplete shipment, or failure or omission to ship
any or all of the goods referred to in the Letters of Credit or documents; any
deviation from instructions; delay, default, or fraud by the shipper and/or
anyone else in connection with the Collateral or the shipping thereof; or any
breach of contract between the shipper or vendors and the Borrower. Furthermore,
without being limited by the foregoing, Lenders shall not be responsible for any
act or omission with respect to or in connection with any Collateral.
5. The Borrower agrees that any action taken by Lenders, if
taken in good faith, or any action taken by any Issuing Bank, under or in
connection with the Letters of Credit, the Letter of Credit Guaranties, the
drafts or acceptances, or the
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Collateral, shall be binding on the Borrower and shall not put Lenders in any
resulting liability to the Borrower. In furtherance thereof, CITBC shall have
the full right and authority to clear and resolve any questions of noncompliance
of documents; to give any instructions as to acceptance or rejection of any
documents or goods; to execute any and all steamship or airways guaranties (and
applications therefor), indemnities or delivery orders; to grant any extensions
of the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or acceptances; all in CITBC's
sole name, and the Issuing Bank shall be entitled to comply with and honor any
and all such documents or instruments executed by or received solely from CITBC,
all without any notice to or any consent from the Borrower.
6. Without CITBC's express consent and endorsement in writing,
the Borrower agrees: (a) not to execute any and all applications for steamship
or airway guaranties, indemnities or delivery orders; to grant any extensions of
the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or acceptances; and (b) after the
occurrence of an Event of Default which is not cured within any applicable grace
period, if any, or waived by Required Lenders, not to (i) clear and resolve any
questions of noncompliance of documents, or (ii) give any instructions as to
acceptance or rejection of any documents or goods.
7. The Borrower agrees that any necessary import, export or
other licenses or certificates for the import or handling of the Collateral will
have been promptly procured; all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of the Collateral, or the
financing thereof will have been promptly and full complied with; and any
certificates in that regard that CITBC may at any time request will be promptly
furnished. In this connection, the Borrower warrants and represents that all
shipments made under any such Letters of Credit are in accordance with the laws
and regulations of the countries in which the shipments originate and terminate,
and are not prohibited by any such laws and regulations. The Borrower assumes
all risk, liability and responsibility for, and agrees to pay and discharge, all
present and future local, state, federal or foreign taxes, duties, or levies.
Any embargo, restriction, laws, customs or regulations of any country, state,
city, or other political subdivision, where the Collateral is or may be located,
or wherein payments are to be made, or wherein drafts may be drawn, negotiated,
accepted, or paid, shall be solely the Borrower's risk, liability and
responsibility.
8. Upon any payments made to the Issuing Bank under a Letter
of Credit Guaranty, Lenders shall acquire by subrogation, any rights, remedies,
duties or obligations granted or undertaken by the Borrower to the Issuing Bank
in any application for Letters of Credit, any standing agreement relating to
Letters of Credit or otherwise, all of which shall be deemed to have been
granted to Lenders and apply in all respects to Lenders and shall be in addition
to any rights, remedies, duties or obligations contained herein.
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SECTION 6. COLLATERAL.
1. To induce Lenders to make the Loans, the Borrower hereby
(i) reaffirms the validity and first priority of the liens and security
interests previously granted to Lenders Agent in the Pre-Petition Collateral
under the Pre-Petition Agreements including, without limitation, under the
Patent Security Agreement and under all Mortgages in favor of Lenders Agent
granted prior to the Filing Date (subject only to perfected Permitted
Encumbrances arising prior to and existing on the Filing Date that may be
senior), (ii) pledges and grants to Lenders Agent as security for the
Obligations a continuing security interest and first priority lien (subject only
to perfected Permitted Encumbrances arising prior to and existing on the Filing
Date that may be senior and the Tax Liens) in accordance with sections 364(c)(2)
and (3) of the Bankruptcy Code in and to the Pre-Petition Collateral, (iii)
further pledges and grants to Lenders Agent as security for the Obligations a
first priority priming lien which is senior to the Tax Liens in accordance with
section 364(d)(1) of the Bankruptcy Code and (iv) further pledges and grants to
Lenders Agent for the benefit of Lenders Agent and the Lenders as security for
the Obligations a continuing security interest and first priority lien (subject
only to perfected Permitted Encumbrances arising prior to and existing on the
Filing Date that may be senior) in accordance with sections 364(c)(2) and (3)
and 364(d)(1) of the Bankruptcy Code and security interest in and to the payment
delivered by the Borrower to Lenders Agent pursuant to Section 9, paragraph
12(a) of this Financing Agreement, all property and interests of the Borrower
and its estate, real or personal, tangible or intangible, whether now owned or
existing or hereafter acquired or arising and regardless of where located
including, but not limited to:
(a) All Collateral, whether presently in existence or
hereafter acquired or created, however acquired or created, and which is owned
by the Borrower or in which the Borrower has any interest, whether held by the
Borrower or others for its account, and, if any Collateral is Equipment, whether
the Borrower's interest in such Equipment is as owner or lessee or conditional
vendee;
(b) All Equipment whether the same constitutes personal
property or fixtures, including, but without limiting the generality of the
foregoing, all dies, jigs, tools, benches, tables, accretions, component parts
thereof and additions thereto, as well as all accessories, motors, engines and
auxiliary parts used in connection with or attached to the Equipment;
(c) All Inventory and any portion thereof which may be
returned, rejected, reclaimed or repossessed by either Lenders Agent or the
Borrower from the Borrower's customers, as well as all supplies, goods,
incidentals, packaging materials, labels and any other items which contribute to
the finished goods or products manufactured or processed by the Borrower, or to
the sale, promotion or shipment thereof;
(d) All present and future Accounts;
(e) All present and future General Intangibles;
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(f) All Real Estate; and
(g) All proceeds and products of the Collateral.
2. The Borrower hereby covenants, represents and warrants
that, from and after entry of the Interim Order (i) pursuant to Section
364(c)(1) of the Bankruptcy Code, the Obligations of the Borrower hereunder and
under the Pre-Petition Agreements shall at all times constitute allowed
administrative expense claims in the Case having priority over all
administrative expenses of the kind specified in Sections 503(b), 507(b) or
546(c) of the Bankruptcy Code and (ii) pursuant to Section 364(c)(2) and
364(d)(1) of the Bankruptcy Code, the Obligations of the Borrower hereunder and
under the Pre-Petition Agreements shall at all times after entry of the Interim
Order be secured by a first priority lien (including, without limitation, a
first-priority priming lien senior to the Tax Liens) in the Collateral and all
cash maintained in the cash concentration accounts forming part of the
Borrower's lock box arrangements referred in Section 2, paragraphs (1) and (2),
and the cash Collateral Account and any direct investments of the funds
contained therein, subject in each case only to (x) the payment of allowed and
unpaid professional fees and disbursements incurred by the Borrower and any
statutory committees appointed in the Cases in an aggregate amount not in excess
of $200,000, (y) the payment of fees pursuant to 28 U.S.C. ss.1930
(collectively, the "Carve-Out"), and (z) Permitted Encumbrances arising and
perfected prior to the Filing Date, CITBC agrees that so long as no Event of
Default or event which with the giving of notice or lapse of time or both would
constitute an Event of Default shall have occurred, the Borrower shall be
permitted to pay compensation and reimbursement of expenses allowed and payable
under 11 U.S.C. ss. 330 and 11 U.S.C. ss. 331 (to the extent allowed by order of
the Bankruptcy Court), as the same may be due and payable, and the same shall
not reduce the Carve-Out.
3. The Borrower agrees to safeguard, protect and hold all
Inventory for the Lender's account and make no disposition thereof except in the
regular course of business of the Borrower. Until Lenders Agent has given the
Borrower notice to the contrary, as provided for below, any Inventory may be
sold and shipped by the Borrower to its customers in the ordinary course of the
Borrower's business, on open account and on terms currently being extended by
the Borrower to its customers; provided that all proceeds of all sales
(including cash, accounts receivable, checks, notes, instruments for the payment
of money and similar proceeds) are forthwith transferred, endorsed, and turned
over and delivered to Lenders Agent in accordance with this paragraph 3, and
Lenders Agent shall have the right to withdraw this permission at any time upon
the occurrence of an Event of Default and until such time as such Event of
Default is waived or cured to Lender's Agent's satisfaction, in which event no
further disposition shall be made of the Inventory by the Borrower without
Lenders Agent's prior written approval. Cash sales or sales of Inventory in
which a lien upon, or security interest in, Inventory is retained by the
Borrower shall be made by the Borrower only with the approval of Lenders Agent,
and the proceeds of such sales or sales of Inventory for cash shall not be
commingled with the Borrower's other property, but shall be segregated, held by
the Borrower in trust for Lenders Agent as Lenders Agent's exclusive property
(for its benefit and for the benefit of the Lenders), and shall be delivered
immediately by the Borrower
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to Lenders Agent in the identical form received by the Borrower by deposit to
the Collection Accounts and shall be applied to such of the Obligations as
Lenders Agent may decide in its sole discretion. Upon the sale, exchange, or
other disposition of Inventory, as herein provided, the security interest in the
Borrower's Inventory provided for herein shall, without break in continuity and
without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts receivable,
contract rights, documents of title, shipping documents, chattel paper and all
other cash and noncash proceeds of such sale, exchange or disposition. As to any
such sale, exchange or other disposition, Lenders Agent shall have all of the
rights of an unpaid seller, including stoppage in transit, replevin, rescission
and reclamation.
4. The Borrower will, at its own cost and expense, keep the
Equipment in as good and substantial repair and condition as the same is now or
at the time the lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and replacements
when and where necessary. Except as provided herein, the Borrower also agrees to
make no disposition thereof whether by sale, exchange or otherwise, unless the
Borrower first obtains the prior written approval of Lenders Agent and the
proceeds of any such disposition shall be deposited in the Collection Accounts.
Upon the sale, exchange, or other disposition of the Equipment, as herein
provided, the security interest provided for herein shall, without break in
continuity and without further formality or act, continue in, and attach to, all
proceeds, including any instruments for the payment of money, accounts
receivable, contract rights, documents of title, shipping documents, chattel
paper and all other cash and noncash proceeds of such sales, exchange or
disposition. As to any such sale, exchange or other disposition, Lenders Agent
shall have all of the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation. Notwithstanding anything hereinabove
contained to the contrary, upon written notice from the Borrower to Lenders
Agent prior to any disposition of Equipment, the Borrower may sell, exchange or
otherwise dispose of obsolete Equipment or Equipment no longer needed in the
Borrower's operations; provided, however, that (a) the then book value of the
Equipment so disposed of by the Borrower does not exceed $50,000 in any
consecutive twelve-month period; and provided, further, that no such prior
notice shall be required in respect of sales, exchanges, and other dispositions
of Equipment unless the book value of such Equipment disposed of without such
prior notice has exceeded, or would upon such disposition, exceed $50,000 in the
aggregate for the Borrower in any consecutive twelve-month period, and (b) the
proceeds of such sales or dispositions are delivered to Lenders Agent in
accordance with the foregoing provisions of this paragraph, except that the
Borrower may retain and use such proceeds to purchase forthwith replacement
Equipment which the Borrower determines in its reasonable business judgment to
have a collateral value at least equal to the Equipment so disposed of or sold;
provided, however, that the aforesaid right shall automatically cease upon the
occurrence and during the continuance of an Event of Default which is not
waived.
5. The rights and security interests granted to the Lenders
Agent hereunder are to continue in full force and effect, notwithstanding the
termination of this Financing Agreement or the fact that the account maintained
in the Borrower's name on the books of Lenders Agent or the Lenders may from
time to time be temporarily in a
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credit position, until the final payment in full to the Lenders Agent and the
Lenders of all Obligations and the termination of this Financing Agreement. Any
delay, or omission by the Lenders or Lenders Agent to exercise any right under
this Section, shall not be deemed a waiver thereof, or be deemed a waiver of any
other right, unless such waiver be in writing and signed by the Lenders Agent
and Required Lenders. A waiver on any one occasion shall not be construed as a
bar to or waiver of any right or remedy on any future occasion.
6. The Borrower agrees that (i) its obligations hereunder
shall not be discharged by the entry of an order confirming a Plan of
Reorganization (and the Borrower pursuant to Section 1141(d)(4) of the
Bankruptcy Code, hereby waives any such discharge) and (ii) the Super-Priority
Claim granted pursuant to the Interim Order and the Final Order, and as
described herein and the liens granted pursuant to the Interim Order and the
Final Order, the Loan Documents and as described herein shall not be affected in
any manner by the entry of an order confirming a Plan of Reorganization.
7. The Borrower will, at its sole cost and expense, do,
execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment, transfers and
assurances as Lenders Agent shall from time to time reasonably require, for the
better assuring, conveying, assigning, transferring and confirming unto the
Lenders and Lenders Agent of the property and rights hereby conveyed or assigned
or intended now or hereafter so to be, or which the Borrower may be or may
hereafter become bound to convey or assign to the Lenders and Lenders Agent, or
for carrying out the intention or facilitating the performance of the terms of
each mortgage granted pursuant to the terms hereof, or for filing, registering
or recording of such mortgage and, on demand, will execute and deliver, and
hereby authorizes Lenders Agent to execute and file in the Borrower's name in
the event Borrower fails to promptly do so or if there has occurred a Default or
Event of Default, to the extent it may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments, to evidence or
perfect more effectively Lenders Agent's security interest in and the lien
hereof upon the Collateral for the benefit of Lenders Agent and the Lenders.
8. The rights and security interests granted to the Lender and
Lenders Agent hereunder and under the Mortgages are to continue in full force
and effect until the final payment in full to Lenders Agent and the Lenders of
all Obligations and the termination of this Financing Agreement.
9. To the extent that the Obligations are now or hereafter
secured or guaranteed by any assets or property other than the Collateral or by
the guarantee, endorsement, assets or property of any other Person, then Lenders
Agent shall have the right in its sole discretion to determine which rights,
security, liens, security interests or remedies Lenders Agent or the Lenders
shall at any time pursue, foreclose upon, relinquish, subordinate, modify or
take any other action with respect to, without in any way modifying or affecting
any of them, or any of the Lenders' or Lenders Agent's rights hereunder.
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10. Any reserves or balances to the credit of the Borrower and
any other property or assets of the Borrower in the possession of Lenders Agent
or any Lender may be held by Lenders Agent or the Lenders as security for any
Obligations and applied in whole or partial satisfaction of all Obligations when
due. The liens and security interests granted herein and any other lien or
security interest Lenders Agent or any Lender may have in any other assets of
the Borrower, shall secure payment and performance of all now existing and
future Obligations. Lenders Agent may in its discretion charge any or all of the
Obligations to the account of the Borrower when due.
11. This Financing Agreement and the obligation of the
Borrower to perform all of its covenants and obligations hereunder in relation
to the Pre-Petition Obligations reaffirmed herein are further secured by certain
Mortgages executed by the Borrower which are included among the Pre-Petition
Agreements.
12. The Borrower shall give to Lenders Agent for the benefit
of the Lenders and Lenders Agent from time to time such mortgage, deed of trust
or assignment on the Real Estate or real estate acquired after the date hereof
as Lenders Agent shall require to obtain a valid first lien thereon subject only
to Permitted Encumbrances.
13. The Borrower shall give to Lenders Agent for the benefit
of the Lenders, from time to time such pledge or security agreements with
respect to subsequently acquired Collateral of the Borrower, and such guaranty
of the Obligations, as Lenders Agent shall require to obtain an enforceable
guaranty of the Obligations and valid first liens on such Collateral subject to
Permitted Encumbrances.
14. Upon the occurrence of an Event of Default, the automatic
stay provided under section 362 of the Bankruptcy Code shall be deemed
automatically vacated to permit Lenders Agent, upon three (3) Business Days'
prior written notice from Lenders Agent to the Borrower, to take any action
permitted under this Agreement, the other Loan Documents, the Pre-Petition
Agreements, the Bankruptcy Code, the UCC or other applicable law with respect to
the Collateral.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
The Borrower represents, covenants and warrants as follows:
1. CORPORATE EXISTENCE.
(a) The Borrower has the corporate power to own its property
and to carry on its business as now being conducted. The Borrower has delivered
to Lenders Agent true, complete and correct copies of its certificate of
incorporation and by-laws, as amended and in full force and effect on the date
hereof and a list of all jurisdictions in which it is qualified or licensed to
do business.
(b) The Borrower has all requisite power and authority to
enter into and perform all its obligations under this Financing Agreement and
the other Loan Documents to which it is a party.
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The Borrower has identified on Schedule 7.1 the name and
jurisdiction of incorporation or organization of the Borrower and has identified
therein all franchise taxes and penalties and interest and other amounts
relating thereto that have not been paid when due in such jurisdiction and any
other matters that prevent the Borrower from being in good standing.
2. AUTHORIZATION OF FINANCING AGREEMENT AND OTHER DOCUMENTS.
The Borrower has taken all actions necessary to authorize it to enter into and
perform its obligations under this Financing Agreement and the other Loan
Documents to which it is a party, and to consummate the transactions
contemplated hereby and thereby. Each such Loan Document when executed and
delivered by the Borrower as provided in this Financing Agreement will be legal,
valid and binding obligations of the Borrower and enforceable in accordance with
its respective terms.
3. FINANCIAL STATEMENTS. Borrower has furnished to Lenders
Agent the Balance Sheet of Borrower as at July 31, 1998, and the related
statements of earnings, stockholders' equity and cash flows of Borrower for the
fiscal year ended July 31, 1998, all certified by PriceWaterhouseCoopers,
including in each case the related schedules and notes.
All such financial statements (including any related schedules
and/or notes) have been prepared in accordance with GAAP consistently applied,
except to the extent set forth in the notes to such financial statements,
throughout the periods involved and to the extent required by such principles
show all liabilities, direct and contingent, of Borrower. The balance sheets and
the related schedules and notes present fairly the financial condition of
Borrower as at the respective dates thereof; and the net income and
stockholders' equity statements and the related schedules and notes present
fairly the results of the operations of Borrower for the respective periods
indicated.
4. NO VIOLATION. Neither the execution nor delivery of this
Financing Agreement or any other Loan Document, nor the performance by the
Borrower to the extent a party thereto, of its obligations hereunder or
thereunder, nor the consummation of the transactions contemplated hereby and
thereby, will:
(a) violate any provision of the charter or by-laws of the
Borrower;
(b) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority to which the Borrower
or any of its respective properties may be subject;
(c) cause the acceleration of the maturity of any debt or
obligation of the Borrower;
(d) violate, or be in conflict with, or constitute a default
under, or permit the termination of, or, except as set forth in Schedule 7.4,
require the consent of any Person under, or result in the creation of any lien
(other than the lien contemplated in the Loan Documents) upon any property of
the Borrower under, any agreement to which the
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Borrower is a party or by which the Borrower (or its respective properties) may
be bound other than as would not have a material adverse effect on the Borrower;
or
(e) except for the approval of the Bankruptcy Court and entry
of the Interim Order and the Final Order, require any consent, approval or other
action by any court or administrative or governmental body or any other Person
pursuant to, the charter or by-laws of the Borrower, any award of any arbitrator
or any agreement (including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which the Borrower is
subject.
Except with regard to the Pre-Petition Agreements, the
Borrower is not a party to, or otherwise subject to any provision contained in,
any instrument evidencing Indebtedness of the Borrower, any agreement relating
thereto or any other contract or agreement (including its charter) which, except
to the extent complied with by the Borrower or consented to in connection with
the execution of this Financing Agreement and the Notes, restricts or otherwise
limits the incurring of the Indebtedness evidenced by this Financing Agreement
or the Notes.
5. FULL DISCLOSURE. Neither this Financing Agreement nor any
other Loan Document, nor any of the other documents, certificates or statements
furnished to Lenders Agent or any Lender in writing by or on behalf of the
Borrower in connection herewith or therewith contains any untrue statement of a
material fact or, when read together, omits to state a material fact necessary
to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to the Borrower which the Borrower has not disclosed to Lenders Agent and each
Lender which materially adversely affects, or insofar as the Borrower can
reasonably foresee will materially adversely affect, the properties, business,
prospects, operations, earnings, assets, liabilities or condition (financial or
otherwise) of the Borrower or the ability of the Borrower to perform its
obligations under this Financing Agreement, the Term Loan Promissory Notes and
the Revolving Loans Promissory Notes, or any other Loan Document contemplated
hereby or thereby.
The financial projections attached as Exhibit M and further
financial projections delivered pursuant to Section 2, paragraph 1(i) and
paragraph 2(k) of this Financing Agreement are based on the good faith estimates
and assumptions of the Executive Officers of the Borrower, who have no reason to
believe that such projections are not reasonable based upon current general
economic conditions.
6. LITIGATION. There are no unstayed actions, proceedings or
suits or investigations pending, or to the best knowledge of the Executive
Officers of the Borrower after due inquiry, threatened, against or affecting the
Borrower in any court or before any governmental authority or arbitration board
or tribunal, foreign or domestic.
7. PROPERTIES. Schedule 1(a) lists all Real Estate owned by
the Borrower. The Borrower has good and marketable fee title to all such Real
Estate and such other Real Estate fee title to which it may acquire after the
Closing Date. Except as otherwise disclosed in Schedule 1(a), all material
leases and other material agreements to
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which the Borrower is a party are valid and binding and in full force and
effect, no default has occurred or is continuing thereunder which would have a
material adverse effect on the Borrower taken as a whole and no consent need be
obtained (other than consents, if any, which have been or will be obtained prior
to the Closing Date, are identified on a schedule previously delivered to
Lenders Agent and copies of which will be delivered to Lenders Agent prior to
the Closing Date) from any Person in respect of any such lease or agreement in
connection with the transactions contemplated hereby. The Borrower enjoys
peaceful and undisturbed possession of all leases necessary in any material
respect for the operation of its respective properties and assets, none of which
contains any unusual or burdensome provisions which materially or adversely
affect or impair the operation of such properties or assets.
8. COMPLIANCE WITH LAWS. The Borrower is not in violation of
any statutes, laws, ordinances, governmental rules or regulations or any
judgment, order, writ, injunction, decree, rule or regulation (federal, state,
local or foreign) to which it is subject and has not failed to obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership or operation of its properties or the conduct of its business,
except for such violations and failures to obtain those which would not have a
material adverse effect on the property, prospects, operations, earnings,
assets, liabilities, or condition (financial or otherwise) of the Borrower.
9. GOVERNMENTAL REGULATIONS. The Borrower is not subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Federal Power Act, the
Interstate Commerce Act or to any federal or state statute or regulation
limiting its ability to incur indebtedness for borrowed money.
10. OUTSTANDING DEBT. The Borrower does not have outstanding
Indebtedness except as set forth in Borrower's Balance Sheet as of April 30,
1999 or identified on Schedule 7.10 hereto. The Borrower does not have
outstanding Subordinated Indebtedness other than the subordinated indebtedness
set forth on Schedule 7.10 hereto.
11. SECURITY INTEREST AND LIENS. (i) The Borrower further
warrants and represents that, from and after entry of the Interim Order, except
for the Permitted Encumbrances, the security interests granted herein constitute
and shall at all times constitute the first liens on the Collateral; that,
except for the Permitted Encumbrances and the Tax Liens (as to which, from and
after entry of the Interim Order, the Borrower warrants and represents that the
liens granted under this Financing Agreement shall be senior to and shall prime
the Tax Liens), the Borrower is the absolute owner of the Collateral with full
right to pledge, sell, consign, transfer and create a security interest therein,
free and clear of any and all claims or liens in favor of others; and that the
Equipment does not comprise a part of the Inventory of the Borrower and that the
Equipment is and will only be used by the Borrower in its business and will not
be held for sale or lease, or removed from its premises, or otherwise disposed
of by the Borrower without the prior written approval of Lenders Agent or as
otherwise expressly permitted by this Financing Agreement.
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(ii) The Obligations of the Borrower will constitute allowed
administrative expenses in the Case having priority over all administrative
expenses and unsecured claims against the Borrower now existing or hereafter
arising, of any kind or nature whatsoever, including, without limitation, all
administrative expenses of the kind specified in Sections 503(b), 507(b) and
546(c) of the Bankruptcy Code, subject, as to priority, only to Carve-Out
expenses having priority over the Obligations to the extent set forth in
paragraph 2 of Section 6.
12. TITLE, LIENS. The Borrower has good and marketable title
to its properties and assets reflected in Borrower's Balance Sheet as at April
30, 1999 (other than properties and assets disposed of in the ordinary course of
business and assets otherwise disposed of which are identified in Schedule
7.12).
13. TAXES. Except as identified in Schedule 7.13, the Borrower
has filed all federal, state and other income tax returns that, to the knowledge
of the Borrower, are required to be filed, and has paid, to the extent
consistent with the rights and obligations of the Borrower as
debtor-in-possession under the Bankruptcy Code, all taxes as shown on said
returns and on all assessments received by it to the extent that such taxes have
become due.
14. POSSESSION OF PATENTS, ETC. The Borrower possesses or has,
free from burdensome restrictions, the right to the use of all the patents,
trademarks, trade names, service marks, copyrights, licenses and other rights
that are currently used by it or are necessary in any material respect for the
ownership, maintenance and operation of its respective businesses, properties
and assets. All of the foregoing are listed in Schedule 7.14 hereto and are
subject to the Patent Security Agreement. Except as set forth in Schedule 7.14
hereto, the Borrower is not in violation of any thereof in any material respect
and has neither received notice from nor has knowledge of any material claim by
any Person that it is now infringing any of the foregoing.
15. BROKER'S OR FINDER'S COMMISSIONS. No broker's or finder's
or placement fee or commission will be payable with respect to this Financing
Agreement, the Term Loan Promissory Notes or the Revolving Loans Promissory
Notes or any other Loan Document or the transactions contemplated thereby, and
the Borrower will hold the Lenders Agent and each Lender harmless from any
claim, demand or liability for broker's or finder's or placement fees or
commissions alleged to have been incurred in connection with this Financing
Agreement, the Term Loan Promissory Notes, the Revolving Loans Promissory Notes,
any other Loan Document or such transactions.
16. APPLICATION OF PROCEEDS. The proceeds of the Loans will be
used to pay in full the Obligations under the Pre-Petition Agreements to the
extent provided for herein, and to provide working capital for, to finance
Inventory purchases by, and for other general corporate purposes of the Borrower
only to the extent and as set forth in the Budget. Neither the Borrower nor any
agent acting on its behalf has taken or will take any action which might cause
this Financing Agreement, or any other Loan Document to violate Regulation G,
Regulation T, Regulation U, Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Exchange Act, in each
case as in effect now or as the same hereafter may be in effect.
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17. GOVERNMENTAL CONSENT. Neither the nature of the Borrower,
nor any of its respective businesses or properties, nor any relationship between
the Borrower and any other Person, nor any circumstance in connection with the
transactions contemplated by this Financing Agreement is such as to require any
consent, approval or authorization of, or any notice to, or filing, registration
or qualification with, any court or administrative or governmental body in
connection with the execution and delivery of this Financing Agreement, the Term
Loan Promissory Notes or the Revolving Loans Promissory Notes or any other Loan
Document, or fulfillment of, or compliance with, the terms and provisions of
this Financing Agreement, the Term Loan Promissory Notes or the Revolving Loans
Promissory Notes or any other Loan Document, other than the filings,
registrations or qualifications under the state securities laws or blue sky laws
of any state of the United States of America that may be required to be made or
obtained which shall have no bearing on the validity and enforceability of this
Financing Agreement, the Term Loan Promissory Notes or the Revolving Loans
Promissory Notes or any other Loan Document and other than such filings as may
be required to perfect the security interests and other liens contemplated in
this Financing Agreement and the other Loan Documents.
18. ERISA. Neither the Borrower nor any other Person,
including any fiduciary, has engaged in any prohibited transaction (as defined
in section 4975 of the Code or section 406 of ERISA) which could subject the
Borrower, or any entity which the Borrower has an obligation to indemnify, to
any tax or penalty imposed under section 4975 of the Code or section 502 of
ERISA. Each Employee Benefit Plan intended to be qualified under section 401(a)
or 401(k) of the Code is so qualified. The Borrower has received a letter from
the Internal Revenue Service stating that each such plan is so qualified and the
Borrower has no knowledge of any operational defects that have occurred since
the date of such determination letter that could adversely affect such
qualification. Each Employee Benefit Plan is administered in accordance with its
terms and in compliance with all applicable law. Except as set forth on Schedule
7.18, (i) with respect to any Employee Benefit Plan, neither the Borrower nor
any ERISA Affiliate has failed to make any contribution due under the terms of
such plan or as required by law; (ii) there is no lien outstanding or security
interest given in connection with a Pension Plan; and (iii) neither the Borrower
nor any ERISA Affiliate has incurred an accumulated funding deficiency (as
defined in section 302 of ERISA or section 412 of the Code) whether or not
waived. With respect to any terminated Pension Plan, the assets have been
distributed in full satisfaction of all benefit liabilities thereunder, and any
such plan has been terminated in compliance with section 4041 of ERISA and the
PBGC has not issued a notice of noncompliance with respect to any such
termination. Neither the Borrower nor any ERISA Affiliate has incurred or
expects to incur any liability under Title IV or ERISA, including any withdrawal
liability. Neither the Borrower nor any ERISA Affiliate maintains or contributes
to any Employee Benefit Plan subject to Title IV of ERISA, section 412 of the
Code or section 302 of ERISA other than those defined benefit pension plans set
forth on Schedule 7.18.
Neither the Borrower nor any ERISA Affiliate has ever
sponsored or maintained, has ever contributed to, or has ever incurred any
withdrawal liability under, a Multiemployer Plan, and neither the Borrower nor
any ERISA Affiliate has any written
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or oral commitment to establish, maintain or contribute to any Multiemployer
Plan. Neither the Borrower nor any ERISA Affiliate has received notice that any
Multiemployer Plan is in Reorganization, is Insolvent or is terminating. Neither
the Borrower nor any ERISA Affiliate has liability for retiree medical, life
insurance or other death benefits (contingent or otherwise) which provide for
continuing benefits or coverage after termination of employment or retirement
other than as a result of a continuation of medical coverage required under
section 4980B of the Code and except as set forth on Schedule 7.18.
The unfunded benefit liabilities as of the date of the most
recent actuarial valuation for each Pension Plan is set forth on Schedule 7.18
and to the best knowledge of the Borrower, there has been no material adverse
change in such liabilities.
19. ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed in a written report to Lenders Agent
prior to the Closing Date, the Borrower is not in violation, or alleged to be in
violation, of any judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including, without limitation, those
arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
("▇▇▇▇"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any federal, state or local statute, regulation,
ordinance, order or decree relating to health, safety or the environment
(hereinafter "Environmental Laws"), which violation would have a material
adverse effect on the business, assets or financial condition of the Borrower.
(b) The Borrower has not received written notice from any
third party, including, without limitation, any federal, state or local
governmental authority, (i) that the Borrower has been identified by the United
States Environmental Protection Agency ("EPA") as a potentially responsible
party under CERCLA with respect to a site listed on the National Priorities
List, 40 C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇ (1986); (ii) that any hazardous waste, as
defined by 42 U.S.C. ss. 6903(5), any hazardous substances as defined by 42
U.S.C. ss. 9601(14), any pollutant or contaminant as defined by 42 U.S.C. ss.
9601(33), any medical waste and any toxic substances, oil or hazardous materials
or other chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of has
been released at any site at which a federal, state or local agency has
conducted or has ordered that the Borrower conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law or has named
the Borrower as a Potentially Responsible Party or is seeking contributions from
the Borrower; or (iii) that it is or shall be a name party to any claim, action,
cause of action, complaint, or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances.
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(c) To the knowledge of the Borrower and except as disclosed
in a written report to Lenders Agent prior to the Closing Date, to the extent
such activity would have a material adverse effect on the business, assets or
financial condition of the Borrower: (i) no portion of the property of the
Borrower has been used for the handling, processing, storage or disposal of
Hazardous Substances, except in accordance with applicable Environmental Laws;
and except as disclosed in a written report to Lenders Agent prior to the
Closing Date, no underground tank or other underground storage receptacle for
Hazardous Substances is located on any portion of the property; (ii) in the
course of any activities conducted by the Borrower or operators of its
properties, no Hazardous Substances have been generated or are being used on the
property except in accordance with applicable Environmental Laws; (iii) there
have been no releases (i.e., any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Substances on, upon,
into or from the property of the Borrower, which releases would have a material
adverse effect on the value of any of the property or adjacent properties or the
environment; and (iv) in addition, any Hazardous Wastes as defined by 42 U.S.C.
ss. 6903(5), if any, that have been generated on any of the property have been
transported offsite only by carriers having an identification number issued by
the EPA, treated or disposed of only by treatment or disposal facilities
maintaining valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the Borrower's
knowledge operating in material compliance with such permits and applicable
Environmental Laws.
20. YEAR 2000. The cost to Borrower of any reprogramming
required to permit the proper functioning, in and following the year 2000, of
(a) the computer systems of Borrower and (b) equipment containing embedded
microchips (including systems and equipment supplied by others) and the testing
of all such systems and equipment, as so reprogrammed, and of the reasonably
foreseeable consequences of Year 2000 Problems to Borrower (including
reprogramming errors) could not reasonably be expected to result in a material
adverse change in the business, condition or prospects of the Borrower. Borrower
has adopted and successfully implementing a plan of correction which the
Borrower reasonably believes will result in a substantial elimination of Year
2000 Problems before any processing failure of the systems or equipment
described in clauses (a) and (b) of the preceding sentence due to such problems
which could reasonably be expected to have such a material adverse change and in
the event that the aforementioned plan of correction is not timely implemented,
is developing a contingency plan which the Borrower reasonably believes will
address such processing failures due to Year 2000 Problems prior to such
problems resulting in such a material adverse change. As used in this Section,
"Year 2000 Problems" means limitations in the capacity or readiness to handle
date information, for 1999 or years beginning January 1, 2000, of any of the
hardware, firmware or software systems associated with information processing
and delivery, operations or services (e.g., security and alarms, elevators,
communications, and HVAC) operated by Borrower.
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements
contained in any certificate or other document delivered to Lenders Agent or any
Lender by or on behalf of the Borrower pursuant to or in connection with this
Financing
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Agreement or any other Loan Document shall be deemed to constitute
representations and warranties under this Financing Agreement with the same
force and effect as the representations and warranties expressly set forth
herein. All the Borrower's representations and warranties thereunder and
hereunder shall survive the execution and delivery of the same and any
investigation by Lenders Agent or any Lender.
SECTION 8. CERTAIN COVENANTS.
1. ADDITIONAL COLLATERAL. The Borrower hereby covenants that,
except for the Permitted Encumbrances and the Tax Liens (as to which the
Borrower covenants that, from and after entry of the Interim Order, the liens
granted under this Financing Agreement shall be senior to and shall prime the
Tax Liens), upon entry of the Final Order, the Borrower will be at the time
additional Collateral is acquired by it, the absolute owner of the Collateral
with full right to pledge, sell, consign, transfer and create a security
interest therein, free and clear of any and all claims or liens in favor of
others; that the Borrower will at any time Lenders Agent requests, execute and
deliver to Lenders Agent for its own benefit and the benefit of the Lenders a
copyright security agreement in such form as Lenders Agent may reasonably
request in order to more effectively create and perfect in favor of Lenders
Agent for its own benefit and for the benefit of the Lenders a first priority
security interest in any copyrights of the Borrower; that the Borrower will at
any time Lenders Agent requests, execute and deliver to Lenders Agent for its
own benefit and the benefit of the Lenders a trademark security agreement
covering the trademarks of the Borrower as Lenders Agent may reasonably request
in order to more effectively create and perfect in favor of Lenders Agent a
first priority security interest in such trademarks for the benefit of the
Lenders Agent and the Lenders; that the Borrower will at its expense forever
warrant and, at Lenders Agent's request, defend the same from any and all claims
and demands of any other Person other than the Permitted Encumbrances; and that
the Borrower will not grant, create or permit to exist, any lien upon or
security interest in the Collateral, or any proceeds thereof, in favor of any
other Person other than the Permitted Encumbrances in favor of the holders of
the Permitted Encumbrances.
2. GUARANTY AND PLEDGE. Within ninety (90) days of the Filing
Date, Borrower shall cause (a) D.V. Associates to provide to Lenders Agent a
guaranty of the Obligations of the Borrower under this Financing Agreement, and
provide a pledge of, and a security interest in, its intellectual property (the
"Trademark Security Agreement") as collateral security therefor, substantially
in the forms set forth in Exhibits I and J to this Financing Agreement, duly
executed by D.V. Associates, and (b) the owners of the common stock, partnership
or other equity interests in D.V. Associates issued and outstanding to provide
to Lenders Agent a pledge of all of the common stock or partnership or other
equity interests of or in D.V. Associates held by them, all in form and
substance satisfactory to Lenders Agent and executed by the relevant owner of
such stock or other interests. Additionally, Borrower shall cause, within ninety
(90) days of the Filing Date, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇ ▇. ▇▇▇▇▇ to
execute and deliver guaranties in favor of Lenders Agent each in the amount of
$2,500,000 (in respect of principal) substantially in the form annexed hereto as
Exhibit K and L respectively.
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3. INSPECTION RIGHTS. The Borrower will maintain books and
records pertaining to the Collateral in such detail, form and scope as Lenders
Agent shall reasonably require. The Borrower agrees that Lenders Agent and each
Lender or their respective agents may enter upon the Borrower's premises at any
time during normal business hours, and from time to time, for the purpose of
inspecting the Collateral, and any and all records pertaining thereto. The
Borrower agrees to afford Lenders Agent and each Lender prior written notice of
any change in the location of any Collateral, including, but not limited to, the
location of all engineers' drawings, other than to locations, that as of the
date hereof, are known to Lenders Agent and each Lender and at which Lenders
Agent has filed financing statements and otherwise fully perfected its liens
thereon. The Borrower also agrees to advise Lenders Agent promptly, in
sufficient detail, of any material adverse change relating to the type, quantity
or quality of the Collateral or on the security interests granted to Lenders
Agent and any Lender therein.
4. REPORTS. (a) The Borrower will execute and deliver to
Lenders Agent, from time to time, solely for Lenders Agent's convenience in
maintaining a record of the Collateral, such written statements and schedules as
Lenders Agent may reasonably require, designating, identifying or describing the
Collateral pledged or otherwise made subject to the security interest granted to
Lenders Agent hereunder. The Borrower's failure, however, to promptly give
Lenders Agent such statements, or schedules shall not affect, diminish, modify
or otherwise limit Lenders Agent's or any Lender's security interests in the
Collateral.
(b) As soon as practicable and in any event within five
Business Days after the end of each week (including the week in which this
Financing Agreement is executed), the Borrower shall furnish to Lenders Agent
weekly inventory reports in form and substance reasonably satisfactory to
Lenders Agent, and certified by the Borrower's Chief Financial Officer, Chief
Executive Officer, or Responsible Person, as satisfactory to Lenders Agent.
(c) As soon as practicable and in any event within five
Business Days after the end of each week (including the week in which this
Financing Agreement is executed), the Borrower shall furnish to Lenders Agent
weekly projections and a weekly availability schedule, including monthly balance
sheet, statement of operations, and cash flow statements for the six (6) months
following the date of execution of this Financing Agreement and through the
debtor-in-possession financing period.
(d) Promptly after the sending thereof, the Borrower shall
give Lenders Agent copies of all written reports given by the Borrower to any
official or unofficial committees in the Case.
(e) The Borrower shall provide on a daily basis to Lenders
Agent reports on (i) daily sales assignment, (ii) daily collections and (iii)
daily availability, all in form reasonably satisfactory in form and substance to
Lenders Agent.
(f) Promptly upon their becoming available, the Borrower shall
deliver to Lenders Agent a copy of (i) all reports, financial statements or
other information
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delivered by the Borrower to its Board of Directors, (ii) all reports, proxy
statements, financial statements and other information generally distributed by
the Borrower to its creditors or the financial community in general, (iii) all
reports and notices filed by the Borrower with the Securities and Exchange
Commission (to the extent not delivered pursuant to another clause of this
provision) and (vi) any audit or other reports submitted to the Borrower by
independent accountants in connection with any annual, interim or special audit
of the Borrower.
5. PERFECTION OF SECURITY INTERESTS. The Borrower will comply
with the requirements of all state and federal laws in order to grant to Lenders
Agent for the benefit of Lenders Agent and the Lenders valid and perfected first
security interests in the Collateral, subject only to the Permitted
Encumbrances. Lenders Agent is hereby authorized by the Borrower to file any
financing statements covering the Collateral whether or not the Borrower's
signature appears thereon. The Borrower will do whatever Lenders Agent may
reasonably request, from time to time, by way of: filing notices of liens,
Mortgages, financing statements, amendments, renewals and continuations thereof;
cooperating with Lenders Agent's custodians; keeping stock records; transferring
proceeds of Collateral to Lenders Agent's possession; and performing such
further acts as Lenders Agent may reasonably require in order to effect the
purposes of this Financing Agreement.
6. INSURANCE.
(a) The Borrower will maintain insurance on the Real Estate,
Equipment and Inventory under such policies of insurance, with such insurance
companies, in such reasonable amounts and covering such insurable risks as are
at all times reasonably satisfactory to the Required Lenders. All policies
covering the Real Estate, Equipment and Inventory are, subject to the rights of
any holders of Permitted Encumbrances holding claims senior to the Lenders, to
be made payable to Lenders Agent, in case of loss, under a standard
noncontributory "mortgage", "lender" or "secured party" clause and are to
contain such other provisions as Lenders Agent may require to fully protect
Lenders Agent's interest in the Real Estate, Inventory and Equipment and to any
payments to be made under such policies. True copies thereof are to be delivered
to Lenders Agent, premium prepaid, with the loss payable endorsement in Lenders
Agent's favor, and shall provide for not less than thirty (30) days' prior
written notice to Lenders Agent of the exercise of any right of cancellation. At
the Borrower's request or if the Borrower fails to maintain such insurance,
Lenders Agent may arrange for such insurance, but at the Borrower's expense and
without any responsibility on Lenders 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 continuation of an
Event of Default, Lenders Agent shall, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to the Lenders, have the sole
right, in the name of Lenders Agent or the Borrower, 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
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to effect the collection, compromise or settlement of any claims under any such
insurance policies.
(b) (i) In the event of any loss or damage by fire or other
casualty, insurance proceeds relating to Inventory shall first reduce
the Borrower's Revolving Loans (with payments first to reduce the
Overadvances) in inverse order of maturity, and then the Term Loans and
such payments will be applied to the Term Loans in the inverse order of
maturity of principal repayment installments.
(ii) In the event any part of the Borrower's Real Estate or
Equipment is damaged by fire or other casualty and the Proceeds from
insurance for such damage or other casualty are less than or equal to
$100,000, Lenders Agent shall promptly apply such proceeds to reduce
the Borrower's outstanding balances under the Revolving Loans (with
payments first to reduce the Overadvances) in inverse order of maturity
of principal repayment installments.
(iii) As long as no Event of Default has occurred and is
continuing, the Borrower has sufficient business interruption insurance
to replace the lost profits of any of the Borrower's facilities, and
the proceeds are in excess of $100,000, the Borrower may elect (by the
Borrower delivering written notice to Lenders Agent) to replace, repair
or restore such Real Estate or Equipment to substantially the
equivalent condition prior to such fire or other casualty as set forth
herein. If the Borrower does not, or cannot, elect to use the proceeds
as set forth above, Lenders Agent may, subject to the rights of any
holders of Permitted Encumbrances holding claims senior to the Lender,
apply the proceeds to the payment of the Obligations in such manner and
in such order as Lenders Agent may reasonably elect.
(iv) If the Borrower elects to use the proceeds for the
repair, replacement or restoration of any Real Estate or Equipment, and
there is then no Event of Default, (i) proceeds of insurance on
Equipment and Real Estate in excess of $100,000 will be applied to the
reduction of the Revolving Loans of the Borrower (with payments first
to reduce the Overadvances) in inverse order of maturity of principal
repayment installments, and (ii) Lenders Agent may set up a reserve
against Availability for an amount equal to the proceeds referred to in
clause (i) hereof. The reserve will be reduced Dollar-for-Dollar upon
receipt of noncancelable executed purchase orders, delivery receipts or
contracts for the replacement, repair or restoration of Equipment or
the Real Estate and disbursements in connection therewith. Prior to the
commencement of any restoration, repair or replacement of Real Estate,
the Borrower shall provide the Lenders Agent with a restoration plan
and a total budget certified by an independent third party experienced
in construction costing. If there are insufficient proceeds to cover
the cost of restoration as so determined, the Borrower shall be
responsible for the amount of any such insufficiency prior to the
commencement of restoration and shall demonstrate evidence of such
before the reserve will be reduced. Completion of restoration shall be
evidenced by a
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final, unqualified certification of the design architect employed, if
any; an unconditional certificate of occupancy, if applicable; such
other certification as may be required by law; or if none of the above
is applicable, a written good faith determination of completion by the
Borrower (herein collectively the "Completion"). Upon Completion, any
remaining reserve as established hereunder will be automatically
released.
(v) The Borrower will pay any reasonable costs, fees or
expenses which Lenders Agent or any Lender may reasonably incur in connection
herewith.
7. TAXES. The Borrower will pay, to the extent consistent with
the rights and obligations of the Borrower as debtor-in-possession under the
Bankruptcy Code, prior to its becoming delinquent, all taxes, assessments,
claims and other charges (herein "taxes") lawfully levied or assessed upon the
Borrower or the Collateral and if such taxes remain unpaid after the date fixed
for the payment thereof, unless such taxes are being diligently contested in
good faith by the Borrower by appropriate proceedings, or if any lien shall be
claimed thereunder (x) for taxes due the United States of America or (y) which
in the opinion of Lenders Agent might create a valid obligation having priority
over the rights granted to Lenders herein, Lenders may, on the Borrower's
behalf, pay such taxes, and the amount thereof shall be an Obligation secured
hereby and due to Lenders on demand.
8. COMPLIANCE WITH LAWS. The Borrower: (a) will comply with
all acts, rules, regulations and orders of any legislative, administrative or
judicial body or official which the failure to comply with would have a material
and adverse impact on the Collateral, or any part thereof, or on the operation
of the Borrower's business; provided, however, that the Borrower may contest any
acts, rules, regulations, orders and directions of such bodies or officials in
any reasonable manner which will not, in Required Lenders' reasonable opinion,
materially and adversely affect the operation of the business of the Borrower or
Lenders Agent's or any Lender's rights or priority in the Collateral; (b) will
comply with all environmental statutes, acts, rules, regulations or orders as
presently existing or as adopted or amended in the future, applicable to the
ownership and/or use of its real property and operation of its business, which
the failure to comply with would have a material and adverse impact on the
Collateral, or any part thereof, or on the operation of the business of the
Borrower. The Borrower hereby indemnifies Lenders Agent and each Lender and
agrees to defend and hold Lenders Agent and each Lender harmless from and
against any and all loss, damage, claim, liability, injury or expense which
Lenders Agent and each Lender may sustain or incur (other than as a result of
actions of Lenders Agent or the applicable Lender, as the case may be) in
connection with: any claim or expense asserted against Lenders Agent or any
Lender as a result of any environmental pollution, hazardous material or
environmental cleanup of the Borrower's real property; or any claim or expense
which results from the Borrower's operations (including, but not limited to, the
Borrower's offsite disposal practices) and the Borrower further agrees that this
indemnification shall survive termination of this Financing Agreement as well as
the payment of all Obligations due hereunder.
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9. FINANCIAL STATEMENTS. Until termination of this Financing
Agreement and payment and satisfaction of all Obligations, the Borrower agrees
that, unless the Required Lenders shall have otherwise consented in writing, the
Borrower will furnish to Lenders Agent and each Lender, within ninety (90) days
after the end of each fiscal year of the Borrower, an audited Balance Sheet as
at the close of such year, and statements of consolidated earnings, cash flow
and reconciliation of surplus of the Borrower, audited by independent public
accountants selected by the Borrower, and satisfactory to the Required Lenders;
within forty-five (45) days after the end of each fiscal quarter a Balance Sheet
as at the end of such period and statements of earnings, cash flow and surplus
of the Borrower, certified by an authorized financial or accounting officer of
the Borrower; and within thirty (30) days after the end of each month monthly
interim financial statements, certified by an authorized financial or accounting
officer of the Borrower; and from time to time, such further information
regarding the business affairs and financial condition of the Borrower as
Lenders Agent or any Lender may reasonably request or as may be filed by the
Borrower with the Securities and Exchange Commission. The Borrower shall deliver
to Lenders Agent and each Lender no later than (30) days prior to Lenders Agent
and each fiscal year end of the Borrower a preliminary budget for the following
fiscal year. The Borrower shall deliver to each Lender no later than sixty (60)
days from the start of each fiscal year of the Borrower, annual cash flow
projections for such fiscal year, including a projected balance sheet and
statements of earnings, cash flow and surplus. All such financial statements
shall be prepared in accordance with generally accepted accounting principles
consistently applied, subject to year end adjustments. Each financial statement
which the Borrower is required to submit hereunder must be accompanied by an
Officer's Certificate certifying that: (i) the financial statement(s) fairly and
accurately represent(s) the Borrower's and Consolidated Subsidiaries' financial
condition at the end of the particular accounting period, as well as the
Borrower's operating results during such accounting period, subject to yearend
audit adjustments; (ii) during the particular accounting period: (x) there has
been no default or condition which, with the passage of time or notice, or both,
would constitute a Default or Event of Default under this Financing Agreement;
provided, however, that if any Executive Officer has knowledge that any such
Default or Event of Default has occurred during such period, the existence of
and a detailed description of same shall be set forth in the Officer's
Certificate; and (y) the Borrower has not received any notice of cancellation
with respect to its property insurance policies; and (iii) the exhibits attached
to such financial statement(s) constitute detailed calculations showing
compliance with all financial covenants contained in this Financing Agreement.
The Borrower shall furnish to each Lender promptly upon
receipt thereof, copies of any reports submitted to the Borrower by independent
certified accountants in connection with the examination of the financial
statements and financial, accounting and auditing controls (including, without
limitation, management letters) of the Borrower made by such accountants.
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10. FINAL ORDER; ADMINISTRATIVE PRIORITY; LIEN PRIORITY;
PAYMENT OF CLAIMS.
(a) The Borrower shall not at any time seek, consent to or
suffer to exist any modification, stay, vacation or amendment of the Final Order
except for any modifications and amendments agreed to by Lenders Agent;
(b) The Borrower shall not at any time suffer to exist a
priority for any administrative expense or unsecured claim against the Borrower
(now existing or hereafter arising of any kind or nature whatsoever, including,
without limitation, any administrative expenses of the kind specified in
Sections 503(b), 507(b) and 546(c) of the Bankruptcy Code) equal or superior to
the priority of Lenders Agent (for its benefit and that of the Lenders) in
respect of the Obligations, except for the Carve-Out;
(c) The Borrower shall not at any time suffer to exist any
lien on the Collateral having a priority equal or superior to the liens and
security interests in favor of Lenders Agent (for its benefit and that of the
Lenders) in respect of the Obligations, or any liens except for Permitted
Encumbrances;
(d) Prior to the date on which the Obligations have been paid
in full in cash and the Revolving Line of Credit and this Financing Agreement
have been terminated, the Borrower shall not (i) pay any administrative expense
claims except (A) professional expenses and (B) other administrative expense
claims incurred in the ordinary course of the business of the Borrower, except
as otherwise permitted in paragraph 11 of this Section 8; or (ii) apply deposits
or prepayments provided to the Borrower by its customers prior to the Filing
Date without the prior written consent of Lenders Agent, and any request for any
such consent shall be accompanied by such information as Lenders Agent may
request, including information regarding the proposed application and evidence
that, and how, the relevant deposit or prepayment is being applied to discharge
obligations incurred by the Borrower to enable it to complete performance of its
obligations to the relevant customers following the Filing Date under the
contract giving rise to such deposit or prepayment, after reaffirmation of such
contract by both the Borrower and the relevant customer; or, (iii) without
Lenders Agent's prior written consent, honor obligations arising prior to the
Filing Date to customers to make refunds, adjustments to invoices and apply
other credits owed to customers or honor warranties for goods sold by the
Borrower to customers prior to the Filing Date, and any request for such a
consent shall be accompanied by such information as Lenders Agent may request,
including evidence that the relevant customers and the Borrower have reaffirmed
the contract in question after the Filing Date.
11. CERTAIN RESTRICTIONS. Until termination of this Financing
Agreement and payment and satisfaction of all Obligations, the Borrower will
not, without the prior written consent of the Required Lenders, except as
otherwise herein provided:
A. Mortgage, assign, pledge, transfer or otherwise permit any lien,
charge, security interest, encumbrance or judgment (whether as a result
of a purchase money or
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title retention transaction, or other security interest, or otherwise)
to exist on any of its assets or goods, whether real, personal or
mixed, whether now owned or hereafter acquired, except for the
Permitted Encumbrances;
B. Incur or create any Indebtedness other than the Permitted Indebtedness
or increase the principal amount of any Permitted Indebtedness;
C. Borrow any money on the security of the Collateral from sources other
than the Lenders;
D. Sell, lease, assign, transfer or otherwise dispose of (i) Collateral,
except as otherwise specifically permitted by this Financing Agreement,
or (ii) either all or substantially all of the Borrower's assets which
do not constitute Collateral;
E. Engage in as Bulk Sales (as defined in the UCC); provided however, that
Borrower may engage in Bulk Sales that conform to the requirements of
Bankruptcy Case section 363, which are satisfactory to the Required
Lenders.
F. Merge, consolidate or otherwise alter or modify its corporate name,
principal place of business, structure, status or existence, or enter
into or engage in any operation or activity materially different from
that presently being conducted by the Borrower;
G. Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any Person, firm, entity or corporation, except by the
endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
H. Declare or pay any dividend of any kind on, or purchase, acquire,
redeem or retire, any of the capital stock or equity interest, of any
class whatsoever of the Borrower, whether now or hereafter outstanding;
I. Make any advance or loan to, or any investment in, any firm, entity,
Person or corporation;
J. Change its fiscal year;
K. Pay amounts in respect of total compensation to its Executive Officers
(other than the Responsible Person) and severance payments to its
former Chief Executive Officer, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and Chief Operating
Officer, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, which, in the aggregate, exceed seventy
percent (70%) of the aggregate compensation paid to them immediately
prior to the Filing Date (for the same relevant period) (as disclosed
in Schedule 8.11(K) to this Financing Agreement, for each month of the
12 month period ending June 30, 1999), or pay any such severance pay in
excess of the amounts agreed with the individuals named above prior to
the date of this Financing Agreement;
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L. Make any payments in respect of obligations arising or due prior to the
Filing Date (other than repayment of the Pre-Petition Obligations)
without the written consent of Lenders Agent; provided, however, that
to the extent permitted pursuant to orders of the Bankruptcy Court
obtained on notice to Lenders Agent, the Borrower may pay the following
obligations which arose prior to the Filing Date, subject to the
restrictions specified in this subparagraph: (a) amounts owed in
respect of (1) obligations to pay employee wages and salaries, (2)
reimbursable employee business expenses, (3) payments owed for payroll
deductions and contributions to employee benefit plans, and (4) certain
costs and expenses relating to the foregoing, in the aggregate not to
exceed $1,750,000; (b) amounts owed in respect of workers' compensation
premiums in an amount not to exceed $330,000; (c) trust fund taxes owed
by the Borrower to applicable taxing authorities not to exceed $
240,000 and (d) amounts owed to PriceWaterhouseCoopers prior to the
Filing Date in an amount not to exceed $70,950, but only (1) after the
date the Bankruptcy Court enters the Final Order and (2) if and
(subject to the preceding clause) when the Bankruptcy has entered an
order authorizing the retention of PriceWaterhouseCoopers as auditors
of the Borrower during the pendency of the Case and
PriceWaterhouseCoopers has been so retained.
12. FINANCIAL COVENANTS. The Borrower shall at all times
perform and be in compliance with each of the financial covenants (as generally
described below in this paragraph) that are set forth in a supplement to this
Financing Agreement to be executed and delivered by the Borrower, Lenders Agent
and the Lenders as soon as practicable after review by Lenders Agent of the
Business Plan delivered by the Borrower hereunder and, from and after delivery
by it of the Business Plan as provided herein until execution of such
supplement, shall, at each month end and each other time indicated in the
Business Plan for a projected goal, shall have achieved at least ninety percent
(90%) of such goal. For this purpose, it is expected that the Financial
Covenants will deal with financial maintenance tests of the kinds set forth in
the Pre-Petition Agreements and it is agreed that they shall be such as will
require the Borrower to meet those tests at levels that represent ninety percent
(90%) of the Borrower's projections set forth in the Business Plan.
13. ENVIRONMENTAL COMPLIANCE. The Borrower will advise Lenders
Agent in writing of: (a) all expenditures (actual or anticipated) in excess of
$200,000 for (x) environmental clean-up, (y) environmental compliance or (z)
environmental testing and the impact of said expenses on the Borrower's working
capital; and (b) any notices that the Borrower receives from any local, state or
federal authority advising the borrower of any of its premises, its waste
disposal practices, or waste disposal sites used by the Borrower and to provide
Lenders Agent with copies of all such notices if so required.
14. TRANSACTIONS WITH AFFILIATES. Without the prior written
consent of the Required Lenders, the Borrower will not enter into any
transaction, including, without limitation, any purchase, sale, lease, loan or
exchange of property with any Subsidiary or
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affiliate of the Borrower unless such transaction shall be on an arm's-length
basis on terms no less favorable to the Borrower than a transaction with a third
party.
15. ERISA NOTICES. The Borrower will deliver to Lenders Agent,
if and when (but in no case less than ten (10) days from the date of such event)
(i) the Borrower or any ERISA Affiliate gives or is required to give notice to
the PBGC of any Reportable Event with respect to any Pension Plan, a copy of the
notice of such Reportable Event; (ii) the Borrower or any ERISA Affiliate
becomes obligated to contribute to a Multiemployer Plan to which such entity was
not obligated to contribute on the Closing Date, a letter of a financial officer
describing such event and estimating the future contingent withdrawal liability
with respect thereto; (iii) the Borrower or any ERISA Affiliate receives notice
of complete or partial withdrawal liability with respect to a Multiemployer Plan
or receives notice that a Multiemployer Plan may be or has been terminated, in
Reorganization or Insolvency, or receives notice from the administrator of a
Multiemployer Plan that indicates the existence of potential withdrawal
liability under a Multiemployer Plan, a copy of such notice; (iv) the Borrower
or any ERISA Affiliate receives notice from the PBGC of an intent to terminate
or appoint a trustee to administer any Pension Plan or Multiemployer Plan, a
copy of such notice; (v) the Borrower or any ERISA Affiliate fails to make a
timely contribution to a Pension Plan which may give rise or has given rise to
an accumulated funding deficiency or a lien, a letter of a financial officer
describing such event; (vi) the Borrower or any ERISA Affiliate adopts or
proposes to adopt an amendment which may require or requires the granting of a
security interest, a letter of a financial officer describing such event; (vii)
the Borrower or any ERISA Affiliate fails to make a contribution required under
the terms of an Employee Benefit Plan or Pension Plan or as required by law,
which failure has a material adverse effect on such Employee Benefit Plan or
Pension Plan, a letter of a financial officer describing such event; (ix) if any
Pension Plan intending to qualify under section 401(a) or 401(k) of the Code
fails to so qualify, a letter of a financial officer describing such event; (x)
a transaction prohibited under section 4975 of the Code or section 406 of ERISA
occurs resulting in liability to the Borrower or any entity which the Borrower
has an obligation to indemnify, a letter of a financial officer describing such
event; (xi) any action is taken by the Internal Revenue Service or the PBGC with
respect to the pending minimum funding waiver for the Pension Plan for Hourly
Rated Employees of the National Acme Copy, a copy of any documentation or other
information with respect to such action . Upon the request of any Lender made
from time to time, the Borrower will deliver a copy of the most recent actuarial
report and annual report completed with respect to any Employee Benefit Plan or
any other financial information the Borrower or any ERISA Affiliate has with
respect to any Employee Benefit Plan.
16. ERISA COVENANT. The Borrower will, maintain all Employee
Benefit Plans and Pension Plans in material compliance with all applicable law,
including any reporting requirements, and make all contributions due under the
terms of each Pension Plan and Employee Benefit Plan or as required by law.
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17. CERTAIN NOTICES.
(a) The Borrower shall notify Lenders Agent of litigation
involving the Borrower.
(b) The Borrower shall give or cause to be given or served on
Lenders Agent and its counsel copies of all pleadings, motions, applications,
financial information and reports and other papers and documents filed or
received by the Borrower in or relating to the Case.
(c) The Borrower shall notify Lenders Agent promptly of
receipt of any Asset Disposition Proceeds and, in advance, of its intention to
cash any check expected to generate or otherwise seek to receive any Asset
Disposition Proceeds, the Borrower shall take such steps as Lenders Agent may
request to cause such Asset Disposition Proceeds to be credited directly to
Lenders Agent by the financial institution or other Person making the relevant
payment.
18. OPERATING LEASES AND CAPITAL LEASES. Without the prior
written consent of Lenders Agent, the Borrower shall not: (a) enter into any
Operating Lease or (b) contract for, purchase, make expenditures for, lease
pursuant to a Capital Lease or otherwise incur obligations with respect to
Capital Expenditures (whether subject to a security interest or otherwise).
SECTION 9. INTEREST, FEES, EXPENSES AND ASSIGNMENTS.
1. INTEREST ON REVOLVING LOANS. Interest on the Revolving
Loans shall be payable monthly on each Monthly Date commencing with July 1999,
and shall be an amount calculated at a rate per annum equal to (a) the Chase
Bank Rate plus (b) three percent (3.00%) per annum (the "Revolving Loan
Margin"). In the event of any change in said The Chase Manhattan Bank Rate, the
rate applicable to the Revolving Loans under clause (a) above shall change, as
of the first day of the month following any change, so as to remain three
percent (3.00%) above the Chase Manhattan Bank Rate. All rates hereunder shall
be calculated based on a 360-day year for the actual number of days elapsed.
Lenders Agent shall be entitled to charge the Borrower's account at the rate
provided for herein when due until all Obligations have been paid in full.
2. INTEREST ON TERM LOANS. Interest on each of the Term Loans
shall be payable monthly on each Monthly Date, commencing July 1999 on the
unpaid balance or on payment in full prior to maturity in an amount calculated
at a rate per annum equal to (a) the Chase Bank Rate plus (b) four percent
(4.00%) per annum (the "Term Loan Margin"). In the event of any change in said
Chase Bank Rate, the rate applicable to the Term Loans shall change, as of the
first day of the month following any change, so as to remain four percent
(4.00%) above the Chase Bank Rate. All rates applicable to the Term Loans shall
be calculated based on a 360-day year for the actual number of days elapsed.
Lenders Agent shall be entitled to charge the Borrower's account in respect of
interest on Term Loans at the rate provided for herein when due until all
Obligations in respect of interest on Term Loans have been paid in full.
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3. INCREASED COSTS. In the event that any law, regulation,
treaty or directive hereafter enacted, promulgated, approved or issued or any
change in any presently existing law, regulation, treaty or directive therein or
in the interpretation or application thereof by any governmental authority
charged with the administration thereof or compliance by any Lender (or any
corporation directly or indirectly owning or controlling such Lender) with any
request or directive from any central bank or other governmental authority,
agency or instrumentality:
(a) does or shall subject such Lender to any tax of any kind
whatsoever with respect to any loans or advances or its obligations under this
Financing Agreement to make loans or advances, including, without limitation,
CITBC's Letter of Credit Guaranties (or the payments to be made by other Lenders
hereunder to CITBC on account of their respective Participations purchased
pursuant to Section 16), or changes the basis of taxation of payments to such
Lender of principal, interest or any other amount payable hereunder in respect
of its loans or advances (except for imposition of, or change in the rate of,
tax on the overall net income of such Lender, other than a tax imposed solely or
primarily on United States branches or subsidiaries of foreign corporations); or
(b) does or shall impose, modify or make applicable any
reserve, special deposit, compulsory loan, assessment, increased cost or similar
requirement against assets held by, or deposits of, or advances or loans by, or
other credit extended by, or any other acquisitions of funds by, any office of
such Lender in respect of its loans or advances including, without limitation,
CITBC's Letter of Credit Guaranties (or the payments to be made by other Lenders
hereunder to CITBC on account of their respective Participations purchased
pursuant to Section 16), which is not otherwise included in the determination of
the applicable rate or rates of interest hereunder;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing, converting or maintaining its loans or advances hereunder or
its commitment to make such loans or advances, or to reduce any amount
receivable hereunder in respect of its loans and advances, including, without
limitation, CITBC's Letter of Credit Guaranties (or the payments to be made by
other Lenders hereunder to CITBC on account of their respective Participations
purchased pursuant to Section 16), then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such additional cost or reduction in such amount
receivable which such lender deems to be material as determined by such Lender.
No failure by any Lender to demand compensation for any increased cost shall
constitute a waiver of such Lender's right to demand such compensation at any
time; provided, however, that such Lender shall notify the Borrower of any such
increased cost within ninety (90) days after the officer of such Lender having
primary responsibility for this Financing Agreement has obtained knowledge of
such increased cost. A statement setting forth the calculations of any
additional amounts payable pursuant to the foregoing sentence submitted by any
Lender to the Borrower shall be conclusive absent manifest error.
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4. CAPITAL ADEQUACY.
(a) If either (i) the introduction of, the adoption or
effectiveness of or any change or phasing in of any law or regulation or in the
interpretation thereof by any United States or foreign governmental authority
charged with the administration thereof, (ii) compliance with any directive,
guideline, decision or request from any central bank or United States or foreign
governmental authority (whether or not having the force of law) promulgated or
made after the Closing Date, or (iii) compliance with the Risk-Based Capital
Guidelines of the Federal Reserve System as set forth in 12 C.F.R., Parts 208
and 225, or of the Comptroller of the Currency, Department of Treasury, as set
forth in 12 C.F.R., Part 3 or similar legislation, rules, guidelines, directives
or regulations issued by any United States or foreign governmental authority
affects or would affect the amount of capital required or expected to be
maintained by any Lender (or any lending office of any Lender) or any
corporation directly or indirectly owning or controlling any Lender, and such
Lender shall have determined that such introduction, change or compliance has or
would have the effect of reducing the rate of return on such Lender's capital or
the asset value to such Lender of any loan or advance made by such Lender as a
consequence, directly or indirectly, of its obligations to make and maintain the
funding of loans and advances hereunder (including, without limitation, CITBC's
Letter of Credit Guaranties and its obligation hereunder to make them and the
payments to be made by other Lenders hereunder to CITBC on account of their
respective Participations purchased pursuant to Section 16, and their
commitments to make such payments) to a level below that which such Lender could
have achieved but for such introduction, change or compliance (after taking into
account such Lender's policies regarding capital adequacy) by an amount deemed
by such Lender to be material, then, upon demand by such Lender, the Borrower
shall promptly pay to such Lender such additional amount or amounts as shall be
sufficient to compensate such Lender for such reduction in the rate of return. A
certificate as to such amounts submitted to the Borrower and by any Lender
setting forth the determination of such amounts that will compensate such Lender
for such reductions shall be presumed correct absent manifest error.
(b) If any Lender requests compensation pursuant to paragraph
6, the Borrower may require that such Lender transfer all of its right, title
and interest under this Financing Agreement to any commercial bank (having
undivided capital and surplus of no less than $1,000,000,000) identified by the
Borrower, pursuant to an assignment and acceptance agreement, if such bank (a
"Proposed Lender") agrees to assume all of the obligations of such Lender
hereunder and under any other documents entered into by such Lender in
connection with this Financing Agreement for consideration equal to the sum of
(i) the outstanding principal amount of such Lender's pro rata share of loans
and advances hereunder, (ii) accrued interest on such loans and advances to the
date of such transfer, and (iii) all other amounts payable hereunder to such
Lender on or prior to the date of such transfer (including any fees accrued
hereunder and any amounts which would be payable under paragraph 6 as if all of
such Lender's loans and advances were being prepaid in full on such date).
Subject to the approval of such Proposed Lender in the reasonable discretion of
such Lender, and such assignment and acceptance agreement, such Proposed Lender
be a "Lender" for all purposes hereunder.
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5. OUT-OF-POCKET EXPENSES. On the Closing Date and from time
to time upon demand (which, without limiting the foregoing, may be made on the
Commitment Termination Date, should the Closing Date not occur), the Borrower
shall reimburse or pay the Lender and the Lenders Agent, as the case may be, for
all Out-of-Pocket Expenses of the Lender and the Lenders Agent.
6. LINE OF CREDIT FEE. On the first day of each month,
commencing with the month after the Closing Date occurs, the Borrower shall pay
the Lenders Agent for distribution among the Lenders in accordance with their
respective Commitments during the preceding calendar month the Line of Credit
Fee, calculated on the basis of a 360-day year for the actual number of days
elapsed during such month.
7. LOAN FACILITY FEE. To induce each Lender to enter into this
Financing Agreement and to extend to the Borrower the Loans, the Borrower shall
pay to Lenders Agent for distribution among the Lenders in accordance with their
respective Shares a Loan Facility Fee in the amount of $300,000, payable on the
Closing Date.
8. COLLATERAL MANAGEMENT FEE. On the Closing Date, the
Borrower shall pay the Collateral Management Fee to Lenders Agent. Payment of
this fee shall be made as contemplated in paragraph 12(b) of this Section 9, to
the extent funds are available as provided therein. The Collateral Management
Fee paid pursuant to this provision shall not be refundable in whole or in part
(regardless of whether this Financing Agreement remains in effect for less than
one year).
9. LETTER OF CREDIT GUARANTY FEE. The Borrower shall pay
Lenders Agent the Letter of Credit Guaranty Fee, which shall be an amount equal
to three percent (3%) per annum (calculated on the basis of a 360-day year for
the actual number of days elapsed), payable monthly in arrears on each Monthly
Date, on the maximum amount drawable from time to time under Letters of Credit
plus any bank charges which CITBC may incur in connection with the Letter of
Credit Guaranties.
10. AGENT AND SYNDICATION FEE. On the Closing Date, the
Borrower shall pay Lenders Agent, for distribution among the Lenders in
accordance with their respective Commitments, the Agent and Syndication Fee.
11. MISCELLANEOUS FEES. The Borrower shall pay Lenders Agent's
standard charges for, and the fees and expenses of, the Lenders Agent personnel
used by Lenders Agent for reviewing the books and records of the Borrower and
for verifying, testing protecting, safeguarding, preserving or disposing of all
or any part of the Collateral; provided, however, that the foregoing shall not
be payable until the occurrence of and during the continuance of an Event of
Default.
12. DEPOSIT ON ACCOUNT FEES AND EXPENSES; CHARGE TO BORROWER'S
ACCOUNT. (a) On the date of execution of this Agreement by the Borrower, the
Borrower shall pay to the Lenders' Agent the amount of $100,000, to be applied
on the Closing Date, to the Out-of-Pocket Expenses payable on the Closing Date
pursuant to paragraph 5 of this Section 9 and, to the extent any portion of that
amount remains after such
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application, to be applied to the Collateral Management Fee payable pursuant to
paragraph 8 of this Section 9 on the earlier of the Closing Date and the
Commitment Termination Date, should the Closing Date not occur. The Borrower
hereby irrevocably authorizes and instructs Lenders Agent to so apply the amount
paid by the Borrower with the Lenders Agent pursuant to this provision and
acknowledges that no portion of such amount will be refundable to the Borrower
unless the Lenders terminate this Financing Agreement without making any Loans
hereunder for any reason other than the nonsatisfaction of any of the conditions
set forth in Section 2. In this case, Lenders Agent shall refund to the Borrower
any portion of the amount paid by the Borrower pursuant to this paragraph 12(a)
to the extent it exceeds the Out-of-Pocket Expenses payable as provided in this
provision and paragraph 5 of this Section 9.
(b) The Borrower hereby authorizes Lenders Agent and the
Lenders to charge the Borrower's accounts with Lenders Agent or such Lender with
the amount of all payments due hereunder as such payments become due. The
Borrower confirms that any charges which Lenders Agent or a Lender may so make
to the Borrower's account as herein provided will be made as an accommodation to
the Borrower and solely at Lenders Agent's or such Lender's discretion.
13. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender may assign its rights and delegate its
obligations under this Financing Agreement and further may assign, or sell
participations in, all or any part of the Obligations, the Revolving Line of
Credit, Commitment, the Revolving Loans, Term Loans, and any other interest
herein or therein to any affiliate or to one or more other Persons. The Borrower
acknowledges that in assigning or selling participations of any of its interests
under this Financing Agreement, such Lender may grant to such participant
certain rights which would require the participant's consent to certain waivers,
amendments and other actions with respect to the provisions of this Financing
Agreement.
(b) The Borrower authorizes each Lender to disclose to any
participant or purchasing lender (each, a "Transferee") and any bona fide
prospective Transferee any and all financial information in such Lender's
possession concerning the Borrower and its affiliates which has been delivered
to such Lender by or on behalf of the Borrower pursuant to this Financing
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its affiliates prior to entering into this Financing Agreement.
(c) In the case of an assignment authorized under this
paragraph 13, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as it would if it were originally a party
hereunder and the assigning party shall be relieved of its obligations hereunder
with respect to its Revolving Line of Credit, Commitment, Revolving Loans or
Term Loans or assigned portion thereof on and after the date of such assignment.
The Borrower hereby acknowledges and agrees that any assignment permitted
hereunder will give rise to a direct obligation of Borrower to the assignee and
that the assignee shall be considered to be a Lender under this Financing
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Agreement. The Borrower shall, promptly after demand, execute and deliver to
each Lender involved in an assignment provided for herein such Notes as are
necessary to reflect the effects of the assignment. If such Lender was a Lender
prior to such assignment, such Lender shall, after receipt of each requested new
Note, return to the Borrower the Notes superseded by such new Notes which are
then in such Lender's possession. If any such superseded Note has been lost, the
provisions of ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(▇) The Borrower may not assign or transfer any of its rights
or obligations hereunder.
(e) Each Lender agrees that to the extent any payment is
received by it on any of Borrower's obligations under any Note, whether by
counterclaim, setoff, banker's lien, by realizing on Collateral or otherwise and
such payment results in such Lender receiving a greater payment than it would
have been entitled to under the terms of this Financing Agreement had the total
amount of such payment been paid directly to Lenders Agent for disbursement,
then such Lender shall immediately purchase for cash from the other Lenders, an
additional Participation and a participation or other interest from the other
Lenders in such Note (subject to the same terms and conditions provided for
herein), sufficient in amount so that such payment shall effectively be shared
pro rata with such Lenders, and the other Lenders in accordance with the amount,
and to the extent, of their respective interests in the Revolving Loans
Promissory Notes and Term Loan Promissory Notes; provided, however, that if all
or any portion of such payment is thereafter recovered from such Lender at any
time, the purchase shall be rescinded and the purchase price returned to the
extent of such recovery, but without interest or other return thereof.
SECTION 10. POWERS.
The Borrower hereby authorizes Lenders Agent or any person or
agent Lenders Agent may designate as its attorneyinfact, at the Borrower's cost
and expense, to exercise all of the following powers, which being coupled with
an interest, shall be irrevocable until all of the Borrower's Obligations to
Lenders Agent and the Lenders have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all
in the name of Lenders Agent or the Borrower, any and all checks, notes, drafts,
and other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to the
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as Lenders Agent may designate;
(c) To request from customers indebted on Accounts at any
time, in the name of Lenders Agent or the Borrower or that of Lenders Agent's
designee, information concerning the amounts owing on the Accounts;
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(d) To transmit to customers indebted on Accounts notice of
Lenders Agent's interest therein and to notify customers indebted on Accounts to
make payment directly to Lenders Agent for the Borrower's account; and
(e) To take or bring, in the name of Lenders Agent or the
Borrower, all steps, actions, suits or proceedings deemed by Lenders Agent
necessary or desirable to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the
contrary, the powers set forth in (b) and (e) above may only be exercised after
the occurrence of and during the continuance of an Event of Default.
SECTION 11. EVENTS OF DEFAULT AND REMEDIES.
1. Notwithstanding anything hereinabove to the contrary, the
Lenders may terminate this Financing Agreement and/or their Commitments
hereunder immediately upon the occurrence of any of the following (herein
"Events of Default"):
(a) cessation of the business of the Borrower;
(b) any representation or warranty contained herein (other
than those referred to in subparagraph (d) below) shall prove to have been false
in any material respect when made or in any other written agreement, including,
without limitation, any Loan Document or any document delivered by the Borrower
to Lenders Agent or any Lender in connection herewith or therewith or the
transactions contemplated hereby or thereby;
(c) breach by the Borrower of any covenant in this Financing
Agreement (other than those referred to in subparagraph (d) below) or in any
other written agreement between the Borrower and the Lenders or Lenders Agent,
including, without limitation, any Loan Document, or any other document
delivered by the Borrower to the Lenders or Lenders Agent in connection herewith
or therewith or the transactions contemplated hereby or thereby, if such breach
shall not have been remedied within five (5) days after such breach;
(d) breach by the Borrower of any warranty, representation or
covenant set forth in any of the following provisions of this Financing
Agreement: Section 3, paragraph 3 (other than the third sentence of paragraph
3); Section 6, paragraphs 3 or 4; Section 8, paragraphs 1, 6(a) or (b), 7 or 11;
Section 8, paragraph 2; failure by the Borrower to modify or establish lock-box
arrangements satisfactory to Lenders Agent as specified in Section 2, paragraph
2(j) by the time there specified; failure by the Borrower to deliver or cause to
be delivered to Lenders Agent any of the Term Loan Promissory Notes to be
delivered pursuant to Section 2, paragraph 2(p) after the relevant Term Loan has
been made in accordance with that provision or failure by the Borrower to
deliver or cause to be delivered to Lenders Agent any of the agreements or other
documents provided for in Section 2, paragraph 1(j) not later than the date that
is 14 days after the Filing Date (it being understood that the reference in this
provision to this delivery requirement shall in no way limit treatment of
delivery of those documents as a condition
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precedent to the obligations of the Lenders to make Loans hereunder); or failure
by the Borrower to deliver the Business Plan as and when provided in Section 2
or otherwise to cooperate in supplementing this Financing Agreement as
contemplated in Section 8, paragraph 12;
(e) failure of the Borrower to pay when due (i) any of the
principal of the Revolving Loans or Term Loans, or (ii) to pay any of the
interest on the Revolving Loans or any of the Term Loans within two (2) Business
Days of the due date thereof or (iii) to reimburse CITBC on any Letter of Credit
Guaranty when requested by CITBC; provided, however, that nothing contained
herein shall prohibit Lenders Agent from charging such amounts to the Borrower's
account on the due date thereof;
(f) an order with respect to the Case shall be entered by the
Bankruptcy Court, or the Borrower shall file an application for an order with
respect to the Case, (i) appointing a trustee in the Case or (ii) appointing an
examiner in the Case with the authority to perform the duties of a trustee in
respect of the estate of the Borrower or the operation of the business of the
Borrower, in addition to those duties set forth in subsections 1106(a)(3) and
1106(a)(4) of the Bankruptcy Code;
(g) an order with respect to the Case shall be entered by the
Bankruptcy Court, or the Borrower shall file an application for an order,
converting the Case to a case under Chapter 7 of the Bankruptcy Code;
(h) entry of an order by the Bankruptcy Court confirming a
plan of reorganization in the Case which does not contain a provision 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;
(i) entry of an order by the Bankruptcy Court, or the Borrower
shall file an application for an order, dismissing the Case which does not
contain a provision for termination of the Commitment and payment in full in
cash of all Obligations of the Borrower hereunder and under the other Loan
Documents;
(j) entry of an order by the Bankruptcy Court with respect to
the Case or the Borrower shall file an application for an order with respect to
the Case, in each case without the express prior written consent of Lenders
Agent, (i) to revoke, reverse, stay, modify, supplement or amend the Final Order
or (ii) to permit any administrative expense or any claim (now existing or
hereafter arising, of any kind or nature whatsoever) to have an administrative
priority as to the Borrower equal or superior to the priority of the claims of
the Lenders Agent and the Lenders in respect of the Obligations, or (iii) to
grant or permit the grant of a lien on the Collateral;
(k) an application for any of the orders described in clauses
(g), (h) or (i) above shall be made by a Person other than the Borrower and such
application is not contested by the Borrower in good faith and the relief
requested is granted in an order that is not stayed pending appeal;
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(l) 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 the Borrower other than the Lenders Agent and the Lenders in their
capacities as such with respect to any claim in an amount equal to or exceeding
$100,000 in the aggregate; provided, however, that it shall not be an Event of
Default if relief from the automatic stay is lifted solely for the purpose of
(i) allowing such creditor to determine the liquidated amount of its claim
against the Borrower or (ii) seeking payment from a collateral source other than
the Borrower;
(m) (i) a default by the Borrower shall have occurred and be
continuing in any payment of principal of or interest on any other obligation
for borrowed money other than the Subordinated Debt (or any obligation or
obligations under a conditional sale or other title retention agreement or any
obligation or obligations issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto in each case involving any
individual obligation or one or more obligations in an aggregate principal
amount of $50,000 or more or (ii) a default by the Borrower shall have occurred
and be continuing in the performance of any other agreement, term or condition
contained in any agreement under which any such obligation referred to in clause
(i) is created (or if any other default under any such agreement shall occur and
be continuing) if the effect of such default is to cause, or permit the holder
or holders of such obligation or obligations (or a trustee on behalf of such
holder or holders) to cause, such obligation or obligations to become due prior
to its or their stated maturity in each case involving any individual obligation
or one or more obligations in an aggregate principal amount of $250,000 or more;
(n) the Borrower or any other Person engages in a transaction
in connection with which the Borrower or any entity which the Borrower has an
obligation to indemnify, could be subject to liability for either a civil
penalty assessed pursuant to section 502 of ERISA or a tax imposed by section
4975 of the Code; except for those matters existing on the date hereof and set
forth on Schedule 7.18, an accumulated funding deficiency (as defined in section
302 of ERISA or section 412 of the Code), whether or not waived, exists with
respect to any Pension Plan or a lien arises with respect to any Pension Plan; a
security interest is granted with respect to any Pension Plan; a Pension Plan is
terminated; a Reportable Event (other than the commencement of the Case) occurs
or proceedings commence to terminate or to have a trustee appointed to terminate
any Pension Plan which Reportable Event or commencement of proceedings or
appointment is, in the reasonable opinion of the Required Lenders, likely to
result in the termination of any such Pension Plan; the Borrower or any ERISA
Affiliate incurs or is likely to incur any liability in connection with a
withdrawal from or the Insolvency, Reorganization or termination of a
Multiemployer Plan or with respect to section 515 of ERISA; or any other similar
event or condition shall occur or exist with respect to any Employee Benefit
Plan;
(o) this Financing Agreement, any Post-Petition Loan Document,
the Interim Order or the Final Order shall, for any reason, cease to create a
valid lien in any
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of the Collateral purported to be covered thereby or such lien shall cease to be
a perfected lien and, at any time after entry of the Interim Order, a first
priority lien, including, without limitation, a first-priority priming lien
senior to the Tax Liens (subject only to Permitted Encumbrances existing as of
the Petition Date) pursuant to section 364(c) and 364(d) of the Bankruptcy Code
against Borrower's estates;
(p) any Person other than the Borrower with obligations under
any of the guaranties, pledges or other security agreements identified in
Section 2, paragraph 1(j), or Section 8, paragraph 2, of this Financing
Agreement or under the Intercreditor Agreement repudiates or denies such
Person's obligations thereunder, or any such agreement for any reason, without
the prior written consent of Required Lenders ceases to be in full force and
effect other than in accordance with its terms as they exist on the date of
execution of such agreement;
(q) the Obligations of the Borrower under the Pre-Petition
Agreements are not satisfied on the earlier of (i) the date the Final Order is
entered by the Bankruptcy Court or (ii) the Commitment Termination Date, through
application of the proceeds of Loans to be made hereunder to the Borrower on
such date as provided herein (or otherwise) for any reason other than (i)
failure by the Lenders to perform their obligations hereunder to make such Loans
(including, without limitation, Borrower's inability to borrow the full amount
of the Total Term Loan Commitment because that amount, when added to the
Revolving Loans outstanding and the outstanding amount of the Letter of Credit
Guaranties would exceed the Total Commitment) or (ii) in the case of such
Obligations in respect of the Pre-Petition Term Loans, a determination by
Lenders Agent that the proceeds of the Loans made hereunder on the earlier of
such dates should not be applied to repay such Pre-Petition Term Loan
Obligations;
(r) the Borrower shall fail, upon receipt of any of the Asset
Disposition Proceeds, from time to time, to pay the full amount thereof to
Lenders Agent for application as provided in Section 4, paragraph b of this
Financing Agreement;
(s) at any time after the first appointment of a Responsible
Person approved by order of the Bankruptcy Court, Borrower's business shall
cease to be operated by a Responsible Person (which may be the Person initially
appointed as the Responsible Person with the approval of the Bankruptcy Court or
another Person subsequently approved of by the Bankruptcy Court and who, prior
to his approval and retention, was approved by Lenders Agent).
2. Upon the occurrence and continuation of a Default and/or
an Event of Default, and with the written consent of all Lenders, all loans and
advances provided for herein shall be thereafter in the Lenders' sole discretion
and the obligation of the Lenders or CITBC, as the case may be, to make
Revolving Loans or Term Loans and/or assist in opening Letters of Credit shall
cease, and at the option of Lenders Agent upon the occurrence and continuation
of an Event of Default: (i) all Obligations shall become immediately due and
payable; provided, however, that Lenders Agent has given the Borrower three
Business Days' written notice of the Event of Default; provided, further,
however, that no notice is required if the Event of Default is an Event of
Default listed in
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paragraph 1(f), 1(g), 1(h), 1(I), 1(j), 1(k), 1(l) or 1(o) of this Section 11;
(ii) the Lenders may charge the Borrower the Default Rate of Interest on all
then outstanding or thereafter incurred Obligations in lieu of the interest
provided for in Section 9, paragraphs 1 and 2 of this Financing Agreement; and
(iii) the Lenders may immediately terminate this Financing Agreement upon notice
to the Borrower; provided, however, that no notice of termination is required if
the Event of Default is any of the events listed in any of sub paragraphs (f)
through (l) of this Section 11, paragraph 1. The exercise of any option is not
exclusive of any other option which may be exercised at any time by the Lenders.
3. Upon three Business Days' notice to the Borrower following
the occurrence of any Event of Default and as long as such Event of Default is
continuing, Lenders Agent may to the extent permitted by law: (a) remove from
any premises where same may be located any and all documents, instruments, files
and records, and any receptacles or cabinets containing same, relating to the
Accounts, or Lenders Agent may use, at the Borrower's expense, such of the
Borrower's personnel, supplies or space at the Borrower's places of business or
otherwise, as may be necessary to properly administer and control the Accounts
or the handling of collections and realizations thereon; (b) bring suit, in the
name of the Borrower or Lenders Agent, and generally shall have all other rights
respecting said Accounts, including, without limitation, the right to:
accelerate or extend the time of payment, settle, compromise, release in whole
or in part any amounts owing on any Accounts and issue credits in the name of
the Borrower or Lenders Agent; (c) sell, assign and deliver the Collateral and
any returned, reclaimed or repossessed merchandise, with or without
advertisement to the extent permitted by applicable law, at public or private
sale, for cash, on credit or otherwise, at Lenders Agent's sole option and
discretion, and Lenders Agent may bid or become a purchaser at any such sale,
free from any right of redemption, which right is hereby expressly waived by the
Borrower to the extent permitted by law; (d) foreclose the security interests
created herein by any available judicial procedure, or to take possession of any
or all of the Inventory and Equipment without judicial process, and to enter any
premises where any Inventory and Equipment may be located for the purpose of
taking possession of or removing the same and (e) exercise any other rights and
remedies provided in law, in equity, by contract or otherwise. Lenders Agent
shall have the right, without notice or advertisement, to sell, lease, or
otherwise dispose of all or any part of the Collateral whether in its then
condition or after further preparation or processing, in the name of the
Borrower or Lenders Agent, or in the name of such other party as Lenders Agent
may designate, either at public or private sale or at any broker's board, in
lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as Lenders Agent in
its sole discretion may deem advisable, and Lenders Agent and the Lenders shall
have the right to purchase at any such sale. If any Inventory and Equipment
shall require rebuilding, repairing, maintenance or preparation, Lenders Agent
shall have the right, at its option, to do such of the aforesaid as is
necessary, for the purpose of putting the Inventory and Equipment in such
saleable form as Lenders Agent shall deem appropriate. The Borrower agrees, at
the request of Lenders Agent, to assemble the Inventory and Equipment and to
make it available to Lenders Agent at premises of the Borrower or elsewhere and
to make available to Lenders Agent the premises and facilities of the Borrower
for the purpose of Lenders Agent's taking possession of, removing or putting the
Inventory and Equipment in saleable form.
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However, if notice of intended disposition of any Collateral is required by law,
it is agreed that ten (10) days' notice shall constitute reasonable notification
and full compliance with the law. The net cash proceeds resulting from Lenders
Agent's exercise of any of the foregoing rights, (after deducting all charges,
costs and expenses, including reasonable attorneys' fees) shall be applied by
Lenders Agent to the payment of the Obligations, whether due or to become due,
in such order as Lenders Agent may elect, and the Borrower shall remain liable
to Lenders Agent for any deficiencies, and Lenders Agent in turn agrees to remit
to the Borrower or its successors or assigns, any surplus resulting therefrom.
The enumeration of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other rights, all
of which shall be cumulative. The Mortgages shall govern the rights and remedies
of Lenders Agent thereto.
SECTION 12. TERMINATION.
Except as otherwise permitted herein, this Financing Agreement
and the Commitments and the Revolving Line of Credit shall terminate as of the
Final Maturity Date. Notwithstanding the foregoing, the Lenders may terminate
the Financing Agreement immediately upon the occurrence of an Event of Default.
All Obligations shall become due and payable as of any termination hereunder or
under Section 11 hereof and, pending a final accounting, Lenders Agent and each
of the Lenders may withhold any balances in the Borrower's account (unless
supplied with an indemnity satisfactory to all the Lenders) to cover all of the
Borrower's Obligations, whether absolute or contingent. All of Lenders Agent's
and each Lender's rights, liens and security interests shall continue after any
termination until all Obligations have been paid and satisfied in full.
SECTION 13. INDEMNIFICATION.
In addition to the payment of expenses pursuant to Section 9
of this Financing Agreement, whether or not the transactions contemplated hereby
shall be consummated, the Borrower agrees to indemnify, pay and hold Lenders
Agent and each Lender and the officers, directors, partners, employees, agents,
affiliates and attorneys of Lenders Agent and each Lender (collectively called
the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of attorneys and accountants for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by the Borrower or by any other Person as
against Lenders Agent or such Lender or any other Person, whether or not such
Indemnitee shall be designated a party thereto) that may be imposed on, incurred
by, or asserted against that Indemnitee, in any manner relating to or arising
out of a Default or Event of Default under this Financing Agreement or (except
to the extent provided for or limited elsewhere in this Financing Agreement) the
consummation of the transactions contemplated hereby or in any other Loan
Document or guaranty or other security agreement to be delivered to the Lenders
or Lenders Agent hereunder by Borrower or any other Person, the use or intended
use of the proceeds of the Loans or the exercise of any
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right or remedy hereunder, including, without limitation, any obligations which
may become due and payable after the termination of this Financing Agreement
(the "Indemnified Liabilities"); provided, however, that the Borrower shall not
have any obligation to an Indemnitee hereunder with respect to Indemnified
Liabilities to the extent arising from the gross negligence or willful
misconduct of any Indemnitee as determined by a court of competent jurisdiction.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in the preceding sentence may be unenforceable because it is violative of any
law or public policy, the Borrower will contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
SECTION 14. MISCELLANEOUS.
1. The Borrower hereby waives diligence, demand, presentment
and protest and any notices thereof as well as notice of nonpayment in
connection with the Loans and the Borrower's other Obligations under the Loan
Documents. No delay or omission of Lenders Agent or any Lender or the Borrower
to exercise any right or remedy hereunder, whether before or after the happening
of any Event of Default, shall impair any such right or shall operate as a
waiver thereof or as a waiver of any such Event of Default. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion. No single or partial exercise by Lenders Agent or any
Lender of any right or remedy precludes any other or further exercise thereof,
or precludes any other right or remedy.
2. This Financing Agreement and the documents executed and
delivered in connection herewith constitute the entire agreement between the
Borrower and the Lenders Agent and the Lenders and supersede any prior
agreements, except the Pre-Petition Agreements. No amendment or waiver of any
provision of this Financing Agreement or any other Loan Document nor consent to
any departure by Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Lenders Agent and 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, unless in writing and signed by all
Lenders do any of the following: (1) increase the Revolving Line of Credit, the
Commitments, the Revolving Loans, the Term Loans or the Letter of Credit
Guaranties; (2) reduce the principal of, or interest payable hereunder or under
the Revolving Loans Promissory Note or the Term Loan Promissory Notes; (3)
postpone any date fixed for any payment of principal of, or interest payable
hereunder or under the Revolving Loans Promissory Note or the Term Loan
Promissory Notes, or waive any default in the payment of principal, interest or
any other amount due hereunder or under any Loan Document; (4) change the
definition of "Availability" or any other definitions used to compute such term;
(5) change any of the financial covenants in this Agreement; (6) waive an Event
of Default of the Borrower; (8) change the definition of "Required Lenders"; or
(9) amend this Section or any other provision requiring the consent of all
Lenders. No failure on the part of the Lenders Agent or any Lender to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof or preclude any
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other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
3. In no event shall the Borrower, upon demand by the Lenders
Agent for payment of any indebtedness relating hereto, by acceleration of the
maturity thereof, or otherwise, be obligated to pay interest and fees in excess
of the amount permitted by law. Regardless of any provision herein or in any
agreement made in connection herewith, no Lender shall ever be entitled to
receive, charge or apply, as interest on any indebtedness relating hereto, any
amount in excess of the maximum amount of interest permissible under applicable
law. If any Lender ever receives, collects or applies any such excess, it shall
be deemed a partial repayment of principal and treated as such; and if principal
is paid in full, any remaining excess shall be refunded to the Borrower. This
paragraph shall control every other provision hereof and of any other agreement
made in connection herewith.
4. If any provision hereof or of any other agreement made in
connection herewith is held to be illegal or unenforceable, such provision shall
be fully severable, and the remaining provisions of the applicable agreement
shall remain in full force and effect and shall not be affected by such
provision's severance. Furthermore, in lieu of any such provision, there shall
be added automatically as a part of the applicable agreement a legal and
enforceable provision as similar in terms to the severed provision as may be
possible.
5. THE BORROWER, LENDERS AGENT, AND EACH LENDER HEREBY WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS
FINANCING AGREEMENT. THE BORROWER, LENDERS AGENT AND EACH LENDER HEREBY
IRREVOCABLY WAIVE PERSONAL SERVICE OF PROCESS AND CONSENT TO SERVICE OF PROCESS
BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO THE
BORROWER, LENDERS' AGENT OR SUCH LENDER, AS THE CASE MAY BE, AT THE ADDRESS
PROVIDED HEREIN FOR NOTICES.
6. (a) The obligations of the Borrower hereunder and under
the other loan documents shall be construed as continuing, absolute and
unconditional without regard to (and the Borrower hereby waives any right or
claim it may have with respect to) (a) the validity or enforceability of this
Financing Agreement, or any other loan document at any time or from time to time
held by the Lenders Agent or any Lender, as against or with respect to the
Borrower, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower against the Lenders Agent or any Lender, or (c) any other
circumstances whatsoever which constitute, or might be construed to constitute,
an equitable or legal discharge of the Borrower hereunder, in bankruptcy or in
any other instance. When Lenders Agent or any Lender is pursuing rights and
remedies hereunder against the Borrower, Lenders Agent or such lender, as the
case may be, may, but shall be under no obligation to, pursue such rights and
remedies as it may have against another person or against any collateral
security or guaranty or any right of offset with respect thereto, and
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any failure by Lenders Agent or such Lender, as the case may be, to pursue such
other rights or remedies or to collect any payments from such other Borrower or
person or to realize upon any such collateral security or guaranty or to
exercise any such right of offset, or any release of such other person or of any
such collateral security, guaranty or right of offset, shall not relieve the
Borrower of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of
Lenders Agent or such Lender, as the case may be, against the Borrower.
(b) The obligations of the Borrower hereunder shall continue
to be effective, or be reinstated, as the case may be, if at any time any
payment of, by or for the Borrower is rescinded or must otherwise be restored or
returned by Lenders Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.
7. The Borrower authorizes and Lenders Agent and each of the
Lenders shall have the right, upon five (5) Business Days' prior written notice,
upon any amount becoming due and payable hereunder, to setoff and apply against
any and all property held by, or in the possession of Lenders Agent or any
Lender or the Collateral the Obligations due and payable to Lenders Agent or any
of the Lenders; provided, however, that if an Event of Default has occurred and
is continuing, Lenders Agent and each of the Lenders shall not be required to
give notice prior to the exercise of their rights set forth in this paragraph 7.
8. Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing, and shall be deemed to
have been validly served, given or delivered when hand delivered or sent by
telegram or telex, or three days after deposit in the United State mails, with
proper first class postage prepaid and addressed to the party to be notified as
follows:
(A) if to Lenders Agent, at:
The CIT Group/Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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(B) if to the Borrower, at:
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McDonald, Hopkins, ▇▇▇▇▇ & ▇▇▇▇▇ Co., L.P.A.
2100 Bank One Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
and
Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
First American Center
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: J. Page Davidson
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
(C) if to a Lender, to its address for notices identified on the
signature pages of this Financing Agreement,
or to such other address as any party may designate for itself by like notice.
9. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
FINANCING AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
10. All representations, warranties and indemnities contained
herein or made in writing by the Borrower in connection herewith shall survive
the execution and delivery of this Financing Agreement, for so long as any
Obligations remain outstanding, unless otherwise stated herein, regardless of
any investigation made by Lenders Agent or any Lender or on behalf of Lenders
Agent or any Lender.
11. All covenants and agreements contained in this Financing
Agreement by or on behalf of any party hereto shall bind and inure to the
benefit of the respective successors and assigns of the parties hereto whether
so expressed or not. References herein to a party by name shall be understood to
include any successor to such party.
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12. If any agreement, certificate or other writing, or any
action taken or to be taken, is by the terms of this Financing Agreement
required to be satisfactory to any or all of the Lenders, the determination of
such satisfaction shall be made by such Lender in its sole and exclusive
judgment exercised in good faith.
13. The descriptive headings of the several paragraphs of this
Financing Agreement and the table of contents are inserted for convenience only
and do not constitute a part of this Financing Agreement.
14. This Financing Agreement may be executed in two or more
counterparts, all of which shall be deemed but one and the same instrument and
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Financing Agreement to produce or account for more than one
such counterpart. Facsimile signatures on this Financing Agreement and any other
Loan Document shall be treated for all purposes as binding on such signatory to
the same extent as an original signature. If a party delivers an executed
counterpart of this Financing Agreement or any other Loan Document by facsimile,
such party shall, within one-business day of that delivery, deliver original
executed counterparts to the other party by overnight courier.
15. If the date for making any payment or the last date for
performance of any or the exercising of any right, as provided in this Financing
Agreement, shall not be a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day, with the same
force and effect as if done on the nominal date provided in this Financing
Agreement, except that interest shall accrue and be payable for the period after
such nominal date.
16. The Borrower will hold Lenders Agent and each Lender
harmless from any claim, demand or liability for broker's or finder's or
placement fees or commissions alleged to have been incurred in connection with
this Financing Agreement, the Revolving Loans Promissory Note, the Term Loan
Promissory Notes or the transactions contemplated hereby or thereby.
17. The Borrower and each Lender shall do and perform or cause
to be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Financing Agreement and the consummation of
the transactions contemplated hereby.
18. All of the obligations of the Borrower hereunder shall
survive the repayment of principal and interest under any loans or advances made
or issued hereunder and all other obligations.
19. In consideration of the Loans to be made to the Borrower
hereunder, the Borrower hereby agrees not to assert and affirmatively waives any
claim the Borrower otherwise might have under section 506(c) of the Bankruptcy
Code and agrees
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that the Collateral securing the Obligations to Lenders Agent and the Lenders
may be charged with costs or expenses only as provided for under paragraph 2 of
Section 6.
20. In consideration of the Loans to be made to the Borrower
hereunder, the Borrower hereby agrees not to assert and affirmatively waives any
claim the Borrower might have under Section 510 of the Bankruptcy Code against
Lenders Agent and the Lenders in any form or manner whatsoever and further
releases Lenders Agent and the Lenders from and affirmatively waives any and all
claims the Borrower may have against Lenders Agent and the Lenders from the
beginning of time to the date hereof.
21. Except as expressly permitted by this Financing Agreement,
the Borrower hereby agrees not to request an order of the Bankruptcy Court
permitting it to use any cash Collateral pursuant to section 363 of the
Bankruptcy Code while this Financing Agreement is in effect and the Obligations
are outstanding, and waives and releases its rights to request such use of any
cash Collateral.
22. REPLACEMENT OF NOTES. If a Note is lost, stolen, destroyed
or mutilated, (i) in the case of a lost, stolen or destroyed Note, upon receipt
by the Borrower of indemnity reasonably satisfactory to it, and (ii) in the case
of a mutilated Note, upon surrender of such Note, the Borrower shall execute and
deliver in lieu thereof a new Note, dated the date of the Note being replaced,
in the same principal amount and otherwise of the same type and with the same
information therein. The Borrower acknowledges that, if the holder of a Note
that has been lost, stolen or destroyed is the payee thereof or any other
financial institution of recognized responsibility, the holder's own agreement
of indemnity shall be deemed to be satisfactory for the purposes of this
provision.
SECTION 15. AGENCY.
1. THE LENDERS AGENT. Each Lender hereby irrevocably
designates and appoints CITBC as Lenders Agent for the Lenders under this
Financing Agreement and any Loan Document and irrevocably authorizes CITBC as
Agent for such Lender, to take such action on its behalf under the provisions of
this Financing Agreement and all Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to Lenders Agent by the terms of
this Financing Agreement and all Loan Documents together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Financing Agreement, Lenders Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Financing Agreement or any other Loan Document.
2. DELEGATION OF DUTIES. Lenders Agent may execute any of its
duties under this Financing Agreement or any other Loan Document by or through
agents or attorneys-in-fact and shall be entitled to the advice of counsel
concerning all matters pertaining to such duties.
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3. EXCULPATORY PROVISIONS. Neither Lenders Agent nor any of
its officers, directors, employees, agents, or attorneysinfact shall be liable
to any Lender for any action lawfully taken or omitted to be taken by it or such
person under or in connection with this Financing Agreement or any other Loan
Document (except for its or such person's own gross negligence or willful
misconduct), or responsible in any manner to any of the Lender(s) for any
recitals, statements, representations or warranties made by Borrower or any
officer thereof contained in this Financing Agreement or any other Loan Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by Lenders Agent under or in connection with, this
Financing Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Financing
Agreement or any other Loan Document or for any failure of Borrower to perform
its obligations thereunder. Lenders Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Financing Agreement or
any other Loan Document or to inspect the properties, books or records of
Borrower.
4. RELIANCE BY LENDERS AGENT. Lenders Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation reasonably believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, an
opinion of counsel to any Borrower), independent accountants and other experts
selected by Lenders Agent. Lenders Agent shall be fully justified in failing or
refusing to take any action under the Financing Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Required Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. Lenders Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Financing Agreement or any other Loan
Document in accordance with a request of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders.
5. NOTICE OF DEFAULT. Lenders Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless Lenders Agent has received written notice from a Lender or the
Borrower describing such Default or Event of Default. In the event that Lenders
Agent receives such a notice, Lenders Agent shall promptly give notice thereof
to the Lenders. Lenders Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided that unless and until Lenders Agent shall have received such
direction, Lenders Agent may in the interim (but shall not be obligated to) take
such action, or refrain from taking any such action, with respect to such
Default or Event of Default as it shall deem advisable and in the best interests
of the Lender(s).
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6. NON-RELIANCE ON LENDERS AGENT AND OTHER LENDERS. Each
Lender expressly acknowledges that neither Lenders Agent nor any of its
officers, directors, employees, agents or attorneys-in-fact has made any
representations or warranties to it and that no act by Lenders Agent hereinafter
taken, including any review of the affairs of Borrower shall be deemed to
constitute any representation or warranty by Lenders Agent to any Lender. Each
Lender represents to Lenders Agent that it has, independently and without
reliance upon Lenders Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of Borrower and made its own decision to enter
into this Financing Agreement and any other Loan Document. Each Lender also
represents that it will, independently and without reliance upon Lenders Agent
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Financing Agreement or
any other Loan Document and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition or creditworthiness of Borrower of any Person providing a guaranty of
the obligations of Borrower hereunder. Lenders Agent, however, shall provide the
Lender(s) with copies of all financial statements, projections and business
plans which come into the possession of Lenders Agent or any of its officers,
employees, agents or attorneys-in-fact.
7. INDEMNIFICATION. Each Lender agrees to indemnify Lenders
Agent in its capacity as such (to the extent not reimbursed by Borrower and
without limiting the obligation of Borrower to do so), from and against such
Lender's Share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time be imposed on, incurred by or asserted
against Lenders Agent in any way relating to or arising out of this Financing
Agreement, any other Loan Document or any documents contemplated by or referred
to herein or the transactions contemplated hereby or any action taken or omitted
by Lenders Agent under or in connection with any of the foregoing; provided that
no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from Lenders Agent's gross negligence
or willful misconduct. The agreements in this paragraph shall survive the
payment of the Obligations and the termination of this Financing Agreement.
8. LENDERS AGENT IN ITS INDIVIDUAL CAPACITY. Lenders Agent may
make loans to, and generally engage in any kind of business with Borrower or any
Person providing a guaranty of Borrowing obligations hereunder as though Lenders
Agent were not Lenders Agent hereunder. With respect to its loans made or
renewed by it or loan obligations hereunder as Lender, Lenders Agent shall have
the same rights and powers, duties and liabilities under this Financing
Agreement as any Lender and may exercise the same as though it were not Lenders
Agent and the "Lender" and "Lenders" shall include Lenders Agent in its
individual capacity.
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9. SUCCESSOR LENDERS AGENT. Lenders Agent may resign as
Lenders Agent upon 30 days' notice to the Lenders and such resignation shall be
effective upon the appointment of a successor Lenders Agent. If Lenders Agent
shall resign as Lenders Agent, then the Required Lenders shall appoint a
successor agent for the Lenders whereupon such successor agent shall succeed to
the rights, powers and duties of Lenders Agent including without limitation with
respect to the perfection of the security interest in the Collateral and the
term "Lenders Agent" shall mean such successor agent effective upon its
appointment, and the former Lenders Agent's rights, powers and duties as Lenders
Agent shall be terminated, without any other or further act or deed on the part
of such former Lenders Agent or any of the parties to this Financing Agreement.
After any retiring Lenders Agent's resignation hereunder as Lenders Agent the
provisions of this Section shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Lenders Agent.
10. AMENDMENTS CONCERNING AGENCY FUNCTION. Lenders Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Financing Agreement or any other Loan Document which affects its duties
hereunder or thereunder unless it shall have given its prior consent thereto.
11. LIABILITY OF LENDERS AGENT AND THE LENDERS. Lenders Agent
shall not have any liabilities or responsibilities to the Borrower on account of
the failure of any Lender to perform its obligations hereunder or to any Lender
on account of the failure of Borrower to perform its obligations hereunder or
under any other Loan Document. The Obligations of each Lender hereunder are
several and no Lender shall have any responsibility for the actions or inactions
of any other Lender or be relieved of its own obligations by any failure of any
other Lender to perform its obligations hereunder.
12. TRANSFER OF AGENCY FUNCTION. Without the consent of
Borrower or any Lender, Lenders Agent may at any time or from time to time
transfer its functions as Lenders Agent hereunder to any of its offices wherever
located within the U.S., provided that Lenders Agent shall promptly notify the
Borrower and the Lender(s) thereof.
13. WITHHOLDING TAXES. Each Lender will furnish to Lenders
Agent and to Borrower such forms, certifications, statements and other documents
as Lenders Agent or Borrower may request from time to time to evidence such
Lender's exemption from withholding taxes imposed by any jurisdiction or to
enable Lenders Agent or Borrower to comply with any applicable laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
any Lender is not created or organized under the laws of the United States of
America or any state thereof, such Lender will furnish to Lenders Agent and to
Borrower two copies of (i) Form 4224 or Form 1001 of the Internal Revenue
Service, or such other forms, certifications, statements or documents, duly
executed and completed by such Lender as evidence of such Lender's complete
exemption from United States withholding taxes with respect to any payments of
interest made hereunder in respect of any Loan or such Lender's commitment to
make any Loan hereunder and (ii) new Forms 4224 or 1001, as applicable, or any
successor forms thereto, upon the expiration or obsolescence of any previously
entered form.
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SECTION 16. PARTICIPATIONS.
1. PARTICIPATIONS IN LETTER OF CREDIT GUARANTIES. Subject to
the terms and conditions hereinafter set forth in this Section 16, CITBC hereby
agrees to sell and each Lender hereby agrees to purchase a participation
("Participation") from CITBC in each Letter of Credit Guaranty to the extent of
its Share (as such percentage may be reduced or otherwise modified from time to
time in accordance with the terms of this Section 16).
Subject to the first paragraph of this Section, each Lender
hereby irrevocably and unconditionally agrees to purchase and CITBC hereby
agrees to sell and transfer to each Lender, an undivided fractional interest
equal to such Lender's Share in each Letter of Credit Guaranty upon issuance
thereof and each draw thereunder upon such drawing and the obligations of
Borrower in respect of each such Letter of Credit Guaranty.
Each Lender will be entitled to receive its Share of all
Letter of Credit Guaranty Fees paid by Borrower to CITBC. CITBC shall pay each
Lender its Share of each Letter of Credit Guaranty Fee within 5 days of receipt
by CITBC of such Fee.
2. SHARING IN COLLATERAL. In addition to the foregoing, each
Lender hereby purchases, and CITBC hereby sells to each Lender, an undivided
fractional interest equal to such Lender's Share in the interests of CITBC in
the Collateral securing the Borrower's Obligations to CITBC in respect of the
Letter of Credit Guaranties that are subject to such other Lender's
Participations and all the other Loan Documents.
3. RELATIONSHIP FORMED. The relationship between CITBC (in its
capacity as seller of Participations pursuant to this Section 16) and each
Lender (in its capacity as purchaser of Participations pursuant to this Section
16) is and shall be that of a purchaser and seller of a property interest and
not a creditor-debtor relationship or joint venture or financing relationship.
4. PROCEDURES. Whenever a draw shall be made under a Letter of
Credit Guaranty and Borrower shall fail to reimburse CITBC therefor in
accordance with this Agreement, CITBC will promptly notify each Lender regarding
such draw as follows: (1) the date of such draw, and (2) the amount of such
draw. Although CITBC shall be responsible for paying each such draw on each
Letter of Credit Guaranty, each Lender shall bear its Share of the credit risk
associated with each such draw. Accordingly, in the event that the amount of any
such draw is not paid in full by or on behalf of Borrower when required in
accordance with the terms of this Financing Agreement, for any reason, CITBC
shall give prompt notice by telephone (promptly confirmed in writing) or telex
to each Lender of such event. Upon receipt of such telephone or telex notice,
each Lender shall cause to be transmitted to CITBC, to an account specified by
CITBC, an amount in immediately available funds equivalent to its Share of such
draw or payment.
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5. COLLECTIONS AND REMITTANCES. Whenever CITBC receives any
payment, interest, reimbursement, collection, or recovery on account of a Letter
of Credit Guaranty whether from Borrower, the Collateral, or otherwise, it shall
allocate such receipts between each Lender and CITBC pro rata, with each such
Lender's percentage of the principal amount based on its Share.
6. RETURN OF PAYMENTS. If any payment received by CITBC and
distributed or credited to a Lender is later rescinded or is otherwise returned
by CITBC, as the case may be, for whatever reason (including, without
limitation, settlement of an alleged claim), each such Lender, upon demand by
CITBC, shall immediately pay to CITBC such Lender's Share of the principal
amount so returned plus interest and/or commission on such amount at the rate be
paid by CITBC. The covenants contained in this paragraph shall survive the
termination of this Financing Agreement.
7. SHARING OF SETOFFS AND COLLECTIONS. Each Lender agrees that
to the extent any payment is received by it on any of Borrower's obligations
under a Letter of Credit Guaranty, whether by counterclaim, setoff, banker's
lien, by realizing on Collateral or otherwise and such payment results in such
Lender receiving a greater payment than it would have been entitled to under
paragraph 5 above had the total amount of such payment been paid directly to
CITBC, for disbursement according to that paragraph, then such Lender shall
immediately purchase for cash from CITBC an additional Participation and a
participation from the other Lenders in such Letter of Credit Guaranty (subject
to the same terms and conditions provided for herein), sufficient in amount so
that such payment shall effectively be shared pro rata with CITBC and the other
Lenders in accordance with the amount, and to the extent, of their respective
interests in the Letter of Credit Guaranties; provided, however, that if all or
any portion of such payment is thereafter recovered from such Lender at any
time, the purchase shall be rescinded and the purchase price returned to the
extent of such recovery, but without interest or other return thereof.
8. INDEMNIFICATION; COSTS AND EXPENSES. To the extent not
reimbursed by Borrower and without limiting the obligation of Borrower to do so,
each Lender agrees to reimburse CITBC, against, and hold CITBC, harmless from,
on demand, to the extent of each such Lender's Share of, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements of any kind whatsoever (including, without
limitation, disbursements necessary, in the judgment of CITBC, to preserve or
protect the Collateral), that may at any time be imposed on, incurred by, or
asserted against CITBC, in any way relating to this Financing Agreement, a
Letter of Credit, the Letter of Credit Guaranties or any other Loan Document or
other instrument relating to any of the foregoing, or the transactions
contemplated thereby and hereby, or any action taken or omitted by CITBC, under
or in connection with any of the foregoing; provided, however, that no Lender
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from CITBC's, gross negligence or willful misconduct.
The covenants contained in this paragraph 8 shall survive the termination of
this Financing Agreement.
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9. ADMINISTRATION; STANDARD OF CARE. CITBC will administer
each Letter of Credit Guaranty and Letter of Credit in the ordinary course of
business and in accordance with its usual practices, modified from time to time
as it deems appropriate under the circumstances. CITBC shall be entitled to use
its discretion in taking or refraining from taking any actions in connection
with any of the foregoing as if it were the sole party involved in any of the
foregoing and no Participations existed.
Each Lender acknowledges that its Participations hereunder are
without recourse to CITBC and that each such Lender expressly assumes all risk
of loss in connection with its Participation in the Letter of Credit Guaranties,
as if such Lender had directly provided such Letter of Credit Guaranty. CITBC
shall have no liability express or implied, for any action taken or omitted to
be taken by CITBC or for any failure or delay in exercising any right or power
possessed by CITBC, under any of the Loan Documents except for actual losses, if
any, suffered by any Lender that are proximately caused by CITBC's gross
negligence or willful misconduct. Without limiting the foregoing, CITBC (1) may
consult with legal counsel, independent public accountants, appraisers, and
other experts, selected by CITBC and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
persons, (2) shall be entitled to rely on, and shall incur no liability by
acting upon, any conversation, notice, consent, certificate, statement, order,
or any document or other writing (including, without limitation, telegraph,
telex, telecopy, TWX, or other telecommunication device) believed by CITBC to be
genuine and correct and to have been signed, sent, or made by the proper person,
(3) makes no warranty or representation of any kind or character relating to
Borrower or any Person providing a guaranty of Borrower's Obligations under this
Financing Agreement, or the Collateral, and shall not be responsible for any
warranty or representation made in or in connection with any of the Loan
Documents, (4) makes no warranty or representation as to, and shall not be
responsible for the correctness as to form, the due execution, legality,
validity, enforceability, genuineness, sufficiency, or collectability of any of
the Loan Documents, for any failure by Borrower or any other Person to perform
its obligations thereunder or under a guaranty of Borrower's Obligations under
this Financing Agreement, for Borrower's use of the proceeds therefrom, or for
the preservation of the Collateral or the loss, depreciation, or release
thereof, (5) makes no warranty or representation as to, and assumes no
responsibility for, the authenticity, validity, accuracy, or completeness of any
notice, financial statement, or other document or information received by CITBC,
or any Lender in connection with, or otherwise referred to in, any of the Loan
Documents, and (6) shall not be required to make any inquiry concerning the
observance or performance of any agreement contained in, or conditions of, any
of the Loan Documents or under a guaranty of Borrower's Obligations under this
Financing Agreement, or to inspect the property, books, or records of Borrower
or any other Person.
Notwithstanding the provisions of the first paragraph of this
paragraph 9, CITBC agrees that it will not knowingly take any of the following
actions without the written consent of each Lender: (1) extend the time of
payment on Borrower's obligations to CITBC with respect to any of the Letter of
Credit Guaranties for more than thirty (30) days after any due date or (2)
reduce the fees charged for the Letter of Credit Guaranties. CITBC shall be
fully justified in failing or refusing to take any action under
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any of the Loan Documents unless it shall first receive such advice or
concurrence of the Lenders as CITBC shall deem appropriate.
CITBC may lend money to, accept deposits from, and generally
engage in any kind of business with Borrower or any other Person to perform its
obligations thereunder or under a guaranty of Borrower's Obligations under this
Financing Agreement as freely as though no Participations had been granted to a
Lender.
10. INDEPENDENT INVESTIGATION BY THE LENDERS. Each Lender
acknowledges (1) that it has made an informed judgment with respect to the
desirability of purchasing Participations in the Letter of Credit Guaranties,
(2) that CITBC has not made any representations or warranties to such Lender and
that no prior or future act by CITBC shall be deemed to constitute a
representation or warranty of CITBC and (3) that such Lender has independently,
without reliance upon CITBC, and based on such information as such Lender has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial condition, and general
creditworthiness of the Borrower and any Person providing a guaranty of
Borrower's Obligations under this Financing Agreement, made its own analysis of
the value and lien status of any Collateral, and made its own decision to
execute this Financing Agreement and thereby purchase Participations in
accordance with this Financing Agreement. Each Lender agrees that, independently
and without reliance upon CITBC or any representations or statements of CITBC,
and based on such information as such Lender deems appropriate at the time, it
will continue to make and rely upon its own credit analysis and decisions in
taking or not taking any action under this Article 16 or any of the Loan
Documents.
SECTION 17. REAFFIRMATION.
The Borrower acknowledges and confirms its Obligations to
Lenders Agent and the Lenders arising out of, in connection with or as a
consequence of the Pre-Petition Agreements and other Loan Documents. To the
extent this Financing Agreement amends the Pre-Petition Agreements, the
Pre-Petition Agreements are amended, and to the extent this Financing Agreement
restates the Pre-Petition Agreements, the Pre-Petition Agreements are restated.
The Borrower also acknowledges that its Obligations under Revolving Loans that
are deemed hereunder to be made as a result of any payment under any of the
Pre-Petition Contingent Liabilities shall for all purposes be deemed to be
Obligations of the Borrower arising after the Filing Date. The Borrower further
acknowledges and confirms that each of Lenders Agent and each of the Lenders is
entitled to all benefits of the security interest and liens granted under and
pursuant to the terms of the Pre-Petition Agreements and any and all other Loan
Documents. The Borrower hereby further acknowledges and confirms the validity,
priority and extent of the security interests, liens and claims of Lenders Agent
(for itself and for the Lenders) and the claims of Lenders in and to the
Pre-Petition Collateral and waives its right to challenge the entitlements
thereto of Lenders Agent and the Lenders, and acknowledges that such liens,
security interests and claims are valid, enforceable, and binding and entitled
to first priority as and against all other claims against the Pre-Petition
Collateral, except for valid and perfected liens arising prior to and existing
on the Filing Date. The
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Borrower hereby waives and releases any and all rights it may have to challenge
the validity, extent and perfection of the liens, claims and security interests
in and to the Pre-Petition Collateral of Lenders Agent and the Lenders, whether
arising under the Loan Documents, this Financing Agreement, or otherwise.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Financing Agreement to be executed and delivered by their proper and duly
authorized officers with effect as of the Filing Date. This Financing Agreement
shall take effect as of the date set forth above after being accepted below by
an officer of CITBC after which, CITBC shall forward to the Borrower a fully
executed original for its files.
Borrower:
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Lenders Agent:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Lenders:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Initial Commitment: $3,750,000
Adjusted Commitment: $18,750,000
Address for Notices:
The CIT Group/Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇
▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
Initial Commitment: $2,250,000
Adjusted Commitment: $11,250,000
Address for Notices:
BNY Factoring LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
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