EXHIBIT 10.4
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DEBTOR IN POSSESSION CREDIT AGREEMENT
dated as of
September 24, 2002
by and among
PEREGRINE SYSTEMS, INC.,
a Delaware corporation and
a Chapter 11 Debtor-in-Possession, and
PEREGRINE REMEDY, INC., a Delaware corporation and
a Chapter 11 Debtor-in-Possession (collectively, "BORROWERS")
---------
and
the Subsidiaries of Borrowers named herein ("GUARANTORS")
----------
and
BMC SOFTWARE, INC.,
a Delaware corporation ("LENDER")
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TABLE OF CONTENTS
Page
ARTICLE 1
DIP FACILITY
Section 1.1 Post-Petition Loans.............................................................................1
ARTICLE 2
INTEREST, FEES AND CHARGES
Section 2.1 Interest........................................................................................3
Section 2.2 Fees............................................................................................3
Section 2.3 Computation of Interest and Fees................................................................4
Section 2.4 Reimbursement Obligations.......................................................................4
Section 2.5 Bank Charges....................................................................................5
Section 2.6 Funding Losses..................................................................................5
Section 2.7 Maximum Interest................................................................................5
ARTICLE 3
LOAN ADMINISTRATION
Section 3.1 Manner of Borrowing and Funding Post-Petition Loans.............................................6
ARTICLE 4
PAYMENTS
Section 4.1 General Payment Provisions......................................................................7
Section 4.2 Repayment of Post-Petition Loans................................................................7
Section 4.3 Payment of Other Obligations....................................................................7
Section 4.4 Marshalling; Payments Set Aside.................................................................7
Section 4.5 Application of Payments and Collections.........................................................7
Section 4.6 Receipt of Payments and Collections.............................................................8
Section 4.7 Prepayments.....................................................................................8
ARTICLE 5
DIP TERM AND TERMINATION OF COMMITMENT
Section 5.1 Term of Commitment..............................................................................8
Section 5.2 Termination.....................................................................................8
ARTICLE 6
COLLATERAL SECURITY AND GUARANTEE
Section 6.1 Grant of Security Interest in Collateral........................................................9
Section 6.2 Other Collateral...............................................................................10
Section 6.3 Lien on Deposit Accounts.......................................................................10
Section 6.4 Lien Perfection; Further Assurances............................................................10
Section 6.5 Lien Priority..................................................................................11
Section 6.6 Guarantee......................................................................................11
Section 6.7 No Impairment of Guarantee.....................................................................12
Section 6.8 Subrogation....................................................................................12
ARTICLE 7
COLLATERAL ADMINISTRATION
Section 7.1 General Provisions.............................................................................12
Section 7.2 Administration of Accounts.....................................................................13
Section 7.3 Administration of Inventory....................................................................14
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Section 7.4 Administration of Equipment....................................................................14
Section 7.5 Pledged Securities.............................................................................15
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
Section 8.1 General Representations and Warranties.........................................................16
Section 8.2 Reaffirmation of Representations and Warranties................................................18
ARTICLE 9
COVENANTS AND CONTINUING AGREEMENTS
Section 9.1 Affirmative Covenants..........................................................................18
Section 9.2 Negative Covenants.............................................................................21
ARTICLE 10
CONDITIONS PRECEDENT
Section 10.1 Conditions Precedent to Initial Credit Extensions..............................................23
Section 10.2 Conditions Precedent to All Credit Extensions..................................................24
Section 10.3 Limited Waiver of Conditions Precedent.........................................................24
ARTICLE 11
EVENTS OF DEFAULT;
RIGHTS AND REMEDIES ON DEFAULT
Section 11.1 Events of Default..............................................................................25
Section 11.2 Acceleration of the Obligations................................................................27
Section 11.3 Remedies.......................................................................................27
Section 11.4 Licenses and Sale of Collateral................................................................28
Section 11.5 Setoff.........................................................................................28
Section 11.6 Pledged Securities.............................................................................29
Section 11.7 Remedies Cumulative; No Waiver.................................................................30
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
Section 12.1 Successors and Assigns.........................................................................30
Section 12.2 Participations.................................................................................31
Section 12.3 Assignments....................................................................................31
ARTICLE 13
MISCELLANEOUS
Section 13.1 Power of Attorney..............................................................................32
Section 13.2 General Indemnity..............................................................................33
Section 13.3 Survival of All Indemnities....................................................................33
Section 13.4 Indulgences Not Waivers........................................................................33
Section 13.5 Modification of Agreement......................................................................34
Section 13.6 Severability...................................................................................34
Section 13.7 Cumulative Effect; Conflict of Terms...........................................................34
Section 13.8 Execution in Counterparts......................................................................34
Section 13.9 Lender's Consent...............................................................................34
Section 13.10 Notices........................................................................................34
Section 13.11 Performance of Borrowers' Obligations..........................................................34
Section 13.12 Time of Essence................................................................................35
Section 13.13 Entire Agreement; Appendix A, Exhibits and Schedules...........................................35
Section 13.14 Interpretation.................................................................................35
iii
Section 13.15 Governing Law...................................................................................35
Section 13.16 Waivers by Obligors.............................................................................35
Section 13.17 Release.........................................................................................36
APPENDIX A
GENERAL DEFINITIONS
SCHEDULES AND EXHIBITS
Exhibit A - Form of DIP Note
Exhibit B - Form of Notice of Borrowing
Schedule 7.1 Location of Collateral
Schedule 8.1(o) Pledged Securities
Schedule 8.1(q) Subsidiaries of Borrowers
Schedule 9.2(b) Liens
iv
DEFINED TERMS
Page
Acceptable Plan.................................................................................................A-1
Account.........................................................................................................A-1
Account Debtor..................................................................................................A-1
Acquisition Agreement...........................................................................................A-1
Affiliate.......................................................................................................A-1
Agreement.......................................................................................................A-1
Applicable Law..................................................................................................A-1
Asset Disposition...............................................................................................A-1
Average Loan Balance............................................................................................A-2
Avoidance Claim.................................................................................................A-2
Base Rate.......................................................................................................A-2
Base Rate Loan..................................................................................................A-2
Bid Procedures Order............................................................................................A-2
Borrower..........................................................................................................1
Borrowers.........................................................................................................1
Borrowing.......................................................................................................A-2
Break-Up Fee....................................................................................................A-2
Budget..........................................................................................................A-2
Budgeted Expenses...............................................................................................A-2
Business Day....................................................................................................A-2
Capital Expenditures............................................................................................A-2
Capitalized Lease Obligation....................................................................................A-3
Carve Out.......................................................................................................A-3
Cash Equivalents................................................................................................A-3
CERCLA..........................................................................................................A-3
Chapter 11 Case.................................................................................................A-3
Chapter 11 Cases..................................................................................................1
Chattel Paper...................................................................................................A-3
Claims..........................................................................................................A-3
Closing Date....................................................................................................A-3
Collateral......................................................................................................A-3
Commitment......................................................................................................A-4
Commitment Termination Date.....................................................................................A-4
Committee.......................................................................................................A-4
Company.........................................................................................................A-4
Compliance Certificate..........................................................................................A-4
Confirmation Order..............................................................................................A-4
Contingent Obligation......................................................................................A-4, A-5
Court........................................................................................................1, A-5
Critical Vendor.................................................................................................A-5
Debt............................................................................................................A-5
Default.........................................................................................................A-5
Default Rate....................................................................................................A-5
v
Deposit Account.................................................................................................A-5
DIP Facility....................................................................................................A-5
DIP Financing Documents.........................................................................................A-5
DIP Motion......................................................................................................A-5
DIP Note........................................................................................................A-5
DIP Term........................................................................................................A-6
Distribution....................................................................................................A-6
Document........................................................................................................A-6
Dollars and the sign $..........................................................................................A-6
Eligible Assignee...............................................................................................A-6
Environmental Laws..............................................................................................A-6
Environmental Release...........................................................................................A-6
Equipment.......................................................................................................A-6
Equity Interest.................................................................................................A-6
ERISA...........................................................................................................A-6
Estate..........................................................................................................A-6
Event of Default............................................................................................25, A-6
Extraordinary Expenses..........................................................................................A-7
Final Financing Order...........................................................................................A-7
Financing Orders................................................................................................A-7
Fiscal Year.....................................................................................................A-7
FLSA............................................................................................................A-7
Foreign Subsidiary..............................................................................................A-7
Full Payment....................................................................................................A-7
GAAP............................................................................................................A-8
General Intangible..............................................................................................A-8
Governmental Approvals..........................................................................................A-8
Governmental Authority..........................................................................................A-8
Guarantors...................................................................................................1, A-8
Hazardous Materials.............................................................................................A-8
Indemnified Amount..............................................................................................A-8
Indemnitee......................................................................................................A-8
Insolvency Proceeding...........................................................................................A-8
Instrument......................................................................................................A-9
Intellectual Property...........................................................................................A-9
Interim Financing Order.........................................................................................A-9
Interim Period..................................................................................................A-9
Inventory.......................................................................................................A-9
Investment Property.............................................................................................A-9
Lender..................................................................................................1, A-1, A-9
Lender Professionals............................................................................................A-9
LIBOR Loan.....................................................................................................A-10
LIBOR Rate.....................................................................................................A-10
Lien...........................................................................................................A-10
Material Adverse Effect........................................................................................A-10
Material Contract..............................................................................................A-11
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Maximum Rate...................................................................................................A-11
Money Borrowed.................................................................................................A-11
▇▇▇▇▇'▇........................................................................................................A-11
Multiemployer Plan.............................................................................................A-11
Net Proceeds...................................................................................................A-11
Notes..........................................................................................................A-11
Notice of Borrowing.........................................................................................6, ▇-▇▇
▇▇▇▇▇▇▇▇▇▇▇....................................................................................................▇-▇▇
Obligor........................................................................................................A-12
Ordinary Course of Business....................................................................................A-12
Organization Documents.........................................................................................A-12
OSHA...........................................................................................................A-12
Parent.........................................................................................................A-12
Participant................................................................................................31, A-12
Payment Items..................................................................................................A-12
Permitted Contingent Obligations...............................................................................A-12
Permitted Liens................................................................................................A-12
Permitted Purchase Money Debt..................................................................................A-12
Person.........................................................................................................A-13
Petition Date..................................................................................................A-13
Plan...........................................................................................................A-13
Pledged Securities.............................................................................................A-13
Post-Petition Loan.............................................................................................A-13
Pre-Petition Emergency Loan....................................................................................A-13
Pre-Petition Term Loan.........................................................................................A-13
primary obligations.............................................................................................A-4
primary obligor.................................................................................................A-4
Professional Expenses..........................................................................................A-13
Professional Person............................................................................................A-13
Properly Contested.............................................................................................A-13
Property.......................................................................................................A-14
Purchase Money Debt............................................................................................A-14
Purchase Money Lien............................................................................................A-14
Real Property..................................................................................................A-14
RELEASED CLAIMS..................................................................................................37
RELEASED PARTIES.................................................................................................37
RELEASING PARTIES................................................................................................37
Reorganization Plan............................................................................................A-14
Reportable Event...............................................................................................A-14
Restricted Investment..........................................................................................A-14
S&P............................................................................................................A-14
SEC............................................................................................................A-14
Security.......................................................................................................A-14
Security Documents.............................................................................................A-14
Senior Officer.................................................................................................A-14
Subsidiary.....................................................................................................A-15
vii
Tax Refund.....................................................................................................A-15
Taxes..........................................................................................................A-15
Transferee.................................................................................................32, A-15
UCC............................................................................................................A-15
viii
DEBTOR IN POSSESSION CREDIT AGREEMENT
THIS DEBTOR IN POSSESSION CREDIT AGREEMENT dated as of September 24,
2002, by and among PEREGRINE SYSTEMS, INC., a
Delaware corporation and a Chapter
11 debtor-in-possession and PEREGRINE REMEDY, INC., a
Delaware corporation and a
Chapter 11 debtor-in-possession (each individually a "BORROWER", and
collectively, "BORROWERS"); each of the Subsidiaries of Borrowers listed on the
signature pages hereof (collectively, "GUARANTORS") and BMC SOFTWARE, INC., a
Delaware corporation ("LENDER"). Capitalized terms used in this Agreement have
the meanings assigned to them in Appendix A, General Definitions.
RECITALS:
A. Borrowers are debtors-in-possession under Chapter 11 of the
Bankruptcy Code in cases (the "CHAPTER 11 CASES") pending in the United States
Bankruptcy Court for the District of
Delaware (the "COURT"). Borrowers have
requested that Lender extend financing on a secured basis to Borrowers in
connection with the Chapter 11 Cases in accordance with the provisions of this
Agreement.
B. Lender is willing to make loans and other extensions of credit to
Borrowers, subject to the terms and conditions of this Agreement and subject to
the terms and conditions set forth in the Financing Orders.
C. Each of the Guarantors has agreed to guaranty the obligations of
Borrowers hereunder, and each of Borrowers and Guarantors has agreed to secure
its obligations to Lender hereunder with Liens on all of its Property, whether
real, personal or mixed, tangible or intangible, now existing or hereafter
acquired or arising, all as more fully provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE 1
DIP FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other DIP
Financing Documents, Lender agrees to make the DIP Facility available to
Borrowers, in an aggregate amount up to the Commitment, as follows:
Section 1.1 Post-Petition Loans.
(a) General. Subject to the terms and conditions of this
Agreement, Lender agrees to make Post-Petition Loans to Borrowers, on any
Business Day during the period from the date hereof through the day before the
last day of the DIP Term, in an aggregate principal amount outstanding at any
time which does not exceed the Commitment at such time; provided, however, that
Lender shall have no obligation whatsoever to make any Post-Petition Loan if, at
the time of the proposed funding thereof, the aggregate principal amount of all
the Post-Petition
1
Loans then outstanding would exceed the Commitment after the funding of such
Post-Petition Loan. The Post-Petition Loans shall bear interest as set forth in
Section 2.1 hereof, shall be guaranteed by the Guarantors and secured by all of
the Collateral and shall be evidenced by the DIP Note. Each Post-Petition Loan
shall, at the option of Borrowers unless otherwise specified herein, be made as
and consist entirely of either a Base Rate Loan or LIBOR Loan. Amounts borrowed
under the DIP Facility and repaid or prepaid may not be reborrowed.
(b) Use of Proceeds. The proceeds of the Post-Petition Loans
shall be used by Borrowers during the pendency of their Chapter 11 Cases
exclusively for one or more of the following purposes: (i) to pay in full the
Pre-Petition Term Loan and the Pre-Petition Emergency Loan from the proceeds of
the initial Post-Petition Loan, to the extent authorized by the Court; (ii) to
pay expenditures described in the Budget or, with Lender's consent after the
occurrence of an Event of Default, to fund the cost of an orderly liquidation of
the Collateral to the extent approved by Lender; (iii) to pay fees required to
be paid to the office of the United States Trustee; (iv) to pay any of the
Obligations; (v) to pay the Claims of Critical Vendors, to the extent authorized
by order of the Court; (vi) to pay the Break-Up Fee and for this purpose
$10,000,000 will be reserved from the Commitment; and (vii) to pay other
expenses authorized by order of the Court; provided that in no event shall the
outstanding Post-Petition Loans exceed $60,000,000 until the Bid Procedures
Order is entered. Notwithstanding anything to the contrary contained herein, in
no event shall proceeds of Post-Petition Loans be used to pay any Professional
Expenses incurred in connection with the assertion of or joinder in any claim,
counterclaim, action, contested matter, objection, defense or other proceeding,
the purpose of which is to seek or the result of which would be to obtain any
order, judgment, declaration, or similar relief (i) invalidating, setting aside,
avoiding or subordinating, in whole or in part, any of the Obligations or Liens
and security interests in any of the Collateral granted to Lender under this
Agreement or the Financing Orders; (ii) declaring any of the DIP Financing
Documents to be invalid, not binding or unenforceable in any respect, (iii)
preventing, enjoining, hindering or otherwise delaying Lender's enforcement of
any of the DIP Financing Documents or any realization upon any Collateral
(unless such enforcement or realization is in direct violation of an explicit
provision in any of the Financing Orders); (iv) declaring any Liens granted or
purported to be granted under any of the DIP Financing Documents to have a
priority other than the priority set forth therein; or (v) objecting to the
amount or method of calculation by Lender of any of the Obligations. Nothing in
this Section 1.1(b) shall be construed to waive Lender's right to object to any
requests, motions or applications made in or filed with the Court, including any
applications for interim or final allowances of Professional Expenses.
(c) DIP Note. The Post-Petition Loans made by Lender and
interest accruing thereon shall be evidenced by the records of Lender and by the
DIP Note payable to Lender (or the assignee of Lender), which shall be executed
by Borrowers, completed in conformity with this Agreement and delivered to
Lender on the Closing Date. All outstanding principal amounts and accrued
interest under the DIP Note shall be due and payable as set forth in Section 4.2
hereof.
2
ARTICLE 2
INTEREST, FEES AND CHARGES
Section 2.1 Interest.
(a) Rates of Interest. Borrowers agree to pay interest in
respect of all unpaid principal amounts of the Post-Petition Loans from the
respective dates such principal amounts are advanced until paid (whether at
stated maturity, on acceleration or otherwise) at a rate per annum equal to the
applicable rate indicated below:
(i) for Post-Petition Loans made or outstanding as
Base Rate Loans, 2% plus the Base Rate in effect from time to time; or
(ii) for Post-Petition Loans made or outstanding as
LIBOR Loans, 3.50% plus the LIBOR Rate for the applicable Post-Petition Loan as
determined by Lender in conformity with this Agreement.
Upon determining the LIBOR Rate for any LIBOR Loan requested by
Borrowers, Lender shall promptly notify Borrowers thereof by telephone and, if
so requested by Borrowers, confirmed in writing (including, by way of electronic
transmission). Such determination made in good faith shall, absent manifest
error, be final, conclusive and binding on all parties and for all purposes. The
applicable rate of interest for all Post-Petition Loans bearing interest based
upon the Base Rate shall be increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Base Rate, with such adjustments
to be effective as of the opening of business on the day that any such change in
the Base Rate becomes effective.
(b) Interest Rate Not Ascertainable. If Lender shall determine
in good faith (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) that on any date for determining the
LIBOR Rate for any Post-Petition Loan, by reason of any changes arising after
the date of this Agreement affecting the London interbank market, adequate and
fair means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of LIBOR Rate, then, and in any such event,
Lender shall forthwith give notice (by telephone confirmed in writing) to
Borrowers of such determination. Until Lender notifies Borrowers that the
circumstances giving rise to the suspension described herein no longer exist,
the obligation of Lender to make LIBOR Loans shall be suspended, and any
subsequent Post-Petition Loan shall bear interest as a Base Rate Loan.
(c) Default Rate of Interest. From and after the occurrence of
any Event of Default, but only so long as such Event of Default is continuing,
the principal amount of the Obligations (and, to the extent permitted by
Applicable Law, all past due interest) shall bear interest at the Default Rate.
Section 2.2 Fees.
(a) Facility Fee. Borrowers shall pay to Lender a facility fee
of .35% of the Commitment, which shall be fully earned and non-refundable and
shall be paid concurrently with the funding of the initial Post-Petition Loan
hereunder.
3
(b) Commitment Fee. Borrowers shall pay to Lender a commitment
fee equal to 0.75% per annum of the amount by which the Average Loan Balance for
any month (or portion thereof that the Commitment is in effect) is less than
$110,000,000, such fee to be paid on the first Business Day of the following
month; but if the Commitment is terminated on a day other than the first day of
a month, then any such fee payable for the month in which termination shall
occur shall be paid on the effective date of such termination.
(c) General Provisions. All fees shall be fully earned by
Lender pursuant to the foregoing provisions of this Agreement on the due date
thereof and, except as otherwise set forth herein or required by Applicable Law,
shall not be subject to rebate, refund or proration. All fees provided for in
this Section 2.2 are and shall be deemed to be compensation for services and are
not, and shall not be deemed to be, interest or any other charge for the use,
forbearance or detention of money.
Section 2.3 Computation of Interest and Fees. Interest shall be
calculated on a daily basis, commencing on the date of funding of the initial
Post-Petition Loan, and shall be payable monthly, in arrears, on the first
Business Day of each month. All interest, fees and other charges provided for in
this Agreement shall be calculated daily and shall be computed on the actual
number of days elapsed over a year of 360 days.
Section 2.4 Reimbursement Obligations. Borrowers shall reimburse Lender
for all reasonable legal, accounting, appraisal and other fees and expenses
incurred by Lender in connection with (i) the negotiation and preparation of any
of the DIP Financing Documents, any amendment or modification to any of the DIP
Financing Documents, any waiver of any Default or Event of Default thereunder,
or any restructuring or forbearance with respect thereto; (ii) the
administration of the DIP Financing Documents and the transactions contemplated
thereby; (iii) any action taken to perfect or maintain the perfection or
priority of any of Lender's Liens with respect to any of the Collateral; (iv)
any inspection of or audits conducted with respect to any Obligor's books and
records or any of the Collateral; (v) any effort to verify, protect, preserve,
or restore any of the Collateral or to collect, sell, liquidate or otherwise
dispose of or realize upon any of the Collateral; (vi) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by or against Lender,
any Obligor or any other Person) in any way arising out of or relating to any of
the Collateral (or the validity, perfection or priority of any of Lender's Liens
thereon), any of the DIP Financing Documents or the validity, allowance or
amount of any of the Obligations; (vii) the protection or enforcement of any
rights or remedies of Lender in any Insolvency Proceeding; and (viii) any other
action taken by Lender to enforce any of the rights or remedies of Lender
against any Obligor or any Account Debtors to enforce collection of any of the
Obligations or payments with respect to any of the Collateral. All amounts
chargeable to Borrowers under this Section 2.4 shall constitute Obligations that
are secured by all of the Collateral and shall be payable to Lender on demand.
Borrowers shall also reimburse Lender for reasonable expenses incurred by Lender
in its administration of any of the Collateral to the extent and in the manner
provided in Article 7 hereof or in any of the other DIP Financing Documents. The
foregoing shall be in addition to, and shall not be construed to limit, any
other provision of any of the DIP Financing Documents regarding the
reimbursement by Borrowers of costs, expenses or liabilities suffered or
incurred by Lender.
4
Section 2.5 Bank Charges. Borrowers shall pay to Lender, on demand, any
and all fees, costs or expenses which Lender pays to a bank or other similar
institution arising out of or in connection with (a) the forwarding to Borrowers
or any other Person on behalf of Borrowers by Lender of proceeds of
Post-Petition Loans made by Lender to Borrowers pursuant to this Agreement and
(b) the depositing for collection by Lender of any Payment Item received or
delivered to Lender on account of the Obligations. Borrowers acknowledge and
agree that Lender may charge such costs, fees and expenses to Borrowers based
upon Lender's good faith estimate of such costs, fees and expenses as they are
incurred by Lender.
Section 2.6 Funding Losses. Borrowers shall compensate Lender, upon
Lender's written consent (which request shall set forth the basis for requesting
such amounts and which request shall, absent manifest error, be final,
conclusive and binding upon Borrowers), for all losses, expenses and liabilities
(including any interest paid by Lender to lenders of funds borrowed by Lender to
make or carry its LIBOR Loan to the extent not recovered by Lender in connection
with the re-employment of such funds), which Lender may sustain: (a) if for any
reason (other than a default by Lender) a Borrowing of any LIBOR Loan does not
occur on the date specified therefor in a Notice of Borrowing (whether or not
withdrawn), (b) if any repayment of any LIBOR Loan occurs on a date prior to the
Commitment Termination Date, or (c) if, for any reason, Borrowers default in
their obligation to repay any LIBOR Loan when required by the terms of this
Agreement.
Section 2.7 Maximum Interest. In no event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under the Notes and
charged or collected pursuant to the terms of this Agreement or pursuant to the
Notes exceed the Maximum Rate, nor shall any provisions hereof be construed as a
contract to pay for the use, forbearance or detention of money with interest at
a rate or in an amount in excess of the Maximum Rate. If any provisions of this
Agreement or the Notes contravene any Applicable Law, such provisions shall be
deemed amended to conform to such Applicable Law. Notwithstanding anything to
the contrary contained herein, no provision of this Agreement or the Notes shall
require the payment or permit the collection of interest in excess of the
Maximum Rate. If any excess of interest in such respect is herein provided for,
or shall be adjudicated to be so provided, in this Agreement, the Notes or
otherwise in connection with this loan transaction, the provisions of this
paragraph shall govern and prevail, and neither Borrowers nor the sureties,
guarantors, successors or assigns of Borrowers shall be obligated to pay the
excess amount of such interest, or any other excess sum paid for the use,
forbearance or detention of sums loaned pursuant hereto. If for any reason
interest in excess of the Maximum Rate shall be deemed charged, required or
permitted by any court of competent jurisdiction, any such excess shall be
applied as a payment and reduction of the principal of indebtedness evidenced by
this Agreement and the Notes; and, if the principal amount hereof has been paid
in full, any remaining excess shall forthwith be paid to Borrowers. In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, Borrowers and Lender shall, to the extent permitted by Applicable Law, (a)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the indebtedness
evidenced by this Agreement and the Notes so that the interest for the entire
term does not exceed the Maximum Rate.
5
ARTICLE 3
LOAN ADMINISTRATION
Section 3.1 Manner of Borrowing and Funding Post-Petition Loans.
Borrowings under the Commitment established pursuant to Article 1 hereof shall
be made and funded as follows:
(a) Notice of Borrowing.
(i) Whenever Borrowers desire to make a Borrowing
under this Agreement, Borrowers shall give Lender prior written notice of such
Borrowing request (a "NOTICE OF BORROWING"), which shall be in the form of
Exhibit B annexed hereto and signed by a Senior Officer. Except for the initial
Notice of Borrowing, such Notice of Borrowing shall be given by Borrowers no
later than 11:00 a.m., Houston, Texas time, at the office of Lender, as
designated by Lender from time to time at least three (3) Business Days prior to
the requested funding date of such Borrowing, but no more frequently than once
per week. Notices received after 11:00 a.m. shall be deemed received on the next
Business Day. Each Post-Petition Loan shall be in the minimum amount of
$2,500,000 (unless deemed requested pursuant to Section 3.1(a)(ii) or otherwise
agreed by Lender). Each Notice of Borrowing shall be irrevocable and shall
specify (A) the principal amount of the Borrowing, (B) the date of Borrowing
(which shall be a Business Day), (C) whether the Borrowing is to consist of a
Base Rate Loan or LIBOR Loan, and (D) the proposed use of the proceeds thereof.
(ii) Unless payment is otherwise timely made by
Borrowers, the becoming due of the Break-Up Fee or of any amount required to be
paid under this Agreement or any of the other DIP Financing Documents with
respect to the Obligations (whether as principal, accrued interest, fees or
other charges) shall be deemed irrevocably to be a request for a Post-Petition
Loan on the due date of, and in an aggregate amount required to pay, such
Break-Up Fee, principal, accrued interest, fees or other charges, and the
proceeds of such Post-Petition Loan may be disbursed by way of direct payment of
the Break-Up Fee or relevant Obligation.
(b) Fundings by Lender. Subject to its receipt of a Notice of
Borrowing as provided in Section 3.1(a)(i), and in compliance with the terms and
conditions hereof, Lender shall make the proceeds of the Post-Petition Loan
available to Borrowers by disbursing such proceeds in accordance with Borrowers'
disbursement instructions set forth in the applicable Notice of Borrowing.
(c) Disbursement Authorization. Borrowers hereby irrevocably
authorize Lender to disburse the proceeds of each Post-Petition Loan requested
by Borrowers, or deemed to be requested pursuant to Section 3.1(a), as follows:
(i) the proceeds of each Post-Petition Loan requested under Section 3.1(a)(i)
shall be disbursed by Lender in accordance with the terms of the Notice of
Borrowing; and (ii) the proceeds of each Post-Petition Loan requested or deemed
requested under Section 3.1(a)(ii) shall be disbursed by Lender by way of direct
payment of the relevant interest or other Obligation. Any proceeds disbursed in
payment of any of the Obligations shall be deemed to have been received by
Borrowers.
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ARTICLE 4
PAYMENTS
Section 4.1 General Payment Provisions. All payments (including all
prepayments) of principal of and interest on the Post-Petition Loans and other
Obligations that are payable to Lender shall be made to Lender in Dollars,
without any offset or counterclaim and free and clear of (and without deduction
for) any present or future Taxes, by wire transfer of immediately available
funds not later than 12:00 noon, Houston, Texas time, on the due date.
Section 4.2 Repayment of Post-Petition Loans.
(a) Payment of Principal. The outstanding principal amounts
with respect to the Post-Petition Loans shall be due and payable on the
Commitment Termination Date.
(b) Payment of Interest. Interest accrued on each
Post-Petition Loan shall be due and payable on the first Business Day of each
month (for the immediately preceding month), computed through the last calendar
day of the preceding month. Accrued but unpaid interest shall also be paid by
Borrowers on the Commitment Termination Date.
Section 4.3 Payment of Other Obligations. The balance of the
Obligations requiring the payment of money, including Extraordinary Expenses
incurred by Lender, shall be repaid by Borrowers to Lender as and when provided
in the DIP Financing Documents, or, if no date of payment is otherwise specified
in the DIP Financing Documents, on demand.
Section 4.4 Marshalling; Payments Set Aside. Lender shall not be under
any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of any Obligor or against or in
payment of any or all of the Obligations. To the extent that Borrowers make a
payment or payments to Lender or Lender receives payment from the proceeds of
any Collateral or exercises its right of setoff, and such payment or payments or
the proceeds of Collateral or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party, then to the extent of such
recovery, the Obligations or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred. The provisions of the immediately preceding sentence
of this Section 4.4 shall survive any termination of the Commitment and Full
Payment of the Obligations.
Section 4.5 Application of Payments and Collections. All monies to be
applied to the Obligations, whether such monies represent voluntary payments by
one or more Obligors or are received pursuant to demand for payment or realized
from any disposition of Collateral, shall be applied as follows: (i) first, to
pay the amount of Extraordinary Expenses and amounts owing to Lender pursuant to
Section 13.11 hereof that have not been reimbursed to Lender by Borrowers,
together with interest accrued thereon at the rate then applicable to Base Rate
Loans; (ii) second, to pay any Indemnified Amount that has not been paid to
Lender by Obligors, together with interest accrued thereon at the rate then
applicable to Base Rate Loans; (iii) third, to pay any fees due and payable to
Lender; (iv) fourth, in payment of accrued interest in respect of the
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Post-Petition Loans; (v) fifth, in payment of the unpaid principal of the
Post-Petition Loans; and (vi) sixth, in payment of any other Obligations then
outstanding.
Section 4.6 Receipt of Payments and Collections. All payments received
by Lender by 12:00 noon, Houston, Texas time, on any Business Day shall be
deemed received on that Business Day. All Payment Items received by Lender after
12:00 noon, Houston, Texas time, on any Business Day shall be deemed received on
the next Business Day. Except to the extent that the manner of application to
the Obligations of payments or proceeds of Collateral is expressly governed by
other provisions of this Agreement, Borrowers irrevocably waive the right to
direct the application of any and all payments and Collateral proceeds at any
time or times received by Lender from or on behalf of Borrowers, and Borrowers
do hereby irrevocably agree that Lender shall have the continuing exclusive
right to apply and reapply any and all such payments and Collateral proceeds
received at any time or times hereafter by Lender or its agent against the
Obligations, in such manner as Lender may deem advisable, notwithstanding any
entry by Lender upon any of its books and records.
Section 4.7 Prepayments.
(a) Voluntary Prepayments. Borrowers may, upon at least three
(3) Business Days notice to Lender, prepay the Post-Petition Loans at any time
without premium or penalty, but subject to any compensation payable pursuant to
Section 2.6 hereof.
(b) Mandatory Prepayments. A mandatory prepayment of the
Post-Petition Loans shall be due on any date (i) Borrowers or any Guarantor
shall receive Net Proceeds from any Asset Disposition in an amount equal to such
Net Proceeds, and (ii) Borrowers or any of their Subsidiaries shall receive any
Tax Refund in an amount equal to such Tax Refund.
ARTICLE 5
DIP TERM AND TERMINATION OF COMMITMENT
Section 5.1 Term of Commitment. Subject to Lender's right to cease
making Post-Petition Loans to Borrowers when any Default exists and is
continuing or upon the Commitment Termination Date, the Commitment shall be in
effect for the DIP Term. The DIP Term may be extended by written agreement
between Borrowers and Lender without further notice or hearing or order by the
Court.
Section 5.2 Termination.
(a) Termination by Lender. Lender may terminate the DIP
Facility (and any Commitment thereunder) at any time, without notice to
Borrowers, after the occurrence and during the continuance of an Event of
Default.
(b) Termination by Borrowers. Borrowers may terminate the DIP
Facility at any time upon 10 days prior written notice to Lender; provided,
however, no such termination by Borrowers shall be effective until Full Payment
of the Obligations. Any notice of termination given by Borrowers shall be
irrevocable unless Lender otherwise agrees in writing. Borrowers may elect to
terminate the DIP Facility in its entirety only.
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(c) Effect of Termination. On the Commitment Termination Date,
all of the Obligations shall be immediately due and payable, and Lender shall
have no further obligation to make any Post-Petition Loans. All undertakings,
agreements, covenants, warranties and representations of Borrowers contained in
the DIP Financing Documents shall survive any such termination and Lender shall
retain its Liens in the Collateral and all of its rights and remedies under the
DIP Financing Documents notwithstanding such termination until Full Payment of
the Obligations. The provisions of Section 2.4, Section 4.4, and this Section
5.2(c) and all obligations of Borrowers to indemnify Lender pursuant to this
Agreement shall in all events survive any termination of the Commitment.
ARTICLE 6
COLLATERAL SECURITY AND GUARANTEE
Section 6.1 Grant of Security Interest in Collateral. To secure the
prompt and Full Payment and performance of all of the Obligations, each Borrower
hereby grants to Lender, a continuing security interest in and Lien upon all of
the following Property and interests in Property of such Borrower, whether now
owned or existing or hereafter created, acquired or arising (irrespective of
whether the same existed on or was created or acquired after the Petition Date):
(a) all Accounts;
(b) all Inventory;
(c) all Equipment;
(d) all General Intangibles (including all Intellectual
Property);
(e) all Instruments;
(f) all Chattel Paper;
(g) all Documents;
(h) all Investment Property (including all Pledged
Securities);
(i) all other goods and personal property, whether tangible or
intangible, wherever located, including money, letters of credit and all rights
of payment or performance under letters of credit;
(j) all Real Property;
(k) all Avoidance Claims;
(l) all money and other Property of any kind, whether or not
in the possession or under the control of Lender or a bailee of Lender;
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(m) all cash and non-cash proceeds of (a) through (l) above,
including proceeds of and unearned premiums with respect to insurance policies
insuring any of the Collateral; and
(n) all books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (a) through (m) above.
In no event shall (i) the Lien granted above in all Avoidance Claims be
enforceable unless and until the Final Financing Order is entered nor (ii) the
Liens described herein extend to the Carve-Out. Lender agrees that so long as no
Default or Event of Default shall have occurred and be continuing, Borrowers
shall be permitted to pay Professional Expenses allowed and payable as part of
the Carve-Out.
Section 6.2 Other Collateral. In addition to the items of Property
referred to in Section 6.1 above, the Obligations shall also be secured by all
of the other items of Property from time to time described in the Financing
Orders or any of the Security Documents as security for all of the Obligations.
Section 6.3 Lien on Deposit Accounts. As additional security for the
Full Payment and performance of the Obligations, each Borrower hereby grants to
Lender a continuing security interest in and Lien upon, and hereby collaterally
assigns to Lender, all of such Borrower's right, title and interest in and to
any deposits or other sums at any time credited to each Deposit Account. In
connection with the foregoing, each Borrower hereby authorizes and directs each
bank or other depository to pay or deliver to Lender upon its written demand
therefor made at any time upon the occurrence and during the continuation of an
Event of Default and without further notice to such Borrower (such notice being
hereby expressly waived), all balances in each Deposit Account maintained by
such Borrower with such depository for application to the Obligations then
outstanding, and the rights given Lender in this Section shall be cumulative
with and in addition to Lender's other rights and remedies in regard to the
foregoing Property as proceeds of Collateral. Each Borrower hereby irrevocably
appoints Lender as their attorney-in-fact to collect any and all such balances
to the extent any such payment is not made to Lender by such bank or other
depository after demand thereon is made by Lender pursuant hereto.
Section 6.4 Lien Perfection; Further Assurances. Promptly after
Lender's request therefor, but subject to Section 9.1(p), Borrowers shall
execute or cause to be executed and deliver to Lender such instruments,
assignments, title certificates or other documents as are necessary under the
UCC or other Applicable Law (including any motor vehicle certificates of title
act) to perfect (or continue the perfection of) Lender's Lien upon the
Collateral, and shall take such other action as may be requested by Lender to
give effect to or carry out the intent and purposes of this Agreement. Each
Borrower hereby authorizes Lender to file any financing statement which may be
necessary under the UCC. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof.
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Section 6.5 Lien Priority. The Liens and security interests granted to
Lender pursuant to the provisions of this Article 6 and pursuant to any of the
DIP Financing Documents shall be first priority Liens and security interests in
the Collateral owned by each Borrower, subject only to (a) valid, perfected,
nonavoidable and enforceable Liens which constitute Permitted Liens, and (b) the
Carve-Out, and except as expressly provided otherwise in the Financing Orders.
Section 6.6 Guarantee.
(a) Each of the Guarantors unconditionally and irrevocably
guarantees the due and punctual payment and performance by Borrowers of the
Obligations. Each of the Guarantors further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and it will remain bound upon this guarantee notwithstanding any
extension or renewal of any of the Obligations. The Obligations of the
Guarantors shall be joint and several.
(b) Each of the Guarantors waives presentation to, demand for
payment from and protest to Borrowers or any other Guarantor, and also waives
notice of protest for nonpayment. The Obligations of the Guarantors hereunder
shall not be affected by (i) the failure of Lender to assert any claim or demand
or to enforce any right or remedy against Borrowers or any other Guarantor under
the provisions of this Agreement or any other DIP Financing Documents or
otherwise; (ii) any extension or renewal of any provision hereof or thereof;
(iii) any rescission, waiver, compromise, acceleration, amendment or
modification or any of the terms or provisions of any of the DIP Financing
Documents; (iv) the release, exchange, waiver or foreclosure of any security
held by Lender for Obligations or any of them; (v) the failure of Lender to
exercise any right or remedy against any other Guarantor; or (vi) the release or
substitution of any Guarantor or any other Guarantor.
(c) Each of the Guarantors further agrees that this guarantee
constitutes a guarantee of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by Lender to
any security held for payment of the Obligations or to any balance of any
deposit, account or credit on the books of Lender in favor of Borrowers or any
other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby waives any defense that it
might have based on a failure to remain informed of the financial condition of
Borrowers and of any other Guarantor and any circumstances affecting the ability
of the Borrowers to perform under this Agreement and the other DIP Financing
Documents.
(e) Each Guarantor's guarantee shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations, this
Agreement, the Notes, the other DIP Financing Documents or any other instrument
evidencing any Obligations, or by the existence, validity, enforceability,
perfection, or extent of any collateral therefore or by any other circumstance
relating to the Obligations which might otherwise constitute a defense to this
guarantee. Lender makes no representation or warranty in respect of any such
circumstances and shall have no duty or responsibility whatsoever to any
Guarantor in respect of the management and maintenance of the Obligations.
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(f) Upon the Obligations becoming due and payable (by
acceleration or otherwise), Lender shall be entitled to immediate payment of
such Obligations by the Guarantors upon written demand by Lender without further
application to or order of the Court.
Section 6.7 No Impairment of Guarantee. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than Full Payment), including
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations. Without limiting the generality of the
foregoing, the obligations of the Guarantors hereunder shall not be discharged
or impaired or otherwise affected by the failure of Lender to assert any claim
or demand or to enforce any remedy under this Agreement or any other agreement,
by any waiver or modification of any provision thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of the Guarantors or would
otherwise operate as a discharge of the Guarantors as a matter of law, unless
and until Full Payment of the Obligations.
Section 6.8 Subrogation. Until Full Payment of the Obligations
guaranteed hereby, each Guarantor hereby waives all rights or subrogation of
contribution, whether arising by contract or operation of law.
ARTICLE 7
COLLATERAL ADMINISTRATION
Section 7.1 General Provisions.
(a) Locations of Collateral. All tangible items of Collateral,
other than Inventory in transit, shall at all times be kept by an Obligor at one
or more of the business locations of Obligors described in Schedule 7.1 hereof
and shall not be moved therefrom, without the prior written approval of Lender,
except that prior to an Event of Default and acceleration of the maturity of the
Obligations in consequence thereof, an Obligor may (i) make sales or other
dispositions of any Collateral to the extent authorized by Section 7.4(b) hereof
and (ii) move Inventory or any record relating to any Collateral to a location
in the United States other than those described in Schedule 7.1, so long as an
Obligor has given Lender at least 10 days prior written notice of such new
location.
(b) Insurance of Collateral; Condemnation Proceeds. Borrowers
shall maintain and pay for insurance upon all Collateral, wherever located,
covering casualty, hazard, public liability, and such other risks in such
amounts and with such insurance companies as are reasonably satisfactory to
Lender. All proceeds payable under each such policy shall be payable to Lender
for application to the Obligations. Borrowers shall deliver the originals or
certified copies of such policies to Lender with loss payable endorsements
reasonably satisfactory to Lender, naming Lender as sole loss payee, assignee or
additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Lender in the event of cancellation of the policy for any
reason. If Borrowers fail to provide and pay for such insurance, Lender may, at
its option, but
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shall not be required to, procure the same and charge Borrowers therefor.
Borrowers agree to deliver to Lender, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies. For so long as no
Event of Default exists and is continuing, Borrowers shall have the right to
settle, adjust and compromise any claim with respect to any insurance maintained
by Borrowers provided that all proceeds thereof are applied in the manner
specified in this Agreement, and Lender agrees promptly to provide any necessary
endorsement to any checks or drafts issued in payment of any such claim. At any
time that an Event of Default exists and is continuing, only Lender shall be
authorized to settle, adjust and compromise such claims. Lender shall have all
rights and remedies with respect to such policies of insurance as are provided
for in this Agreement and the other DIP Financing Documents.
(c) Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping any
Collateral, all Taxes imposed under any Applicable Law on any of the Collateral
or in respect of the sale thereof, and all other payments required to be made by
Lender to any Person to realize upon any Collateral shall be borne and paid by
Obligors. If any Obligor fails to pay promptly any portion thereof when due,
Lender may, at its option, but shall not be required to, pay the same and charge
Borrowers therefor. Lender shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Lender's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever, but the same shall be at Obligors' sole risk.
(d) Defense of Title to Collateral. Each Obligor shall at all
times defend its title to the Collateral and Lender's Liens therein against all
Persons and all claims and demands whatsoever.
Section 7.2 Administration of Accounts.
(a) Records and Schedules of Accounts. Each Obligor shall keep
accurate and complete records of its Accounts and all payments and collections
thereon and shall submit to Lender on such periodic basis as Lender shall
request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the 20th day of each month from and after
the date hereof, Borrowers shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("SCHEDULE OF ACCOUNTS"), and, upon Lender's request therefor, copies of
proof of delivery and a copy of all documents, including repayment histories and
present status reports relating to the Accounts so scheduled and such other
matters and information relating to the status of then existing Accounts as
Lender shall reasonably request. At the request of Lender made at any time, each
Obligor shall deliver to Lender copies of invoices or invoice registers related
to all of its Accounts.
(b) Account Verification. Whether or not a Default or an Event
of Default exists, Lender shall have the right at any time, in the name of
Lender, any designee of Lender or Borrowers, to verify the validity, amount or
any other matter relating to any Accounts of any
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Obligor by mail, telephone, telegraph or otherwise. Each Obligor shall cooperate
fully with Lender in an effort to facilitate and promptly conclude any such
verification process.
Section 7.3 Administration of Inventory
(a) Records and Reports of Inventory. Each Obligor shall keep
accurate and complete records of its Inventory and shall furnish Lender periodic
inventory reports in form and detail satisfactory to Lender and certified to be
true and correct by the chief financial officer (or any other officer acceptable
to Lender in its sole discretion) of each Borrower.
(b) Returns of Inventory. An Obligor shall not return any of
its Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the ordinary course of business of Obligor and such
Person; (ii) no Default or Event of Default exists or would result therefrom;
(iii) Borrowers promptly notify Lender thereof if the aggregate value of all
Inventory returned in any month exceeds $100,000; and (iv) such return is not
made for the purpose of allowing such Person to credit its claim against an
Obligor arising prior to the Petition Date.
Section 7.4 Administration of Equipment.
(a) Records and Schedules of Equipment. Each Obligor shall
keep accurate records itemizing and describing the kind, type, quality, quantity
and cost of its Equipment and all dispositions made in accordance with Section
7.4(b) hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender. Promptly after request therefor by Lender, an Obligor shall deliver to
Lender any and all evidence of ownership, if any, of any of the Equipment.
(b) Dispositions of Equipment. Each Obligor will not sell,
lease or otherwise dispose of or transfer any of the Equipment or any part
thereof without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment in the Ordinary Course of
Business, (ii) dispositions of Equipment which, in the aggregate has a fair
market value or book value, whichever is less, of $250,000 or less, provided
that all Net Proceeds thereof are remitted to Lender for application to the
Obligations, or (iii) replacements of Equipment that is substantially worn,
damaged or obsolete with Equipment of like kind, function and value, provided
that the replacement Equipment shall be acquired prior to or concurrently with
any disposition of the Equipment that is to be replaced, the replacement
Equipment shall be free and clear of Liens other than Permitted Liens that are
not Purchase Money Liens, and such Obligor shall have given Lender at least 10
days prior written notice of such disposition.
(c) Condition of Equipment. The Equipment is in good operating
condition and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved, reasonable wear and tear excepted. Each Obligor
will not permit any of the Equipment to become affixed to any real Property
leased to such Obligor so that an interest arises therein under the real estate
laws of the applicable jurisdiction unless the landlord of such real Property
has executed a landlord waiver or leasehold mortgage in favor of and in form
acceptable to Lender, and each Obligor
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will not permit any of the Equipment to become an accession to any personal
Property that is subject to a Lien unless the Lien is a Permitted Lien.
Section 7.5 Pledged Securities.
(a) Delivery of Certificates. Each Obligor will deliver to
Lender as soon as reasonably practicable after the Closing Date all certificates
or instruments representing or evidencing any Pledged Securities, whether now
existing or hereafter acquired, in suitable form for transfer by delivery or, as
applicable, accompanied by such Obligor's endorsement or duly executed
instruments of transfer in blank, all in form and substance satisfactory to
Lender. Lender shall have the right, at any time in its discretion and without
notice to any Obligor, to transfer to or to register in its name or in the name
of its nominees any or all of the Pledged Securities. Lender shall have the
right at any time to exchange certificates or instruments representing or
evidencing any of the Pledged Securities for certificates or instruments of
smaller or larger denominations.
(b) Certain Distributions. Any sums paid upon or in respect of
any of the Pledged Securities upon liquidation or dissolution of any issuer of
any of the Pledged Securities, any distribution of capital made on or in respect
of any of the Pledged Securities, or any property distributed upon or with
respect to any of the Pledged Securities pursuant to the recapitalization or
reclassification of the capital of any issuer of Pledged Securities or pursuant
to the reorganization thereof shall be delivered to Lender to be held by it
hereunder as additional security for the Obligations. If any sums of money or
property so paid or distributed in respect of any of the Pledged Securities
shall be received by any Obligor, such Obligor shall, until such money or
property is paid or delivered to Lender, hold such money or such property in
trust for Lender, segregated from other funds of such Obligor, as additional
security for the Obligations.
(c) Voting Rights. Except as provided in Section 11.6, each
Obligor will be entitled to exercise all voting, consensual and corporate rights
with respect to the Pledged Securities; provided, however, that no vote shall be
cast, consent given or right exercised or other action taken by such Obligor
which would impair the Collateral or which would be inconsistent with or result
in any violation of any provision of this Agreement or any other DIP Financing
Document or, without prior written consent of Lender, to enable or take any
action to permit any issuer of Pledged Securities to issue any Equity Interest
of any nature or issue any other securities convertible into or granting the
right to purchase or exchange for any Equity Interest securities of any nature
of such issuer.
(d) Control. No Obligor shall grant control over any
Investment Property to any Person other than Lender.
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ARTICLE 8
REPRESENTATIONS AND WARRANTIES
Section 8.1 General Representations and Warranties. To induce Lender to
enter into this Agreement and to make available the Commitment, each Obligor
warrants and represents to Lender that:
(a) Organization and Qualification. Each Obligor is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, has the power to own Properties and to
transact the business in which it is presently engaged or proposed to be engaged
and is duly qualified and in good standing in each jurisdiction in which it
presently is, or proposes to be, engaged in business, other than failures to be
so qualified and in good standing that could not reasonably be expected to have
a Material Adverse Effect.
(b) Power and Authority. The execution, delivery and
performance by each Obligor of the DIP Financing Documents are within such
Obligor's corporate power, have been duly authorized by all necessary or proper
corporate action and, on the date of initial funding of Post-Petition Loans
hereunder, will be authorized by the Interim Financing Order pursuant to
Sections 363 and 364 of the Bankruptcy Code; are not in contravention of any
provision of its own Organizational Documents; will not violate any Applicable
Law (following entry of the Interim Financing Order); does not require the
consent or approval of any Governmental Authority or any other Person other than
the entry by the Court of the Interim Financing Order and thereafter the Final
Financing Order.
(c) Enforceable Agreements. Each of the DIP Financing
Documents has been duly executed and delivered by such Obligor and constitutes a
legal, valid and binding obligation of Borrowers, enforceable against such
Obligor in accordance with its terms, subject to the Financing Orders.
(d) Priority of Liens. Upon entry of the Interim Financing
Order, and thereafter upon entry of the Final Financing Order, the security
interests granted pursuant to the DIP Financing Documents constitute valid,
enforceable, perfected and first priority Liens on the Collateral owned by the
Obligors, except to the extent otherwise expressly provided in the Financing
Orders and except for Permitted Liens.
(e) Places of Business. Each Obligor has no office or place of
business, nor does each Obligor store any Collateral, at any location other than
those identified in Schedule 7.1.
(f) Compliance With Laws. All of each Obligor's business,
operations and Properties are conducted, maintained and owned in accordance with
Applicable Law, including all Environmental Laws, except to the extent that any
such noncompliance could not reasonably be expected to have a Material Adverse
Effect and except as heretofore described by Borrowers in filings with the SEC.
(g) Governmental Approvals. Each Obligor has obtained and
holds in full force and effect all Governmental Approvals necessary for the
operation of its business as
16
presently and proposed to be conducted to the extent that the failure to obtain
same could not reasonably be expected to have a Material Adverse Effect.
(h) No Adverse Changes. Since the Petition Date, no event has
occurred that has or could reasonably be expected to have a Material Adverse
Effect.
(i) Taxes. Each Obligor has filed all federal, state and local
tax returns and other reports that it is required by Applicable Law to file and
has paid, or made for provision of the payment of, all Taxes upon it, its income
and properties as and when such Taxes are due and payable, except to the extent
being Properly Contested.
(j) Brokers. Except for possible claims of Ernst & Young LLP
payable by Borrowers, there are no claims for brokerage commissions, finders'
fees or investment banking fees in connection with the transactions contemplated
by this Agreement or any of the other DIP Financing Documents.
(k) No Default. No Default or Event of Default exists at the
time, or would result from the funding, of any Post-Petition Loan or other
extension of credit hereunder;
(l) ERISA. Borrowers and each of their Subsidiaries are in
full compliance with the requirements of ERISA and the regulations promulgated
thereunder with respect to each Plan. No fact or situation that is reasonably
likely to result in a material adverse change in the financial condition of
Borrowers or any of their Subsidiaries exists in connection with any Plan.
Neither Borrowers nor any of their Subsidiaries has any withdrawal liability in
connection with a Multiemployer Plan.
(m) Not a Regulated Entity. No Obligor is (i) an "investment
company" or a "person directly or indirectly controlled by or acting on behalf
of an investment company" within the meaning of the Investment Company Act of
1940; or (ii) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935.
(n) Margin Stock. Neither Borrowers nor any of their
Subsidiaries is engaged, principally or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
margin stock.
(o) Pledged Securities. All Pledged Securities of any Obligor
as of the date hereof are listed on Schedule 8.1(o), and all of such Pledged
Securities are owned by such Obligor free and clear of any Lien or adverse claim
except any Lien granted to secure the Pre-Petition Term Loan, which Lien shall
be released concurrently with the funding of the initial Post-Petition Loan. The
Pledged Securities pledged hereunder by the Obligors constitute that percentage
of the issued and outstanding Equity Interests of each issuer thereof as set
forth on Schedule 8.1(o). All of the Pledged Securities have been duly and
validly issued and are fully paid and nonassessable. Except as set forth on
Schedule 8.1(o), all certificates or instruments evidencing the Pledged
Securities have been delivered to Lender.
17
(p) Acquisition Agreement. All of the representations and
warranties made by Borrowers in Articles III and IV of the Acquisition Agreement
are true and correct in all material respects.
(q) Subsidiaries. All of the direct and indirect Subsidiaries
of Borrowers are listed on Schedule 8.1(q).
Section 8.2 Reaffirmation of Representations and Warranties. All of the
foregoing representations and warranties made by any Obligor in this Agreement
or in any of the other DIP Financing Documents shall survive the execution and
delivery of this Agreement and such other DIP Financing Documents, and shall be
deemed to have been remade and reaffirmed on each day that any Obligations are
outstanding or that Borrowers request or are deemed to have requested the
funding of a Post-Petition Loan under the DIP Facility.
ARTICLE 9
COVENANTS AND CONTINUING AGREEMENTS
Section 9.1 Affirmative Covenants. During the DIP Term and thereafter
until Full Payment of the Obligations, each Obligor covenants that it shall and
shall cause each of its Subsidiaries to:
(a) Business and Existence. Preserve and maintain its separate
corporate existence and all rights, privileges, and franchises in connection
therewith, and maintain its qualification and good standing in all states in
which such qualification is necessary to the ownership of its Properties or the
conduct of its businesses.
(b) Business Records. Keep adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with GAAP reflecting all financial transactions.
(c) Visits and Inspections. Permit representatives of Lender,
from time to time, as often as may be reasonably requested, but only during
normal business hours, to visit and inspect the Properties of any Obligor or any
Subsidiary, inspect and make extracts from their books and records, and discuss
with their officers, employees and independent accountants, the business,
assets, liabilities, financial condition, business prospects and results of
operations of any Obligor or any Subsidiary.
(d) Further Assurances. At Lender's request, promptly execute
or cause to be executed and deliver to Lender any and all documents, instruments
and agreements deemed necessary by Lender to give effect to or carry out the
terms or intent of this Agreement or any of the DIP Financing Documents.
(e) Compliance With Orders. To the extent having applicability
to any Obligor, comply with the Interim Financing Order, the Final Financing
Order and all other orders entered by the Court in the Chapter 11 Cases.
18
(f) Financing of Company. Provide financing in the minimum
amount set forth in the Budget, or such greater other amounts as Lender deems
necessary to enable Company and Guarantors to conduct normal business operations
throughout the DIP Term.
(g) Financial Statements. Cause to be prepared and to be
furnished to Lender the following:
(i) as soon as available, and in any event within 30
days after the end of each month hereafter, unaudited interim consolidated
financial statements of Parent and its Subsidiaries as of the end of such month
and the related unaudited consolidated statements of income and cash flow for
such month and for the portion of Parent's Fiscal Year then elapsed, certified
by the chief financial officer of Parent as prepared in accordance with GAAP and
fairly presenting the consolidated financial position and results of operations
of Parent and its Subsidiaries for such month and period subject only to changes
from audit and year-end adjustments and the ongoing restatement process and
except that such statements need not contain notes;
(ii) such other data and information (financial or
otherwise) as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or any Obligor's or any Subsidiary's financial
condition or results of operations;
(iii) promptly after the sending or filing thereof,
as the case may be, copies of any 10Qs, 10Ks and any proxy statements, financial
statements or reports which Parent has made generally available to their
shareholders and copies of any regular, periodic and special reports or
registration statements which Borrowers file with the SEC (or any other
Governmental Authority which may be substituted therefor), or any national
securities exchange; and
(iv) on or before the third Business Day of each
week, (A) a report in form acceptable to Lender setting forth any variances in
actual cash receipts and expenditures from those projected in the Budget and (B)
an update to the Budget setting forth any changes therein reasonably anticipated
by Borrowers (it being understood that no such changes shall become part of the
Budget unless approved by Lender in writing).
Concurrently with the delivery of the financial statements described in
clause (i) of this Section 9.1(g), or more frequently if requested by Lender
during any period that a Default or Event of Default exists, Borrowers shall
cause to be prepared and furnish to Lender a Compliance Certificate.
(h) Notices. Notify Lender in writing, promptly after such
Obligor's obtaining knowledge thereof, of the termination or breach of any
Material Contract; the occurrence of any Default or Event of Default; such
Obligor's violation (or asserted violation) of any Applicable Law (including the
Bankruptcy Code or any Environmental Law); any claim that such Obligor may make
under any policy of insurance with respect to the Collateral; any pleading filed
with the Court seeking relief from stay or conversion or dismissal of any
Chapter 11 Case; and any proposed sale of any of the Collateral (including with
such notice copies of drafts of all instruments and agreements applicable to any
such sale), which shall specify the identity of the proposed purchaser, the
terms of the proposed sale and the expected date of
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closing, subject to Court approval. Borrowers shall provide, or shall cause
their counsel in its Chapter 11 Cases to provide, Lender's counsel with copies
of all pleadings, motions, reports, applications and other papers filed by
Borrowers with the Court as well as copies of all billing and expense statements
received from any Professional Person. Each Obligor shall include counsel for
Lender on any "Special Notice List" or other similar list of parties to be
served with papers in its Chapter 11 Case.
(i) Insurance. In addition to the insurance required herein
with respect to the Collateral, maintain with financially sound and reputable
insurers, insurance with respect to its Properties and business against such
casualties and contingencies of such type (including product liability, business
interruption, larceny, embezzlement or other criminal misappropriation
insurance) and in such amounts as is customary in the business of such Obligor.
(j) Compliance With Laws. Comply with all Applicable Law,
including ERISA, FLSA, OSHA, all Environmental Laws, the Bankruptcy Code and all
laws, statutes, regulations and ordinances regarding the collection, payment and
deposit of Taxes, and obtain and keep in force any and all Governmental
Approvals necessary to the ownership of its Properties or to the conduct of its
business, to the extent that any such failure to comply, obtain or keep in force
could be reasonably expected to have a Material Adverse Effect.
(k) Taxes. Pay and discharge all Taxes prior to the date on
which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested or are not
permitted to be paid currently under federal bankruptcy law.
(l) Reports to the U.S. Trustee. As soon as available, and in
any event within 2 Business Days after the filing thereof, provide to Lender a
copy of each report filed by any Obligor with the office of the United States
Trustee.
(m) Proposed Sale of Assets. Promptly upon receipt thereof,
provide to Lender any and all documentation that in any way relates to a written
solicitation, offer, or proposed sale or disposition of any material amount of
real or personal Property of Parent or any of its Subsidiaries (other than
Company and any of the Guarantors), including letters of inquiry, solicitations,
letters of intent or asset purchase agreements.
(n) Utility Deposits. To the extent any Obligor has made or
makes any deposits for the benefit of utilities companies or any other Person,
such Obligor acknowledges that Lender has been granted a first priority
perfected Lien in such deposits, subject to any right of setoff by such utility
company. No Obligor shall use or transfer such deposits, and each Obligor hereby
assigns and sets over all such deposits to Lender, subject to any right of
setoff by such utility company.
(o) Payment of Administrative Expenses. Make all payments of
(i) post-petition operating costs and expenses as and when due and (ii)
administrative costs and expenses as and when such administrative costs and
expenses are due and payable, as approved by the Court.
(p) Pledge of Stock of Guarantors. Cooperate with Lender in
executing all collateral documents and taking all actions to enable Lender to
obtain or confirm, in accordance
20
with the laws of the applicable foreign jurisdictions, valid, enforceable and
perfected Liens in all Equity Interests of each Guarantor on or before October
15, 2002. Borrowers' failure to exert their diligent good faith efforts to
achieve compliance with this Section 9.1(p) by October 15, 2002 shall constitute
an Event of Default.
(q) Acquisition Agreement. Comply with all covenants contained
in Article VI of the Acquisition Agreement which are incorporated herein by
reference with the same effect as if all such covenants were restated herein.
(r) Other Information. Promptly (and in any event within 5
Business Days) after any request of Lender, deliver to Lender such additional
financial or other information concerning the acts, conduct, properties, assets,
liabilities, operations, businesses, financial condition or transactions of
Borrowers or any of their Subsidiaries, or concerning any matter which may
affect the administration of any Obligor's Estate, as Lender may from time to
time reasonably request.
Section 9.2 Negative Covenants. During the DIP Term and thereafter
until Full Payment of the Obligations, each Obligor covenants that it shall not
and shall not permit any Subsidiary to:
(a) Fundamental Changes. Merge or consolidate with any Person,
acquire a material amount of assets of any Person, or liquidate, wind up its
affairs or dissolve itself.
(b) Limitation on Liens. Create or suffer to exist any Lien
upon any of its Property, income or profits, whether now owned or hereafter
acquired, except: (i) Liens in existence on the Petition Date as disclosed on
Schedule 9.2(b) and not required to be terminated as noted thereon; (ii) Liens
for Taxes (excluding any Lien imposed pursuant to any of the provisions of
ERISA) not yet due or being Properly Contested; (iii) statutory Liens (excluding
Liens imposed pursuant to any of the provisions of ERISA) securing the claims or
demands of materialmen, mechanics, carriers, warehousemen, landlords and other
like Persons for labor, materials, supplies or rentals incurred in the Ordinary
Course of Business, but only if the payment thereof is not at the time required
or the Debt secured by such Lien is being Properly Contested; (iv) Liens
resulting from deposits made in the Ordinary Course of Business in connection
with workmen's compensation, unemployment insurance, social security and other
like laws; (v) reservations, exceptions, easements, rights-of-way, and other
similar encumbrances affecting real Property of any Obligor that were in
existence on the Petition Date; (vi) Liens securing Permitted Purchase Money
Debt; and (vii) such other Liens as Lender may consent to in writing from time
to time, in its sole and absolute discretion.
(c) Disposition of Assets. Except as contemplated by the
Acquisition Agreement, sell, lease or otherwise dispose of any of their
Property, including any disposition of the Collateral as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the Ordinary Course of Business for so long as no Event of Default
exists hereunder, (ii) dispositions of Equipment as authorized by Section 7.4
hereof, (iii) dispositions of Property that are authorized by the Court after
notice and hearing, provided that the Net Proceeds thereof are remitted to
Lender for application to the Obligations as provided herein, (iv)
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dispositions which result in Full Payment of all of the Obligations and (v) the
rejection pursuant to Section 365 of the Bankruptcy Code of unexpired leases and
executory contracts.
(d) Compromise of Accounts. Compromise or settle, or extend
the time of payment of, any Account in excess of $250,000 without Lender's prior
written consent.
(e) Payment of Claims. Make any payment of principal or
interest on account of any Claim against any Obligor that arose prior to the
Petition Date, other than rent under leases in existence on the Petition Date,
Claims permitted to be paid by the Budget and "first day orders" to the extent
approved by order of the Court, the Claims of Critical Vendors to the extent
approved by Lender, and any other payments authorized by the Court.
(f) Filing of Motions and Applications. Apply to the Court for
authority to (i) take any action that is prohibited by the terms of any of the
DIP Financing Documents, (ii) refrain from taking any action that is required to
be taken by the terms of any of the DIP Financing Documents or the Financing
Orders (iii) permit any Debt or Claim to be pari passu with or senior to any of
the Obligations, or (iv) use any cash proceeds of the Collateral other than in
payment of the Obligations or as otherwise expressly authorized herein.
(g) Modifications to Orders. Seek or consent to any amendment,
supplement or any other modification of any of the terms of the Financing
Orders.
(h) Restricted Investments. Make or have any new Restricted
Investment.
(i) Distributions. Make any Distribution, except Distributions
by a Subsidiary to a Borrower in cash or as otherwise expressly permitted by the
Budget.
(j) Permitted Debt. Incur or suffer to exist any Debt other
than Claims and Debt in existence on the Petition Date; the Obligations;
Capitalized Lease Obligations not to exceed $100,000.00 and Permitted Purchase
Money Debt; Debt (other than Debt for Money Borrowed, Capitalized Lease
Obligations and Permitted Purchase Money Debt) incurred in the Ordinary Course
of Business during the Chapter 11 Cases, so long as such Debt is not past due
and payable and is not secured by any Lien that is not a Permitted Lien; and
Permitted Contingent Obligations.
(k) Conduct of Business. Engage in any business other than the
business engaged in by it on the Petition Date and any business or activities
that are substantially similar, related or incidental thereto.
(l) Use of Proceeds. Use any proceeds of Post-Petition Loans
for a purpose that is not expressly permitted by Section 1.1(b).
(m) Accounting Changes. Change any method of accounting or
accounting practice used by it, except for any change required by GAAP or
Applicable Law.
(n) Organization Documents. Amend, modify or otherwise change
any of the terms or provisions in any of its Organization Documents as in effect
on the date hereof, except for changes that do not affect in any way any
Borrower's or such Subsidiary's rights and
22
obligations to enter into and perform the DIP Financing Documents to which it is
a party and to pay all of the Obligations and that do not otherwise have a
Material Adverse Effect.
(o) Advances and Transfers to Subsidiaries. Notwithstanding
anything in this Agreement to the contrary, while Post-Petition Loans are
outstanding or while any Commitment exists, make any loans, advances or
transfers to any Subsidiaries other than loans by Borrowers to Subsidiaries to
pay expenditures permitted by the Budget or otherwise approved by Lender in
writing.
(p) Budget. Make or commit or agree to make, or permit any of
its Subsidiaries to make or commit or agree to make, any expenditures in any
given week or on a cumulative basis which are not set forth in the Budget,
subject to cumulative variances not to exceed five percent (5%) of such
aggregate expenditures.
ARTICLE 10
CONDITIONS PRECEDENT
Section 10.1 Conditions Precedent to Initial Credit Extensions.
Notwithstanding any other provision of this Agreement or any of the other DIP
Financing Documents, and without affecting in any manner the rights of Lender
under other sections of this Agreement, Lender shall not be required to fund any
Post-Petition Loan requested by Borrowers, unless, on or before September 27,
2002, or the date of the Final Financing Order, as applicable, each of the
following conditions has been and continues thereafter to be satisfied:
(a) All of the DIP Financing Documents (unless Section 9.1(p)
applies) shall have been executed in form and substance satisfactory to Lender
by each of the signatories thereto and accepted by Lender, and each Obligor
shall be in compliance with all of the terms thereof, and all representations
and warranties contained therein shall be true and correct in all material
respects.
(b) No Default or Event of Default shall exist at the time of,
and would not result from the funding of, any requested Post-Petition Loan, and
no event shall have occurred and no condition shall exist since the Petition
Date that has had or could reasonably be expected to have a Material Adverse
Effect.
(c) The Interim Financing Order shall have been entered, shall
be in full force and effect and shall not have been vacated, reversed, modified
or stayed in any respect (and, if such order is the subject of a pending appeal,
no performance of any obligation of any party shall have been stayed pending
such appeal).
(d) Lender shall have received satisfactory proof of insurance
by Obligors, in accordance with the terms of this Agreement, and, no later than
the date of the Final Financing Order, evidence of loss payable endorsements
naming Lender as loss payee with respect to each policy and certified copies of
Obligors' liability insurance policies, together with endorsements naming Lender
as an additional insured.
23
(e) No later than the date of the Final Financing Order,
Lender shall have received all certificates evidencing any of the Pledged
Securities, together with stock powers duly endorsed in blank relating thereto.
(f) Lender shall have received the Budget and found it to be
acceptable in form and substance.
(g) All fees and expenses required to be paid by Borrowers
hereunder on the Closing Date shall have been paid in full.
Section 10.2 Conditions Precedent to All Credit Extensions.
Notwithstanding any other provision of this Agreement or any of the other DIP
Financing Documents, and without affecting in any manner the rights of Lender
under other sections of this Agreement, Lender shall not be required to fund any
Post-Petition Loan, unless and until each of the following conditions has been
and continues to be satisfied:
(a) No Default or Event of Default exists at the time, or
would result from the funding, of any Post-Petition Loan or other extension of
credit.
(b) No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court
or Governmental Authority to enjoin, restrain or prohibit any of the DIP
Financing Documents or the consummation of any of the transactions contemplated
thereby.
(c) No event shall have occurred and no condition shall exist
that could reasonably be expected to have a Material Adverse Effect.
(d) With respect to all Post-Petition Loans requested after
the sooner to occur of (i) the final hearing on the DIP Motion or (ii) 30 days
following the entry of the Interim Financing Order, the Final Financing Order
shall have been entered, shall be in full force and effect and shall not have
been vacated, reversed, modified, amended or stayed without the prior written
consent of Lender.
(e) Lender shall have received an officer's certificate from
Borrowers (i) demonstrating Borrowers' compliance with the Budget, (ii)
certifying that Borrowers shall apply the proceeds of the Post-Petition Loans
only to Budgeted Expenses and (iii) containing a comparison of the Budgeted
Expenses to actual expenditures for the most recent week then ended, all
certified by a Senior Officer, in form and substance satisfactory to Lender. The
certificate required by this Section shall be provided to Lender on a weekly
basis.
(f) All representations and warranties contained within the
Agreement and the Acquisition Agreement shall be true and correct in all
material respects.
(g) Lender shall have received such other information or
documents regarding the requested Post-Petition Loan as Lender may reasonably
request.
Section 10.3 Limited Waiver of Conditions Precedent. If Lender shall
make any Post-Petition Loan or otherwise extend any credit to Borrowers under
this Agreement at a time when
24
any of the foregoing conditions precedent are not satisfied (regardless of
whether the failure of satisfaction of any of such conditions precedent is known
or unknown to Lender), the funding of such Post-Petition Loan shall not operate
as a waiver of the right of Lender to insist upon the satisfaction of all
conditions precedent with respect to each subsequent Borrowing requested by
Borrowers or a waiver of any Default or Event of Default as a consequence of the
failure of any such conditions to be satisfied.
ARTICLE 11
EVENTS OF DEFAULT;
RIGHTS AND REMEDIES ON DEFAULT
Section 11.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an "EVENT OF DEFAULT":
(a) Payment of Obligations. Borrowers shall fail to pay (i)
the principal of or accrued interest with respect to any Post-Petition Loan on
the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise) or within three Business Days of such due date or
(ii) any of the other Obligations on the due date thereof (whether due at stated
maturity, upon acceleration or otherwise), but if no due date is specified
therefor, within three Business Days after demand for payment of such
Obligation.
(b) Misrepresentations. Any warranty, representation, or other
statement made or furnished to Lender by or on behalf of any Borrower or any
other Obligor or in any instrument, certificate or financial statement furnished
in compliance with or in reference to this Agreement or any of the DIP Financing
Documents proves to have been false or misleading in any material respect when
made or furnished.
(c) Breach of Specific Covenants. Any Borrower or any other
Obligor shall fail or neglect to perform, keep or observe any covenant contained
in Section 1.1(b), Section 6.4, Section 7.1(a), Section 7.1(b), Section 7.4(b),
Section 7.5(a), Section 9.1(a), Section 9.1(c), Section 9.1(d), Section 9.1(e),
Section 9.1(g), Section 9.1(i), Section 9.1(j), Section 9.1(k) or Section 9.2
hereof on the date that such Borrower or such Obligor is required to perform,
keep or observe such covenant.
(d) Breach of Other Covenants. Any Borrower or any other
Obligor shall fail or neglect to perform, keep or observe any covenant contained
in this Agreement (other than a covenant which is dealt with specifically
elsewhere in Section 11.1 hereof) and the breach of such other covenant is not
cured to Lender's satisfaction within 10 days after the sooner to occur of any
Senior Officer's receipt of notice of such breach from Lender or the date on
which such failure or neglect first becomes known to any Senior Officer;
provided that if any such breach is of a nature that is not reasonably
susceptible of cure within such 10-day period, no Event of Default shall be
deemed to have occurred hereunder by reason thereof so long as Borrowers
commence to cure such breach within such 10-day period and thereafter diligently
pursue such cure to completion within an additional 10-day period; and provided
further, however, that such notice and opportunity to cure shall not apply in
the case of any failure to perform, keep or observe any covenant which is not
capable of being cured at all or within such 10-day period or which is a willful
and knowing breach by a Borrower or such Obligor.
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(e) Default Under Other DIP Financing Documents. Any event of
default shall occur under, or any Borrower or any other Obligor shall default in
the performance or observance of any term, covenant, condition or agreement
contained in, any of the other DIP Financing Documents and such default shall
continue (i) beyond any applicable period of grace, or (ii) if no grace period
is specified within such DIP Financing Documents, within 10 days after the
sooner to occur of any Senior Officer's receipt of notice of such breach from
Lender or the date on which such failure or neglect first becomes known to any
Senior Officer.
(f) Cross-Defaults. There shall occur any default or event of
default on the part of any Borrower or any other Obligor under any agreement,
document or instrument which is entered into after the Petition Date and which
relates to any Debt.
(g) Uninsured Losses; Unauthorized Dispositions. There shall
occur any material loss, theft, damage or destruction not fully covered by
insurance (as required by this Agreement and subject to such deductibles as
Lender shall have agreed to in writing), or any sale, lease or encumbrance of
any of the Collateral or the making of any levy, seizure, or attachment thereof
or thereon, except as may be specifically permitted by other provisions of this
Agreement.
(h) Certain Bankruptcy Events. Any Borrower shall fail to
comply with any of the provisions of the Financing Orders in any material
respect; a trustee shall be appointed in any Chapter 11 Case; an examiner shall
be appointed in any Chapter 11 Case with enlarged powers (powers beyond those
set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section
1106(b) of the Bankruptcy Code; any Chapter 11 Case shall be dismissed or
converted to a case under Chapter 7; Borrowers shall obtain Court approval of a
disclosure statement for a Reorganization Plan other than an Acceptable Plan or
a Confirmation Order shall be entered with respect to a Reorganization Plan
proposed by a Person other than Borrowers if such Reorganization Plan is not an
Acceptable Plan; there shall be filed by Borrowers any motion to sell all or a
substantial part of the Collateral (excluding any Acquisition Transaction as
defined in the Acquisition Agreement) on terms that are not acceptable to Lender
in its sole discretion; the Final Financing Order is not entered by October 22,
2002; any Borrower shall file any motion to alter, amend, vacate, supplement,
modify, or reconsider, in any respect, either of the Financing Orders or,
without Lender's prior written consent, either of the Financing Orders is
amended, vacated, stayed, reversed or otherwise modified; the Court shall enter
an order granting to any Person (other than Lender) relief from the automatic
stay to foreclose upon a Lien with respect to any Property of any Borrower that
has an aggregate book value in excess of $250,000 or to terminate or otherwise
exercise remedies under any material agreement, document or instrument which is
entered into after the Petition Date, whether or not it relates to any Debt; any
Borrower shall file a motion or other request with the Court seeking authority
to use any cash proceeds of the Collateral or to obtain any financing under
Section 364(c) or Section 364(d) of the Bankruptcy Code or otherwise secured by
a Lien upon any Collateral (in each case (i) without Lender's prior written
consent or (ii) if such motion fails to contemplate payment in full of the
Obligations); or, without Lender's consent, any Obligor shall discontinue or
suspend all or any material part of its business operations or commence an
orderly wind-down or liquidation of any material part of the Collateral.
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(i) Failure of DIP Financing Documents. Any material covenant,
agreement or obligation of any Obligor contained in or evidenced by any of the
DIP Financing Documents shall cease to be enforceable or shall be determined to
be unenforceable in accordance with its terms other than by reason of Lender's
actions; any Obligor shall deny or disaffirm its obligations under any of the
DIP Financing Documents or Liens granted in connection therewith; any Obligor
shall initiate or support (in any such case by way of any motion or other
pleading filed with the Court or any other writing to another party-in-interest
executed by or behalf of an Obligor) any other Person's opposition of or
challenge to the enforceability, validity and priority of the DIP Financing
Documents or the Liens granted thereby; or the Liens granted in any of the
Collateral owned by any Obligor shall be determined to be voidable, invalid or
subordinated or shall be determined, with respect to any material part of the
Collateral owned by any Obligor, to be unperfected or not to have the priority
contemplated by this Agreement.
(j) Guarantor Defaults. Any Guarantor shall be in default
under the terms of any agreement, document or instrument which relates to any
Debt for Money Borrowed; or any Insolvency Proceeding shall be commenced by or
against any Guarantor.
(k) Material Contracts. Any Material Contract shall be
terminated or amended in any material respect without the prior written consent
of Lender, unless said contract is concurrently replaced with a comparable
agreement on comparable terms.
Section 11.2 Acceleration of the Obligations. Without in any way
limiting the right of Lender to demand payment of any portion of the Obligations
payable on demand in accordance with this Agreement, upon or at any time after
the occurrence of an Event of Default as above provided, Lender may, in its
discretion, (i) declare the principal of and any accrued interest on the
Post-Petition Loans and all other Obligations owing under any of the DIP
Financing Documents to be, whereupon the same shall become, without further
notice or demand (all of which notice and demand each Obligor expressly waives),
forthwith due and payable and Borrowers shall forthwith pay to Lender the entire
principal of and accrued and unpaid interest on the Post-Petition Loans and
other Obligations plus reasonable attorneys' fees and expenses if such principal
and interest are collected by or through an attorney-at-law; and (ii) terminate
the Commitment.
Section 11.3 Remedies. Subject to the Financing Orders, upon or at any
time after the occurrence of an Event of Default, Lender may, in its discretion,
exercise from time to time the following rights and remedies to enforce
collection of the Obligations (without prejudice to the rights of Lender to
enforce its Claims against any or all Obligors):
(a) All of the rights and remedies of a secured party under
the UCC or under other Applicable Law, and all other legal and equitable rights
to which Lender may be entitled under any of the DIP Financing Documents or the
Financing Orders, all of which rights and remedies shall be cumulative and shall
be in addition to any other rights and remedies contained in this Agreement or
any of the other DIP Financing Documents, and none of which shall be exclusive.
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(b) The right to collect Accounts, Chattel Paper, Instruments
and General Intangibles and all other rights of any Obligor to the payment of
money from any Person obligated therefor.
(c) The right to take immediate possession of all tangible
items of the Collateral and (i) to require any Obligor to assemble such
Collateral, at such Obligor's expense, and make it available to Lender at a
place designated by Lender that is reasonably convenient to both parties and
(ii) to enter any of the premises of any Obligor or wherever any of the
Collateral shall be located, and to keep and store the same on said premises
until sold (and if said premises be the Property of any Obligor, such Obligor
agrees not to charge Lender for storage thereof).
(d) The right to sell or otherwise dispose of all or any
Inventory in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable; each Obligor agrees that 10 days
written notice to such Obligor of any public or private sale or other
disposition of such Collateral shall be reasonable notice thereof, and such sale
shall be at such locations as Lender may designate in said notice. Lender shall
have the right to conduct such sales on any Obligor's premises, without charge
therefor, and such sales may be adjourned from time to time in accordance with
Applicable Law; Lender may sell, lease or otherwise dispose of such Collateral,
or any part thereof, for cash, credit or any combination thereof, and Lender may
purchase all or any part of such Collateral at public or, if permitted by
Applicable Law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations.
Section 11.4 Licenses and Sale of Collateral. Lender is hereby
irrevocably granted a license or other right to use, without charge, which
license or right can only be exercised upon an Event of Default, each Obligor's
labels, patents, copyrights, rights of use of any name, trade secrets,
tradenames, trademarks and advertising matter, or any Property of a similar
nature, as it pertains to the Collateral, in advertising for sale and selling
any Collateral and each Obligor's rights under all licenses and all franchise
agreements shall inure to Lender's benefit, to the extent permissible under the
applicable agreement(s) and Applicable Law. Any proceeds realized from the sale
of any Collateral may be applied to the Obligations, after allowing 2 Business
Days for collection, to principal, interest, fees and expenses (including
Extraordinary Expenses) in such order and manner as Lender, in its sole
discretion, may determine.
Section 11.5 Setoff. In addition to any Liens granted under any of the
DIP Financing Documents and any rights now or hereafter available under
Applicable Law, Lender (and each of its Affiliates) is hereby authorized by each
Obligor at any time that an Event of Default exists, without notice, except as
required by the Financing Orders, to such Obligor or any other Person (any such
notice being hereby expressly waived) to set off and to appropriate and to apply
any and all deposits, general or special (including Debt evidenced by
certificates of deposit whether matured or unmatured (but not including trust
accounts)) and any other Debt at any time held or owing by Lender, such Lender
or any of its Affiliates to or for the credit or the account of such Obligor
against and on account of the Obligations of such Obligor arising under the DIP
Financing Documents to Lender, or any of its Affiliates, including all
Post-Petition Loans and all claims of any nature or description arising out of
or in connection with this Agreement, irrespective of whether or not (i) Lender
shall have made any demand hereunder, (ii) Lender
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shall have declared the principal of and interest on the Post-Petition Loans and
other amounts due hereunder to be due and payable as permitted by this Agreement
and even though such Obligations may be contingent or unmatured or (iii) the
Collateral for the Obligations is adequate.
Section 11.6 Pledged Securities.
(a) After the occurrence of an Event of Default, if Lender
shall have given notice of its intent to exercise such rights to the relevant
Obligor or Obligors, (i) Lender shall have the right to receive any and all cash
dividends, payments or other proceeds paid in respect of the Pledged Securities
and make application thereof to the Obligations in the order set forth herein,
and (ii) Lender or its nominee may exercise (A) all voting, consensual,
corporate and other rights pertaining to the Pledged Securities at any meeting
of shareholders, partners or members, as the case may be, of the relevant
issuers of Pledged Securities or otherwise and (B) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to the Pledged Securities as if it were the absolute owner
thereof (including the right to exchange at its discretion any and all of the
Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
issuer of Pledged Securities, the right to deposit and deliver any and all of
the Pledged Securities with any committee, depository, transfer agent, registrar
or other designated agency upon such terms and conditions as Lender may
determine), all without liability except to account for Property actually
received by it, but Lender shall have no duty to any Obligor to exercise any
such right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
(b) In order to permit Lender to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions which it may be entitled to
receive hereunder, (i) each Obligor shall promptly execute and deliver (or cause
to be executed and delivered) to Lender all such proxies, dividend payment
orders and other instruments as Lender may from time to time reasonably request
and (ii) without limiting the effect of clause (i) above, each Obligor hereby
grants to Lender an irrevocable proxy to vote all or any part of the Pledged
Securities and to exercise all of the rights, powers, privileges and remedies to
which a holder of the Pledged Securities would be entitled, which proxy shall be
effective, automatically and without the necessity of any action (including any
transfer of any Pledged Securities on the record books of the issuer thereof) by
any other Person (including the issuer of such Pledged Securities or any officer
or agent thereof), after the occurrence of an Event of Default and which proxy
shall only terminate upon the Full Payment of the Obligations.
(c) Each Obligor hereby expressly authorizes and instructs
each issuer of any Pledged Securities pledged hereunder by such Obligor to (i)
comply with any instruction received by it from Lender in writing that (a)
states that an Event of Default has occurred and is continuing and (b) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Obligor, and each Obligor agrees that such issuer
shall be fully protected in so complying and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to Lender.
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Section 11.7 Remedies Cumulative; No Waiver.
(a) All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of Obligors contained in this
Agreement and the other DIP Financing Documents, or in any document referred to
herein or contained in any agreement supplementary hereto or in any schedule
given to Lender or contained in any other agreement between Lender and any
Obligor, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Obligors herein contained. The rights
and remedies of Lender under this Agreement and the other DIP Financing
Documents shall be cumulative and not exclusive of any rights or remedies that
Lender would otherwise have.
(b) The failure or delay of Lender to require strict
performance by any Obligor of any provision of any of the DIP Financing
Documents or to exercise or enforce any rights, Liens, powers or remedies under
any of the DIP Financing Documents or with respect to any Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Obligors to Lender shall have been fully satisfied. None of
the undertakings, agreements, warranties, covenants and representations of any
Obligor contained in this Agreement or any of the other DIP Financing Documents
and no Event of Default by Borrowers under this Agreement or any other DIP
Financing Documents shall be deemed to have been suspended or waived by Lender,
unless such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Lender
and directed to Borrowers.
(c) If Lender shall accept performance by any Obligor, in
whole or in part, of any obligation that such Obligor is required by any of the
DIP Financing Documents to perform only when a Default or Event of Default
exists, or if Lender shall exercise any right or remedy under any of the DIP
Financing Documents that may not be exercised other than when a Default or Event
of Default exists, Lender's acceptance of such performance by such Obligor or
Lender's exercise of any such right or remedy shall not operate to waive any
such Event of Default or to preclude the exercise by Lender of any other right
or remedy, unless otherwise expressly agreed in writing by Lender, as the case
may be.
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
Section 12.1 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Obligors, Lender and their respective
successors and assigns, except that (a) no Obligor shall have any right to
assign its rights or delegate performance of any of its obligations under any of
the DIP Financing Documents and (b) any assignment by Lender must be made in
compliance with Section 12.3 hereof. Any assignee or transferee of a Note agrees
by acceptance thereof to be bound by all the terms and provisions of the DIP
Financing Documents. Any request, authority or consent of any Person, who at the
time of making such request or giving such authority or consent is the holder of
a Note, shall be conclusive and binding on any
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subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
Section 12.2 Participations.
(a) Permitted Participants; Effect. Lender may, in accordance
with Applicable Law, at any time sell to one or more Affiliates, banks or other
financial institutions (each a "PARTICIPANT") a participating interest in any of
the Obligations owing to Lender, any Commitment of Lender or any other interest
of Lender under any of the DIP Financing Documents. In the event of any such
sale by Lender of participating interests to a Participant, Lender's obligations
under the DIP Financing Documents shall remain unchanged, Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, Lender shall remain the holder of any Note for all purposes under
the DIP Financing Documents, all amounts payable by any Obligor under this
Agreement and any of the Notes shall be determined as if Lender had not sold
such participating interests, and Borrowers shall continue to deal solely and
directly with Lender in connection with Lender's rights and obligations under
the DIP Financing Documents. If Lender sells a participation to a Person other
than an Affiliate of Lender, then Lender shall give prompt written notice
thereof to Borrowers.
(b) Voting Rights. Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the DIP Financing Documents other than an amendment,
modification or waiver with respect to any Post-Petition Loans or Commitment in
which such Participant has an interest which forgives principal, interest or
fees or reduces the stated interest rate or the stated rates at which fees are
payable with respect to any such Post-Petition Loan or Commitment, postpones the
Commitment Termination Date, or any date fixed for any regularly scheduled
payment of interest or fees on such Post-Petition Loan or Commitment, or
releases from liability Borrowers or any Guarantor or releases any substantial
portion of any of the Collateral.
(c) Benefit of Set-Off. Each Obligor agrees that each
Participant shall be deemed to have the right of set-off provided in Section
11.5 hereof in respect of its participating interest in amounts owing under the
DIP Financing Documents to the same extent and subject to the same requirements
under this Agreement as if the amount of its participating interest were owing
directly to it as Lender under the DIP Financing Documents, provided that Lender
shall retain the right of set-off provided in Section 11.5 hereof with respect
to the amount of participating interests sold to each Participant. Lender agrees
to share with each Participant, and each Participant by exercising the right of
set-off provided in Section 11.5 agrees to share with Lender, any amount
received pursuant to the exercise of its right of set-off.
Section 12.3 Assignments.
(a) Permitted Assignments. Lender may, in accordance with
Applicable Law, at any time assign to any Eligible Assignee any part (but not
all) of its rights and obligations under the DIP Financing Documents, so long as
(i) each assignment is of a constant, and not a varying, ratable percentage of
all of the transferor Lender's rights and obligations under the DIP Financing
Documents with respect to the Post-Petition Loans and is in a minimum principal
amount of $1,000,000; and (ii) immediately after giving effect to any
assignment, the aggregate
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amount of the Commitment retained by the transferor Lender shall in no event be
less than $500,000. Each assignee shall be deemed to have consented and be
subject to, and to be bound by the terms of, all of the DIP Financing Documents.
(b) Effect; Effective Date. On and after the effective date of
any assignment, such Eligible Assignee shall for all purposes be a Lender party
to the Agreement and any other DIP Financing Document executed by Lender and
shall have all the rights and obligations of Lender under the DIP Financing
Documents to the same extent as if it were an original party thereto, and no
further consent or action by any Obligor shall be required to release the
transferor Lender with respect to the Commitment (or portion thereof) of such
Lender and Obligations assigned to such Eligible Assignee. Upon the consummation
of any assignment to an Eligible Assignee pursuant to this Section 12.3(b), the
transferor Lender and Borrowers shall make appropriate arrangements so that
replacement Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Eligible Assignee, in each
case in principal amounts reflecting their respective Commitments, as adjusted
pursuant to such assignment. The transferring Lender shall continue to be
entitled to the benefits of all indemnities applicable to the period prior to
the effective date of the assignment.
(c) Dissemination of Information. Borrowers authorize Lender
to disclose to any Participant, any Eligible Assignee or any other Person
acquiring an interest in the DIP Financing Documents by operation of law (each a
"TRANSFEREE"), and any prospective Transferee, any and all information in
Lender's possession concerning Borrowers, the Subsidiaries of Borrowers or the
Collateral, subject to appropriate confidentiality undertakings on the part of
such Transferee.
ARTICLE 13
MISCELLANEOUS
Section 13.1 Power of Attorney. Each Obligor hereby irrevocably
designates, makes, constitutes and appoints Lender (and all Persons designated
by Lender) as such Obligor's true and lawful attorney (and Lender-in-fact) and
Lender, or Lender's designee, may, without notice to such Obligor and in either
such Obligor's or Lender's name, but at the cost and expense of such Obligor:
(a) At such time or times as Lender or said designee, in its
sole discretion, may determine, endorse such Obligor's name on any Payment Item
or proceeds of the Collateral which come into the possession of Lender or under
Lender's control.
(b) At any time that an Event of Default exists and subject to
any notice required under the Financing Orders: (i) demand payment of the
Accounts from the Account Debtors, enforce payment of the Accounts by legal
proceedings or otherwise, and generally exercise all of such Obligor's rights
and remedies with respect to the collection of the Accounts; (ii) settle,
adjust, compromise, discharge or release any of the Accounts or other Collateral
or any legal proceedings brought to collect any of the Accounts or other
Collateral; (iii) sell or assign any of the Accounts and other Collateral upon
such terms, for such amounts and at such time or times as Lender deems
advisable; (iv) take control, in any manner, of any item of payment or proceeds
relating to any Collateral; (v) prepare, file and sign such Obligor's name to a
proof of
32
claim in bankruptcy or similar document against any Account Debtor or to any
notice of lien, assignment or satisfaction of Lien or similar document in
connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to such Obligor and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of such Obligor upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of such Obligor upon any
chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or
similar document or agreement relating to any Accounts or Inventory of any
Obligor and any other Collateral; (ix) use such Obligor's stationery and sign
the name of such Obligor to verifications of the Accounts and notices thereof to
Account Debtors; (x) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory and any other Collateral; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in
Lender's determination, to fulfill such Obligor's obligations under this
Agreement.
Section 13.2 General Indemnity. Each Obligor hereby agrees to indemnify
and defend the Indemnitees and to hold the Indemnitees harmless from and against
any Claim ever suffered or incurred by any of the Indemnitees arising out of or
related to this Agreement or any of the other DIP Financing Documents, the
performance by Lender of its duties or the exercise of any of its rights or
remedies hereunder, or the result of such Obligor's failure to observe, perform
or discharge any of such Obligor's duties hereunder. Each Obligor shall also
indemnify and defend the Indemnitees against and save the Indemnitees harmless
from all Claims of any Person arising out of, related to, or with respect to any
transactions entered into pursuant to this Agreement or Lender's Lien arising
from the DIP Financing Documents upon the Collateral. Without limiting the
generality of the foregoing, these indemnities shall extend to any Claims
asserted against any of the Indemnitees by any Person under any Environmental
Laws or similar laws by reason of such Obligor's or any other Person's failure
to comply with laws applicable to Hazardous Materials. Additionally, if any
Taxes (excluding Taxes imposed upon or measured solely by the net income of
Lender, but including, any intangibles tax, stamp tax, recording tax or
franchise tax) shall be payable by Lender, or any Obligor on account of the
execution or delivery of this Agreement, or the execution, delivery, issuance or
recording of any of the other DIP Financing Documents, or the creation or
repayment of any of the Obligations hereunder, by reason of any Applicable Law
now or hereafter in effect, such Obligor shall pay (or will promptly reimburse
Lender for the payment of) all such Taxes, including any interest and penalties
thereon, and will indemnify and hold Indemnitees harmless from and against
liability in connection therewith. The foregoing indemnities shall not apply to
protect any of the Indemnitees for the consequences of their own gross
negligence or willful misconduct.
Section 13.3 Survival of All Indemnities. Notwithstanding anything to
the contrary in this Agreement or any of the other DIP Financing Documents, the
obligation of each Obligor and Lender with respect to each indemnity given by it
in this Agreement shall survive the Full Payment of the Obligations and the
termination of any of the Commitment.
Section 13.4 Indulgences Not Waivers. Lender's failure at any time or
times hereafter to require strict performance by any Obligor of any provision of
this Agreement shall not waive, affect or diminish any right of Lender
thereafter to demand strict compliance and performance therewith.
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Section 13.5 Modification of Agreement. This Agreement may not be
modified, altered or amended, except by an agreement in writing signed by
Obligors and Lender.
Section 13.6 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 13.7 Cumulative Effect; Conflict of Terms. To the fullest
extent permitted by Applicable Law, the provisions of the Security Documents are
hereby made cumulative with the provisions of this Agreement. Except as
otherwise provided in any of the other DIP Financing Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other DIP Financing Documents (other than the
Financing Orders), the provision contained in this Agreement shall govern and
control; in the event that any provision in this Agreement is in direct conflict
with, or inconsistent with, any provisions of the Financing Orders, the
provisions of the Financing Orders shall govern and control.
Section 13.8 Execution in Counterparts. This Agreement and any
amendments hereto may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.
Section 13.9 Lender's Consent. Whenever Lender's consent is required to
be obtained under this Agreement or any of the other DIP Financing Documents as
a condition to any action, inaction, condition or event, Lender shall be
authorized to give or withhold its consent in its sole and absolute discretion,
unless expressly stated otherwise.
Section 13.10 Notices. All notices, requests and demands to or upon a
party hereto shall be in writing and shall be sent by certified or registered
mail, return receipt requested, personal delivery against receipt or by
telecopier or other facsimile transmission and shall be deemed to have been
validly served, given or delivered when delivered against receipt or 3 Business
Days after deposit in the U.S. mail, certified mail postage prepaid, or, in the
case of facsimile transmission, when received (if on a Business Day and, if not
received on a Business Day, then on the next Business Day after receipt) at the
office where the noticed party's telecopier is located, in each case addressed
to the noticed party at the address shown for such party on the signature page
hereof. Notwithstanding the foregoing, no notice to or upon Lender pursuant to
Section 3.1 or Section 5.2(b) shall be effective until actually received by the
individual to whose attention at Lender such notice is required to be sent. Any
written notice or demand that is not sent in conformity with the provisions
hereof shall nevertheless be effective on the date that such notice is actually
received by the noticed party.
Section 13.11 Performance of Borrowers' Obligations. If any Obligor
shall fail to discharge any covenant, duty or obligation hereunder or under any
of the other DIP Financing Documents, Lender may, in its sole discretion at any
time or from time to time, for the Obligor's account and at the Obligor's
expense, pay any amount or do any act required of Obligor
34
hereunder or under any of the DIP Financing Documents or otherwise lawfully
requested by Lender to enforce any of the DIP Financing Documents or
Obligations, preserve, protect, insure or maintain any of the Collateral, or
preserve, defend, protect or maintain the validity or priority of Lender's Liens
in any of the Collateral, including the payment of any judgment against any
Obligor, any insurance premium, any warehouse charge, any finishing or
processing charge, any landlord claim, any other Lien upon or with respect to
any of the Collateral. All payments that Lender may make under this Section and
all out-of-pocket costs and expenses (including Extraordinary Expenses) that
Lender pays or incurs in connection with any action taken by it hereunder shall
be reimbursed to Lender by any Obligor on demand with interest from the date
such payment is made or such costs or expenses are incurred to the date of
payment thereof at the Default Rate applicable for Post-Petition Loans. Any
payment made or other action taken by Lender under this Section shall be without
prejudice to any right to assert, and without waiver of, an Event of Default
hereunder and to proceed thereafter as provided herein or in any of the other
DIP Financing Documents.
Section 13.12 Time of Essence. Time is of the essence of this Agreement
and the Security Documents.
Section 13.13 Entire Agreement; Appendix A, Exhibits and Schedules.
This Agreement and the other DIP Financing Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written. Appendix A, each of
the Exhibits and each of the Schedules attached hereto are incorporated into
this Agreement and by this reference made a part hereof.
Section 13.14 Interpretation. No provision of this Agreement or any of
the other DIP Financing Documents shall be construed against or interpreted to
the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having, or being deemed to have,
structured, drafted or dictated such provision.
Section 13.15 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware.
Section 13.16 Waivers by Obligors. To the fullest extent permitted by
Applicable Law, each Obligor waives (a) the right to trial by jury (which Lender
hereby also waives) in any action, suit, proceeding or counterclaim of any kind
arising out of or related to any of the DIP Financing Documents, the Obligations
or the Collateral; (b) presentment, demand and protest and notice of
presentment, protest, default, non payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lender on which each Obligor may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard; (c) except as
provided in the Financing Orders, notice prior to taking possession or control
of the Collateral or any bond or security which might be required by any court
prior to allowing Lender to exercise any of Lender's remedies; (d) the benefit
of all valuation, appraisement and exemption laws; and (e) notice of acceptance
hereof. Each Obligor
35
acknowledges that the foregoing waivers are a material inducement to Lender's
entering into this Agreement and that Lender is relying upon the foregoing
waivers in its future dealings with Obligors. Each Obligor warrants and
represents that it has reviewed the foregoing waivers with its legal counsel and
has knowingly and voluntarily waived its jury trial rights following
consultation with legal counsel. In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court in which such litigation
is brought.
Section 13.17 Release. BORROWERS, IN THEIR OWN RIGHT AND ON BEHALF OF
THEIR RESPECTIVE ESTATES, REPRESENTATIVES, DIRECTORS, OFFICERS, EMPLOYEES,
INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS, AND THEIR SUCCESSORS AND ASSIGNS
(COLLECTIVELY, THE "RELEASING PARTIES"), HEREBY JOINTLY AND SEVERALLY RELEASE,
ACQUIT, AND FOREVER DISCHARGE LENDER AND ITS REPRESENTATIVES, DIRECTORS,
OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS, AND THEIR
SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "RELEASED PARTIES"), FROM ANY AND ALL
ACTS AND OMISSIONS OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES
OF ACTION, AVOIDANCE ACTIONS, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS,
DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES, OBLIGATIONS,
LIABILITIES, OBJECTIONS, LEGAL PROCEEDINGS, EQUITABLE PROCEEDINGS, AND
EXECUTIONS OF ANY NATURE, TYPE, OR DESCRIPTION WHICH THE RELEASING PARTIES HAVE
OR MAY COME TO HAVE AGAINST THE RELEASED PARTIES, WHETHER DIRECTLY, INDIRECTLY
OR DERIVATIVELY, WHETHER OR NOT IN CONNECTION WITH OR RELATED TO THE DIP
FINANCING DOCUMENTS OR ANY MATTER OR DOCUMENT RELATED HERETO, AT LAW OR IN
EQUITY, BY STATUTE OR COMMON LAW, IN CONTRACT, IN TORT, WHETHER THE LAW OF THE
UNITED STATES OR ANY OTHER COUNTRY, UNION, ORGANIZATION OF FOREIGN COUNTRIES OR
OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, BUT EXCLUDING OBLIGATIONS
OF LENDER UNDER THE ACQUISITION AGREEMENT AND THE DIP FINANCING DOCUMENTS (THE
"RELEASED CLAIMS"). BORROWERS FURTHER COVENANT NOT TO ▇▇▇ THE RELEASED PARTIES
ON ACCOUNT OF ANY RELEASED CLAIM. THIS SECTION IS IN ADDITION TO AND SHALL NOT
IN ANY WAY LIMIT ANY OTHER RELEASE, COVENANT NOT TO ▇▇▇, OR WAIVER BY THE
RELEASING PARTIES IN FAVOR OF THE RELEASED PARTIES.
[The remainder of this page is intentionally left blank.
Signature pages follow.]
36
IN WITNESS WHEREOF, this Agreement has been duly executed on the day
and year specified at the beginning of this Agreement.
BORROWERS:
PEREGRINE SYSTEMS, INC., a
Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: CFO
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
PEREGRINE REMEDY, INC., a
Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: CFO
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Signature Page
GUARANTORS:
PEREGRINE SYSTEMS GLOBAL LTD.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: CFO
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
REMEDY SOFTWARE IRELAND, LTD.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: CFO
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Signature Page
LENDER:
BMC SOFTWARE, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President and General Counsel
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Signature Page
APPENDIX A
GENERAL DEFINITIONS
When used in the Debtor In Possession Credit Agreement dated as of
September 24, 2002 (as at any time amended, the "AGREEMENT"), by and among
PEREGRINE SYSTEMS, INC., a Delaware corporation and a Chapter 11
debtor-in-possession, and PEREGRINE REMEDY, INC., a Delaware corporation and a
Chapter 11 debtor-in-possession (collectively, "BORROWERS"), a Delaware
corporation and a Chapter 11 debtor-in-possession, each Guarantor listed on the
signature pages thereto and BMC SOFTWARE, INC., a Delaware corporation
("LENDER"), the following terms shall have the following meanings (terms defined
in the singular to have the same meaning when used in the plural and vice versa)
(all capitalized terms not otherwise defined herein shall have the same meaning
as set forth in the Acquisition Agreement):
ACCEPTABLE PLAN - a Reorganization Plan which provides for Full Payment
of all Obligations on the effective date of such Reorganization Plan, provides
for an effective date thereof no later than 45 days after the date of entry of
the Confirmation Order, or which is otherwise acceptable to Lender, in its sole
and absolute discretion.
ACCOUNT - shall have the meaning ascribed to "account" in the UCC as
such definition may be amended from time to time and shall include a right to
payment for goods sold or leased or for services rendered that is not evidenced
by an Instrument or Chattel Paper, whether or not any such right to payment has
been earned by performance.
ACCOUNT DEBTOR - any Person who is or may become obligated under or on
account of an Account.
ACQUISITION AGREEMENT - the Acquisition Agreement dated as of September
20, 2002 among Lender and Borrowers, as the same may be amended, modified or
supplemented from time to time.
AFFILIATE - a Person (other than a Subsidiary): (a) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, another Person; (b) which beneficially owns or
holds 10% or more of any class of the Equity Interests of another Person; or (c)
10% or more of the Equity Interests of which is beneficially owned or held by
another Person or a Subsidiary of another Person.
AGREEMENT - the Debtor In Possession Credit Agreement referred to in
the first sentence of this Appendix A, all Exhibits and Schedules thereto and
this Appendix A.
APPLICABLE LAW - all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant or DIP Financing Documents in question,
including all applicable common law and equitable principles; all provisions of
all applicable state and federal constitutions, statutes, rules, regulations and
orders of governmental bodies; and orders, judgments and decrees of all courts
and arbitrators.
ASSET DISPOSITION - any sale, issuance, conveyance, transfer, lease or
other disposition by any Borrower or any Guarantor in one or a series of related
transactions, of any Property
A-1
including, without limitation, any Collateral or Equity Interests of such
Borrower or such Guarantor to any Person (other than to a Borrower or any
Guarantor).
AVERAGE LOAN BALANCE - for any period, the amount obtained by adding
the aggregate unpaid balance of Post-Petition Loans at the end of each day for
the period in question and by dividing such sum by the number of days in such
period.
AVOIDANCE CLAIM - any claim that could be asserted by or on behalf of
any Borrower or its Estate against a Person under 11 U.S.C. Sections 544, 546,
547, 548, 549, 550 or 553.
BASE RATE - the rate of interest announced or granted by JPMorgan Chase
Bank from time to time as its prime rate which rate might not be the lowest rate
charged by such bank.
BASE RATE LOAN - a Post-Petition Loan which bears interest based upon
the Base Rate.
BID PROCEDURES ORDER - an order approving bidding procedures with
respect to the Acquisition Agreement, in form and substance acceptable to
Lender.
BORROWING - a borrowing consisting of one or more Post-Petition Loans
made or deemed made on the same day by Lender.
BREAK-UP FEE - as defined in the Acquisition Agreement.
BUDGET - a 12-week cash expense budget detailing the anticipated cash
receipts and expenditures and permitted cumulative variances, including
Professional Expenses, of Borrowers and their Subsidiaries through the first 12
weeks following the Petition Date, as amended or supplemented from time to time
with Lender's prior written consent, which budget (and any amendments thereto)
shall be in form and substance acceptable to the Lender and shall be
incorporated into the Financing Orders.
BUDGETED EXPENSES - expenses permitted to be paid by Obligors in the
amounts and for the purposes and within the variances set forth in the Budget.
BUSINESS DAY - any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of Texas or is a day on which
banking institutions located in such state are closed.
CAPITAL EXPENDITURES - expenditures made for the acquisition of any
fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations.
CAPITALIZED LEASE OBLIGATION - any Debt represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
CARVE OUT - as defined in the Interim Financing Order and subject to
the limitations set forth therein.
A-2
CASH EQUIVALENTS - (a) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government having maturities of not
more than 12 months from the date of acquisition; (b) domestic certificates of
deposit and time deposits having maturities of not more than 12 months from the
date of acquisition, bankers' acceptances having maturities of not more than 12
months from the date of acquisition and overnight bank deposits, in each case
issued by any commercial bank organized under the laws of the United States, any
state thereof or the District of Columbia, which at the time of acquisition are
rated A-1 (or better) by S&P or P-1 (or better) by ▇▇▇▇▇'▇, and (unless issued
by a Lender) not subject to offset rights in favor of such bank arising from any
banking relationship with such bank; (c) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in
clauses (a) and (b) entered into with any financial institution meeting the
qualifications specified in clause (b) above; and (d) commercial paper having at
the time of investment therein or a contractual commitment to invest therein a
rating of A-1 (or better) by S&P or P-1 (or better) by ▇▇▇▇▇'▇, and having a
maturity within 9 months after the date of acquisition thereof.
CERCLA - the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq. and its implementing regulations.
CHAPTER 11 CASE - as defined in the Recitals hereto.
CHATTEL PAPER - shall have the meaning ascribed to the term "chattel
paper" in the UCC, as such definition may be amended from time to time.
CLAIMS - any and all claims, demands, liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, awards, remedial response costs,
expenses or disbursements of any kind or nature whatsoever (including reasonable
attorneys', accountants', consultants' or paralegals' fees and expenses),
whether arising under or in connection with the DIP Financing Documents, any
Applicable Law (including any Environmental Laws) or otherwise, that may now or
hereafter be suffered or incurred by a Person and whether suffered or incurred
in or as a result of any investigation, litigation, arbitration or other
judicial or non-judicial proceeding or any appeals related thereto.
CLOSING DATE - the date on which all of the conditions precedent in
Section 10.1 of the Agreement are satisfied and the initial Post-Petition Loan
is made under the Agreement.
COLLATERAL - all of the Property and interests in Property of Borrowers
that are described in Article 6 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and performance
of any of the Obligations, whether or not such Property or interest in Property
was in existence on or acquired by a Borrower or any other Obligor prior to or
after the Petition Date.
COMMITMENT - at any date, the obligation of Lender to make
Post-Petition Loans and provide Credit Support pursuant to the terms and
conditions of the Agreement, the maximum amount of which shall be $110,000,000
less the unpaid balance of the Pre-Petition Emergency Loan.
A-3
COMMITMENT TERMINATION DATE - the date that is the soonest to occur of:
(a) the last day of the DIP Term, (b) the effective date of any Acceptable Plan
or the date of entry of a Confirmation Order with respect to any other
Reorganization Plan, (c) the closing date of the sale contemplated by the
Acquisition Agreement, (d) fifteen (15) days after the entry of a Court order
approving a sale of the stock or assets of Company to any other than Lender or
an Affiliate thereof, (e) the date Lender terminates the DIP Facility pursuant
to Section 5.2(a) of the Agreement, (f) the date on which Borrowers elect to
terminate the Agreement pursuant to Section 5.2(b) of the Agreement, (g) October
14, 2002, if the Bid Procedure Order has not been entered by that date.
COMMITTEE - a creditors' or equity security holders' committee
appointed in either of the Borrowers' Chapter 11 Cases by the U.S. Trustee.
COMPANY - Peregrine Remedy, Inc., a Delaware corporation.
COMPLIANCE CERTIFICATE - a compliance certificate to be provided by
Borrowers to Lender in accordance with, and in the form annexed as Exhibit B to,
the Agreement, and the supporting schedules to be annexed thereto.
CONFIRMATION ORDER - an order entered by the Court confirming a
Reorganization Plan.
CONTINGENT OBLIGATION - with respect to any Person, any obligation of
such Person arising from any guaranty, indemnity or other assurance of payment
or performance of any Debt, lease, dividend or other obligation ("PRIMARY
OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including (a) the direct or indirect guaranty
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (b) the obligation to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (c) any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
Property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligations or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase Property, Securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof;
provided, however, that the term "CONTINGENT OBLIGATION" shall not include any
product warranties extended in the ordinary course of business. The amount of
any Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation with respect to which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.
COURT - as defined in the Recitals to the Agreement.
A-4
CRITICAL VENDOR - a Person who is a supplier of essential goods or
services to an Obligor and whose continued supply of such goods and services is
reasonably determined by Borrowers (with Lender's consent, not to be
unreasonably withheld, or upon Court approval) to be essential to the successful
sale or reorganization of such Obligor's business.
DEBT - as applied to a Person means, without duplication: (a) all items
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person on the date as
of which Debt is to be determined, including Capitalized Lease Obligations; (b)
all obligations of other Persons which such Person has guaranteed; (c) all
reimbursement obligations in connection with letters of credit or letter of
credit guaranties issued for the account of such Person; and (d) in the case of
Borrowers (without duplication), the Obligations.
DEFAULT - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
DEFAULT RATE - a fixed rate of 18% per annum.
DEPOSIT ACCOUNT - a demand, time, savings, passbook, money market or
other depository account, or a certificate of deposit, maintained by an Obligor
with any bank, savings and loan association, credit union or other depository
institution.
DIP FACILITY - the $110,000,000 credit facility established by Lender
in favor of Borrowers under Article 1 of the Agreement.
DIP FINANCING DOCUMENTS - the Agreement, the Notes, the Security
Documents, the Financing Orders, the Acquisition Agreement and any and all other
agreements, instruments and documents now or hereafter executed by any Borrower
or any Guarantor in favor of Lender with respect to any of the transactions
contemplated by the Agreement.
DIP MOTION - the motion of Obligors for approval of the financing under
the DIP Facility pursuant to the Agreement.
DIP NOTE - a Note to be executed by Borrowers in favor of Lender in the
form of Exhibit A to the Agreement, which shall be in the face amount of the
Commitment and which shall evidence all Post-Petition Loans made by Lender to
Borrowers pursuant to the Agreement.
DIP TERM - a period commencing on the date of entry of the Interim
Financing Order and ending on December 31, 2002.
DISTRIBUTION - in respect of any entity, (a) any payment of any
dividends or other distributions on Equity Interests of the entity (except
distributions in such Equity Interests) and (b) any purchase, redemption or
other acquisition or retirement for value of any Equity Interests of the entity
or any Affiliate of the entity unless made contemporaneously from the Net
Proceeds of the sale of Equity Interests.
DOCUMENT - shall have the meaning ascribed to the term "document" in
the UCC, as such definition may be amended from time to time.
A-5
DOLLARS AND THE SIGN $ - lawful money of the United States of America.
ELIGIBLE ASSIGNEE - any commercial bank, savings and loan association,
savings bank, finance company, investment fund or other financial institution
(whether a corporation, partnership, or other entity), or any Affiliate of
Lender.
ENVIRONMENTAL LAWS - any and all laws, statutes, rules, regulations,
orders, ordinances, codes, legal directives, notices, legal requirements and
rules of common law of any effect as of the date hereof in any and all
jurisdictions in which any Obligor is conducting or at any time has conducted
business or where the Collateral is or was located, and any judicial or
administrative interpretation thereof including, but not limited to, any
judicial or administrative order, consent decree, judgment or settlement
relating to the environment, Hazardous Materials or exposure to Hazardous
Materials.
ENVIRONMENTAL RELEASE - a release as defined in CERCLA or under any
applicable Environmental Laws.
EQUIPMENT - shall have the meaning ascribed to the term "equipment" in
the UCC, as such definition may be amended from time to time.
EQUITY INTEREST - the interest of (a) a shareholder in a corporation,
(b) a partner (whether general or limited) in a partnership (whether general,
limited or limited liability), (c) a member in a limited liability company, or
(d) any other Person having any other form of equity security in any form of
entity.
ERISA - the Employee Retirement Income Security Act of 1974 and all
rules and regulations from time to time promulgated thereunder.
ESTATE - the estate created in each of the Chapter 11 Cases pursuant to
11 U.S.C. Section 541(a).
EVENT OF DEFAULT - as defined in Article 11 of the Agreement.
EXTRAORDINARY EXPENSES - all costs, expenses, fees (including fees
incurred by Lender Professionals) or advances that Lender may suffer or incur,
whether prior to or after the occurrence of an Event of Default, and whether
prior to, after or during the pendency of an Insolvency Proceeding of an
Obligor, on account of or in connection with (a) the audit, inspection,
repossession, storage, repair, appraisal, insuring, completion of the
manufacture of, preparing for sale, advertising for sale, selling, collecting or
otherwise preserving or realizing upon any Collateral; (b) the defense of
Lender's Lien upon any Collateral or the priority thereof or any adverse claim
with respect to the Post-Petition Loans, the DIP Financing Documents or the
Collateral asserted by any Obligor, any receiver or trustee for any Obligor or
any creditor or representative of creditors of any Obligor; (c) the settlement
or satisfaction of any Liens upon any Collateral (whether or not such Liens are
Permitted Liens); (d) the collection or enforcement of any of the Obligations;
(e) the negotiation, documentation, and closing of any restructuring or
forbearance agreement with respect to the DIP Financing Documents or
Obligations; (f) amounts advanced by Lender pursuant to Section 7.1(c) of the
Agreement; or (g) the enforcement of any of the provisions of any of the DIP
Financing Documents. Such costs, expenses and advances
A-6
may include transfer fees, taxes, storage fees, insurance costs, permit fees,
utility reservation and standby fees, legal fees, appraisal fees, brokers' fees
and commissions, auctioneers' fees and commissions, consultants' fees,
accountants' fees, environmental study fees, wages and salaries paid to
employees of Borrowers or independent contractors in liquidating any Collateral,
travel expenses, all other fees and expenses payable or reimbursable by
Borrowers or any other Obligor under any of the DIP Financing Documents, and all
other fees and expenses associated with the enforcement of rights or remedies
under any of the DIP Financing Documents, but excluding compensation paid to
employees (including inside legal counsel who are employees) of Lender.
FINAL FINANCING ORDER - an order which is entered by the Court pursuant
to Section 364 of the Bankruptcy Code and Bankruptcy Rule 4001(c), which is in
form and substance acceptable to Lender in all respects, and which authorizes
the incurrence by Borrowers and guarantee by the Guarantors of post-petition
secured and superpriority indebtedness under the DIP Facility in accordance with
the DIP Financing Documents.
FINANCING ORDERS - the Interim Financing Order and the Final Financing
Order.
FISCAL YEAR - the fiscal year of Parent and its Subsidiaries for
accounting and tax purposes, which ends on March 31 of each year.
FLSA - the Fair Labor Standards Act of 1938.
FOREIGN SUBSIDIARY - any Subsidiary which is domiciled in any country
other than the United States of America or any of its territories or
possessions.
FULL PAYMENT - full, final and indefeasible payment of all Obligations
which are then due and payable in cash or immediately available funds and, in
the case of any Obligation that is, at the time in question, contingent, upon
Lender's receipt of either cash or a direct pay letter of credit naming Lender
as beneficiary and in form and substance, and from an issuing bank, acceptable
to Lender, in each case in an amount not less than 105% of each such contingent
Obligation.
GAAP - generally accepted accounting principles and practices in effect
in the United States of America from time to time.
GENERAL INTANGIBLE - shall have the meaning ascribed to the term
"general intangible" in the UCC, as such definition may be amended from time to
time, and shall include all interests in Intellectual Property.
GOVERNMENTAL APPROVALS - all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
GOVERNMENTAL AUTHORITY - any federal, state, municipal, national or
other governmental department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case whether
associated with a state of the United States, the District of Columbia or a
foreign entity or government.
A-7
GUARANTORS - all of Borrowers' Subsidiaries which are signatories to
the Agreement, and each other Person who guarantees payment or performance of
the whole or any part of the Obligations.
HAZARDOUS MATERIALS - any "waste," "hazardous waste," "industrial
waste," "solid waste," "hazardous material," "hazardous substance," "toxic
substance," "hazardous material," "pollutant," or "contaminant" as those or
similar terms are defined, identified, or regulated under any Environmental
Laws; any asbestos, polychlorinated biphenyls, or radon; any petroleum,
petroleum hydrocarbons, petroleum products, crude oil and any components,
fractions or derivatives thereof; and any substance that, whether by its nature
or its use, is subject to regulation under any Environmental Law or results in
any Governmental Authority requiring any environmental investigation,
remediation, or monitoring thereof.
INDEMNIFIED AMOUNT - the amount of any loss, cost, expenses or damages
suffered or incurred by Indemnitees and against which Obligors have agreed to
indemnify such Indemnitees pursuant to the terms of the Agreement or any of the
other DIP Financing Documents.
INDEMNITEE - Lender in its capacity as a lender under the Agreement and
its present and future officers, directors and agents, including all Lender
Professionals.
INSOLVENCY PROCEEDING - any action, case or proceeding commenced by or
against a Person, or any agreement of such Person, for (a) the entry of an order
for relief under any chapter of the Bankruptcy Code or other insolvency or debt
adjustment law (whether state, federal or foreign), (b) the appointment of a
receiver, trustee, liquidator or other custodian for such Person or any part of
its Property, (c) an assignment or trust mortgage for the benefit of creditors
of such Person, or (d) the liquidation, dissolution or winding up of the affairs
of such Person.
INSTRUMENT - shall have the meaning ascribed to the term "instrument"
in the UCC, as such definition may be amended from time to time.
INTELLECTUAL PROPERTY - means all United States and foreign (i)
patents, patent applications, utility models or statutory invention
registrations (whether or not filed), and invention disclosures; (ii)
trademarks, service marks, logos, designs, trade names, trade dress, domain
names and corporate names and registrations and applications for registration
thereof (whether or not filed) and the goodwill associated therewith; (iii)
copyrights, whether registered or unregistered, and registrations and
applications for registration thereof (whether or not filed) and other works or
authorship, whether or not published; (iv) trade secrets, proprietary
information, formulas, inventions, know-how, procedures, customer lists,
supplier lists, manufacturer lists, manufacturing and production processes and
techniques, manuals, formulas, hardware, software, firmware, databases; and (v)
moral rights relating to any of the foregoing.
INTERIM FINANCING ORDER - an order that is entered by the Court
pursuant to Section 364 of the Bankruptcy Code and Bankruptcy Rule 4001(c),
which is in form and substance satisfactory to Lender, which authorizes
Borrowers to incur (and the Guarantors to guarantee), during the Interim Period,
post-petition secured and superpriority Debt under the DIP Facility in
accordance with the DIP Financing Documents.
A-8
INTERIM PERIOD - the period commencing upon entry of the Interim
Financing Order and ending on the entry of the Final Financing Order.
INVENTORY - shall have the meaning ascribed to "inventory" in the UCC,
as such definition may be amended from time to time including, in the case of
any Obligor: (a) all goods intended for sale or lease by such Obligor, or for
display or demonstration; (b) all work in process; (c) all raw materials and
other materials and supplies of every nature and description used or which might
be used in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise used or
consumed in such Obligor's business; and (d) all Documents evidencing any
General Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by such Obligor.
INVESTMENT PROPERTY - shall have the meaning ascribed to "investment
property" in the UCC, as such definition may be amended from time to time.
LENDER - BMC Software, Inc. and any other Person who may from time to
time become a "LENDER" under the Agreement, and their respective successors and
permitted assigns.
LENDER PROFESSIONALS - attorneys, accountants, appraisers, business
valuation experts, environmental engineers or consultants, turnaround
consultants and other professionals or experts retained by Lender.
LIBOR LOAN - a Post-Petition Loan which bears interest based on the
applicable LIBOR Rate.
LIBOR RATE - with respect to any LIBOR Loan, the 90-day London
interbank offered rate as published in The Wall Street Journal, Eastern Edition,
on the Business Day next succeeding the date on which Lender receives a notice
of Borrowing requesting such LIBOR Loan.
LIEN - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on common law, statute or contract. The term "LIEN" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, an Obligor shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
MATERIAL ADVERSE EFFECT - the effect of any event, condition, act,
omission or circumstance, which, alone or when taken together with other events,
conditions, acts, omissions or circumstances occurring or existing concurrently
therewith: (a) has, or could reasonably be expected to have, a material adverse
effect upon the business, operations, Properties, assets, liabilities,
obligations, or condition (financial or otherwise) of Parent, Company or
Borrowers and the Subsidiaries taken as a whole; (b) has or may be reasonably
expected to have any material adverse effect whatsoever upon the validity or
enforceability of the Agreement or any of the other DIP Financing Documents; (c)
has any material adverse effect upon the value of the whole or any material part
of the Collateral, the Liens of Lender with respect to the Collateral or
A-9
the priority of any such Liens; (d) materially impairs the ability of any
Obligor to perform its obligations under the Agreement or any of the other DIP
Financing Documents, including repayment of any of the Obligations when due; or
(e) materially impairs the ability of Lender to enforce or collect the
Obligations or realize upon any of the Collateral in accordance with the DIP
Financing Documents and Applicable Law; provided; however, that in no event
shall any of the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining whether
there has been, a Material Adverse Effect: (i) any change resulting from
compliance with the terms and conditions of the Acquisition Documents (as
defined in the Acquisition Agreement); (ii) any change in the listing status,
stock price or trading volume of shares of Parent, or any failure by Company to
meet internal projections or forecasts or published revenue or earnings
projections (but not any change or effect underlying such change or failure to
the extent such change or effect would otherwise constitute a Material Adverse
Effect); (iii) any change or effect that results or arises from changes
affecting the industry in which Company operates generally or the United States
economy generally and not specifically relating to or having the effect of
specifically relating to or having a materially disproportionate effect
(relative to most other industry participants) on Company; or (iv) any loss of
employees or any cancellation or deferral of any contract, including any product
or service orders by customers, as a result of the announcement or pendency of
the transactions contemplated by the Acquisition Agreement including the Chapter
11 Cases.
MATERIAL CONTRACT - any agreement to which any Obligor is a party and
which, if terminated or breached, could reasonably be expected to have a
Material Adverse Effect.
MAXIMUM RATE - the maximum non-usurious rate of interest permitted by
Applicable Law that at any time, or from time to time, may be contracted for,
taken, reserved, charged or received on the Debt in question or, to the extent
that at any time Applicable Law may thereafter permit a higher maximum
non-usurious rate of interest, then such higher rate. Notwithstanding any other
provision hereof, the Maximum Rate shall be calculated on a daily basis
(computed on the actual number of days elapsed over a year of 365 or 366 days,
as the case may be).
MONEY BORROWED - as applied to any Person, (a) Debt arising from the
lending of money by any other Person to such Person; (b) Debt, whether or not in
any such case arising from the lending of money by another Person to such
Person, (i) which is represented by notes payable or drafts accepted that
evidence extensions of credit, (ii) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (c) Debt that constitutes a
Capitalized Lease Obligation; (d) reimbursement obligations with respect to
letters of credit or guaranties of letters of credit and (e) Debt of such Person
under any guaranty of obligations that would constitute Debt for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by such Person.
▇▇▇▇▇'▇ - ▇▇▇▇▇'▇ Investors Services, Inc.
MULTIEMPLOYER PLAN - has the meaning set forth in Section 4001(a)(3) of
ERISA.
NET PROCEEDS - proceeds (including cash receivable (when received) by
way of deferred payment) received by an Obligor from the sale, lease, transfer
or other disposition of any
A-10
Property, including insurance proceeds and awards of compensation received with
respect to the destruction or condemnation of all or part of such Property, net
of: (a) the reasonable and customary costs of such sale, lease, transfer or
other disposition; and (b) amounts applied to repayment of Debt (other than the
Obligations) secured by a Permitted Lien on the Property disposed of that is
senior to Lender's Liens.
NOTES - the DIP Note and any other promissory note executed by
Borrowers at Lender's request to evidence any of the Obligations.
NOTICE OF BORROWING - as defined in Section 3.1(a)(i) of the Agreement.
OBLIGATIONS - in each case, whether now in existence or hereafter
arising, (a) the principal of, and interest on, the Post-Petition Loans; and (b)
all other Debts, covenants, duties and obligations (including Contingent
Obligations) now or at any time or times hereafter owing by any Obligor to
Lender under or pursuant to the Agreement or any of the other DIP Financing
Documents, whether evidenced by any note or other writing, whether arising from
any extension of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise and whether direct or indirect, absolute
or contingent, due or to become due, primary or secondary, or joint or several,
including all interest, charges, expenses, fees or other sums (including
Extraordinary Expenses) chargeable to any or all Obligors hereunder or under any
of the other DIP Financing Documents.
OBLIGOR - Borrowers, each Guarantor, and any other Person that is at
any time liable for the payment of the whole or any part of the Obligations or
that has granted in favor of Lender a Lien upon any of any of such Person's
assets to secure payment of any of the Obligations.
ORDINARY COURSE OF BUSINESS - with respect to any Person, the ordinary
course of such Person's business, as conducted by such Person in accordance with
past practices and undertaken by such Person in good faith and not for the
purpose of evading any covenant or restriction in any DIP Financing Document.
ORGANIZATION DOCUMENTS - with respect to any Person, its charter,
certificate or articles of incorporation, bylaws, articles of organization,
operating agreement, members agreement, partnership agreement, voting trust, or
similar agreement or instrument governing the formation or operation of such
Person.
OSHA - the Occupational Safety and Hazard Act of 1970.
PARENT - Peregrine Systems, Inc., a Delaware corporation
PARTICIPANT - as defined in Section 12.2(a).
PAYMENT ITEMS - all checks, drafts, or other items of payment payable
to any Obligor, including proceeds of any of the Collateral.
PERMITTED CONTINGENT OBLIGATIONS - Contingent Obligations arising from
endorsements for collection or deposit in the Ordinary Course of Business;
Contingent Obligations of Borrowers and their Subsidiaries existing as of the
Closing Date, including extensions and
A-11
renewals thereof that do not increase the amount of such Contingent Obligations
as of the date of such extension or renewal; Contingent Obligations incurred in
the Ordinary Course of Business with respect to surety bonds, appeal bonds,
performance bonds and other similar obligations.
PERMITTED LIENS - any Lien of a kind specified in Section 9.2(b) of the
Agreement.
PERMITTED PURCHASE MONEY DEBT - Purchase Money Debt of Borrowers and
their Subsidiaries which is incurred after the date of the Agreement and which
is secured by no Lien or only by a Purchase Money Lien, provided that the
aggregate amount of Purchase Money Debt incurred after the date of the Agreement
does not exceed $100,000 and the incurrence of such Purchase Money Debt does not
violate any limitation in the DIP Financing Documents regarding Capital
Expenditures. For the purposes of this definition, the principal amount of any
Purchase Money Debt consisting of capitalized leases shall be computed as a
Capitalized Lease Obligation.
PERSON - an individual, partnership, corporation, limited liability
company, limited liability partnership, joint stock company, land trust,
business trust, or unincorporated organization, or a Governmental Authority.
PETITION DATE - September 22, 2002.
PLAN - an employee benefit plan now or hereafter maintained for
employees of an Obligor that is covered by Title IV of ERISA.
PLEDGED SECURITIES - all Equity Interests owned by any Obligor in any
Person.
POST-PETITION LOAN - a Loan made by Lender as provided in Section 1.1
of the Agreement.
PRE-PETITION EMERGENCY LOAN - the term loan in the current principal
amount of $3,500,000 made by Lender to Parent for emergency purposes on
September 20, 2002.
PRE-PETITION TERM LOAN - the term loan in the current principal amount
of $37,000,000 made by Ableco Finance LLC to Parent pursuant to a Loan and
Security Agreement dated June 12, 2002, as amended.
PROFESSIONAL EXPENSES - the fees and reimbursable expenses of a
Professional Person.
PROFESSIONAL PERSON - a Person who is an attorney, accountant,
appraiser, auctioneer or other professional person and who is retained, with
Court approval, by (a) any Borrower pursuant to Section 327 of the Bankruptcy
Code or (b) a Committee pursuant to Section 1103(a) of the Code.
PROPERLY CONTESTED - in the case of any Debt of an Obligor (including
any Taxes) that is not paid as and when due or payable by reason of such
Obligor's bona fide dispute concerning its liability to pay same or concerning
the amount thereof: (a) such Debt is being properly contested in good faith by
appropriate proceedings promptly instituted and diligently conducted; (b) such
Obligor has established appropriate reserves as shall be required in conformity
with GAAP;
A-12
(c) the non-payment of such Debt will not have a Material Adverse Effect and
will not result in a forfeiture of any assets of such Obligor; (d) no Lien is
imposed upon any of such Obligor's assets with respect to such Debt unless the
applicable Lien is at all times junior and subordinate in priority to the Liens
in favor of Lender (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such Lien is
stayed during the period prior to the final resolution or disposition of such
dispute; (e) if the Debt results from, or is determined by the entry, rendition
or issuance against an Obligor or any of its assets of a judgment, writ, order
or decree, enforcement of such judgment, writ, order or decree is stayed pending
a timely appeal or other judicial review; and (f) if such contest is abandoned,
settled or determined adversely (in whole or in part) to such Obligor, such
Obligor forthwith pays such Debt and all penalties, interest and other amounts
due in connection therewith.
PROPERTY - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
PURCHASE MONEY DEBT - means and includes (a) Debt (other than the
Obligations) for the payment of all or any part of the purchase price of any
fixed assets, (b) any Debt (other than the Obligations) incurred at the time of
or within 10 days prior to or after the acquisition of any fixed assets for the
purpose of financing all or any part of the purchase price thereof, and (c) any
renewals, extensions or refinancings thereof, but not any increases in the
principal amounts thereof outstanding at the time.
PURCHASE MONEY LIEN - a Lien upon fixed assets which secures Purchase
Money Debt, but only if such Lien shall at all times be confined solely to the
fixed assets acquired through the incurrence of the Purchase Money Debt secured
by such Lien and such Lien constitutes a purchase money security interest under
the UCC.
REAL PROPERTY - all of those plots, pieces or parcels of land now
owned, leased or hereafter acquired or leased by any Obligor (the "LAND"),
wherever located, together with the right, title and interest of such Obligor,
if any, in and to the streets, the land lying in the bed of any streets, roads
or avenues, opened or proposed, the air space and development rights pertaining
to the Land and the right to use such air space and development rights, all
rights-of-way, privileges, tenements, hereditaments and appurtenances belonging
or in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including all alley, vault, drainage, mineral, water, oil
and gas rights, together with all of the buildings and other improvements now or
hereafter erected on the Land, and any fixtures appurtenant thereto.
REORGANIZATION PLAN - a plan of reorganization proposed by any Borrower
or any other Person (including Lender) in its Chapter 11 Case.
REPORTABLE EVENT - any of the events set forth in Section 4043(b) of
ERISA.
RESTRICTED INVESTMENT - a loan, advance, capital contribution,
subscription or other investment, except the following: (a) investments in
Subsidiaries of Borrowers; and (b) Cash Equivalents.
S&P - Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc.
A-13
SEC - the Securities Exchange Commission.
SECURITY - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933.
SECURITY DOCUMENTS - any and all other instruments and agreements now
or at any time hereafter securing the whole or any part of the Obligations.
SENIOR OFFICER - the chairman of the board of directors, the president,
or the chief financial officer of, or in-house legal counsel to, each Borrower.
SUBSIDIARY - any Person a majority of the Equity Interests of which is
at the time owned, directly or indirectly, by another Person or by one or more
other Subsidiaries or by such other Person and one or more other Subsidiaries.
TAX REFUND - any refund of Taxes received by any Borrower or any
Subsidiary from any Governmental Authority.
TAXES - any present or future taxes (including value added taxes),
levies, imposts, duties, fees, assessments, deductions, withholdings or other
charges of whatever nature, including income, receipts, excise, property, sales,
use, transfer, license, payroll, withholding, social security and franchise
taxes now or hereafter imposed or levied by the United States, or any state,
local or foreign government or by any department, agency or other political
subdivision or taxing authority thereof or therein and all interest, penalties,
additions to tax and similar liabilities with respect thereto, but excluding, in
the case of each Lender, taxes imposed on or measured by the net income or
overall gross receipts of such Lender.
TRANSFEREE - as defined in Section 12.3(c) of the Agreement.
UCC - the Uniform Commercial Code (or any successor statute) as adopted
and in force in the State of Delaware or, when the laws of any other state
govern the method or manner of the creation or perfection of any security
interest in any of the Collateral, the Uniform Commercial Code (or any successor
statute) of such state.
ACCOUNTING TERMS. Unless otherwise specified herein, all terms of an
accounting character used in the Agreement shall be interpreted, all accounting
determinations under the Agreement shall be made, and all financial statements
required to be delivered under the Agreement shall be prepared in accordance
with GAAP, applied on a basis consistent with the most recent audited
consolidated financial statement of Parent and its Subsidiaries heretofore
delivered to Lender and using the same method for inventory valuation as used in
such audited financial statements, except for any change in which Parent's
independent public accountants concur or as required by GAAP unless (a) Parent
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements or (b) Lender shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made. In the event of any change in GAAP that
occurs after the date of the Agreement and that is material to Borrowers, Lender
shall the right to require either that conforming adjustments be made to any
financial covenants set forth in the Agreement, or the components thereof, that
are
A-14
affected by such change or that Borrowers report their financial condition based
on GAAP as in effect immediately prior to the occurrence of such change.
OTHER TERMS. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations; to any of the DIP Financing
Documents shall include any and all amendment or modifications thereto and any
and all restatements, extensions or renewals thereof; to any Person shall mean
and include the successors and permitted assigns of such Person; to "including"
and "include" shall be understood to mean "including, without limitation;" to
the time of day shall mean the time of day on the day in question in Houston,
Texas, unless otherwise expressly provided in the Agreement; and to any Property
of an Obligor shall mean and include all Property of such Obligor's Estate. A
Default or an Event of Default shall be deemed to exist at all times during the
period commencing on the date that such Default or Event of Default occurs to
the date on which such Default or Event of Default is waived in writing pursuant
to this Agreement or, in the case of a Default, is cured within any period of
cure expressly provided in this Agreement; and an Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by Lender.
[The remainder of this page is intentionally left blank.]
A-15
EXHIBIT A
FORM OF DIP NOTE
U.S. $_____________ September _____, 2002
FOR VALUE RECEIVED, the undersigned PEREGRINE SYSTEMS, INC., a Delaware
corporation, and PEREGRINE REMEDY, INC., a Delaware corporation (collectively,
"BORROWERS"), hereby unconditionally jointly and severally promise to pay to the
order of BMC SOFTWARE, INC., a Delaware corporation (herein, together with any
subsequent holder hereof, called the "LENDER"), on or prior to December 31,
2002, the principal sum of ________________________ AND 00/100 DOLLARS
($__________), or such lesser sum as may constitute the outstanding principal
amount of all Post-Petition Loans pursuant to the terms of the Credit Agreement
referred to below. Borrowers likewise unconditionally jointly and severally
promise to pay to Lender interest from and after the date hereof on the
outstanding principal amount of Post-Petition Loans at such interest rates,
payable at such times, and computed in such manner as are specified in the
Credit Agreement, in strict accordance with the terms thereof.
This Note ("NOTE") is issued pursuant to, and is the "DIP Note"
referred to in, the Debtor in Possession Credit Agreement dated September ___,
2002 among Borrowers, certain subsidiaries of Borrowers parties thereto and
Lender (as the same may be amended from time to time, the "CREDIT AGREEMENT"),
and Lender is and shall be entitled to all benefits thereof and of all DIP
Financing Documents executed and delivered in connection therewith. The
provisions of the Credit Agreement are incorporated herein by this reference.
All capitalized terms used herein, unless otherwise defined herein, shall have
the meanings ascribed to such terms in the Credit Agreement.
The repayment of the principal balance of this Note is subject to the
provisions of Section 4.7 and Section 5.2(c) of the Credit Agreement. The entire
unpaid principal balance and all accrued interest on this Note shall be due and
payable immediately upon the termination of the Commitment as set forth in
Section 5.2(c) of the Credit Agreement.
All payments of principal and interest shall be made in Dollars in
immediately available funds as specified in the Credit Agreement.
Upon or after the occurrence of an Event of Default and for so long as
such Event of Default exists, the principal balance and all accrued interest of
this Note may be declared due and payable in the manner and with the effect
provided in the Credit Agreement, and the unpaid principal balance hereof shall
bear interest at the Default Rate as provided in Section 2.1(c) of the Credit
Agreement. Borrowers jointly and severally agree to pay, and save Lender
harmless against, any liability for the payment of, all costs and expenses,
including, but not limited to, reasonable attorneys' fees, arising in connection
with the enforcement by Lender of any of its rights under this Note, the Credit
Agreement or any of the other DIP Financing Documents.
Exhibit A - Page 1
All principal amounts of Post-Petition Loans made by Lender to
Borrowers pursuant to the Credit Agreement, and all accrued and unpaid interest
thereon, shall be deemed outstanding under this Note and shall continue to be
owing by Borrowers in accordance with the terms of this Note and the Credit
Agreement.
In no contingency or event whatsoever, whether by reason of advancement
of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid
to Lender for the use, forbearance or detention of money advanced hereunder
exceed the highest lawful rate permissible under any law which a court of
competent jurisdiction may deem applicable hereto; and, in the event of any such
payment inadvertently paid by Borrowers or inadvertently received by Lender,
such excess sum shall be, at Borrowers' option, returned to Borrowers forthwith
or credited as a payment of principal, but shall not be applied to the payment
of interest. It is the intent hereof that Borrowers not pay or contract to pay,
and that Lender not receive or contract to receive, directly or indirectly in
any manner whatsoever, interest in excess of that which may be paid by Borrowers
under Applicable Law.
Time is of the essence of this Note. To the fullest extent permitted by
Applicable Law, Borrowers, for themselves and their legal representatives,
successors and assigns, expressly waive presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of acceleration and intent to
accelerate, notice of maturity, notice of protest, presentment for the purpose
of accelerating maturity, diligence in collection, and the benefit of any
exemption or insolvency laws.
Wherever possible each provision of this Note shall be interpreted in
such a manner as to be effective and valid under Applicable Law, but if any
provision of this Note shall be prohibited or invalid under Applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any Collateral securing this Note without
enforcing its rights against Borrowers, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrowers. Borrowers agree that, without releasing or impairing Borrowers'
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any Collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
The rights and obligations of Lender and Borrowers hereunder shall be
construed in accordance with and governed by the laws (without giving effect to
the conflict of law principles thereof) of the State of Delaware.
Exhibit A - Page 2
IN WITNESS WHEREOF, Borrowers have caused this Note to be executed and
delivered in __________, ___________, by their duly authorized officers on the
date first above written.
PEREGRINE SYSTEMS, INC., a Delaware
corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
PEREGRINE REMEDY, INC., a Delaware
corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Exhibit A - Page 3
EXHIBIT B
FORM OF NOTICE OF BORROWING
____________________, 2002
BMC SOFTWARE, INC.
---------------------
---------------------
---------------------
RE: Debtor in Possession Credit Agreement dated September _____,
2002, by and among PEREGRINE SYSTEMS, INC. and PEREGRINE
REMEDY, INC. (collectively, "BORROWERS"), certain subsidiaries
of Borrowers parties thereto, and BMC SOFTWARE, INC. (as at
any time amended, the "CREDIT AGREEMENT")
Ladies and Gentlemen:
This Notice of Borrowing is delivered to you pursuant to Section
3.1(a)(i) of the Credit Agreement. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings attributable thereto in the Credit
Agreement. Borrowers hereby request a Post-Petition Loan in the principal amount
of $__________ bearing interest at the [Base Rate/LIBOR Rate] (please indicate
which rate) to be made on ____________, 2002, and to be used for the following
purposes:
[SPECIFY PROPOSED USE OF PROCEEDS]
Borrowers hereby certifies that all representations and warranties
contained in the Credit Agreement are true and correct in all material respects
as of the date hereof, and no Default or Event of Default exists on the date
hereof. Borrowers hereby ratify and reaffirm all of the DIP Financing Documents
and all Obligations arising thereunder.
IN WITNESS WHEREOF, Borrowers have caused this Notice of Borrowing to
be executed and delivered this ______ day of ____________, 2002.
BORROWERS
PEREGRINE SYSTEMS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
PEREGRINE REMEDY, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Exhibit B - Page 1
SCHEDULE 7.1
LOCATION OF COLLATERAL
[To be provided by Borrowers.]
Schedule 7.1 - Page 1
SCHEDULE 8.1(o)
PLEDGED SECURITIES
[To be provided by Borrowers.]
Schedule 8.1(o) - Page 1
SCHEDULE 8.1(q)
SUBSIDIARIES OF BORROWERS
[To be provided by Borrowers.]
Schedule 8.1(q) - Page 1
SCHEDULE 9.2(b)
LIENS
1. Liens under that certain Loan and Security Agreement by and among
Peregrine Systems, Inc., Borrower Subsidiaries, Foothill Capital
Corporation, as the Arranger and Administrative Agent, and signatory
Lenders, dated as of June 12, 2002, as amended, modified or
supplemented from time to time [Liens to be released and discharged
upon payment of the Pre-Petition Term Loan, as contemplated under the
Debtor In Possession Credit Agreement]
2. Liens on those accounts and related rights to payment (and proceeds
thereof) purchased prior to June 1, 2002 by (i) Silicon Valley Bank
pursuant to the terms of the SVB Account Receivables Purchase Agreement
and listed on Schedule A attached hereto; (ii) ▇▇▇▇▇ Fargo HSBC Trade
Bank, N.A. pursuant to the terms of the ▇▇▇▇▇ Receivables Purchase
Agreements and listed on Schedule B attached hereto; and (iii) Fleet
Business Credit LLC pursuant to the terms of the Fleet Receivables
Purchase Agreements and listed on Schedule C attached hereto; provided
that such liens have been perfected by duly filed financing statements
and excluding, however, Ongoing Maintenance Accounts and all IBM/SOW
Accounts (other than the IBM/SOW Account owing from IBM with respect to
the Florida Power and Light receivable arising on or about April 9,
2002) to the extent that such IBM/SOW Accounts secure payments received
from and after August 1, 2002, in an aggregate amount in excess of
$2,374,857.87. Capitalized terms not defined in this paragraph are as
defined in that certain Intercreditor Agreement dated August 26, 2002
by and among Foothill Capital Corporation, as the Arranger and
Administrative Agent, Ableco Finance LLC, Fleet Business Credit LLC,
▇▇▇▇▇ Fargo HSBC Trade Bank, N.A., Silicon Valley Bank, Peregrine
Systems, Inc. and certain of its subsidiaries.
3. Liens under financing statements or similar filings made by lessors
under any equipment or capital leases or rental agreements with respect
to such equipment or leased or rented property.
Schedule 9.2(b) - Page 1