Exhibit 99.2
================================================================================
REVOLVING CREDIT AND GUARANTY AGREEMENT
================================================================================
Among
BURLINGTON INDUSTRIES, INC.,
a Debtor and a Debtor-in-Possession under Chapter 11 of the Bankruptcy Code
as Borrower
and
THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,
Each a Debtor and a Debtor-in-Possession under Chapter 11 of
the Bankruptcy Code
as Guarantors
and
THE BANKS PARTY HERETO,
and
JPMORGAN CHASE BANK,
as Administrative Agent, Documentation Agent
and Collateral Agent
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
as Book Manager
and
Lead Arranger
================================================================================
Dated as of November 15, 2001
================================================================================
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS..................................................2
SECTION 1.01 Defined Terms................................................3
SECTION 2. AMOUNT AND TERMS OF CREDIT..................................23
SECTION 2.01 Commitment of the Banks.....................................23
SECTION 2.02 Borrowing Base..............................................23
SECTION 2.03 Letters of Credit...........................................23
SECTION 2.04 Issuance....................................................25
SECTION 2.05 Nature of Letter of Credit Obligations Absolute.............26
SECTION 2.06 Making of Loans.............................................26
SECTION 2.07 Repayment of Loans; Evidence of Debt........................27
SECTION 2.08 Interest on Loans...........................................28
SECTION 2.09 Default Interest............................................28
SECTION 2.10 Optional Termination or Reduction of Commitment.............28
SECTION 2.11 Alternate Rate of Interest..................................29
SECTION 2.12 Refinancing of Loans........................................29
SECTION 2.13 Mandatory Prepayment; Commitment Termination; Cash
Collateral...............30
SECTION 2.14 Optional Prepayment of Loans; Reimbursement of Banks........31
SECTION 2.15 Reserve Requirements; Change in Circumstances...............32
SECTION 2.16 Change in Legality..........................................33
SECTION 2.17 Pro Rata Treatment, etc.....................................34
SECTION 2.18 Taxes.......................................................34
SECTION 2.19 Certain Fees................................................35
SECTION 2.20 Commitment Fee..............................................35
SECTION 2.21 Letter of Credit Fees.......................................35
SECTION 2.22 Nature of Fees..............................................36
SECTION 2.23 Priority and Liens..........................................36
SECTION 2.24 Right of Set-Off............................................37
SECTION 2.25 Security Interest in Letter of Credit Account...............38
SECTION 2.26 Payment of Obligations......................................38
SECTION 2.27 No Discharge; Survival of Claims............................38
SECTION 2.28 Use of Cash Collateral......................................38
SECTION 2.29 Replacement of Certain Banks 38
SECTION 3. REPRESENTATIONS AND WARRANTIES..............................39
SECTION 3.01 Organization and Authority..................................39
SECTION 3.02 Due Execution...............................................40
SECTION 3.03 Statements Made.............................................40
SECTION 3.04 Financial Statements........................................40
SECTION 3.05 Ownership...................................................41
SECTION 3.06 Liens.......................................................41
SECTION 3.07 Compliance with Law.........................................41
SECTION 3.08 Insurance...................................................41
SECTION 3.09 Use of Proceeds.............................................42
SECTION 3.10 Litigation..................................................42
SECTION 4. CONDITIONS OF LENDING.......................................42
SECTION 4.01 Conditions Precedent to Initial Loans and Initial
Letters of Credit.........42
SECTION 4.02 Conditions Precedent to Each Loan and Each Letter of Credit.45
SECTION 5. AFFIRMATIVE COVENANTS.......................................46
SECTION 5.01 Financial Statements, Reports, etc..........................46
SECTION 5.02 Corporate Existence.........................................49
SECTION 5.03 Insurance...................................................49
SECTION 5.04 Obligations and Taxes.......................................49
SECTION 5.05 Notice of Event of Default, etc.............................49
SECTION 5.06 Access to Books and Records.................................49
SECTION 5.07 Maintenance of Concentration Account........................50
SECTION 5.08 Borrowing Base Certificate..................................50
SECTION 5.09 Collateral Monitoring and Review............................50
SECTION 5.10 Business Plan...............................................50
SECTION 6. NEGATIVE COVENANTS..........................................51
SECTION 6.01 Liens.......................................................51
SECTION 6.02 Merger, etc.................................................51
SECTION 6.03 Indebtedness................................................51
SECTION 6.04 Capital Expenditures........................................51
SECTION 6.05 EBITDA......................................................52
SECTION 6.06 Guarantees and Other Liabilities............................52
SECTION 6.07 Chapter 11 Claims...........................................53
SECTION 6.08 Dividends; Capital Stock....................................53
SECTION 6.09 Transactions with Affiliates................................53
SECTION 6.10 Investments, Loans and Advances.............................53
SECTION 6.11 Disposition of Assets.......................................53
SECTION 6.12 Nature of Business..........................................53
SECTION 7. EVENTS OF DEFAULT...........................................54
SECTION 7.01 Events of Default...........................................54
SECTION 8. THE AGENT...................................................57
SECTION 8.01 Administration by Agent.....................................57
SECTION 8.02 Advances and Payments.......................................57
SECTION 8.03 Sharing of Setoffs..........................................58
SECTION 8.04 Agreement of Required Banks.................................58
SECTION 8.05 Liability of Agent..........................................58
SECTION 8.06 Reimbursement and Indemnification...........................59
SECTION 8.07 Rights of Agent.............................................59
SECTION 8.08 Independent Banks...........................................59
SECTION 8.09 Notice of Transfer..........................................60
SECTION 8.10 Successor Agent.............................................60
SECTION 9. GUARANTY....................................................60
SECTION 9.01 Guaranty....................................................60
SECTION 9.02 No Impairment of Guaranty...................................61
SECTION 9.03 Subrogation.................................................61
SECTION 10. MISCELLANEOUS...............................................62
SECTION 10.01 Notices.....................................................62
SECTION 10.02 Survival of Agreement, Representations and Warranties, etc..62
SECTION 10.03 Successors and Assigns......................................62
SECTION 10.04 Confidentiality.............................................64
SECTION 10.05 Expenses....................................................65
SECTION 10.06 Indemnity...................................................65
SECTION 10.07 CHOICE OF LAW...............................................66
SECTION 10.08 No Waiver...................................................66
SECTION 10.09 Extension of Maturity.......................................66
SECTION 10.10 Amendments, etc.............................................66
SECTION 10.11 Severability................................................67
SECTION 10.12 Headings....................................................67
SECTION 10.13 Execution in Counterparts...................................67
SECTION 10.14 Prior Agreements............................................67
SECTION 10.15 Further Assurances..........................................68
SECTION 10.16 WAIVER OF JURY TRIAL........................................68
ANNEX A Commitment Amounts
EXHIBIT A - Form of Interim Order
EXHIBIT B - Form of Security and Pledge Agreement
EXHIBIT C - Form of Opinion of Counsel
EXHIBIT D - Form of Assignment and Acceptance
EXHIBIT E - Form of Borrowing Base Certificate
SCHEDULE 1.01 - Existing Agreement
SCHEDULE 3.05 - Subsidiaries
SCHEDULE 3.06 - Liens
SCHEDULE 6.10 - Existing Investments
REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of November 15, 2001
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of November
15, 2001, among BURLINGTON INDUSTRIES, INC., a Delaware corporation (the
"Borrower"), a debtor and debtor-in-possession in a case pending under Chapter
11 of the Bankruptcy Code, the direct and indirect domestic subsidiaries of the
Borrower signatory hereto (each a "Guarantor" and collectively, the
"Guarantors"), each of which Guarantors is a debtor and debtor-in-possession in
a case pending under Chapter 11 of the Bankruptcy Code (the cases of the
Borrower and the Guarantors, each a "Case" and collectively, the "Cases"),
JPMORGAN CHASE BANK, a New York banking corporation ("JPMorgan Chase"), each of
the other financial institutions from time to time party hereto (together with
JPMorgan Chase, the "Banks") and JPMORGAN CHASE BANK, as administrative agent
(in such capacity, the "Agent") for the Banks.
INTRODUCTORY STATEMENT
On November 15, 2001, the Borrower and the Guarantors filed
voluntary petitions with the Bankruptcy Court initiating the Cases and have
continued in the possession of their assets and in the management of their
business pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower has applied to the Banks for a revolving credit
and letter of credit facility in an aggregate principal amount not to exceed
$190,000,000, all of the Borrower's obligations under which are to be guaranteed
by the Guarantors.
The proceeds of the Loans will be used (i) to repurchase the
Existing Receivables Portfolio and (ii) for working capital and other general
corporate purposes of the Borrower and the Guarantors (including, to the extent
permitted under Section 6.10, for loans and advances to Subsidiaries not party
hereto).
To provide guarantees and security for the repayment of the
Loans, the reimbursement of any draft drawn under a Letter of Credit and the
payment of the other obligations of the Borrower and the Guarantors hereunder
and under the other Loan Documents (including, without limitation, the
Obligations of the Borrower under Section 6.03(vi), the Borrower and the
Guarantors will provide to the Agent and the Banks the following (each as more
fully described herein):
(a) a guaranty from each of the Guarantors of the due and punctual
payment and performance of the obligations of the Borrower hereunder;
(b) an allowed administrative expense claim in each of the Cases pursuant to
Section 364(c)(1) of the Bankruptcy Code having joint and several superpriority
over all administrative expenses of the kind specified in Sections 503(b) and
507(b) of the Bankruptcy Code;
(c) a perfected first priority Lien, pursuant to Section 364(c)(2) of the
Bankruptcy Code, upon all property of the Borrower and the Guarantors'
respective estates in the Cases that is not subject to valid, perfected and
non-avoidable liens on the Filing Date, including, without limitation, all
accounts receivable and inventory of the Borrower and Guarantors (excluding the
Borrower's and the Guarantors' rights in respect of avoidance actions under the
Bankruptcy Code, but not excluding the proceeds of such causes of action
(including, without limitation, assets as to which liens are avoided) which
shall be subject to liens under Section 364(c)(2) of the Bankruptcy Code and
available to repay the Loans and all other obligations under the Agreement) and
on all cash and cash equivalents in the Letter of Credit Account, provided that
following the Termination Date, amounts in the Letter of Credit Account shall
not be subject to the Carve-Out hereinafter referred to;
(d) a perfected Lien, pursuant to Section 364(c)(3) of the Bankruptcy Code, upon
all property of the Borrower and the Guarantors' respective estates in the Cases
(other than the property referred to in paragraph (e) below that is subject to
the valid and perfected Liens that presently secure the Borrower's and
Guarantors' pre-petition Indebtedness under the Existing Agreement) that is
subject to valid, perfected and non-avoidable Liens in existence on the Filing
Date or that is subject to valid Liens in existence on the Filing Date that are
perfected subsequent to the Filing Date as permitted by Section 546(b) of the
Bankruptcy Code or that is subject to Permitted Liens, junior to such valid,
perfected and non-avoidable Liens; and
(e) perfected first priority senior priming Liens, pursuant to Section 364(d)(1)
of the Bankruptcy Code, upon all property of the Borrower and the Guarantors
that is subject to (x) the existing Liens that presently secure the Borrower's
and Guarantors' pre-petition Indebtedness under or in connection with that
certain Credit Agreement dated as of September 30, 1988, as amended and restated
as of December 5, 2000, among the Borrower, the secured lenders from time to
time party thereto and The Chase Manhattan Bank, as administrative agent, Chase
Manhattan Bank USA, N.A., as fronting bank, Bank of America, N.A., as
syndication agent, and Chase Securities Inc., as arranger (as further amended,
the "Existing Agreement") (but subject to any Liens to which the Liens being
primed hereby are subject on the Filing Date or become subject subsequent to the
Filing Date as permitted by Section 546(b) of the Bankruptcy Code) and (y) any
Liens granted after the Filing Date to provide adequate protection in respect of
the Existing Agreement, which first priority priming Liens in favor of the Agent
and the Banks shall be senior in all respects to all of such existing Liens
under or in connection with the Existing Agreement, and to any Liens granted
after the Filing Date to provide adequate protection in respect thereof;
provided, however, the Borrower shall not be required to pledge to the Agent (i)
the membership interests in and/or the capital stock of Nano-Tex owned by it or
(ii) in excess of 65% of the capital stock of its foreign Subsidiaries.
All of the claims and the Liens granted hereunder in the Cases
to the Agent and the Banks shall be subject to the Carve-Out to the extent
provided in Section 2.23.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1.........DEFINITIONS
SECTION 1.01......Defined Terms.
-------------
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Section 2.
"Account" any right to payment for goods sold or leased or for
services rendered, whether or not earned by performance.
"Account Debtor" shall mean, with respect to any Account, the
obligor with respect to such Account.
"Adjusted Eligible Finished Goods" shall mean, on any date,
Eligible Finished Goods minus Inventory Reserves.
"Adjusted Eligible Finished Yarn" shall mean, on any date,
Eligible Finished Yarn minus Inventory Reserves.
"Adjusted Eligible Raw Materials" shall mean, on any date,
Eligible Raw Materials minus Inventory Reserves.
"Additional Credit" shall have the meaning given such term in
Section 4.02(d) hereof.
"Adjusted LIBOR Rate" shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the quotient of
(a) the LIBOR Rate in effect for such Interest Period divided by (b) a
percentage (expressed as a decimal) equal to 100% minus Statutory Reserves. For
purposes hereof, the term "LIBOR Rate" shall mean the rate at which dollar
deposits approximately equal in principal amount to such Eurodollar Borrowing
and for a maturity comparable to such Interest Period are offered to the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Affiliate" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the Introduction.
"Agreement" shall mean this Revolving Credit and Guaranty
Agreement, as the same may from time to time be further amended, modified or
supplemented.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the
Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate"
shall mean the rate of interest per annum publicly announced from time to time
by the Agent as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective on the date such change
is publicly announced. "Base CD Rate" shall mean the sum of (a) the quotient of
(i) the Three-Month Secondary CD Rate divided by (ii) a percentage expressed as
a decimal equal to 100% minus Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "Federal Funds Effective
Rate" shall mean, for any day, the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate
or both for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"Assessment Rate" shall mean for any date the annual rate
(rounded upwards, if necessary, to the next 1/100 of 1%) most recently estimated
by the Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Agent to the Federal Deposit
Insurance Corporation (or any successor) for insurance by such Corporation (or
any successor) of time deposits made in dollars at the Agent's domestic offices.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Bank and an Eligible Assignee, and accepted by the
Agent, substantially in the form of Exhibit D.
"Bank Affiliate" shall mean, (a) with respect to any Bank, (i)
an Affiliate of such Bank or (ii) any entity (whether a corporation,
partnership, trust or otherwise) that is engaged in making, purchasing, holding
or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Bank or an
Affiliate of such Bank and (b) with respect to any Bank that is a fund which
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Bank or by an Affiliate of such investment
advisor.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Section 101
et seq.
"Bankruptcy Court" shall mean the United States Bankruptcy
Court for the District of Delaware or any other court having jurisdiction over
the Cases from time to time.
"Banks" shall have the meaning set forth in the Introduction.
"B.I. Funding" shall mean B.I. Funding, Inc., a Delaware
corporation.
"Bill and Hold Sales" shall mean, on any date, transactions
invoicing the sale of Inventory to third parties, which have not been shipped by
the Borrower to the third party Account Debtor by express mutual agreement. Such
transactions are also (i) segregated and uniquely identified as being Account
Debtor owned both in the systems of the Borrower as well as on the physical
inventory; (ii) not included in the Borrower's Inventory; (iii) ones in which
title and risk of loss have passed to the Account Debtor; (iv) non-cancelable
and payable sale transactions under normal payment terms from the date of the
invoice; (v) qualified as a sale and account receivable according to all
applicable regulatory accounting guidelines; and (vi) evidenced by an executed
bilateral letter agreement stipulating the above.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Borrower" shall have the meaning set forth in the
Introduction.
"Borrowing" shall mean the incurrence of Loans of a single
Type made from all the Banks on a single date and having, in the case of
Eurodollar Loans, a single Interest Period (with any ABR Loan made pursuant to
Section 2.16 being considered a part of the related Borrowing of Eurodollar
Loans).
"Borrowing Base" shall mean, on any date, the amount
(calculated based on the most recent Borrowing Base Certificate delivered
pursuant to this Agreement) that is equal to (a) 85% of Eligible Accounts
Receivable, net of Dilution Reserve plus (b) 25% of Adjusted Eligible Raw
Materials plus (c) 35% of Adjusted Eligible Finished Yarn for CasualWear, 15%
Adjusted Eligible Finished Yarn for Lees Carpet, and 25% Adjusted Eligible
Finished Yarn for House and PerformanceWear, plus (d) 40% of Adjusted Eligible
Finished Goods for CasualWear, and 50% of Adjusted Eligible Finished Goods for
Lees Carpet, House and PerformanceWear plus (e) Eligible Equipment minus (f) the
Carve-Out; provided that the amount derived from clause (e) shall not comprise
more than ten percent (10%) of the Borrowing Base. Borrowing Base eligibility
standards may be fixed and revised from time to time by the Agent, in its sole
discretion, and in the Agent's exclusive judgment exercised reasonably. The
Borrowing Base shall be subject to reserves from time to time established by the
Agent with any changes in such standards and reserves to be effective 10 days
after delivery of notice thereof to the Borrower.
"Borrowing Base Certificate" shall mean a certificate
substantially in the form of Exhibit E hereto (with such changes therein as may
be required by the Agent to reflect the components of and reserves against the
Borrowing Base as provided for hereunder from time to time), executed and
certified by a Financial Officer of the Borrower, which shall include
appropriate exhibits and schedules as referred to therein and as provided for in
Section 5.08.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banks in the State of New York are required or
permitted to close (and, for a Letter of Credit, other than a day on which the
Fronting Bank issuing such Letter of Credit is closed); provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
on the London interbank market.
"Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether (i) paid in cash and not theretofore
accrued or (ii) accrued as liabilities during such period, and including that
portion of any post-petition Capitalized Lease which is capitalized on the
consolidated balance sheet of the Borrower and the Guarantors) net of cash
amounts received by the Borrower and the Guarantors from other Persons during
such period in reimbursement of Capital Expenditures made by the Borrower and
the Guarantors, excluding interest capitalized during construction, made by the
Borrower and the Guarantors during such period that, in conformity with GAAP,
are required to be included in or reflected by the property, plant, equipment or
similar fixed asset accounts reflected in the consolidated balance sheet of the
Borrower and the Guarantors (including equipment which is purchased
simultaneously with the trade-in of existing equipment owned by the Borrower or
any of the Guarantors to the extent of the gross amount of such purchase price
less the book value of the equipment being traded in at such time), but
excluding expenditures made in connection with the replacement or restoration of
assets to the extent reimbursed or financed from (x) insurance proceeds paid on
account of the loss of or the damage to the assets being replaced or restored or
(y) awards of compensation arising from the taking by condemnation or eminent
domain of such assets being replaced.
"Capitalized Lease" shall mean, as applied to any Person, any
lease of property by such Person as lessee which would be capitalized on a
balance sheet of such Person prepared in accordance with GAAP.
"Carve-Out" shall have the meaning set forth in Section 2.23.
"Cases" shall have the meaning set forth in the Introduction.
"CasualWear" shall mean the operating division of the Borrower
referred to as Burlington CasualWear.
"Change of Control" shall mean (i) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder as in effect on the date
hereof), of shares representing more than 50% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Borrower;
or (ii) the occupation of a majority of the seats (other than vacant seats) on
the Board of Directors of the Borrower by Persons who were neither (A) nominated
by the Board of Directors of the Borrower nor (B) appointed by directors so
nominated.
"Closing Date" shall mean the date on which this Agreement has
been executed and the conditions precedent to the making of the initial Loans
set forth in Section 4.01 have been satisfied or waived, which date shall occur
promptly upon entry of the Interim Order, but not later than 15 days following
the entry of the Interim Order.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Collateral" shall mean the "Collateral" as defined in the
Security and Pledge Agreement.
"Commitment" shall mean, with respect to each Bank, the
commitment of each Bank hereunder in the amount set forth opposite its name on
Annex A hereto or as may subsequently be set forth in the Register from time to
time, as the same may be reduced from time to time pursuant to this Agreement.
"Commitment Fee" shall have the meaning set forth in Section
2.20.
"Commitment Letter" shall mean that certain Commitment Letter
dated November 7, 2001, among the Agent, ▇.▇. ▇▇▇▇▇▇ Securities Inc. and the
Borrower.
"Commitment Percentage" shall mean at any time, with respect
to each Bank, the percentage obtained by dividing its Commitment at such time by
the Total Commitment at such time.
"Consummation Date" shall mean the date of the substantial
consummation (as defined in Section 1101 of the Bankruptcy Code and which for
purposes of this Agreement shall be no later than the effective date) of a
Reorganization Plan that is confirmed pursuant to an order of the Bankruptcy
Court.
"Dilution Percentage" shall vary by division and shall mean,
expressed as a percentage, the greater of the rolling twelve month average of
(i) the total non-cash credits to accounts receivable in a month divided by (ii)
the gross ▇▇▇▇▇▇▇▇ in the same month; or (A) for CasualWear 5% or (B) for Lees
Carpet and House 7% or (C) for PerformanceWear 3%.
"Dilution Reserve" shall mean an amount equal to the product
of (A) the Dilution Percentage multiplied by (B) the amount that would
constitute Eligible Accounts Receivable prior to the implementation of the
Dilution Reserve.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean, for any period, all as determined in
accordance with GAAP, the consolidated net income (or net loss) of the Borrower
and its Subsidiaries for such period, plus (a) the sum of (i) depreciation
expense, (ii) amortization expense, (iii) other non-cash expenses, (iv)
consolidated federal, state and local income tax expense, (v) gross interest
expense for such period less gross interest income for such period, (vi)
extraordinary losses, (vii) any non-recurring charge or restructuring charge
which in accordance with GAAP has been deducted in the calculation of operating
income, (viii) the cumulative effect of any change in accounting principles and
(ix) "Chapter 11 expenses" (or "administrative costs reflecting Chapter 11
expenses") as shown on the Borrower's consolidated statement of income for such
period less (b) extraordinary gains plus or minus (c) the amount of cash
received or expended in such period in respect of any amount which, under clause
(vii) above, was taken into account in determining EBITDA for such or any prior
period.
"Eligible Accounts Receivable" at the time of any
determination, the gross outstanding balance at such time, determined in
accordance with GAAP and stated on a basis consistent with the historical
practices of the Borrower as of the date hereof, of Accounts of the Borrower
less, as applicable and without duplication, the aggregate amount of (i) all
accrued rebates, (ii) all finance agreements, (iii) all trade discounts, (iv)
all finance charges, late fees and other fees that are unearned, (v) the
aggregate amount of all reserves for service fees and such other fees or
commissions or similar amounts that the Borrower has agreed to pay (vi) the
aggregate amount of all cash received in respect of Accounts but not yet applied
by the Borrower to reduce the amount of the Accounts and (vii) at the reasonable
discretion of the Agent and (viii) are not ineligible for inclusion in the
calculation of the Borrowing Base pursuant to any of clauses (a) through (r)
below or otherwise deemed by the Agent in its reasonable discretion to be
ineligible for inclusion in the calculation of the Borrowing Base as described
below. Without limiting the foregoing, to qualify as an Eligible Account
Receivable, an Account shall indicate as sole payee and as sole remittance party
the Borrower. Standards of eligibility may be fixed from time to time solely by
the Agent in the exercise of its reasonable judgment, with any changes in such
standards to be effective 10 (ten) days after delivery of notice thereof to the
Borrower. Unless otherwise approved from time to time in writing by the Agent,
no Account shall be an Eligible Account Receivable if, without duplication:
(a) the Borrower does not have sole lawful and absolute title
to such Account; or
(b) it arises out of a sale made by the Borrower to an
employee, officer, agent, director, stockholder, or Affiliate of the Borrower;
or
(c) the Account Debtor (i) is a creditor, (ii) has or has
asserted a right of set-off against the Borrower (unless such Account Debtor has
entered into a written agreement reasonably acceptable to the Agent to waive
such set-off rights) or (iii) has disputed its liability (whether by chargeback
or otherwise) or made any asserted or unasserted claim with respect to the
Account or any other Account of the Borrower which has not been resolved, in
each case, without duplication, to the extent of the amount owed by such
Borrower to the Account Debtor, the amount of such actual or asserted right of
set-off, or the amount of such dispute or claim, as the case may be; or
(d) the Account Debtor is insolvent or the subject of any
bankruptcy case or insolvency proceeding of any kind (other than postpetition
accounts payable of an Account Debtor that is a debtor-in-possession under the
Bankruptcy Code and acceptable to the Agent); or
(e) the Account is not payable in Dollars or the Account
Debtor is either not incorporated under the laws of the United States of
America, any state thereof or the District of Columbia or is located outside or
has its principal place of business or substantially all of its assets outside
the United States, with the exception of Canada (except to the extent each
Account is supported by an irrevocable letter of credit issued by an institution
acceptable to the Agent in its reasonable discretion); or
(f) the sale to the Account Debtor is on a delayed shipment
basis that does not meet the criteria set forth in the definition of Bill and
Hold Sale, or is deemed ineligible at the reasonable discretion of the Agent,
guaranteed sale, sale-and-return, ship-and-return, sale on approval, extended
terms or consignment or other similar basis or made pursuant to any other
agreement providing for repurchase or return of any merchandise which has been
claimed to be defective or otherwise unsatisfactory; or
(g) except for Bill and Hold Sale, the goods giving rise to
such Account have not been shipped and title has not been transferred to the
Account Debtor, or the Account represents a progress-billing or otherwise does
not represent a completed sale; for purposes hereof, "progress-billing" means
any invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon the Borrower's completion of any further performance under
the contract or agreement; or
(h) the Account does not comply in all material respects with
the requirements of all applicable laws and regulations, whether Federal, state
or local, including without limitation the Federal Consumer Credit Protection
Act, the Federal Truth in Lending Act and Regulation Z of the Board; or
(i) the Account is subject to any adverse security deposit,
retainage or other similar advance made by or for the benefit of the Account
Debtor, in each case to the extent thereof; or
(j) the Account is unpaid more than 60 days from the original
due date; or
(k) such Account was not paid in full, and the Borrower
created a new receivable for the unpaid portion of the Account, without the
agreement of the customer, including without limitation chargebacks, debit memos
and other adjustments for unauthorized deductions; or
(l) the Account balance that is over 60 days from the original
due date, which represents greater than 50% of the total customer's balance, in
which case, the receivable amount owing that is less than 60 from the original
due date, that is otherwise eligible, will be ineligible; or
(m) the eligible portion of an Account whose payment term is
greater than 90 days; or
(n) (i) it is not subject to a valid and perfected first
priority Lien in favor of the Agent for the benefit of the Secured Parties,
subject to no other Liens other than the Liens (if any) permitted by the Loan
Documents or (ii) it does not otherwise conform in all material respects to the
representations and warranties contained in the Loan Documents relating to
Accounts; or
(o) as to all or any part of such Account, a check, promissory
note, draft, trade acceptance or other Instrument for the payment of money has
been received, presented for payment and returned uncollected for any reason; or
(p) it has been written off the books of the Borrower or has
been otherwise designated as uncollectible; or
(q) inclusion of the applicable Account does not cause the
total Eligible Accounts Receivable with respect to the applicable account debtor
and its Affiliates, in the aggregate, to exceed 5% of the total Eligible
Accounts Receivable for Accounts which are not rated Investment Grade, and 10%
of the total Eligible Accounts Receivable for Accounts which are rated
Investment Grade; or
(r) the Account is a non-trade Account, or relates to payments
for interest.
Notwithstanding anything to the contrary in the foregoing definition of
"Eligible Accounts Receivable," 50% of the Accounts which are due to Lees Carpet
for installation labor shall be deemed to be Eligible Accounts Receivable, which
shall be determined as either: (i) 50% of the actual amount of all such Accounts
due to the Lees Carpet division which are specifically identified by Borrower
and accepted by Agent, in its reasonable sole discretion, or (ii) if
identification of all such Accounts is not practicable or is not accepted by
Agent, then 50% of the product of (a) the total accounts receivable of Lees
Carpet, times (b) the percentage derived by dividing the Lees Carpet division's
total labor installation revenue for the rolling 12 month period by its total
sales revenue for the same period.
"Eligible Assignee" shall mean (i) a commercial bank having
total assets in excess of $1,000,000,000; (ii) a finance company, insurance
company or other financial institution or fund, in each case reasonably
acceptable to the Agent, which in the ordinary course of business extends credit
of the type contemplated herein and has total assets in excess of $200,000,000
and whose becoming an assignee would not constitute a prohibited transaction
under Section 4975 of ERISA; (iii) a Bank Affiliate of the assignor Bank; and
(iv) any other financial institution satisfactory to the Borrower (but only for
so long as an Event of Default shall not have occurred and be continuing) and
the Agent.
"Eligible Equipment" shall be defined in a manner reasonably
satisfactory to the Agent and will include the Borrower's and the Guarantors'
machinery and equipment deemed appropriate by the Agent in its sole discretion
in each case meeting certain eligibility standards reasonably satisfactory to
the Agent.
"Eligible Finished Goods" shall mean, on any date, Eligible
Inventory defined as Produced Goods by the Borrower on such date as shown on the
Borrower's perpetual inventory records in accordance with its current and
historical accounting practices.
"Eligible Finished Yarn" shall mean, on any date, Eligible
Inventory defined as Finished Yarn by the Borrower on such date as shown on the
Borrower's perpetual inventory records in accordance with its current and
historical accounting practices.
"Eligible Inventory" at the time of any determination thereof,
without duplication, the Inventory Value of the Borrower at the time of such
determination that is not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (a) through (k) below, minus any
reserve otherwise deemed by the Agent in good faith to be ineligible for
inclusion in the calculation of the Borrowing Base as described below. Without
limiting the foregoing, to qualify as "Eligible Inventory" no person other than
the Borrower, as applicable, shall have any direct or indirect ownership,
interest or title to such Inventory and no person other than the Borrower, as
applicable, shall be indicated on any purchase order or invoice with respect to
such Inventory as having or purporting to have an interest therein. Standards of
eligibility may be altered from time to time solely by the Agent in the exercise
of its reasonable judgment, with any changes in such standards to be effective
10 days after delivery of notice thereof to the Borrower. Unless otherwise from
time to time approved in writing by the Agent, no Inventory shall be deemed
Eligible Inventory if, without duplication:
(a) the Borrower does not have sole and good, valid and
unencumbered title thereto (except for Permitted Liens); or
(b) it is not located in the United States; or
(c) it is not located on property owned or leased by the
Borrower or is located in a third party warehouse or is located at a closed
facility owned by the Borrower; or
(d) it is supplies, packing or shipping materials, cartons,
repair parts, labels or miscellaneous spare parts, dyes or chemicals; or
(e) it is not subject to a valid and perfected first priority
Lien in favor of the Agent for the benefit of the Banks (except for Permitted
Liens); or
(f) it is classified as stock in process or work in process by
the Borrower, with the exception of Inventory that can be separately identified
as Finished Yarn that are not classified as Finished Goods; or
(g) it is consigned or at a customer location but still
accounted for in the Borrower's perpetual inventory balance; or
(h) it is Inventory which is being processed offsite at a
third party location or outside processor, or is in-transit to or from the said
third party location or outside processor; or
(i) it is identified as overstock by the Borrower; or
(j) it is in-transit to or from a foreign location, or is part
of a Bill and Hold arrangement from a vendor, which has not yet been received
into a facility owned or operated by the Borrower; or
(k) it is Inventory used as a sample or prototype, which will
be reduced by 75% of its Inventory Value if it is first quality for the Lees
Carpet and CasualWear divisions, and will be entirely ineligible if it is either
(i) not first quality or (ii) not for the Lees Carpet or CasualWear division.
"Eligible Raw Materials" shall mean, on any date, Eligible
Inventory defined as Raw Materials by the Borrower on such date as shown on the
Borrower's perpetual inventory records in accordance with its current and
historical accounting practices.
"Environmental Lien" shall mean a Lien in favor of any
Governmental Authority for (i) any liability under federal or state
environmental laws or regulations, or (ii) damages arising from or costs
incurred by such Governmental Authority in response to a release or threatened
release of a hazardous or toxic waste, substance or constituent, or other
substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrower or a Subsidiary of the
Borrower would be deemed to be a single employer within the meaning of Section
414(b), (c), (m), or (o) of the Code.
"Eurocurrency Liabilities" shall have the meaning assigned
thereto in Regulation D issued by the Board, as in effect from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a
rate determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.
"Event of Default" shall have the meaning given such term in
Section 7.
"Exchange Rate" shall mean, on any date when an amount
expressed in a currency other than Dollars is to be determined, the nominal rate
of exchange of the Fronting Bank in the case of Letters of Credit, in the New
York foreign exchange market for the purchase by the Fronting Bank (by cable
transfer) of such currency in exchange for Dollars at 12:00 noon, New York time,
one Business Day prior to such date, expressed as the number of units of such
currency per one Dollar.
"Excluded Taxes" shall mean, with respect to the Agent, any
Bank, the Fronting Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Bank, in which its applicable lending office is located, (b) any branch profits
taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (c) in the case of a
Foreign Bank, any withholding tax that is imposed on amounts payable to such
Foreign Bank at the time such Foreign Bank becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Bank's
failure to comply with Section 2.18(e), except to the extent that such Foreign
Bank (or its assignor, if any) was entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 2.18(a).
"Existing Agreement" shall have the meaning set forth in the
Introduction and shall include all of the agreements granting security interests
and Liens in property and assets of the Borrower and the Guarantors to the
Existing Lenders, including without limitation, the security agreements,
mortgages and leasehold mortgages listed on Schedule 1.01 hereto, each of which
documents was executed and delivered (to the extent party thereto) by the
Borrower and the Guarantors prior to the Filing Date, as each may have been
amended or modified from time to time.
"Existing Lenders" shall mean, collectively, the lenders under
the Existing Agreement, together with any successors or assigns thereof.
"Existing Receivables Facility" shall mean (i) the loans
outstanding under that certain Loan Agreement dated as of December 10, 1997 (as
heretofore amended) among B.I. Funding, certain financial institutions party
thereto, Blue Ridge Asset Funding Corporation and Wachovia Bank, N.A., as agent
for the lenders party thereto and (ii) the purchase of Receivables pursuant to
that certain Amended and Restated Receivables Purchase Agreement, dated as of
December 10, 1997 (as heretofore amended), among B.I. Funding, the Borrower and
other Sellers of receivables party thereto.
"Existing Receivables Portfolio" shall mean (i) the portfolio
of prepetition Receivables sold to B.I. Funding on or before the Filing Date as
reflected on its books and records pursuant to the Existing Receivables
Facility, to the extent in existence on the date of the repurchase thereof by
the Borrower and (ii) the replacement liens and other interests of the lenders
under the Existing Receivables Facility in the Receivables of the Sellers (as
defined in the Existing Receivables Facility) arising on or after the Filing
Date through and including the Closing Date pursuant to the Interim Order.
"Fees" shall collectively mean the Commitment Fees, Letter of
Credit Fees and other fees referred to in Sections 2.19, 2.20 and 2.21.
"Filing Date" shall mean November 15, 2001.
"Final Order" shall have the meaning given such term in
Section 4.02(d).
"Financial Officer" shall mean the Chief Financial Officer,
Principal Accounting Officer, Controller, Treasurer or Assistant Treasurer of
the Borrower.
"Finished Goods" shall mean completed goods which require no
additional processing, to be sold by the Borrower in the ordinary course of
business.
"Finished Yarn" shall mean any Inventory which has been
altered from Raw Material state and is classified as Finished Yarn by the
Borrower, which is comprised of (a) for CasualWear, undyed cotton yarn; (b) for
Lees Carpet, dyed and undyed synthetic spools of yearn; (c) for House, undyed
synthetic spools of yarn; and (d) for PerformanceWear, spools of wool and
synthetic yarn.
"Foreign Bank" shall mean any Bank that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Foreign Factoring Agreement" shall mean that certain Export
Receivables Agreement, dated as of September 9, 1997, between the Borrower and
General Motors Acceptance Credit Corporation or its permitted successors and
assigns, as amended, restated or replaced from time to time on terms reasonably
satisfactory to the Agent.
"Foreign Factoring Receivables" shall mean accounts
receivables arising from sales the Borrower makes or services the Borrower
provides to account debtors in the ordinary course of the Borrower's business
outside the United States of America, its various dependent territories, Puerto
Rico and Canada pursuant to the Foreign Factoring Agreement, provided that the
foregoing shall not include such accounts of Canadian Account Debtors payable in
Dollars.
"Fronting Bank" shall mean JPMorgan Chase (or any of its
banking affiliates) or such other Bank (which other Bank shall be reasonably
satisfactory to the Borrower) as may agree with JPMorgan Chase to act in such
capacity.
"GAAP" shall mean generally accepted accounting principles
applied in accordance with Section 1.02.
"Governmental Authority" shall mean any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Greige Goods" shall mean, on any date, Inventory defined as
woven fabric which is not on any machine, and is classified as Produced Goods by
the Borrower.
"Guarantor" shall have the meaning set forth in the
Introduction.
"House" shall mean the operating division of the Borrower
referred to as Burlington House.
"Indebtedness" shall mean, at any time and with respect to any
Person, (i) all indebtedness of such Person for borrowed money, (ii) all
indebtedness of such Person for the deferred purchase price of property or
services (other than property, including inventory, and services purchased, and
expense accruals and deferred compensation items arising, in the ordinary course
of business), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments (other than performance, surety and
appeal bonds arising in the ordinary course of business), (iv) all indebtedness
of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (v)
all obligations of such Person under Capitalized Leases, (vi) all reimbursement,
payment or similar obligations of such Person, contingent or otherwise, under
acceptance, letter of credit or similar facilities and all obligations of such
Person in respect of (x) currency swap agreements, currency future or option
contracts and other similar agreements designed to hedge against fluctuations in
foreign interest rates and (y) interest rate swap, cap or collar agreements and
interest rate future or option contracts; (vii) all Indebtedness referred to in
clauses (i) through (vi) above guaranteed directly or indirectly by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (A) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (B) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such Indebtedness or to
assure the holder of such Indebtedness against loss in respect of such
Indebtedness, (C) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (D) otherwise to
assure a creditor against loss in respect of such Indebtedness, and (viii) all
Indebtedness referred to in clauses (i) through (vii) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"Indemnified Taxes" shall mean Taxes other than Excluded
Taxes.
"Insufficiency" shall mean, with respect to any Plan, its
"amount of unfunded benefit liabilities" within the meaning of Section
4001(a)(18) of ERISA, if any.
"Interim Order" shall have the meaning given such term in
Section 4.01(b).
"Interest Payment Date" shall mean (i) as to any Eurodollar
Loan, the last day of each consecutive 30 day period running from the
commencement of the applicable Interest Period, and (ii) as to all ABR Loans,
the last calendar day of each month and the date on which any ABR Loans are
refinanced with Eurodollar Loans pursuant to Section 2.12.
"Interest Period" shall mean, as to any Borrowing of
Eurodollar Loans, the period commencing on the date of such Borrowing (including
as a result of a refinancing of ABR Loans) or on the last day of the preceding
Interest Period applicable to such Borrowing and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in the
calendar month that is one, three, or six months thereafter, as the Borrower may
elect in the related notice delivered pursuant to Sections 2.06(b) or 2.12;
provided, however, that (i) if any Interest Period would end on a day which
shall not be a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, and (ii) no Interest Period shall end later than
the Termination Date.
"Inventory" shall mean all Raw Materials, Finished Yarn and
Finished Goods held by the Borrower in the normal course of business.
"Inventory Reserves" means Inventory defined as Raw Materials,
Finished Yarn or Finished Goods by the Borrower reduced by the sum of the
following:
(a) a reserve for shrink, or discrepancies that arise
pertaining to inventory quantities on hand between the Borrower perpetual
accounting system, and physical counts of the inventory which will be equal to
the greater of 1% or the results of the last physical count with the variance
expressed as a percentage, for Raw Materials, Finished Yarn and Finished Goods,
respectively for CasualWear, Lees Carpet, House and PerformanceWear; or
(b) a 50% reserve for Inventory that is deemed to be greater
than 6 months old, or a 100% reserve for Inventory that is deemed to be greater
than one year old; or
(c) a reserve for Inventory which is recognised as damaged,
off quality, or not to customer specifications by the Borrower; or
(d) a reserve for Greige Goods which are classified as
Produced Goods by the Borrower, equal to the full cost to be incurred in the
future to convert the goods to Finished Goods which are sold in the Borrower's
normal course of business; or
(e) a reserve for Inventory classified as Produced Goods in
process by the Borrower, equal to the full cost to be incurred in the future to
convert the goods to Finished Goods which are sold in the Borrower's normal
course of business; or
(f) a reserve for Inventory that is discontinued; or
(g) any other reserve as deemed appropriate by the Agent in
their sole discretion, from time to time.
"Inventory Value" of any Inventory shall mean at the time of
any determination thereof the standard cost carried on the perpetual records of
the Borrower in accordance with its current and historical accounting practices,
in Dollars, determined in accordance with the standard cost method of accounting
less (i) any markup on Inventory from an Affiliate and (ii) in the event
variances under the standard cost method (a) are capitalized, favorable
variances shall be deducted from Eligible Inventory, and unfavorable variances
shall not be added to Eligible Inventory, and (b) are expensed, a reserve shall
be determined as appropriate in order to adjust the standard cost of Eligible
Inventory to approximate actual cost.
"Investment Grade" shall be defined as a rating established by
a third party rating agency, equivalent to a Standard & Poors Ratings Group BBB-
or a ▇▇▇▇▇'▇ Investor Services, Inc. Baa3 or better.
"Investments" shall have the meaning given such term in
Section 6.10.
"JPMorgan Chase" shall have the meaning set forth in the
Introduction.
"Lees Carpet" shall mean the operating division of the
Borrower referred to as Lees Carpet.
"Letter of Credit" shall mean any irrevocable letter of credit
issued pursuant to Section 2.03, which letter of credit shall be (i) an import
documentary or a standby letter of credit, (ii) issued for purposes that are
consistent with past practices as heretofore disclosed to the Agent or are
reasonably acceptable to the Agent, (iii) denominated in Dollars or in a
Permitted Foreign Currency (limited to the Dollar equivalent of $750,000) and
(iv) otherwise in such form as may be reasonably approved from time to time by
the Agent and the applicable Fronting Bank.
"Letter of Credit Account" shall mean the account established
by the Borrower under the sole and exclusive control of the Agent maintained at
the office of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ designated
as the "Burlington Letter of Credit Account" that shall be used solely for the
purposes set forth in Sections 2.03(b) and 2.13.
"Letter of Credit Fees" shall mean the fees payable in respect
of Letters of Credit pursuant to Section 2.21.
"Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate undrawn stated amount of all Letters of Credit then
outstanding plus (ii) all amounts theretofore drawn under Letters of Credit and
not then reimbursed. For purposes of this definition (x) any amount described
hereunder which is denominated in a currency other than Dollars shall be valued
based on the applicable Exchange Rate for such currency as of such date of
determination; and (y) (aa) the first such date of determination with respect to
any non-Dollar-denominated Letter of Credit shall be its date of issuance, and
(bb) thereafter, the Agent shall recalculate the value of all such Letters of
Credit outstanding no less frequently than once per calendar week.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Loan" shall have the meaning given such term in Section 2.01.
"Loan Documents" shall mean this Agreement, the Letters of
Credit, the Security and Pledge Agreement, and any other instrument or agreement
executed and delivered to the Agent or any Bank in connection herewith.
"Lower of Cost or Market Reserve" shall mean a reserve for
differences between the Borrower's actual cost to produce versus its selling
price to third parties, determined on a product line basis.
"Maturity Date" shall mean November 15, 2003.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of) the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the
five-year period immediately following the latest date on which the Borrower, or
a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or
had an obligation to contribute to such plan.
"Multiple Employer Plan" shall mean a Single Employer Plan,
which (i) is maintained for employees of the Borrower or an ERISA Affiliate and
at least one person (as defined in Section 3(9) of ERISA) other than the
Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of
which the Borrower or an ERISA Affiliate could have liability under Section 4064
or 4069 of ERISA in the event such Plan has been or were to be terminated.
"Nano-Tex" shall collectively mean Nano-Tex LLC, a California
limited liability company and Nano-Tex, Inc., a Delaware corporation.
"Net Proceeds" shall mean, in respect of any sale of assets,
the cash proceeds of such sale after the payment of or reservation for (x)
expenses that are directly related to (or the need for which arises as a result
of) the transaction of sale, including, but not limited to, related severance
costs, taxes payable, brokerage commissions, professional expenses, other
similar costs that are directly related to the sale (all of which expenses shall
be satisfactory to the Agent in its reasonable judgment), (y) the amount secured
by valid and perfected Liens, if any, that are senior to the Liens on such
assets held by the Agent on behalf of the Banks (and, in respect of any
calculation of Net Proceeds payable to the Existing Lenders, Liens that are
senior to the Liens held by the Existing Lenders) and (z) the reasonable costs
and expenses of any repairs, alterations or improvements made by the Borrower or
any Guarantor to the assets sold to the extent such repairs, alterations or
improvements were required pursuant to the terms of such sale.
"Obligations" shall mean (a) the due and punctual payment of
principal of and interest on the Loans and the reimbursement of all amounts
drawn under Letters of Credit, and (b) the due and punctual payment of the Fees
and all other present and future, fixed or contingent, monetary obligations of
the Borrower and the Guarantors to the Banks and the Agent under the Loan
Documents.
"Orders" shall mean the Interim Order and the Final Order of
the Bankruptcy Court referred to in Sections 4.01(b) and 4.02(d).
"Other Taxes" shall mean any and all present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor agency or entity performing substantially the same functions.
"Pension Plan" shall mean a defined benefit plan (as defined
in Section 414(j) of the Code and Section 3(35) of ERISA) which meets and is
subject to the requirements of Section 401(a) of the Code.
"PerformanceWear" shall mean the operating division of the
Borrower referred to as Burlington PerformanceWear.
"Permitted Foreign Currencies" shall mean Euros, Pounds
Sterling or Canadian Dollars.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within twelve
months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below, investments in
commercial paper maturing within six months from the date of acquisition thereof
and having, at such date of acquisition, a rating of at least "A-2" or the
equivalent thereof from Standard & Poor's Corporation or of at least "P-2" or
the equivalent thereof from ▇▇▇▇▇'▇ Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and time
deposits (including Eurodollar time deposits) maturing within six months from
the date of acquisition thereof issued or guaranteed by or placed with (i) any
domestic office of the Agent or the bank with whom the Borrower and the
Guarantors maintain their cash management system, provided, that if such bank is
not a Bank hereunder, such bank shall have entered into an agreement with the
Agent pursuant to which such bank shall have waived all rights of setoff and
confirmed that such bank does not have, nor shall it claim, a security interest
therein or (ii) any domestic office of any other commercial bank of recognized
standing organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not
less than $250,000,000 and is the principal banking Subsidiary of a bank holding
company having a long-term unsecured debt rating of at least "A-2" or the
equivalent thereof from Standard & Poor's Ratings Services or at least "P-2" or
the equivalent thereof from ▇▇▇▇▇'▇ Investors Service, Inc.;
(d) investments in commercial paper maturing within six months from the date of
acquisition thereof and issued by (i) the holding company of the Agent or (ii)
the holding company of any other commercial bank of recognized standing
organized under the laws of the United States of America or any State thereof
that has (A) a combined capital and surplus in excess of $250,000,000 and (B)
commercial paper rated at least "A-2" or the equivalent thereof from Standard &
Poor's Corporation or of at least "P-2" or the equivalent thereof from ▇▇▇▇▇'▇
Investors Service, Inc.;
(e) investments in repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a) above
entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above;
(f) investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (a) through (e) above;
and
(g) to the extent owned on the Filing Date, investments by the Borrower or any
Guarantor in the capital stock or membership interest of any direct or indirect
Subsidiary.
"Permitted Liens" shall mean (i) Liens imposed by law (other
than Environmental Liens and any Lien imposed under ERISA) for taxes,
assessments or charges of any Governmental Authority for claims not yet due or
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP; (ii) Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens (other than
Environmental Liens and any Lien imposed under ERISA) in existence on the Filing
Date or thereafter imposed by law and created in the ordinary course of
business; (iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including, without limitation,
surety bonds and appeal bonds) or in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar obligations
(including customs bonds) or arising as a result of progress payments under
government contracts; (iv) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded) and interest of ground
lessors, which do not interfere materially with the ordinary conduct of the
business of the Borrower or any Guarantor, as the case may be, and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to the Borrower or any Guarantor, as the case
may be; (v) purchase money Liens (including Capitalized Leases) upon or in any
property acquired or held in the ordinary course of business to secure the
purchase price of such property or to secure Indebtedness permitted by Section
6.03(iv) solely for the purpose of financing the acquisition of such property;
(vi) letters of credit or deposits in the ordinary course to secure leases;
(vii) any license or sublicense in existence on the Filing Date or similar
arrangements entered into in the ordinary course of business; (viii) customary
rights of set off, revocation, refund or charge back under deposit agreements or
under the Uniform Commercial Code of banks or other financial institutions where
the Borrower or any of its Guarantors maintains deposits (other than deposits
intended as cash collateral) in the ordinary course of business; (ix) Liens in
favor of banks which arise under Article 4 of the Uniform Commercial Code on
items in collection and the documents relating thereto and proceeds thereof; (x)
Liens in respect of interests of consignors and UCC filings by consignors in
respect of segregated inventory, if any, held on consignment; (xi) Environmental
Liens for amounts not in excess of $5,000,000 in the aggregate only so long as
no judgment is entered, order is issued or action is initiated to enforce such
Lien that if successful could constitute an Event of Default; (xii) other Liens
securing obligations permitted by Section 6.03 (viii); and (xiii) extensions,
renewals or replacements of any Lien referred to in paragraphs (i) through (xii)
above, provided that the principal amount of the obligation secured thereby is
not increased and that any such extension, renewal or replacement is limited to
the property originally encumbered thereby.
"Person" shall mean any natural person, corporation, division
of a corporation, partnership, trust, joint venture, association, company,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" shall mean a Single Employer Plan or a Multiemployer
Plan.
"Prepayment Date" shall mean the date that is forty five (45)
days after the entry of the Interim Order by the Bankruptcy Court if the Final
Order has not been entered by the Bankruptcy Court prior to the expiration of
such forty five (45) day period.
"Pre-Petition Agent" shall mean The Chase Manhattan Bank as
agent for the Existing Lenders.
"Pre-Petition Payment" shall mean a payment (by way of
adequate protection or otherwise) of principal or interest or otherwise on
account of any pre-petition Indebtedness or trade payables or other pre-petition
claims against the Borrower or any Guarantor.
"Produced Goods" shall mean Inventory which has been woven,
and only required "finishing steps" such as dyeing or sewing, and includes
Greige Goods and in process produced goods, as well as Finished Goods.
"Raw Materials" shall mean materials used or consumed in the
manufacturing of goods to be sold by the Borrower in the ordinary course of
business, such as ▇▇▇▇▇ of cotton, ▇▇▇▇▇ of greasy wool and spools of synthetic
yarn.
"Register" shall have the meaning set forth in Section
10.03(d).
"Reorganization Plan" shall mean a plan of reorganization in
any of the Cases.
"Required Banks" shall mean, at any time, Banks holding Loans
representing in excess of 50% of the aggregate principal amount of such Loans
outstanding or, if no Loans are outstanding, Banks having Commitments
representing in excess of 50% of the Total Commitment.
"Security and Pledge Agreement" shall have the meaning set
forth in Section 4.01(c).
"Single Employer Plan" shall mean a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of
the Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of
which the Borrower could have liability under Title IV of ERISA in the event
such Plan has been or were to be terminated.
"Statutory Reserves" shall mean on any date the percentage
(expressed as a decimal) established by the Board and any other banking
authority which is (i) for purposes of the definition of Base CD Rate, the then
stated maximum rate of all reserves (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City, for new three month negotiable
nonpersonal time deposits in dollars of $100,000 or more or (ii) for purposes of
the definition of Adjusted LIBOR Rate, the then stated maximum rate for all
reserves (including but not limited to any emergency, supplemental or other
marginal reserve requirements) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency Liabilities (or any successor category
of liabilities under Regulation D issued by the Board, as in effect from time to
time). Such reserve percentages shall include, without limitation, those imposed
pursuant to said Regulation. The Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in such percentage.
"Subsidiary" shall mean, with respect to any Person (herein
referred to as the "parent"), any corporation, association or other business
entity (whether now existing or hereafter organized) of which at least a
majority of the securities or other ownership interests having ordinary voting
power for the election of directors is, at the time as of which any
determination is being made, owned or controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Super-majority Banks" shall have the meaning given such term
in Section 10.10(b).
"Superpriority Claim" shall mean a claim against the Borrower
and any Guarantor in any of the Cases which is an administrative expense claim
having priority over any or all administrative expenses of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code.
"Taxes" shall mean any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"Termination Date" shall mean the earliest to occur of (i) the
Prepayment Date, (ii) the Maturity Date, (iii) the Consummation Date and (iv)
the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.
"Termination Event" shall mean (i) a "reportable event", as
such term is described in Section 4043(c) of ERISA (other than a "reportable
event" as to which the 30-day notice is waived under subsection .22, .23, .25,
.27 or .28 of PBGC Regulation Section 4043) or an event described in Section
4068 of ERISA and excluding events which would not be reasonably likely (as
reasonably determined by the Agent) to have a material adverse effect on the
financial condition, operations, business, properties or assets of the Borrower
and the Guarantors taken as a whole, or (ii) the withdrawal of the Borrower or
any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a "substantial employer," as such term is defined in Section 4001(a)(2) of
ERISA, the incurrence of liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, the
imposition of Withdrawal Liability, or (iii) providing notice of intent to
terminate a Plan pursuant to Section 4041(c) of ERISA or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, if such amendment
requires the provision of security, or (iv) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or (v) any other event
or condition (other than the commencement of the Cases and the failure to have
made any contribution accrued as of the Filing Date but not paid) which would
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
imposition of any liability under Title IV of ERISA (other than for the payment
of premiums to the PBGC in the ordinary course).
"Total Commitment" shall mean, at any time, the sum of the
Commitments at such time.
"Type" when used in respect of any Loan or Borrowing shall
refer to the Rate of interest by reference to which interest on such Loan or on
the Loans comprising such Borrowing is determined. For purposes hereof, "Rate"
shall mean the Adjusted LIBOR Rate and the Alternate Base Rate.
"Unused Total Commitment" shall mean, at any time, (i) the
Total Commitment less (ii) the sum of (x) the aggregate outstanding principal
amount of all Loans and (y) the aggregate Letter of Credit Outstandings.
"Withdrawal Liability" shall have the meaning given such term
under Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02......Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Sections, Exhibits and
Schedules shall be deemed references to Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that for purposes of determining compliance with any
covenant set forth in Section 6, such terms shall be construed in accordance
with GAAP as in effect on the date of this Agreement applied on a basis
consistent with the application used in the Borrower's audited financial
statements referred to in Section 3.04.
SECTION 2.........AMOUNT AND TERMS OF CREDIT
SECTION 2.01......Commitment of the Banks.
-----------------------
(a) Each Bank severally and not jointly with the other Banks agrees, upon the
terms and subject to the conditions herein set forth (including, without
limitation, the provisions of Section 2.28), to make revolving credit loans
(each a "Loan" and collectively, the "Loans") to the Borrower at any time and
from time to time during the period commencing on the date hereof and ending on
the Termination Date in an aggregate principal amount not to exceed, when added
to such Bank's Commitment Percentage of the then aggregate Letter of Credit
Outstandings (in excess of the amount of cash then held in the Letter of Credit
Account pursuant to Section 2.03(b)), the Commitment of such Bank, which Loans
may be repaid and reborrowed in accordance with the provisions of this
Agreement. At no time shall the sum of the then outstanding aggregate principal
amount of the Loans plus the then aggregate Letter of Credit Outstandings exceed
the lesser of (i) the Total Commitment of $190,000,000, as the same may be
reduced from time to time pursuant to Sections 2.10 and 2.13 and (ii) the
Borrowing Base.
(b) Each Borrowing shall be made by the Banks pro rata in accordance with their
respective Commitments; provided, however, that the failure of any Bank to make
any Loan shall not in itself relieve the other Banks of their obligations to
lend.
SECTION 2.02......Borrowing Base. Notwithstanding any other provision of this
Agreement to the contrary, the aggregate principal amount of all outstanding
Loans plus the then aggregate Letter of Credit Outstandings (in excess of the
amount of cash then held in the Letter of Credit Account pursuant to Section
2.03(b)) shall not at any time exceed the Borrowing Base and no Loan shall be
made or Letter of Credit issued in violation of the foregoing.
SECTION 2.03......Letters of Credit.
-----------------
(a) Upon the terms and subject to the conditions herein set forth, the Borrower
may request a Fronting Bank, at any time and from time to time after the date
hereof and prior to the Termination Date, to issue, and, subject to the terms
and conditions contained herein, such Fronting Bank shall issue, for the account
of the Borrower or a Guarantor one or more Letters of Credit, provided that (A)
no Letter of Credit shall be issued if after giving effect to such issuance (i)
the aggregate Letter of Credit Outstandings shall exceed $50,000,000 or (ii) the
aggregate Letter of Credit Outstandings, when added to the aggregate outstanding
principal amount of the Loans, would exceed the Total Commitment and (B) any
Letter of Credit denominated in a currency other than Dollars may only be
denominated in Permitted Foreign Currencies and the aggregate amount of such
Letters of Credit denominated in Permitted Foreign Currencies shall not exceed,
at any time, the Dollar equivalent of $750,000 based on the applicable Exchange
Rate at such time and, provided further that no Letter of Credit shall be issued
if the Fronting Bank shall have received notice from the Agent or the Required
Banks that the conditions to such issuance have not been met.
(b) No Letter of Credit shall expire later than the Maturity Date, provided that
if any Letter of Credit shall be outstanding on the Termination Date, the
Borrower shall, at or prior to the Termination Date, except as the Agent may
otherwise agree in writing, (i) cause all Letters of Credit which expire after
the Termination Date to be returned to the Fronting Bank undrawn and marked
"cancelled" or (ii) if the Borrower is unable to do so in whole or in part,
either (x) provide a "back-to-back" letter of credit to one or more Fronting
Banks in a form satisfactory to such Fronting Bank and the Agent (in their sole
discretion), issued by a bank satisfactory to such Fronting Bank and the Agent
(in their sole discretion), denominated in Dollars or Permitted Foreign
Currencies, as the case may be, and in an amount equal to 105% of the then
undrawn stated amount of all outstanding Letters of Credit issued by such
Fronting Banks (less the amount, if any, then on deposit in the Letter of Credit
Account) and/or (y) deposit cash (such deposit to be in Dollars with respect to
Letters of Credit denominated in Dollars and in the applicable Permitted Foreign
Currency with respect to Letters of Credit denominated in Permitted Foreign
Currencies) in the Letter of Credit Account in an amount equal to 105% of the
then undrawn stated amount of all Letter of Credit Outstandings (less the
amount, if any, then on deposit in the Letter of Credit Account) as collateral
security for the Borrower's reimbursement obligations in connection therewith,
such cash to be promptly remitted to the Borrower upon the expiration,
cancellation or other termination or satisfaction of such reimbursement
obligations.
(c) The Borrower shall pay to each Fronting Bank, in addition to such other fees
and charges as are specifically provided for in Section 2.21 hereof, such fees
and charges in connection with the issuance and processing of the Letters of
Credit issued by such Fronting Bank as are customarily imposed by such Fronting
Bank from time to time in connection with letter of credit transactions.
(d) Drafts drawn under each Letter of Credit (i) shall be reimbursed by the
Borrower in Dollars not later than the first Business Day following the date of
draw (using, in the case of Letters of Credit issued in a Permitted Foreign
Currency, the Exchange Rate on the date of draw) and (ii) shall bear interest
from the date of draw until the first Business Day following the date of draw at
a rate per annum equal to the Alternate Base Rate plus 2% and thereafter on the
unreimbursed portion until reimbursed in full at a rate per annum equal to the
Alternate Base Rate plus 4% (computed on the basis of the actual number of days
elapsed over a year of 365 days or 366 days in a leap year). The Borrower shall
effect such reimbursement (x) if such draw occurs prior to the Termination Date,
in cash or through a Borrowing without the satisfaction of the conditions
precedent set forth in Section 4.02 or (y) if such draw occurs on or after the
Termination Date, in cash. Each Bank agrees to make the Loans described in
clause (x) of the preceding sentence notwithstanding a failure to satisfy the
applicable lending conditions thereto or the provisions of Sections 2.02 or
2.28.
(e) Immediately upon the issuance of any Letter of Credit by any Fronting Bank,
such Fronting Bank shall be deemed to have sold to each Bank other than such
Fronting Bank and each such other Bank shall be deemed unconditionally and
irrevocably to have purchased from such Fronting Bank, without recourse or
warranty, an undivided interest and participation, to the extent of such Bank's
Commitment Percentage, in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower and the Guarantors under this Agreement with respect
thereto. Upon any change in the Commitments pursuant to Section 10.03, it is
hereby agreed that with respect to all Letter of Credit Outstandings, there
shall be an automatic adjustment to the participations hereby created to reflect
the new Commitment Percentages of the assigning and assignee Banks. Any action
taken or omitted by a Fronting Bank under or in connection with a Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Fronting Bank any resulting liability to
any other Bank.
(f) In the event that a Fronting Bank makes any payment under any Letter of
Credit and the Borrower shall not have reimbursed such amount in full to such
Fronting Bank pursuant to this Section, the Fronting Bank shall promptly notify
the Agent, which shall promptly notify each Bank of such failure, and each Bank
shall promptly and unconditionally pay to the Agent for the account of the
Fronting Bank the amount of such Bank's Commitment Percentage of (i) in the case
of Letters of Credit denominated in Dollars, such unreimbursed payment in
Dollars and in same day funds or (ii) in the case of Permitted Foreign
Currencies Letters of Credit, in the Dollar equivalent of each Letter of Credit
disbursement made by the Fronting Bank denominated in Permitted Foreign
Currencies, calculated using the Exchange Rates on the date of such
disbursement. If the Fronting Bank so notifies the Agent, and the Agent so
notifies the Banks prior to 11:00 a.m. (New York City time) on any Business Day,
such Banks shall make available to the Fronting Bank such Bank's Commitment
Percentage of the amount of such payment on such Business Day in same day funds.
If and to the extent such Bank shall not have so made its Commitment Percentage
of the amount of such payment available to the Fronting Bank, such Bank agrees
to pay to such Fronting Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Agent for the account of such Fronting Bank at the Federal Funds
Effective Rate. The failure of any Bank to make available to the Fronting Bank
its Commitment Percentage of any payment under any Letter of Credit shall not
relieve any other Bank of its obligation hereunder to make available to the
Fronting Bank its Commitment Percentage of any payment under any Letter of
Credit on the date required, as specified above, but no Bank shall be
responsible for the failure of any other Bank to make available to such Fronting
Bank such other Bank's Commitment Percentage of any such payment. Whenever a
Fronting Bank receives a payment of a reimbursement obligation as to which it
has received any payments from the Banks pursuant to this paragraph, such
Fronting Bank shall pay to each Bank which has paid its Commitment Percentage
thereof, in Dollars and in same day funds, an amount equal to such Bank's
Commitment Percentage thereof.
SECTION 2.04......Issuance. Whenever the Borrower desires a Fronting Bank to
issue a Letter of Credit, it shall give to such Fronting Bank and the Agent
prior written (including telegraphic, telex, facsimile or cable communication)
notice reasonably in advance of the requested date of issuance specifying the
date on which the proposed Letter of Credit is to be issued (which shall be a
Business Day), the stated amount of the Letter of Credit so requested, the
currency in which the Letter of Credit is requested to be denominated (which
shall be Dollars or Permitted Foreign Currencies) the expiration date of such
Letter of Credit and the name and address of the beneficiary thereof.
SECTION 2.05......Nature of Letter of Credit Obligations Absolute. The
obligations of the Borrower to reimburse the Banks for drawings made under any
Letter of Credit shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation (it being understood that any such payment by the
Borrower shall be without prejudice to, and shall not constitute a waiver of,
any rights the Borrower might have or might acquire as a result of the payment
by the Fronting Bank of any draft or the reimbursement by the Borrower thereof):
(i) any lack of validity or enforceability of any Letter of Credit; (ii) the
existence of any claim, setoff, defense or other right which the Borrower or any
Guarantor may have at any time against a beneficiary of any Letter of Credit or
against any of the Banks, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction; (iii) any draft,
demand, certificate or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) payment by a
Fronting Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vi) the fact that any Event of Default
shall have occurred and be continuing.
SECTION 2.06......Making of Loans.
---------------
(a) Except as contemplated by Section 2.11, Loans shall be either ABR Loans or
Eurodollar Loans as the Borrower may request subject to and in accordance with
this Section, provided that all Loans made pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, be Loans of the same Type. Each
Bank may fulfill its Commitment with respect to any Eurodollar Loan or ABR Loan
by causing any lending office of such Bank to make such Loan; provided that any
such use of a lending office shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement. Each Bank shall,
subject to its overall policy considerations, use reasonable efforts (but shall
not be obligated) to select a lending office which will not result in the
payment of increased costs by the Borrower pursuant to Section 2.15. Subject to
the other provisions of this Section and the provisions of Section 2.12,
Borrowings of Loans of more than one Type may be incurred at the same time,
provided that no more than ten (10) Borrowings of Eurodollar Loans may be
outstanding at any time.
(b) The Borrower shall give the Agent prior notice of each Borrowing hereunder
of at least three Business Days for Eurodollar Loans and one Business Day for
ABR Loans (subject, in the case of ABR Loans, to the last sentence of this
Section); such notice shall be irrevocable and shall specify the amount of the
proposed Borrowing (which shall not be less than $5,000,000 (and integral
multiples of $1,000,000) in the case of Eurodollar Loans and $1,000,000 (and
integral multiples of $100,000) in the case of ABR Loans) and the date thereof
(which shall be a Business Day) and shall contain disbursement instructions.
Such notice, to be effective, must be received by the Agent not later than 1:00
p.m., New York City time, on the third Business Day in the case of Eurodollar
Loans and 12:00 noon, New York City time on the first Business Day in the case
of ABR Loans, preceding the date on which such Borrowing is to be made except as
provided in the last sentence of this Section 2.06(b). Such notice shall specify
whether the Borrowing then being requested is to be a Borrowing of ABR Loans or
Eurodollar Loans. If no election is made as to the Type of Loan, such notice
shall be deemed a request for Borrowing of ABR Loans. The Agent shall promptly
notify each Bank of its proportionate share of such Borrowing, the date of such
Borrowing, the Type of Borrowing or Loans being requested and the Interest
Period or Interest Periods applicable thereto, as appropriate. On the borrowing
date specified in such notice, each Bank shall make its share of the Borrowing
available at the office of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, no later than 12:00 noon, New York City time, in immediately available
funds. Upon receipt of the funds made available by the Banks to fund any
borrowing hereunder, the Agent shall disburse such funds in the manner specified
in the notice of borrowing delivered by the Borrower and shall use reasonable
efforts to make the funds so received from the Banks available to the Borrower
no later than 2:00 p.m. New York City time (other than as provided in the
following sentence). With respect to ABR Loans of $5,000,000 or less, the Banks
shall make such Borrowings available to the Agent and the Agent shall disburse
such funds in the manner specified in the notice of borrowing delivered by the
Borrower and shall use reasonable efforts to make such funds available to the
Borrower by 3:00 p.m., New York City time, on the same Business Day that the
Borrower gives telephonic notice (promptly confirmed in writing) to the Agent of
such Borrowing by 1:00 p.m., New York City time.
SECTION 2.07......Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Agent for the
account of each Bank the then unpaid principal amount of each Loan on the
Termination Date.
(b) Each Bank shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Bank resulting from
each Loan made by such Bank, including the amounts of principal and interest
payable and paid to such Bank from time to time hereunder.
(c) The Agent shall maintain accounts in which it shall record (i) the amount of
each Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Bank hereunder and (iii) the
amount of any sum received by the Agent hereunder for the account of the Banks
and each Bank's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided that the failure of any Bank or the
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.
(e) Any Bank may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall execute and deliver to such Bank a
promissory note payable to the order of such Bank (or, if requested by such
Bank, to such Bank and its registered assigns) in a form furnished by the Agent
and reasonably acceptable to the Borrower. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.03) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.08......Interest on Loans.
-----------------
(a) Subject to the provisions of Section 2.09, each ABR Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days or, when the Alternate Base Rate is based on the Prime Rate, a year with
365 days or 366 days in a leap year) at a rate per annum equal to the Alternate
Base Rate plus 2%.
(b) Subject to the provisions of Section 2.09, each Eurodollar Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal, during each Interest Period applicable
thereto, to the Adjusted LIBOR Rate for such Interest Period in effect for such
Borrowing plus 3%.
(c) Accrued interest on all Loans shall be payable monthly in arrears on each
Interest Payment Date applicable thereto, on the Termination Date, after the
Termination Date on demand and (with respect to Eurodollar Loans) upon any
repayment or prepayment thereof (on the amount prepaid).
SECTION 2.09......Default Interest. If the Borrower or any Guarantor, as the
case may be, shall default in the payment of the principal of or interest on any
Loan or in the payment of any other amount becoming due hereunder (including,
without limitation, the reimbursement pursuant to Section 2.03(d) of any draft
drawn under a Letter of Credit), whether at stated maturity, by acceleration or
otherwise, the Borrower or such Guarantor, as the case may be, shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days or when the Alternate Base
Rate is applicable and is based on the Prime Rate, a year with 365 days or 366
days in a leap year) equal to (x) in the case of Borrowings consisting of
Eurodollar Loans, the Adjusted LIBOR Rate in effect for such Borrowing plus 5%
and (y) in the case of all other amounts, the Alternate Base Rate plus 4%.
SECTION 2.10......Optional Termination or Reduction of Commitment. Upon at least
two Business Days' prior written notice to the Agent, the Borrower may at any
time in whole permanently terminate, or from time to time in part permanently
reduce, the Unused Total Commitment. Each such reduction of the Commitments
shall be in the principal amount of $5,000,000 or any integral multiple thereof.
Simultaneously with each reduction or termination of the Commitment, the
Borrower shall pay to the Agent for the account of each Bank the Commitment Fee
accrued and unpaid on the amount of the Commitment of such Bank so terminated or
reduced through the date thereof. Any reduction of the Total Commitment pursuant
to this Section shall be applied pro rata to reduce the Commitment of each Bank.
SECTION 2.11......Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower absent manifest
error) that reasonable means do not exist for ascertaining the applicable
Adjusted LIBOR Rate, the Agent shall, as soon as practicable thereafter, give
written, facsimile or telegraphic notice of such determination to the Borrower
and the Banks, and any request by the Borrower for a Borrowing of Eurodollar
Loans (including pursuant to a refinancing with Eurodollar Loans) pursuant to
Section 2.06 or 2.12 shall be deemed a request for a Borrowing of ABR Loans.
After such notice shall have been given and until the circumstances giving rise
to such notice no longer exist, each request for a Borrowing of Eurodollar Loans
shall be deemed to be a request for a Borrowing of ABR Loans.
SECTION 2.12......Refinancing of Loans. The Borrower shall have the right, at
any time, on three Business Days' prior irrevocable notice to the Agent (which
notice, to be effective, must be received by the Agent not later than 1:00 p.m.,
New York City time, on the third Business Day preceding the date of any
refinancing), (x) to refinance (without the satisfaction of the conditions set
forth in Section 4 as a condition to such refinancing, except as set forth in
subsection (a) below) any outstanding Borrowing or Borrowings of Loans of one
Type (or a portion thereof) with a Borrowing of Loans of the other Type or (y)
to continue an outstanding Borrowing of Eurodollar Loans for an additional
Interest Period, subject to the following:
(a) as a condition to the refinancing of ABR Loans with Eurodollar Loans and to
the continuation of Eurodollar Loans for an additional Interest Period, no Event
of Default shall have occurred and be continuing at the time of such
refinancing;
(b) if less than a full Borrowing of Loans shall be refinanced, such refinancing
shall be made pro rata among the Banks in accordance with the respective
principal amounts of the Loans comprising such Borrowing held by the Banks
immediately prior to such refinancing;
(c) the aggregate principal amount of Loans being refinanced shall be at least
$5,000,000, provided that no partial refinancing of a Borrowing of Eurodollar
Loans shall result in the Eurodollar Loans remaining outstanding pursuant to
such Borrowing being less than $5,000,000 in aggregate principal amount;
(d) each Bank shall effect each refinancing by applying the proceeds of its new
Eurodollar Loan or ABR Loan, as the case may be, to its Loan being refinanced;
(e) the Interest Period with respect to a Borrowing of Eurodollar Loans effected
by a refinancing or in respect to the Borrowing of Eurodollar Loans being
continued as Eurodollar Loans shall commence on the date of refinancing or the
expiration of the current Interest Period applicable to such continuing
Borrowing, as the case may be;
(f) a Borrowing of Eurodollar Loans may be refinanced only on the last day of an
Interest Period applicable thereto; and
(g) each request for a refinancing with a Borrowing of Eurodollar Loans which
fails to state an applicable Interest Period shall be deemed to be a request for
an Interest Period of one month.
In the event that the Borrower shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall
not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of ABR Loans at the expiration of the then-current Interest
Period. The Agent shall, after it receives notice from the Borrower, promptly
give each Bank notice of any refinancing, in whole or part, of any Loan made by
such Bank.
SECTION 2.13......Mandatory Prepayment; Commitment Termination; Cash Collateral.
-------------------------------------------------------------
(a) If at any time the aggregate principal amount of the outstanding Loans plus
the Letter of Credit Outstandings exceeds the lesser of (x) the Total Commitment
and (y) the Borrowing Base, the Borrower will within three Business Days (i)
prepay the Loans in an amount necessary to cause the aggregate principal amount
of the outstanding Loans plus the aggregate Letter of Credit Outstandings to be
equal to or less than the Total Commitment and/or the Borrowing Base, as the
case may be, and (ii) if, after giving effect to the prepayment in full of the
Loans, the undrawn amount of outstanding Letter of Credit Outstandings in excess
of the amount of cash held in the Letter of Credit Account exceeds the Total
Commitment and/or the Borrowing Base, as the case may be, deposit into the
Letter of Credit Account an amount equal to 105% of the amount by which the
aggregate Letter of Credit Outstandings in excess of the amount of cash held in
the Letter of Credit Account so exceeds the Total Commitment or Borrowing Base,
as the case may be (such deposit shall be, first, in Dollars with respect to
Letters of Credit denominated in Dollars and, second, in the applicable
Permitted Foreign Currencies with respect to Letters of Credit denominated in
Permitted Foreign Currencies).
(b) If an Event of Default or event which upon notice or lapse of time or both
would constitute an Event of Default has occurred or is continuing, the Borrower
shall apply 100% of the Net Proceeds from any sale of assets permitted in
Section 6.11(iv) to the prepayment of the Loans and, after the Loans have been
prepaid in full, to the deposit with the Agent of cash collateral for the Letter
of Credit Outstandings in an aggregate amount equal to 105% thereof (such
deposit shall be, first, in Dollars with respect to Letters of Credit
denominated in Dollars and, second, in the applicable Permitted Foreign
Currencies with respect to Letters of Credit denominated in Permitted Foreign
Currencies) ("Cash Collaterization"). Upon any such prepayment, the Total
Commitment shall be automatically and permanently reduced in an amount equal to
the amount so prepaid.
(c) Promptly and in any event within four (4) Business Days after the date of
receipt of the Net Proceeds, upon any sale of assets permitted in Section
6.11(v), the Borrower shall apply 100% of such Net Proceeds thereof to the
prepayment of the Loans and, after the Loans have been prepaid in full, if an
Event of Default has occurred and is continuing, to the Cash Collateralization
of the Letter of Credit Outstandings. Upon any such prepayment, the Total
Commitment shall be automatically and permanently reduced in an amount equal to
the amount so prepaid.
(d) Upon the Termination Date, the Total Commitment shall be terminated in full
and the Borrower shall repay the Loans in full (plus any accrued but unpaid
interest and fees thereon) and, except as the Agent may otherwise agree in
writing, if any Letter of Credit remains outstanding, deposit into the Letter of
Credit Account an amount equal to 105% of the amount by which the Letter of
Credit Outstandings exceeds the amount of cash held in the Letter of Credit
Account, such cash to be remitted to the Borrower upon the expiration,
cancellation, satisfaction or other termination of such reimbursement
obligations, or otherwise comply with Section 2.03(b).
SECTION 2.14 Optional Prepayment of Loans; Reimbursement of Banks.
----------------------------------------------------
(a) The Borrower shall have the right at any time and from time to time to
prepay any Loans, in whole or in part, (x) with respect to Eurodollar Loans,
upon at least three Business Days' prior written or facsimile notice to the
Agent and (y) with respect to ABR Loans on the same Business Day if written or
facsimile notice is received by the Agent prior to 12:00 noon, New York City
time, and thereafter upon at least one Business Day's prior written or facsimile
notice to the Agent; provided, that (i) each such partial prepayment shall be in
multiples of $1,000,000, (ii) no prepayment of Eurodollar Loans shall be
permitted pursuant to this Section 2.14(a) other than on the last day of an
Interest Period applicable thereto unless such prepayment is accompanied by the
payment of the amounts described in clause (i) of the first sentence of Section
2.14(b), and (iii) no partial prepayment of a Borrowing of Eurodollar Loans
shall result in the aggregate principal amount of the Eurodollar Loans remaining
outstanding pursuant to such Borrowing being less than $5,000,000. Each notice
of prepayment shall specify the prepayment date, the principal amount of the
Loans to be prepaid and in the case of Eurodollar Loans, the Borrowing or
Borrowings pursuant to which made, shall be irrevocable and shall commit the
Borrower to prepay such Loan by the amount and on the date stated therein. The
Agent shall, promptly after receiving notice from the Borrower hereunder, notify
each Bank of the principal amount of the Loans held by such Bank which are to be
prepaid, the prepayment date and the manner of application of the prepayment.
(b) The Borrower shall reimburse each Bank on demand for any loss incurred or to
be incurred by it in the reemployment of the funds released (i) resulting from
any prepayment (for any reason whatsoever, including, without limitation,
refinancing with ABR Loans) of any Eurodollar Loan required or permitted under
this Agreement, if such Loan is prepaid other than on the last day of the
Interest Period for such Loan (including, without limitation, any such
prepayment in connection with the syndication of the credit facility evidenced
by this Agreement) or (ii) in the event that after the Borrower delivers a
notice of borrowing under Section 2.06 in respect of Eurodollar Loans, such
Loans are not made on the first day of the Interest Period specified in such
notice of borrowing for any reason other than a breach by such Bank of its
obligations hereunder. Such loss shall be the amount as reasonably determined by
such Bank as the excess, if any, of (A) the amount of interest which would have
accrued to such Bank on the amount so paid or not borrowed at a rate of interest
equal to the Adjusted LIBOR Rate for such Loan, for the period from the date of
such payment or failure to borrow to the last day (x) in the case of a payment
or refinancing with ABR Loans other than on the last day of the Interest Period
for such Loan, of the then current Interest Period for such Loan, or (y) in the
case of such failure to borrow, of the Interest Period for such Loan which would
have commenced on the date of such failure to borrow, over (B) the amount of
interest which would have accrued to such Bank on such amount by placing such
amount on deposit for a comparable period with leading banks in the London
interbank market. Each Bank shall deliver to the Borrower from time to time one
or more certificates setting forth the amount of such loss as determined by such
Bank.
(c) In the event the Borrower fails to prepay any Loan on the date specified in
any prepayment notice delivered pursuant to Section 2.14(a), the Borrower on
demand by any Bank shall pay to the Agent for the account of such Bank any
amounts required to compensate such Bank for any loss incurred by such Bank as a
result of such failure to prepay, including, without limitation, any loss, cost
or expenses incurred by reason of the acquisition of deposits or other funds by
such Bank to fulfill deposit obligations incurred in anticipation of such
prepayment, but without duplication of any amounts paid under Section 2.14(b).
Each Bank shall deliver to the Borrower from time to time one or more
certificates setting forth the amount of such loss as determined by such Bank.
(d) Any partial prepayment of the Loans by the Borrower pursuant to Sections
2.13 or 2.14 shall be applied as specified by the Borrower or, in the absence of
such specification, as determined by the Agent, provided that in the latter case
no Eurodollar Loans shall be prepaid pursuant to Section 2.13 to the extent that
such Loan has an Interest Period ending after the required date of prepayment
unless and until all outstanding ABR Loans and Eurodollar Loans with Interest
Periods ending on such date have been repaid in full.
SECTION 2.15 Reserve Requirements; Change in Circumstances.
---------------------------------------------
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Bank of the principal
of or interest on any Eurodollar Loan made by such Bank or any fees or other
amounts payable hereunder (other than changes in respect of Taxes, Other Taxes
and taxes imposed on, or measured by, the net income or overall gross receipts
or franchise taxes of such Bank by the national jurisdiction in which such Bank
has its principal office or in which the applicable lending office for such
Eurodollar Loan is located or by any political subdivision or taxing authority
therein, or by any other jurisdiction or by any political subdivision or taxing
authority therein other than a jurisdiction in which such Bank would not be
subject to tax but for the execution and performance of this Agreement), or
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Bank (except any such reserve requirement which is reflected in
the Adjusted LIBOR Rate) or shall impose on such Bank or the London interbank
market any other condition affecting this Agreement or the Eurodollar Loans made
by such Bank, and the result of any of the foregoing shall be to increase the
cost to such Bank of making or maintaining any Eurodollar Loan or to reduce the
amount of any sum received or receivable by such Bank hereunder (whether of
principal, interest or otherwise) by an amount deemed by such Bank to be
material, then the Borrower will pay to such Bank in accordance with paragraph
(c) below such additional amount or amounts as will compensate such Bank for
such additional costs incurred or reduction suffered.
(b) If any Bank shall have determined that the adoption or effectiveness after
the date hereof of any law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any lending office of such Bank) or any
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or on the capital of such Bank's holding company, if any,
as a consequence of this Agreement, the Loans made by such Bank pursuant hereto,
such Bank's Commitment hereunder or the issuance of, or participation in, any
Letter of Credit by such Bank to a level below that which such Bank or such
Bank's holding company could have achieved but for such adoption, change or
compliance (taking into account Bank's policies and the policies of such Bank's
holding company with respect to capital adequacy) by an amount deemed by such
Bank to be material (except to the extent that such amount is reflected in the
Adjusted LIBOR Rate), then from time to time the Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank or such Bank's
holding company for any such reduction suffered.
(c) A certificate of each Bank setting forth such amount or amounts as shall be
necessary to compensate such Bank or its holding company as specified in
paragraph (a) or (b) above, as the case may be, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
each Bank the amount shown as due on any such certificate delivered to it within
15 days after its receipt of the same. Any Bank receiving any such payment shall
promptly make a refund thereof to the Borrower if the law, regulation, guideline
or change in circumstances giving rise to such payment is subsequently deemed or
held to be invalid or inapplicable.
(d) Failure on the part of any Bank to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any period shall not constitute a waiver of such Bank's
right to demand compensation with respect to such period or any other period,
provided that the Borrower shall not be required to compensate a Bank pursuant
to this Section for any increased costs or reductions incurred more than 270
days prior to the date that such Bank notifies the Borrower of the circumstance
giving rise to such increased costs or reductions and of such Bank's intention
to claim compensation therefor. The protection of this Section shall be
available to each Bank regardless of any possible contention of the invalidity
or inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
SECTION 2.16 Change in Legality.
------------------
(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if (x) any change after the date of this Agreement in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration thereof shall make it unlawful for a Bank to
make or maintain a Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan or (y) at any time any
Bank determines that the making or continuance of any of its Eurodollar Loans
has become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the London interbank market or the position of
such Bank in such market, then, by written notice to the Borrower, such Bank may
(i) declare that Eurodollar Loans will not thereafter be made by such Bank
hereunder, whereupon any request by the Borrower for a Eurodollar Borrowing
shall, as to such Bank only, be deemed a request for an ABR Loan unless such
declaration shall be subsequently withdrawn; and (ii) require that all
outstanding Eurodollar Loans made by it be converted to ABR Loans, in which
event all such Eurodollar Loans shall be automatically converted to ABR Loans as
of the effective date of such notice as provided in paragraph (b) below. In the
event any Bank shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the Eurodollar Loans that would have been made by
such Bank or the converted Eurodollar Loans of such Bank shall instead be
applied to repay the ABR Loans made by such Bank in lieu of, or resulting from
the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.16, a notice to the Borrower by any Bank
pursuant to paragraph (a) above shall be effective, if lawful, and if any
Eurodollar Loans shall then be outstanding, on the last day of the then-current
Interest Period, otherwise, such notice shall be effective on the date of
receipt by the Borrower.
SECTION 2.17 Pro Rata Treatment, etc. All payments and repayments of principal
and interest in respect of the Loans (except as provided in Sections 2.15 and
2.16) shall be made pro rata among the Banks in accordance with the then
outstanding principal amount of the Loans and/or participations in Letter of
Credit Outstandings hereunder and all payments of Commitment Fees and Letter of
Credit Fees (other than those payable to a Fronting Bank) shall be made pro rata
among the Banks in accordance with their Commitments. All payments by the
Borrower hereunder shall be (i) net of any tax applicable to the Borrower or
Guarantor and (ii) made in Dollars in immediately available funds at the office
of the Agent by 12:00 noon, New York City time, on the date on which such
payment shall be due. Interest in respect of any Loan hereunder shall accrue
from and including the date of such Loan to but excluding the date on which such
Loan is paid in full or converted to a Loan of a different Type.
SECTION 2.18 Taxes. (a) Any and all payments by or on account of any obligation
of the Borrower hereunder shall be made free and clear of, and without deduction
for, any Indemnified Taxes or Other Taxes; provided that if the Borrower shall
be required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) the Agent, Bank or Fronting Bank (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower will indemnify the Agent, each Bank and the Fronting Bank,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Agent, such Bank or the Fronting
Bank, as the case may be, on or with respect to any payment by or on account of
any obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Bank or the Fronting Bank, or by the Agent on its own
behalf or on behalf of a Bank or the Fronting Bank, shall be conclusive absent
manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Agent.
(e) Any Foreign Bank that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement or any other Loan Document shall deliver to the
Borrower (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate.
SECTION 2.19 Certain Fees. The Borrower shall pay to the Agent, for the
respective accounts of the Agent and the Banks, the fees set forth in that
certain fee letter dated November 7, 2001 among the Agent, ▇.▇. ▇▇▇▇▇▇
Securities Inc. and the Borrower at the times set forth therein.
SECTION 2.20 Commitment Fee. The Borrower shall pay to the Banks a commitment
fee (the "Commitment Fee") for the period commencing on the Closing Date to the
Termination Date or the earlier date of termination of the Commitment, computed
(on the basis of the actual number of days elapsed over a year of 360 days) at
the rate of one-half of one percent (1/2%) per annum on the average daily Unused
Total Commitment. Such Commitment Fee, to the extent then accrued, shall be
payable (x) monthly, in arrears, on the last calendar day of each month, (y) on
the Termination Date and (z) as provided in Section 2.10 hereof, upon any
reduction or termination in whole or in part of the Total Commitment.
SECTION 2.21 Letter of Credit Fees. The Borrower shall pay with respect to each
Letter of Credit (i) to the Agent on behalf of the Banks a fee calculated (on
the basis of the actual number of days elapsed over a year of 360 days) at the
rate of (x) three percent (3%) per annum on the daily average Letter of Credit
Outstandings and (ii) to the Fronting Bank such Fronting Bank's customary fees
for issuance, amendments and processing referred to in Section 2.03. In
addition, the Borrower agrees to pay each Fronting Bank for its account a
fronting fee of one quarter of one percent (1/4%) per annum in respect of each
Letter of Credit issued by such Fronting Bank, for the period from and including
the date of issuance of such Letter of Credit to and including the date of
termination of such Letter of Credit, computed at a rate, and payable at times,
to be determined by such Fronting Bank, the Borrower and the Agent. Accrued fees
described in clause (i) of the first sentence of this paragraph in respect of
each Letter of Credit shall be due and payable monthly in arrears on the last
calendar day of each month and on the Termination Date. Accrued fees described
in clause (ii) of the first sentence of this paragraph in respect of each Letter
of Credit shall be payable at times to be determined by the Fronting Bank, the
Borrower and the Agent.
SECTION 2.22 Nature of Fees. All Fees shall be paid on the dates due, in
immediately available funds, to the Agent for the respective accounts of the
Agent and the Banks, as provided herein and in the fee letter described in
Section 2.19. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.23 Priority and Liens.
------------------
(a) The Borrower and each of the Guarantors hereby covenants, represents and
warrants that, upon entry of the Interim Order (and the Final Order, as
applicable), the Obligations of the Borrower and the Guarantors hereunder and
under the Loan Documents and in respect of Indebtedness permitted by Section
6.03(vi): (i) pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all
times constitute allowed administrative expense claims in the Cases having
priority over all administrative expenses of the kind specified in Sections
503(b) or 507(b) of the Bankruptcy Code; (ii) pursuant to Section 364(c)(2) of
the Bankruptcy Code, shall at all times be secured by a perfected first priority
Lien on all unencumbered property of the Borrower and the Guarantors' respective
estates in the Cases, including, without limitation, all accounts receivable and
inventory of the Borrower and Guarantors (excluding the Borrower's and the
Guarantors' rights in respect of avoidance actions under the Bankruptcy Code,
but not excluding the proceeds of such causes of action (including, without
limitation, assets as to which liens are avoided) which proceeds shall be
subject to the liens under Section 364(c)(2) of the Bankruptcy Code and
available to repay the Loans and all other obligations under the Agreement) and
on all cash maintained in the Letter of Credit Account and any direct
investments of the funds contained therein; (iii) pursuant to Section 364(c)(3)
of the Bankruptcy Code, shall be secured by a perfected Lien upon all property
of the Borrower and the Guarantors (other than the property that is subject to
existing Liens that presently secure the obligations of the Borrower and the
Guarantors under the Existing Agreement, as to which the Lien in favor of the
Agent and the Banks will be as described in clause (iv) of this sentence) that
is subject to valid, perfected and non-avoidable Liens in existence on the
Filing Date or to valid Liens in existence on the Filing Date that are perfected
subsequent to the Filing Date as permitted by Section 546(b) of the Bankruptcy
Code or to Permitted Liens, junior to such valid, perfected and non-avoidable
Liens; and (iv) pursuant to Section 364(d)(1) of the Bankruptcy Code, shall be
secured by a perfected first priority, senior priming Lien on all of the
tangible and intangible property of the Borrower and the Guarantors (including
without limitation, accounts receivable, inventory, patents, copyrights,
trademarks, tradenames and all other intellectual property, and the capital
stock of all direct subsidiaries of the Borrower and each Guarantor and the
proceeds thereof) that is subject to existing Liens that presently secure the
Borrower's and the Guarantors' pre-petition Indebtedness under the Existing
Agreement (but subject to any Liens in existence on the Filing Date to which the
Liens being primed hereby are subject or become subject subsequent to the Filing
Date as permitted by Section 546(b) of the Bankruptcy Code) and any Liens
granted after the Filing Date to provide adequate protection in respect of the
Existing Agreement, senior to all of such Liens, provided, however, the Borrower
shall not be required to pledge to the Agent (i) the membership interests in
and/or the capital stock of Nano-Tex owned by it or (ii) in excess of 65% of the
capital stock of its foreign Subsidiaries; subject only to (x) in the event of
the occurrence and during the continuance of an Event of Default or an event
that would constitute an Event of Default with the giving of notice or lapse of
time or both, the payment of allowed and unpaid professional fees and
disbursements incurred by the Borrower, the Guarantors and any statutory
committees appointed in the Cases in an aggregate amount not in excess of
$3,000,000 (plus all unpaid professional fees and disbursements incurred prior
to the occurrence of an Event of Default or an event that would constitute an
Event of Default with the giving of notice or lapse of time or both to the
extent allowed by the Bankruptcy Court at any time) and (y) the payment of
unpaid fees pursuant to 28 U.S.C. ss. 1930 and to the Clerk of the Bankruptcy
Court (collectively, the "Carve-Out"), provided that, except as otherwise
provided in the Orders, no portion of the Carve-Out shall be utilized for the
payment of professional fees and disbursements incurred in connection with any
challenge to the amount, extent, priority, validity, perfection or enforcement
of the indebtedness of the Borrower and the Guarantors owing to the Existing
Lenders or to the collateral securing such indebtedness. The Banks agree that so
long as no Event of Default or event which with the giving of notice or lapse of
time or both would constitute an Event of Default shall have occurred, the
Borrower and the Guarantors shall be permitted to pay compensation and
reimbursement of expenses allowed and payable under 11 U.S.C. ss. 330 and 11
U.S.C. ss. 331, as the same may be due and payable, and the same shall not
reduce the Carve-Out.
(b) Subject to the priorities set forth in subsection (a) above and to the
Carve-Out, as to all real property the title to which is held by the Borrower or
any of the Guarantors, or the possession of which is held by the Borrower or any
of the Guarantors pursuant to leasehold interest and which secures the
obligations under the Existing Agreement, the Borrower and each Guarantor hereby
assigns and conveys as security, grants a security interest in, hypothecates,
mortgages, pledges and sets over unto the Agent on behalf of the Banks all of
the right, title and interest of the Borrower and such Guarantor in all of such
owned real property and in all such leasehold interests, together in each case
with all of the right, title and interest of the Borrower and such Guarantor in
and to all buildings, improvements, and fixtures related thereto, any lease or
sublease thereof, all general intangibles relating thereto and all proceeds
thereof. The Borrower and each Guarantor acknowledges that, pursuant to the
Orders, the Liens in favor of the Agent on behalf of the Banks in all of such
real property and leasehold instruments shall be perfected without the
recordation of any instruments of mortgage or assignment. The Borrower and each
Guarantor further agree that, upon the reasonable request of the Agent, the
Borrower and such Guarantor shall enter into separate fee and leasehold
mortgages in recordable form with respect to such properties on terms reasonably
satisfactory to the Agent.
SECTION 2.24 Right of Set-Off. Subject to the provisions of Section 7.01, upon
the occurrence and during the continuance of any Event of Default, the Agent and
each Bank is hereby authorized at any time and from time to time, to the fullest
extent permitted by law and without further order of or application to the
Bankruptcy Court, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Agent and each such Bank to or for the credit or the
account of the Borrower or any Guarantor against any and all of the obligations
of such Borrower or Guarantor now or hereafter existing under the Loan
Documents, irrespective of whether or not such Bank shall have made any demand
under any Loan Document and although such obligations may not have been
accelerated. Each Bank and the Agent agrees promptly to notify the Borrower and
Guarantors after any such set-off and application made by such Bank or by the
Agent, as the case may be, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of each Bank
and the Agent under this Section are in addition to other rights and remedies
which such Bank and the Agent may have upon the occurrence and during the
continuance of any Event of Default.
SECTION 2.25 Security Interest in Letter of Credit Account. Pursuant to Section
364(c)(2) of the Bankruptcy Code, the Borrower and the Guarantors hereby assign
and pledge to the Agent, for its benefit and for the ratable benefit of the
Banks, and hereby grant to the Agent, for its benefit and for the ratable
benefit of the Banks, a first priority security interest, senior to all other
Liens, if any, in all of the Borrower's and the Guarantors' right, title and
interest in and to the Letter of Credit Account and any direct investment of the
funds contained therein. Cash held in the Letter of Credit Account shall not be
available for use by the Borrower, whether pursuant to Section 363 of the
Bankruptcy Code or otherwise and shall be released to the Borrower as described
in clause (ii)(y) of Section 2.03(b).
SECTION 2.26 Payment of Obligations. Subject to the provisions of Section 7.01,
upon the maturity (whether by acceleration or otherwise) of any of the
Obligations under this Agreement or any of the other Loan Documents of the
Borrower and the Guarantors, the Banks shall be entitled to immediate payment of
such Obligations without further application to or order of the Bankruptcy
Court.
SECTION 2.27 No Discharge; Survival of Claims. Each of the Borrower and the
Guarantors agrees that (i) its obligations hereunder shall not be discharged by
the entry of an order confirming a Reorganization Plan (and each of the Borrower
and the Guarantors, pursuant to Section 1141(d)(4) of the Bankruptcy Code,
hereby waives any such discharge) and (ii) the Superpriority Claim granted to
the Agent and the Banks pursuant to the Orders and described in Section 2.23 and
the Liens granted to the Agent pursuant to the Orders and described in Sections
2.23 and 2.25 shall not be affected in any manner by the entry of an order
confirming a Reorganization Plan.
SECTION 2.28 Use of Cash Collateral. Notwithstanding anything to the contrary
contained herein, the Borrower shall not be permitted (i) to request a Borrowing
under Section 2.06 or request the issuance of a Letter of Credit under Section
2.04 unless the Bankruptcy Court shall have entered the Interim Order or (ii) to
request a Borrowing under Section 2.06 unless the Borrower and the Guarantors
shall at that time have the use of all cash collateral subject to the Orders for
the purposes described in Section 3.09.
SECTION 2.29 Replacement of Certain Banks. In the event a Bank ("Affected
Lender") shall have (i) failed to fund its Commitment Percentage of any Loan
requested by the Borrower or to fund its Commitment Percentage of any
unreimbursed payment made by the Fronting Bank, which such Bank is obligated to
fund under the terms of this Agreement and which failure has not been cured,
(ii) requested compensation from the Borrower under Section 2.15 with respect to
increased costs or capital or under Section 2.18 to recover Taxes, Other Taxes
or other additional costs incurred by such Bank which, in any case, are not
being incurred generally by the other Banks, or (iii) delivered a notice
pursuant to Section 2.16 claiming that such Bank is unable to extend Eurodollar
Loans to the Borrower or the Guarantors for reasons not generally applicable to
the other Banks, then, in any case, the Borrower or the Agent may make written
demand on such Affected Lender (with a copy to the Agent in the case of a demand
by the Borrower and a copy to the Borrower in the case of a demand by the Agent)
for the Affected Lender to assign, and such Affected Lender shall use
commercially reasonable efforts to assign pursuant to one or more duly executed
Assignments and Acceptances five (5) Business Days after the date of such
demand, to one or more financial institutions that comply with the provisions of
Section 10.03 which the Borrower or the Agent, as the case may be, shall have
engaged for such purpose ("Replacement Lender"), all of such Affected Lender's
rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitment, all Loans owing to it, all of
its participation interests in existing Letters of Credit, and its obligations
to participate in additional Letters of Credit hereunder) in accordance with
Section 10.03. The Agent agrees, upon the occurrence of such events with respect
to an Affected Lender and upon the written request of the Borrower, to use its
reasonable efforts to obtain the commitments from one or more financial
institutions to act as a Replacement Lender. Further, with respect to such
assignment the Affected Lender shall have concurrently received, in cash, all
amounts due and owing to the Affected Lender hereunder or under any other Loan
Document, including, without limitation, the aggregate outstanding principal
amount of the Loans owed to such Bank, together with accrued interest thereon
through the date of such assignment, amounts payable under Section 2.15 with
respect to such Affected Lender and compensation payable under Section 2.20 in
the event of any replacement of any Affected Lender under clause (ii) or clause
(iii) of this Section 2.29; provided that upon such Affected Lender's
replacement, such Affected Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.15, 10.05 and 10.06, as
well as to any fees accrued for its account hereunder and not yet paid, and
shall continue to be obligated under Section 8.06 with respect to losses,
obligations, liabilities, damages, penalties, actions, judgments, costs,
expenses or disbursements for matters which occurred prior to the date the
Affected Lender is replaced.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make Loans and issue and/or
participate in Letters of Credit hereunder, the Borrower and each of the
Guarantors jointly and severally represent and warrant as follows:
SECTION 3.01 Organization and Authority. Each of the Borrower and the Guarantors
(i) is a corporation duly organized and validly existing under the laws of the
State of its incorporation and is duly qualified as a foreign corporation and is
in good standing in each jurisdiction in which the failure to so qualify would
have a material adverse effect on the financial condition, operations, business,
properties, assets or prospects of the Borrower and the Guarantors taken as a
whole; (ii) subject to the entry by the Bankruptcy Court of the Interim Order
(or the Final Order, when applicable) has the requisite corporate power and
authority to effect the transactions contemplated hereby, and by the other Loan
Documents to which it is a party, and (iii) subject to the entry by the
Bankruptcy Court of the Interim Order (or the Final Order, when applicable) has
all requisite corporate power and authority and the legal right to own, pledge,
mortgage and operate its properties, and to conduct its business as now or
currently proposed to be conducted.
SECTION 3.02 Due Execution. Upon the entry by the Bankruptcy Court of the
Interim Order (or the Final Order, when applicable), the execution, delivery and
performance by each of the Borrower and the Guarantors of each of the Loan
Documents to which it is a party (i) are within the respective corporate powers
of each of the Borrower and the Guarantors, have been duly authorized by all
necessary corporate action including the consent of shareholders where required,
and do not (A) contravene the charter or by-laws of any of the Borrower or the
Guarantors, (B) violate any law (including, without limitation, the Securities
Exchange Act of 1934) or regulation (including, without limitation, Regulations
T, U or X of the Board of Governors of the Federal Reserve System), or any order
or decree of any court or Governmental Authority, (C) conflict with or result in
a breach of, or constitute a default under, any material indenture, mortgage or
deed of trust entered into after the Filing Date or any material lease,
agreement or other instrument entered into after the Filing Date binding on the
Borrower or the Guarantors or any of their properties, or (D) result in or
require the creation or imposition of any Lien upon any of the property of any
of the Borrower or the Guarantors other than the Liens granted pursuant to this
Agreement, the other Loan Documents or the Orders; and (ii) do not require the
consent, authorization by or approval of or notice to or filing or registration
with any Governmental Authority other than the entry of the Orders. Upon the
entry by the Bankruptcy Court of the Interim Order (or the Final Order, when
applicable), this Agreement has been duly executed and delivered by each of the
Borrower and the Guarantors. Upon entry by the Bankruptcy Court of the Interim
Order (or the Final Order, when applicable), this Agreement is, and each of the
other Loan Documents to which the Borrower and each of the Guarantors is or will
be a party, when delivered hereunder or thereunder, will be, a legal, valid and
binding obligation of the Borrower and each Guarantor, as the case may be,
enforceable against the Borrower and the Guarantors, as the case may be, in
accordance with its terms and the Orders.
SECTION 3.03 Statements Made. The information that has been delivered in writing
by the Borrower or any of the Guarantors to the Agent or to the Bankruptcy Court
in connection with any Loan Document, and any financial statement delivered
pursuant hereto or thereto (other than to the extent that any such statements
constitute projections), taken as a whole and in light of the circumstances in
which made, contains no untrue statement of a material fact and does not omit to
state a material fact necessary to make such statements not misleading; and, to
the extent that any such information constitutes projections, such projections
were prepared in good faith on the basis of assumptions, methods, data, tests
and information believed by the Borrower or such Guarantor to be reasonable at
the time such projections were furnished.
SECTION 3.04 Financial Statements. The Borrower has furnished the Banks with
copies of the audited consolidated financial statements and schedules of the
Borrower for the fiscal years ended September 30, 1999 and September 30, 2000
and the three fiscal quarters ended June 30, 2001. Such financial statements
present fairly the financial condition and results of operations of the Borrower
and the Guarantors on a consolidated basis as of such date and for such period;
such balance sheets and the notes thereto disclose all liabilities, direct or
contingent, of the Borrower and the Guarantors as of the dates thereof required
to be disclosed by GAAP and such financial statements were prepared in a manner
consistent with GAAP. Except as disclosed to the Banks in writing prior to the
date of the Commitment Letter, no material adverse change in the operations,
business, properties, assets, prospects or condition (financial or otherwise) of
the Borrower and the Guarantors, taken as a whole, has occurred from that set
forth in the Borrower's consolidated financial statements for the fiscal year
ended September 30, 2000 other than those which customarily occur as a result of
events leading up to and following the commencement of a proceeding under
Chapter 11 of the Bankruptcy Code and the commencement of the Cases (including,
without limitation, those reflected in the financial projections heretofore made
available to the Agent).
SECTION 3.05 Ownership. Other than as set forth on Schedule 3.05, (i) each of
the Persons listed on Schedule 3.05 is a wholly-owned, direct or indirect
Subsidiary of the Borrower, and (ii) the Borrower owns no other Subsidiaries,
whether directly or indirectly.
SECTION 3.06 Liens. Except for Liens existing on the Filing Date substantially
of the nature of those reflected on Schedule 3.06, there are no Liens of any
nature whatsoever on any assets of the Borrower or any of the Guarantors other
than: (i) Liens granted pursuant to the Existing Agreement; (ii) Permitted
Liens; (iii) other Liens permitted pursuant to Section 6.01; and (iv) Liens in
favor of the Agent and the Banks. Neither the Borrower nor the Guarantors are
parties to any contract, agreement, lease or instrument the performance of
which, either unconditionally or upon the happening of an event, will result in
or require the creation of a Lien on any assets of the Borrower or any Guarantor
or otherwise result in a violation of this Agreement other than the Liens
granted to the Agent and the Banks as provided for in this Agreement.
SECTION 3.07 Compliance with Law.
-------------------
(a) Except for matters which could not reasonably be expected to have a material
adverse effect on the financial condition, operations, business, properties,
assets or prospects of the Borrower and the Guarantors taken as a whole (i) the
operations of the Borrower and the Guarantors comply in all material respects
with all applicable environmental, health and safety statutes and regulations,
including, without limitation, regulations promulgated under the Resource
Conservation and Recovery Act (42 U.S.C. ▇▇.▇▇. 6901 et seq.); (ii) to the
Borrower's and each of the Guarantor's knowledge, none of the operations of the
Borrower or the Guarantors is the subject of any Federal or state investigation
evaluating whether any remedial action involving a material expenditure by the
Borrower or any Guarantor is needed to respond to a release of any Hazardous
Waste or Hazardous Substance (as such terms are defined in any applicable state
or Federal environmental law or regulations) into the environment; and (iii) to
the Borrower's and each of the Guarantor's knowledge, the Borrower and the
Guarantors do not have any material contingent liability in connection with any
release of any Hazardous Waste or Hazardous Substance into the environment.
(b) Neither the Borrower nor any Guarantor is, to the best of its knowledge, in
violation of any law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority the violation
of which, or a default with respect to which, would have a material adverse
effect on the financial condition, operations, business, properties, assets or
prospects of the Borrower and the Guarantors taken as a whole.
SECTION 3.08 Insurance. All policies of insurance of any kind or nature owned by
or issued to the Borrower and the Guarantors, including, without limitation,
policies of life, fire, theft, product liability, public liability, property
damage, other casualty, employee fidelity, workers' compensation, employee
health and welfare, title, property and liability insurance, are in full force
and effect and are of a nature and provide such coverage as is customarily
carried by companies of the size and character of the Borrower and the
Guarantors.
SECTION 3.09 Use of Proceeds. The proceeds of the Loans shall be used (i) to
repurchase the Existing Receivables Portfolio and (ii) for working capital and
for other general corporate purposes of the Borrower and the Guarantors
(including, to the extent permitted under Section 6.10, for loans and advances
to Subsidiaries not party hereto).
SECTION 3.10 Litigation. There are no unstayed actions, suits or proceedings
pending or, to the knowledge of the Borrower or the Guarantors, threatened
against or affecting the Borrower or the Guarantors or any of their respective
properties, before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which is reasonably
likely to be determined adversely to the Borrower or the Guarantors and, if so
determined adversely to the Borrower or the Guarantors would have a material
adverse effect on the financial condition, business, properties, prospects,
operations or assets of the Borrower and the Guarantors, taken as a whole.
SECTION 4. CONDITIONS OF LENDING
SECTION 4.01 Conditions Precedent to Initial Loans and Initial Letters of
Credit. The obligation of the Banks to make the initial Loans or the Fronting
Bank to issue the initial Letter of Credit, whichever may occur first, is
subject to the following conditions precedent:
(a) Supporting Documents. The Agent shall have received for each of the Borrower
and the Guarantors:
(i) a copy of such entity's certificate of incorporation, as amended, certified
as of a recent date by the Secretary of State of the state of its incorporation;
(ii) a certificate of such Secretary of State, dated as of a recent date, as to
the good standing of and payment of taxes by that entity and as to the charter
documents on file in the office of such Secretary of State; and
(iii) a certificate of the Secretary or an Assistant Secretary of that entity
dated the date of the initial Loans or the initial Letter of Credit hereunder,
whichever first occurs, and certifying (A) that attached thereto is a true and
complete copy of the by-laws of that entity as in effect on the date of such
certification, (B) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of that entity authorizing the
Borrowings and Letter of Credit extensions hereunder, the execution, delivery
and performance in accordance with their respective terms of this Agreement, the
Loan Documents and any other documents required or contemplated hereunder or
thereunder and the granting of the security interest in the Letter of Credit
Account and other Liens contemplated hereby, (C) that the certificate of
incorporation of that entity has not been amended since the date of the last
amendment thereto indicated on the certificate of the Secretary of State
furnished pursuant to clause (i) above and (D) as to the incumbency and specimen
signature of each officer of that entity executing this Agreement and the Loan
Documents or any other document delivered by it in connection herewith or
therewith (such certificate to contain a certification by another officer of
that entity as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iii)).
(b) Interim Order. At the time of the making of the initial Loans or at the time
of the issuance of the initial Letters of Credit, whichever first occurs, the
Agent and the Banks shall have received a certified copy of an order of the
Bankruptcy Court in substantially the form of Exhibit A-1 (the "Interim Order")
approving the Loan Documents and granting the Superpriority Claim status and
senior priming and other Liens described in Section 2.23 which Interim Order (i)
shall have been entered, with the consent or non-objection of a preponderance
(as determined by the Agent) of the Existing Lenders upon an application or
motion of the Borrower reasonably satisfactory in form and substance to the
Agent, on such prior notice to such parties (including the Existing Lenders) as
may in each case be reasonably satisfactory to the Agent, (ii) shall authorize
extensions of credit in amounts satisfactory to the Agent, (iii) shall approve
the payment by the Borrower of all of the Fees set forth in Section 2.19, (iv)
shall be in full force and effect, (v) shall have authorized the use by the
Borrower and the Guarantors of any cash collateral in which any Existing Lender
under the Existing Agreement may have an interest and shall have provided, as
adequate protection for the use of such cash collateral and the priming
contemplated hereby, for (A) the monthly payment of current interest and letter
of credit fees (including the payment on the Closing Date of any such interest
and fees that are accrued and unpaid as of the Filing Date) at the applicable
non-default rates (including LIBOR pricing options) provided for pursuant to the
Existing Agreement (the payments described in this clause to be without
prejudice to the rights of any Existing Lender to assert a claim for the payment
of additional interest and letters of credit fees calculated at any other
applicable rates of interest (including, without limitation, at any default
rates), or on any other basis, set forth in the Existing Agreement or to the
rights of the Borrower to contest such assertion), (B) a superpriority claim as
contemplated by Section 507(b) of the Bankruptcy Code immediately junior to the
claims under Section 364(c)(1) of the Bankruptcy Code held by the Agent and the
Banks (without the requirement to file any motion or pleading or to make any
demand), (C) a Lien on substantially all of the assets of the Borrower and the
Guarantors having a priority immediately junior to the priming and other Liens
granted in favor of the Agent and the Banks hereunder and under the other Loan
Documents, (D) the payment on a current basis of the reasonable fees and
disbursements of respective professionals (including, but not limited to, the
reasonable fees and disbursements of counsel and internal and third-party
consultants, including financial consultants, and auditors) for the Pre-Petition
Agent (including the payment on the Closing Date or as soon thereafter as is
practicable of any unpaid pre-petition fees and expenses) and the continuation
of the payment to the Pre-Petition Agent on a current basis of the
administration fees that are provided for under the Existing Agreement, (E) the
receipt of all financial statements and other reports that are furnished to the
Banks, (F) so long as no Event of Default and no condition which would
constitute an Event of Default with the giving of notice or lapse of time or
both shall exist, the payment of 50% of the Net Proceeds of asset sales that are
permitted by clause (iv) of Section 6.11, and (G) such other protection as
agreed between the Borrower, the Guarantors and the Existing Lenders, and (vi)
shall not have been vacated, stayed, reversed, modified or amended in any
respect; and, if the Interim Order is the subject of a pending appeal in any
respect, neither the making of such Loans nor the issuance of such Letter of
Credit nor the performance by the Borrower or any of the Guarantors of any of
their respective obligations hereunder or under the Loan Documents or under any
other instrument or agreement referred to herein shall be the subject of a
presently effective stay pending appeal.
(c) Security and Pledge Agreement. The Borrower and each of the Guarantors shall
have duly executed and delivered to the Agent a Security and Pledge Agreement in
substantially the form of Exhibit B (the "Security and Pledge Agreement").
(d) First Day Orders. All of the "first day orders" entered by the Bankruptcy
Court at the time of the commencement of the Cases shall be reasonably
satisfactory in form and substance to the Agent.
(e) Repayment of Existing Receivables Facility. In the event the Interim Order
(or a separate order of the Bankruptcy Court that is satisfactory in form and
substance to the Agent and that is entered at the time of the entry of the
Interim Order) approves the repurchase of the Existing Receivables Portfolio,
the Borrower shall have repurchased the Existing Receivables Portfolio from B.I.
Funding free and clear of liens and in a manner satisfactory to the Agent for a
purchase price that is in an amount sufficient to enable B.I. Funding to pay in
full the aggregate principal amounts outstanding under the Existing Receivables
Facility, together with accrued and unpaid interest thereon and unpaid fees and
expenses in connection therewith.
(f) Opinion of Counsel. The Agent and the Banks shall have received the
favorable written opinions of counsel to the Borrower and the Guarantors
reasonably acceptable to the Agent, dated the date of the initial Loans or the
issuance of the initial Letter of Credit, whichever first occurs, substantially
in the forms of Exhibit C.
(g) Payment of Fees. The Borrower shall have paid to the Agent the then unpaid
balance of all accrued and unpaid Fees due under and pursuant to this Agreement
and the letter referred to in Section 2.19.
(h) Corporate and Judicial Proceedings. All corporate and judicial proceedings
and all instruments and agreements in connection with the transactions among the
Borrower, the Guarantors, the Agent and the Banks contemplated by this Agreement
shall be reasonably satisfactory in form and substance to the Agent, and the
Agent shall have received all information and copies of all documents and
papers, including records of corporate and judicial proceedings, which the Agent
may have reasonably requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate, governmental or judicial
authorities.
(i) Information. The Agent shall have received such information (financial or
otherwise) as may be reasonably requested by the Agent and shall have discussed
the Borrower's business plan heretofore delivered to the Agent with the
Borrower's management and shall be satisfied with the nature and substance of
such discussions.
(j) Compliance with Laws. The Borrower and the Guarantors shall have granted the
Agent access to and the right to inspect all reports, audits and other internal
information of the Borrower and the Guarantors relating to environmental matters
(except for such internal information the disclosure of which would result in a
waiver of an attorney/client privilege), and any third party verification of
certain matters relating to compliance with environmental laws and regulations
requested by the Agent, and the Agent shall be reasonably satisfied that (x)
except for matters which could not reasonably be expected to have a material
adverse effect on the financial condition, operations, business, properties,
assets or prospects of the Borrower and the Guarantors taken as a whole, the
Borrower and the Guarantors are in compliance in all material respects with all
applicable environmental laws and regulations and (y) the Borrower has made
adequate provision for the costs of maintaining such compliance.
(k) UCC Searches. The Agent shall be satisfied with UCC search results
(including tax liens and judgments) received by the Borrower and the Guarantors
and conducted in the jurisdictions in which the Borrower and the Guarantors
conduct business (dated as of a date reasonably satisfactory to the Agent),
reflecting the absence of Liens and encumbrances on the assets of the Borrower
and the Guarantors other than Liens granted under the Existing Receivables
Facility, Permitted Liens, other Liens permitted under the Loan Documents and
such other Liens as may be satisfactory to the Agent.
(l) Closing Documents. The Agent shall have received all documents required by
Section 4.01 reasonably satisfactory in form and substance to the Agent.
SECTION 4.02 Conditions Precedent to Each Loan and Each Letter of Credit. The
obligation of the Banks to make each Loan and of the Fronting Bank to issue each
Letter of Credit, including the initial Loan and the initial Letter of Credit,
is subject to the following conditions precedent:
(a) Notice. The Agent shall have received a notice with respect to such
borrowing or issuance, as the case may be, as required by Section 2.
(b) Representations and Warranties. All representations and warranties contained
in this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of each Borrowing or the issuance of
each Letter of Credit hereunder with the same effect as if made on and as of
such date except to the extent such representations and warranties expressly
relate to an earlier date.
(c) No Default. On the date of each Borrowing hereunder or the issuance of each
Letter of Credit, no Event of Default or event which upon notice or lapse of
time or both would constitute an Event of Default shall have occurred and be
continuing.
(d) Orders. The Interim Order shall be in full force and effect and shall not
have been stayed, reversed, modified or amended in any respect without the prior
written consent of the Agent, the Required Banks and the Pre-Petition Agent,
provided, that at the time of the making of any Loan or the issuance of any
Letter of Credit the aggregate amount of either of which, when added to the sum
of the principal amount of all Loans then outstanding and the Letter of Credit
Outstandings, would exceed the amount authorized by the Interim Order
(collectively, the "Additional Credit"), the Agent and each of the Banks shall
have received a certified copy of an order of the Bankruptcy Court in
substantially the form of the Interim Order (with only such modifications
thereto as are satisfactory in form and substance to the Agent) (the "Final
Order") (and if the repurchase of the Existing Receivables Portfolio shall not
have been approved pursuant to the Interim Order, such repurchase shall have
been approved on terms satisfactory to the Agent by the Final Order or by a
separate order of the Bankruptcy Court that is satisfactory in form and
substance to the Agent and that is entered at the time of, or prior to, the
entry of the Final Order), which, in any event, shall have been entered by the
Bankruptcy Court no later than 45 days after the entry of the Interim Order and
at the time of the extension of any Additional Credit the Final Order shall be
in full force and effect, and shall not have been vacated, stayed, reversed,
modified or amended in any respect without the prior written consent of the
Agent, and the Required Banks and the Pre-Petition Agent; and if either the
Interim Order or the Final Order is the subject of a pending appeal in any
respect, neither the making of the Loans nor the issuance of any Letter of
Credit nor the performance by the Borrower or any Guarantor of any of their
respective obligations under any of the Loan Documents shall be the subject of a
presently effective stay pending appeal.
(e) Payment of Fees. The Borrower shall have paid to the Agent and the
Pre-Petition Agent the then unpaid balance of all accrued and unpaid Fees then
payable under and pursuant to this Agreement, the Orders and the letter referred
to in Section 2.19.
(f) Borrowing Base Certificate. The Agent shall have received the timely
delivery of the most recent Borrowing Base Certificate (dated no more than seven
(7) days prior to the making of a Loan or the issuance of a Letter of Credit,
substantially in the form of Exhibit E, except that the initial Borrowing Base
Certificate shall be delivered by the Closing Date) required to be delivered
hereunder.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section have been
satisfied or waived at that time.
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall
be in effect or any Letter of Credit shall remain outstanding (in a face amount
in excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)), or any amount shall remain outstanding or
unpaid under this Agreement, the Borrower and each of the Guarantors agree that,
unless the Required Banks shall otherwise consent in writing, the Borrower and
each of the Guarantors will:
SECTION 5.01 Financial Statements, Reports, etc. In the case of the Borrower and
the Guarantors, deliver to the Agent and each of the Banks:
(a) within 90 days after the end of each fiscal year, the Borrower's
consolidated balance sheet and related statement of income and cash flows,
showing the financial condition of the Borrower and its Subsidiaries on a
consolidated basis as of the close of such fiscal year and the results of their
respective operations during such year, the consolidated statement of the
Borrower to be audited for the Borrower and the Guarantors by ▇▇▇▇▇ & Young LLP
or other independent public accountants of recognized national standing and
accompanied by an opinion of such accountants (which shall not be qualified in
any material respect other than with respect to the Cases or a going concern
qualification) and to be certified by a Financial Officer of the Borrower to the
effect that such consolidated financial statements fairly present the financial
condition and results of operations of the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP;
(b) within 45 days after the end of each of the first three fiscal quarters, the
Borrower's consolidated balance sheets and related statements of income and cash
flows, showing the financial condition of the Borrower and its Subsidiaries on a
consolidated basis as of the close of such fiscal quarter and the results of
their operations during such fiscal quarter and the then elapsed portion of the
fiscal year, each certified by a Financial Officer as fairly presenting the
financial condition and results of operations of the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments;
(c) commencing with the first fiscal month following the closing Date, as soon
as practicable, but in no event later than 45 Days after the end of each fiscal
month of the Borrower, monthly unaudited consolidated balance sheets of the
Borrower and its Subsidiaries and related consolidated statements of earnings
and cash flows of the Borrower and its Subsidiaries for the prior fiscal month,
each certified by a Financial Officer of the Borrower;
(d) (i) concurrently with any delivery of financial statements under (a) and (b)
above, a certificate of a Financial Officer certifying such statements (A)
certifying that no Event of Default or event which upon notice or lapse of time
or both would constitute an Event of Default has occurred, or, if such an Event
of Default or event has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto and (B)
setting forth computations in reasonable detail satisfactory to the Agent
demonstrating compliance with the provisions of Sections 6.04, 6.05 and 6.10 and
(ii) concurrently with any delivery of financial statements under (a) above, a
certificate (which certificate may be limited to accounting matters and disclaim
responsibility for legal interpretations) of the accountants auditing the
consolidated financial statements delivered under (a) above certifying that, in
the course of the regular audit of the business of the Borrower and its
Subsidiaries, such accountants have obtained no knowledge that an Event of
Default has occurred and is continuing, or if, in the opinion of such
accountants, an Event of Default has occurred and is continuing, specifying the
nature thereof and all relevant facts with respect thereto;
(e) concurrently with any delivery of financial statements under (c) above,
monthly financial projections for the following monthly period in the event that
there has been a material variance from the financial projections provided to
the Agent for the period reported in such financial statements;
(f) as soon as possible, and in any event when the Borrower's and the
Guarantors' statement of financial affairs and schedules of assets and
liabilities are required to be filed with the Bankruptcy Court, a consolidated
pro forma balance sheet of the Borrower's and the Guarantors' financial
condition as of the Filing Date;
(g) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by it with the
Securities and Exchange Commission, or any governmental authority succeeding to
any of or all the functions of said commission, or with any national securities
exchange, as the case may be;
(h) as soon as available and in any event (A) within 30 days after the Borrower
or any of its ERISA Affiliates knows or has reason to know that any Termination
Event described in clause (i) of the definition of Termination Event with
respect to any Single Employer Plan of the Borrower or such ERISA Affiliate has
occurred and (B) within 10 days after the Borrower or any of its ERISA
Affiliates knows or has reason to know that any other Termination Event with
respect to any such Plan has occurred, a statement of a Financial Officer of the
Borrower describing the full details of such Termination Event and the action,
if any, which the Borrower or such ERISA Affiliate is required or proposes to
take with respect thereto, together with any notices required or proposed to be
given to or filed with or by the Borrower, the ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto;
(i) promptly and in any event within 10 days after receipt thereof by the
Borrower or any of its ERISA Affiliates from the PBGC copies of each notice
received by the Borrower or any such ERISA Affiliate of the PBGC's intention to
terminate any Single Employer Plan of the Borrower or such ERISA Affiliate or to
have a trustee appointed to administer any such Plan;
(j) if requested by the Agent, promptly and in any event within 30 days after
the filing thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with respect to
each Single Employer Plan of the Borrower or any of its ERISA Affiliates;
(k) within 10 days after notice is given or required to be given to the PBGC
under Section 302(f)(4)(A) of ERISA of the failure of the Borrower or any of its
ERISA Affiliates to make timely payments to a Plan, a copy of any such notice
filed and a statement of a Financial Officer of the Borrower setting forth (A)
sufficient information necessary to determine the amount of the lien under
Section 302(f)(3), (B) the reason for the failure to make the required payments
and (C) the action, if any, which the Borrower or any of its ERISA Affiliates
proposed to take with respect thereto;
(l) promptly and in any event within 10 days after receipt thereof by the
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of
each notice received by the Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the amount of
liability incurred, or which may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in clause (A), (B) or (C)
above;
(m) promptly, from time to time, such other information regarding the
operations, business affairs and financial performance or condition of the
Borrower or any Guarantor (individually as to any Guarantor contributing in
excess of five percent (5%) of consolidated EBITDA of the Borrower and its
Subsidiaries for the most recently ended 12 month period or taken as a whole as
to all of the Guarantors), or compliance with the terms of any material loan or
financing agreements as the Agent, at the request of any Bank, may reasonably
request; and
(n) furnish to the Agent and its counsel promptly after the same is available,
copies of all pleadings, motions, applications, judicial information, financial
information and other documents filed by or on behalf of the Borrower or any of
the Guarantors with the Bankruptcy Court in the Cases, or distributed by or on
behalf of the Borrower or any of the Guarantors to any official committee
appointed in the Cases.
SECTION 5.02 Corporate Existence. Preserve and maintain in full force and effect
all governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business except
(i)(A) if in the reasonable business judgment of the Borrower or such Guarantor,
as the case may be, it is in its best economic interest not to preserve and
maintain such rights, privileges, qualifications, permits, licenses and
franchises, and (B) such failure to preserve the same could not, in the
aggregate, reasonably be expected to have a material adverse effect on the
operations, business, properties, assets, prospects or condition (financial or
otherwise) of the Borrower and the Guarantors, taken as a whole, and (ii) as
otherwise permitted in connection with sales of assets permitted by Section
6.11.
SECTION 5.03 Insurance. (a) Keep its insurable properties insured at all times,
against such risks, including fire and other risks insured against by extended
coverage, as is customary with companies of the same or similar size in the same
or similar businesses; and maintain in full force and effect public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties owned,
occupied or controlled by the Borrower or any Guarantor, as the case may be, in
such amounts (giving effect to self-insurance) and with such deductibles as are
customary with companies of the same or similar size in the same or similar
businesses and in the same geographic area; and (b) maintain such other
insurance or self insurance as may be required by law.
SECTION 5.04 Obligations and Taxes. With respect to the Borrower and each
Guarantor, pay all its material obligations arising after the Filing Date
promptly and in accordance with their terms and pay and discharge promptly all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property arising after the
Filing Date, before the same shall become in default, as well as all material
lawful claims for labor, materials and supplies or otherwise arising after the
Filing Date which, if unpaid, would become a Lien or charge upon such properties
or any part thereof; provided, however, that the Borrower and each Guarantor
shall not be required to pay and discharge or to cause to be paid and discharged
any such obligation, tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings (if the Borrower and the Guarantors shall have set aside on their
books adequate reserves therefor).
SECTION 5.05 Notice of Event of Default, etc. Promptly give to the Agent notice
in writing of any Event of Default or the occurrence of any event or
circumstance which with the passage of time or giving of notice or both would
constitute an Event of Default.
SECTION 5.06 Access to Books and Records. Maintain or cause to be maintained at
all times true and complete books and records in a manner consistent with GAAP
of the financial operations of the Borrower and the Guarantors; and provide the
Agent and its representatives reasonable access to all such books and records
during regular business hours, in order that the Agent may upon reasonable prior
notice examine and make abstracts from such books, accounts, records and other
papers for the purpose of verifying the accuracy of the various reports
delivered by the Borrower or the Guarantors to the Agent or the Banks pursuant
to this Agreement or for otherwise ascertaining compliance with this Agreement;
and at any reasonable time and from time to time during regular business hours,
upon reasonable notice, permit the Agent and any agents or representatives
(including, without limitation, appraisers) thereof to visit the properties of
the Borrower and the Guarantors and to conduct examinations of and to monitor
the Collateral held by the Agent.
SECTION 5.07 Maintenance of Concentration Account. Continue to maintain with the
Agent an account or accounts to be used by the Borrower and the Guarantors as
their principal concentration account for day-to-day operations conducted by the
Borrower and the Guarantors.
SECTION 5.08 Borrowing Base Certificate. A Borrowing Base Certificate
substantially in the form of Exhibit E: shall be furnished to the Agent: (a)as
soon as available and in any event prior to the making of the initial Loans or
the issuance of the initial Letter of Credit and (b) thereafter on or before the
fifth Business Day following the end of each week, which weekly Borrowing Base
Certificate shall reflect (i) the accounts receivables updated as of Friday of
each such week; and (ii) the inventory, which shall be updated as of the
twentieth (20th) Business Day of each month, (c) if requested by the Agent at
any other time when the Agent reasonably believes that the then existing
Borrowing Base Certificate is materially inaccurate, as soon as reasonably
available but in no event later than five (5) Business Days after such request,
a Borrowing Base Certificate showing the Borrowing Base as of the date so
requested, in each case with supporting documentation (including, without
limitation, the documentation described on Schedule 1 to Exhibit E), and (d) and
shall be supplemented at any time by such other supporting documentation and
additional reports with respect to the Borrowing Base as the Agent shall
reasonably request.
SECTION 5.09 Collateral Monitoring and Review. At any reasonable time upon the
request of the Agent or the Required Banks through the Agent, permit the Agent
or professionals (including, without limitation, internal and third party
consultants, accountants and appraisers) retained by the Agent or its
professionals to conduct evaluations and appraisals of (i) the Borrower's
practices in the computation of the Borrowing Base and (ii) the assets included
in the Borrowing Base, and pay the reasonable fees and expenses in connection
therewith (including, without limitation, the reasonable and customary fees and
expenses associated with the Agent's Collateral Agent Services Group as set
forth in the Fee Letter referred to in Section 2.19). In connection with any
collateral monitoring or review and appraisal relating to the computation of the
Borrowing Base, the Borrower shall make such adjustments to the Borrowing Base
as the Agent shall reasonably require based upon the terms of this Agreement and
results of such collateral monitoring, review or appraisal.
SECTION 5.10 Business Plan. Make its senior officers available to discuss the
Borrower's business plans, consolidated and by division (a copy of which has
heretofore been delivered to the Agent and the Banks), with the Agent and/or the
Banks upon the Agent's reasonable request.
SECTION 6. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall
be in effect or any Letter of Credit shall remain outstanding (in a face amount
in excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)) or any amount shall remain outstanding or
unpaid under this Agreement, unless the Required Banks shall otherwise consent
in writing, the Borrower and each of the Guarantors will not (and will not apply
to the Bankruptcy Court for authority to):
SECTION 6.01 Liens. Incur, create, assume or suffer to exist any Lien on any
asset of the Borrower or the Guarantors, now owned or hereafter acquired by the
Borrower or any of such Guarantors, other than (i) Liens which were existing on
the Filing Date as reflected on Schedule 3.06 hereto and Liens granted pursuant
to the Existing Agreement; (ii) Liens in favor of the Existing Lenders as
adequate protection granted pursuant to the Orders, which Liens are junior to
the Liens contemplated hereby in favor of the Agent and the Banks, provided that
the Interim Order and the Final Order provide that the holder of such junior
Liens shall not be permitted to take any action to foreclose with respect to
such junior Liens so long as any amounts shall remain outstanding hereunder or
any Commitment shall be in effect; (iii) Permitted Liens; (iv) Liens in favor of
the Agent and the Banks; (v) Liens on the Foreign Factoring Receivables and (vi)
Liens securing purchase money Indebtedness or Capitalized Leases permitted by
Section 6.03(iv).
SECTION 6.02 Merger, etc. Consolidate or merge with or into another Person.
SECTION 6.03 Indebtedness. Contract, create, incur, assume or suffer to exist
any Indebtedness, except for (i) Indebtedness under the Loan Documents; (ii)
Indebtedness incurred prior to the Filing Date (including existing Capitalized
Leases); (iii) intercompany Indebtedness between the Borrower and the
Guarantors, (iv) Indebtedness incurred subsequent to the Filing Date secured by
purchase money Liens or Capitalized Leases in an aggregate amount not to exceed
$10,000,000 to the extent permitted by Section 6.04; (v) Indebtedness arising
from Investments among the Borrower and the Guarantors that are permitted by
Section 6.10; (vi) Indebtedness owed to JPMorgan Chase or any other Bank or any
of their respective banking Affiliates in respect of any overdrafts and related
liabilities arising from treasury, depository and cash management services or in
connection with any automated clearing house transfers of funds, (vii)
Indebtedness owed to JPMorgan Chase or any other Bank or any of their respective
banking Affiliates in respect of hedging and foreign exchange transactions
entered into in the ordinary course of business consistent with past practices
and (viii) other Indebtedness (not for borrowed money) not in excess of
$100,000.
SECTION 6.04 Capital Expenditures. Make cumulative Capital Expenditures in an
aggregate amount in excess of (x) $20,000,000 during the 12 month period
following the commencement of the Cases (of which no more than $10,000,000 may
be expended during the 6 month period following such commencement) and (y)
$20,000,000 during the 12 month period commencing on the first anniversary of
the commencement of the Cases and ending on the Maturity Date (of which no more
than $10,000,000 may be expended during the 6 month period following such first
anniversary), provided that if aggregate Capital Expenditures during the 12
month period following such commencement are less than $20,000,000, the unused
portion thereof not to exceed $4,000,000 may be carried over and used for
Capital Expenditures during the 12 month period commencing on the first
anniversary of such commencement.
SECTION 6.05 EBITDA. Permit EBITDA for each 12-month period ending on the last
day of each month listed below to be less than the amount specified opposite
such date:
12 Months Ending EBITDA
---------------- ------
December 31, 2001 $35,000,000
January 31, 2002 $35,000,000
February 28, 2002 $35,000,000
March 31, 2002 $27,000,000
April 30, 2002 $27,000,000
May 31, 2002 $27,000,000
June 30, 2002 $27,000,000
July 31, 2002 $29,000,000
August 31, 2002 $34,000,000
September 30, 2002 $46,000,000
October 31, 2002 $48,000,000
November 30, 2002 $53,000,000
December 31, 2002 $59,000,000
January 31, 2003 $61,000,000
February 28, 2003 $62,000,000
March 31, 2003 $64,000,000
April 30, 2003 $64,000,000
May 31, 2003 $65,000,000
June 30, 2003 $66,000,000
July 31, 2003 $66,000,000
August 31, 2003 $66,000,000
September 30, 2003 $66,000,000
October 31, 2003 $71,000,000
November 30, 2003 $76,000,000
SECTION 6.06 Guarantees and Other Liabilities. Purchase or repurchase (or agree,
contingently or otherwise, so to do) the Indebtedness of, or assume, guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance of any obligation or capability of so doing, or
otherwise), endorse or otherwise become liable, directly or indirectly, in
connection with the obligations, stock or dividends of any Person, except (i)
for any guaranty of Indebtedness or other obligations of the Borrower or
Guarantor if such person could have incurred such Indebtedness or obligations
under this Agreement and (ii) by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
SECTION 6.07 Chapter 11 Claims. Incur, create, assume, suffer to exist or permit
any other Super-Priority Claim which is pari passu with or senior to the claims
of the Agent and the Banks against the Borrower and the Guarantors hereunder,
except for the Carve-Out.
SECTION 6.08 Dividends; Capital Stock. Declare or pay, directly or indirectly,
any dividends or make any other distribution or payment, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any options,
warrants, rights or other equity securities or agreements relating to any
capital stock), or set apart any sum for the aforesaid purposes, provided that
any Guarantor may pay dividends to the Borrower and to any other Guarantor that
is its direct parent.
SECTION 6.09 Transactions with Affiliates. Sell or transfer any property or
assets to, or otherwise engage in any other material transactions with, any of
its Affiliates (other than the Borrower and the Guarantors), except for (i)
transactions that are entered into in the ordinary course of business at prices
and on terms and conditions not less favorable to the Borrower or such Guarantor
than could be obtained on an arm's-length basis from unrelated third parties and
(ii) key employee retention programs approved by the Bankruptcy Court.
SECTION 6.10 Investments, Loans and Advances. Purchase, hold or acquire any
capital stock, evidences of indebtedness or other securities of, make or permit
to exist any loans or advances to, or make or permit to exist any investment in,
any other Person (all of the foregoing, "Investments"), except for (i) ownership
by the Borrower of the capital stock of each of the Guarantors listed on
Schedule 3.05, (ii) Permitted Investments, (iii) advances and loans among the
Borrower and the Guarantors in the ordinary course of business, (iv) existing
Investments described on Schedule 6.10 hereto, and (v) other loans and advances
after the date hereof to foreign subsidiaries of the Borrower or Nano-Tex in an
aggregate amount not to exceed $17,500,000 at any one time outstanding (no more
than $5,000,000 of which may be advanced by the Borrower to Nano-Tex for its use
in the ordinary course in any year).
SECTION 6.11 Disposition of Assets. Sell or otherwise dispose of any assets
(including, without limitation, the capital stock of any subsidiary) except for
(i) sales of inventory, fixtures and equipment in the ordinary course of
business, (ii) dispositions of surplus, obsolete or damaged equipment no longer
used in production, (iii) sales of Foreign Factoring Receivables which shall at
no time exceed in the aggregate the Dollar equivalent of $15,000,000 based on
the applicable Exchange Rate at any time, (iv) sales in arm's length
transactions, at fair market value and for cash in an aggregate amount not to
exceed $25,000,000, and (v) following the sales permitted by clause (iv) above,
sales in arm's length transactions, at fair market value and for cash in an
aggregate amount not to exceed an additional $25,000,000; provided, however,
that in no event shall the Borrower or any Guarantor sell the stock, assets, or
intellectual property of or otherwise dispose of its interests in, Nano-Tex.
SECTION 6.12 Nature of Business. Modify or alter in any material manner the
nature and type of its business as conducted at or prior to the Filing Date or
the manner in which such business is conducted (except as required by the
Bankruptcy Code), it being understood that asset sales permitted by Section 6.11
shall not constitute such a material modification or alteration.
SECTION 7. EVENTS OF DEFAULT
SECTION 7.01 Events of Default. In the case of the happening of any of the
following events and the continuance thereof beyond the applicable period of
grace if any (each, an "Event of Default"):
(a) any material representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any Loan Document or in connection with this
Agreement or the credit extensions hereunder or any material statement or
representation made in any report, financial statement, certificate or other
document furnished by the Borrower or any Guarantors to the Banks under or in
connection with this Agreement, shall prove to have been false or misleading in
any material respect when made or delivered; or
(b) default shall be made in the payment of any (i) Fees or interest on the
Loans when due, and such default shall continue unremedied for more than two (2)
Business Days or (ii) principal of the Loans or other amounts payable by the
Borrower hereunder (including, without limitation, reimbursement obligations or
cash collateralization in respect of Letters of Credit), when and as the same
shall become due and payable, whether at the due date thereof (including the
Prepayment Date) or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise; or
(c) default shall be made by the Borrower or any Guarantor in the due observance
or performance of any covenant, condition or agreement contained in Section 6
hereof; or
(d) default shall be made by the Borrower or any Guarantor in the due observance
or performance of any other covenant, condition or agreement to be observed or
performed pursuant to the terms of this Agreement, any of the Orders or any of
the other Loan Documents and such default shall continue unremedied for more
than ten (10) days; or
(e) any of the Cases shall be dismissed or converted to a case under Chapter 7
of the Bankruptcy Code or the Borrower or any Guarantor shall file a motion or
other pleading seeking the dismissal of any of the Cases under Section 1112 of
the Bankruptcy Code or otherwise; a trustee under Chapter 7 or Chapter 11 of the
Bankruptcy Code, a responsible officer or an examiner with enlarged powers
relating to the operation of the business (powers beyond those set forth in
Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code shall be appointed in any of the Cases and the order appointing
such trustee, responsible officer or examiner shall not be reversed or vacated
within 30 days after the entry thereof; or an application shall be filed by the
Borrower or any Guarantor for the approval of any other Super-Priority Claim
(other than the Carve-Out) in any of the Cases which is pari passu with or
senior to the claims of the Agent and the Banks against the Borrower or any
Guarantor hereunder, or there shall arise or be granted any such pari passu or
senior Super-Priority Claim; or
(f) the Bankruptcy Court shall enter an order or orders granting relief from the
automatic stay applicable under Section 362 of the Bankruptcy Code to the holder
or holders of any security interest to permit foreclosure (or the granting of a
deed in lieu of foreclosure or the like) on any assets of the Borrower or any of
the Guarantors which have a value in excess of $1,000,000 in the aggregate; or
(g) a Change of Control shall occur; or
(h) the Borrower shall fail to deliver a certified Borrowing Base Certificate
when due and such default shall continue unremedied for more than three (3)
Business Days; or
(i) any material provision of any Loan Document shall, for any reason, cease to
be valid and binding on the Borrower or any of the Guarantors, or the Borrower
or any of the Guarantors shall so assert in any pleading filed in any court; or
(j) an order of the Bankruptcy Court shall be entered reversing, staying for a
period in excess of 10 days, vacating or (without the written consent of the
Agent) otherwise amending, supplementing or modifying any of the Orders in a
manner that is adverse to the Banks as determined by the Agent or terminating
the use of cash collateral by the Borrower or the Guarantors pursuant to the
Orders; or
(k) any judgment or order as to a post-petition liability or debt for the
payment of money in excess of $1,500,000 not covered by insurance shall be
rendered against the Borrower or any of the Guarantors and the enforcement
thereof shall not have been stayed; or
(l) any non-monetary judgment or order with respect to a post-petition event
shall be rendered against the Borrower or any of the Guarantors which does or
would reasonably be expected to (i) cause a material adverse change in the
financial condition, business, prospects, operations or assets of the Borrower
and the Guarantors taken as a whole on a consolidated basis, (ii) have a
material adverse effect on the ability of the Borrower or any of the Guarantors
to perform their respective obligations under any Loan Document, or (iii) have a
material adverse effect on the rights and remedies of the Agent or any Bank
under any Loan Document, and there shall be any period of 20 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(m) except as permitted by the Orders or as otherwise agreed to by the Agent,
the Borrower or the Guarantors shall make any Pre-Petition Payment other than
Pre-Petition Payments authorized by the Bankruptcy Court (u) in accordance with
other "first day" orders reasonably satisfactory to the Agent, (w) not in excess
of $8,000,000 in respect of certain critical vendors and service providers (and
other matters reasonably acceptable to the Agent and approved by the Bankruptcy
Court), (x) in connection with the assumption of executory contracts and
unexpired leases, (y) in respect of accrued payroll and related expenses and
employee benefits as of the Filing Date;
(n) any Termination Event described in clauses (iii) or (iv) of the definition
of such term shall have occurred and shall continue unremedied for more than 10
days and the sum (determined as of the date of occurrence of such Termination
Event) of the Insufficiency of the Plan in respect of which such Termination
Event shall have occurred and be continuing and the Insufficiency of any and all
other Plans with respect to which such a Termination Event (described in such
clauses (iii) or (iv)) shall have occurred and then exist is equal to or greater
than $24,000,000; or
(o) (i) the Borrower or any ERISA Affiliate thereof shall have been notified by
the sponsor or trustee of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate
does not have reasonable grounds, in the opinion of the Agent, to contest such
Withdrawal Liability and is not in fact contesting such Withdrawal Liability in
a timely and appropriate manner, and (iii) the amount of such Withdrawal
Liability specified in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date of such notification), exceeds $5,000,000
allocable to post-petition obligations or requires payments exceeding $500,000
per annum in excess of the annual payments made with respect to such
Multiemployer Plans by the Borrower or such ERISA Affiliate for the plan year
immediately preceding the plan year in which such notification is received; or
(p) the Borrower or any ERISA Affiliate thereof shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years that include the date hereof by an amount exceeding $5,000,000; or
(q) the Borrower or any ERISA Affiliate shall have committed a failure described
in Section 302(f)(1) of ERISA (other than the failure to make any contribution
accrued and unpaid as of the Filing Date) and the amount determined under
Section 302(f)(3) of ERISA is equal to or greater than $5,000,000; or
(r) it shall be determined (whether by the Bankruptcy Court or by any other
judicial or administrative forum) that the Borrower or any Guarantor is liable
for the payment of claims arising out of any failure to comply (or to have
complied) with applicable environmental laws or regulations the payment of which
will have a material adverse effect on the financial condition, business,
properties, operations, assets or prospects of the Borrower or the Guarantors,
taken as a whole, and the enforcement thereof shall not have been stayed;
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Agent may, and at the request of the Required Banks, shall, by notice
to the Borrower (with a copy to counsel for the Official Creditors' Committee
appointed in the Cases, to counsel for the Pre-Petition Agent and to the United
States Trustee for the District of Delaware), take one or more of the following
actions, at the same or different times (provided, that with respect to clause
(iv) below and the enforcement of Liens or other remedies with respect to the
Collateral under clause (v) below, the Agent shall provide the Borrower (with a
copy to counsel for the Official Creditors' Committee in the Cases, to counsel
for the Pre-Petition Agent and to the United States Trustee for the District of
Delaware) with five (5) Business Days' written notice prior to taking the action
contemplated thereby and provided, further, that upon receipt of notice referred
to in the immediately preceding clause with respect to the accounts referred to
in clause (iv) below, the Borrower may continue to make ordinary course
disbursements from such accounts (other than the Letter of Credit Account) but
may not withdraw or disburse any other amounts from such accounts): (i)
terminate forthwith the Total Commitment; (ii) declare the Loans then
outstanding to be forthwith due and payable, whereupon the principal of the
Loans together with accrued interest thereon and any unpaid accrued Fees and all
other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower and the Guarantors, anything contained herein or in any
other Loan Document to the contrary notwithstanding; (iii) require the Borrower
and the Guarantors upon demand to forthwith deposit in the Letter of Credit
Account cash (such deposit to be in Dollars with respect to Letters of Credit
denominated in Dollars and in the applicable Permitted Foreign Currencies with
respect to Letters of Credit denominated in Permitted Foreign Currencies) in an
amount which, together with any amounts then held in the Letter of Credit
Account, is equal to the sum of 105% of the then Letter of Credit Outstandings
(and to the extent the Borrower and the Guarantors shall fail to furnish such
funds as demanded by the Agent, the Agent shall be authorized to debit the
accounts of the Borrower and the Guarantors maintained with the Agent in such
amount five (5) Business Days after the giving of the notice referred to above);
(iv) set-off amounts in the Letter of Credit Account or any other accounts
maintained with the Agent and apply such amounts to the obligations of the
Borrower and the Guarantors hereunder and in the other Loan Documents; and (v)
exercise any and all remedies under the Loan Documents and under applicable law
available to the Agent and the Banks.
SECTION 8. THE AGENT
SECTION 8.01 Administration by Agent. The general administration of the Loan
Documents shall be by the Agent. Each Bank hereby irrevocably authorizes the
Agent, at its discretion, to take or refrain from taking such actions as agent
on its behalf and to exercise or refrain from exercising such powers under the
Loan Documents as are delegated by the terms hereof or thereof, as appropriate,
together with all powers reasonably incidental thereto (including the release of
Collateral in connection with any transaction that is expressly permitted by the
Loan Documents). The Agent shall have no duties or responsibilities except as
set forth in this Agreement and the remaining Loan Documents.
SECTION 8.02 Advances and Payments.
(a) On the date of each Loan, the Agent shall be authorized (but not obligated)
to advance, for the account of each of the Banks, the amount of the Loan to be
made by it in accordance with its Commitment hereunder. Should the Agent do so,
each of the Banks agrees forthwith to reimburse the Agent in immediately
available funds for the amount so advanced on its behalf by the Agent, together
with interest at the Federal Funds Effective Rate if not so reimbursed on the
date due from and including such date but not including the date of
reimbursement.
(b) Any amounts received by the Agent in connection with this Agreement (other
than amounts to which the Agent is entitled pursuant to Sections 2.19, 8.06,
10.05 and 10.06), the application of which is not otherwise provided for in this
Agreement shall be applied, first, in accordance with each Bank's Commitment
Percentage to pay accrued but unpaid Commitment Fees or Letter of Credit Fees,
and second, in accordance with each Bank's Commitment Percentage to pay accrued
but unpaid interest and the principal balance outstanding and all unreimbursed
Letter of Credit drawings. All amounts to be paid to a Bank by the Agent shall
be credited to that Bank, after collection by the Agent, in immediately
available funds either by wire transfer or deposit in that Bank's correspondent
account with the Agent, as such Bank and the Agent shall from time to time
agree.
SECTION 8.03 Sharing of Setoffs. Each Bank agrees that if it shall, through the
exercise of a right of banker's lien, setoff or counterclaim against the
Borrower, including, but not limited to, a secured claim under Section 506 of
the Bankruptcy Code or other security or interest arising from, or in lieu of,
such secured claim and received by such Bank under any applicable bankruptcy,
insolvency or other similar law, or otherwise, obtain payment in respect of its
Loans as a result of which the unpaid portion of its Loans is proportionately
less than the unpaid portion of the Loans of any other Bank (a) it shall
promptly purchase at par (and shall be deemed to have thereupon purchased) from
such other Bank a participation in the Loans of such other Bank, so that the
aggregate unpaid principal amount of each Bank's Loans and its participation in
Loans of the other Banks shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount of its
Loans prior to the obtaining of such payment was to the principal amount of all
Loans outstanding prior to the obtaining of such payment and (b) such other
adjustments shall be made from time to time as shall be equitable to ensure that
the Banks share such payment pro-rata, provided that if any such non-pro-rata
payment is thereafter recovered or otherwise set aside such purchase of
participations shall be rescinded (without interest). The Borrower expressly
consents to the foregoing arrangements and agrees that any Bank holding (or
deemed to be holding) a participation in a Loan may exercise any and all rights
of banker's lien, setoff (in each case, subject to the same notice requirements
as pertain to clause (iv) of the remedial provisions of Section 7.01) or
counterclaim with respect to any and all moneys owing by the Borrower to such
Bank as fully as if such Bank held a Note and was the original obligee thereon,
in the amount of such participation.
SECTION 8.04 Agreement of Required Banks. Upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part of
the Required Banks, action shall be taken by the Agent for and on behalf or for
the benefit of all Banks upon the direction of the Required Banks, and any such
action shall be binding on all Banks. No amendment, modification, consent, or
waiver shall be effective except in accordance with the provisions of Section
10.10.
SECTION 8.05 Liability of Agent.
(a) The Agent when acting on behalf of the Banks, may execute any of its
respective duties under this Agreement by or through any of its respective
officers, agents, and employees, and neither the Agent nor its directors,
officers, agents, employees or Affiliates shall be liable to the Banks or any of
them for any action taken or omitted to be taken in good faith, or be
responsible to the Banks or to any of them for the consequences of any oversight
or error of judgment, or for any loss, unless the same shall happen through its
gross negligence or willful misconduct. The Agent and its respective directors,
officers, agents, employees and Affiliates shall in no event be liable to the
Banks or to any of them for any action taken or omitted to be taken by them
pursuant to instructions received by them from the Required Banks or in reliance
upon the advice of counsel selected by it. Without limiting the foregoing,
neither the Agent, nor any of its respective directors, officers, employees,
agents or Affiliates shall be responsible to any Bank for the due execution,
validity, genuineness, effectiveness, sufficiency, or enforceability of, or for
any statement, warranty, or representation in, this Agreement, any Loan Document
or any related agreement, document or order, or shall be required to ascertain
or to make any inquiry concerning the performance or observance by the Borrower
of any of the terms, conditions, covenants, or agreements of this Agreement or
any of the Loan Documents.
(b) Neither the Agent nor any of its respective directors, officers, employees,
agents or Affiliates shall have any responsibility to the Borrower or the
Guarantors on account of the failure or delay in performance or breach by any
Bank or by the Borrower or the Guarantors of any of their respective obligations
under this Agreement or any of the Loan Documents or in connection herewith or
therewith.
(c) The Agent, in its capacity as Agent hereunder, shall be entitled to rely on
any communication, instrument, or document reasonably believed by such person to
be genuine or correct and to have been signed or sent by a person or persons
believed by such person to be the proper person or persons, and such person
shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by such
person.
SECTION 8.06 Reimbursement and Indemnification. Each Bank agrees (i) to
reimburse the Agent for such Bank's Commitment Percentage of any expenses and
fees incurred for the benefit of the Banks under this Agreement and any of the
Loan Documents, including, without limitation, counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Banks, and any
other expense incurred in connection with the operations or enforcement thereof,
not reimbursed by the Borrower or the Guarantors and (ii) to indemnify and hold
harmless the Agent and any of its directors, officers, employees, agents or
Affiliates, on demand, in the amount of its proportionate share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against it
or any of them in any way relating to or arising out of this Agreement or any of
the Loan Documents or any action taken or omitted by it or any of them under
this Agreement or any of the Loan Documents to the extent not reimbursed by the
Borrower or the Guarantors (except such as shall result from their respective
gross negligence or willful misconduct).
SECTION 8.07 Rights of Agent. It is understood and agreed that JPMorgan Chase
shall have the same rights and powers hereunder (including the right to give
such instructions) as the other Banks and may exercise such rights and powers,
as well as its rights and powers under other agreements and instruments to which
it is or may be party, and engage in other transactions with the Borrower or any
Guarantor, as though it were not the Agent of the Banks under this Agreement.
SECTION 8.08 Independent Banks. Each Bank acknowledges that it has decided to
enter into this Agreement and to make the Loans hereunder based on its own
analysis of the transactions contemplated hereby and of the creditworthiness of
the Borrower and the Guarantors and agrees that the Agent shall bear no
responsibility therefor.
SECTION 8.09 Notice of Transfer. The Agent may deem and treat a Bank party to
this Agreement as the owner of such Bank's portion of the Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Bank shall have been received by the Agent.
SECTION 8.10 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor Agent, which shall be
reasonably satisfactory to the Borrower. If no successor Agent shall have been
so appointed by the Required Banks and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation, the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of a
least $100,000,000, which shall be reasonably satisfactory to the Borrower. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
SECTION 9. GUARANTY
SECTION 9.01 Guaranty.
(a) Each of the Guarantors unconditionally and irrevocably guarantees the due
and punctual payment by the Borrower 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 guaranty 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 the Borrower 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 the Agent or a Bank to assert any claim or demand
or to enforce any right or remedy against the Borrower or any other Guarantor
under the provisions of this Agreement or any other Loan Document or otherwise;
(ii) any extension or renewal of any provision hereof or thereof; (iii) any
rescission, waiver, compromise, acceleration, amendment or modification of any
of the terms or provisions of any of the Loan Documents; (iv) the release,
exchange, waiver or foreclosure of any security held by the Agent for the
Obligations or any of them; (v) the failure of the Agent or a Bank 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 guaranty constitutes a
guaranty of payment when due and not just of collection, and waives any right to
require that any resort be had by the Agent or a Bank to any security held for
payment of the Obligations or to any balance of any deposit, account or credit
on the books of the Agent or a Bank in favor of the Borrower 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 the Borrower and of
any other Guarantor and any circumstances affecting the ability of the Borrower
to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Obligations or any other
instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. Neither of the Agent, nor any of the Banks makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the Obligations.
(f) Subject to the provisions of Section 7.01, upon the Obligations becoming due
and payable (by acceleration or otherwise), the Banks shall be entitled to
immediate payment of such Obligations by the Guarantors upon written demand by
the Agent, without further application to or order of the Bankruptcy Court.
SECTION 9.02 No Impairment of Guaranty. The obligations of the Guarantors
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, 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 the Agent or a Bank 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
the Obligations are paid in full.
SECTION 9.03 Subrogation. Upon payment by any Guarantor of any sums to the Agent
or a Bank hereunder, all rights of such Guarantor against the Borrower arising
as a result thereof by way of right of subrogation or otherwise, shall in all
respects be subordinate and junior in right of payment to the prior final and
indefeasible payment in full of all the Obligations. If any amount shall be paid
to such Guarantor for the account of the Borrower, such amount shall be held in
trust for the benefit of the Agent and the Banks and shall forthwith be paid to
the Agent and the Banks to be credited and applied to the Obligations, whether
matured or unmatured.
SECTION 10. MISCELLANEOUS
SECTION 10.01 Notices. Notices and other communications provided for herein
shall be in writing (including facsimile communication) and shall be mailed,
transmitted by facsimile or delivered to the Borrower or any Guarantor at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer and
to a Bank or the Agent to it at its address set forth on Annex A, or such other
address as such party may from time to time designate by giving written notice
to the other parties hereunder. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the fifth Business Day after the date when sent by
registered or certified mail, postage prepaid, return receipt requested, if by
mail; or when receipt is acknowledged, if by any facsimile equipment of the
sender; in each case addressed to such party as provided in this Section 10.01
or in accordance with the latest unrevoked written direction from such party;
provided, however, that in the case of notices to the Agent notices pursuant to
the preceding sentence with respect to change of address and pursuant to Section
2 shall be effective only when received by the Agent.
SECTION 10.02 Survival of Agreement, Representations and Warranties, etc. All
warranties, representations and covenants made by the Borrower or any Guarantor
herein or in any certificate or other instrument delivered by it or on its
behalf in connection with this Agreement shall be considered to have been relied
upon by the Banks and shall survive the making of the Loans herein contemplated
regardless of any investigation made by any Bank or on its behalf and shall
continue in full force and effect so long as any amount due or to become due
hereunder is outstanding and unpaid and so long as the Commitments have not been
terminated. All statements in any such certificate or other instrument shall
constitute representations and warranties by the Borrower and the Guarantors
hereunder with respect to the Borrower.
SECTION 10.03 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Agent and the Banks and their respective successors and assigns.
Neither the Borrower nor any of the Guarantors may assign or transfer any of
their rights or obligations hereunder without the prior written consent of all
of the Banks. Each Bank may sell participations to any Person in all or part of
any Loan, or all or part of its Commitment, in which event, without limiting the
foregoing, the provisions of Section 2.15 shall inure to the benefit of each
purchaser of a participation (provided that such participant shall look solely
to the seller of such participation for such benefits and the Borrower's and the
Guarantors' liability, if any, under Sections 2.15 and 2.18 shall not be
increased as a result of the sale of any such participation) and the pro rata
treatment of payments, as described in Section 2.17, shall be determined as if
such Bank had not sold such participation. In the event any Bank shall sell any
participation, such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower and each of the Guarantors relating to
the Loans, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement (provided that such
Bank may grant its participant the right to consent to such Bank's execution of
amendments, modifications or waivers which (i) reduce any Fees payable hereunder
to the Banks, (ii) reduce the amount of any scheduled principal payment on any
Loan or reduce the principal amount of any Loan or the rate of interest payable
hereunder or (iii) extend the maturity of the Borrower's obligations hereunder).
The sale of any such participation shall not alter the rights and obligations of
the Bank selling such participation hereunder with respect to the Borrower.
(b) Each Bank may assign to one or more Banks or Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the same
portion of the related Loans at the time owing to it), provided, however, that
(i) other than in the case of an assignment to a Bank Affiliate of such assignor
Bank, or to another Bank, the Agent and the Fronting Bank must give their
respective prior written consent to such assignment, which consent will not be
unreasonably withheld, (ii) the aggregate amount of the Commitment and/or Loans
of the assigning Bank subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Agent) shall, unless otherwise agreed to in writing by the Agent, in no
event be less than $1,000,000 or the remaining portion of such Bank's Commitment
and/or Loans, if less and (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance with blanks
appropriately completed, together with a processing and recordation fee of
$3,500 (for which the Borrower shall have no liability). Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be within ten
Business Days after the execution thereof (unless otherwise agreed to in writing
by the Agent), (A) the assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and (B) the Bank thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the Bank assignor
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents; (ii) such Bank assignor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Guarantor or the performance or observance by
the Borrower or any Guarantor of any of its obligations under this Agreement or
any of the other Loan Documents or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Loan Documents, together with copies of the
financial statements referred to in Section 3.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such Bank assignor or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
thereto, together with such powers as are reasonably incidental hereof; and (vi)
such assignee agrees that it will perform in accordance with their terms all
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(d) The Agent shall maintain at its office a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of the Loans
owing to, each Bank from time to time (the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Guarantors, the Agent and the Banks shall treat each Person the
name of which is recorded in the Register as a Bank hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an assigning
Bank and the assignee thereunder together with the fee payable in respect
thereto, the Agent shall, if such Assignment and Acceptance has been completed
with blanks appropriately filled and consented to by the Agent and the Fronting
Bank (to the extent such consent is required hereunder), (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt written notice thereof to the Borrower (together
with a copy thereof). No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(f) Any Bank may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 10.03, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Borrower or any of the Guarantors furnished to such Bank by or
on behalf of the Borrower or any of the Guarantors; provided that prior to any
such disclosure, each such assignee or participant or proposed assignee or
participant shall agree in writing to be bound by the provisions of Section
10.04.
(g) The Borrower hereby agrees, to the extent set forth in the Commitment
Letter, to actively assist and cooperate with the Agent in the Agent's efforts
to sell participations herein (as described in Section 10.03(a)) and assign to
one or more Banks or Eligible Assignees a portion of its interests, rights and
obligations under this Agreement (as set forth in Section 10.03(b)).
SECTION 10.04 Confidentiality. Each Bank agrees to keep any information
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any Bank
from disclosing such information (i) to any of its Affiliates or to any other
Bank, provided such Affiliate agrees to keep such information confidential to
the same extent required by the Banks hereunder, (ii) upon the order of any
court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority, (iv) which has been publicly disclosed other
than as a result of a disclosure by the Agent or any Bank which is not permitted
by this Agreement, (v) in connection with any litigation to which the Agent, any
Bank, or their respective Affiliates may be a party to the extent reasonably
required, (vi) to the extent reasonably required in connection with the exercise
of any remedy hereunder, (vii) to such Bank's legal counsel and independent
auditors, and (viii) to any actual or proposed participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 10.03(f). Each
Bank shall use reasonable efforts to notify the Borrower of any required
disclosure under clause (ii) of this Section.
SECTION 10.05 Expenses. Whether or not the transactions hereby contemplated
shall be consummated, the Borrower and the Guarantors agree to pay all
reasonable and documented out-of-pocket expenses incurred by the Agent
(including but not limited to the reasonable fees and disbursements of ▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel for the Agent, any other counsel that the
Agent shall retain and any internal or third-party appraisers, consultants and
accountants advising the Agent and ▇.▇. ▇▇▇▇▇▇ Securities Inc.) in connection
with the preparation, execution, delivery and administration of this Agreement
and the other Loan Documents, the making of the Loans and the issuance of the
Letters of Credit, the perfection of the Liens contemplated hereby, the
syndication of the transactions contemplated hereby, the reasonable and
customary costs, fees and expenses (including, without limitation, internally
allocated charges and expenses relating to the Agent's initial and ongoing
Borrowing Base examinations as set forth in the Fee Letter referred to in
Section 2.19) of the Agent in connection with its monthly and other periodic
field examinations, monitoring of assets (including reasonable and customary
internal collateral monitoring fees as set forth in and limited by the Fee
Letter referred to in Section 2.19) and publicity expenses, and, following the
occurrence of an Event of Default, all reasonable out-of-pocket expenses
incurred by the Banks and the Agent in the enforcement or protection of the
rights of any one or more of the Banks or the Agent in connection with this
Agreement or the other Loan Documents, including but not limited to the
reasonable fees and disbursements of any counsel for the Banks or the Agent.
Such payments shall be made on the date of the Interim Order and thereafter on
demand upon delivery of a statement setting forth such costs and expenses.
Whether or not the transactions hereby contemplated shall be consummated, the
Borrower and the Guarantors agree to reimburse the Agent and ▇.▇. ▇▇▇▇▇▇
Securities Inc. for the expenses set forth in the Commitment Letter and the
reimbursement provisions thereof are hereby incorporated herein by reference.
The obligations of the Borrower and the Guarantors under this Section shall
survive the termination of this Agreement and/or the payment of the Loans.
SECTION 10.06 Indemnity. The Borrower and each of the Guarantors agree to
indemnify and hold harmless the Agent, ▇.▇. ▇▇▇▇▇▇ Securities Inc. and the Banks
and their directors, officers, employees, agents and Affiliates (each an
"Indemnified Party") from and against any and all expenses, losses, claims,
damages and liabilities incurred by such Indemnified Party arising out of claims
made by any Person in any way relating to the transactions contemplated hereby,
but excluding therefrom all expenses, losses, claims, damages, and liabilities
to the extent that they are determined by the final judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnified Party. The obligations of the Borrower and the
Guarantors under this Section shall survive the termination of this Agreement
and/or the payment of the Loans.
SECTION 10.07 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK AND (TO THE EXTENT APPLICABLE) THE BANKRUPTCY CODE.
SECTION 10.08 No Waiver. No failure on the part of the Agent or any of the Banks
to exercise, and no delay in exercising, any right, power or remedy hereunder or
any of the other Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
SECTION 10.09 Extension of Maturity. Should any payment of principal of or
interest or any other amount due hereunder become due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.
SECTION 10.10 Amendments, etc.
(a) No modification, amendment or waiver of any provision of this Agreement or
the Security and Pledge Agreement, and no consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Banks, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given; provided, however, that no such modification or amendment shall
without the written consent of (1) the Super-majority Banks increase the advance
rates set forth in the definition of the term "Borrowing Base" or release of any
of the Liens granted to the Agent hereunder, under the Orders or under any other
Loan Document, or release any of the Guarantors, (2) the Bank affected thereby
(x) increase the Commitment of a Bank (it being understood that a waiver of an
Event of Default shall not constitute an increase in the Commitment of a Bank),
or (y) reduce the principal amount of any Loan or the rate of interest payable
thereon, or extend any date for the payment of interest hereunder or reduce any
Fees payable hereunder or extend the final maturity of the Borrower's
obligations hereunder or (3) all of the Banks (i) amend or modify any provision
of this Agreement which provides for the unanimous consent or approval of the
Banks, (ii) amend this Section 10.10 or the definition of Required Banks, (iii)
amend or modify the Superpriority Claim status of the Banks contemplated by
Section 2.23 or (iv) release all or any substantial portion of the Liens granted
to the Agent hereunder, under the Orders or under any other Loan Document, or
release all or substantially all of the Guarantors. No such amendment or
modification may adversely affect the rights and obligations of the Agent or any
Fronting Bank hereunder or any Bank in the capacity referred to in Section 6.03
(vi) without its prior written consent. No notice to or demand on the Borrower
or any Guarantor shall entitle the Borrower or any Guarantor to any other or
further notice or demand in the same, similar or other circumstances. Each
assignee under Section 10.03(b) shall be bound by any amendment, modification,
waiver, or consent authorized as provided herein, and any consent by a Bank
shall bind any Person subsequently acquiring an interest on the Loans held by
such Bank. No amendment to this Agreement shall be effective against the
Borrower or any Guarantor unless signed by the Borrower or such Guarantor, as
the case may be.
(b) Notwithstanding anything to the contrary contained in Section 10.10(a), in
the event that the Borrower requests that this Agreement be modified or amended
in a manner which would require the unanimous consent of all of the Banks and
such modification or amendment is agreed to by the Super-majority Banks (as
hereinafter defined), then with the consent of the Borrower and the
Super-majority Banks, the Borrower and the Super-majority Banks shall be
permitted to amend the Agreement without the consent of the Bank or Banks which
did not agree to the modification or amendment requested by the Borrower (such
Bank or Banks, collectively the "Minority Banks") to provide for (w) the
termination of the Commitment of each of the Minority Banks, (x) the addition to
this Agreement of one or more other financial institutions (each of which shall
be an Eligible Assignee), or an increase in the Commitment of one or more of the
Super-majority Banks, so that the Total Commitment after giving effect to such
amendment shall be in the same amount as the Total Commitment immediately before
giving effect to such amendment, (y) if any Loans are outstanding at the time of
such amendment, the making of such additional Loans by such new financial
institutions or Super-majority Bank or Banks, as the case may be, as may be
necessary to repay in full the outstanding Loans of the Minority Banks
immediately before giving effect to such amendment and (z) such other
modifications to this Agreement as may be appropriate. As used herein, the term
"Super-majority Banks" shall mean, at any time, Banks holding Loans representing
at least 66-2/3% of the aggregate principal amount of the Loans outstanding, or
if no Loans are outstanding, Banks having Commitments representing at least
66-2/3% of the Total Commitment.
SECTION 10.11 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.12 Headings. Section headings used herein are for convenience only
and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 10.13 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 10.14 Prior Agreements. This Agreement represents the entire agreement
of the parties with regard to the subject matter hereof and the terms of any
letters and other documentation entered into between the Borrower or a Guarantor
and any Bank or the Agent prior to the execution of this Agreement which relate
to Loans to be made hereunder shall be replaced by the terms of this Agreement
(except as otherwise expressly provided herein with respect to the Commitment
Letter and the fee letter referred to therein, including without limitation the
Borrower's agreements to actively assist the Agent in the syndication of the
transactions contemplated hereby referred to in Section 10.03(g) and with
respect to interest rates and Commitment Fees and including also the provisions
of Section 2.19).
SECTION 10.15 Further Assurances. Whenever and so often as reasonably requested
by the Agent, the Borrower and the Guarantors will promptly execute and deliver
or cause to be executed and delivered all such other and further instruments,
documents or assurances, and promptly do or cause to be done all such other and
further things as may be necessary and reasonably required in order to further
and more fully vest in the Agent all rights, interests, powers, benefits,
privileges and advantages conferred or intended to be conferred by this
Agreement and the other Loan Documents.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE GUARANTORS, THE
AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and the year first written.
BORROWER:
BURLINGTON INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President, Corporate Development and Law
GUARANTORS:
B. I. TRANSPORTATION, INC.
BH/M-II INC.
BI PROPERTIES INC.
BI PROPERTIES I INC.
BII MEXICO HOLDINGS I, INC.
BII MEXICO HOLDINGS II, INC.
BII MEXICO LAUNDRY HOLDING CO.
BII MEXICO YARNS HOLDING CO.
BURLINGTON APPAREL SERVICES COMPANY
BURLINGTON FABRICS INC.
BURLINGTON FABRITEX USA, INC.
BURLINGTON INDUSTRIES I, LLC
BURLINGTON INDUSTRIES II, LLC
BURLINGTON INDUSTRIES III, LLC
BURLINGTON INDUSTRIES IV, LLC
BURLINGTON INDUSTRIES V, LLC
BURLINGTON INTERNATIONAL SERVICES COMPANY
BURLINGTON INVESTMENT INC.
BURLINGTON INVESTMENT II INC.
BURLINGTON ▇▇▇▇▇ CORPORATION
BURLINGTON ▇▇▇▇▇, INC.
BURLINGTON WORLDWIDE INC.
BURLINGTON WORSTEDS INC.
DISTRIBUTEX, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
JPMORGAN CHASE BANK,
Individually and as Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
ANNEX A
to
REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of November 15, 2001
Commitment Commitment
Bank Amount Percentage
JPMorgan Chase Bank $190,000,000.00 100.0000%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇▇
Total $190,000,000.00 100.0000%
===============
Exhibit B to the
Revolving Credit and
Guaranty Agreement
FORM OF SECURITY AND
PLEDGE AGREEMENT
SECURITY AND PLEDGE AGREEMENT
SECURITY AND PLEDGE AGREEMENT (the "Agreement"), dated as of November
15, 2001, by and among Burlington Industries, Inc., a Delaware corporation (the
"Borrower"), and the subsidiaries of the Borrower signatory hereto (together
with the Borrower, the "Grantors"), each a debtor and debtor-in-possession under
Chapter 11 of the Bankruptcy Code, and JPMorgan Chase Bank, as agent (in such
capacity, the "Agent") for the financial institutions and other lenders (the
"Banks") party to the Credit Agreement (as hereinafter defined).
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Agent, the Banks and the Grantors are entering into a Revolving
Credit and Guaranty Agreement dated as of the date hereof (as amended, modified
or supplemented from time to time, the "Credit Agreement"); and
WHEREAS, unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined; and
WHEREAS, it is a condition precedent to the making of Loans and the
issuance of Letters of Credit that the Grantors shall have granted a security
interest, pledge and lien on (x) all cash and cash equivalents maintained in the
Letter of Credit Account pursuant to Section 364(c)(2) of the Bankruptcy Code
and (y) certain of the Grantors' assets and properties and the proceeds thereof
pursuant to Sections 364(c)(2), 364(c)(3) and 364(d)(1) of the Bankruptcy Code;
and
WHEREAS, the grant of such security interest, pledge and lien has been
authorized pursuant to Sections 364(c)(2), 364(c)(3) and 364(d)(1) of the
Bankruptcy Code by the Interim Order and (after its entry by the Bankruptcy
Court) the Final Order; and,
WHEREAS, to supplement the Interim Order and the Final Order without in
any way diminishing or limiting the effect of the Interim Order and the Final
Order or the security interest, pledge and lien granted thereunder, the parties
hereto desire to more fully set forth their respective rights in connection with
such security interest, pledge and lien; and
WHEREAS, this Agreement has been approved by the Interim Order and
(after its entry by the Bankruptcy Court) the Final Order;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Loans and issue Letters of Credit, the Grantors hereby agree
with the Agent as follows:
Section 1. Grant of Security and Pledge. Each of the Grantors hereby
transfers, grants, bargains, sells, conveys, hypothecates, assigns, pledges and
sets over to the Agent for its benefit and the ratable benefit of the Banks and
hereby grants to the Agent for its benefit and the ratable benefit of the Banks,
a perfected pledge and security interest in all of each Grantors' right, title
and interest in and to the following (the "Collateral"), which pledge and
security interest shall be subject to the priorities set forth in Section 2.23
of the Credit Agreement:
(a) all present and future accounts, accounts receivable and other rights of
each of the Grantors to payment for goods sold or leased or for services
rendered (except those evidenced by instruments or chattel paper), whether now
existing or hereafter arising and wherever arising, and whether or not they have
been earned by performance (collectively, the "Accounts"), including, without
limitation, Accounts that are repurchased from B.I. Funding, Inc.;
(b) all goods and merchandise now owned or hereafter acquired by each of the
Grantors wherever located, whether in the possession of a Grantor or of a bailee
or other person for sale, storage, transit, processing, use or otherwise
consisting of whole goods, components, supplies, materials, or consigned,
returned or repossessed goods which are held for sale or lease or to be
furnished (or have been furnished) under any contract of service or which are
raw materials, work-in-process, finished goods or materials used or consumed in
such Grantor's business or processed by or on behalf of any Grantor
(collectively, the "Inventory");
(c) all machinery, all manufacturing, distribution, selling, data processing and
office equipment, all furniture, furnishings, appliances, fixtures and trade
fixtures, tools, tooling, molds, dies, vehicles, vessels, aircraft and all other
goods of every type and description (other than Inventory), in each instance
whether now owned or hereafter acquired by each of the Grantors and wherever
located (collectively, the "Equipment");
(d) all works of art now owned or hereafter acquired by each of the Grantors,
including, without limitation, paintings, sketches, drawings, prints,
sculptures, crafts, tapestries, porcelain, carvings, artifacts, renderings and
designs;
(e) all rights, interests, choses in action, causes of action, claims and all
other intangible property of each of the Grantors of every kind and nature
(other than Accounts, Trademarks, Patents and Copyrights), in each instance
whether now owned or hereafter acquired by such Grantor, including, without
limitation, all general intangibles, but excluding avoidance causes of action
under the Bankruptcy Code (it being understood and agreed, however, that the
proceeds of any such avoidance causes of action shall be subject to the pledge
and security interest granted herein and shall be available to repay the
Obligations); all corporate and other business records; all loans, royalties,
and other obligations receivable; all inventions, designs, trade secrets,
computer programs, software, printouts and other computer materials, goodwill,
registrations, copyrights, licenses, franchises, customer lists, credit files,
correspondence, and advertising materials (to the extent the same are assignable
by such Grantor under applicable law without the consent of the licensor or
owner thereunder); all customer and supplier contracts, firm sale orders, rights
under license and franchise agreements (including all license agreements with
any other Person in connection with any of the Patents and Trademarks or such
other Person's names or marks, whether such Grantor is a licensor or licensee
under any such license agreement but only to the extent such license agreements
are assignable by such Grantor under applicable law without the consent of the
licensor thereunder), and other contracts and contract rights; all interests in
partnerships and joint ventures; all tax refunds and tax refund claims; all
right, title and interest under leases, subleases, licenses and concessions and
other agreements to the extent assignable relating to real or personal property;
all payments due or made to each of the Grantors in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of any property
by any person or governmental authority; all deposit accounts (general or
special) with any bank or other financial institution; all credits with and
other claims against carriers and shippers; all rights to indemnification; all
reversionary interests in pension and profit sharing plans and reversionary,
beneficial and residual interest in trusts; all proceeds of insurance of which
each of the Grantors is beneficiary; and all letters of credit, guaranties,
liens, security interest and other security held by or granted to each of the
Grantors; and all other intangible property, whether or not similar to the
foregoing (collectively, the "General Intangibles");
(f) all chattel paper, all instruments, all notes and debt instruments and all
payments thereunder and instruments and other property from time to time
delivered in respect thereof or in exchange therefor, and all bills of lading,
warehouse receipts and other documents of title and documents, in each instance
whether now owned or hereafter acquired by each of the Grantors;
(g) all property or interests in property now or hereafter acquired by each of
the Grantors which may be owned or hereafter may come into the possession,
custody or control of the Agent or any agent or affiliate of the Agent in any
way or for any purpose (whether for safekeeping, deposit, custody, pledge,
transmission, collection or otherwise), and all rights and interests of each of
the Grantors, now existing or hereafter arising and however and wherever
arising, in respect of any and all (i) notes, drafts, letters of credits,
stocks, bonds, and debt and equity securities, whether or not certificated, and
warrants, options, puts and calls and other rights to acquire or otherwise
relating to the same; (ii) money (including all cash and cash equivalents held
in the Letter of Credit Account (as defined and referred to in the Credit
Agreement)); (iii) proceeds of loans, including, without limitation, Loans made
under the Credit Agreement; and (iv) insurance proceeds and books and records
relating to any of the property covered by this Agreement; together, in each
instance, with all accessions and additions thereto, substitutions therefor, and
replacements, proceeds and products thereof;
(h) all trademarks, trade names, trade styles, service marks, prints and labels
on which said trademarks, trade names, trade styles and service marks have
appeared or appear, designs and general intangibles of like nature, now existing
or hereafter adopted or acquired, and all registrations and recordings thereof,
including, without limitation, applications, registrations and recordings in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof, or any other country or political
subdivision thereof (except for "intent to use" applications for trademark or
service mark registrations filed pursuant to Section 1(b) of the ▇▇▇▇▇▇ Act,
unless and until an Amendment to Allege Use or a Statement of Use under Sections
1(c) and 1(d) of said Act has been filed), all whether now owned or hereafter
acquired by each of the Grantors, including, but not limited to, those described
in Schedule 3 annexed hereto and made a part hereof, and all reissues,
extensions or renewals thereof and all licenses thereof (together, in each case,
with the goodwill of the business connected with the use of, and symbolized by
each such trademark, service mark, trade name and trade dress, all of the
foregoing being herein referred to as the "Trademarks");
(i) all letters patent of the United States or any other country, and all
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, all
whether now owned or hereafter acquired by each of the Grantors, including, but
not limited to, those described in Schedule 3 annexed hereto and made a part
hereof, and (ii) all reissues, continuations, continuations-in-part or
extensions thereof and all licenses thereof (all of the foregoing being herein
referred to as the "Patents");
(j) all copyrights of the United States, or any other country, and all
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Copyright Office
or in any similar office or agency of the United States, any State thereof, or
any other country or political subdivision thereof, all whether now owned or
hereafter acquired by each of the Grantors, including, but not limited to, those
described in Schedule 3 hereto and all renewals and extensions thereof and all
licenses thereof (all of the foregoing being herein referred to as the
"Copyrights");
(k) all books, records, ledger cards and other property at any time evidencing
or relating to the Accounts, Equipment, General Intangibles, Trademarks, Patents
or Copyrights;
(l) (i) all the shares of capital stock owned by each Grantor, as applicable,
listed on Schedule 4 hereto of the issuers listed thereon (individually, an
"Issuer", and collectively, the "Issuers") and all shares of capital stock of
any Issuer obtained in the future by such Grantor and the certificates
representing or evidencing all such shares (the "Pledged Shares"); (ii) all
other property which may be delivered to and held by the Agent in respect of the
Pledged Shares pursuant to the terms hereof; (iii) subject to Section 9 below,
all dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed, in respect of, in exchange for or upon the
conversion of the securities referred to in clauses (i) and (ii) above; and (iv)
subject to Section 9 below, all rights and privileges of each Grantor, as
applicable, with respect to the securities and other property referred to in
clauses (i), (ii) and (iii) (the items referred to in clauses (i) through (iv)
being collectively called the "Pledged Collateral");
(m) all other personal property of each of the Grantors, whether tangible or
intangible, and whether now owned or hereafter acquired; and
(n) all proceeds and products of any of the foregoing, in any form, including,
without limitation, any claims against third parties for loss or damage to or
destruction of any or all of the foregoing and to the extent not otherwise
included, all (i) payments under insurance (whether or not the Agent is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing Collateral
and (ii) cash.
Notwithstanding anything contained herein to the contrary, (i) the total amount
of shares of capital stock or other ownership interests of any Person pledged
pursuant to this Agreement that is not incorporated or organized in the United
States shall in no event exceed sixty-five percent (65%) of the total
outstanding shares of capital stock or such other ownership interests thereof
and (ii) no membership interest in and/or the capital stock of Nano-Tex owned by
the Grantors shall be pledged pursuant to the terms herein.
SECTION 2. Security for Obligations. This Agreement and the Collateral secure
the payment of all obligations of each of the Grantors, now or hereafter
existing, under the Credit Agreement and the other Loan Documents (and any other
documents in respect of such obligations), and in respect of Indebtedness
permitted by Section 6.03(vi) of the Credit Agreement, whether for principal,
interest, fees, expenses or otherwise, and all obligations of each of the
Grantors now or hereafter existing under or in respect of this Agreement (all
such obligations of the Grantor being herein called the "Obligations").
SECTION 3. Delivery of Pledged Collateral; Other Action. Upon written request by
the Agent (and without further order of the Bankruptcy Court), all certificates
or instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by the Agent pursuant hereto and shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Agent. All such certificates or instruments
previously delivered by the Grantors to the Pre-Petition Agent shall be deemed
to be held by the Agent. Upon the occurrence and during the continuance of any
Event of Default, the Agent shall have the right (for the ratable benefit of the
Banks), at any time in its discretion and without notice to the Grantors to
transfer to or to register in the name of the Agent or any of its nominees any
or all of the Pledged Collateral.
SECTION 4. Representations and Warranties. Each Grantor, jointly and severally,
represents and warrants as follows:
(a) As of the Filing Date, all of the Inventory and/or Equipment is located at
the places specified in Schedule 1 hereto. As of the Filing Date, the chief
places of business and chief executive offices of each of the Grantors and the
offices where each Grantor keeps its records concerning any Accounts and all
originals of all chattel paper which evidence any Account are located at the
places specified in Schedule 2 hereto. As of the Filing Date, all trade names
under which each of the Grantors have sold and will sell Inventory are listed on
Schedule 3 hereto.
(b) Each of the Grantors owns the Collateral free and clear of any lien,
security interest, charge or encumbrance except for the security interest
created by this Agreement and except as permitted under Section 6.01 of the
Credit Agreement. No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any recording
office, except (x) such as may have been filed in favor of the Agent relating to
this Agreement and (y) in favor of any holder of a Lien permitted under Section
6.01 of the Credit Agreement.
(c) As of the Filing Date, no Grantor owns any material Trademarks, Patents or
Copyrights or has any material Trademarks, Patents or Copyrights registered in,
or the subject of pending applications in, the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, other than those described in Schedule 3 hereto.
The registrations for the Collateral disclosed on such Schedule 3 hereto are
valid and subsisting and in full force and effect to the extent they are
material to the assets, properties, condition (financial or otherwise),
operations or prospects of the Grantors taken as a whole. None of the material
Patents or Copyrights have been abandoned or dedicated.
(d) The Pledged Shares have been duly authorized and validly issued and are
fully paid and non-assessable.
(e) Each Grantor, as the case may be, is the legal and beneficial owner of the
Pledged Shares as described on Schedule 4, free and clear of any lien, security
interest, option or other charge or encumbrance, except for the security
interest created by this Agreement and the Final Order and Liens permitted under
Section 6.01.
(f) Except as disclosed on Schedule 4, the Pledged Shares described in Section
1(l) hereof constitute all of the issued and outstanding shares of stock of each
of the Issuers and no Issuer is under any contractual obligation to issue any
additional shares of stock or any other securities, rights or indebtedness.
(g) Except for the Interim Order and the Final Order, no authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required either (i) for the grant and pledge by each of
the Grantors of the security interests granted hereby or for the execution,
delivery or performance of this Agreement by each of the Grantors or (ii) for
the perfection of the security interests or the exercise by the Agent of its
rights and remedies hereunder.
(h) The Borrower has been duly incorporated and is in good standing under the
laws of the State of Delaware, and each other Grantor has been duly incorporated
or organized, as the case may be, and is in good standing under the laws of its
respective state of incorporation or organization as set forth in Schedule 3.05
to the Credit Agreement.
SECTION 5. Further Assurances.
(a) Each of the Grantors agrees that from time to time, at the expense of the
Grantors, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary, or that the Agent
may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Agent to exercise and
enforce any of its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, and without further order of
the Bankruptcy Court, each of the Grantors will execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary, or as the Agent may reasonably request, in order
to perfect and preserve the security interests granted or purported to be
granted hereby.
(b) Each Grantor hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of such Grantor where permitted by law.
(c) Each Grantor will furnish to the Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent may reasonably request,
all in reasonable detail.
SECTION 6. As to Equipment and Inventory. Each Grantor shall:
(a) Keep the Equipment and Inventory (other than Inventory sold in the ordinary
course of business) at the places specified therefor in Schedule 1 hereto or,
upon 30 days' prior written notice to the Agent following any transfer thereof
to a different jurisdiction, at other places in jurisdictions where all action
required by Section 5 shall have been taken to assure the continuation of the
perfection of the security interest of the Agent (for its benefit and the
ratable benefit of the Banks) with respect to the Equipment and Inventory.
(b) Subject to provisions of the Credit Agreement, maintain or cause to be
maintained in good repair, working order and condition, excepting ordinary wear
and tear and damage due to casualty, all of the Equipment, and make or cause to
be made all appropriate repairs, renewals and replacements thereof, to the
extent not obsolete and consistent with past practice of such Grantor, as
quickly as practicable after the occurrence of any loss or damage thereto which
are necessary or reasonably desirable to such end, except where the failure to
do any of the foregoing would not result in a material adverse effect on the
assets, properties, condition (financial or otherwise), operations or prospects
of the Grantors, taken as a whole.
(c) Until satisfaction in full of the Obligations, at any time when an Event of
Default has occurred and is continuing: (i) each Grantor will perform any and
all reasonable actions requested by the Agent to enforce the Agent's security
interest in the Inventory and all of the Agent's rights hereunder, such as
subleasing warehouses to the Agent or its designee, placing and maintaining
signs, appointing custodians, transferring Inventory to warehouses, and
delivering to the Agent warehouse receipts and documents of title in the Agent's
name; (ii) if any Inventory is in the possession or control of any of the
Grantors' agents, contractors or processors or any other third party (other than
in connection with a temporary relocation of such inventory for a limited time
such that the perfection of the security interests in such Inventory is not
adversely affected thereby), each such Grantor will notify the Agent thereof and
will notify such agents, contractors or processors or third party of the Agent's
security interest therein and, upon request, instruct them to hold all such
Inventory for the Agent and such Grantor's account, as their interests may
appear, and subject to the Agent's instructions; (iii) the Agent shall have the
right to hold all Inventory subject to the security interest granted hereunder;
and (iv) the Agent shall have the right to take possession of the Inventory or
any part thereof and to maintain such possession on such Grantor's premises or
to remove any or all of the Inventory to such other place or places as the Agent
desires in its sole discretion. If the Agent exercises its right to take
possession of the Inventory, such Grantor, upon the Agent's demand, will
assemble the Inventory and make it available to the Agent at such Grantor's
premises at which it is located.
SECTION 7. As to Accounts.
(a) Each Grantor shall keep its chief place of business and chief executive
office and the offices where it keeps its records concerning the Accounts, and
the offices where it keeps all originals of all chattel paper which evidence
Accounts, at the location or locations therefor specified in Section 4(a) or,
upon 15 days' prior written notice to the Agent, at such other locations in a
jurisdiction where all actions required by Section 5 shall have been taken with
respect to the Accounts. Each Grantor will hold and preserve such records and
chattel paper and will permit representatives of the Agent, at any time during
normal business hours and upon reasonable prior written notice, to inspect and
make abstracts from such records and chattel paper in accordance with Section
5.06 of the Credit Agreement.
(b) Except as otherwise provided in this subsection (b), each Grantor shall
continue to collect in accordance with its customary practice, at its own
expense, all amounts due or to become due to such Grantor under the Accounts
and, prior to the occurrence and continuance of an Event of Default, such
Grantor shall have the right to adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon, all in accordance with
its customary practices. In connection with such collections, the Grantors may,
upon the occurrence and during the continuation of an Event of Default, take
(and at the direction of the Agent shall take) such action as the Grantors or
the Agent may reasonably deem necessary or advisable to enforce collection of
the Accounts; provided, that upon written notice by the Agent to any Grantor,
following the occurrence and during the continuation of an Event of Default, of
its intention so to do, the Agent shall have the right to notify the account
debtors or obligors under any Accounts of the assignment of such Accounts to the
Agent and to direct such account debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the Agent
and, upon such notification and at the expense of such Grantor, to enforce
collection of any such Accounts, and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as such Grantor
might have done. After receipt by such Grantor of the notice referred to in the
proviso to the preceding sentence, and unless and until such notice is rescinded
by the Agent by written notice to such Grantor (i) all amounts and proceeds
(including instruments) received by such Grantor in respect of the Accounts
shall be received in trust for the benefit of the Agent (for the ratable benefit
of the Banks) hereunder, shall be segregated from other funds of the Grantors
and shall be forthwith paid over to the Agent in the same form as so received
(with any necessary endorsement) to be held as cash collateral and either (A)
released to the Grantors if such Event of Default shall have been cured or
waived or (B) if such Event of Default shall be continuing, applied as provided
by Section 15, and (ii) the Grantors shall not adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any account debtor
or obligor thereof, or allow any credit or discount thereon.
SECTION 8. As to Trademarks, Patents and Copyrights.
(a) Each Grantor shall, either itself or through licensees, continue to use the
Trademarks as each is currently used in the Grantor's business in order to
maintain the Trademarks in full force free from any claim of abandonment for
nonuse and each such Grantor will not (and will not permit any licensee thereof
to) do any act or knowingly omit to do any act whereby any Trademark may become
invalidated, unless such failure to use a Trademark is not reasonably likely to
have a material adverse effect on the assets, properties, condition (financial
or otherwise), operations or prospects of the Grantors taken as a whole.
(b) No Grantor will do any act, or omit to do any act, whereby the Patents or
Copyrights may become abandoned or dedicated and each such Grantor shall notify
the Agent immediately if it knows of any reason or has reason to know that any
application or registration may become abandoned or dedicated, unless such
abandonment or dedication is not reasonably likely to have a material adverse
effect on the condition (financial or otherwise), operations or properties of
the Grantors taken as a whole.
(c) No Grantor will, either itself or through any agent, employee, licensee or
designee, (i) file an application for the registration of any Patent or
Trademark with the United States Patent and Trademark Office or any similar
office or agency in any other country or any political subdivision thereof or
(ii) file any assignment of any patent or trademark, which such Grantor may
acquire from a third party, with the United States Patent and Trademark Office
or any similar office or agency in any other country or any political
subdivision thereof, unless such Grantor shall, within 30 days after the date of
such filing, notify the Agent thereof, and, upon request of the Agent, execute
and deliver any and all assignments, agreements, instruments, documents and
papers as the Agent may request to evidence the Agent's interest in such Patent
or Trademark and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby, and such Grantor hereby constitutes the Agent
its attorney-in-fact to execute and file all such writings for the foregoing
purposes, all lawful acts of such attorney being hereby ratified and confirmed;
such power being coupled with an interest is irrevocable until the Obligations
are paid in full.
(d) Each Grantor will take all necessary steps in any proceeding before the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political subdivision
thereof, to maintain in all material respects each application and registration
of all material Trademarks, Patents and Copyrights, including, without
limitation, filing of renewals, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings.
(e) Each Grantor will, without further order of the Bankruptcy Court, perform
all acts and execute and deliver all further instruments and documents,
including, without limitation, assignments for security in form suitable for
filing with the United States Patent and Trademark Office, and the United States
Copyright Office, respectively, reasonably requested by the Agent at any time to
evidence, perfect, maintain, record and enforce the Agent's interest in all
material Trademarks, Patents and Copyrights or otherwise in furtherance of the
provisions of this Agreement, and each Grantor hereby authorizes the Agent to
execute and file one or more accurate financing statements (and similar
documents) or copies thereof or of this Security Agreement with respect to
material Patents, Trademarks and Copyrights signed only by the Agent.
(f) Each Grantor will, upon acquiring knowledge of any use by any person of any
term or design likely to cause confusion with any material Trademark, promptly
notify the Agent of such use, and if requested by the Agent, shall join with the
Agent, at such Grantor's expense, in such action as the Agent, in its reasonable
discretion, may deem advisable for the protection of the Agent's interest in and
to the Trademarks.
SECTION 9. As to the Pledged Collateral; Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be continuing:
(i). the Grantors (as applicable) shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the terms of this Agreement;
(ii). notwithstanding the provisions of Section 1 hereof, such Grantors shall be
entitled to receive and retain any and all dividends and other distributions
paid in respect of the Pledged Collateral; provided, that any and all
(A) dividends paid or payable other than in cash
in respect of, and instruments and other
property received, receivable or otherwise
distributed in respect of, or in exchange
for, any Pledged Collateral, and
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged
Collateral in connection with a partial or
total liquidation or dissolution or in
connection with a reduction of capital,
capital surplus or paid-in-surplus,
(C) cash paid, payable or otherwise distributed
in respect of, or in redemption of, or in
exchange for, any Pledged Shares;
shall be, and shall be forthwith delivered to the Agent to hold as Pledged
Collateral and shall, if received by any of the Grantors, be received in trust
for the benefit of the Agent, be segregated from the other property or funds of
such Grantor, and be forthwith delivered to the Agent as Pledged Collateral in
the same form as so received (with any necessary endorsement); and
(iii). the Agent shall execute and deliver (or cause to be executed and
delivered) to the Grantors (as applicable) all such proxies and other
instruments as the Grantors (as applicable) may reasonably request for the
purpose of enabling such Grantor to exercise the voting and other rights which
it is entitled to exercise pursuant to paragraph (i) above and to receive the
dividends which it is authorized to receive and retain pursuant to paragraph
(ii) above;
(b) Upon the occurrence and during the continuance of an Event of Default:
(i). upon written notice from the Agent to the Grantors (as applicable) to such
effect, all rights of such Grantors (as applicable) to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 9(a)(i) and to receive the dividends which it would
otherwise be authorized to receive and retain pursuant to Section 9(a)(ii) shall
cease, and all such rights shall thereupon become vested in the Agent, who shall
thereupon have the sole right to exercise such voting and other consensual
rights and to receive and hold as Pledged Collateral any such dividends; and
(ii). all dividends which are received by such Grantors contrary to the
provisions of paragraph (i) of this Section 9(b) shall be received in trust for
the benefit of the Agent, shall be segregated from other funds of the Grantors
and shall be forthwith paid over to the Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement).
SECTION 10. Insurance. Upon the occurrence and during the continuance of any
Event of Default, all insurance payments in respect of Inventory and Equipment
shall be held, applied and paid to the Agent as specified in Section 15 hereof.
SECTION 11. Transfers to Others; Liens; Additional Shares. Each Grantor shall
not:
(a) Sell, assign (by operation of law or otherwise) or otherwise dispose of any
of the Collateral, except for dispositions otherwise permitted by the Credit
Agreement.
(b) Create or suffer to exist any lien, security interest or other charge or
encumbrance upon or with respect to any of the Collateral to secure any
obligation of any person or entity, except for the security interest created by
this Agreement, the Credit Agreement and the Final Order, or except as otherwise
permitted by the Credit Agreement.
(c) Each of the Grantors (as applicable) agrees that it will (i) cause each of
the Issuers that are wholly-owned Subsidiaries not to issue any stock or other
securities in addition to or substitution for the Pledged Shares issued by such
Issuer, except to the respective Grantor and (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all such
additional shares of stock or other securities of each Issuer of the Pledged
Shares.
SECTION 12. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints the Agent such Grantor's attorney-in-fact (which appointment shall be
irrevocable and deemed coupled with an interest), with full authority in the
place and stead of such Grantor and in the name of such Grantor or otherwise,
from time to time in the Agent's discretion, upon and during the occurrence and
continuation of an Event of Default, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(i). to obtain and adjust insurance required to be paid to the Agent pursuant to
Section 10,
(ii). to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral,
(iii). to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (i) or (ii) above,
(iv). to receive, endorse and collect all instruments made payable to the
Grantors representing any dividend or other distribution in respect of the
Pledged Collateral or any part thereof and to give full discharge for the same,
and
(v). to file any claims or take any action or institute any proceedings which
the Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Agent with respect to any
of the Collateral.
SECTION 13. Agent May Perform. If any Grantor fails to perform any agreement
contained herein, the Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith (as to which invoices have been furnished) shall be payable by the
Grantors under Section 16(b).
SECTION 14. The Agent's Duties. The powers conferred on the Agent hereunder are
solely to protect its interest and the interests of the Banks in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral, including,
without limitation, ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Agent has or is deemed to have knowledge
of such matters.
SECTION 15. Remedies. If any Event of Default shall have occurred and be
continuing, and subject to the provisions of Section 7 of the Credit Agreement:
(a) The Agent may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it, and
without application to or order of the Bankruptcy Court, all the rights and
remedies of a secured party on default under the Uniform Commercial Code and
also may (i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Agent forthwith, assemble all or
part of the Collateral as directed by the Agent and make it available to the
Agent at a place to be designated by the Agent which is reasonably convenient to
both parties and (ii) without notice except as specified in the following
sentence, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as the Agent may deem commercially reasonable. Each Grantor agrees that,
to the extent notice of such sale shall be required by law, at least ten days'
notice to the Grantors of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Agent may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(b) The Agent may instruct the Grantors not to make any further use of the
Patents, Copyrights or Trademarks or any mark similar thereto for any purpose to
the extent that such use would be inconsistent with the exercise by the Agent of
any other remedies under this Section.
(c) The Agent may license, whether general, special or otherwise, and whether on
an exclusive or nonexclusive basis, any of the Trademarks, Patents or Copyrights
throughout the world for such term or terms, on such conditions, and in such
manner, as the Agent shall in its sole discretion determine.
(d) The Agent may (without assuming any obligations or liability thereunder), at
any time, enforce (and shall have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of the Grantors in, to and under
any one or more license agreements with respect to the Collateral, and take or
refrain from taking any action under any thereof, and each of the Grantors
hereby releases the Agent from, and agrees to hold the Agent free and harmless
from and against any claims arising out of, any action taken or omitted to be
taken with respect to any such license agreement except claims involving gross
negligence, willful misconduct or bad faith of the Agent.
(e) In the event of any such license, assignment, sale or other disposition of
the Collateral, or any of it, each Grantor shall supply its know-how and
expertise relating to the Trademarks, Patents or Copyrights, and its customer
lists and other records relating to the Trademarks, Patents or Copyrights to the
Agent or its designee.
(f) In order to implement the assignment, sale or other disposal of any of the
Trademarks, Patents or Copyrights, the Agent may, at any time, pursuant to the
authority granted in Section 12 hereof, execute and deliver on behalf of the
Grantors, one or more instruments of assignment of the Trademarks, Patents or
Copyrights (or any application of registration thereof), in form suitable for
filing, recording or registration in any country.
(g) All cash proceeds received by the Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Agent, be held by the Agent as collateral for, and
then or at any time thereafter or shall, upon instruction from the Required
Banks, be applied (after payment of any amounts payable to the Agent pursuant to
Section 16 hereof) in whole or in part against, all or any part of the
Obligations in such order as provided for in the Credit Agreement. Any surplus
of such cash or cash proceeds held by the Agent and remaining after payment in
full of all the Obligations shall be paid over to the Grantors or to whomsoever
may be lawfully entitled to receive such surplus.
(h) If at any time when the Agent shall determine to exercise its right to sell
all or any part of the Pledged Collateral pursuant to this Section 15, such
Pledged Collateral or the part thereof to be sold shall not be effectively
registered under the Securities Act of 1933, as amended, and as from time to
time in effect, and the rules and regulations thereunder (the "Securities Act"),
the Agent is hereby expressly authorized to sell such Pledged Collateral or such
part thereof by private sale in such manner and under such circumstances as the
Agent may deem necessary or advisable in order that such sale may legally be
effected without such registration. Without limiting the generality of the
foregoing, in any such event the Agent, in compliance with applicable securities
laws, (a) may proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Pledged Collateral or
such part thereof shall have been filed under such Securities Act, (b) may
approach and negotiate with a restricted number of potential purchasers to
effect such sale and (c) may restrict such sale to purchasers as to their
number, nature of business and investment intention including without limitation
to purchasers each of whom will represent and agree to the satisfaction of the
Agent that such purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Pledged Collateral, or part
thereof, it being understood that the Agent may cause or require each Grantor,
and each Grantor hereby agrees upon the written request of the Agent, to cause
(i) a legend or legends to be placed on the certificates to be delivered to such
purchasers to the effect that the Pledged Collateral represented thereby have
not been registered under the Securities Act and setting forth or referring to
restrictions on the transferability of such securities; and (ii) the issuance of
stop transfer instructions to such Issuer's transfer agent, if any, with respect
to the Pledged Collateral, or, if such Issuer transfers its own securities, a
notation in the appropriate records of such Issuer. In the event of any such
sale, each Grantor does hereby consent and agree that the Agent shall incur no
responsibility or liability for selling all or any part of the Pledged
Collateral at a price which the Agent may deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were public and deferred until after registration
as aforesaid.
SECTION 16. Indemnity and Expenses.
(a) Each Grantor, jointly and severally, agrees to indemnify the Agent from and
against any and all claims, losses and liabilities growing out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities directly arising from the
Agent's own gross negligence, willful misconduct or bad faith.
(b) The Grantors will upon demand pay to the Agent the amount of any and all
reasonable expenses (as to which invoices have been furnished), including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Agent hereunder or (iv) the
failure by any of the Grantors to perform or observe any of the provisions
hereof.
(c) The Grantors assume all responsibility and liability arising from the use of
the Trademarks, Patents and Copyrights.
(d) Each of the Grantors agrees that the Agent does not assume, and shall have
no responsibility for, the payment of any sums due or to become due under any
agreement or contract included in the Collateral or the performance of any
obligations to be performed under or with respect to any such agreement or
contract by any of the Grantors, and except as the same may have resulted from
the gross negligence, willful misconduct or bad faith of the Agent, each of the
Grantors hereby jointly and severally agree to indemnify and hold the Agent
harmless with respect to any and all claims by any person relating thereto.
SECTION 17. Security Interest Absolute. All rights of the Agent and security
interests hereunder, and all obligations of each of the Grantors hereunder,
shall be absolute and unconditional, irrespective of any circumstance which
might constitute a defense available to, or a discharge of, any guarantor or
other obligor in respect of the Obligations.
SECTION 18. Amendments; Etc. No amendment or waiver of any provision of this
Agreement, nor any consent to any departure by any of the Grantors herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the party against whom enforcement is sought, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 19. Addresses for Notices. All notices and other communications provided
for hereunder shall be in writing and shall be given in accordance with the
applicable provisions of the Credit Agreement.
SECTION 20. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until payment in full of the Obligations, (ii) be binding upon
each of the Grantors, their successors and assigns and (iii) inure, together
with the rights and remedies of the Agent hereunder, to the benefit of the Agent
and each of the Banks and their respective successors, transferees and assigns.
Upon the payment in full of the Obligations, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantors subject to any existing liens, security interests or encumbrances on
such Collateral. Upon any such termination, the Agent will, at the Grantor's
expense, execute and deliver to the Grantors such documents as the Grantors
shall reasonably request to evidence such termination.
SECTION 21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except as required by
mandatory provisions of law and except to the extent that the validity or
perfection of the security interest hereunder, or remedies hereunder, in respect
of any particular Collateral are governed by the laws of a jurisdiction other
than the State of New York and by Federal law (including, without limitation,
the Bankruptcy Code) to the extent the same has pre-empted the law of the State
of New York or such other jurisdiction.
SECTION 22. Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
[Signature Pages Follow]
IN WITNESS WHEREOF, each of the Grantors and the Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
GRANTORS:
BURLINGTON INDUSTRIES, INC.
B. I. TRANSPORTATION, INC.
BH/M-II INC.
BI PROPERTIES INC.
BI PROPERTIES I INC.
BII MEXICO HOLDINGS I, INC.
BII MEXICO HOLDINGS II, INC.
BII MEXICO LAUNDRY HOLDING CO.
BII MEXICO YARNS HOLDING CO.
BURLINGTON APPAREL SERVICES COMPANY
BURLINGTON FABRICS INC.
BURLINGTON FABRITEX USA, INC.
BURLINGTON INDUSTRIES I, LLC
BURLINGTON INDUSTRIES II, LLC
BURLINGTON INDUSTRIES III, LLC
BURLINGTON INDUSTRIES IV, LLC
BURLINGTON INDUSTRIES V, LLC
BURLINGTON INTERNATIONAL SERVICES COMPANY
BURLINGTON INVESTMENT INC.
BURLINGTON INVESTMENT II INC.
BURLINGTON ▇▇▇▇▇ CORPORATION
BURLINGTON ▇▇▇▇▇, INC.
BURLINGTON WORLDWIDE INC.
BURLINGTON WORSTEDS INC.
DISTRIBUTEX, INC.
By:
--------------------------------------
Name:
Title: Authorized Signator
JPMORGAN CHASE BANK,
Individually and as Agent
By:
-------------------------------
Title: