Exhibit 10.67
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$30,600,000
SENIOR SECURED
SUPER PRIORITY DEBTOR-IN-POSSESSION
LOAN AND SECURITY AGREEMENT
Dated as of April 7, 2000
By and Among
Safety components international, inc.
and
CERTAIN SUBSIDIARIES PARTY HERETO
AS BORROWERS
(collectively, the Borrowers)
and
THE Subsidiary Guarantors PARTY HERETO
(collectively, the Guarantors)
and
THE FINANCIAL INSTITUTIONS PARTY
HERETO FROM TIME TO TIME
(the Lenders)
and
BANK OF AMERICA, N.A.
(the Agent)
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TABLE OF CONTENTS(1)
Page
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ARTICLE 1 DEFINITIONS..................................................................................2
SECTION 1.1. Definitions.......................................................................2
SECTION 1.2. General..........................................................................30
ARTICLE 2 REVOLVING LOAN FACILITY AND TERM LOAN FACILITY..............................................30
SECTION 2.1. Revolving Loans..................................................................30
SECTION 2.2. Manner of Borrowing Revolving Loans..............................................31
SECTION 2.3. Repayment of Revolving Loans.....................................................32
SECTION 2.4. Revolving Loan Note..............................................................33
SECTION 2.5. Term Loans.......................................................................34
SECTION 2.6. Manner of Borrowing Term Loans...................................................34
SECTION 2.7. Repayment of Term Loans..........................................................34
SECTION 2.8. Term Loan Note...................................................................34
ARTICLE 3 LETTER OF CREDIT FACILITY...................................................................34
SECTION 3.1. Agreement to Issue...............................................................34
SECTION 3.2. Amounts..........................................................................35
SECTION 3.3. Conditions.......................................................................35
SECTION 3.4. Issuance of Letters of Credit....................................................35
SECTION 3.5. Duties of the Issuing Bank.......................................................36
SECTION 3.6. Payment of Reimbursement Obligations.............................................36
SECTION 3.7. Participations...................................................................36
SECTION 3.8. Indemnification, Exoneration.....................................................38
SECTION 3.9. Supporting Letter of Credit; Cash Collateral.....................................38
SECTION 3.10. Letters of Credit under Pre-Petition Loan Agreement..............................39
ARTICLE 4 GENERAL LOAN PROVISIONS.....................................................................40
SECTION 4.1. Interest.........................................................................40
SECTION 4.2. Certain Fees.....................................................................41
SECTION 4.3. Manner of Payment................................................................42
SECTION 4.4. General..........................................................................43
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(1) This Table of Contents is included for reference purposes only and does not
constitute part of the Loan and Security Agreement.
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SECTION 4.5. Loan Accounts; Statements of Account.............................................43
SECTION 4.6. Termination of Agreement.........................................................43
SECTION 4.7. Making of Loans..................................................................44
SECTION 4.8. Settlement Among Lenders.........................................................46
SECTION 4.9. Mandatory Prepayments............................................................49
SECTION 4.10. Payments Not at End of Interest Period; Failure to Borrow........................50
SECTION 4.11. Assumptions Concerning Funding of LIBOR Loans....................................50
SECTION 4.12. Notice of Conversion or Continuation.............................................50
SECTION 4.13. Conversion or Continuation.......................................................51
SECTION 4.14. Maximum Number of LIBOR Loans; Minimum Increments................................51
SECTION 4.15. Changed Circumstances............................................................51
SECTION 4.16. Cash Collateral Account..........................................................53
SECTION 4.17. Borrowers' Agent.................................................................54
SECTION 4.18. Joint and Several Liability......................................................54
SECTION 4.19. Obligations Absolute.............................................................54
SECTION 4.20. Waiver of Suretyship Defenses....................................................55
SECTION 4.21. Superpriority Nature of Secured Obligations......................................55
ARTICLE 5 CONDITIONS PRECEDENT........................................................................56
SECTION 5.1. Conditions Precedent to Loans and Letters of Credit..............................56
SECTION 5.2. All Loans; Letters of Credit.....................................................59
SECTION 5.3. Conditions as Covenants..........................................................60
ARTICLE 6 REPRESENTATIONS AND WARRANTIES..............................................................60
SECTION 6.1. Representations and Warranties...................................................60
SECTION 6.2. Survival of Representations and Warranties, Etc..................................69
ARTICLE 7 SECURITY INTEREST...........................................................................69
SECTION 7.1. Security Interest................................................................69
SECTION 7.2. Continued Priority of Security Interest..........................................70
ARTICLE 8 COLLATERAL COVENANTS........................................................................71
SECTION 8.1. Collection of Receivables........................................................71
SECTION 8.2. Verification and Notification....................................................72
SECTION 8.3. Disputes, Returns and Adjustments................................................72
SECTION 8.4. Invoices.........................................................................73
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SECTION 8.5. Delivery of Instruments..........................................................73
SECTION 8.6. Sales of Inventory...............................................................73
SECTION 8.7. Ownership and Defense of Title...................................................73
SECTION 8.8. Insurance........................................................................73
SECTION 8.9. Location of Offices and Collateral...............................................74
SECTION 8.10. Records Relating to Collateral...................................................74
SECTION 8.11. Inspection.......................................................................75
SECTION 8.12. Information and Reports..........................................................75
SECTION 8.13. Power of Attorney................................................................76
SECTION 8.14. Assignment of Claims Act.........................................................76
ARTICLE 9 AFFIRMATIVE COVENANTS.......................................................................76
SECTION 9.1. Preservation of Corporate Existence and Similar Matters..........................77
SECTION 9.2. Compliance with Applicable Law...................................................77
SECTION 9.3. Maintenance of Property..........................................................77
SECTION 9.4. Conduct of Business..............................................................77
SECTION 9.5. Insurance........................................................................77
SECTION 9.6. Payment of Taxes and Claims......................................................77
SECTION 9.7. Accounting Methods and Financial Records.........................................77
SECTION 9.8. Use of Proceeds..................................................................77
SECTION 9.9. Hazardous Waste and Substances; Environmental Requirements.......................78
SECTION 9.10. Indenture Trustees...............................................................79
SECTION 9.11. Post Closing Deliveries..........................................................79
ARTICLE 10 INFORMATION.................................................................................79
SECTION 10.1. Financial Statements.............................................................79
SECTION 10.2. Accountants' Certificate.........................................................80
SECTION 10.3. Officer's Certificate............................................................80
SECTION 10.4. Copies of Other Reports..........................................................80
SECTION 10.5. Notice of Litigation and Other Matters...........................................81
SECTION 10.6. ERISA............................................................................81
SECTION 10.7. Accuracy of Information..........................................................82
SECTION 10.8. Revisions or Updates to Schedules................................................82
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ARTICLE 11 NEGATIVE COVENANTS..........................................................................82
SECTION 11.1. Financial Ratios.................................................................82
SECTION 11.2. Indebtedness for Money Borrowed..................................................82
SECTION 11.3. Guaranties.......................................................................83
SECTION 11.4. Investments......................................................................83
SECTION 11.5. Capital Expenditures.............................................................83
SECTION 11.6. Restricted Dividend Payments and Purchases, Etc..................................83
SECTION 11.7. Merger, Consolidation and Sale of Assets.........................................83
SECTION 11.8. Transactions with Affiliates.....................................................83
SECTION 11.9. Liens............................................................................83
SECTION 11.10. Capitalized Lease Obligations....................................................83
SECTION 11.11. Operating Leases.................................................................83
SECTION 11.12. Limitation on Certain Restrictions on Subsidiaries...............................84
SECTION 11.13. Plans............................................................................84
SECTION 11.14. Sales and Leasebacks.............................................................84
SECTION 11.15. Amendments of Other Agreements...................................................84
SECTION 11.16. Fiscal Year......................................................................84
SECTION 11.17. Repayments.......................................................................84
ARTICLE 12 DEFAULT.....................................................................................84
SECTION 12.1. Events of Default................................................................84
SECTION 12.2. Remedies.........................................................................88
SECTION 12.3. Application of Proceeds..........................................................90
SECTION 12.4. Power of Attorney................................................................90
SECTION 12.5. Miscellaneous Provisions Concerning Remedies.....................................91
ARTICLE 13 ASSIGNMENTS.................................................................................91
SECTION 13.1. Successors and Assigns; Participations...........................................91
SECTION 13.2. Representation of Lenders........................................................94
ARTICLE 14 AGENT.......................................................................................94
SECTION 14.1. Appointment of Agent.............................................................94
SECTION 14.2. Delegation of Duties.............................................................95
SECTION 14.3. Exculpatory Provisions...........................................................95
SECTION 14.4. Reliance by Agent................................................................95
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SECTION 14.5. Notice of Default................................................................96
SECTION 14.6. Non-Reliance on Agent and Other Lenders..........................................96
SECTION 14.7. Indemnification..................................................................96
SECTION 14.8. Agent in Its Individual Capacity.................................................97
SECTION 14.9. Successor Agent..................................................................97
SECTION 14.10. Notices from Agent to Lenders....................................................97
SECTION 14.11. Field Examination Reports; Disclaimer by Lenders.................................97
ARTICLE 15 GUARANTEE...................................................................................98
SECTION 15.1. Guarantee........................................................................98
SECTION 15.2. Obligations Unconditional........................................................98
SECTION 15.3. Waiver of Suretyship Defenses....................................................98
SECTION 15.4. Reinstatement....................................................................99
SECTION 15.5. Remedies.........................................................................99
SECTION 15.6. Continuing Guaranty..............................................................99
ARTICLE 16 MISCELLANEOUS...............................................................................99
SECTION 16.1. Notices..........................................................................99
SECTION 16.2. Expenses........................................................................100
SECTION 16.3. Stamp and Other Taxes...........................................................101
SECTION 16.4. Setoff..........................................................................101
SECTION 16.5. Litigation......................................................................102
SECTION 16.6. Waiver of Rights................................................................102
SECTION 16.7. Consent to Advertising and Publicity............................................103
SECTION 16.8. Reversal of Payments............................................................103
SECTION 16.9. Injunctive Relief...............................................................103
SECTION 16.10. Accounting Matters..............................................................103
SECTION 16.11. Amendments......................................................................103
SECTION 16.12. Assignment......................................................................105
SECTION 16.13. Performance of Obligors' Duties.................................................105
SECTION 16.14. Indemnification.................................................................105
SECTION 16.15. All Powers Coupled with Interest................................................105
SECTION 16.16. Survival........................................................................105
SECTION 16.17. Titles and Captions.............................................................106
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SECTION 16.18. Severability of Provisions......................................................106
SECTION 16.19. Governing Law...................................................................106
SECTION 16.20. Counterparts....................................................................106
SECTION 16.21. Reproduction of Documents.......................................................106
SECTION 16.22. Term of Agreement...............................................................106
SECTION 16.23. Contribution and Indemnification among the Obligors.............................106
SECTION 16.24. Restrictions on Actions by Lenders; Sharing of Payments.........................107
SECTION 16.25. Agency for Perfection...........................................................107
SECTION 16.26. Taxes...........................................................................108
SECTION 16.27. Final Agreement.................................................................108
SECTION 16.28. Waiver of Consequential Damages, Etc............................................108
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EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C-1 FORM OF REVOLVING LOAN NOTE
EXHIBIT C-2 FORM OF TERM LOAN NOTE
EXHIBIT D FORM OF SETTLEMENT REPORT
EXHIBIT E [RESERVED]
EXHIBIT F FORM OF COMPLIANCE CERTIFICATE
Schedule C-1 Commitments
Schedule P-1 Projections
Schedule S-1 Senior Claims
Schedule 3.10 Outstanding Letters of Credit
Schedule 5.1(m) First Day Orders
Schedule 6.1(a) Organization
Schedule 6.1(b) Capitalization
Schedule 6.1(c) Subsidiaries
Schedule 6.1(e) Compliance with Laws
Schedule 6.1(f) Principal Business
Schedule 6.1(g) Governmental Approvals
Schedule 6.1(h) Title to Properties
Schedule 6.1(i) Liens
Schedule 6.1(j) Indebtedness and Guaranties
Schedule 6.1(k) Litigation
Schedule 6.1(l) Tax Matters
Schedule 6.1(n) Material Liabilities
Schedule 6.1(p) ERISA
Schedule 6.1(s) Location of Offices and Receivables
Schedule 6.1(t) Location of Inventory
Schedule 6.1(u) Equipment
Schedule 6.1(v) Real Estate
Schedule 6.1(w) Corporate and Fictitious Names
Schedule 6.1(z) Employee Relations
Schedule 6.1(aa) Proprietary Rights
Schedule 6.1(bb) Trade Names
Schedule 6.1(cc) Bank Accounts
vii
$30,600,000 SENIOR SECURED SUPER PRIORITY DEBTOR-IN-POSSESSION
LOAN AND SECURITY AGREEMENT
Dated as of April 7, 2000
SAFETY COMPONENTS INTERNATIONAL, INC., a Delaware corporation ("Safety
Components"), safety components FABRIC TECHNOLOGIES, INC., a Delaware
corporation, AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL, INC., a Delaware
corporation, ASCI HOLDINGS UK (DE), INC., a Delaware corporation, and ASCI
HOLDINGS MEXICO (DE), INC., a Delaware corporation, each as a debtor and a
debtor-in-possession (collectively, the "Debtor Borrowers"), VALENTEC
INTERNATIONAL CORPORATION LLC, a Delaware limited liability company, VALENTEC
SYSTEMS, INC., a Delaware corporation, GALION, INC., a Delaware corporation, and
AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL, LIMITED, a United Kingdom
corporation (the "Non-Debtor Borrowers", together with the Debtor Borrowers, the
"Borrowers" and each a "Borrower"), and ASCI HOLDINGS GERMANY (DE), INC., a
Delaware corporation, and ASCI HOLDINGS CZECH (DE), INC., a Delaware
corporation, each as a debtor and a debtor-in-possession (the "Debtor
Guarantors", together with any subsequent party hereto qualifying as a
Non-Debtor Guarantor (as defined below), the "Guarantors" and each a
"Guarantor"), the financial institutions party to this Agreement from time to
time (the "Lenders"), and BANK OF AMERICA, N.A., a national banking association,
as agent for the Lenders (the "Agent"), agree as follows:
W I T N E S S E T H :
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A. On April 10, 2000 (the "Petition Date"), a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. ▇▇.▇▇. 101 et
seq. was filed by each of the Debtor Borrowers and the Debtor Guarantors
(together, the "Debtors" and each a "Debtor") in the United States Bankruptcy
Court for the District of Delaware (the "Court") as administratively
consolidated Chapter 11 Case No. [INSERT CASE NUMBER] (the "Chapter 11 Case").
The Debtor Borrowers and the Debtor Guarantors are and will continue to operate
their respective businesses and manage their respective properties as
debtors-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
B. The Borrowers have requested that the Lenders and the Issuing Bank
provide a senior secured super priority revolving and term loan credit facility
of up to $30,600,000. The Borrowers intend to utilize such facility to (i)
refinance not in excess of $17,000,000 (only to the extent that such sums are
not otherwise paid from funds held by the Borrowers on the Effective Date, and
subject to the terms of the Intercreditor and Subordination Agreement, this
Agreement and the other Loan Documents) of certain obligations owed pursuant to
that certain Credit Agreement dated as of May 21, 1997 by and among Key Bank,
N.A., as Administrative Agent, the various Lenders party thereto from time to
time, Safety Components, Automotive Safety Components UK, and Phoenix Airbag
GmbH & Co., KG, a company organized under the laws of the Federal Republic of
Germany (as amended, restated or modified from time to time, the "Pre-Petition
Loan Agreement"), (ii) fund their working capital requirements and guarantee
their letter of credit obligations during the pendency of the Chapter 11 Case as
provided herein, (iii) fund general corporate purposes in the ordinary course of
business including capital expenditures as provided herein, (iv) fund the
payment of fees and expenses due hereunder, and (v) fund the payment of certain
administrative, professional and other such expenses incurred in the Chapter 11
Case, all on the terms and conditions provided herein. The Agent, the Issuing
Bank and the Lenders are willing to extend such post-petition financing to the
Borrowers in accordance with and on the terms and conditions set forth in this
Agreement (including, but not limited to, the grant by each Obligor to the
Agent, for the benefit of
1
the Secured Creditors, of a Lien on and security interest in, all property of
the Obligors, whether now owned or hereafter acquired, as more fully set forth
in the other Loan Documents executed by the Borrowers in connection with this
Agreement and in the Final Order), and on a final basis.
C. The Obligors' business is a mutual and collective enterprise and the
Obligors believe that the consolidation of all loans and other financial
accommodations under this Agreement will enhance the aggregate borrowing powers
of the Obligors and facilitate the administration of the Chapter 11 Case and
their loan relationship with the Agent, the Issuing Bank and the Lenders, all to
the mutual advantage of the Obligors.
D. Each Obligor acknowledges that it will receive substantial direct and
indirect benefits by reason of the making of loans and other financial
accommodations to the other Obligors as provided in this Agreement, by virtue of
the Obligors' various inter-relationships as joint guarantors or joint obligors
and the beneficiaries thereof, as lessors and lessees, as suppliers and
customers, and as joint venturers.
E. The Agent's, the Issuing Bank's and the Lenders' willingness to extend
financial accommodations to the Obligors, and to administer each Obligor's
collateral security therefor, on a combined basis as more fully set forth in
this Agreement, is done solely as an accommodation to the Obligors and at the
Obligors' request and in furtherance of the Obligors' mutual and collective
enterprise.
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. For the purposes of this Agreement:
"Account Debtor" means a Person who is obligated on a Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or Investment,
means the acquiring or acquisition of such Business Unit or Investment by
purchase, exchange, issuance of stock or other securities, or by merger,
reorganization or any other method.
"Affiliate" means, with respect to a Person, any other Person (other than a
Subsidiary) that, (i) directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such given
Person, (ii) directly or indirectly beneficially owns or holds 20% or more of
any class of voting stock or partnership or other voting interest of such Person
or any Subsidiary of such Person, or (iii) 20% or more of the voting stock or
partnership or other voting interest of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or partnership or other voting
interest, by contract or otherwise.
"Agency Account" means an account of an Obligor maintained by it with a
Clearing Bank pursuant to an Agency Account Agreement.
"Agency Account Agreement" means an agreement among an Obligor, the Agent
and a Clearing Bank, in form and substance satisfactory to the Agent, concerning
the collection of payments that represent the proceeds of Receivables or of any
other Collateral.
2
"Agent" means Bank of America, N.A., a national banking association, and
any successor agent appointed pursuant to Section 14.9.
"Agent's Office" means the office of the Agent specified in or determined
in accordance with the provisions of Section 16.1.
"Aggregate Revolving Loan Obligations" means, as of any time of
determination, the sum of (a) the aggregate principal amount of Revolving Loans
then outstanding, plus (b) the aggregate principal amount of all Agent Advances
then outstanding.
"Agreement" means and includes this Agreement, including all Schedules,
Exhibits and other attachments hereto, and all amendments, modifications and
supplements hereto and thereto.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Inventory Advance Percentage" means 60% in the case of Eligible
Inventory consisting of raw materials and finished goods.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and of all
orders and decrees of all courts and arbitrators, including Environmental Laws
and the Bankruptcy Code.
"Applicable Revolver Margin" means, (a) as to Prime Rate Revolving Loans,
1.25%, and (b) as to LIBOR Revolving Loans, 2.75%.
"Applicable Term Margin" means, (a) as to Prime Rate Term Loans, 1.50%, and
(b) as to LIBOR Term Loans, 3.00%.
"ASCI Mexico" means Automotive Safety Components International, S.A. de
C.V., a Mexican corporation.
"ASCI Germany" means ASCI Holdings Germany (DE), Inc., a Delaware
corporation.
"Asset Disposition" means the disposition of any asset of any Obligor or
any of its US and UK Subsidiaries, other than sales of Inventory in the ordinary
course of business.
"Assignment and Acceptance" means an assignment and acceptance in the form
attached hereto as Exhibit A assigning all or a portion of a Lender's interests,
rights and obligations under this Agreement pursuant to Section 13.1.
"Available Revolving Loan Facility" means, as of any time of determination,
(a) the Revolving Loan Facility, minus (b) the Aggregate Revolving Loan
Obligations, minus (c) the Letter of Credit Reserve.
"Automotive Safety Components UK" means Safety Components' United Kingdom
Subsidiary, Automotive Safety Components International, Limited.
"Bank of America" means Bank of America, N.A., and its successors and
assigns.
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"Banking Relationship" means (a) checking and operating account
relationships between any Obligor and any Lender (or any Affiliate of a Lender)
and (b) Hedge Agreements between any Obligor and any Lender (or any Affiliate of
a Lender).
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
Section 101 et seq.), as now or hereafter amended, and any successor statute.
"Benefit Plan" means an "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) in respect of which an
Obligor or any Related Company is, or within the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA, including such plans as
may be established after the Agreement Date.
"Borrower" has the meaning set forth in the recital clauses hereof.
"Borrowers' Agent" means Safety Components, acting in its capacity as agent
for the other Borrowers and Obligors, pursuant to Section 4.17.
"Borrowing" means a borrowing of Revolving Loans or Term Loans bearing
interest at the same rate, made by all Lenders on the same date and, in the case
of LIBOR Loans, having a single Interest Period, and the continuation or
conversion of an existing Loan or Loans in whole or in part.
"Borrowing Base" means at any time an amount equal to the lesser of:
(a) the Revolving Loan Facility minus the sum of
(i) the Letter of Credit Reserve, plus
(ii) the Carve-Out Amount, plus
(iii) the Treasury Management Reserve, plus
(iv) such other reserves as the Agent in its reasonable
discretion may establish from time to time, and
(b) an amount equal to
(i) 85% (or such lesser percentage as the Agent may in its
reasonable discretion determine from time to time) of the face value
of Eligible Receivables due and owing at such time, plus
(ii) the lesser of
(A) the Applicable Inventory Advance Percentage of the
lesser of cost (determined on a first-in-first-out accounting
basis) and fair market value, and
(B) the Inventory Sublimit, minus
(iii) the sum of
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(A) the Letter of Credit Reserve, plus
(B) the Carve-Out Amount, plus
(C) the Treasury Management Reserve, plus
(D) such other reserves as the Agent in its reasonable
discretion may establish from time to time.
"Borrowing Base Certificate" means a certificate in the form attached
hereto as Exhibit B.
"Business Day" means (a) any day other than a Saturday, Sunday or other day
on which banks in Charlotte, North Carolina are authorized or required to close
and (b) in respect of any determination with respect to a LIBOR Loan, any day
referred to in clause (a) that is also a day on which tradings are conducted in
the London interbank eurodollar market.
"Business Unit" means the assets constituting the business or a division or
operating unit thereof of any Person.
"Capital Expenditures" means, with respect to any Person, all expenditures
made and liabilities incurred for the acquisition of assets (other than assets
which constitute a Business Unit) which are not, in accordance with GAAP,
treated as expense items for such Person in the year made or incurred or as a
prepaid expense applicable to a future year or years.
"Capitalized Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"Carve-Out Amount" has the meaning set forth in Section 4.21.
"Carve-Out Expenses" has the meaning set forth in Section 4.21.
"Cash Collateral" means collateral consisting of cash or Cash Equivalents
on which the Agent, for the benefit of the Secured Creditors, has a first
priority Lien.
"Cash Collateral Account" means a special interest-bearing deposit account
consisting of cash maintained at the Agent's Office and under the sole dominion
and control of the Agent, for the benefit of the Secured Creditors, established
pursuant to the provisions of Section 4.16 for the purposes set forth therein.
"Cash Equivalents" means: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
commercial paper maturing no more than one year from the date issued and, at the
time of acquisition thereof, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from ▇▇▇▇▇'▇ Investors Service, Inc.; (c)
certificates of deposit or bankers' acceptances issued in Dollar denominations
5
and maturing within one year from the date of issuance thereof issued by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia having combined capital and surplus of
not less than $100,000,000 and, unless issued by the Agent or a Lender, not
subject to setoff or offset rights in favor of such bank arising from any
banking relationship with such bank; and (d) repurchase agreements in form and
substance and for amounts satisfactory to the Agent.
"Chapter 11 Case" has the meaning assigned to it in the recital clauses
hereof.
"Clearing Bank" means Bank of America and any other banking institution
with which an Agency Account has been established pursuant to an Agency Account
Agreement.
"Collateral" means and includes, collectively, all of the collateral
referred to in the Final Order and each of the Security Documents and all of
each Obligor's right, title and interest in and to each of the following,
wherever located and whether now or hereafter existing or now owned or hereafter
acquired or arising, but in any event excluding all avoidance actions under
Sections 542, 544, 545, 547, 548, 549, 550, 551, 553(b) or 724(a) of the
Bankruptcy Code:
(a) all Receivables,
(b) all Inventory,
(c) all Contract Rights,
(d) all General Intangibles,
(e) all Tax Refund Claims,
(g) all Equipment,
(h) all Real Estate,
(i) all Equity Interests,
(j) all goods and other property, whether or not delivered, (i) the
sale or lease of which gives or purports to give rise to any Receivable,
including all merchandise returned or rejected by or repossessed from
customers, or (ii) securing any Receivable, including all rights as an
unpaid vendor or lienor (including stoppage in transit, replevin and
reclamation) with respect to such goods and other property,
(k) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements, and other
agreements and property which secure or relate to any Receivable or other
Collateral, or are acquired for the purpose of securing and enforcing any
item thereof,
(l) all documents of title, policies and certificates of insurance,
securities, chattel paper and other documents and instruments evidencing or
pertaining to any and all items of Collateral,
(m) all files, correspondence, computer programs, tapes, discs and
related data processing software which contain information identifying or
pertaining to any Tax Refund Claim
6
or any of the Receivables or any Account Debtor, or showing the amounts
thereof or payments thereon or otherwise necessary or helpful in the
realization thereon or the collection thereof,
(n) any demand, time, savings, passbook, money market or like
depository account, and all certificates of deposit, maintained with a
bank, savings and loan association, credit union or like organization,
(o) all cash deposited with the Agent or any Lender or any Affiliate
of the Agent or any Lender or which the Agent, for the benefit of the
Secured Creditors, or any Lender or such Affiliate is entitled to retain or
otherwise possess as collateral pursuant to the provisions of this
Agreement or any of the Security Documents or any agreement relating to any
Letters of Credit,
(p) any other "property" of the Debtors' estates pursuant to Section
541 of the Bankruptcy Code, and
(q) any and all products and proceeds of the foregoing (including any
claim to any item referred to in this definition, and any claim against any
third party for loss of, damage to or destruction of any or all of, the
Collateral or for proceeds payable under, or unearned premiums with respect
to, policies of insurance) in whatever form, including cash, negotiable
instruments and other instruments for the payment of money, investment
property, chattel paper, security agreements and other documents,
provided that, other than with respect to Automotive Safety Components UK
(which Subsidiary herein pledges all of its assets to secure the
Obligations), the Collateral does not include any pledge of any of the
assets of any Obligor's foreign Subsidiaries or any Non-Debtor Guarantor.
"Collateral Access Agreement" means, with respect to any leased premises of
any Borrower, an agreement executed by the landlord, warehouseman or bailee
thereof and delivered to the Agent, pursuant to which such landlord,
warehouseman or bailee waives any Lien rights it may hold in regard to such
Borrower's property, grants access by the Agent to such leased premises, permits
the use of such leased premises by the Agent and grants to the Agent other
rights consistent therewith to permit the Agent to exercise any and all rights
with respect to any of the Collateral, in form and substance reasonably
acceptable to the Agent or the inclusion of such findings and decretal portions
in the Final Order as provides rights and protections that are reasonably
equivalent to the foregoing and are reasonably acceptable to the Agent, in lieu
of, the execution and delivery of the above referenced agreements.
"Commitment" means, as to each Lender, the obligations of such Lender to
make Revolving Loans and Term Loans and to purchase participations in Letters of
Credit, and which shall not exceed the amount set forth (i) opposite such
Lender's name on Schedule C-1, or (ii) from and after the date hereof, in the
Register (as defined in Section 13.1).
"Commitment Percentage" means, as to any Lender, the percentage of the
Total Commitment obtained by dividing such Lender's Commitment by the Total
Commitment.
"Committee" means the Official Committee of Unsecured Creditors, appointed
or approved by the applicable United States Trustee in the Chapter 11 Case.
"Consolidated EBITDA" means the Obligors' EBITDA, calculated on a
consolidated basis.
7
"Consolidated Interest Expense" means, for any period, the total
consolidated cash interest expense of the Obligors for such period (calculated
without regard to any limitations on the payment thereof) payable during such
period in respect of all consolidated Indebtedness of the Obligors for such
period (including, without duplication, that portion of Capitalized Lease
Obligations of the Obligors representing the interest factor for such period).
"Consolidated Subsidiaries" means, as to Safety Components, the
Subsidiaries of Safety Components whose accounts are at the time in question,
consolidated in accordance with GAAP and, with respect to Subsidiaries formed
after the Effective Date, pursuant to the written consent of the Required
Lenders, which consent may be withheld in their discretion conditioned upon,
among other things, the execution and delivery of guaranties, security
agreements, mortgages and other documents required by the Required Lenders in
their discretion, consolidated with those of Safety Components.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contract Rights" means any rights under contracts not yet earned by
performance and not evidenced by an instrument or chattel paper, which contracts
relate to or arise out of any of the Receivables or Inventory.
"Copyrights" means and includes, in each case whether now existing or
hereafter arising during the term of this Agreement, all of each Obligor's
right, title and interest in and to: (a) all copyrights, rights and interests in
copyrights, works protectable by copyright, copyright registrations and
copyright applications; (b) all renewals of any of the foregoing; (c) all
income, royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing, including damages or payments for past or future
infringements of any of the foregoing; (d) the right to ▇▇▇ for past, present
and future infringements of any of the foregoing; and (e) all rights
corresponding to any of the foregoing throughout the world.
"Court" has the meaning assigned to it in the recital clauses hereof.
"Debtor Borrowers" has the meaning assigned to it in the recital clauses
hereof.
"Debtors" has the meaning assigned to it in the recital clauses hereof.
"Debtor Guarantors" has the meaning assigned to it in the recital clauses
hereof.
"Default" means any of the events specified in Section 12.1 which with the
passage of time or giving of notice or both would constitute an Event of
Default.
"Default Margin" means 2%.
"Disbursement Account" means one or more accounts maintained by and in the
name of Safety Components or any other Borrower with a Disbursing Bank for the
purposes of disbursing Revolving Loan and Term Loan proceeds and amounts
deposited thereto.
"Disbursing Bank" means any commercial bank with which a Disbursement
Account is maintained.
8
"Dollar" and "$" mean freely transferable United States dollars.
"EBITDA" means, with respect to any Obligor on a consolidated basis with
its US and UK Subsidiaries, for any period, the Net Income of such Obligor for
such period, (a) plus, without duplication and to the extent deducted in
computing Net Income for such period, the sum of (i) income taxes, (ii) Interest
Expense, (iii) depreciation and amortization expense, (iv) bankruptcy charges,
and (v) other non-cash charges reasonably acceptable to the Agent, (b) minus, to
the extent included in Net Income for such period, extraordinary gains.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
"Effective Date" means the later of (a) the Agreement Date, and (b) the
first date on which all of the conditions set forth in Article 5 shall have been
fulfilled or waived.
"Effective Interest Rate" means: (i) in the case of Revolving Loans, each
rate of interest per annum on such Revolving Loans in effect from time to time
pursuant to the provisions of Sections 4.1 (a), (b) and (f), and (ii) in the
case of Term Loans, each rate of interest per annum on such Term Loans in effect
from time to time pursuant to the provisions of Sections 4.1 (c), (d) and (f).
"Eligible Assignee" means: (a) a commercial bank, commercial finance
company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default exists, any
Person reasonably acceptable to the Agent; provided in each case that the
representation contained in Section 13.2 hereof shall be true with respect to
such Person.
"Eligible In-Transit Inventory" means (a) Inventory being imported to the
United States by a Borrower under a documentary Letter of Credit, provided that
all documents of title with respect thereto have been consigned with the Agent
or its representative on terms reasonably acceptable to the Agent, and (b)
finished goods Inventory in transit between the Borrower's locations in the
United States, further provided, in each case, such Inventory meets all of the
requirements set forth under Eligible Inventory.
"Eligible Inventory" means Inventory which the Agent, in its reasonable
discretion, determines to meet all of the following requirements:
(a) such Inventory is owned by a Borrower which is organized or
incorporated under the laws of the United States (or, in either case, any
state or province thereof) and which has its principal place of business
and chief executive office in the United States,
(b) such inventory is stored at a location listed on Schedule 6.1(t)
or is Eligible In-Transit Inventory,
(c) such Inventory is subject to the Security Interest, which is
perfected as to such Inventory, and is subject to no other Lien whatsoever
other than a Permitted Lien,
(d) such Inventory consists of finished goods or raw materials,
9
(e) such Inventory does not consist of work-in-process, griege goods,
chemicals, dyes, supplies, or packing and shipping materials,
(f) such Inventory is in good condition and meets all standards
imposed by any governmental agency, or department or division thereof,
having regulatory authority over such goods, their use or sale,
(g) such Inventory is currently either usable or salable, at prices
approximating at least cost, in the normal course of the applicable
Borrower's business, and is not slow moving or stale,
(h) such Inventory is not obsolete or returned or repossessed or used
goods taken in trade,
(i) unless such Inventory is Eligible In-Transit Inventory, such
Inventory is located within the United States at one of the locations set
forth in the most recent Schedule of Inventory delivered to the Agent,
(j) unless such Inventory is Eligible In-Transit Inventory, such
Inventory is in the possession and control of a Borrower and not any third
party or if the Inventory is held by a third party bailee and a negotiable
instrument has not been issued with respect to it (i) a financing statement
(or the equivalent) which names the third party bailee as the
debtor/bailee, names such Borrower as the secured party/▇▇▇▇▇▇, names the
Agent as assignee of the secured party/▇▇▇▇▇▇, and contains a description
of such Inventory acceptable to the Agent and otherwise in compliance with
the requirements of Sections 2-326 and 9-114 of the Uniform Commercial Code
(or the equivalent) has been filed in the appropriate filing office and
(ii) such other steps as the Agent may reasonably require in order to
establish and preserve the priority of the Security Interest against
secured creditors of such third party bailee or such Borrower shall have
been taken,
(k) if such Inventory is located in a warehouse or other facility
leased by a Non-Debtor Borrower, a Collateral Access Agreement with respect
to such premises is in effect,
(l) if such Inventory contains or bears any Proprietary Rights
licensed to a Borrower by any Person, the Agent shall be satisfied that it
may sell or otherwise dispose of such Inventory in accordance with Article
12 without infringing the rights of the licensor of such Proprietary Rights
or violating any contract with such licensor (and without payment of any
royalties other than any royalties due with respect to the sale or
disposition of such Inventory pursuant to the existing license agreement),
and, if the Agent deems it necessary, the applicable Borrower shall deliver
to the Agent a consent or sublicense agreement from such licensor in form
and substance acceptable to the Agent, and
(m) such Inventory is not determined by the Agent, on behalf of the
Secured Creditors, in its reasonable discretion, to be ineligible for any
other reason.
"Eligible Machinery and Equipment" means machinery and equipment which the
Agent, in its reasonable discretion, determines to meet all of the following
requirements:
(a) such machinery and equipment is owned by a Borrower which is
organized or incorporated under the laws of the United States or the United
Kingdom (or, in either case, any
10
state or province thereof) and which has its principal place of business
and chief executive office in the United States or the United Kingdom,
(b) such machinery and equipment is stored at a location listed on
Schedule 6.1(t),
(c) such machinery and equipment is subject to the Security Interest,
which is perfected as to such machinery and equipment, and is subject to no
other Lien whatsoever other than a Permitted Lien,
(d) such machinery and equipment is in good condition and meets all
standards imposed by any governmental agency, or department or division
thereof, having regulatory authority over such machinery and equipment,
their use or sale,
(e) such machinery and equipment is currently either usable or
salable, and is not obsolete or returned or repossessed or used machinery
and equipment taken in trade,
(f) such machinery and equipment is located within the United States
or the United Kingdom,
(g) such machinery and equipment is in the possession and control of a
Borrower and not any third party,
(h) if such machinery and equipment is located in a warehouse or other
facility leased by a Borrower, a Collateral Access Agreement with respect
to such premises is in effect,
(i) such machinery and equipment does not contain or bear any
Proprietary Rights licensed to a Borrower by any Person, and
(j) such machinery and equipment is not determined by the Agent, on
behalf of the Secured Creditors, in its reasonable discretion, to be
ineligible for any other reason.
"Eligible Receivable" means a Receivable that consists of the unpaid
portion of the obligation stated on the invoice issued to an Account Debtor with
respect to Inventory sold and shipped to or services performed for such Account
Debtor in the ordinary course of business, net of any credits or rebates owed by
any Borrower to the Account Debtor, and that the Agent, in its reasonable
discretion, determines to meet all of the following requirements:
(a) such Receivable is owned by either: (i) Automotive Safety
Components UK and the Account Debtor thereunder is (y) located within the
United Kingdom, or (z) any of TRW Inc., Autoliv Inc., or Delphi Automotive
Systems Corp. or their Affiliates, or (ii) a Borrower which is organized or
incorporated under the laws of the United States (or any state or province
thereof) and which has its principal place of business and chief executive
office in the United States,
(b) such Receivable represents a complete bona fide transaction which
requires no further act under any circumstances on the part of such
Borrower to make such Receivable payable by the Account Debtor,
(c) such Receivable shall not be more than 60 days past due,
(d) no more than 120 days shall have elapsed from the date of the
original invoice,
11
(e) the goods the sale of which gave rise to such Receivable were
shipped or delivered to the Account Debtor on an absolute sale basis and
not on a ▇▇▇▇ and hold sale basis, a consignment sale basis, a guaranteed
sale basis, a sale or return basis, or on the basis of any other similar
understanding, and no material part of such goods shall have been returned
or rejected,
(f) such Receivable is not evidenced by chattel paper or an instrument
of any kind, or if such Receivable is evidenced by chattel paper or an
instrument, such chattel paper or instrument has been collaterally assigned
to the Agent, for the benefit of the Secured Creditors, pursuant to an
assignment in form and substance satisfactory to the Agent, and is in the
possession of the Agent,
(g) the Account Debtor with respect to such Receivable is not
insolvent or the subject of any bankruptcy or insolvency proceedings of any
kind or of any other proceeding or action, threatened in writing or
pending, which might, in the Agent's reasonable discretion, have a
materially adverse effect on such Account Debtor, and is not, in the
reasonable discretion of the Agent, deemed ineligible for credit or other
reasons,
(h) such Receivable is not owing by an Account Debtor having 50% or
more in face value of its then-existing accounts owing to the Borrowers
which are in dispute or ineligible under clause (b) or (c) above,
(i) such Receivable is not owing by an Account Debtor whose
then-existing accounts owing to any Borrower exceed in face amount 15%
(other than with respect to Receivables owed by any of TRW Inc., Autoliv
Inc., or Delphi Automotive Systems Corp. or their Affiliates) of total
Eligible Receivables of such Borrower, provided this restriction shall only
exclude the amount in excess of such concentration limit,
(j) if such Receivable arises from the performance of services, such
services have been fully rendered and do not relate to any warranty claim
or obligation,
(k) if such Receivable is owing by an Account Debtor that is located
outside of the United States, either (i) such Receivable is owned by
Automotive Safety Components UK and the Account Debtor thereunder is (a)
located within the United Kingdom, or (b) any of TRW Inc., Autoliv Inc., or
Delphi Automotive Systems Corp. or their Affiliates, or (ii) the goods
which gave rise to such Receivable were shipped after receipt by the
applicable Borrower from the Account Debtor of an irrevocable letter of
credit that has been issued or confirmed by a financial institution
acceptable to the Agent, is in form and substance reasonably acceptable to
the Agent, payable in the full face amount of the face value of the
Receivable at a place of payment located within the United States or the
United Kingdom and has, if requested by the Agent, been duly assigned to
the Agent,
(l) such Receivable is a valid, legally enforceable obligation of the
Account Debtor with respect thereto,
(m) such Receivable is not subject to any presently asserted or
claimed (and no facts exist which are the basis for any future assertion or
claim) offset, deduction, counterclaim, dispute or other defense on the
part of the Account Debtor with respect thereto, provided this restriction
shall only exclude the amount of such Receivable that is subject to offset,
deduction, counterclaim, dispute or defense,
12
(n) such Receivable is subject to the Security Interest, which is
perfected as to such Receivable, and is subject to no other Lien
whatsoever,
(o) such Receivable is evidenced by an invoice or other documentation
in form reasonably acceptable to the Agent,
(p) such Receivable is not subject to the Assignment of Claims Act of
1940, as amended from time to time, or any Applicable Law now or hereafter
existing similar in effect thereto, or to any other prohibition (under
Applicable Law, by contract or otherwise) against its assignment or
requiring notice of or consent to such assignment, unless all such required
notices have been given, all such required consents have been received and
all other procedures have been complied with such that such Receivable
shall have been duly and validly assigned to the Agent, for the benefit of
the Secured Creditors,
(q) the goods giving rise to such Receivable were not, at the time of
the sale thereof, subject to any Lien, except the Security Interest and
Permitted Liens,
(r) no Borrower is in breach of any express or implied representation
or warranty with respect to the goods the sale of which gave rise to such
Receivable nor in breach of any representation or warranty, covenant or
other agreement contained in the Loan Documents with respect to such
Receivable,
(s) such Receivable does not arise out of any transaction with any
Subsidiary, Affiliate, creditor, tenant, lessor or supplier of any
Borrower, provided that, if such Receivable does arise out of a transaction
with a creditor or supplier of any Borrower, it only shall be deemed not to
qualify as an Eligible Receivable by virtue of the account debtor's status
as a creditor or supplier to the extent that a contra account exists with
respect to such Receivable,
(t) such Receivable does not arise out of finance or similar charges
by any Borrower or other fees for the time value of money,
(u) the Account Debtor with respect to such Receivable is not located
in any state or jurisdiction denying creditors access to its courts in the
absence of qualification to transact business in such state or the filing
of a Notice of Business Activities Report or other similar filing, unless
the applicable Borrower has either qualified as a foreign corporation
authorized to transact business in such state or jurisdiction or has filed
a Notice of Business Activities Report or similar filing with the
applicable state or jurisdiction agency for the then current year, and
(v) neither the Account Debtor with respect to such Receivable, nor
such Receivable, is determined by the Agent in its reasonable discretion to
be ineligible for any other reason.
"Environmental Laws" means all federal, state, local and foreign laws now
or hereafter in effect relating to pollution or protection of the environment,
including laws relating to emissions, discharges, Releases or threatened
Releases of pollutants, Contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including ambient air,
surface water, ground water, or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, removal, transport,
or handling of pollutants, Contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes, and any and all regulations, notices or demand
letters issued, entered, promulgated or approved thereunder; such laws and
regulations include but are not limited to
13
the Resource Conservation and Recovery Act, 42 U.S.C.ss.6901 et seq., as
amended; the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C.ss.9601 et seq., as amended; the Toxic Substances Control Act, 15
U.S.C.ss.2601 et seq., as amended; the Clean Air Act, 46 ▇.▇.▇.▇▇. 7401 et seq.,
as amended; and all federal, state, local and foreign lien and environmental
cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental entity for
(a) any liability under Environmental Laws or (b) damages arising from, or costs
incurred by such governmental entity in response to, a Release or threatened
Release of Contaminant into the environment.
"Equipment" means all machinery, apparatus, equipment, motor vehicles,
tractors, trailers, rolling stock, fittings and fixtures and other tangible
personal property (other than Inventory) of every kind and description used in
the Obligors' business operations or owned by an Obligor or in which an Obligor
has an interest, and all parts, accessories and special tools and all increases
and accessions thereto and substitutions and replacements therefor.
"Equity Interest Pledge Agreements" means an agreement between each
respective Obligor, the Agent and the Lenders in form acceptable to the Agent in
its sole discretion providing for the pledge of all Equity Interests owned by
such Obligor to secure the Secured Obligations.
"Equity Interests" means, as applied to any Person, any capital stock,
general or limited partnership interests, limited liability company interests or
other equity interests of such Person, including but not limited to any and all
Investment Property of such Person, regardless of class or designation, and all
warrants, options, purchase rights, conversion or exchange rights, voting
rights, calls or claims of any character with respect thereto.
"Event of Default" means any of the events specified in Section 12.1,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to 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 for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of Atlanta, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"Fee Letter" means, collectively, the March 22, 2000 fee letter between
Bank of America and Safety Components, and any other letter agreement between
Safety Components and Bank of America with respect to fees payable by the
Obligors in connection with this Agreement.
"Final Order" means the order of the Court entered in the Chapter 11 Case
after a final hearing under Bankruptcy Rule 4001(c)(2) or such other procedures
as approved by the Court and acceptable to the Agent, reasonably satisfactory in
form and substance to the Agent and the Lenders, and from which no appeal has
been timely filed, or if timely filed, no stay of such order pending appeal has
been granted or such appeal has been dismissed (unless the Agent and the Lenders
waive such requirement), together with all extensions, modifications and
amendments thereto, which, among other matters but not by way of limitation,
authorizes the Borrowers to obtain credit, incur Indebtedness, and grant Liens
under this Agreement and the other Loan Documents, as the case may be, and
provides for the super priority of the Agent and the Lenders' claims, all as set
forth in such order.
14
"Financial Officer" means the Chief Financial Officer, Treasurer or
Controller of Safety Components.
"Financing Statements" means any and all Uniform Commercial Code financing
statements (or other similar documents), in form and substance satisfactory to
the Agent, executed and delivered by the Obligors to the Agent, naming the
Agent, for the benefit of the Secured Creditors, as secured party, and the
Obligors as debtor, in connection with this Agreement.
"Fixed Charges" for any period shall mean the sum of: (i) Consolidated
Interest Expense for such period, and (ii) the aggregate principal amount of all
scheduled payments of Indebtedness (including the principal portion of rentals
under any Capitalized Lease Obligations but excluding any repayment of Loans not
accompanied by a permanent reduction in the Total Commitment) required to be
made during such period.
"Fixed Charge Coverage Ratio" for any period shall mean the ratio of (x)
Consolidated EBITDA, minus Capital Expenditures and minus taxes paid in cash, to
(y) Fixed Charges for such period.
"Funded Indebtedness" means (a) all Indebtedness under this Agreement and
(b) all other Indebtedness for Money Borrowed, including all Subordinated
Indebtedness.
"GAAP" means generally accepted accounting principles consistently applied
and maintained throughout the period indicated; provided, however, that, in the
event that changes shall be mandated by the Financial Accounting Standards Board
or any similar accounting authority of comparable standing, or shall be
recommended by Safety Components' independent public accountants, such changes
shall be included in GAAP as applicable to Safety Components and its
Subsidiaries only from and after such date as the Borrowers' Agent, the Required
Lenders and the Agent shall have amended this Agreement to the extent necessary
to reflect any such changes in the financial covenants set forth in Article 11.
"General Intangibles" means all of the Obligors' now owned or hereafter
acquired general intangibles and other intangible personal property of every
kind and nature which relate to or arise out of any of the Receivables or
Inventory, including all of the following which relate to or arise out of any of
the Receivables or Inventory: all Proprietary Rights, corporate or other
business records, inventions, designs, blueprints, plans, specifications,
goodwill, computer software, customer lists, registrations, licenses,
franchises, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of insurance and any proceeds thereof, and any
letter of credit, guarantee, claims, security interest or other security held by
or granted to any Obligor to secure payment by an Account Debtor of any of the
Receivables.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local or foreign national or
provincial and all agencies thereof.
"Guarantor" has the meaning set forth in the recital clauses hereof.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any obligation of
another Person shall mean and include (a) a guaranty (other than by endorsement
of negotiable instruments for collection in the ordinary course of business),
directly or indirectly, in any manner, of any part or all of such obligation of
such other Person, and (b) an agreement, direct or indirect, contingent or
otherwise,
15
and whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation of such other Person
whether by (i) the purchase of securities or obligations, (ii) the purchase,
sale or lease (as lessee or lessor) of property or the purchase or sale of
services primarily for the purpose of enabling the guarantor with respect to
such obligation to make any payment or performance (or payment of damages in the
event of nonperformance) of or on account of any part or all of such obligation,
or to assure the owner of such obligation against loss, (iii) the supplying of
funds to or in any other manner investing in the guarantor with respect to such
obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of
credit, or (v) the supplying of funds to or investing in a Person on account of
all or any part of such Person's obligation under a Guaranty of any obligation
or indemnifying or holding harmless, in any way, such Person against any part or
all of such obligation, excluding, in any event, indemnification obligations
arising in the ordinary course of business.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts, and other similar agreements.
"Indebtedness" of any Person means, without duplication, the following: (a)
all obligations for Money Borrowed or for the deferred purchase price of
property or services (other than trade payables), (b) all obligations
(including, during the noncancellable term of any lease in the nature of a title
retention agreement, all future payment obligations under such lease discounted
to their present value in accordance with GAAP) secured by any Lien to which any
property or asset owned or held by such Person is subject, whether or not the
obligation secured thereby shall have been assumed by such Person, (c) all
obligations of other Persons which such Person has Guaranteed, including all
obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person, (d) all
obligations of such Person in respect of Hedge Agreements, and (e) in the case
of the Borrowers (without duplication), all obligations under the Revolving
Loans and the Term Loans.
"Indenture" means that certain Indenture dated as of July 24, 1997 by and
among Safety Components, the Subsidiary Guarantors named therein and IBJ
▇▇▇▇▇▇▇▇ Bank & Trust Company, as well as any amendments or modifications
thereto.
"Indenture Trustee" means Bank of New York, as successor Indenture Trustee
for IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company pursuant to the terms of the Indenture,
and any subsequent successor Indenture Trustee thereunder.
"Initial Loans" means the Revolving Loans and Term Loans made to the
Borrowers on the Effective Date pursuant to the Initial Notice of Borrowing.
"Initial Notice of Borrowing" means the Notice of Borrowing given by the
Borrowers with respect to the Initial Loans, which shall also specify the method
of disbursement.
"Interbank Offered Rate" means, with respect to any LIBOR Loan for the
Interest Period applicable thereto, the per annum rate of interest determined by
the Agent (each such determination to be conclusive and binding absent manifest
error) as of two Business Days prior to the first day of such Interest Period as
the effective rate at which deposits in immediately available funds in Dollars
are being offered or quoted to major banks in the London interbank market for
deposits for a term comparable to such Interest Period and in the amount of such
LIBOR Loan, which rate shall be determined from the display designated as Page
3750 of Dow Services, Inc. In the event Page 3750 shall be unavailable for any
reason or the Agent in good faith elects to no longer use such service for
determining such rate under
16
this Agreement, such rate may be determined by the Agent from any other interest
rate reporting service of recognized standing that the Agent shall select.
"Intercreditor and Subordination Agreement" means the Intercreditor and
Subordination Agreement, dated as of April 7, 2000, between the Agent and the
Pre-Petition Lenders.
"Interest Payment Date" means the first day of each calendar month
commencing on May 1, 2000 and continuing on the first day of each month
thereafter until the Secured Obligations have been irrevocably paid in full.
"Interest Period" means, with respect to each LIBOR Loan, the period
commencing on the date of the making or continuation of or conversion to such
LIBOR Loan and ending one month thereafter; provided, that: (a) any Interest
Period that would otherwise end on a day that is not a Business Day shall,
subject to the provisions of clause (c) below, be extended to the next
succeeding Business Day unless such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the immediately preceding
Business Day; (b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Business Day of a calendar month; (c) any
Interest Period that would otherwise end after the Termination Date shall end on
the Termination Date; and (d) notwithstanding clause (c) above, no Interest
Period shall have a duration of less than one month and if any applicable
Interest Period would be for a shorter period, such Interest Period shall not be
available hereunder.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Inventory" means all inventory as such term is defined in the Uniform
Commercial Code and shall include, without limitation, (a) all goods intended
for sale or lease by the Obligors, or for display or demonstration, (b) all work
in process, (c) all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, packing, shipping, advertising, selling, leasing or furnishing of
such goods or otherwise used or consumed in the Obligors' business, and (d) all
documents evidencing and general intangibles relating to any of the foregoing.
"Inventory Appraisal" means the inventory appraisal prepared by the
Inventory Appraiser and delivered to the Agent pursuant to Section 8.12(f).
"Inventory Appraiser" has the meaning set forth in Section 8.12(f).
"Inventory Sublimit" means $5,000,000.
"Investment" means, with respect to any Person, (a) the acquisition or
ownership by such Person of any share of capital stock, evidence of Indebtedness
or other security issued by any other Person, (b) any loan, advance or extension
of credit to, or contribution to the capital of, any other Person, excluding
advances to employees in the ordinary course of business for business expenses,
(c) any Guaranty of the obligations of any other Person, and (d) any other
similar investment (other than the Acquisition of a Business Unit) in any other
Person.
"Investment Property" means "investment property" as defined in the Uniform
Commercial Code as in effect in the State of Georgia, as amended from time to
time, including without
17
limitation all securities, whether certificated or uncertificated, security
entitlements, security accounts, commodity contracts and commodity accounts.
"IRS" means the Internal Revenue Service.
"Issuing Bank" means Bank of America, in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"Interest Expense" means, with respect to any Person on a consolidated
basis for any period, interest expense and loan fees determined in accordance
with GAAP, and including capitalized and non-capitalized interest and the
interest component of Capitalized Lease Obligations. Unless the context clearly
provides otherwise, any reference to Interest Expense in this Agreement shall be
to the Interest Expense of Safety Components and its US and UK Subsidiaries.
"Lender" means at any time any financial institution party to this
Agreement at such time, including any such Person becoming a party hereto
pursuant to the provisions of Article 13, and its successors and assigns, and
"Lenders" means at any time all of the financial institutions party to this
Agreement at such time, including any such Persons becoming parties hereto
pursuant to the provisions of Article 13, and their successors and assigns.
"Letter of Credit" means any Letter of Credit issued by the Issuing Bank
for the account of the Borrowers pursuant to Article 3.
"Letter of Credit Amount" means, with respect to any Letter of Credit, the
aggregate maximum amount at any time available for drawing under such Letter of
Credit.
"Letter of Credit Facility" means the amount of up to $1,000,000.
"Letter of Credit Obligations" means, at any time, the sum of (a) the
Reimbursement Obligations of the Borrowers at such time, plus (b) the aggregate
Letter of Credit Amount of Letters of Credit outstanding at such time, plus (c)
the aggregate Letter of Credit Amount of Letters of Credit the issuance of which
has been authorized by the Agent and the Issuing Bank pursuant to Section 3.4(b)
but that have not yet been issued, in each case as determined by the Agent.
"Letter of Credit Reserve" means, at any time, the aggregate Letter of
Credit Obligations at such time, other than Letter of Credit Obligations that
are fully secured by Cash Collateral.
"Liabilities" of any Person means all items (except for items of capital
stock, additional paid-in capital or retained earnings, or of general
contingency or deferred tax reserves) which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Liabilities are to be
determined.
"LIBOR" means, with respect to any LIBOR Loan for the Interest Period
applicable thereto, a simple per annum interest rate determined pursuant to the
following formula:
LIBOR = Interbank Offered Rate
-----------------------------------------------
1 - LIBOR Reserve Percentage
LIBOR shall be adjusted automatically as of the effective date of any change in
the LIBOR Reserve Percentage.
18
"LIBOR Loan" means any Loan bearing interest at a rate determined by
reference to LIBOR, including any such Loans continued as or converted into a
LIBOR Loan on the same day by the Lenders for the same Interest Period.
"LIBOR Reserve Percentage" means that percentage (expressed as a decimal)
which is in effect from time to time under Regulation D of the Board of
Governors of the Federal Reserve System, as such regulation may be amended from
time to time, or any successor regulation, as the maximum reserve requirement
(including any basic, supplemental, emergency, special, or marginal reserves)
applicable with respect to Eurocurrency liabilities as that term is defined in
Regulation D (or against any other category of liabilities that includes
deposits by reference to which the interest rate of LIBOR Loans is determined),
whether or not any Lender has any Eurocurrency liabilities subject to such
reserve requirement at that time. LIBOR Loans shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed subject to reserve
requirements without benefit of credits for proration, exceptions or offsets
that may be available from time to time to any Lender. As of the Agreement Date,
the LIBOR Reserve Percentage is 0%.
"LIBOR Revolving Loan" means a LIBOR Loan outstanding under the Revolving
Loan Facility.
"LIBOR Term Loan" means a LIBOR Loan outstanding under the Term Loan
Facility.
"Lien" means, as applied to the property of any Person: (a) any mortgage,
deed to secure debt, deed of trust, lien, pledge, charge, lease constituting a
Capitalized Lease Obligation, conditional sale or other title retention
agreement, or other security interest, security title or encumbrance of any kind
in respect of any property of such Person, or upon the income or profits
therefrom, (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person, (c) any Indebtedness which is unpaid more than sixty (60) days
after the same shall have become due and payable and which if unpaid might by
law (including bankruptcy and insolvency laws), or otherwise, be given any
priority whatsoever over the claims of post-petition unsecured creditors of such
Person, and (d) the filing of, or any agreement to give, any financing statement
under the Uniform Commercial Code or its equivalent in any jurisdiction,
excluding informational financing statements relating to leased property.
"Loan" means any Revolving Loan or Term Loan, as well as all such loans
collectively, as the context requires.
"Loan Account" and "Loan Accounts" shall have the meanings ascribed thereto
in Section 4.5.
"Loan Documents" means collectively this Agreement, the Notes, the Security
Documents, the Fee Letter, all Collateral Access Agreements, and each other
instrument, agreement or document executed by any Obligor, or any Affiliate or
Subsidiary of any Obligor, in connection with this Agreement, whether prior to,
on or after the Effective Date, and each other instrument, agreement or document
referred to herein or contemplated hereby.
"Lockbox" means each post office box specified in a Lockbox Agreement.
19
"Lockbox Agreement" means each agreement between an Obligor and a Clearing
Bank concerning the establishment of a Lockbox for the collection of
Receivables.
"Materially Adverse Effect" means any act, omission, situation,
circumstance, event or undertaking (other than the filing of the Chapter 11
Case, the issuance of default notices under the Indenture and otherwise as
disclosed in the financial statements and other financial reports furnished to
the Agent and the Lenders prior to the Petition Date) which would, singly or in
any combination with one or more other acts, omissions, situations,
circumstances, events or undertakings have, or reasonably be expected by the
Agent to have, a materially adverse effect upon (a) the business, assets,
properties, liabilities, condition (financial or otherwise), results of
operations or business prospects of Safety Components and its Consolidated
Subsidiaries taken as a whole, (b) the value of the Collateral, (c) the Security
Interest or the priority of the Security Interest, (d) the respective ability of
any Obligor or any of their Subsidiaries to perform any material obligations
under this Agreement or any other Loan Document to which it is a party, or (e)
the legality, validity, binding effect, or enforceability of any Loan Document
or the ability of the Agent or any Lender to enforce any rights or remedies
under or in connection with any Loan Document.
"Minimum Commitment" means $5,000,000.
"Money Borrowed" means, as applied to Indebtedness, (a) Indebtedness for
money borrowed, (b) Indebtedness, whether or not in any such case the same was
for money borrowed, (i) represented by notes payable, and drafts accepted, that
represent extensions of credit, (ii) constituting obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid or that was issued or assumed as full or partial
payment for property (other than trade credit that is incurred in the ordinary
course of business), (c) Indebtedness that constitutes a Capitalized Lease
Obligation, (d) Indebtedness under Hedge Agreements, and (e) Indebtedness that
is such by virtue of clause (c) of the definition thereof, but only to the
extent that the obligations Guaranteed are obligations that would constitute
Indebtedness for Money Borrowed.
"Mortgages" means and includes any and all of the mortgages, deeds of
trust, deeds to secure debt, assignments and orders of the Court pursuant to
which the Agent receives, for the benefit of the Secured Creditors, a Lien on
all Real Estate of the Obligors, and all amendments, modifications and
supplements thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which an Obligor or a Related Company is required to
contribute or has contributed within the immediately preceding six years.
"Net Income" means, with respect to any Person on a consolidated basis for
any period, its net income (or deficit) determined in accordance with GAAP.
Unless the context clearly provides otherwise, any reference to Net Income in
this Agreement shall be to the Net Income of Safety Components and its US and UK
Subsidiaries.
"Net Outstandings" of any Lender means, at any time, the sum of (a) all
amounts paid by such Lender (other than pursuant to Section 14.7) to the Agent
in respect of Revolving Loans, Term Loans or otherwise under this Agreement,
minus (b) all amounts paid by the Agent to such Lender which are received by the
Agent and which, pursuant to this Agreement, are paid over to such Lender for
application in reduction of the outstanding principal balance of the Revolving
Loans and the Term Loans.
20
"Net Proceeds" means proceeds received by any Obligor in cash from any
Asset Disposition (including payments under notes or other debt securities
received in connection with any Asset Disposition), net of: (a) the transaction
costs of such sale, lease, transfer or other disposition; (b) any tax liability
arising from such transaction; and (c) amounts applied to repayment of
Indebtedness (other than the Secured Obligations) secured by a Lien on the asset
or property disposed.
"Non-Debtor Borrower" has the meaning assigned to it in the recital clauses
hereof.
"Non-Debtor Guarantor" shall mean any Guarantor that is not a Debtor
Guarantor.
"Non-Ratable Loan" has the meaning specified in Section 4.8(b).
"Note" means any of the Revolving Loan Notes or the Term Loan Notes and
"Notes" means more than one such Note.
"Noteholders" means the holders of those certain 10 1/8% Senior
Subordinated Notes Due 2007, Series B pursuant to the terms of the Indenture.
"Noteholders Restructuring Agreement" means that certain restructuring
agreement by and among Borrowers and the Required Noteholder Representatives
providing, among other things, for the conversion of all Indebtedness under the
Indenture to equity interests in Safety Components, on terms and conditions
satisfactory to the Agent.
"Notice of Borrowing" means a written notice, or telephonic notice followed
by a confirming same-day written notice, requesting a Borrowing of either a
Prime Rate Revolving Loan, a LIBOR Revolving Loan, a Prime Rate Term Loan or a
LIBOR Term Loan which is given by telex or facsimile transmission in accordance
with the applicable provisions of Sections 2.2 or 2.6 and which specifies (i)
the amount of the requested Borrowing, and (ii) the date of the requested
Borrowing.
"Notice of Conversion or Continuation" has the meaning specified in Section
4.12.
"Obligor" means any Borrower, any Guarantor and any other Person liable
with respect to the Secured Obligations, whether as maker, endorser, guarantor,
pledgor or otherwise, and whether such liability is direct, indirect, primary or
secondary, and "Obligors" means all of such Persons collectively.
"Operating Lease" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property.
"Orderly Liquidation Value" means the value, based on the net median
recovery percentage and other methodology reasonably acceptable to the Agent, as
determined from time to time by an Inventory Appraiser.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"Patent Assignment" means the Conditional Assignment and Patent Security
Agreement, dated as of the Agreement Date, made by the Obligors to the Agent,
for the benefit of the Secured Creditors.
21
"Patents" means and includes, in each case whether now existing or
hereafter arising during the term of this Agreement, all of the Obligors' right,
title and interest in and to (a) any and all patents and patent applications,
(b) inventions and improvements described and claimed therein, (c) reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, (d) income, royalties, damages, claims and payments now or hereafter
due and/or payable under and with respect thereto, including damages and
payments for past and future infringements thereof, (e) rights to ▇▇▇ for past,
present and future infringements thereof, and (f) all rights corresponding to
any of the foregoing throughout the world.
"Permitted Investments" means Investments in: (a) negotiable certificates
of deposit and time deposits issued by Bank of America or by any United States
bank or trust company having capital, surplus and undivided profits in excess of
$100,000,000, (b) any direct obligation of the United States of America or any
agency or instrumentality thereof which has a remaining maturity at the time of
purchase of not more than one year and repurchase agreements relating to the
same, (c) sales of inventory on credit in the ordinary course of business, (d)
shares of capital stock, evidence of Indebtedness or other security acquired in
consideration for or as evidence of past-due or restructured Receivables in an
aggregate face amount of such Receivables at any time not to exceed $50,000, (e)
Guaranties permitted pursuant to Section 11.3, (f) loans and advances to any
Borrower from any other Obligor, for the purpose of providing working capital in
the ordinary course of business, to the extent permitted by the Court, (g) loans
to employees for recruiting and hiring purposes, to the extent permitted by the
Court, (h) other Investments of up to $50,000 in the aggregate at any time, and
(i) other Investments consented to by the Agent in writing.
"Permitted Liens" means: (a) Liens securing taxes, assessments and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA or the Federal Tax Lien Act of 1966) or the claims of
materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business, but
(i) in all cases only if payment shall not at the time be required to be made in
accordance with Section 9.6 or the Bankruptcy Code and (ii) in the case of
warehousemen's or landlords' Liens, only if such liens do not exceed the
respective amounts (if any) set forth in the Final Order, (b) Liens consisting
of deposits or pledges made in the ordinary course of business in connection
with, or to secure payment of, obligations under workers' compensation,
unemployment insurance or similar legislation or under payment or performance
bonds, and utility deposits required by order of the Court, if any, (c) Liens
constituting encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property, which do not
materially detract from the value of such property or impair the use thereof in
the business of the Obligors or their Subsidiaries, (d) Permitted Purchase Money
Liens not to exceed $500,000 in the aggregate, (e) Liens of the Agent, for the
benefit of the Secured Creditors, arising under this Agreement and the other
Loan Documents, (f) reclamation claims against the Borrowers not exceeding the
respective amounts, if any, set forth in the Final Order, (g) Liens which, by
virtue of the entry of, and pursuant to the terms of, the Intercreditor and
Subordination Agreement, the Final Order, or any other order of the Court
granting such Liens, are subordinate and inferior to the Liens of the Agent on
the Collateral, (h) a Lien for Carve-Out Expenses not exceeding the Carve-Out
Amount, (i) Liens securing the Senior Claims, provided, however, that the liens
and claims of the Pre-Petition Lenders (whether in their capacity as
Pre-Petition Lenders or in their capacity as Post-Petition Subordinated Lenders)
shall be subordinate in all respects to the liens and claims of the Agent and
the Lenders under this Agreement and the other Loan Documents pursuant to the
Intercreditor and Subordination Agreement and Bankruptcy Code Section 364(d),
(j) Liens arising in the ordinary course of business which do not materially
detract from the value of or interfere with the use of properties of the
Borrowers or otherwise materially impair the business or operation of the
Borrowers provided that the indebtedness secured by such Liens may not exceed
$500,000 in the aggregate.
22
"Permitted Purchase Money Lien" means a lien to secure Permitted Purchase
Money Indebtedness.
"Permitted Purchase Money Indebtedness" means Purchase Money Indebtedness
incurred after the Agreement Date (a) which is secured by a Purchase Money Lien,
(b) the aggregate principal amount of which does not exceed an amount equal to
the lesser of (i) the cost (including the principal amount of such Indebtedness,
whether or not assumed) of the property (other than Inventory) subject to such
Lien, and (ii) the fair value of such property (other than Inventory) at the
time of its acquisition, provided that the aggregate amount of Permitted
Purchase Money Indebtedness shall not exceed $500,000 during the term of this
Agreement. For the purposes of this definition, the principal amount of any
Purchase Money Indebtedness consisting of Capitalized Leases shall be computed
as a Capitalized Lease Obligation.
"Person" means an individual, limited liability company, corporation,
partnership, association, trust or unincorporated organization, joint venture or
other entity or a government or any agency or political subdivision thereof.
"Petition Date" has the meaning assigned to it in the recital clauses
hereof.
"Plan" means any employee benefit plan as defined in Section 3(3) of ERISA
in respect of which an Obligor or any Related Company is, or within the
immediately preceding six years was, an "employer" as defined in Section 3(5) of
ERISA.
"Post Petition Subordinated Lenders" means each Person qualifying as a
"Lender" pursuant to and as defined in the Post Petition Lenders Credit
Agreement.
"Post-Petition Lenders Credit Agreement" means that certain Subordinated
Debtor-in-Possession Agreement dated April 7, 2000, by and among the Obligors
and the Pre-Petition Lenders (in their capacity as Post-Petition Subordinated
Lenders) providing, among other things, for the restructuring of the liens and
claims held by the Pre-Petition Lenders pursuant to the Pre-Petition Loan
Agreement.
"Pre-Petition Loans" means "Loans" as defined in and made pursuant to the
Pre-Petition Loan Agreement.
"Pre-Petition Loan Agreement" shall have the meaning assigned to it in the
recital clauses hereof.
"Pre-Petition Lenders" means each Person qualifying as a "Lender" as
defined in and pursuant to the Pre-Petition Loan Agreement.
"Prime Rate" means on any day the interest rate per annum equal to the rate
of interest publicly announced by the Agent at its head office in Atlanta,
Georgia as its "prime" rate, as in effect on the last Business Day of the
calendar month immediately preceding the month in which such day falls. The
Agent lends at rates above and below the Prime Rate.
"Prime Rate Loan" means any Prime Rate Revolving Loan, or Prime Rate Term
Loan, and "Prime Rate Loans" means more than one such Loan.
23
"Prime Rate Revolving Loan" means each Borrowing of Prime Rate Loans under
the Revolving Loan Facility on the same day, a specified principal amount of
Prime Rate Loans outstanding under the Revolving Loan Facility, and any
Non-Ratable Revolving Loan.
"Prime Rate Term Loan" means each Borrowing of Prime Rate Loans under the
Term Loan Facility on the same day, a specified principal amount of Prime Rate
Loans outstanding under the Term Loan Facility, and any Non-Ratable Term Loan.
"Projections" means, for Safety Components and its US and UK Subsidiaries,
(a) the forecasted Borrowing Base calculations and cash flow statements for the
period from April 1, 2000, through March 31, 2001, prepared on a weekly basis
and attached hereto as Schedule P-1, and (b) the quarterly budgets delivered to
the Agent after the Agreement Date pursuant to Section 10.1(c) hereof, in each
case together with appropriate supporting details and a statement of underlying
assumptions.
"Proportionate Share" or "Ratable", as applied to a Lender, means such
Lender's share of an amount in Dollars or other property at the time of
determination equal to (i) the Commitment Percentage of such Lender, or (ii) if
the Commitments are terminated, the percentage of the total principal amount of
Loans (plus Letter of Credit Obligations) outstanding at such time obtained by
dividing the principal amount of the Loans (plus Letter of Credit Obligations)
then owing to such Lender by the total principal amount of all Loans (plus
Letter of Credit Obligations) then owing to all Lenders.
"Proprietary Rights" means all of the Obligors' now owned and hereafter
arising during the term of this Agreement or acquired Patents, Copyrights, and
Trademarks, including those Proprietary Rights set forth on Schedule 6.1(aa)
hereto, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to ▇▇▇ for past, present and future
infringement of any of the foregoing.
"Purchase Money Indebtedness" means (a) Indebtedness created to secure the
payment of all or any part of the purchase price of any property (other than
Inventory), (b) any Indebtedness incurred at the time of or within thirty (30)
days prior to or after the acquisition of any property (other than Inventory)
for the purpose of financing all or any part of the purchase price thereof, and
(c) any renewals, extensions or refinancings thereof, but not any increases in
the principal amounts thereof outstanding at the time of any such renewal,
extension or refinancing.
"Purchase Money Lien" means any Lien securing Purchase Money Indebtedness,
but only if such Lien shall at all times be confined solely to the property
(other than Inventory) the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
"Real Estate" means all of the Obligors' now or hereafter owned or leased
estates in real property, including the real property described on Schedule
6.1(v).
"Receivables" means and includes, as to each Obligor, (a) any and all
rights to the payment of money or other forms of consideration of any kind
(whether classified under the Uniform Commercial Code as accounts, contract
rights, chattel paper, general intangibles, or otherwise) including accounts
receivable, letters of credit and the right to receive payment thereunder,
chattel paper, tax refunds, insurance proceeds, Contract Rights, notes, drafts,
instruments, documents, acceptances, and all other debts, obligations and
liabilities in whatever form from any Person, (b) all guarantees, security and
Liens for payment thereof, (c) all goods, whether now owned or hereafter
acquired, and whether sold, delivered, undelivered, in transit or returned,
which may be represented by, or the sale or lease of which
24
may have given rise to, any such right to payment or other debt, obligation or
liability, and (d) all proceeds of any of the foregoing.
"Reimbursement Agreement" means, with respect to a Letter of Credit, such
form of application therefor and form of reimbursement agreement therefor
(whether in a single document or several documents) as the Issuing Bank may
employ in the ordinary course of business for its own account, with such
modifications thereto as may be agreed upon by the Issuing Bank and the
Borrowers, provided that such application and agreement and any modifications
thereto are not inconsistent with the terms of this Agreement.
"Reimbursement Obligations" means the reimbursement or repayment
obligations of the Borrowers to the Issuing Bank pursuant to Section 3.6 or
pursuant to a Reimbursement Agreement with respect to amounts that have been
drawn under Letters of Credit.
"Related Company" means any (a) corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as any Obligor; (b) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Internal Revenue Code) with any Obligor; or (c) member
of the same affiliated service group (within the meaning of Section 414(m) of
the Internal Revenue Code) as any Obligor, any corporation described in clause
(a) above or any partnership, trade or business described in clause (b) above.
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any property, including the movement of
Contaminants through or in the air, soil, surface water or groundwater.
"Remedial Action" means actions required to (i) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor environment; (ii)
prevent the Release or threat of Release or minimize the further Release of
Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (iii) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
"Reportable Event" has the meaning set forth in Section 4043(c) of ERISA,
but shall not include a Reportable Event as to which the provision for thirty
(30) days notice to the PBGC is waived under applicable regulations.
"Required Lenders" means, at any time, any combination of Lenders whose
Commitment Percentages at such time aggregate in excess of 66 2/3%; provided,
however, that if any Lender shall have failed to fund its Proportionate Share of
any Loan in accordance with the terms of this Agreement, then, for so long as
such failure continues, the term "Required Lenders" shall mean Lenders
(excluding such Lender whose failure to fund its Proportionate Share of any Loan
has not been cured) whose Commitment Percentages (computed after excluding the
defaulting Lender's Commitment from the Total Commitment) at such time aggregate
in excess of 66 2/3%; provided further, however, that if the Commitments have
been terminated, the term "Required Lenders" shall mean Lenders (excluding each
Lender whose failure to fund its Proportionate Share of any Loan has not been
cured) holding Loans (plus Letter of Credit Obligations) representing in excess
of 66 2/3% of the aggregate principal amount of Loans and Letter of Credit
Obligations (excluding the Loans and Letter of Credit Obligations owing to the
defaulting Lender) outstanding at such time.
25
"Required Noteholder Representatives" means Noteholders that collectively
hold in excess of two thirds in amount of those certain 10 1/8% Senior
Subordinated Notes Due 2007, Series B, under the terms of the Indenture.
"Restricted Dividend Payment" means any dividend, distribution or payment
on or with respect to (a) any shares of a Person's capital stock (other than
dividends payable solely in shares of its capital stock) or (b) any partnership
or other ownership interest in a Person, excluding, however, any such dividend,
distribution or payment to Safety Components by any Subsidiary of Safety
Components.
"Restricted Payment" means (a) any redemption or prepayment or other
retirement, prior to the stated maturity thereof or prior to the due date of any
regularly scheduled installment or amortization payment with respect thereto, of
any Indebtedness for Money Borrowed, (b) any redemption, retirement or payment
with respect to Subordinated Indebtedness other than as permitted under Section
9.8 and pursuant to the terms of the Intercreditor and Subordination Agreement,
(c) the payment by any Person of the principal amount of or interest on any
Indebtedness (other than trade debt) owing to a shareholder, partner or equity
holder of such Person or to any Affiliate of any such shareholder, partner or
equity holder, (d) the payment of any management, consulting or similar fee by
any Person to any shareholder, executive officer or director of such Person.
"Restricted Purchase" means any payment on account of the purchase,
redemption or other acquisition or retirement by a Person of any (a) shares of
such Person's capital stock (except shares acquired on the conversion thereof
into other shares of capital stock of such Person), (b) a partnership interest
in such Person, if such Person is a partnership, or (c) a membership interest in
such Person, if such Person is a limited liability company.
"Revolving Loan Facility" means the principal amount of $25,000,000 or such
lesser or greater amount as shall be agreed upon from time to time in writing by
the Agent, the Lenders and the Borrowers.
"Revolving Loans" means loans made to the Borrowers pursuant to Section
2.1.
"Revolving Loan Note" means each Revolving Loan Note made by the Borrowers
payable to the order of a Lender evidencing the joint and several obligation of
the Borrowers to pay the aggregate unpaid principal amount of the Revolving
Loans made to them by such Lender (and any promissory note or notes that may be
issued from time to time in substitution, renewal, extension, replacement or
exchange therefor, whether payable to such Lender or to a different Lender in
connection with a Person becoming a Lender after the Effective Date or
otherwise), substantially in the form of Exhibit C-1 hereto, with all blanks
properly completed, either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed, extended or refinanced.
"Safety Components" means Safety Components International, Inc., a Delaware
corporation.
"Schedule of Inventory" means a schedule delivered by the Borrowers' Agent
to the Agent pursuant to the provisions of Section 8.12(b).
"Schedule of Receivables" means a schedule delivered by the Borrowers'
Agent to the Agent pursuant to the provisions of Section 8.12(a).
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"Secured Creditors" means, collectively, the Agent, the Issuing Bank, the
Lenders, and each Affiliate of each of the foregoing.
"Secured Obligations" means, in each case whether now in existence or
hereafter arising, (a) the principal of, and interest and premium, if any, on,
the Loans, and any fees payable in connection with the Loans or this Agreement,
(b) the Reimbursement Obligations and all other obligations of the Borrowers to
the Issuing Bank, the Agent or any Lender arising in connection with the
issuance of Letters of Credit, and (c) all indebtedness, liabilities,
obligations, covenants and duties of the Obligors to the Agent, the Lenders or
any other Secured Creditor of every kind, nature and description arising under
or in respect of this Agreement, the Notes or any of the other Loan Documents or
the Banking Relationship, whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any note, and whether or not for the payment of money,
including fees required to be paid pursuant to Article 4 and expenses required
to be paid or reimbursed pursuant to Section 16.2.
"Security Documents" means this Agreement, the Financing Statements, the
Patent Assignment, the Trademark Assignment, the UK Debenture, the Equity
Interest Pledge Agreements, the Mortgages, the Final Order and each other
writing executed and delivered by an Obligor securing the Secured Obligations.
"Security Interest" means the Liens of the Agent, for the benefit of the
Secured Creditors, on and in the Collateral effected hereby or by any of the
Security Documents or pursuant to the terms hereof or thereof.
"Senior Claims" means (a) the Liens and claims in favor of the Pre-Petition
Lenders (in their capacity as Post-Petition Subordinated Lenders) on the
Collateral as security for the obligations evidenced by the Pre-Petition Loan
Agreement, provided that such Liens and claims are subject to the Intercreditor
and Subordination Agreement and, to the extent provided under such Intercreditor
and Subordination Agreement and this Agreement, are junior to the Lien and
claims of the Agent pursuant to this Agreement and the other Loan Documents, and
(b) those other claims or liens that have priority over the claims or Liens of
the Agent, the Issuing Bank, and the Lenders, to the extent allowed and as
specifically set forth on Schedule S-1 attached hereto.
"Settlement Date" means each Business Day after the Effective Date selected
by the Agent in its sole discretion subject to and in accordance with the
provisions of Section 4.8(b) as of which a Settlement Report is delivered by the
Agent and on which settlement is to be made among the Lenders in accordance with
the provisions of Section 4.8.
"Settlement Report" means each report, substantially in the form attached
hereto as Exhibit D, prepared by the Agent and delivered to each Lender and
setting forth, among other things, as of the Settlement Date indicated thereon
and as of the next preceding Settlement Date, the aggregate principal balance of
all Revolving Loans and Term Loans outstanding, each Lender's Commitment
Percentage thereof, each Lender's Net Outstandings and all Non-Ratable Loans
made, and all payments of principal, interest and fees received by the Agent
from the Borrowers during the period beginning on such next preceding Settlement
Date and ending on such Settlement Date.
"Subordinated Indebtedness" means (a) the Indebtedness of Safety Components
evidenced by the Pre-Petition Loan Agreement and the Post-Petition Lenders
Credit Agreement, including principal thereof and interest and premium, if any,
thereon, together with any and all
27
Indebtedness related thereto, and (b) any other Indebtedness for Money Borrowed
which is in an amount, and is expressly subordinated to the Secured Obligations
on terms and conditions, acceptable to the Agent and the Required Lenders in
their discretion.
"Subsidiary" (a) when used to determine the relationship of a Person to
another Person, means a Person of which an aggregate of 50% or more of the stock
of any class or classes or 50% or more of other ownership interests is owned of
record or beneficially by such other Person, or by one or more Subsidiaries of
such other Person, or by such other Person and one or more Subsidiaries of such
Person, (i) if the holders of such stock, or other ownership interests, (A) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or other individuals performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or (ii) in the case of such other
ownership interests, if such ownership interests constitute a majority voting
interest, and (b) when used with respect to a Plan, ERISA or a provision of the
Internal Revenue Code pertaining to employee benefit plans, also means any
corporation, trade or business (whether or not incorporated) which is under
common control with any Obligor and is treated as a single employer with such
Obligor under Section 414(b) or (c) of the Internal Revenue Code and the
regulations thereunder.
"Supporting Letter of Credit" has the meaning specified in Section 3.9.
"Tax Refund Claims" means all tax refund claims and all rights with respect
thereto, including all rights to settle or compromise the amount of such claims,
to file amendments and other documents with respect thereto, and to receive the
proceeds thereof.
"Term Loan Facility" means $5,600,000.
"Term Loan" means any loan made to the Borrowers pursuant to Section 2.5.
"Term Loan Note" means each Term Loan Note made by the Borrowers payable to
the order of a Lender evidencing the joint and several obligation of the
Borrowers to pay the aggregate unpaid principal amount of the Term Loans made to
them by such Lender (and any promissory note or notes that may be issued from
time to time in substitution, renewal, extension, replacement or exchange
therefor, whether payable to such Lender or to a different Lender in connection
with a Person becoming a Lender after the Effective Date or otherwise),
substantially in the form of Exhibit C-2 hereto, with all blanks properly
completed, either as originally executed or as the same may from time to time be
supplemented, modified, amended, renewed, extended or refinanced.
"Termination Date" means the earliest of: (a) April 7, 2001; (b) the date
that the Agent elects pursuant to Section 12.2 to terminate the Borrowers' right
to receive Loans or accommodations for Letters of Credit; (c) the date of
prepayment in full by the Borrowers of the Loans in accordance with the
provisions of Section 4.6; (d) thirty-five (35) days following the Petition
Date, if the Final Order has not been entered by the Court by such date; (e)
unless the Agent and the Lenders agree otherwise, the date upon which a plan of
reorganization confirmed in the Chapter 11 Case of the Borrowers becomes
effective that does not provide for the payment in full of all amounts owed to
the Agent and the DIP Lenders under this Agreement and the other Loan Documents,
and (f) the date of the closing of a sale of all or substantially all of the
Borrowers' assets pursuant to Section 363 of the Bankruptcy Code, a confirmed
plan of reorganization or a liquidation pursuant to Chapter 7 of the Bankruptcy
Code.
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"Termination Event" means (a) a Reportable Event, (b) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (c) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or the appointment
by the PBGC of a trustee to administer any Plan.
"Total Commitment" means the sum of the Commitments, but in any event, an
amount not to exceed $30,600,000.
"Trademark Assignment" means the Conditional Assignment and Trademark
Security Agreement, dated as of the Agreement Date, made by the Obligors to the
Agent, for the benefit of the Secured Creditors.
"Trademarks" means and includes in each case whether now existing or
hereafter arising during the term of this Agreement, all of the Obligors' right,
title and interest in and to (a) trademarks (including service marks), trade
names and trade styles and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the trademarks, (b)
licenses of the foregoing, whether as licensee or licensor, (c) renewals
thereof, (d) income, royalties, damages and payments now or hereafter due and/or
payable with respect thereto, including damages, claims and payments for past
and future infringements thereof, (e) rights to ▇▇▇ for past, present and future
infringements thereof, including the right to settle suits involving claims and
demands for royalties owing, and (f) all rights corresponding to any of the
foregoing throughout the world.
"Treasury Management Reserve" means a reserve established by the Agent from
time to time in its reasonable discretion in connection with its cash management
relationship with the Borrowers, which reserve as of the Agreement Date is $0.
"Type" means, when used in respect of any Loan or Borrowing, the rate by
reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined.
"UK Debenture" means that certain debenture executed by Automotive Safety
Components UK granting a security interest to the Agent and the Lenders in all
of Automotive Safety Components UK's owned Collateral.
"Unfunded Vested Accrued Benefits" means with respect to any Plan subject
to Title IV of ERISA at any time, the amount (if any) by which (a) the present
value of all vested nonforfeitable benefits under such Plan exceeds (b) the fair
market value of all Plan assets allocable to such benefits, all determined as of
the then most recent valuation date for such Plan.
"Uniform Commercial Code" means the Uniform Commercial Code as in effect
from time to time in the State of Georgia or in any other state the laws of
which are required by Section 9-103 thereof to be applied in connection with the
issue of perfection of security interests.
"US and UK Subsidiaries" means all Subsidiaries of the Obligors located in
the United States and the United Kingdom.
SECTION 1.2. General.
(a) All terms of an accounting nature not specifically defined herein shall
have the meaning ascribed thereto by GAAP.
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(b) The terms accounts, chattel paper, contract rights, documents,
equipment, instruments, general intangibles, investment property and inventory,
as and when used in this Agreement or the Security Documents, shall have the
meanings given those terms in the Uniform Commercial Code.
(c) Unless otherwise specified, a reference in this Agreement to a
particular section or subsection is a reference to that section or subsection of
this Agreement, and the words "hereof," "herein," "hereunder" and words of
similar import, when used in this Agreement, refer to this Agreement as a whole
and not to any particular provision, section or subsection of this Agreement.
(d) Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
(e) Words denoting individuals include corporations and vice versa.
(f) Unless otherwise specified, the word "including" means "including but
not limited to".
(g) References to any legislation or statute or code, or to any provisions
of any legislation or statute or code, shall include any modification or
reenactment of, or any legislative, statutory or code provision substituted for,
such legislation, statute or code or provision thereof.
(h) References to any document or agreement (including this Agreement)
shall include references to such document or agreement as amended, novated,
supplemented, modified, reissued or replaced from time to time, so long as and
to the extent that such amendment, novation, supplement, modification,
reissuance or replacement is either not prohibited by the terms of this
Agreement or is consented to by the Required Lenders (or Lenders, as the case
may be) and the Agent.
(i) References to any Person include its successor or permitted substitutes
and assigns.
(j) Each reference to a time of day shall refer to Atlanta, Georgia time.
ARTICLE 2
REVOLVING LOAN FACILITY AND TERM LOAN FACILITY
SECTION 2.1. Revolving Loans. Upon the terms and subject to the conditions
of, and in reliance upon the representations and warranties made under, this
Agreement, each Lender agrees, severally, but not jointly, to make Revolving
Loans (on a final basis as that term is commonly used in the context of the
Bankruptcy Code) to the Borrowers from time to time from the Effective Date to
but not including the Termination Date, as requested or deemed requested by the
Borrowers in accordance with the terms of Section 2.2, in amounts equal to such
Lender's Commitment Percentage of each such Loan requested or deemed requested
hereunder up to an aggregate amount at any one time outstanding equal to such
Lender's Commitment Percentage of the Borrowing Base; provided, however, that
the Aggregate Revolving Loan Obligations (after giving effect to the Loans
requested) shall not exceed the Borrowing Base. It is expressly understood and
agreed that the Lenders may and at present intend to use the Borrowing Base as a
maximum ceiling on Revolving Loans to the Borrowers; provided, however, that it
is agreed that should the Revolving Loans exceed the ceiling so determined or
any other limitation set
30
forth in this Agreement, such Revolving Loans shall nevertheless constitute
Secured Obligations and, as such, shall be entitled to all benefits thereof and
security therefor. The principal amount of any Revolving Loan which is repaid
pursuant to Section 2.3(c) may be reborrowed by the Borrowers, subject to the
terms and conditions of this Agreement, in accordance with the terms of this
Section 2.1. The Agent's and each Lender's books and records reflecting the date
and the amount of each Revolving Loan and each repayment of principal thereof
shall constitute prima facie evidence of the accuracy of the information
contained therein, subject to the provisions of Section 4.5.
SECTION 2.2. Manner of Borrowing Revolving Loans. Borrowings under the
Revolving Loan Facility shall be made as follows:
(a) Requests for Borrowing.
(i) Prime Rate Revolving Loans. A request for a Borrowing of a
Prime Rate Revolving Loan shall be made, or shall be deemed to be
made, in the following manner:
(A) with respect to the initial Borrowing to be made on the
Effective Date, the Borrowers shall give the Agent an Initial
Notice of Borrowing on the proposed date of the Borrowing, and,
as to subsequent Prime Rate Revolving Loans, the Borrowers shall
give the Agent a Notice of Borrowing before 12:00 p.m. on the
proposed Borrowing date, all of which notices shall be
irrevocable,
(B) whenever a check or other item is presented to a
Disbursing Bank for payment against a Disbursement Account in an
amount greater than the then available balance in such account,
such Disbursing Bank shall, and is hereby irrevocably authorized
by the Borrowers to, give the Agent notice thereof, which notice
shall be deemed to be an irrevocable request for a Prime Rate
Revolving Loan on the date of such notice in an amount equal to
the excess of such check or other item over such available
balance,
(C) unless payment is otherwise made by the Obligors, the
becoming due of any amount required to be paid under this
Agreement or any of the Notes as interest shall be deemed to be
an irrevocable request for a Prime Rate Revolving Loan on the due
date in the amount required to pay such interest,
(D) unless payment is otherwise made by the Obligors, the
becoming due of any other Secured Obligation shall be deemed to
be an irrevocable request for a Prime Rate Revolving Loan on the
due date in the amount then so due, and such request shall be
irrevocable, and
(E) the receipt by the Agent of notification from the
Issuing Bank to the effect that a drawing has been made under a
Letter of Credit and that the Borrowers have failed to reimburse
the Issuing Bank therefor in accordance with the terms of the
Letter of Credit, the Reimbursement Agreement and Article 3,
shall be deemed to be an irrevocable request for a Prime Rate
Revolving Loan on the date such notification is received in the
amount of such drawing which is so unreimbursed.
(ii) LIBOR Revolving Loans. The Borrowers may request a LIBOR
Loan under the Revolving Loan Facility by giving the Agent a Notice of
Borrowing (which
31
notice shall be irrevocable) not later than 12:00 p.m. on the date
three Business Days before the date on which the requested LIBOR
Revolving Loan is to be made; provided the Borrowers shall not be
permitted to request, and the Lenders shall not be required to make,
LIBOR Revolving Loans at any time during the existence of an Event of
Default.
(iii) Notification of Lenders. Unless the Agent has elected
periodic settlements pursuant to Section 4.8, the Agent shall promptly
notify the Lenders of any Notice of Borrowing given or deemed given
pursuant to this Section 2.2(a) by 12:00 noon on the proposed
Borrowing date (in the case of Prime Rate Revolving Loans) or by 3:00
p.m. three Business Days before the proposed Borrowing date (in the
case of LIBOR Revolving Loans). Not later than 1:00 p.m. on the
proposed Borrowing date, each Lender will make available to the Agent,
for the account of the Borrowers, at the Agent's Office in funds
immediately available to the Agent, an amount equal to such Lender's
Commitment Percentage of such Prime Rate Revolving Loan or LIBOR
Revolving Loan, as the case may be.
(b) Disbursement of Loans. Each Borrower hereby irrevocably authorizes
the Agent to disburse the proceeds of each Borrowing requested, or deemed
to be requested, pursuant to this Section 2.2 as follows:
(i) the proceeds of each Borrowing requested under Sections
2.2(a)(i)(A) (other than the Borrowing of the Initial Loans),
2.2(a)(i)(B) or 2.2(a)(ii) shall be disbursed by the Agent in Dollars
in immediately available funds by wire transfer to a Disbursement
Account or, in the absence of a Disbursement Account, by wire transfer
to such other account as may be agreed upon by the Borrowers and the
Agent from time to time, and the proceeds of the Initial Loans under
Section 2.2(a)(i)(A) shall be disbursed in accordance with the Initial
Notice of Borrowing;
(ii) the proceeds of each Borrowing deemed requested under
Sections 2.2(a)(i)(C) or (D) shall be disbursed by the Agent by way of
direct payment of the relevant interest or Secured Obligation; and
(iii) the proceeds of each Borrowing deemed requested under
Section 2.2(a)(i)(E) shall be disbursed by the Agent directly to the
Issuing Bank on behalf of the Borrowers.
SECTION 2.3. Repayment of Revolving Loans. The Revolving Loans will be
repaid as follows:
(a) Whether or not any Default or Event of Default has occurred, the
outstanding principal amount of all the Revolving Loans is due and payable,
and shall be repaid by the Borrowers in full, not later than the
Termination Date;
(b) If at any time the Aggregate Revolving Loan Obligations exceed the
Borrowing Base in effect at such time, the Borrowers shall repay the
Revolving Loans in an amount sufficient to reduce the aggregate unpaid
principal amount of such Revolving Loans by an amount equal to such excess,
together with accrued and unpaid interest on the amount so repaid to the
date of repayment;
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(c) Each Borrower hereby instructs the Agent to repay the Revolving
Loans outstanding on any day in an amount equal to the amount, if any,
received by the Agent on such day pursuant to Section 8.1(b); provided that
payments received in excess of outstanding Revolving Loans or payments
received on account of LIBOR Loans which would otherwise result in
prepayment of such Loans prior to the end of the Interest Period applicable
thereto may (in the absence of an Event of Default), upon the instruction
of the Borrowers to the Agent not later than 1:00 p.m. on any Business Day,
be applied to the Cash Collateral Account; and
(d) Each LIBOR Loan is due and payable on the last day of the Interest
Period applicable thereto, except to the extent converted or continued in
accordance with Sections 4.12 and 4.13.
Repayments pursuant to Sections 2.3(b) or (c) shall be applied first to the
Prime Rate Revolving Loans and then, subject to the provisions of Section
2.3(c), to LIBOR Revolving Loans.
SECTION 2.4. Revolving Loan Note. Each Lender's Revolving Loans and the
joint and several obligation of the Borrowers to repay such Revolving Loans
shall also be evidenced by a Revolving Loan Note payable to the order of such
Lender. Each Revolving Loan Note shall be dated as of the Agreement Date (or the
later date of any Assignment and Acceptance) and shall be duly and validly
executed and delivered by the Borrowers.
SECTION 2.5. Term Loans. Upon the terms and subject to the conditions of,
and in reliance upon the representations and warranties made under, this
Agreement, each Lender agrees, severally, but not jointly, to make Term Loans
(on a final basis as that term is commonly used in the context of the Bankruptcy
Code) to the Borrowers on the Effective Date, as requested or deemed requested
by the Borrowers in accordance with the terms of Section 2.6, in amounts equal
to such Lender's Commitment Percentage of each such Loan requested or deemed
requested hereunder up to an aggregate amount at any one time outstanding equal
to such Lender's Commitment Percentage with respect to such Term Loans;
provided, however, that the aggregate amount of Term Loans extended to the
Borrowers shall not exceed the amount of the Term Loan Facility. The principal
amount of any Term Loan which is repaid pursuant to Section 2.7 may not be
reborrowed by the Borrowers under the Term Loan. The Agent's and each Lender's
books and records reflecting the date and the amount of each Term Loan and each
repayment of principal thereof shall constitute prima facie evidence of the
accuracy of the information contained therein, subject to the provisions of
Section 4.5.
SECTION 2.6. Manner of Borrowing Term Loans. Each Lender shall make the
amount of such Lender's Commitment Percentage with respect to Term Loans
available to the Agent in same day funds, to such account of the Agent as the
Agent may designate, not later than 1:00 p.m. (Atlanta, Georgia time) on the
Effective Date. After the Agent's receipt of the proceeds of such Term Loans,
the Agent shall make the proceeds of such Term Loans available to the Borrower
on such Effective Date by transferring same day funds equal to the proceeds of
such Term Loans received by the Agent to the Disbursement Account.
SECTION 2.7. Repayment of Term Loans. The principal amount of the Term
Loans shall be payable in sixty (60) equal monthly installments of $94,000,
commencing June 1, 2000, and on the first day of each calendar month thereafter,
and applied, based upon each Lender's Commitment Percentage with respect
thereto, to repayment of the Term Loans. Any remaining unpaid principal and
interest on the Term Loans shall be due and payable in full on the Termination
Date. Each regularly scheduled installment shall be payable to the Agent for the
account of the Lenders based upon their respective Commitment Percentage with
respect the Term Loans.
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SECTION 2.8. Term Loan Note. Each Lender's Term Loans and the joint and
several obligation of the Borrowers to repay such Term Loans shall also be
evidenced by a Term Loan Note payable to the order of such Lender. Each Term
Loan Note shall be dated as of the Agreement Date (or the later date of any
Assignment and Acceptance) and shall be duly and validly executed and delivered
by the Borrowers.
ARTICLE 3
LETTER OF CREDIT FACILITY
SECTION 3.1. Agreement to Issue. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, the Issuing Bank agrees to issue for the account of the
Borrowers one or more Letters of Credit in accordance with this Article 3, from
time to time during the period commencing on the Effective Date and ending on
the Termination Date.
SECTION 3.2. Amounts. The Issuing Bank shall not have any obligation to
issue any Letter of Credit at any time: (a) if, after giving effect to the
issuance of the requested Letter of Credit, (i) the aggregate Letter of Credit
Obligations of the Borrowers would exceed the Letter of Credit Facility then in
effect or (ii) the Aggregate Revolving Loan Obligations would exceed the
Borrowing Base (after reduction for the Letter of Credit Reserve in respect of
such Letter of Credit); or (b) which has a term longer than ninety days or an
expiration date after the last Business Day that is more than five (5) days
prior to the Termination Date.
SECTION 3.3. Conditions. The obligation of the Issuing Bank to issue any
Letter of Credit is subject to the satisfaction of (a) the conditions precedent
contained in Article 5 and (b) the following additional conditions precedent in
a manner satisfactory to the Agent and the Issuing Bank: (i) the Borrowers shall
have delivered to the Issuing Bank and the Agent at such times and in such
manner as the Issuing Bank or the Agent may prescribe an application in form and
substance satisfactory to the Issuing Bank and the Agent for the issuance of the
Letter of Credit, a Reimbursement Agreement and such other documents as may be
required pursuant to the terms thereof, and the form and terms of the proposed
Letter of Credit shall be satisfactory to the Issuing Bank and the Agent; and
(ii) as of the date of issuance, no order of any court, arbitrator or
governmental authority having jurisdiction or authority over the Issuing Bank
shall purport by its terms to enjoin or restrain banks generally from issuing
letters of credit of the type and in the amount of the proposed Letter of
Credit, and no law, rule or regulation applicable to banks generally and no
request or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over banks generally shall prohibit, or
request that the Issuing Bank refrain from, the issuance of letters of credit
generally or the issuance of such Letter of Credit.
SECTION 3.4. Issuance of Letters of Credit.
(a) Request for Issuance. The Borrowers shall give the Issuing Bank and the
Agent written notice of the Borrowers' request for the issuance of a Letter of
Credit no later than three Business Days prior to the proposed date of issuance
of the Letter of Credit. Such notice shall be irrevocable and shall specify the
original face amount of the Letter of Credit requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit, whether such Letter of Credit may be drawn in a single or in multiple
draws, the date on which such requested Letter of Credit is to expire (which
date shall be a Business Day more than
34
ten (10) days prior to the Termination Date), the purpose for which such Letter
of Credit is to be issued, and the beneficiary of the requested Letter of
Credit. The Borrowers shall attach to such notice the form of the Letter of
Credit that the Borrowers request to be issued.
(b) Responsibilities of the Agent; Issuance. The Agent shall determine, as
of the Business Day immediately preceding the requested effective date of
issuance of the Letter of Credit set forth in the notice from the Borrowers
pursuant to Section 3.4(a), the amount of the unused Letter of Credit Facility
and the Borrowing Base. If (i) the form of the Letter of Credit delivered by the
Borrowers to the Agent is acceptable to the Issuing Bank and the Agent in their
sole discretion, (ii) the undrawn face amount of the requested Letter of Credit
is less than or equal to the lesser of (A) the unused Letter of Credit Facility
and (B) the Borrowing Base less the Aggregate Revolving Loan Obligations, and
(iii) if requested by the Agent, the Agent has received a certificate or other
assurance from the Borrowers stating that the applicable conditions set forth in
Article 5 have been satisfied, then the Issuing Bank will cause the Letter of
Credit to be issued.
(c) Notice of Issuance. Promptly after the issuance of any Letter of
Credit, the Issuing Bank shall give the Agent written or facsimile notice, or
telephonic notice confirmed promptly thereafter in writing, of the issuance of
such Letter of Credit, and the Agent shall give each Lender written or facsimile
notice, or telephonic notice confirmed promptly thereafter in writing, of the
issuance of such Letter of Credit.
(d) No Extension or Amendment. No Letter of Credit shall be extended or
amended unless the requirements of this Section 3.4 are met as though a new
Letter of Credit were being requested and issued.
SECTION 3.5. Duties of the Issuing Bank. Any action taken or omitted to be
taken by the Issuing Bank under or in connection with any Letter of Credit, if
taken or omitted in the absence of gross negligence or willful misconduct, shall
not result in any liability of the Issuing Bank to any Lender or relieve any
Lender of its obligations hereunder to the Issuing Bank. In determining whether
to pay under any Letter of Credit, the Issuing Bank shall have no obligation to
any Lender other than to confirm that any documents required to be delivered
under such Letter of Credit in connection with such drawing have been presented
and appear on their face to comply with the requirements of such Letter of
Credit.
SECTION 3.6. Payment of Reimbursement Obligations.
(a) Payment to Issuer. Notwithstanding any provisions to the contrary in
any Reimbursement Agreement, the Borrowers jointly and severally agree to
reimburse the Issuing Bank for any drawings (whether partial or full) under each
Letter of Credit issued by the Issuing Bank and agree to pay to the Issuing Bank
the amount of all other Reimbursement Obligations and other amounts payable to
the Issuing Bank under or in connection with such Letter of Credit immediately
when due, irrespective of any claim, setoff, defense or other right which the
Borrowers may have at any time against the Issuing Bank or any other Person.
(b) Recovery or Avoidance of Payments. In the event any payment by or on
behalf of the Borrowers with respect to any Letter of Credit (or any
Reimbursement Obligation relating thereto) received by the Issuing Bank, or by
the Agent and distributed by the Agent to the Lenders on account of their
respective participations therein, is thereafter set aside, avoided or recovered
from the Issuing Bank or the Agent in connection with any receivership,
liquidation or bankruptcy proceeding, the Lenders shall, upon demand by the
Agent, pay to the Agent, for the
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account of the Agent or the Issuing Bank, their respective Commitment
Percentages of such amount set aside, avoided or recovered together with
interest at the rate required to be paid by the Agent upon the amount required
to be repaid by it.
SECTION 3.7. Participations.
(a) Purchase of Participations. Immediately upon issuance by the Issuing
Bank of a Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation in such Letter of Credit equal to such
Lender's Commitment Percentage of the face amount thereof (including all
obligations of the Borrowers with respect thereto, other than amounts owing to
the Issuing Bank under Section 4.2(d), and any security therefor or guaranty
pertaining thereto).
(b) Sharing of Letter of Credit Payments. In the event that the Issuing
Bank makes a payment under any Letter of Credit and the Issuing Bank shall not
have been repaid such amount pursuant to Section 3.6, then the Issuing Bank
shall be deemed to have made a Non-Ratable Loan in the amount of such payment,
and notwithstanding the occurrence or continuance of a Default or Event of
Default at the time of such payment, such Non-Ratable Loan shall be subject to
the provisions of Section 4.8 and the absolute obligations of the Lenders to pay
for their respective participation interests therein.
(c) Sharing of Reimbursement Obligation Payments. Whenever the Issuing Bank
receives a payment from or on behalf of the Borrowers on account of a
Reimbursement Obligation as to which the Agent has previously received for the
account of the Issuing Bank payment from a Lender pursuant to this Section 3.7,
the Issuing Bank shall promptly pay to the Agent, for the benefit of such
Lender, such Lender's Commitment Percentage of the amount of such payment from
the Borrowers in Dollars. Each such payment shall be made by the Issuing Bank on
the Business Day on which the Issuing Bank receives immediately available funds
pursuant to the immediately preceding sentence, if received prior to 11:00 a.m.
on such Business Day and otherwise on the next succeeding Business Day.
(d) Documentation. Upon the request of any Lender, the Agent shall furnish
to such Lender copies of any Letter of Credit, Reimbursement Agreement or
application for any Letter of Credit and such other documentation as may
reasonably be requested by such Lender.
(e) Obligations Irrevocable. Notwithstanding the occurrence or continuance
of a Default or Event of Default or other failure of any condition to the
issuance of Letters of Credit hereunder subsequent to the Letters of Credit to
be issued on the Effective Date, unless the Issuing Bank shall have received
notice from the Required Lenders (which notice shall become effective on the
third Business Day after receipt of such notice by the Issuing Bank unless
otherwise agreed by the Issuing Bank) prior to a proposed issuance date of any
Letter of Credit that such Lenders will not participate in any Letter of Credit
to be issued on such date, the Issuing Bank may assume that each Lender will
participate in such Letter of Credit in accordance with this Section 3.7, and
the Issuing Bank may, in reliance upon such assumption, issue such Letter of
Credit for the account of the Borrowers. The obligations of each Lender to make
payments to the Agent with respect to any Letter of Credit and their
participations therein pursuant to the provisions of Section 4.8 hereof or
otherwise and the obligations of the Borrowers to make payments to the Issuing
Bank or to the Agent, for the account of Lenders, shall be irrevocable, shall
not be subject to any qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement (assuming, in the
case of the obligations of the Lenders to make
36
such payments, that the Letter of Credit has been issued in accordance with this
Article 3), including any of the following circumstances: (i) any lack of
validity or enforceability of this Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right which the
Borrowers may have at any time against a beneficiary named in a Letter of Credit
or any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, the Issuing Bank or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions (including any
underlying transactions between the Borrowers or any other Person and the
beneficiary named in any Letter of Credit); (iii) any draft, certificate or any
other document presented under the Letter of Credit upon which payment has been
made in good faith and according to its terms proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv) the surrender or impairment of any Collateral or
any other security for the Secured Obligations or the performance or observance
of any of the terms of any of the Loan Documents; (v) the occurrence of any
Default or Event of Default; or (vi) the Agent's failure to deliver to the
Lenders the notice provided for in Section 3.4(c).
SECTION 3.8. Indemnification, Exoneration.
(a) Indemnification. In addition to amounts payable as elsewhere provided
in this Article 3, the Borrowers jointly and severally agree to protect,
indemnify, pay and save the Issuing Bank, the Lenders and the Agent harmless
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) which the
Issuing Bank, any Lender or the Agent may incur or be subject to as a
consequence, directly or indirectly, of (i) the issuance of any Letter of
Credit, other than as a result of its gross negligence or willful misconduct, as
determined by a court of competent jurisdiction, or (ii) the failure of the
Issuing Bank to honor a drawing under any Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto governmental authority (all such acts or omissions being hereinafter
referred to collectively as "Government Acts").
(b) Assumption of Risk by the Borrowers. As among the Borrowers, the
Issuing Bank, the Lenders and the Agent, the Borrowers assume all risks of the
acts and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the applications for
the issuance of Letters of Credit, the Issuing Bank, the Lenders and the Agent
shall not be responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any Person in
connection with the application for and issuance of and presentation of drafts
with respect to any of the Letters of Credit, even if it should prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any Letter of Credit to comply duly with conditions required in order to draw
upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or of
the proceeds thereof; (vii) the misapplication by the beneficiary of any Letter
of Credit of the proceeds of any drawing under such Letter of Credit; or (viii)
any consequences arising from causes beyond the
37
control of the Lenders or the Agent, including any Government Acts. None of the
foregoing shall affect, impair or prevent the vesting of any of the Issuing
Bank's or the Agent's rights or powers under this Section 3.8.
(c) Exoneration. In furtherance and extension, and not in limitation, of
the specific provisions set forth above, any action taken or omitted by the
Agent, the Issuing Bank or any Lender under or in connection with any of the
Letters of Credit or any related certificates, if taken or omitted in good
faith, shall not result in any liability of the Issuing Bank, any Lender or the
Agent to the Borrowers or relieve the Borrowers of any of their obligations
hereunder to any such Person.
SECTION 3.9. Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 3.2(b), any Letter of Credit is
outstanding on the Termination Date, then on or prior to the Termination Date,
or in any case upon the occurrence of an Event of Default, the Borrowers shall,
promptly on demand by the Agent, deposit with the Agent, for the Ratable benefit
of the Lenders, with respect to each Letter of Credit then outstanding, as the
Agent shall specify, either (a) a standby letter of credit (a "Supporting Letter
of Credit") in form and substance satisfactory to the Agent and the Issuing
Bank, issued by an issuer reasonably satisfactory to the Agent and the Issuing
Bank in an amount equal to the greatest amount for which such Letter of Credit
may be drawn, under which Supporting Letter of Credit the Agent is entitled to
draw amounts necessary to reimburse the Agent, the Issuing Bank and the Lenders
for payments made by the Agent, the Issuing Bank and the Lenders under such
Letter of Credit or under any reimbursement or guaranty agreement with respect
thereto, or (b) Cash Collateral in an amount necessary to reimburse the Agent,
the Issuing Bank and the Lenders for payments made by the Agent, the Issuing
Bank and the Lenders under such Letter of Credit or under any reimbursement or
guaranty agreement with respect thereto. Such Supporting Letter of Credit or
Cash Collateral shall be held by the Agent for the benefit of the Issuing Bank
and the Lenders, as security for, and to provide for the payment of, the
Reimbursement Obligations. In addition, the Agent may at any time after the
Termination Date apply any or all of such Cash Collateral to the payment of any
or all of the Secured Obligations then due and payable. At the Borrowers'
request, but subject to the Agent's reasonable approval, the Agent shall invest
any Cash Collateral consisting of cash or any proceeds of Cash Collateral
consisting of cash in Cash Equivalents, and any commissions, expenses and
penalties incurred by the Agent in connection with any investment and redemption
of such Cash Collateral shall be Secured Obligations hereunder secured by the
Collateral, shall bear interest at the rates provided herein for Prime Rate
Revolving Loans, and shall be charged to the Borrowers' Loan Accounts, or, at
the Agent's option, shall be paid out of the proceeds of any earnings received
by the Agent from the investment of such Cash Collateral as provided herein or
out of such cash itself. The Agent makes no representation or warranty as to,
and shall not be responsible for, the rate of return, if any, earned on any Cash
Collateral. Any earnings on Cash Collateral shall be held as additional Cash
Collateral on the terms set forth in this Section 3.9.
SECTION 3.10. Letters of Credit under Pre-Petition Loan Agreement. Schedule
3.10 contains a schedule of certain active and standby letters of credit issued
prior to the Effective Date pursuant to the Pre-Petition Loan Agreement for the
account of the Borrowers. On the Effective Date, any and all such active letters
of credit, to the extent still outstanding, shall automatically and without
further action of the parties thereto, be replaced by like Letters of Credit
issued pursuant to this Article 3, up to a maximum aggregate amount not to
exceed $234,000. On or prior to the fourth day prior to the applicable maturity
date of any such other existing standby letters of credit, such standby letters
of credit shall, upon the Borrowers' request as set forth in Section 3.4 and
subject to the terms and conditions of
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this Article 3, be replaced by a like Letter of Credit from the Issuing Bank, up
to a maximum aggregate amount not to exceed $766,000. Subject to the provisions
hereof, the face amount of all such active and standby letters of credit shall
be included in the calculation of Letter of Credit Obligations, and all
liabilities of the Borrowers with respect to such letters of credit shall
constitute Secured Obligations.
ARTICLE 4
GENERAL LOAN PROVISIONS
SECTION 4.1. Interest.
(a) Prime Rate Revolving Loans. Subject to the provisions of Section
4.1(f), the Borrowers will pay interest on the unpaid principal amount of each
Prime Rate Revolving Loan, for each day from the day such Loan is made until
such Loan is paid (whether at maturity, by reason of acceleration, or otherwise)
or is converted to a Loan of a different Type, at a rate per annum equal to the
sum of (i) the Applicable Revolver Margin and (ii) the Prime Rate, payable
monthly in arrears as it accrues on each Interest Payment Date and when such
Prime Rate Revolving Loan is due (whether at maturity, by reason of acceleration
or otherwise).
(b) LIBOR Revolving Loans. Subject to the provisions of Section 4.1(f), the
Borrowers will pay interest on the unpaid principal amount of each LIBOR
Revolving Loan for the applicable Interest Period at a rate per annum equal to
the sum of (i) the Applicable Revolver Margin and (ii) LIBOR, payable in arrears
as it accrues on each Interest Payment Date, and when such LIBOR Revolving Loan
is due (whether at maturity, by reason of acceleration or otherwise).
(c) Prime Rate Term Loans. Subject to the provisions of Section 4.1(f), the
Borrowers will pay interest on the unpaid principal amount of each Prime Rate
Term Loan, for each day from the day such Loan is made until such Loan is paid
(whether at maturity, by reason of acceleration, or otherwise) or is converted
to a Loan of a different Type, at a rate per annum equal to the sum of (i) the
Applicable Term Margin and (ii) the Prime Rate, payable monthly in arrears as it
accrues on each Interest Payment Date and when such Prime Rate Term Loan is due
(whether at maturity, by reason of acceleration or otherwise).
(d) LIBOR Term Loans. Subject to the provisions of Section 4.1(f), the
Borrowers will pay interest on the unpaid principal amount of each LIBOR Term
Loan for the applicable Interest Period at a rate per annum equal to the sum of
(i) the Applicable Term Margin and (ii) LIBOR, payable in arrears as it accrues
on each Interest Payment Date, and when such LIBOR Term Loan is due (whether at
maturity, by reason of acceleration or otherwise).
(e) Other Secured Obligations. The Borrowers will, to the extent permitted
by Applicable Law, pay interest on the unpaid principal amount of any Secured
Obligation that is due and payable, other than the Loans, in accordance with
Sections 4.1(a) or (f), as applicable, as if such Secured Obligation were a
Prime Rate Revolving Loan.
(f) Default Rate. If there shall occur and be continuing an Event of
Default, at the election of the Required Lenders, the unpaid principal amount of
the Loans and other Secured Obligations shall no longer bear interest in
accordance with the terms of Sections 4.1(a), (b), (c), (d) or (e), but shall
bear interest for each day from the date of such Event of Default until such
Event of Default shall have been cured or waived at a rate per annum equal to
the sum of (i) the
39
Default Margin and (ii) the rate otherwise applicable to such Loan or other
Secured Obligation, payable on demand. The interest rate provided for in the
preceding sentence shall, to the extent permitted by Applicable Law, apply to
and accrue on the amount of any judgment entered with respect to any Secured
Obligation.
(g) Calculation of Interest. The interest rates provided for in Sections
4.1(a), (b), (c), (d), (e) and (f) shall be computed on the basis of a year of
360 days and the actual number of days elapsed.
(h) Maximum Rate. It is not intended by the Lenders, and nothing contained
in this Agreement or the Notes shall be deemed, to establish or require the
payment of a rate of interest in excess of the maximum rate permitted by
Applicable Law (the "Maximum Rate"). If, in any month, the Effective Interest
Rate, absent such limitation, would have exceeded the Maximum Rate, then the
Effective Interest Rate for that month shall be the Maximum Rate, and, if in
future months, the Effective Interest Rate would otherwise be less than the
Maximum Rate, then the Effective Interest Rate shall remain at the Maximum Rate
until such time as the amount of interest paid hereunder equals the amount of
interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event, upon payment in full of the Secured Obligations, the
total amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would have been paid or accrued if
the Effective Interest Rate had at all times been in effect, then the Borrowers
shall, to the extent permitted by Applicable Law, pay to the Lenders an amount
equal to the excess, if any, of (i) the lesser of (A) the amount of interest
which would have been charged if the Maximum Rate had, at all times, been in
effect and (B) the amount of interest which would have accrued had the Effective
Interest Rate, at all times, been in effect and (ii) the amount of interest
actually paid or accrued under this Agreement. In the event the Lenders receive,
collect or apply as interest any sum in excess of the Maximum Rate, such excess
amount shall be applied to the reduction of the principal balance of the Secured
Obligations, and if no such principal is then outstanding, such excess or part
thereof remaining, shall be paid to the Borrowers.
SECTION 4.2. Certain Fees.
(a) Closing Fee. As additional consideration for the extensions of credit
provided for hereunder, the Borrowers shall pay to the Agent, on behalf of the
Lenders in accordance with their respective Commitment Percentages, a closing
fee in the amount set forth in the Fee Letter. The closing fee provided for
herein shall compensate the Lenders for the internal costs associated with the
origination, structuring, processing, approving and closing of the transactions
contemplated by this Agreement, including administrative, general overhead and
lost opportunity costs, but not including any out-of-pocket expenses for which
the Borrowers have agreed to reimburse the Agent, including the Agent's
out-of-pocket expenses incurred (and per diem charges accrued) in connection
with its due diligence examination of the Obligors and the closing of the
transactions contemplated by this Agreement. The closing fee shall be fully
earned when due and shall not be subject to refund or rebate.
(b) Agent Fee; Field Exam Fee. For administration and other services
performed by the Agent in connection with its continuing administration of this
Agreement, the Borrowers shall pay to the Agent, for its own account, and not
for the account of the Lenders, the Agent and field examination fees in
accordance with the terms of the Fee Letter. The fees payable pursuant to this
Section 4.2(b) shall be fully earned by the Agent on the date payment thereof is
due and shall not be subject to refund or rebate.
40
(c) Unused Line Fee. In connection with and as consideration for the
holding available for the use of the Borrowers hereunder the full amount of the
Revolving Loan Facility, the Borrowers will pay a fee to the Agent, for the
Ratable benefit of the Lenders, for each day from the Effective Date until the
Termination Date, in an amount equal to 0.375% per annum of the Available
Revolving Loan Facility for such day. Such fee shall be payable monthly in
arrears on each Interest Payment Date, shall be fully earned when due and
payable and shall not be subject to refund or rebate, and shall be calculated
based on a year of 360 days and the actual number of days elapsed.
(d) Letter of Credit Fees.
(i) The Borrowers shall pay to the Agent, for the Ratable benefit of
the Lenders, Letter of Credit fees on a per annum basis equal to the
Applicable Revolver Margin for LIBOR Revolving Loans multiplied by the
average daily aggregate Letter of Credit Amount of all Letters of Credit
from time to time outstanding during the term of this Agreement. Such fees
shall be payable to the Agent, for the Ratable benefit of the Lenders in
accordance with their respective Commitment Percentages, monthly in arrears
on each Interest Payment Date, and shall be calculated based on a year of
360 days and the actual number of days elapsed.
(ii) The Borrowers shall pay to the Agent, for the account of the
Issuing Bank, (A) the standard fees and charges of the Issuing Bank for
issuing, administering, amending, renewing, paying and canceling letters of
credit, as and when assessed, and (B) a facing fee equal to 0.125% of the
face amount of each Letter of Credit, due upon issuance.
(e) Collection Fee. During the period from and including the Effective Date
to and including the Termination Date, the Borrowers will pay to the Agent for
its own account on the first day of each month an amount of interest computed at
the Effective Interest Rate applicable to Prime Rate Revolving Loans on each
remittance received by the Agent against Receivables (as contemplated by Section
8.1 hereof) during the preceding month, from the close of business on the date
of receipt of each such remittance until the close of business on the second
Business Day following the receipt of the remittance, as compensation for delays
in the collection and clearance of checks and other remittances.
(f) General. All fees shall be fully earned by the identified recipient
thereof when due and payable and, except as otherwise set forth herein or
required by applicable law, shall not be subject to refund or rebate. All fees
provided for in this Section 4.2 are for compensation for services and are not,
and shall not be deemed to be, interest or a charge for the use of money. The
Borrowers acknowledge that all of the terms of the Fee Letter shall survive the
execution, delivery and closing of this Agreement.
SECTION 4.3. Manner of Payment.
(a) Except as otherwise expressly provided in Section 8.1(b), each payment
(including prepayments) by the Borrowers on account of the principal of or
interest on the Loans or of any other amounts payable to the Lenders under this
Agreement or any Note shall be made not later than 12:00 noon on the date
specified for payment under this Agreement to the Agent, for the account of the
Lenders, at the Agent's Office, in Dollars, in immediately available funds
41
and shall be made without any setoff, counterclaim or deduction whatsoever. Any
payment received after such time but before 1:00 p.m. on such day shall be
deemed a payment on such date for the purposes of Section 12.1, but for all
other purposes shall be deemed to have been made on the next succeeding Business
Day.
(b) The Borrowers hereby irrevocably authorize each Lender and each
Affiliate of such Lender and each participant herein to charge any account of
the Borrowers maintained with such Lender or such Affiliate or participant with
such amounts as may be necessary from time to time to pay any Secured
Obligations (whether or not owed to such Lender, Affiliate or participant) which
are not paid when due.
SECTION 4.4. General. If any payment under this Agreement or any Note shall
be specified to be made upon a day which is not a Business Day, it shall be made
on the next succeeding day which is a Business Day and such extension of time
shall in such case be included in computing interest, if any, in accordance with
such payment.
SECTION 4.5. Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a loan account in the
Borrowers' name (each, a "Loan Account" and collectively, the "Loan Accounts").
Each such Loan Account shall show as debits thereto each Loan made under this
Agreement by such Lender to the Borrowers and as credits thereto all payments
received by such Lender and applied to principal of such Loan, so that the
balance of the loan account at all times reflects the principal amount due such
Lender from the Borrowers.
(b) The Agent shall maintain on its books a control account for the
Borrowers in which shall be recorded (i) the amount of each disbursement made
hereunder, (ii) the amount of any principal or interest due or to become due
from the Borrowers hereunder, and (iii) the amount of any sum received by the
Agent hereunder from the Borrowers and each Lender's Ratable share therein.
(c) The entries made in the accounts pursuant to subsections (a) and (b)
shall be prima facie evidence, in the absence of manifest error, of the
existence and amounts of the obligations of the Borrowers therein recorded and
in case of discrepancy between such accounts, in the absence of manifest error,
the accounts maintained pursuant to subsection (b) shall be controlling.
(d) The Agent will account separately to the Borrowers monthly with a
statement of Loans, charges and payments made to and by the Borrowers pursuant
to this Agreement, and such accounts rendered by the Agent shall be deemed
final, binding and conclusive, save for manifest error, unless the Agent is
notified by the Borrowers in writing to the contrary within thirty (30) days of
the date the account to the Borrowers was so rendered. Such notice by the
Borrowers shall be deemed an objection to only those items specifically objected
to therein. Failure of the Agent to render such account shall in no way affect
the rights of the Agent or of the Lenders hereunder.
SECTION 4.6. Termination of Agreement. The Borrowers shall have the right,
at any time, to terminate this Agreement upon not less than thirty (30) days
prior written notice to the Agent of their intention to terminate this
Agreement, which notice shall specify the effective date of such termination.
Upon receipt of such notice, the Agent shall promptly notify each Lender
thereof. On the
42
date specified in such notice, such termination shall be effected, provided,
that the Borrowers shall, on or prior to such date, pay to the Agent, for itself
and the account of the Secured Creditors, in same day funds, an amount equal to
all Secured Obligations then outstanding, including all (a) accrued interest
thereon, (b) all accrued fees provided for hereunder, (c) any amounts payable to
the Lenders pursuant to this Article 4 or Sections 16.2, 16.3 and 16.14, and (d)
any other amounts payable to the Agent or any Secured Creditor under any other
Loan Document. In addition thereto, the Borrowers shall deliver to the Agent (i)
an indemnity or Cash Collateral in form and substance acceptable to the Agent
with respect to any checks or other instruments received by the Agent and
credited to the Borrowers in calculating the payoff amount, and (ii) in respect
of each outstanding Letter of Credit, either a Supporting Letter of Credit or
Cash Collateral as provided in Section 3.9. Following a notice of termination as
provided for in this Section 4.6 and upon payment in full of the amounts
specified in this Section 4.6, this Agreement shall be terminated and the Agent,
the Issuing Bank, the Lenders and the Obligors shall have no further obligations
to any other party hereto, except for any indemnity obligations which expressly
survive the termination of this Agreement.
SECTION 4.7. Making of Loans.
(a) Nature of Obligations of Lenders to Make Loans. The obligations of the
Lenders under this Agreement to make the Loans are several and are not joint or
joint and several.
(b) Assumption by Agent. Subject to the provisions of Section 4.8 and
notwithstanding the occurrence or continuance of a Default or Event of Default
or other failure of any condition to the making of Loans hereunder subsequent to
the Loans to be made on the Effective Date, unless the Agent shall have received
notice from the Required Lenders in accordance with the provisions of Section
4.7(c) (and such notice shall have become effective) prior to a proposed
borrowing date that such Lenders will not make available to the Agent such
Lenders' Ratable portion of the amount to be borrowed on such date, the Agent
may assume that each Lender will make such portion available to the Agent in
accordance with Section 2.2(a) and 2.6, and the Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount.
If and to the extent any Lender shall not make such Ratable portion available to
the Agent, such Lender and the Borrowers severally agree to repay to the Agent
forthwith on demand such corresponding amount, together with interest thereon
for each day from the date such amount is made available to the Borrowers until
the date such amount is repaid to the Agent at the Effective Interest Rate or,
if lower, subject to Section 4.1(f), the Maximum Rate. If such Lender shall
repay to the Agent such corresponding amount, the amount so repaid shall
constitute such Lender's Commitment Percentage of the Loan made on such
borrowing date for purposes of this Agreement. The failure of any Lender to make
its Commitment Percentage of any Loan available shall not (without regard to
whether the Borrowers shall have returned the amount thereof to the Agent in
accordance with this Section 4.7) relieve it or any other Lender of its
obligation, if any, hereunder to make its Commitment Percentage of such Loan
available on such borrowing date, but no Lender shall be responsible for the
failure of any other Lender to make its Commitment Percentage of such Loan
available on the borrowing date.
(c) Delegation of Authority to Agent. Without limiting the generality of
Section 14.1, each Lender expressly authorizes the Agent to determine on behalf
of such Lender (i) any reduction or increase of advance rates applicable to the
Borrowing Base, so long as such advance rates do not at any time exceed the
rates set forth in the Borrowing Base definition, (ii) the creation or
elimination of any reserves (other than the Letter of Credit Reserve) against
the Revolving Loan Facility and the Borrowing Base, and (iii) whether or not
Inventory or Receivables shall be deemed to constitute Eligible Inventory,
Eligible In-Transit Inventory, or
43
Eligible Receivables. Such authorization may be withdrawn by the Required
Lenders by giving the Agent written notice of such withdrawal signed by the
Required Lenders; provided, however, that unless otherwise agreed by the Agent
such withdrawal of authorization shall not become effective until the thirtieth
Business Day after receipt of such notice by the Agent. Thereafter, the Required
Lenders shall jointly instruct the Agent in writing regarding such matters with
such frequency as the Required Lenders shall jointly determine. Unless and until
the Agent shall have received written notice from the Required Lenders as to the
existence of a Default, an Event of Default or some other circumstance which
would relieve the Lenders of their respective obligations to make Loans
hereunder, which notice shall be in writing and shall be signed by the Required
Lenders and shall expressly state that the Required Lenders do not intend to
make available to the Agent such Lenders' Ratable share of Loans made after the
effective date of such notice, the Agent shall be entitled to continue to make
the assumptions described in Section 4.7(b). The notice described in the
preceding sentence shall become effective on the third Business Day after
receipt of such notice by the Agent unless otherwise agreed by the Agent. The
Agent shall not be required to make any Loan as to which it shall have received
notice by a Lender of such Lender's intention not to make its Ratable portion of
such Loan available to the Agent. Any withdrawal of authorization under this
Section 4.7(c) shall not affect the validity of any Loans made (or Letters of
Credit issued) prior to the effectiveness thereof.
(d) Agent Advances. The Agent is hereby authorized by the Borrowers and the
Lenders, from time to time in the Agent's sole discretion, (i) after the
occurrence of a Default or an Event of Default, or (ii) at any time that any of
the other applicable conditions precedent set forth in Article 5 have not been
satisfied, to make Revolving Loans to the Borrowers on behalf of the Lenders
which the Agent, in its reasonable business judgment, deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion thereof, (B)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Secured Obligations, or (C) to pay any other amount chargeable to the
Obligors pursuant to the terms of this Agreement, including costs, fees and
expenses as described in Section 16.2 (any of the advances described in this
Section 4.7(d) being hereinafter referred to as "Agent Advances"); provided that
(x) the Required Lenders may at any time revoke the Agent's authorization
contained in this Section 4.7(d) to make Agent Advances, any such revocation to
be in writing and to become effective on the third Business Day after the
Agent's receipt thereof, and (y) the Agent shall not allow more than $5,000,000
in Agent Advances to be outstanding under this Section 4.7(d) at any time
without the consent of all the Lenders. All Agent Advances shall be repayable by
the Borrowers on demand and secured by the Collateral, shall constitute
Revolving Loans and Secured Obligations hereunder, and shall bear interest at
the rate applicable to Prime Rate Revolving Loans from time to time. The Agent
shall notify each Lender in writing of each such Agent Advance. All Agent
Advances shall constitute Non-Ratable Loans, as defined in Section 4.8(b), and
shall be subject to the provisions thereof.
(e) Replacement of Certain Lenders. If a Lender (the "Affected Lender")
shall have failed to fund its Proportionate Share of any Loan requested (or
deemed requested) by the Borrowers which such Lender is obligated to fund under
the terms of this Agreement and which failure has not been cured, then, in any
such case and in addition to any other rights and remedies that the Agent, any
other Lender or the Borrowers may have against such Affected Lender, the Agent
or the Borrowers' Agent may make written demand on such Affected Lender (with a
copy to the Borrowers' Agent, in case of demand by the Agent, and with a copy to
the Agent, in the case of demand by the Borrowers' Agent) for the Affected
Lender to assign, and such Affected Lender shall assign pursuant to one or more
duly executed Assignment and Acceptances within five (5) Business Days after the
date of such demand, to one or more Lenders willing to accept such assignment or
assignments, or to one or
44
more Eligible Assignees (to the extent willing to accept such assignment or
assignments) designated by the Agent or the Borrowers' Agent (provided such
Eligible Assignee is reasonably acceptable to the Agent and, if no Event of
Default exists, the Borrowers' Agent), all of such Affected Lender's rights and
obligations under this Agreement (including its Commitments and all Loans owing
to it) in accordance with Article 13. The Affected Lender shall be entitled to
receive, in cash and concurrently with the execution and delivery of each such
Assignment and Acceptance, all amounts owed to the Affected Lender hereunder or
under any other Loan Document, including the aggregate outstanding principal
amount of the Loans owed to such Lender, together with accrued interest thereon
through the date of such assignment. Upon the replacement of any Affected Lender
pursuant to this Section 4.7(e), such Affected Lender shall cease to have any
participation in, entitlement to, or other right to share in the Security
Interest or any other Lien of the Agent in any Collateral and such Affected
Lender shall have no further liability to the Agent, any Lender or any other
Person under any of the Loan Documents (except as provided in Section 14.7 and
elsewhere in this Agreement as to events or transactions which occur prior to
the replacement of such Affected Lender).
SECTION 4.8. Settlement Among Lenders.
(a) It is agreed that each Lender's Net Outstandings are intended by the
Lenders to be equal at all times to such Lender's Commitment Percentage of the
aggregate principal amount of all Loans outstanding. Notwithstanding such
agreement, the several and not joint obligation of each Lender to fund Loans
made in accordance with the terms of this Agreement ratably in accordance with
such Lender's Commitment Percentage and each Lender's right to receive its
Ratable share of principal payments on Loans in accordance with its Commitment
Percentage, the Lenders agree that in order to facilitate the administration of
this Agreement and the other Loan Documents that settlement among them may take
place on a periodic basis in accordance with the provisions of this Section 4.8.
(b) Settlement Procedures as to Loans. To the extent and in the manner
hereinafter provided in this Section 4.8, settlement among the Lenders as to
Loans may occur periodically on Settlement Dates determined from time to time by
the Agent, which may occur before or after the occurrence or during the
continuance of a Default or Event of Default and whether or not all of the
conditions set forth in Section 5.2 have been met. On each Settlement Date
payments shall be made by or to Bank of America and the other Lenders in the
manner provided in this Section 4.8 in accordance with the Settlement Report
delivered by the Agent pursuant to the provisions of this Section 4.8 in respect
of such Settlement Date so that as of each Settlement Date, and after giving
effect to the transactions to take place on such Settlement Date, each Lender's
Net Outstandings shall equal such Lender's Commitment Percentage of the Loans
outstanding.
(i) Selection of Settlement Dates. If the Agent elects, in its
discretion, but subject to the consent of Bank of America, to settle
accounts among the Lenders with respect to principal amounts of Loans less
frequently than each Business Day, then the Agent shall designate periodic
Settlement Dates which may occur on any Business Day after the Effective
Date; provided, however, that the Agent shall designate as a Settlement
Date any Business Day which is an Interest Payment Date; and provided
further, that a Settlement Date shall occur at least once during each
seven-day period. The Agent shall designate a Settlement Date by delivering
to each Lender a Settlement Report not later than 12:00 noon on the
proposed Settlement Date, which Settlement Report shall be with respect to
the period beginning on the next preceding Settlement Date and ending on
such designated Settlement Date.
45
(ii) Non-Ratable Loans and Payments. Between Settlement Dates, the
Agent shall request and Bank of America may (but shall not be obligated to)
advance to the Borrowers out of Bank of America's own funds, the entire
principal amount of any Revolving Loan requested or deemed requested
pursuant to Section 2.2(a) or any Agent Advance made pursuant to Section
4.7(d) (any such Revolving Loan or Agent Advance being referred to as a
"Non-Ratable Loan"). The making of each Non-Ratable Loan by Bank of America
shall be deemed to be a purchase by Bank of America of a 100% participation
in each other Lender's Commitment Percentage of the amount of such
Non-Ratable Loan. All payments of principal, interest and any other amount
with respect to such Non-Ratable Loan shall be payable to and received by
the Agent for the account of Bank of America. Upon demand by Bank of
America, with notice thereof to the Agent, each other Lender shall pay to
Bank of America, as the repurchase of such participation, an amount equal
to 100% of such Lender's Commitment Percentage of the principal amount of
such Non-Ratable Loan. Any payments received by the Agent between
Settlement Dates which in accordance with the terms of this Agreement are
to be applied to the reduction of the outstanding principal balance of
Revolving Loans, shall be paid over to and retained by Bank of America for
such application, and such payment to and retention by Bank of America
shall be deemed, to the extent of each other Lender's Commitment Percentage
of such payment, to be a purchase by each such other Lender of a
participation in the Revolving Loans (including the repurchase of
participations in Non-Ratable Loans) held by Bank of America. Upon demand
by another Lender, with notice thereof to the Agent, Bank of America shall
pay to the Agent, for the account of such other Lender, as a repurchase of
such participation, an amount equal to such other Lender's Commitment
Percentage of any such amounts (after application thereof to the repurchase
of any participations of Bank of America in such other Lender's Commitment
Percentage of any Non-Ratable Loans) paid only to Bank of America by the
Agent.
(iii) Net Decrease in Outstandings. If on any Settlement Date the
increase, if any, in the dollar amount of any Lender's Net Outstandings
which is required to comply with the first sentence of Section 4.8(a) is
less than such Lender's Commitment Percentage of amounts received by the
Agent but paid only to Bank of America since the next preceding Settlement
Date, such Lender and the Agent, in their respective records, shall apply
such Lender's Commitment Percentage of such amounts to the increase in such
Lender's Net Outstandings, and Bank of America shall pay to the Agent, for
the account of such Lender, the excess allocable to such Lender.
(iv) Net Increase in Outstandings. If on any Settlement Date the
increase, if any, in the dollar amount of any Lender's Net Outstandings
which is required to comply with the first sentence of Section 4.8(a)
exceeds such Lender's Commitment Percentage of amounts received by the
Agent but paid only to Bank of America since the next preceding Settlement
Date, such Lender and the Agent, in their respective records, shall apply
such Lender's Commitment Percentage of such amounts to the increase in such
Lender's Net Outstandings, and such Lender shall pay to the Agent, for the
account of Bank of America, any excess.
(v) No Change in Outstandings. If a Settlement Report indicates that
no Loans have been made during the period since the next preceding
Settlement Date, then such Lender's Commitment Percentage of any amounts
received by the Agent but paid only to Bank of America shall be paid by
Bank of America to the Agent, for the account
46
of such Lender. If a Settlement Report indicates that the increase in the
dollar amount of a Lender's Net Outstandings which is required to comply
with the first sentence of Section 4.8(a) is exactly equal to such Lender's
Commitment Percentage of amounts received by the Agent but paid only to
Bank of America since the next preceding Settlement Date, such Lender and
the Agent, in their respective records, shall apply such Lender's
Commitment Percentage of such amounts to the increase in such Lender's Net
Outstandings.
(vi) Return of Payments. If any amounts received by Bank of America in
respect of the Secured Obligations are later required to be returned or
repaid by Bank of America to the Borrowers or their respective
representatives or successors in interest, whether by court order,
settlement or otherwise, in excess of Bank of America's Commitment
Percentage of all such amounts required to be returned by all Lenders, each
other Lender shall, upon demand by Bank of America with notice to the
Agent, pay to the Agent for the account of Bank of America, an amount equal
to the excess of such Lender's Commitment Percentage of all such amounts
required to be returned by all Lenders over the amount, if any, returned
directly by such Lender.
(vii) Payments to Agent, Lenders.
(A) Payment by any Lender to the Agent shall be made not later
than 1:00 p.m. on the Business Day such payment is due, provided that
if such payment is due on demand by another Lender, such demand is
made on the paying Lender not later than 10:00 a.m. on such Business
Day. Payment by the Agent to any Lender shall be made by wire
transfer, promptly following the Agent's receipt of funds for the
account of such Lender and in the type of funds received by the Agent,
provided that if the Agent receives such funds at or prior to 1:00
p.m., the Agent shall pay such funds to such Lender by 2:00 p.m. on
such Business Day. If a demand for payment is made after the
applicable time set forth above, the payment due shall be made by 2:00
p.m. on the first Business Day following the date of such demand.
(B) If a Lender shall, at any time, fail to make any payment to
the Agent required hereunder, the Agent may, but shall not be required
to, retain payments that would otherwise be made to such Lender
hereunder and apply such payments to such Lender's defaulted
obligations hereunder, at such time, and in such order, as the Agent
may elect in its sole discretion.
(C) With respect to the payment of any funds under this Section
4.8(b), whether from the Agent to a Lender or from a Lender to the
Agent, the party failing to make full payment when due pursuant to the
terms hereof shall, upon demand by the other party, pay such amount
together with interest on such amount at the Federal Funds Effective
Rate.
(c) Settlement of Other Secured Obligations. All other amounts received by
the Agent on account of, or applied by the Agent to the payment of, any Secured
Obligation owed to the Lenders (including fees payable to the Lenders pursuant
to Sections 4.2(c) and (d) and proceeds from the sale of, or other realization
upon, all or any part of the Collateral following an Event of Default) that are
received by the Agent on or prior to 1:00 p.m. on a Business Day will be paid by
the Agent to each Lender on the same Business Day, and any such amounts that are
received by
47
the Agent after 1:00 p.m. will be paid by the Agent to each Lender on the
following Business Day. Unless otherwise stated herein, the Agent shall
distribute fees payable to the Lenders pursuant to Sections 4.2(c) and (d)
ratably to the Lenders based on each Lender's Commitment Percentage and shall
distribute proceeds from the sale of, or other realization upon, all or any part
of the Collateral following an Event of Default ratably to the Lenders based on
the amount of the Secured Obligations then owing to each Lender.
(d) Allocation of Payments. All monies to be applied to the Secured
Obligations, whether such monies represent voluntary payments by the Obligors or
are received pursuant to demand for payment or realized from any disposition of
Collateral, shall be allocated among the Agent and such of the Lenders and other
holders of the Secured Obligations as are entitled thereto (and, with respect to
monies allocated to the Lenders, on a Ratable basis unless otherwise provided in
this Section 4.8(d)): (i) first, to Bank of America to pay principal and accrued
interest on any portion of any Non-Ratable Loan which Bank of America may have
advanced on behalf of any Lender (other than itself) and for which Bank of
America has not been reimbursed by such Lender or the Obligors; (ii) second, to
the Agent to pay the amount of expenses that have not been reimbursed to the
Agent by the Obligors or the Lenders, together with interest accrued thereon;
(iii) third, to the Agent to pay any indemnified amount that has not been paid
to the Agent by the Obligors or the Lenders, together with interest accrued
thereon; (iv) fourth, to the Agent to pay any fees due and payable to the Agent
under this Agreement; (v) fifth, to the Lenders for any indemnified amount that
they have paid to the Agent and for any expenses that they have reimbursed to
the Agent; (vi) sixth, to the Lenders in payment of the unpaid principal and
accrued interest in respect of the Loans and any other Secured Obligations then
outstanding and held by any Lender to be shared among the Lenders on a Ratable
basis, or on such other basis as may be agreed upon in writing by all of the
Lenders (which agreement or agreements may be entered into without notice to or
the consent or approval of the Obligors), and (vii) seventh, to the holders of
the other Secured Obligations who are not Lenders on a pro rata basis. The
allocations set forth in this Section 4.8(d) are solely to determine the rights
and priorities of the Agent and the Lenders as among themselves and may be
changed by the Agent and the Lenders without notice to, or the consent or
approval of, the Obligors or any other Person. Whenever allocation is made
pursuant to this Section 4.8(d) to the holder of Secured Obligations in which
another Lender acquires a participation, the monies received by such holder
shall be shared as between such holder and such participants on a Ratable basis.
SECTION 4.9. Mandatory Prepayments.
(a) Prepayments from Asset Dispositions. Without limiting the restrictions
set forth in Sections 8.7 and 11.7, the Obligors agree that immediately upon the
receipt by any Obligor of the proceeds of any Asset Disposition of the
Collateral, the Obligors shall apply 100% of such proceeds as provided in
Section 4.9(c). Concurrently with the making of any such application, the
Borrowers' Agent shall deliver to the Agent a certificate of the Financial
Officer demonstrating the calculations of the amount required to be applied and,
in the case of the application of the Net Proceeds from Asset Dispositions, the
amount of such Net Proceeds to be applied as provided in Section 4.9(c).
(b) Prepayments from Equity Offerings. In the event that, at any time after
the Effective Date, any Obligor issues capital stock or other securities or
receives an additional capital contribution in respect of existing capital stock
or other securities (excluding any such issuance to, or receipt from, another
Obligor or a Consolidated Subsidiary of Safety Components, and further excluding
any such issuance to, or receipt pursuant to the terms of the Noteholders
48
Restructuring Agreement), no later than the second Business Day following the
date of receipt of the proceeds from such issuance, the Obligors shall (i) apply
such proceeds, net of underwriting discounts and commissions and other
reasonable costs associated therewith, as provided in Section 4.9(c), and (ii)
the Borrowers' Agent shall deliver to the Agent a certificate of the Financial
Officer demonstrating the calculations of the amount required to be applied and
the amount of such net proceeds to be applied as provided in Section 4.9(c).
(c) Application of Proceeds of Prepayments. All prepayments of the Secured
Obligations pursuant to this Section 4.9 shall be applied as follows: (i) first,
to repay any fees, expenses or charges payable to the Agent under this Agreement
and the other Loan Documents, (ii) second, as a mandatory prepayment of
installments of principal under the Term Loans in inverse order of maturity,
(iii) third, to accrued interest and fees under the Term Loans, (iv) fourth,
once all principal, interest and fees under Term Loans have been paid in full,
as a mandatory prepayment of principal under Revolving Loans with a
corresponding permanent reduction of the Total Commitment with respect to such
Revolving Loans, (v) fifth, to accrued interest and fees under the Revolving
Loans, and (vi) sixth, then to the other Secured Obligations, provided that
payments shall be first applied as provided above to Prime Rate Loans to the
extent thereof and then to LIBOR Loans, and provided further that payments shall
be first applied to Prime Rate Loans to the extent thereof and then to LIBOR
Loans and any payments received which would otherwise result in the prepayment
of LIBOR Loans prior to the end of the Interest Period applicable thereto may,
upon the request of the Borrowers' Agent, in the absence of an Event of Default,
be applied to the Cash Collateral Account, with any excess to be deposited with
the Agent to be held as Cash Collateral for the Secured Obligations and applied
by the Agent from time to time to outstanding Loans promptly upon the making of
such Loans or, after the Termination Date, to any of the Secured Obligations as
set forth in Section 4.8(d).
SECTION 4.10. Payments Not at End of Interest Period; Failure to Borrow. If
for any reason any payment of principal with respect to any LIBOR Loan is made
on any day prior to the last day of the Interest Period applicable to such LIBOR
Loan or, after having given a Notice of Borrowing with respect to any LIBOR
Revolving Loan or a Notice of Conversion or Continuation with respect to any
Loan to be continued as or converted into a LIBOR Loan, such Loan is not made or
is not continued as or converted into a LIBOR Loan due to the Borrowers' failure
to borrow or to fulfill the applicable conditions set forth in Article 5, the
Borrowers shall pay to each Lender upon the request of the Agent or such Lender
an amount sufficient to compensate the Agent and such Lender for any and all
losses or expenses which the Agent or such Lender has sustained or incurred as a
consequence thereof. The Borrowers shall pay such amount upon presentation by
the Agent (or as to any Lender, by such Lender) of a statement setting forth the
amount and the Agent's (or such Lender's) calculation thereof pursuant hereto,
which statement shall be deemed true and correct absent manifest error.
SECTION 4.11. Assumptions Concerning Funding of LIBOR Loans. Calculation of
all amounts payable to the Lenders under this Article 4 shall be made as though
each Lender had actually funded or committed to fund its LIBOR Loans through the
purchase of an underlying deposit in an amount equal to the amount of its
Ratable share thereof and having a maturity comparable to the relevant Interest
Period for such LIBOR Loan; provided, however, each Lender may fund its LIBOR
Loans in any manner it deems fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Article 4.
SECTION 4.12. Notice of Conversion or Continuation. Whenever the Borrowers
desire, subject to the provisions of Section 4.13, to convert an outstanding
Loan into a Loan or Loans of a different Type or to continue all or a portion of
an outstanding LIBOR Loan for a subsequent Interest Period, the
49
Borrowers shall notify the Agent by telephone or in writing by telex or
facsimile transmission (which notice shall be irrevocable) not later than 11:00
a.m. on the date three Business Days before the day on which such proposed
conversion or continuation is to be effective (and such effective date of any
continuation shall be the last day of the Interest Period for the applicable
LIBOR Loan), provided the Borrowers shall not be permitted to convert Loans into
(or continue Loans as) LIBOR Loans at any time during the existence of an Event
of Default. Each such notice (a "Notice of Conversion or Continuation") shall
(a) identify the Loan to be converted or continued, the aggregate outstanding
principal balance thereof and, if a LIBOR Loan, the last day of the Interest
Period applicable to such Loan, (b) specify the effective date of such
conversion or continuation, and (c) specify the principal amount of such Loan to
be converted or continued and, if converted, the Type or Types into which the
same is to be converted, and shall, if notice thereof was originally given by
telephone, be immediately followed by a signed, written confirmation thereof by
the Borrowers in a form acceptable to the Agent, provided that if such written
confirmation differs in any respect from the action taken by the Lenders, the
records of the Agent shall control absent manifest error.
SECTION 4.13. Conversion or Continuation. Provided that no Event of Default
shall have occurred and be continuing (but subject to the provisions of Sections
4.12 and 4.15), the Borrowers may request that all or any part of any
outstanding Loan be converted into a Loan or Loans of a different Type or be
continued as a Loan or Loans of the same Type, in the same aggregate principal
amount, on any Business Day (which, in the case of continuation of a LIBOR Loan,
shall be the last day of the Interest Period applicable to such Loan), upon
notice (which notice shall be irrevocable) given in accordance with Section
4.12.
SECTION 4.14. Maximum Number of LIBOR Loans; Minimum Increments.
(a) If the Agent does not receive a notice of election in accordance with
Section 4.12 with respect to the continuation of a LIBOR Loan within the
applicable time limits specified in said Section 4.12, or if, when such notice
must be given, an Event of Default exists or such Type of Loan is not available,
the Borrowers shall be deemed to have elected to convert such LIBOR Loan in
whole into a Prime Rate Loan on the last day of the Interest Period therefor.
(b) Notwithstanding the foregoing, the Borrowers may not select an Interest
Period that would end, but for the provisions of the definition of "Interest
Period," after the Termination Date.
(c) In no event shall there be more than four LIBOR Loans outstanding
hereunder at any time. For the purpose of this subsection (d), each LIBOR Loan
having a distinct Interest Period shall be deemed to be a separate Loan
hereunder.
(d) Each LIBOR Loan shall be in a minimum amount of $3,000,000 and
increments of $500,000 in excess thereof.
SECTION 4.15. Changed Circumstances.
(a) If the introduction of or any change in or in the interpretation of (in
each case, after the date hereof) any law or regulation makes it unlawful, or
any governmental authority asserts, after the date hereof, that it is unlawful,
for any Lender to perform its obligations hereunder to make LIBOR Loans or to
fund or maintain LIBOR Loans hereunder, such Lender shall notify the Agent of
such event and the Agent shall notify the Borrowers of such event, and the right
of the Borrowers to select LIBOR Loans for any subsequent Interest Period or in
connection with any subsequent conversion of any Loan shall be suspended until
the Agent shall notify the Borrowers that the circumstances causing such
suspension no longer exist, and the Borrowers shall forthwith prepay in full all
LIBOR
50
Loans then outstanding, and shall pay all interest accrued thereon through the
date of such prepayment or conversion, unless the Borrowers, within three
Business Days after such notice from the Agent, request the conversion of all
LIBOR Loans then outstanding into Prime Rate Loans; provided, that if the date
of such repayment or proposed conversion is not the last day of the Interest
Period applicable to such LIBOR Loan, the Borrowers shall also pay any amount
due pursuant to Section 4.10.
(b) If the Agent shall, at least one Business Day before the date of any
requested Loan or the effective date of any conversion or continuation of an
existing Loan to be made or continued as or converted into a LIBOR Loan (each
such requested Loan made and Loan to be converted or continued, a "Pending
Loan"), notify the Borrowers that LIBOR will not adequately reflect the cost to
the Lenders of making or funding such Pending Loan as a LIBOR Loan or that the
Interbank Offered Rate is not reasonably determinable, including from any
interest rate reporting service of recognized standing, then the right of the
Borrowers to select LIBOR Loans for such Pending Loan, any subsequent Loan or in
connection with any subsequent conversion or continuation of any Loan shall be
suspended until the Agent shall notify the Borrowers that the circumstances
causing such suspension no longer exist, and each Pending Loan and each such
subsequent Loan requested to be made, continued or converted shall be made or
continued as or converted into a Prime Rate Loan.
(c) If, due to either (i) the introduction of or any change (other than any
change by way of imposition or increase of reserve requirements included in the
LIBOR Reserve Percentage) in or in the interpretation of, in each case after the
date hereof, any law or regulation (except to the extent such introduction,
change or interpretation affects taxes measured by net income), or (ii) the
compliance with a guideline or request (except to the extent such guideline or
request affects taxes measured by net income) from any central bank or other
governmental authority (whether nor not having the force of law) made after the
date hereof, there shall be any increase in the cost to any Lender of agreeing
to make or making, funding or maintaining LIBOR Loans (other than as separately
provided for in Section 4.15(d)), then the Borrowers shall from time to time,
within thirty (30) days after demand by such Lender (with a copy of such demand
to the Agent), pay to the Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost.
(d) If (i) the adoption of or change in, after the date hereof, any law,
rule, regulation or guideline regarding capital requirements for banks or bank
holding companies, or any change, after the date hereof, in the interpretation
or application thereof by any governmental authority charged with the
interpretation or administration thereof, or (ii) compliance by such Lender with
any guideline, request or directive, made or promulgated after the date hereof,
of any such entity regarding capital adequacy (whether or not having the force
of law), has the effect of reducing the return on a Lender's capital as a
consequence of its maintaining its Loans or commitment to make Loans hereunder
to a level below that which such Lender could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's policies
with respect to capital adequacy immediately before such adoption, change or
compliance and assuming the full utilization of such Lender's capital
immediately before such adoption, change or compliance) or if any change in law,
regulation, treaty or official directive or the interpretation or application
thereof by any court or by any governmental authority charged with the
administration thereof or the compliance with any guideline or request of any
central bank or other governmental authority (whether or not having the force of
law) subjects a Lender to any tax with respect to payments of principal or
interest or any other amounts payable hereunder by the Borrowers or otherwise
with respect to the transactions contemplated hereby (except for taxes on the
overall net income of such Lender imposed by the United States of America or any
political subdivision thereof), in each case by any amount deemed
51
by such Lender to be material, then such Lender shall promptly after its
determination of such occurrence notify the Borrowers and the Agent thereof. The
Borrowers agree to pay to the Agent, for the account of such Lender, as an
additional fee from time to time, within thirty (30) days after demand by such
Lender, such amount as such Lender certifies to be the amount that will
compensate it for such reduction or tax.
(e) Before giving any notice pursuant to Section 4.15(a) or making any
demand pursuant to Sections 4.15(c) or (d), each Lender agrees to use its
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different lending office if the making of such a
designation would avoid the need for such notice or demand, or reduce the amount
of such increased cost, reduction in return or tax and would not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender.
(f) A certificate of the Lender claiming compensation under Sections
4.15(c) or (d) shall be conclusive in the absence of manifest error. Such
certificate shall set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to it hereunder, and
the method by which such amounts were determined. In determining such amount, a
Lender may use any reasonable averaging and attribution methods.
SECTION 4.16. Cash Collateral Account. The Borrowers shall establish a Cash
Collateral Account with the Agent in which to deposit Collateral consisting of
cash or Cash Equivalents from time to time: (a) representing payments received
pursuant to Sections 2.3(c) and 4.9 in excess of then outstanding Revolving
Loans or on account of LIBOR Loans which would otherwise result in repayment of
such Loans prior to the end of the Interest Period applicable thereto, (b) with
respect to Letter of Credit Obligations (i) at the request of the Agent upon the
occurrence of an Event of Default, or (ii) for the purposes set forth in Section
4.6 in the event of termination of this Agreement, or (c) for any other purpose
appropriate under this Agreement to provide security for the Secured
Obligations. On the last day of the applicable Interest Period as to any amounts
deposited to the Cash Collateral Account pursuant to clause (a) above or if a
drawing under a Letter of Credit occurs with respect to any amounts deposited to
the Cash Collateral Account pursuant to clause (b) above, each Borrower hereby
authorizes the Agent to use the monies deposited in the Cash Collateral Account
to make payment to the payee with respect to such Loan or drawing. The Cash
Collateral Account shall be in the name of the Agent and the Agent shall have
sole dominion and control over, and sole access to, the Cash Collateral Account.
Neither any Borrower nor any Person claiming on behalf of or through any
Borrower shall have any right to withdraw any of the funds held in the Cash
Collateral Account. Each Borrower agrees that it will not at any time sell or
otherwise dispose of any interest in the Cash Collateral Account or any funds
held therein or create or permit to exist any Lien upon or with respect to the
Cash Collateral Account or any funds held therein, except as provided in or
contemplated by this Agreement. The Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Cash Collateral Account and
shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Agent accords other funds deposited
with the Agent, it being understood that the Agent shall not have any
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any funds held in the Cash Collateral Account. Subject
to the right of the Agent to withdraw funds from the Cash Collateral Account as
provided herein, the Agent will, so long as no Default or Event of Default shall
have occurred and be continuing, from time to time invest funds on deposit in
the Cash Collateral Account, reinvest proceeds of any such investments which may
mature or be sold, and invest interest or other income received from any such
investments, in each case, in Cash Equivalents, as the Borrowers may direct
prior to the occurrence of a Default or Event of Default and as the Agent may
select after the occurrence and during the continuance of a Default or Event of
Default. Such proceeds, interest and income, which are not so invested or
reinvested in Cash Equivalents, shall be deposited and held by the Agent in the
Cash Collateral Account. The Agent makes no representation or warranty as to,
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and shall not be responsible for, the rate of return, if any, earned in any Cash
Collateral. Any earnings on Cash Collateral shall be held as additional Cash
Collateral on the terms set forth in this Section 4.16.
SECTION 4.17. Borrowers' Agent. Each of the Obligors other than Safety
Components hereby appoints Safety Components as, and Safety Components shall act
under this Agreement as, the agent, attorney-in-fact and legal representative of
such other Borrowers and Obligors for all purposes, including requesting
Borrowings and receiving account statements and other notices and communications
to the Obligors (or any of them) from the Agent, the Issuing Bank or any Lender.
The Agent, the Issuing Bank and the Lenders may rely, and shall be fully
protected in relying, on any Notice of Borrowing, Notice of Conversion or
Continuation, request for a Letter of Credit, disbursement instruction, report,
information or any other notice or communication made or given by Safety
Components, whether in its own name, on behalf of any other Obligor or on behalf
of "the Borrowers" or "the Obligors," and neither the Agent, the Issuing Bank
nor any Lender shall have any obligation to make any inquiry or request any
confirmation from or on behalf of any other Obligors as to the binding effect on
it of any such Notice, request, instruction, report, information, other notice
or communications, nor shall the joint and several character of the Obligors'
liability for the Secured Obligations be affected, provided that the provisions
of this Section 4.17 shall not be construed so as to preclude any Borrower from
directly requesting Borrowings or taking other actions permitted to be taken by
"a Borrower" hereunder. The Agent and each Lender intend to maintain a single
Loan Account in the name of "Safety Components International, Inc." hereunder
and each Borrower expressly agrees to such arrangement and confirms that such
arrangement shall have no effect on the joint and several character of its
liability for the Secured Obligations.
SECTION 4.18. Joint and Several Liability.
(a) Joint and Several Liability. The Secured Obligations shall constitute
one joint and several direct and general obligation of all of the Borrowers.
Notwithstanding anything to the contrary contained herein, each of the Borrowers
shall be jointly and severally, with each other Borrower, directly and
unconditionally liable to the Agent, the Issuing Bank and the Lenders for all
Secured Obligations and shall have the obligations of co-maker with respect to
the Loans, the Notes and the Secured Obligations, it being agreed that the
advances to each Borrower inure to the benefit of all Borrowers, and that the
Agent, the Issuing Bank and the Lenders are relying on the joint and several
liability of the Borrowers as co-makers in extending the Loans hereunder and
issuing Letters of Credit. Each Borrower hereby unconditionally and irrevocably
agrees that upon default in the payment when due (whether at stated maturity, by
acceleration or otherwise) of any principal of, or interest on, any Loan or
other Secured Obligation payable to the Agent, the Issuing Bank or any Lender,
it will forthwith pay the same, without notice or demand.
(b) No Reduction in Obligations. No payment or payments made by any of the
Borrowers or any other Person or received or collected by the Agent, the Issuing
Bank or any Lender from any of the Borrowers or any other Person by virtue of
any action or proceeding or any setoff or appropriation or application at any
time or from time to time in reduction of or in payment of the Secured
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of each Borrower under this Agreement, which shall remain liable for
the Secured Obligations until the Secured Obligations are paid in full and the
Term Loan Facility and the Revolving Loan Facility are terminated.
SECTION 4.19. Obligations Absolute. Each Borrower agrees that the Secured
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent, the
Issuing Bank or any Lender with respect thereto. All Secured Obligations shall
be conclusively presumed to
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have been created in reliance hereon. The liabilities under this Agreement shall
be absolute and unconditional irrespective of: (a) any lack of validity or
enforceability of any Loan Documents or any other agreement or instrument
relating thereto; (b) any change in the time, manner or place of payments of, or
in any other term of, all or any part of the Secured Obligations, or any other
amendment or waiver thereof or any consent to departure therefrom, including any
increase in the Secured Obligations resulting from the extension of additional
credit to any Borrower or other Obligor or otherwise; (c) any taking, exchange,
release or non-perfection of any collateral, or any release or amendment or
waiver of or consent to departure from any guaranty for all or any of the
Secured Obligations; (d) any change, restructuring or termination of the
corporate structure or existence of any Borrower or other Obligor; or (e) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, any Borrower or a Guarantor. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must otherwise be returned by the
Agent, the Issuing Bank or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower or other Obligor or otherwise, all as though such
payment had not been made.
SECTION 4.20. Waiver of Suretyship Defenses. Each Borrower agrees that the
joint and several liability of the Borrowers provided for in Section 4.18 shall
not be impaired or affected by any modification, supplement, extension or
amendment of any contract or agreement to which the other Borrowers may
hereafter agree (other than an agreement signed by the Agent and the Lenders
specifically releasing such liability), nor by any delay, extension of time,
renewal, compromise or other indulgence granted by the Agent, the Issuing Bank
or any Lender with respect to any of the Secured Obligations, nor by any other
agreements or arrangements whatever with the other Borrowers or with anyone
else, each Borrower hereby waiving all notice of such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each Borrower is direct and unconditional as to all
of the Secured Obligations, and may be enforced without requiring the Agent, the
Issuing Bank or any Lender first to resort to any other right, remedy or
security. Each Borrower hereby expressly waives promptness, diligence, notice of
acceptance and any other notice (except to the extent expressly provided for
herein or in another Loan Document) with respect to any of the Secured
Obligations, the Notes, this Agreement or any other Loan Document and any
requirement that the Agent, the Issuing Bank or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any Borrower or any other Person or any collateral,
including any rights any Borrower may otherwise have under O.C.G.A. ss. 10-7-24
or any successor statute or any analogous statute in any jurisdiction under the
laws of which any Borrower is incorporated or in which any Borrower conducts
business.
SECTION 4.21. Superpriority Nature of Secured Obligations. All Secured
Obligations shall constitute administrative expenses of the Borrowers in the
Chapter 11 Case with priority under Section 364(c) of the Bankruptcy Code over
any and all other administrative expenses of the kind specified in, among other
Sections, Sections 105, 503(b) and 507(b) of the Bankruptcy Code, subject and
subordinate only to (i) Permitted Liens, (ii) Senior Claims, and (iii) the
following (hereafter referred to as the "Carve-Out Expenses"): fees and
disbursements incurred on and after the Petition Date by professionals retained
pursuant to court order in the Chapter 11 Case pursuant to Section 327 or
Section 1103 of the Bankruptcy Code by the Borrowers or the Committee, up to a
maximum aggregate amount unpaid on the Termination Date not to exceed $500,000
(such dollar amount being referred to herein as the "Carve-Out Amount")
(determined without regard to fees and expenses which may be awarded and paid on
an interim basis or any pre-petition retainer paid to Debtors' counsel in
connection with or related to the Chapter 11 Case), and any statutorily mandated
costs and fees of the Clerk of the Court and the United States Trustee with
respect to the Chapter 11 Case. The Carve-Out Expenses shall not include any
other claims that are or may be senior to or pari passu with any of the
Carve-Out Expenses or any professional fees and expenses of a Chapter 7 trustee
and the Carve-Out Expenses shall
54
not include any fees or disbursements related to the preparation for, or
commencement or prosecution of, any claims or proceedings against the Agent or
any Secured Creditor or their claims or security interests in or Liens on, the
Collateral whether under this Agreement or any other Loan Document. Other than
the Senior Claims and the Carve-Out Expenses, no other claim having a priority
superior or pari passu to that granted to the Agent, the Issuing Bank and the
Lenders by the Final Order shall be granted or approved while any Secured
Obligations under this Agreement remain outstanding. Notwithstanding anything in
this Section 4.21 to the contrary, the Liens and claims of the Agent and the
Lenders with respect to the Secured Obligations under this Agreement and the
other Loan Documents shall "prime" the Liens and claims of the Pre-Petition
Lenders (whether in their capacity as Pre-Petition Lenders or in their capacity
as Post-Petition Subordinated Lenders) under the Pre-Petition Loan Agreement and
the Post-Petition Lenders Credit Agreement in accordance with the Intercreditor
and Subordination Agreement and Bankruptcy Code Section 364(d).
ARTICLE 5
CONDITIONS PRECEDENT
SECTION 5.1. Conditions Precedent to Loans and Letters of Credit.
Notwithstanding any other provision of this Agreement, the Initial Loans will
not be made, and no Letters of Credit will be issued, and the provisions of
Articles 7, 8, 9 and 10 will not become effective, until the fulfillment of each
of the following conditions prior to or contemporaneously with the making of the
first to be made of such Loans or issuance of such Letters of Credit:
(a) Financial Condition. The Obligors shall have delivered to the
Agent the Projections required hereunder.
(b) Fees. The Borrowers shall have paid all of the fees payable on the
Effective Date.
(c) Security Interests. The Agent shall have received satisfactory
evidence that the Agent (for the benefit of the Secured Creditors) has a
valid and perfected security interest as of such date in all of the
Collateral, subject only to Permitted Liens, and that such security
interest is of a first priority subject only to Senior Claims or as
provided for by the Final Order.
(d) Intercreditor and Subordination Agreement. The Agent and the
Pre-Petition Lenders (in both their capacity Pre-Petition Lenders and their
capacity as Post-Petition Subordinated Lenders) shall have each executed
the Intercreditor and Subordination Agreement in a form acceptable to the
Agent, which Intercreditor and Subordination Agreement shall have provided,
among other things, for the subordination of any and all secured claims
against the Obligors retained by the Pre-Petition Lenders (whether in their
capacity as Pre-Petition Lenders or in their capacity as Post-Petition
Subordinated Lenders) to the various liens and priority claims granted to
the Agent and the Lenders pursuant to this Agreement, the other Loan
Documents and the Final Order.
(e) Noteholders Restructuring Agreement. The Borrowers and the
Required Noteholder Representatives shall have executed the Noteholders
Restructuring Agreement providing, among other things, for the conversion
of all Indebtedness of the Obligors under the Indenture to equity interests
in Safety Components, on terms and conditions satisfactory to the Agent in
its sole discretion.
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(f) Post-Petition Lenders Credit Agreement. The Borrowers and the
Pre-Petition Lenders shall have executed the Post-Petition Lenders Credit
Agreement providing, among other things, for the restructuring of the
Pre-Petition Lenders' claims and liens pursuant to the Pre-Petition Loan
Agreement, on terms and conditions satisfactory to the Agent.
(g) Closing Documents. The Agent shall have received each of the
following documents, all of which shall be satisfactory in form and
substance to the Agent and its counsel and to the Lenders:
(i) certified copies of the articles or certificate of
incorporation and bylaws (or equivalent constitutive documents) of
each Obligor as in effect on the Effective Date,
(ii) certified copies of all corporate action, including
shareholder approval, if necessary, taken by each Obligor to authorize
the execution, delivery and performance of this Agreement, the other
Loan Documents, and in the case of the Borrowers, the borrowings under
this Agreement,
(iii) certificates of incumbency and specimen signatures with
respect to each of the officers of each Obligor authorized to execute
and deliver this Agreement and the other Loan Documents on behalf of
each Obligor executing any document, certificate or instrument to be
delivered in connection with this Agreement or the other Loan
Documents and, in the case of the Borrowers, to request borrowings
under this Agreement,
(iv) a certificate evidencing the good standing of each Obligor
in the jurisdiction of its incorporation and in each other
jurisdiction in which it is required to be qualified as a foreign
corporation to transact its business as presently conducted,
(v) copies of all financial statements referred to in Section
6.1(n) and meeting the requirements thereof,
(vi) a certification from the principal officers of the Obligors
as to such factual matters as shall be requested by the Agent,
(vii) certificates or binders of insurance relating to each of
the policies of insurance covering any of the Collateral, together
with loss payable clauses which comply with the terms of Section 8.8,
(viii) a certificate of the Financial Officer (or such other
officer of Safety Components as may be acceptable to the Agent)
stating that, to the best of his knowledge and based on an examination
sufficient to enable him to make an informed statement, (A) all of the
representations and warranties made or deemed to be made under this
Agreement are true and correct as of the Effective Date, after giving
effect to the Loans to be made at such time and the application of the
proceeds thereof, and (B) no Default or Event of Default exists,
(ix) a Borrowing Base Certificate prepared as of the last Friday
before the Effective Date, and a Schedule of Inventory and a Schedule
of Receivables prepared as of the last Friday before the Effective
Date,
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(x) a Collateral Access Agreement with respect to each premises
leased by a Non-Debtor Borrower on which any Collateral is located,
(xi) Agency Account Agreements and the related Lockbox
Agreements, each duly executed by the applicable Borrowers and the
Clearing Bank party thereto,
(xii) the Initial Notice of Borrowing, duly executed by the
Borrowers' Agent,
(xiii) copies of each of the other Loan Documents duly executed
by the parties thereto, together with evidence satisfactory to the
Agent of the due authorization and binding effect of each such Loan
Document on such party,
(xiv) the legal opinion of Borrowers' United States and United
Kingdom counsel in form and substance satisfactory to the Agent.
(xv) the Agent shall have (i) received the results of its initial
field examination of the Borrowers' Receivables, Inventory, and
Indebtedness, which results shall be satisfactory to the Agent, and
(ii) reviewed to its satisfaction each of the Borrowers' customer
supply contracts, and received satisfactory evidence that no default
or event of default (other than with respect to the filing of the
Chapter 11 Case) presently exists with respect to any such contract
that has not been waived.
(xvi) such other documents and instruments as the Agent or any
Lender may reasonably request.
(h) Notes. Each Lender shall have received a Revolving Loan Note and
Term Loan Note duly executed and delivered by the Borrowers, complying with
the terms of Sections 2.4 and 2.8.
(i) Other Security Documents. The Agent shall have received each other
Security Document, in form and substance satisfactory to the Agent and the
Lenders, duly executed and delivered by the applicable Borrowers and
Guarantors, including the Patent Assignment and the Trademark Assignment.
(j) Availability. The Agent shall be provided with evidence
satisfactory to it that, as of the Effective Date, after giving effect to
the Initial Loans and the issuance of any Letters of Credit on the
Effective Date, (a) the Borrowing Base at such time minus (b) the aggregate
principal amount of the Initial Loans plus the face value of all initial
Letters of Credit to be issued (including Letters of Credit issued pursuant
to Section 3.10) is not less than $10,000,000 (after disbursements and
advances, and with all obligations of the Borrowers current based on terms
agreed to or acquiesced in by vendors in the Chapter 11 Case or consistent
with the Borrowers' usual payment practices).
(k) No Injunctions, Etc. Other than the filing of the Chapter 11 Case
and those matters reflected on Schedule 6.1(k), no action, proceeding,
investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency or legislative
body to enjoin, restrain, or prohibit, or to obtain damages in respect of,
or which is related to or arises out of this Agreement, Noteholders
Restructuring Agreement, or the consummation of the transactions
contemplated hereby or thereby, or which, in the Lenders'
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discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement.
(l) Materially Adverse Effect. Excluding the filing of the Chapter 11
Cases, there shall have been no change in the business, assets, management,
operations, financial condition or prospects of the Obligors since December
25, 1999, which change, in the reasonable judgment of the Agent, will have
a Materially Adverse Effect.
(m) Bankruptcy Case Matters.
(i) The Court shall have entered the Final Order, in form and
substance satisfactory to the Agent,
(ii) The Borrowers shall have obtained appropriate Court orders
approving their cash management system, all as reasonably acceptable
to the Agent,
(iii) The orders described on Schedule 5.1(m) in form and
substance reasonably satisfactory to the Agent shall have been entered
in the Chapter 11 Case,
(iv) The automatic stay shall have been modified to permit
creation and perfection of the Agent's, the Issuing Banks' and the
Lenders' Liens and security interests and shall have been
automatically vacated, to the extent set forth in the Final Order, to
permit enforcement of the Agent's, the Issuing Banks' and the Lenders'
rights and remedies under the Loan Documents, and
(v) The Debtor Borrowers and the Debtor Guarantors shall have
filed a motion with the Court seeking approval for the retention of a
financial advisor and crisis manager for the Debtor Borrowers and the
Debtor Guarantors acceptable to the Agent in its reasonable
discretion.
SECTION 5.2. All Loans; Letters of Credit. At the time of the making of
each Loan, including the Initial Loans and all subsequent Loans, and the
issuance of each Letter of Credit:
(a) all of the representations and warranties made or deemed to be
made under this Agreement and the other Loan Documents shall be true and
correct at such time both with and without giving effect to the Loan to be
made at such time (and the application of the proceeds thereof) or the
Letter of Credit to be issued at such time,
(b) the corporate actions of the Obligors referred to in Section
5.1(g)(ii) shall remain in full force and effect and the incumbency of
officers shall be as stated in the certificates of incumbency delivered
pursuant to Section 5.1(g)(iii) or as subsequently modified and reflected
in a certificate of incumbency delivered to the Agent,
(c) the credit requested would not cause the aggregate outstanding
amount of the Loans (including Letter of Credit Obligations) to exceed the
amount then authorized by the Final Order, and no order modifying or
vacating such order shall have been entered, and either (i) no appeal of
such order shall have been timely filed or, (ii) if such an appeal has been
taken, no stay of such order pending appeal has been granted or such appeal
has been dismissed, and
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(d) Except in the case of the Initial Loans, the Agent shall be
provided with evidence satisfactory to it that, as of the time of the
making of such Loan or the issuance of such Letter of Credit, after giving
effect to the making of such Loan or the issuance of such Letter of Credit,
(a) the Borrowing Base at such time minus (b) the aggregate principal
amount of all Revolving Loans plus the face value of all Letters of Credit
(including Letters of Credit otherwise issued pursuant to Section 3.10 but
excluding the Letter of Credit described below) is not less than $2,000,000
(after disbursements and advances, and with all post-petition obligations
of the Obligors current based on terms agreed to or acquiesced in by
vendors and consistent with the Obligors' usual payment practices),
provided that the minimum availability contemplated herein shall include an
allocation of up to $638,000 for a replacement standby letter of credit
issued pursuant to Section 3.10 (or up to $638,000 in cash collateral
pledged in respect of such letter of credit that expires prior to the
Termination Date in accordance with clause (b) of Section 3.2).
Each request or deemed request for any Borrowing hereunder shall be deemed
to be a certification by the Borrowers to the Agent and the Lenders as to
the matters set forth in this Section 5.2 and the Agent may, without
waiving either condition, consider the conditions specified in this Section
5.2 fulfilled and a representation by the Borrowers to such effect made, if
no written notice to the contrary is received by the Agent prior to the
making of the Loan then to be made or the issuance of the Letter of Credit
then to be issued.
SECTION 5.3. Conditions as Covenants. In the event that the Lenders make
the Initial Loans or a Letter of Credit is issued prior to the satisfaction of
all conditions precedent set forth in Section 5.1, and such conditions are not
waived in writing by the Agent, the Borrowers shall nevertheless cause such
condition or conditions to be satisfied within thirty (30) days after the making
of such Initial Loans or the issuance of such Letter of Credit.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties. Each Obligor represents and
warrants to the Agent and to the Lenders as follows:
(a) Organization; Power; Qualification. Each Obligor is a corporation,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, having the power and authority to own its
properties and to carry on its business as now being and hereafter proposed
to be conducted and, except as set forth on Schedule 6.1(a), is duly
qualified and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization, except where the failure to be so qualified
or authorized would not constitute or cause a Materially Adverse Effect.
The jurisdictions in which each Obligor is qualified to do business as a
foreign corporation are listed on Schedule 6.1(a).
(b) Capitalization. The outstanding capital stock of each Obligor has
been duly and validly issued and is fully paid and nonassessable, and the
number and owners of such shares of capital stock of each Obligor are set
forth on Schedule 6.1(b). The issuance and sale of each Obligor's capital
stock have been registered or qualified under applicable federal, state and
foreign securities laws or are exempt therefrom. Except as set forth on
Schedule 6.1(b), there are no shareholder agreements, options, subscription
agreements or other agreements or understandings
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to which any Obligor is a party in effect with respect to the capital stock
of such Obligor, including agreements providing for special voting
requirements or arrangements for approval of corporate actions or other
matters relating to corporate governance or restrictions on share transfer
or providing for the issuance of any securities convertible into shares of
the capital stock of such Obligor, any warrants or other rights to acquire
any shares or securities convertible into such shares, or any agreement
that obligates such Obligor, either by its terms of at the election of any
other Person, to repurchase such shares under any circumstances.
(c) Subsidiaries. Schedule 6.1(c) correctly sets forth the name of
each Subsidiary of the Obligors, its jurisdiction of incorporation, the
name of its immediate parent or parents, and the percentage of its issued
and outstanding securities owned by an Obligor or any other Subsidiary of
an Obligor and indicating whether such Subsidiary is a Consolidated
Subsidiary. Except as set forth on Schedule 6.1(c), (i) no Subsidiary of an
Obligor has issued any securities convertible into shares of such
Subsidiary's capital stock or any options, warrants or other rights to
acquire any shares or securities convertible into such shares, (ii) the
outstanding stock and securities of each Subsidiary of each Obligor are
owned by Safety Components or a wholly-owned Subsidiary of Safety
Components, or by Safety Components and one or more of its wholly-owned
Subsidiaries, free and clear of all Liens, warrants, options and rights of
others of any kind whatsoever, and (iii) no Obligor has any Subsidiaries.
The outstanding capital stock of each Subsidiary of the Obligors has been
duly and validly issued and is fully paid and nonassessable by the issuer,
and the number and owners of the shares of such capital stock are set forth
on Schedule 6.1(c).
(d) Authorization of Agreement, Notes, Loan Documents and Borrowing.
Each Obligor has the right and power, and has taken all necessary action to
authorize such Obligor, to execute, deliver and perform this Agreement and
each of the other Loan Documents to which it is a party in accordance with
their respective terms. This Agreement and each of the other Loan Documents
have been duly executed and delivered by the duly authorized officers of
each Obligor party thereto and each is, or each when executed and delivered
in accordance with this Agreement will be, a legal, valid and binding
obligation of each Obligor party thereto, enforceable in accordance with
its terms.
(e) Compliance of Agreement, Notes, Loan Documents and Borrowing with
Laws, Etc. Except as set forth on Schedule 6.1(e), the execution, delivery
and performance of this Agreement and each of the other Loan Documents in
accordance with their respective terms and the borrowings hereunder do not
and will not, by the passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any Applicable Law
relating to any Obligor or any of its Subsidiaries, (ii) conflict with,
result in a breach of or constitute a default under the articles or
certificate of incorporation or by-laws of any Obligor or any of its
Subsidiaries, or (iii) result in or require the creation or imposition of
any Lien upon or with respect to any property now owned or hereafter
acquired by any Obligor or any of its Subsidiaries other than the Security
Interest.
(f) Business. The Obligors are engaged principally in the business set
forth on Schedule 6.1(f).
(g) Compliance with Law; Governmental Approvals.
(i) Except as set forth on Schedule 6.1(g) or as otherwise
provided in Sections 6.1(l) or 9.6, each Obligor and each of its US
and UK Subsidiaries (A) has all
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Governmental Approvals, including permits relating to federal, state,
local and foreign Environmental Laws, ordinances and regulations,
required by any Applicable Law for it to conduct its business, each of
which is in full force and effect, is final and not subject to review
on appeal and is not the subject of any pending or, to the knowledge
of any Obligor, threatened attack by direct or collateral proceeding,
and (B) is in compliance with each Governmental Approval applicable to
it and in compliance with all other Applicable Laws relating to it,
including all Environmental Laws and all occupational health and
safety laws applicable to any Obligor, any of the US and UK
Subsidiaries, or their respective properties, except in the case of
(A) or (B) for instances of noncompliance which would not, singly or
in the aggregate, cause a Default or Event of Default or have a
Materially Adverse Effect.
(ii) Without limiting the generality of the above, except with
respect to matters which could not reasonably be expected to have,
singly or in the aggregate, a Materially Adverse Effect: (A) the
operations of each Obligor and each of the US and UK Subsidiaries,
comply in all material respects with all applicable environmental,
health and safety requirements of Applicable Law; (B) each Obligor and
each of the US and UK Subsidiaries has obtained all environmental,
health and safety permits necessary for its operation except where the
failure to obtain such permits would constitute or cause a Materially
Adverse Effect, and all such permits are in good standing and each
Obligor and each of its Subsidiaries is in compliance in all material
respects with all terms and conditions of such permits; (C) neither
any Obligor nor any of its US and UK Subsidiaries with respect to any
of its respective present or past property or operations has received
notice of any specific order from or agreement with any public
authority or party respecting (x) any environmental, health or safety
requirements of Applicable Law, (y) any Remedial Action, or (z) any
liabilities and costs arising from the Release or threatened Release
of a Contaminant into the environment; (D) none of the operations of
any Obligor or of any of the US and UK Subsidiaries is subject to any
judicial or administrative proceeding alleging a violation of any
environmental, health or safety requirement of Applicable Law; (E) to
the knowledge of the Obligors, none of the present nor past operations
of any Obligor or any of the US and UK Subsidiaries is the subject of
any investigation by any public authority evaluating whether any
Remedial Action is needed to respond to a Release or threatened
Release of a Contaminant into the environment; (F) neither any Obligor
nor any of the US and UK Subsidiaries has filed any notice under any
requirement of Applicable Law indicating past or present treatment,
storage or disposal of a hazardous waste, as that term is defined
under 40 CFR Part 261 or any state equivalent; (G) neither any Obligor
nor any of the US and UK Subsidiaries has filed any notice under any
requirement of Applicable Law reporting a Release of a Contaminant
into the environment; (H) except in compliance in all material
respects with applicable Environmental Laws, during the course of any
Obligor's ownership of or operations on the Real Estate, there have
been no (1) generation, treatment, recycling, storage or disposal of
hazardous waste, as that term is defined under 40 CFR Part 261 or any
state equivalent, (2) use of underground storage tanks or surface
impoundments, (3) use of asbestos-containing materials, or (4) use of
polychlorinated biphenyls (PCB) used in hydraulic oils, electrical
transformers or other equipment; (I) neither any Obligor nor any of
its US and UK Subsidiaries has entered into any negotiations or
agreements with any Person (including any prior owner of any of the
Real Estate or other property of any Obligor or any of its US and UK
Subsidiaries) relating to any Remedial Action or environmental related
claim; (J) neither any Obligor nor any of the US and UK Subsidiaries
has received any notice or claim to the effect that it is or may be
liable to any
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Person as a result of the Release or threatened Release of a
Contaminant into the environment; (K) neither any Obligor nor any of
its US and UK Subsidiaries has any material contingent liability in
connection with any Release or threatened Release of any Contaminant
into the environment; (L) to the knowledge of the Obligors, no
Environmental Lien has attached to any of the Real Estate or other
property of any Obligor or of any of the US and UK Subsidiaries; (M)
the presence and condition of all asbestos-containing material which
is on or part of the Real Estate (excluding any raw materials used in
the manufacture of products or products themselves) do not violate in
any material respect any currently applicable requirement of
Applicable Law; and (N) neither any Obligor nor any of its US and UK
Subsidiaries manufactures, distributes or sells, or has ever
manufactured, distributed or sold, products which contain
asbestos-containing material.
(iii) Each Obligor has notified the Agent of the receipt by it or
any of its US and UK Subsidiaries of any notice of a material
violation of any Environmental Laws and occupational health and safety
laws applicable to such Obligor, US and UK Subsidiaries or any of
their respective properties.
(h) Title to Properties. Except as set forth on Schedule 6.1(h), each
Obligor has valid and legal title to or leasehold interest in all personal
property, Real Estate and other assets used in its business, including
those reflected on the most recent balance sheets of the Obligors delivered
pursuant to Section 6.1(n).
(i) Liens. Except as set forth on Schedule 6.1(i), none of the
properties and assets of any Obligor is subject to any Lien, except
Permitted Liens. Other than the Financing Statements and with respect to
Permitted Liens, no financing statement under the Uniform Commercial Code
or similar laws of any jurisdiction or other instrument evidencing a Lien
which names any Obligor as debtor has been filed (and has not been
terminated) in any jurisdiction, and no Obligor has signed any such
financing statement or other instrument or any security agreement
authorizing any secured party thereunder to file any such financing
statement or instrument, except to perfect Permitted Liens.
(j) Indebtedness and Guaranties. Schedule 6.1(j) is a complete and
correct listing of all Indebtedness for Money Borrowed and Guaranties of
each Obligor. Except as set forth on Schedule 6.1(j), each Obligor has
performed and is in compliance with all of the terms of such Indebtedness
and Guaranties and all instruments and agreements relating thereto, and no
default or event of default, or event or condition which with notice or
lapse of time or both would constitute such a default or event of default,
exists with respect to any such Indebtedness or Guaranty.
(k) Litigation. Except for the filing of the Chapter 11 Case and as
set forth on Schedule 6.1(k), there are no actions, suits or proceedings
pending (nor, to the knowledge of any Obligor, are there any actions, suits
or proceedings threatened, or any reasonable basis therefor) against or in
any other way relating to or affecting any Obligor or any of its
Subsidiaries or any of any Obligor's or any of its Subsidiaries' properties
in any court or before any arbitrator of any kind or before or by any
governmental body, except actions, suits or proceedings of the character
normally incident to the kind of business conducted by the Obligors or any
of their Subsidiaries which, if adversely determined, would not singly or
in the aggregate have a Materially Adverse Effect, and there are no strikes
or walkouts in progress, pending or contemplated, relating to any
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labor contracts to which any Obligor is a party, relating to any labor
contracts being negotiated, or otherwise.
(l) Tax Returns and Payments. Except as set forth on Schedule 6.1(l),
all United States federal, state and local as well as foreign national,
provincial and local and other tax returns of each Obligor and each of its
Subsidiaries required by Applicable Law to be filed at or prior to the date
hereof (taking into account any extensions) have been timely filed, and all
United States federal, state and local and foreign national, provincial and
local and other taxes, assessments and other governmental charges or levies
upon each Obligor and each of its Subsidiaries and each Obligor's and any
of its Subsidiaries' property, income, profits and assets which have become
due and payable at or prior to the date hereof (taking into account any
extensions) have been paid, except any such nonpayment which in the
aggregate would have a materially Adverse Effect or which is at the time
permitted under Section 9.6. Except as set forth in Schedule 6.1(l), the
charges, accruals and reserves on the books of each Obligor and each of its
Subsidiaries in respect of United States federal, state and local and
foreign national, provincial and local taxes for each fiscal year and
portions thereof covered by such books and records are in the judgment of
each Obligor adequate, and no Obligor has been notified by any Governmental
Authority of any reason to anticipate any additional assessments for any of
such years which, singly or in the aggregate, might have a Materially
Adverse Effect.
(m) [RESERVED]
(n) Financial Statements.
(i) The Obligors have furnished to the Agent and the Lenders
copies of the unaudited consolidated balance sheet of Safety
Components and its Consolidated Subsidiaries as of December 25, 1999,
and of the related statements of operations and cash flows for the
nine-month period then ended. On or before the date of the initial
Loans hereunder, the Obligors will have furnished to the Agent and the
Lenders copies of the annual audited consolidated balance sheet of
Safety Components and its Consolidated Subsidiaries as of March 27,
1999, and the related audited consolidated statements of operations,
cash flows and shareholder's equity for the fiscal year ended on such
date, reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. Such financial statements
present (or will present) fairly, in all material respects, as of
their respective dates and in accordance with GAAP (subject to
year-end adjustments and but for the omission of footnotes in the
unaudited statements) the consolidated financial condition of Safety
Components and its Consolidated Subsidiaries as of such dates and the
consolidated results of operations of Safety Components and its
Consolidated Subsidiaries for the periods ended on such dates.
(ii) The Obligors have furnished to the Agent and the Lenders
copies of the Projections. The Projections have been be prepared by
Safety Components in light of the past operations of the business of
Safety Components and the US and UK Subsidiaries and represent as of
the respective dates thereof the best reasonable estimates of Safety
Components and its senior management concerning the course of business
of Safety Components and the US and UK Subsidiaries.
(iii) Except as disclosed or reflected in the financial
statements described in clause (i) above, including footnotes thereto,
or as set forth on Schedule 6.1(n) no Obligor nor any of its
Consolidated Subsidiaries has any material liabilities, contingent or
63
otherwise, and there were no material unrealized or anticipated losses
of any Obligor or any of its Consolidated Subsidiaries.
(o) Adverse Change. Since the date of the unaudited financial
statements of the Obligors delivered to the Agent pursuant to Section
6.1(n)(i) and excluding the effect of the Chapter 11 Case, (i) no material
adverse change has occurred in the business, assets, liabilities, financial
condition, results of operations or business prospects of any Obligor or
any of the US and UK Subsidiaries, and (ii) no event has occurred or failed
to occur which has had, or may have, singly or in the aggregate, a
Materially Adverse Effect.
(p) ERISA:
(i) Neither any Obligor nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on Schedule
6.1(p).
(ii) No Benefit Plan has been terminated or partially terminated,
and no Multiemployer Plan is insolvent or in reorganization, nor have
any proceedings been instituted to terminate any Benefit Plan or to
the knowledge of the Obligors to reorganize any Multiemployer Plan.
(iii) Neither any Obligor nor any Related Company has withdrawn
from any Benefit Plan or Multiemployer Plan, nor has a condition
occurred which if continued would cause a material withdrawal
liability on the part of the Borrowers or any Related Company.
(iv) Neither any Obligor nor any Related Company has incurred any
material withdrawal liability, including contingent withdrawal
liability, to any Multiemployer Plan pursuant to Title IV of ERISA,
nor has a condition occurred which if continued would cause a material
withdrawal liability on the part of the Borrowers or any Related
Company.
(v) Neither any Obligor nor any Related Company has incurred any
material liability to the PBGC other than for required insurance
premiums which have been paid when due.
(vi) No Reportable Event has occurred with respect to a Plan that
could result in a material liability for any Obligor.
(vii) No Benefit Plan has an "accumulated funding deficiency"
(whether or not waived) as defined in Section 302 of ERISA or in
Section 412 of the Internal Revenue Code.
(viii) Each Plan is in substantial compliance with ERISA, and
neither any Obligor nor any Related Company has received any
communication from a governmental agency asserting that a Plan is not
in compliance with ERISA.
(ix) Each Plan which is intended to be a qualified Plan has been
determined by the IRS to be qualified under Section 401(a) of the
Internal Revenue Code as currently in effect or will be submitted to
the IRS for such determination prior to the end of the remedial
amendment period under Section 401(b) of the Internal Revenue Code and
the
64
regulations promulgated thereunder and neither any Obligor nor any
Related Company knows or has reason to know why each such Plan should
not continue to be so qualified, and each trust related to such Plan
that has been submitted to the IRS for determination of exempt status
has been determined to be exempt from federal income tax under Section
501(a) of the Internal Revenue Code or will be submitted to the IRS
for a determination of exempt status.
(x) Except as provided on Schedule 6.1(p), neither any Obligor
nor any Related Company maintains or contributes to any employer
welfare benefit plan within the meaning of Section 3(l) of ERISA which
provides benefits to employees after termination of employment other
than as required by Section 601 or 608 of ERISA or Section 4980B of
the Code.
(xi) Schedule B to the most recent annual report filed with the
IRS with respect to each Benefit Plan and furnished to the Lender is
complete and accurate. Since the date of each such Schedule B, there
has been no adverse change in funding status or financial condition of
the Benefit Plan relating to such Schedule B.
(xii) Neither any Obligor nor any Related Company has failed to
make a required installment under Subsection (m) of Section 412 of the
Internal Revenue Code or any other payment required under Section 412
of the Internal Revenue Code on or before the due date for such
installment or other payment, except to the extent any such failure
has been cured.
(xiii) Neither any Obligor nor any Related Company is required to
provide security to a Benefit Plan under Section 401(a)(29) of the
Internal Revenue Code due to a Benefit Plan amendment that results in
an increase in current liability for the plan year.
(xiv) Neither any Obligor, nor any Related Company, nor any other
"party-in-interest" or "disqualified person" has engaged in a
nonexempt "prohibited transaction," as such terms are defined in
Section 4975 of the Internal Revenue Code and Section 406 of ERISA, in
connection with any Plan or has taken or failed to take any action
which would constitute or result in a Termination Event which
prohibited transaction or Termination Event could result in a material
liability of an Obligor.
(xv) Neither any Obligor nor any Related Company has failed to
comply with the health care continuation coverage requirements of
Section 4980B of the Internal Revenue Code in respect of employees and
former employees of such Obligor or such Related Company and their
dependents and beneficiaries which alone or in the aggregate would
subject such Obligor or such Related Company to any material
liability.
(xvi) Neither any Obligor nor any Related Company has failed to
make a required contribution or payment to a Multiemployer Plan.
Except as provided on Schedule 6.1(p), to the best knowledge of each
Obligor neither any Obligor nor any Related Company shall have any
obligation to make contributions to any Multiemployer Plan on or after
the Effective Date.
(q) Absence of Defaults. No Obligor is in default under its articles
or certificate of incorporation or by-laws and no post-Petition Date event
has occurred, which has not been remedied, cured or waived, (i) which
constitutes a Default or an Event of Default, or (ii) which
65
constitutes, or which with the passage of time or giving of notice or both
would constitute, a default or event of default by any Obligor under any
material agreement entered into after the Petition Date (other than this
Agreement) or judgment, decree or order to which any Obligor is a party or
by which any Obligor or any of their properties may be bound or which would
require any Obligor to make any payment under any such agreement, judgment,
decree or order prior to the scheduled maturity date therefor, except for
defaults existing on the date of this Agreement or resulting from the
filing of the Chapter 11 Case, and except, in the case only of any such
agreement, for alleged defaults arising from actions which are permitted by
the Bankruptcy Code or the Court or which are being contested in good faith
by appropriate proceedings and with respect to which reserves in respect of
any Obligor's reasonably anticipated liability have been established on the
books of such Obligor.
(r) Accuracy and Completeness of Information.
(i) All written information, reports and other papers and data
produced by or on behalf of the Obligors and furnished to the Agent or
any Lender were, at the time the same were so furnished, complete and
correct in all material respects, to the extent necessary to give the
recipient a true and accurate knowledge of the subject matter. No fact
is known to any Obligor which has had, or may in the future have (so
far as such Obligor can foresee), a Materially Adverse Effect which
has not been set forth in the financial statements or disclosure
delivered prior to the Effective Date, in each case referred to in
Section 6.1(n), or in such written information, reports or other
papers or data or otherwise disclosed in writing to the Agent and the
Lenders prior to the Agreement Date. No document furnished or written
statement made to the Agent or any Lender by any Obligor or any of its
Subsidiaries in connection with the negotiation, preparation or
execution of this Agreement or any of the other Loan Documents
contains or will contain any untrue statement of a fact material to
the creditworthiness of any Obligor or omits or will omit to state a
material fact necessary in order to make the statements contained
therein not misleading.
(ii) No Obligor has any reason to believe that any document
furnished or written statement made to the Agent or any Lender by any
Person other than the Obligors in connection with the negotiation,
preparation or execution of this Agreement or any of the other Loan
Documents contained any incorrect statement of a material fact or
omitted to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were
made, not misleading.
(s) Receivables.
(i) Status.
(A) Each Receivable reflected in the computations included
in any Borrowing Base Certificate meets the criteria enumerated
in the definition of Eligible Receivables, except as disclosed in
such Borrowing Base Certificate or as disclosed in a timely
manner in a subsequent Borrowing Base Certificate or otherwise in
writing to the Agent.
(B) No Obligor has any knowledge of any fact or circumstance
not disclosed to the Agent in a Borrowing Base Certificate or
otherwise in writing which would impair the validity or
collectibility of any Eligible Receivables of
66
$25,000 or more or of Eligible Receivables which (regardless of
the individual amount thereof) aggregate $50,000 or more.
(ii) Chief Executive Office. The chief executive office of each
Obligor and the books and records relating to the Receivables (and the
General Intangibles and Tax Refund Claims) are located at the address
or addresses set forth on Schedule 6.1(s); no Obligor has maintained
its chief executive office or books and records relating to any
Receivables at any other address at any time during the five years
immediately preceding the Agreement Date except as disclosed on
Schedule 6.1(s).
(t) Inventory.
(i) Schedule of Inventory. All Inventory included in any Schedule
of Inventory or Borrowing Base Certificate delivered to the Agent
pursuant to Section 8.12 meets the criteria enumerated in the
definition of Eligible Inventory, except as disclosed in such Schedule
of Inventory or Borrowing Base Certificate or in a subsequent Schedule
of Inventory or Borrowing Base Certificate, or as otherwise
specifically disclosed in writing to the Agent.
(ii) Condition. All Eligible Inventory is in good condition,
meets all standards imposed by any governmental agency, or department
or division thereof, having regulatory authority over such goods,
their use or sale, and is currently either usable or salable in the
normal course of the applicable Obligor's business, except to the
extent reserved against in the financial statements referred to in
Section 6.1(n) or delivered pursuant to Article 10 or as disclosed on
a Schedule of Inventory delivered to the Agent pursuant to Section
8.12(b).
(iii) Location. All Inventory is located on the premises set
forth on Schedule 6.1(t) or is Inventory in transit to one of such
locations, except as otherwise disclosed in writing to the Agent. No
Obligor has, in the last four months, located such Inventory at
premises other than those set forth on Schedule 6.1(t).
(u) Equipment. All Equipment is in good order and repair in all
material respects and is located on the premises set forth on Schedule
6.1(u).
(v) Real Property. No Obligor owns any Real Estate or leases any Real
Estate other than that described on Schedule 6.1(v).
(w) Corporate and Fictitious Names. Except as otherwise disclosed on
Schedule 6.1(w), during the five-year period preceding the Agreement Date,
no Obligor, nor any predecessor thereof, has been known as or used any
corporate or fictitious name other than the corporate names of the Obligors
on the Effective Date.
(x) Federal Reserve Regulations. No Obligor is engaged and none will
engage, principally or as one of its important activities, in the business
of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" (as each of the quoted terms is defined or used in
Regulation U of the Board of Governors of the Federal Reserve System). No
part of the proceeds of any of the Loans will be used for so purchasing or
carrying margin stock or, in any event, for any purpose which violates, or
which would be inconsistent with, the provisions of Regulation T, U or X of
such Board of Governors. If requested by the Agent or any Lender, the
67
Obligors will furnish to the Agent and the Lenders a statement or
statements in conformity with the requirements of said Regulation T, U or X
to the foregoing effect.
(y) Investment Company Act. No Obligor is an "investment company" or a
company "controlled" by an "investment company" (as each of the quoted
terms is defined or used in the Investment Company Act of 1940, as
amended).
(z) Employee Relations. Each Obligor has a stable work force in place
and is not, except as set forth on Schedule 6.1(z), party to any collective
bargaining agreement nor has any labor union been recognized as the
representative of any Obligor's employees, and no Obligor knows of any
pending, threatened or contemplated strikes, work stoppage or other labor
disputes involving any Obligor's employees.
(aa) Proprietary Rights. Schedule 6.1(aa) sets forth a correct and
complete list of all of the Obligor's Proprietary Rights. None of the
Obligor's Proprietary Rights is subject to any licensing agreement or
similar arrangement except as set forth on Schedule 6.1(aa) or as entered
into in the sale or distribution of any Obligor's Inventory in the ordinary
course of business. To the best of each Obligor's knowledge, (i) none of
the Proprietary Rights infringes on or conflicts with any other Person's
property, and (ii) no other Person's property infringes on or conflicts
with the Proprietary Rights in each case in any manner which could cause or
constitute a Materially Adverse Effect. To the best of each Obligor's
knowledge the Proprietary Rights described on Schedule 6.1(aa) constitute
all of the property of such type necessary to the current and anticipated
future conduct of each Obligor's business.
(bb) Trade Names. All trade names or styles under which any Obligor
sells Inventory or Equipment or creates Receivables, or to which
instruments in payment of Receivables are made payable, are listed on
Schedule 6.1(bb).
(cc) Bank Accounts, Lockboxes, Etc. Schedule 6.1(cc) is a complete and
correct list of all checking accounts, deposit accounts, lockboxes and
other bank accounts maintained by any Obligor.
SECTION 6.2. Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article 6 and all
representations or warranties contained in any certificate, financial statement,
or other instrument, delivered by or on behalf of any Obligor pursuant to or in
connection with this Agreement or any of the other Loan Documents (including any
such representation or warranty made in or in connection with any amendment
thereto) shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement shall be
made or deemed to be made at and as of the Agreement Date, at and as of the
Effective Date, and at and as of the date of each Loan, except that
representations and warranties which, by their terms are applicable only to one
such date shall be deemed to be made only at and as of such date. All
representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Agent or any Lender, or any
borrowing hereunder.
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ARTICLE 7
SECURITY INTEREST
SECTION 7.1. Security Interest.
(a) To secure the payment, observance and performance of the Secured
Obligations, each Obligor hereby mortgages, pledges and assigns all of its
right, title and interest in and to the Collateral to the Agent, for the benefit
of the Secured Creditors, and grants to the Agent, for the benefit of the
Secured Creditors, a continuing security interest in, and a continuing Lien
upon, all of its right, title and interest in and to the Collateral.
(b) As additional security for all of the Secured Obligations, each Obligor
grants to the Agent, the Lenders and the Affiliates of the Lenders, for the
benefit of the Secured Creditors, a security interest in, and assigns to the
Agent, the Lenders and the Affiliates of the Lenders, for the benefit of the
Secured Creditors, all of such Obligor's right, title and interest in and to,
any deposits or other sums at any time credited by or due from the Agent, each
Lender and each Affiliate of a Lender to such Obligor, or credited by or due
from any participant of any Lender to such Obligor, with the same rights therein
as if the deposits or other sums were credited by or due from such Lender. Each
Obligor hereby authorizes the Agent, each Lender and each Affiliate of such
Lender and each participant to pay or deliver to the Agent, for the account of
the Secured Creditors, without any necessity on the Agent's or any Lender's part
to resort to other security or sources of reimbursement for the Secured
Obligations, at any time during the continuation of any Event of Default and
without further notice to any Obligor (such notice being expressly waived), any
of the aforesaid deposits (general or special, time or demand, provisional or
final) or other sums for application to any Secured Obligation, irrespective of
whether any demand has been made or whether such Secured Obligation is mature,
and the rights given the Agent, the Lenders, their Affiliates and participants
hereunder are cumulative with such Person's other rights and remedies, including
other rights of setoff. The Agent will promptly notify the Borrowers' Agent of
its receipt of any such funds for application to the Secured Obligations, but
failure to do so will not affect the validity or enforceability thereof. The
Agent may give notice of the above grant of a security interest in and
assignment of the aforesaid deposits and other sums, and authorization, to, and
make any suitable arrangements with, any Lender, any such Affiliate of any
Lender or participant for effectuation thereof, and each Obligor hereby
irrevocably appoints the Agent as its attorney to collect any and all such
deposits or other sums to the extent any such payment is not made to the Agent
or any Lender by such Lender, Affiliate or participant.
SECTION 7.2. Continued Priority of Security Interest.
(a) The Security Interest granted by each Obligor shall at all times be
valid, perfected and enforceable against each Obligor and all third parties in
accordance with the terms of this Agreement, as security for the Secured
Obligations, and the Collateral shall not at any time be subject to any Liens
that are prior to, on a parity with or junior to the Security Interest, other
than Permitted Liens.
(b) Each Obligor shall, at its sole cost and expense, take all action that
may be necessary or desirable, or that the Agent may reasonably request, so as
at all times to maintain the validity, perfection, enforceability and rank of
the Security Interest in the Collateral in conformity with the requirements of
Section 7.2(a), or to enable the Agent and the Lenders to exercise or enforce
their rights hereunder, including: (i) paying all taxes, assessments and other
claims
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lawfully levied or assessed on any of the Collateral, except to the extent that
such taxes, assessments and other claims constitute Permitted Liens, (ii)
obtaining, after the Agreement Date, Collateral Access Agreements and consents
and sublicense agreements from licensors of Proprietary Rights to such Obligor,
(iii) delivering to the Agent, for the benefit of the Secured Creditors,
endorsed or accompanied by such instruments of assignment as the Agent may
specify, and stamping or marking, in such manner as the Agent may specify, any
and all chattel paper, instruments, letters and advices of guaranty and
documents evidencing or forming a part of the Collateral, and (iiii) executing
and delivering financing statements, pledges, designations, hypothecations,
notices and assignments in each case in form and substance satisfactory to the
Agent relating to the creation, validity, perfection, maintenance or
continuation of the Security Interest under the Uniform Commercial Code or other
Applicable Law.
(c) The Agent is hereby authorized to file one or more financing or
continuation statements or amendments thereto without the signature of or in the
name of any Obligor for any purpose described in Section 7.2(b). The Agent will
give the Borrowers' Agent notice of the filing of any such statements or
amendments, which notice shall specify the locations where such statements or
amendments were filed. A carbon, photographic, xerographic or other reproduction
of this Agreement or of any of the Security Documents or of any financing
statement filed in connection with this Agreement is sufficient as a financing
statement.
(d) Each Obligor shall ▇▇▇▇ its books and records as directed by the Agent
and as may be necessary or appropriate to evidence, protect and perfect the
Security Interest and shall cause its financial statements to reflect the
Security Interest.
ARTICLE 8
COLLATERAL COVENANTS
Until the Term Loan Facility and the Revolving Loan Facility each have been
terminated and all the Secured Obligations have been paid in full, unless the
Required Lenders shall otherwise consent in the manner provided in Section
16.11:
SECTION 8.1. Collection of Receivables
(a) At the written request of the Agent, the Obligors will cause all
monies, checks, notes, drafts and other payments relating to or constituting
proceeds of trade accounts receivable to be forwarded to a Lockbox for deposit
in an Agency Account in accordance with the procedures set out in the
corresponding Agency Account Agreement. The Obligors will promptly cause all
monies, checks, notes, drafts and other payments relating to or constituting
proceeds of Receivables, of any other Collateral, and of any trade accounts
receivable that are not forwarded to a Lockbox, to be transferred to or
deposited in an Agency Account. In particular, each Obligor will: (i) advise
each Account Debtor on trade accounts receivable to address all remittances with
respect to amounts payable on account thereof to a specified Lockbox, (ii)
advise each other Account Debtor that makes payment to such Obligor by wire
transfer, automated clearinghouse transfer or similar means to make payment
directly to an Agency Account, and (iii) stamp all invoices relating to trade
accounts receivable with a legend satisfactory to the Agent indicating that
payment is to be made to such Obligor via a specified Lockbox.
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(b) The Obligors and the Agent shall cause all collected balances in each
Agency Account to be transmitted daily by wire transfer, depository transfer
check or other means in accordance with the procedures set forth in the
corresponding Agency Account Agreement, to the Agent at the Agent's Office: (i)
for application, on account of the Secured Obligations, as provided in Sections
2.3(c), 12.2, and 12.3, such credits to be entered as of the Business Day they
are received if they are received prior to 1:30 p.m. and to be conditioned upon
final payment in cash or solvent credits of the items giving rise to them, and
(ii) with respect to the balance, so long as no Default or Event of Default has
occurred and is continuing, for transfer by wire transfer or depository transfer
check to a Disbursement Account.
(c) Any monies, checks, notes, drafts or other payments referred to in
subsection (a) of this Section 8.1 which, notwithstanding the terms of such
subsection, are received by or on behalf of an Obligor will be held in trust for
the Agent and will be delivered to the Agent or a Clearing Bank, as promptly as
possible, in the exact form received, together with any necessary endorsements
for application by the Agent directly to the Secured Obligations, or, if
applicable, for deposit in the Agency Account maintained with a Clearing Bank
and processing in accordance with the terms of the corresponding Agency Account
Agreement.
(d) Notwithstanding the foregoing, subsections (a) through (c) of this
Section 8.1 shall not apply to ASCI Mexico, provided that the Borrowers only
shall pay or otherwise transfer funds to ASCI Mexico as payment for services
rendered in connection with the improvement or completion by ASCI Mexico of
Inventory of the Borrowers pursuant to Section 11.6.
(e) Notwithstanding the foregoing, subsections (a) through (c) of this
Section 8.1 shall not apply to Automotive Safety Components UK, but, instead,
the provisions of this subsection (e) shall apply to Automotive Safety
Components UK, provided that, within forty five days after the Effective Date,
Automotive Safety Components UK shall establish and thereafter maintain its
principal operating accounts with the Agent's designated United Kingdom
Affiliate. Upon written notice given by the Agent to Automotive Safety
Components UK (which may be given by notice to the Borrowers' Agent) of the
occurrence of an Event of Default (the "Notice"), Automotive Safety Components
UK will cause all moneys, checks, notes, drafts and other payments relating to
or constituting proceeds of Receivables, or of any other Collateral, to be
forwarded to a Lockbox for deposit in an Agency Account in accordance with the
procedures set out in the corresponding Agency Account Agreement, and in
particular Automotive Safety Components UK will (i) advise each Account Debtor
to address all remittances with respect to amounts payable on account of any
Receivables to a specified Lockbox, (ii) advise each other Account Debtor that
makes payment to Automotive Safety Components UK by wire transfer, automated
clearinghouse transfer or similar means to make payment directly to an Agency
Account, and (iii) stamp all invoices relating to any such amounts with a legend
satisfactory to the Agent indicating that payment is to be made to Automotive
Safety Components UK via a specified Lockbox. After the giving of the Notice,
Automotive Safety Components UK and the Agent shall cause all collected balances
in each such Agency Account to be transmitted daily by wire transfer or
depository transfer check or Automated Clearing House transfer in accordance
with the procedures set forth in the corresponding Agency Account Agreement to
the Agent at the Agent's Office for application on account of the Secured
Obligations as provided in subsection (b) above. Any moneys, checks, notes,
drafts or other payments referred to above which are received by or on behalf of
Automotive Safety Components UK will be held in trust for the Agent and, after
the giving of the Notice, will be delivered to the Agent at the Agent's Office
as promptly as possible in the exact form received, together with any necessary
endorsements.
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SECTION 8.2. Verification and Notification. The Agent shall have the right
at any time and from time to time, (a) in the name of the Agent, the Lenders or
in the name of any Obligor, to verify the validity, amount or any other matter
relating to any Receivables by mail, telephone, telegraph or otherwise, (b) to
review, audit and make extracts from all records and files related to any of the
Receivables, and (c) to notify the Account Debtor under any Receivables of the
assignment of such Receivables to the Agent, for the benefit of the Secured
Creditors, and to direct such Account Debtor to make payment of all amounts due
or to become due thereunder directly to the Agent, for the account of the
Secured Creditors, and, upon such notification and at the expense of the
Obligors, to enforce collection of any such Receivables and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as the Obligors might have done.
SECTION 8.3. Disputes, Returns and Adjustments.
(a) In the event any amounts due and owing under any Receivable for an
amount in excess of $100,000 are in dispute between an Account Debtor and an
Obligor, the Borrowers' Agent shall provide the Agent with prompt written notice
thereof.
(b) The Borrowers' Agent shall notify the Agent promptly of all returns and
credits in excess of $100,000 in respect of any Receivable (other than any
re-▇▇▇▇ or correction arising in the ordinary course of the Obligors' business),
which notice shall specify the Receivable affected.
(c) The Obligors may, in the ordinary course of business unless a Default
or an Event of Default has occurred and is continuing, grant any extension of
time for payment of any Receivable or compromise, compound or settle the same
for less than the full amount thereof, or release wholly or partly any Person
liable for the payment thereof, or allow any credit or discount whatsoever
therein; provided that (i) no such action results in the reduction of more than
5% in the amount payable with respect to any Receivable or of more than $200,000
with respect to all Receivables in fiscal year 2000 (in each case, excluding the
allowance of credits or discounts generally available to Account Debtors in the
ordinary course of the Obligors' business and appropriate adjustments to the
accounts of Account Debtors in the ordinary course of business), and (ii) the
Agent is promptly notified of the amount of such adjustments and the
Receivable(s) affected thereby.
SECTION 8.4. Invoices.
(a) No Obligor will use any invoices other than invoices in the form
delivered to the Agent prior to the Agreement Date without giving the Agent at
least thirty (30) days prior notice of the intended use of a different form of
invoice together with a copy of such different form.
(b) Upon the request of the Agent, each Obligor shall deliver to the Agent,
at the Obligors' expense, copies of customers' invoices or the equivalent,
original shipping and delivery receipts or other proof of delivery, customers'
statements, customer address lists, the original copy of all documents,
including repayment histories and present status reports, relating to
Receivables and such other documents and information relating to the Receivables
as the Agent shall specify.
SECTION 8.5. Delivery of Instruments. In the event any Receivable is at any
time evidenced by a promissory note, trade acceptance or any other instrument
for the payment of money, the Obligors will immediately thereafter deliver such
instrument to the Agent, appropriately endorsed to the Agent, for the benefit of
the Secured Creditors.
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SECTION 8.6. Sales of Inventory. All sales of Inventory will be made in
compliance with all requirements of Applicable Law.
SECTION 8.7. Ownership and Defense of Title.
(a) Except for Permitted Liens, the Obligors shall at all times be the sole
owner or lessee of each and every item of Collateral and shall not create any
lien on, or sell, lease, exchange, assign, transfer, pledge, hypothecate, grant
a security interest or security title in or otherwise dispose of, any of the
Collateral or any interest therein, except for sales of Inventory in the
ordinary course of business, for cash or on open account or on terms of payment
ordinarily extended to its customers, and except for dispositions that are
otherwise expressly permitted under this Agreement. The inclusion of "proceeds"
of the Collateral under the Security Interest shall not be deemed a consent by
the Agent or the Lenders to any other sale or other disposition of any part or
all of the Collateral.
(b) Each Obligor shall defend its title or leasehold interest in and to,
and the Security Interest in, the Collateral against the claims and demands of
all Persons.
SECTION 8.8. Insurance.
(a) The Obligor shall at all times maintain insurance on the Inventory and
Equipment against loss or damage by fire, theft (excluding theft by employees),
burglary, pilferage, loss in transit and such other hazards as the Agent shall
reasonably specify, in amounts not to exceed those obtainable at commercially
reasonable rates and under policies issued by insurers acceptable to the Agent
in the exercise of its reasonable judgment. All premiums on such insurance shall
be paid by the Obligors and copies of the policies delivered to the Agent. The
Obligors will not use or permit the Inventory to be used in violation of
Applicable Law or in any manner which might render inapplicable any insurance
coverage.
(b) All insurance policies required under Section 8.8(a) shall name the
Agent, for the benefit of the Secured Creditors, as an additional insured and
shall contain loss payable clauses in the form submitted to the Obligors by the
Agent, or otherwise in form and substance satisfactory to the Agent, naming the
Agent, for the benefit of the Secured Creditors, as loss payee, as its interests
may appear, and providing that (i) all proceeds thereunder shall be payable to
the Agent, for the benefit of the Secured Creditors, (ii) no such insurance
shall be affected by any act or neglect of the insurer or owner of the property
described in such policy, and (iii) such policy and loss payable clauses may be
canceled, amended or terminated only upon at least thirty (30) days prior
written notice given to the Agent.
(c) Any proceeds of insurance referred to in this Section 8.8 which are
paid to the Agent, for the account of the Secured Creditors, shall be, at the
option of the Required Lenders in their sole discretion, either (i) applied to
replace the damaged or destroyed property, or (ii) applied to the payment or
prepayment of the Secured Obligations; provided that in the event that the
proceeds from any single casualty do not exceed $100,000, then, upon the
Borrowers' Agent's written request to the Agent, provided that no Default or
Event of Default shall have occurred and be continuing, such proceeds shall be
disbursed by the Agent to the Obligors pursuant to such procedures as the Agent
shall reasonably establish for application to the replacement of the damaged or
destroyed property.
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SECTION 8.9. Location of Offices and Collateral.
(a) No Obligor will change the location of its chief executive office or
the place where it keeps its books and records relating to the Collateral or
change its name, its identity or corporate structure without giving the Agent at
least thirty (30) days prior written notice thereof.
(b) All Inventory and Equipment, other than Inventory in transit to any
such location, will at all times be kept by each Obligor at the locations set
forth on Schedules 6.1(t) and (u), and shall not, without the prior written
consent of the Agent, be removed therefrom except pursuant to sales of Inventory
permitted under Section 8.7(a).
(c) If any Inventory is in the possession or control of any of an agent or
processor of an Obligor, such Obligor shall notify such agent or processor of
the Security Interest (and shall promptly provide copies of any such notice to
the Agent and the Lenders) and, upon the occurrence of an Event of Default,
shall instruct them (and cause them to acknowledge such instruction) to hold all
such Inventory for the account of the Lenders, subject to the instructions of
the Agent.
SECTION 8.10. Records Relating to Collateral.
(a) Each Obligor will at all times (i) keep complete and accurate records
of Inventory on a basis consistent with past practices of such Obligor so as to
permit comparison of Inventory records relating to different time periods,
itemizing and describing the kind, type and quantity of Inventory and such
Obligor's cost therefor and a current price list for such Inventory, and (ii)
keep complete and accurate records of all other Collateral.
(b) Each Obligor will prepare a physical listing of all Inventory, wherever
located, at least annually, and shall deliver such listing to the Agent promptly
after completion thereof.
SECTION 8.11. Inspection. The Agent and each Lender (by any of their
officers, employees or agents) shall have the right, to the extent that the
exercise of such right shall be within the control of the Obligors, at any time
or times to: (a) visit the properties of the Obligors and their Subsidiaries,
inspect the Collateral and the other assets of the Obligors and their
Subsidiaries, and inspect and make extracts from the books and records of the
Obligors and their Subsidiaries, including management letters prepared by
independent accounts, upon reasonable prior notice all during customary business
hours at such premises; (b) discuss the Obligors' and their Subsidiaries'
business, assets, liabilities, financial condition, results of operations and
business prospects, insofar as the same are reasonably related to the rights of
the Agent or the Lenders hereunder or under any of the other Loan Documents,
with the Obligors' and their Subsidiaries' (i) principal officers, (ii)
independent accountants, and (iii) any other Person (except that any such
discussion with any third parties shall be conducted only in accordance with the
Agent's or such Lender's standard operating procedures relating to the
maintenance of the confidentiality of confidential information of borrowers);
and (c) verify the amount, quantity, value and condition of, or any other matter
relating to, any of the Collateral and in this connection to review, audit and
make extracts from all records and files related to any of the Collateral. The
Obligors will deliver to the Agent, for the benefit of the Lenders, any
instrument necessary for the Agent to obtain records from any service bureau
maintaining records on behalf of the Obligors or any of their Subsidiaries (or
any of them) .
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SECTION 8.12. Information and Reports.
(a) Schedule of Receivables. The Borrowers' Agent shall deliver to the
Agent, not later than the 15th day of each fiscal month, a Schedule of
Receivables which (i) shall be as of the last Business Day of the immediately
preceding fiscal month, (ii) shall be reconciled to the Borrowing Base
Certificate as of such last Business Day, and (iii) shall set forth a detailed
aged trial balance of all of the Obligors' then existing Receivables, specifying
the names, addresses and balance due for each Account Debtor obligated on a
Receivable so listed.
(b) Schedule of Inventory. The Borrowers' Agent shall deliver to the Agent,
not later than the 15th day of each fiscal month, a Schedule of Inventory as of
the last Business Day of the immediately preceding fiscal month, itemizing and
describing the kind, type and quantity of the Obligors' Inventory, the Obligors'
cost thereof, and the location thereof
(c) Accounts Payable Listings. The Borrowers' Agent shall deliver to the
Agent, no later than fifteen (15) days after the end of each fiscal month of the
Obligors, a listing of all of the Obligors' then existing trade payables as of
the last Business Day of such fiscal month, specifying the name of and balance
due to each trade creditor of the Obligors and the invoice number of each trade
payable. Upon the Agent's request, the Borrowers' Agent shall deliver to the
Agent monthly detailed trade payable agings in form acceptable to the Agent.
(d) Borrowing Base Certificate. The Borrowers' Agent shall deliver to the
Agent a Borrowing Base Certificate, (i) on a daily basis with respect to
Receivables, prepared and updated as of the immediately preceding Business Day,
(ii) on a daily basis with respect to Inventory, prepared and updated as of the
last day of the immediately preceding fiscal week, and (iii) not later than the
15th day of each fiscal month, reconciled against the aged trial balance of all
the Obligors' then existing Receivables as of the last Business Day of the
immediately preceding fiscal month.
(e) Additional Information. The Agent may in its discretion from time to
time request that the Obligors deliver the schedules, certificates and listings
described in Sections 8.12(a), (b), (c) and (d) more or less often and on
different schedules than specified in such Sections and the Obligors will comply
with such requests. The Obligors will also furnish to the Agent and each Lender
such other information with respect to the Collateral as the Agent or such
Lender may from time to time reasonably request.
(f) Inventory Appraisals and Reports. At any time upon the request of the
Agent or the Required Lenders, the Obligors shall, at their expense, promptly
provide the Agent with (i) current appraisals of all of the Obligors' Inventory
(on an orderly liquidation value basis and/or such other bases as the Agent may
request), which appraisals shall be prepared by an appraisal firm reasonably
satisfactory to the Agent or the Required Lenders, as the case may be (the
"Inventory Appraiser") and shall be in form and scope satisfactory to the Agent
or the Required Lenders, as the case may be.
SECTION 8.13. Power of Attorney. Each Obligor hereby appoints the Agent as
its attorney, with power (a) to endorse the name of such Obligor on any checks,
notes, acceptances, money orders, drafts or other forms of payment or security
that may come into the Agent's or any Lender's possession, and (b) to sign the
name of such Obligor on any invoice or ▇▇▇▇ of lading relating to any
Receivable, Inventory or other Collateral, on any drafts against customers
related to letters of credit, on schedules and assignments of Receivables
furnished to the Agent or any Lender by the Obligors (or any
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of them), on notices of assignment, financing statements and other public
records relating to the perfection or priority of the Security Interest, and
verifications of account and notices to or from customers.
SECTION 8.14. Assignment of Claims Act. Upon the request of the Agent after
the occurrence of and during the continuance of an Event of Default, the
Obligors (or any of them) shall execute any documents or instruments and shall
take such steps or actions reasonably required by the Agent so that all monies
due or to become due under any contract with the United States of America, the
District of Columbia or any state, county, municipality or other domestic or
foreign governmental entity, or any department, agency or instrumentality
thereof, will be assigned to the Agent, for the benefit of the Secured
Creditors, and notice given thereof in accordance with the requirements of the
Assignment of Claims Act of 1940, as amended, or any other laws, rules or
regulations relating to the assignment of any such contract and monies due to or
to become due.
ARTICLE 9
AFFIRMATIVE COVENANTS
Until the Term Loan Facility and the Revolving Loan Facility each have been
terminated and all the Secured Obligations have been paid in full, unless the
Required Lenders shall otherwise consent in the manner provided for in Section
16.11, each Obligor will, and will cause each of its Subsidiaries to:
SECTION 9.1. Preservation of Corporate Existence and Similar Matters.
Preserve and maintain its corporate existence, rights, franchises, licenses and
privileges in the jurisdiction of its incorporation and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization.
SECTION 9.2. Compliance with Applicable Law. Comply with all Applicable Law
relating to it, except to the extent being contested in good faith by
appropriate proceedings and for which reserves in respect of such Obligor's or
such Subsidiary's reasonably anticipated liability therefor have been
appropriately established.
SECTION 9.3. Maintenance of Property. In addition to, and not in derogation
of, the requirements of Section 8.7 and of the Security Documents, (a) protect
and preserve all properties material to its business, including Copyrights,
Patents, and Trademarks, and maintain in good repair, working order and
condition in all material respects, with reasonable allowance for wear and tear,
all tangible properties, and (b) from time to time make or cause to be made all
needed and appropriate repairs, renewals, replacements and additions to such
properties necessary for the conduct of its business, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times.
SECTION 9.4. Conduct of Business. At all times carry on its business in an
efficient manner and engage only in the business described in Section 6.1(f).
SECTION 9.5. Insurance. Maintain, in addition to the coverage required by
Section 8.8 and the Security Documents, insurance with responsible insurance
companies against such risks and in such amounts as is customarily maintained by
similar businesses (including business interruption
76
insurance) or as may be required by Applicable Law, and from time to time
deliver to the Agent or any Lender upon its request a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
SECTION 9.6. Payment of Taxes and Claims. Pay or discharge when due (a) all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or upon any properties belonging to it, except that real
property ad valorem taxes shall be deemed to have been so paid or discharged if
the same are paid before they become delinquent, and (b) all lawful claims of
materialmen, mechanics, carriers, warehousemen and landlords for labor,
materials, supplies and rentals which, if unpaid, might become a Lien on any of
its properties; provided that this Section 9.6 shall not require the payment or
discharge of any such tax, assessment, charge, levy or claim (i) which is being
contested in good faith by appropriate proceedings and for which reserves or
appropriate provisions in respect of the reasonably anticipated liability
therefor have been appropriately established or maintained in accordance with
GAAP, or (ii) to the extent nonpayment thereof is permitted by the Bankruptcy
Code, any order of the Court or any appellate court having jurisdiction over the
Debtors or pursuant to any plan of reorganization or other plan or arrangement
approved by or submitted to the Court or any such appellate court for approval
or confirmation.
SECTION 9.7. Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete), as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP.
SECTION 9.8. Use of Proceeds. The Borrowers may:
(a) Use the proceeds of (i) the initial Loans to pay amounts authorized to
be paid by the Court pursuant to the Final Order and the orders listed on
Schedule 5.1(m) (including fees and expenses of the Noteholders and the
Post-Petition Subordinated Lenders), (ii) the initial Loans on or after the
Effective Date to pay up to $17,000,000 (only to the extent that such sums are
not otherwise paid by the Borrowers from funds on hand on the Effective Date)
upon amounts due under the Pre-Petition Loan Agreement, subject to the terms and
conditions of the Intercreditor and Subordination Agreement, this Agreement and
the other Loan Documents, (iii) the initial Loans to pay claims of critical
trade vendors arising before Petition Date, provided that any and all such
critical trade vendors provide trade credit to the Borrowers following the
Petition Date on a dollar-for-dollar basis with respect to any and all such
payments, and provided further that such payments have been approved by a final
order of the Court, (iv) the initial Loans to pay fees and expenses required to
be paid on the Effective Date and which may become due and owing pursuant to
this Agreement and the other Loan Documents, (v) the Loans to pay up to $150,000
in fees and costs incurred in connection with an exit financing credit facility,
after approval by the Court of such payments, (vi) the Loans to fund the
issuance of Letters of Credit on the terms and conditions set forth under
Section 3.10, (vii) the Loans to make Capital Expenditures on the terms and
conditions set forth under Section 11.5, and (vii) all other Loans only for
working capital and general business purposes,
(b) Not use any part of such proceeds to purchase or, to carry or reduce or
retire or refinance any credit incurred to purchase or carry, any margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System) or, in any event, for any purpose which would involve a
violation of such Regulation U or of Regulation T or X of such
77
Board of Governors, or for any purpose prohibited by law or by the terms and
conditions of this Agreement, and
(c) Not allow, directly or indirectly, the proceeds of any Loan to be
transferred to or used by any Affiliate of any Obligor that is not a Borrower,
provided that the Borrowers may pay or otherwise transfer an amount of funds not
exceed $1,000,000 on a monthly basis to ASCI Mexico as payment for services
rendered in connection with the improvement or completion by ASCI Mexico of
Inventory of the Borrowers.
SECTION 9.9. Hazardous Waste and Substances; Environmental Requirements.
(a) In addition to, and not in derogation of, the requirements of Section
9.2 and of the Security Documents, comply with all Environmental Laws and all
Applicable Laws relating to occupational health and safety (except for instances
of noncompliance that are being contested in good faith by appropriate
proceedings if reserves in respect of such Obligor's or such Subsidiary's
reasonably anticipated liability therefor have been appropriately established),
promptly notify the Agent of its receipt of any notice of a violation of any
such Environmental Laws or other such Applicable Laws, and indemnify and hold
the Agent and the Lenders harmless from all loss, cost, damage, liability, claim
and expense incurred by or imposed upon the Agent or any Lender on account of
such Obligor's or Subsidiary's failure to perform its obligations under this
Section 9.9.
(b) Whenever such Obligor gives notice to the Agent pursuant to this
Section 9.9 with respect to a matter that reasonably could be expected to result
in liability to such Obligor or Subsidiary in excess of $250,000 in the
aggregate, such Obligor shall, at the Agent's request and the Obligors' expense
(i) cause an independent environmental engineer acceptable to the Agent to
conduct an assessment, including tests where necessary, of the site where the
noncompliance or alleged noncompliance with Environmental Laws has occurred and
prepare and deliver to the Agent a report setting forth the results of such
assessment, a proposed plan to bring such Obligor or Subsidiary into compliance
with such Environmental Laws (if such assessment indicates noncompliance) and an
estimate of the costs thereof, and (ii) provide to the Agent a supplemental
report of such engineer whenever the scope of the noncompliance, or the response
thereto or the estimated costs thereof, shall materially adversely change.
SECTION 9.10. Indenture Trustees. The Borrowers' Agent will, promptly after
learning thereof, notify the Agent in writing of any change in any Person
serving as an Indenture Trustee or the address of any Indenture Trustee for
notice purposes under any Indenture.
SECTION 9.11. Post Closing Deliveries. The Borrowers shall deliver to the
Agent (a) promptly upon request of the Agent, the Financing Statements duly
executed by the Obligors, and (b) within thirty (30) days after the Effective
Date, an amendment to this Agreement and the other Loan Documents executed by
ASCI Mexico, pursuant to which ASCI Mexico shall become a Non-Debtor Guarantor,
with all of the obligations of a Guarantor hereunder (but not a non-Guarantor
Obligor). The Obligors likewise shall use their reasonable best efforts to
obtain Collateral Access Agreements with respect to each of the locations
identified on Schedule 6.1(t) that are not owned by the Obligors.
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ARTICLE 10
INFORMATION
Until the Term Loan Facility and the Revolving Loan Facility each have been
terminated and all the Secured Obligations have been paid in full, unless the
Required Lenders shall otherwise consent in the manner set forth in Section
16.11, the Obligors will furnish to the Agent and to each Lender at the offices
then designated for such notices pursuant to Section 16.1:
SECTION 10.1. Financial Statements.
(a) Audited Year-End Statements. As soon as available, but not later than
two Business Days after the date that Safety Components is required to file its
Form 10-K with the Securities and Exchange Commission or any successor
commission (or, if earlier, 120 days after the end of each fiscal year of Safety
Components), copies of the consolidating and consolidated balance sheets of
Safety Components and its Consolidated Subsidiaries as at the end of such fiscal
year, together with copies of the consolidated and consolidating statements of
operations and shareholders' equity and consolidated statements of cash flows of
Safety Components and its Consolidated Subsidiaries for such fiscal year, in
each case setting forth in comparative form the figures for the previous fiscal
year, reported on without qualification (other than qualifications that would
customarily be given during the pendency of a chapter 11 case under the
Bankruptcy Code) by independent certified public accountants of nationally
recognized standing; provided, for fiscal year end 2000 only, the
above-referenced financial statements may be unaudited if accompanied by a
certification of independent certified public accountants of nationally
recognized standing as to the Receivables and Inventory of the Borrowers, in
form and substance acceptable to the Agent.
(b) Monthly Financial Statements. As soon as available after the end of
each month, but in any event within thirty (30) days after the end of each
fiscal month of Safety Components (sixty (60) days in the case of the fiscal
month end which is also the fiscal year end), copies of the unaudited
consolidating and consolidated balance sheet of Safety Components and its
Consolidated Subsidiaries as at the end of such fiscal month and the related
unaudited consolidating and consolidated statements of operations and
consolidated statements of cash flows for Safety Components and its Consolidated
Subsidiaries for such fiscal month and for the portion of the fiscal year
through such fiscal month, certified by the Financial Officer as presenting
fairly the financial condition and results of operations of Safety Components
and its Consolidated Subsidiaries (subject to normal year-end audit
adjustments).
(c) Quarterly Budget. As soon as available, but in any event no later than
thirty (30) days prior to the end of each fiscal quarter of Safety Components,
an operating budget for Safety Components and its US and UK Subsidiaries for the
following fiscal quarter (on a weekly basis), in the form customarily prepared
by management of Safety Components consistent with past practice and acceptable
to the Agent, together with a projection of the outstanding Loan balance for
each such period and a statement of the assumptions upon which such budget was
prepared.
All such financial statements referred to in clauses (a) and (b) shall be
complete and correct in all material respects and prepared in accordance with
GAAP (except, with respect to interim financial statements described in clause
(b), for the omission of footnotes and for the effect of normal year-end audit
adjustments) applied consistently throughout the periods reflected therein.
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SECTION 10.2. Accountants' Certificate. Together with the financial
statements referred to in Section 10.1(a) (except for the 2000 fiscal year end
financial statements), the Obligors shall deliver a certificate of such
accountants addressed to the Agent stating (a) that in making the examination
necessary for the certification of such financial statements, nothing has come
to their attention to lead them to believe that any Default or Event of Default
exists and, in particular, they have no knowledge of any Default or Event of
Default or, if such is not the case, specifying such Default or Event of Default
and its nature, and (b) whether or not the Obligors were in compliance with the
covenants contained in Sections 11.1, 11.2, 11.5, 11.10, and 11.11, as at the
date of such financial statements.
SECTION 10.3. Officer's Certificate. At the time that the Obligors furnish
the financial statements pursuant to Section 10.1(b), the Obligors shall also
furnish a certificate of the Financial Officer, substantially in the form of
Exhibit F, (a) setting forth whether or not the Obligors were in compliance with
the requirements of Sections 11.1, 11.2, 11.5, 11.10, and 11.11, as at the end
of each respective period, (b) stating that the information on the schedules to
this Agreement are complete and accurate as of the date of such certificate or,
if such is not the case, attaching to such certificate updated schedules, and
(c) stating that, based on a reasonably diligent examination, no Default or
Event of Default exists, or, if such is not the case, specifying such Default or
Event of Default and its nature, when it occurred, whether it is continuing and
the steps being taken by the Obligors with respect to such Default or Event of
Default.
SECTION 10.4. Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any, submitted
to any Obligor or its Board of Directors by its independent public accountants,
including any management report.
(b) As soon as practicable, copies of all financial statements and reports
that any Obligor shall send to its shareholders generally and of all
registration statements and all regular or periodic reports which any Obligor
shall file with the Securities and Exchange Commission or any successor
commission.
(c) From time to time and as soon as reasonably practicable following each
request, such forecasts, data, certificates, reports, statements, opinions of
counsel, documents or further information regarding the business, assets,
liabilities, financial condition, results of operations or business prospects of
any Obligor or any of its Subsidiaries as the Agent or any Lender may reasonably
request and that any Obligor has or (except in the case of legal opinions
relating to the perfection or priority of the Security Interest) without
unreasonable expense can obtain. The rights of the Agent and the Lenders under
this Section 10.4 are in addition to and not in derogation of their rights under
any other provision of this Agreement or of any other Loan Document.
(d) If requested by the Agent or any Lender, the Obligors will furnish to
the Agent and the Lenders statements in conformity with the requirements of
Federal Reserve Form U-1 referred to in Regulation U of the Board of Governors
of the Federal Reserve System.
(e) Copies of all monthly reports, projections, or other reports respecting
any Obligor's business or financial condition or prospects filed with the Court,
or provided to the U.S. Trustee or the Committee, at the time such document is
filed with the Court or provided to the U.S. Trustee or the Committee.
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SECTION 10.5. Notice of Litigation and Other Matters. Prompt notice of:
(a) (i) the commencement, to the extent any Obligor is aware of the same,
of all proceedings and investigations by or before any governmental or
non-governmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating to or affecting any Obligor, any
of its Subsidiaries or any of any Obligor's or any of its Subsidiaries'
properties, assets or businesses, which might, singly or in the aggregate,
result in the occurrence of a Default or an Event of Default, or have a
Materially Adverse Effect, and (ii) the filing or commencement of any material
contested matter or adversary proceeding in the Chapter 11 Case (but the
foregoing may be satisfied by including the Agent and its counsel in a "core
service group," to receive copies of all pleadings under any order establishing
notice and service requirements in the Chapter 11 Case), and such additional
information with respect to such matters as the Agent or the Lenders may
reasonably request,
(b) any amendment of the articles of incorporation or by-laws (or other
constitutive documents) of any Obligor,
(c) to the extent that any Obligor is aware of the same, any change in the
business, assets, liabilities, financial condition, results of operations or
business prospects of any Obligor or any of its Subsidiaries which has had or
may have, singly or in the aggregate, a Materially Adverse Effect and any change
in the executive officers of any Obligor or any of its Subsidiaries, and
(d) to the extent that any Obligor is aware of the same, any Default or
Event of Default or any event which constitutes or which with the passage of
time or giving of notice or both would constitute a post-Petition Date default
or event of default (whether or not any Borrower has received notice thereof
from any other Person but not including defaults that result from any act or
failure to act of any Borrower which is permitted by the Bankruptcy Code) by any
Obligor or any of its Subsidiaries under any material agreement entered into
after the Petition Date (other than this Agreement), to which such Obligor or
any of its Subsidiaries is a party or by which such Borrower, any of its
Subsidiaries or any of their properties may be bound.
SECTION 10.6. ERISA. As soon as possible and in any event within thirty
(30) days after any Obligor knows, or has reason to know, that: (a) any
Termination Event with respect to a Plan has occurred or will occur that could
result in any material liability to any Obligor, or (b) any Obligor or any of
its Subsidiaries is in "default" (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan required by reason of any
Obligor's or such Subsidiary's complete or partial withdrawal (as described in
Section 4203 or 4205 of ERISA) from such Multiemployer Plan, a certificate of
the Financial Officer setting forth the details of such event and the action
which is proposed to be taken with respect thereto, together with any notice or
filing which may be required by the PBGC or other agency of the United States
government with respect to such event.
SECTION 10.7. Accuracy of Information. All written information, reports,
statements and other papers and data furnished to the Agent or any Lender,
whether pursuant to this Article 10 or any other provision of this Agreement or
of any other Loan Document, shall be, at the time the same is so furnished,
complete and correct in all material respects to the extent necessary to give
the Agent and the Lenders true and accurate knowledge of the subject matter.
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SECTION 10.8. Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, the Obligors shall
deliver to the Agent and the Lenders as part of the officer's certificate
required pursuant to Section 10.3 such revisions or updates to such Schedule(s)
as may be necessary or appropriate to update or correct such Schedule(s),
provided that no such revisions or updates to any Schedule(s) shall be deemed to
have amended, modified or superseded such Schedule(s) as originally attached
hereto, or to have cured any breach of warranty or representation resulting from
the inaccuracy or incompleteness of any such Schedule(s), unless and until the
Required Lenders in their sole and absolute discretion, shall have accepted in
writing such revisions or updates to such Schedule(s).
ARTICLE 11
NEGATIVE COVENANTS
Until the Term Loan Facility and the Revolving Loan Facility each have been
terminated and all the Secured Obligations have been paid in full, unless the
Required Lenders shall otherwise consent in the manner set forth in Section
16.11, the Obligors will not directly or indirectly:
SECTION 11.1. Financial Ratios.
(a) Minimum EBITDA. Have Consolidated EBITDA of less than the amounts shown
with respect to the applicable fiscal period:
================================================================================
Fiscal Period Amount
--------------------------------------------------------------------------------
Three months ended June 24, 2000 $2,900,000
Three months ended September 30, 2000 $2,275,000
Three months ended December 30, 2000 $2,610,000
Three months ended March 31, 2001 $3,000,000
================================================================================
(b) Minimum Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio
of less than the ratio shown for the applicable fiscal period:
================================================================================
Fiscal Period Amount
--------------------------------------------------------------------------------
Three months ended June 24, 2000 1.11 to 1
Six months ended September 30, 2000 1.0 to 1
Nine months ended December 30, 2000 1.1 to 1
Twelve months ended March 31, 2001 1.1 to 1
--------------------------------------------------------------------------------
(c) Minimum Monthly EBITDA. Have Consolidated EBITDA for any fiscal month,
determined as of the end of each fiscal month, of less than fifty percent (50%)
of the amount shown for such month in the Projections.
SECTION 11.2. Indebtedness for Money Borrowed. Create, assume, or otherwise
become or remain obligated in respect of, or permit or suffer to exist or to be
created, assumed or incurred or to be outstanding any Indebtedness for Money
Borrowed, except that this Section 11.2 shall not apply
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to (a) Indebtedness for Money Borrowed represented by the Loans and the Notes,
provided there shall be no increase in the principal amount thereof, (b)
Indebtedness for Money Borrowed existing on the Petition Date and reflected on
Schedule 6.1(j) (excluding any such Indebtedness that is to be paid in full on
the Effective Date), and refinancings thereof (without any increase in the then
outstanding principal balance thereof) upon terms fully disclosed to the Agent
and the Lenders and which are no less favorable to the applicable Obligor than
those with respect to the Indebtedness being refinanced, (c) Permitted Purchase
Money Indebtedness, (d) Subordinated Indebtedness, and (e) Indebtedness under
Hedge Agreements which are reasonably acceptable to the Agent, with a Lender, in
order to manage existing or anticipated interest rate or exchange rate risks and
not for speculative purposes.
SECTION 11.3. Guaranties. Become or remain liable with respect to any
Guaranty of any obligation of any other Person, except for (a) Guarantees of the
Secured Obligations by the Guarantors, and (b) Guarantees by an Obligor of the
obligations of any of its Subsidiaries under real property lease agreements or
other agreements arising in the ordinary course of business, provided such
Subsidiary is a Borrower or a Guarantor hereunder.
SECTION 11.4. Investments. Acquire, after the Agreement Date, any Business
Unit or Investment or, after such date, maintain any Investment other than
Permitted Investments.
SECTION 11.5. Capital Expenditures. Make or incur any Capital Expenditures
in the aggregate in excess of $1,300,000 during the first five (5) months of the
Chapter 11 Case, or in excess of $2,600,000 for the fiscal year ended March 31,
2001.
SECTION 11.6. Restricted Dividend Payments and Purchases, Etc. Declare or
make any Restricted Dividend Payment, Restricted Payment or Restricted Purchase,
or allow, directly or indirectly, the proceeds of any Loan to be transferred to
or used by any Affiliate of any Obligor that is not a Borrower, provided that
the Borrowers may pay or otherwise transfer funds to ASCI Mexico as payment for
services rendered in connection with the improvement or completion by ASCI
Mexico of Inventory of the Borrowers pursuant to Section 8.1(d).
SECTION 11.7. Merger, Consolidation and Sale of Assets. Merge or
consolidate with any other Person or sell, lease, transfer or otherwise dispose
of any of its assets to any Person, other than sales of Inventory in the
ordinary course of business.
SECTION 11.8. Transactions with Affiliates. Effect any transaction with any
Affiliate on a basis less favorable to any Obligor than would be the case if
such transaction had been effected with a Person not an Affiliate.
SECTION 11.9. Liens. Create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of the Collateral or other assets of an
Obligor, other than Permitted Liens. The prohibition provided for in this
Section 11.9 specifically includes, but is not limited to, any efforts by any
Debtor, or any order entered for the benefit of the Committee or any other
party-in-interest in the Chapter 11 Case, to "prime" or create pari passu to any
claims or interests of the Lenders under this Agreement any Lien (other than for
allowed Senior Claims and for the Carve-Out Expenses up to the Carve-Out Amount)
irrespective of whether such claims or interests may be "adequately protected."
SECTION 11.10. Capitalized Lease Obligations. Incur or permit to exist any
Capitalized Lease Obligations if such Capitalized Lease Obligations when added
to existing Capitalized Lease Obligations and Permitted Purchase Money
Indebtedness of the Obligors and their Subsidiaries would exceed $20,000,000 in
the aggregate.
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SECTION 11.11. Operating Leases. Enter into any Operating Lease if the
aggregate annual rental payable under all Operating Leases of the Obligors and
their Subsidiaries would exceed $3,000,000 in the aggregate at any time.
SECTION 11.12. Limitation on Certain Restrictions on Subsidiaries. Create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary to (a) pay dividends or make any
other distributions on its capital stock or any other interest or participation
in its profits owned by an Obligor or any Subsidiary of an Obligor, or pay any
Indebtedness owed to an Obligor or a Subsidiary of an Obligor, (b) make loans or
advances to an Obligor or any of an Obligor's Subsidiaries, or (c) transfer any
of its properties or assets to an Obligor, except for such encumbrances or
restrictions existing under or by reason of (i) Applicable Laws, and (ii) this
Agreement and the other Loan Documents.
SECTION 11.13. Plans. Intentionally Omitted.
SECTION 11.14. Sales and Leasebacks. Enter into any arrangement with any
Person providing for any Obligor's or its US and UK Subsidiaries' leasing from
such Person any real or personal property which has been or is to be sold or
transferred, directly or indirectly, by such Obligor or US and UK Subsidiaries
to such Person.
SECTION 11.15. Amendments of Other Agreements. Amend in any way (a) the
subordination provisions applicable to any Subordinated Indebtedness, (b) the
Noteholders Restructuring Agreement or the Pre-Petition Lenders Restructuring
Agreement without the written consent of the Agent, (c) the interest rate (or
formula pursuant to which such interest rate is determined) or principal amount
or schedule of payments of principal and interest with respect to any
Subordinated Indebtedness, or any other Indebtedness for Money Borrowed, other
than to reduce the principal amount or interest rate or extend the schedule of
payments with respect thereto, or (d) any other provision of the Indenture if,
in the Agent's reasonable judgment, such amendment would adversely affect the
Agent or any of the other Secured Creditors.
SECTION 11.16. Fiscal Year. Change the end of its fiscal year from the last
Saturday in March.
SECTION 11.17. Repayments. Except as provided in Section 9.8(a)(iii) or
with respect to the Orders of the Court referenced in Schedule 5.1(m) and except
as specifically permitted hereunder, the Debtors shall not, without the express
prior written consent of the Required Lenders, make any payment or transfer in
an aggregate amount in excess of $100,000 during the term of this Agreement with
respect to any Lien or Indebtedness incurred or arising prior to the filing of
the Chapter 11 Case, whether by way of "adequate protection" under the
Bankruptcy Code or otherwise; provided that the foregoing shall not prohibit the
Debtors from complying with Bankruptcy Code Section 365 with respect to
unexpired leases of the Debtors or making any payments to be made to the
Pre-Petition Lenders (either in their capacity as Pre-Petition Lenders or their
capacity as Post-Petition Subordinated Lenders) under the Post-Petition Lenders
Credit Agreement, subject to the terms of the Intercreditor and Subordination
Agreement.
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ARTICLE 12
DEFAULT
SECTION 12.1. Events of Default. Notwithstanding the provisions of Section
362 of the Bankruptcy Code and without application or motion to the Court or any
notice to any Borrower, the occurrence of any one or more of the following
events, regardless of the reason therefor, shall constitute an immediate and
automatic "Event of Default" hereunder:
(a) Default in Payment. The Borrowers shall default in any payment of
principal of or interest on any Loan or any Note when and as due (whether
at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Any Obligor shall default in the payment,
as and when due, of any other Secured Obligation, and such default shall
continue for a period of five (5) Business Days after written notice
thereof has been given to the Borrowers' Agent by the Agent.
(c) Misrepresentation. Any representation or warranty made or deemed
to be made by any Obligor under this Agreement or any other Loan Document,
or any amendment hereto or thereto, shall at any time prove to have been
incorrect or misleading in any material respect when made.
(d) Default in Performance. Any Obligor shall default in the
performance or observance of any term, covenant, condition or agreement to
be performed by the Obligors (or any of them), contained in:
(i) except as specifically set forth in clause (ii) below,
Articles 7, 8, 9, 10 or 11 of this Agreement, provided that the Agent
may, in its sole discretion, waive any default under Sections 8.12 or
10.1, 10.2 and 10.3 as long as such default is not outstanding more
than ten (10) days;
(ii) Sections 8.3, 8.4(a), 8.9(b), 8.9(c) or 10.8 of this
Agreement and such default shall continue for a period of ten (10)
Business Days after written notice thereof has been given to the
Borrowers' Agent by the Agent; or
(iii) any other provision of this Agreement or any other Loan
Document (other than as specifically provided for otherwise in this
Section 12.1) and such default shall continue for a period of thirty
(30) days after written notice thereof has been given to the
Borrowers' Agent by the Agent.
(e) Voluntary Bankruptcy Proceeding. Any Non-Debtor Borrower or
Non-Debtor Guarantor shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating
to bankruptcy, insolvency, reorganization, winding up or composition for
adjustment of debts, (iii) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an involuntary case
under such bankruptcy laws or other laws, (iv) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or
the taking of possession by, a receiver, custodian, trustee, or liquidator
of itself or of a substantial part of its property, domestic or foreign,
(v) admit in writing its inability to pay its
85
debts as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any action for the purpose of authorizing any of
the foregoing.
(f) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against any Non-Debtor Borrower or Non-Debtor Guarantor
in any court of competent jurisdiction seeking (i) relief under the federal
bankruptcy laws (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or adjustment of debts, or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of such Non-Debtor Borrower or
Non-Debtor Guarantor or of all or any substantial part of the assets,
domestic or foreign, of such Non-Debtor Borrower or Non-Debtor Guarantor,
and such case or proceeding shall continue undismissed or unstayed for a
period of sixty (60) consecutive calendar days, or an order granting the
relief requested in such case or proceeding against such Non-Debtor
Borrower or Non-Debtor Guarantor (including an order for relief under such
federal bankruptcy laws) shall be entered.
(g) Failure of Agreements. Any Obligor shall challenge the validity
and binding effect of any provision of any Loan Document after delivery
thereof or shall state its intention to make such a challenge in writing,
or any Loan Document, after delivery thereof hereunder, shall for any
reason (except to the extent permitted by the terms thereof) cease to
create a valid and perfected first priority Lien (except for Permitted
Liens) on, or security interest in, any of the Collateral purported to be
covered thereby.
(h) Judgment. Other than with respect to the filing of the Chapter 11
Case or matters reflected on Schedule 6.1(k), a final, unappealable
judgment or order for the payment of money in an amount which exceeds
$100,000 shall be entered after the Petition Date against any Obligor or
any of its US and UK Subsidiaries by any court and such judgment or order
shall continue undischarged or unstayed for thirty (30) days.
(i) Attachment. Other than with respect to the filing of the Chapter
11 Case or matters reflected on Schedule 6.1(k), a warrant or writ of
attachment or execution or similar process which exceeds $100,000 in value
shall be issued after the Petition Date against any property of any Obligor
or any of its US and UK Subsidiaries and such warrant or process shall
continue undischarged or unstayed for thirty (30) days.
(j) ERISA.
(i) Any Termination Event with respect to a Plan shall occur that
could result in a material liability to any Obligor, or
(ii) any Plan shall incur an "accumulated funding deficiency" (as
defined in Section 412 of the Internal Revenue Code or Section 302 of
ERISA) in a material amount for which a waiver has not been obtained
in accordance with the applicable provisions of the Internal Revenue
Code and ERISA, or
(iii) any Obligor or any of its Subsidiaries is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments in a
material amount to a Multiemployer Plan resulting from an Obligor's or
any of its Subsidiaries complete or partial withdrawal (as described
in Section 4203 or 4205 of ERISA) from such Multiemployer Plan.
86
(k) Change in Control. Except as provided in the Noteholders
Restructuring Agreement, at any time after the Agreement Date, (i) a Person
or "group" of Persons (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder), shall acquire, beneficially or of record, 33% or more of the
outstanding voting stock (stock entitled to vote for election of directors
excluding rights subject to a contingency) of Safety Components, or (ii)
during any calendar year, individuals who at the beginning of such period
constituted the Board of Directors of any Obligor (together with any new
directors whose election by the Board of Directors of such Obligor or whose
nomination for election by the shareholders of such Obligor, as the case
may be, was approved by a vote of a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the directors of such Obligor, as
the case may be, then in office, or (iii) Safety Components ceases to own,
directly or indirectly, 100% of the capital stock of each other Obligor
(less any qualifying shares), or such ownership shall cease to vest in
Safety Components voting control over any such Obligor, or (iv) a "Change
of Control" as defined in the Indenture occurs.
(l) Change in Management. For any reason (i) the person serving as the
President or Chief Financial Officer of Safety Components is no longer
actively involved in such role, or (ii) the financial advisor and crisis
manager to the Borrowers, retained by Debtors in accordance with Section
5.1(m)(v), is no longer actively involved in such role, unless a
replacement reasonably satisfactory to the Required Lenders is appointed
within 90 days.
(m) General Insecurity. The occurrence of any act, omission,
circumstance, event or condition or series of acts, omissions,
circumstances, events or conditions which have, or could reasonably be
expected to have, either individually or in the aggregate, a Materially
Adverse Effect.
(n) Events in the Chapter 11 Case.
(i) the bringing of a motion, or the filing of any plan of
reorganization or disclosure statement attendant thereto, by any
Borrower in the Chapter 11 Case: (w) to obtain additional financing
under Section 364(c) or (d) of the Bankruptcy Code; (x) to grant any
Lien upon or affecting any Collateral other than Permitted Liens; or
(y) to use cash collateral of the Agent under Section 363(c) of the
Bankruptcy Code without the consent of the Agent and the Lenders; or
(z) any other action or actions adverse to the Agent and the Lenders
or their rights and remedies hereunder or their interest in the
Collateral that would, individually or in the aggregate, have a
Materially Adverse Effect; or
(ii) the filing of any plan of reorganization or disclosure
statement attendant thereto by any Borrower or any other Person which
does not require repayment in full of all the Secured Obligations
under this Agreement; or
(iii) the entry of an order confirming a plan of reorganization
that does not require repayment in full of all of the Secured
Obligations under this Agreement; or
(iv) the entry of an order amending, supplementing, staying,
vacating or otherwise modifying the Loan Documents or the Final Order
without the written consent of the Required Lenders; or
87
(v) the allowance of any claim or claims under Section 506(c) of
the Bankruptcy Code against or with respect to any of the Collateral
of the Secured Creditors; or
(vi) the appointment of an interim or permanent trustee in the
Chapter 11 Case or the appointment of an examiner in the Chapter 11
Case with expanded powers to operate or manage the financial affairs,
the business, or reorganization of any Borrower; or
(vii) the sale without the Agent's and the Lenders' consent, of
all or substantially all of any Borrower's assets either through a
sale under Section 363 of the Bankruptcy Code, through a confirmed
plan of reorganization in the Chapter 11 Case, or otherwise; or
(viii) the dismissal of the Chapter 11 Case, or the conversion of
the Chapter 11 Case from one under Chapter 11 to one under Chapter 7
of the Bankruptcy Code; or
(ix) the entry of an order by the Court granting relief from or
modifying the automatic stay of Section 362 of the Bankruptcy Code (x)
to allow any creditor to execute upon or enforce a Lien on any
Collateral, or (y) with respect to any Lien of or the granting of any
Lien on any Collateral to any State or local environmental or
regulatory agency or authority, which in either case would have a
Materially Adverse Effect; or
(x) the commencement by any Person of a suit or action against
the Agent, any Lender or any Issuing Bank that asserts any claim or
legal or equitable remedy which challenges the validity or seeks
subordination of the claim or Lien of the Agent or any of the Secured
Creditors pursuant to this Agreement or the Final Order; or
(xi) any payment on, or application for authority to pay, any
Indebtedness of the Borrowers that arose before the Petition Date,
other than (i) payments made with respect to (a) employees (or paid
for their benefit), (b) taxing authorities, (c) creditors under leases
or executory contracts assumed by the Borrowers pursuant to 11 U.S.C.
365, (d) customers for refunds, or (e) exchanges and rebates in the
ordinary course of business, (ii) the Borrowers' use of the Initial
Loans to pay claims of critical trade vendors arising before Petition
Date, provided that any and all such critical trade vendors have
irrevocably committed to extend trade credit to the Borrowers
following the Petition Date on a dollar-for-dollar basis with respect
to any and all such payments, or (iii) payments required to be made
pursuant to or expressly contemplated by this Agreement, without the
Agent's prior written consent.
SECTION 12.2. Remedies. If any Event of Default shall have occurred, and
during the continuance of any such Event of Default, the Agent may, and at the
direction of the Required Lenders in their sole and absolute discretion shall,
do any of the following:
(a) declare the principal of and interest on the Loans and any Note at
the time outstanding, and all other amounts owed to the Agent, the Issuing
Bank and the Lenders under this Agreement or any of the other Loan
Documents and all other Secured Obligations, to be forthwith due and
payable, whereupon the same shall immediately become due and payable
without presentment, demand, protest or other notice of any kind, all of
which are expressly
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waived, anything in this Agreement or the other Loan Documents to the
contrary notwithstanding;
(b) terminate the Revolving Loan Facility and any other right of the
Borrowers to request Borrowings and Letters of Credit hereunder;
(c) notify, or request the Obligors to notify, in writing or
otherwise, any Account Debtor with respect to any one or more of the
Receivables to make payment to the Agent, for the benefit of the Secured
Creditors, or any agent or designee of the Agent, at such address as may be
specified by the Agent and if, notwithstanding the giving of any notice,
any Account Debtor shall make payments to the Obligors, the Obligors shall
hold all such payments they receive in trust for the Agent, for the account
of the Secured Creditors, without commingling the same with other funds or
property of, or held by, the Obligors, and shall deliver the same to the
Agent or any such agent or designee of the Agent immediately upon receipt
by the Obligors in the identical form received, together with any necessary
endorsements;
(d) settle or adjust disputes and claims directly with Account Debtors
on Receivables for amounts and on terms which the Agent considers advisable
and in all such cases only the net amounts received by the Agent, for the
account of the Secured Creditors, in payment of such amounts, after
deductions of costs and attorneys' fees, shall constitute Collateral and
the Obligors shall have no further right to make any such settlements or
adjustments or to accept any returns of merchandise;
(e) enter upon any premises at which Inventory or Equipment may be
located and, without resistance or interference by the Obligors, take
physical possession of any or all thereof and maintain such possession on
such premises or move the same or any part thereof to such other place or
places as the Agent shall choose, without being liable to the Obligors on
account of any loss, damage or depreciation that may occur as a result
thereof, so long as the Agent shall act reasonably and in good faith;
(f) require the Obligors to, and the Obligors shall, without charge to
the Agent or any Lender, assemble the Inventory or Equipment and maintain
or deliver it into the possession of the Agent or any agent or
representative of the Agent at such place or places as the Agent may
designate and as are reasonably convenient to both the Agent and the
Obligors;
(g) at the expense of the Obligors, cause any of the Inventory or
Equipment to be placed in a public or field warehouse, and the Agent shall
not be liable to the Obligors on account of any loss, damage or
depreciation that may occur as a result thereof, so long as the Agent shall
act reasonably and in good faith;
(h) without notice, demand or other process, and without payment of
any rent or any other charge, enter any of the Obligors' premises and,
without breach of the peace, until the Agent, on behalf of the Secured
Creditors, completes the enforcement of its rights in the Collateral, take
possession of such premises or place custodians in exclusive control
thereof, remain on such premises and use the same and any of the Obligors'
Equipment, for the purpose of (A) completing any work in process, preparing
any Inventory for disposition, and disposing thereof, and (B) collecting
any Receivable, and the Agent for the benefit of the Secured Creditors is
hereby granted a license or sublicense and all other rights as may be
necessary, appropriate or desirable to use the Proprietary Rights in
connection with the foregoing, and the rights of the Obligors under all
licenses, sublicenses and franchise agreements shall inure to the Agent for
the
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benefit of the Secured Creditors; provided, however, that any use of any
federally registered trademarks as to any goods shall be subject to the
control as to the quality of such goods of the owner of such trademarks and
the goodwill of the business symbolized thereby;
(i) exercise any and all of its rights under any and all of the
Security Documents;
(j) apply all funds in the Cash Collateral Account and any other
Collateral consisting of cash to the payment of the Secured Obligations in
any order in which the Agent, on behalf of the Secured Creditors, may elect
or use such cash in connection with the exercise of any of its other rights
hereunder or under any of the Security Documents;
(k) establish or cause to be established one or more Lockboxes or
other arrangement for the deposit of proceeds of Receivables, and, in such
case, the Obligors shall cause to be forwarded to the Agent at the Agent's
Office, on a daily basis, copies of all checks and other items of payment
and deposit slips related thereto deposited in such Lockboxes, together
with collection reports in form and substance satisfactory to the Agent;
and
(l) exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code and the Final Order and under any other
Applicable Law, including the right, without notice except as specified
below and with or without taking the possession thereof, to sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any location chosen by the Agent, 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. The Obligors agree that, to the
extent notice of sale shall be required by law, at least ten (10) days
notice to the Borrowers' Agent 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, but notice given in any other reasonable manner or
at any other reasonable time 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.
; provided, however, notwithstanding anything to the contrary contained herein,
the Agent shall be permitted to exercise any remedy in the nature of a
liquidation of, or foreclosure on, any of the Collateral only to the extent
permitted by or the Final Order.
SECTION 12.3. Application of Proceeds. All proceeds from each sale of, or
other realization upon, all or any part of the Collateral following an Event of
Default shall be applied or paid over as follows: (a) first: to the payment of
all costs and expenses incurred in connection with such sale or other
realization, including reasonable attorneys' fees, (b) second: to the payment of
the Secured Obligations (with the Obligors remaining liable for any deficiency)
in accordance with Section 4.8(d), and (c) third: the balance (if any) of such
proceeds shall be paid to the Obligors, subject to any duty imposed by law, or
otherwise to whomsoever shall be entitled thereto. The Obligors shall remain
jointly and severally liable and will pay, on demand, any deficiency remaining
in respect of the Secured Obligations, together with interest thereon at a rate
per annum equal to the highest rate then payable hereunder on such Secured
Obligations, which interest shall constitute part of the Secured Obligations.
SECTION 12.4. Power of Attorney. In addition to the authorizations granted
to the Agent under Section 8.13 or under any other provision of this Agreement
or of any other Loan Document, during the continuance of an Event of Default,
each Obligor hereby irrevocably designates,
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makes, constitutes and appoints the Agent (and all Persons designated by the
Agent from time to time) as such Obligor's true and lawful attorney, and agent
in fact, and the Agent, or any agent of the Agent, may, without notice to any
Obligor, and at such time or times as the Agent or any such agent in its sole
discretion may determine, in the name of such Obligor, another Obligor, the
Agent or the Lenders, (a) demand payment of the Receivables, (b) enforce payment
of the Receivables by legal proceedings or otherwise, (c) exercise all of the
Obligors' rights and remedies with respect to the collection of Receivables, (d)
settle, adjust, compromise, extend or renew any or all of the Receivables, (e)
settle adjust or compromise any legal proceedings brought to collect the
Receivables, (f) discharge and release the Receivables or any of them, (g)
prepare, file and sign the name of any Obligor on any proof of claim in
bankruptcy or any similar document against any Account Debtor, (h) prepare, file
and sign the name of any Obligor on any notice of Lien, assignment or
satisfaction of Lien, or similar document in connection with any of the
Collateral, (i) endorse the name of any Obligor upon any chattel paper,
document, instrument, notice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document
or agreement relating to the Receivables, the Inventory or any other Collateral,
(j) use the stationery of any Obligor and sign the name of any Obligor to
verifications of the Receivables and on any notice to the Account Debtors, (k)
open the Obligors' mail, (l) notify the post office authorities to change the
address for delivery of the Obligors' mail to an address designated by the
Agent, and (m) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Receivables, Inventory or other Collateral to which any Obligor has access.
SECTION 12.5. Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Agent and the Lenders
under this Agreement, the Notes and each of the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies which it or they would
otherwise have. In exercising such rights and remedies the Agent and the Lenders
may be selective and no failure or delay by the Agent or any Lender in
exercising any right shall operate as a waiver of it, nor shall any single or
partial exercise of any power or right preclude its other or further exercise or
the exercise of any other power or right.
(b) Waiver of Marshaling. Each Obligor hereby waives any right to require
any marshaling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this Article 12 or
elsewhere in this Agreement or in any of the other Loan Documents shall be
construed as requiring or obligating the Agent, any Lender or any agent or
designee of the Agent or any Lender to make any demand, or to make any inquiry
as to the nature or sufficiency of any payment received by it, or to present or
file any claim or notice or take any action, with respect to any Receivable or
any other Collateral or the monies due or to become due thereunder or in
connection therewith, or to take any steps necessary to preserve any rights
against prior parties, and the Agent, the Lenders and their agents or designees
shall have no liability to the Obligors (or any of them) for actions taken
pursuant to this Article 12, any other provision of this Agreement or any of the
other Loan Documents so long as the Agent or such Lender shall act reasonably
and in good faith.
(d) Appointment of Receiver. In any action under this Article 12, the Agent
shall be entitled during the continuance of an Event of Default to seek the
appointment of a receiver, without notice of any kind whatsoever, to take
possession of all or any portion of the Collateral and to exercise such power as
the Court shall confer upon such receiver.
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ARTICLE 13
ASSIGNMENTS
SECTION 13.1. Successors and Assigns; Participations.
(a) This Agreement, the other Loan Documents, and all security interests or
Liens created hereby or pursuant to any other Loan Documents shall be binding
upon Borrower, the estate of Borrower, and any trustee or successor in interest
of Borrower in the Chapter 11 Case or any subsequent case commenced under
Chapter 7 of the Bankruptcy Code, and shall not be subject to Section 365 of the
Bankruptcy Code. This Agreement and the other Loan Documents shall be binding
upon, and inure to the benefit of, the Agent, each Lender and Issuing Bank, and
their respective successors, assigns, transferees and endorsees. The security
interests and Liens created in this Agreement and the other Loan Documents shall
remain valid and perfected in the event of the substantive consolidation or
conversion of the Chapter 11 Case or any other bankruptcy case of Borrower to a
case under Chapter 7 of the Bankruptcy Code or in the event of dismissal of the
Chapter 11 Case or the release of any Collateral from the property of Borrower
or jurisdiction of the Court for any reason, without the necessity that the
Agent file financing statements or otherwise perfect the security interests or
Liens of the Agent, Lenders and Issuing Banks under applicable law. No Obligor
may assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
(b) Each Lender may, with the Agent's consent (and to the extent that such
assignment requires a change of any otherwise Applicable Interest Rate, with the
consent of the Borrower's Agent), assign to one or more Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including all or a portion of the Loans at the time owing to it and the Notes
held by it); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Lender's rights and
obligations under this Agreement, (ii) the amount of the Commitment of the
assigning Lender that is 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 in no event be less than the Minimum Commitment, (iii) in
the case of a partial assignment, the amount of the Commitment that is retained
by the assigning Lender (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Agent) shall in no event be
less than the Minimum Commitment, (iv) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register (as hereinafter defined) an Assignment and Acceptance, together with
any Note or Notes subject to such assignment, (v) such assignment shall not,
without the consent of the Borrowers' Agent, require any Obligor to file a
registration statement with the Securities and Exchange Commission or apply to
or qualify the Loans or the Notes under the blue sky laws of any state, (vi) the
representation contained in Section 13.2 hereof shall be true with respect to
any such proposed assignee, and (vii) the parties to such assignment shall
deliver to the Agent a processing fee of $5,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof, (x) 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 Lender hereunder, and (y) the Lender assignor
thereunder shall, to the extent provided in such assignment, be released from
its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties
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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 Lender 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 the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; (ii)
such Lender assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Obligors (or any
of them) or the performance or observance by the Obligors (or any of them) of
any of their obligations under this Agreement or any other Loan Document; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 6.1(n) 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
Lender assignor or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of
the Lenders and the Commitment Percentage of, and principal amount of the Loans
owing to, each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Obligors, the Agent and the Lenders may treat each person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Obligors or any Lender 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 Lender and an Eligible Assignee together with any Note or Notes
subject to such assignment, the fee described in clause (vii) of Section
13.1(b), and the written consent of the Agent to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in the form
of Exhibit A, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, (iii) give prompt notice thereof
to the Lenders and the Borrowers' Agent, and (iv) promptly deliver a copy of
such Assignment and Acceptance to the Borrowers' Agent. Within five Business
Days after receipt of notice, the Borrowers shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note or Notes to the
order of such Eligible Assignee in amounts equal to the Commitment Percentage
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and
a new Note or Notes to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of the assigned
Notes delivered to the assignor Lender. Each surrendered Note or Notes shall be
cancelled and returned to the Borrowers' Agent.
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(f) Each Lender may, without the consent of the Obligors, sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
commitments hereunder and the Loans owing to it and the Notes held by it);
provided, however, that (i) each such participation shall be in an amount not
less than the Minimum Commitment, (ii) such Lender's obligations under this
Agreement (including its commitments hereunder) shall remain unchanged, (iii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) such Lender shall remain the holder of the
Notes held by it for all purposes of this Agreement, (v) the Obligors, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement; provided, that such Lender may agree with any participant that such
Lender will not, without such participant's consent, agree to or approve any
waivers or amendments which would reduce the principal of or the interest rate
on any Loans, extend the term or increase the amount of the commitments of such
participant, reduce the amount of any fees to which such participant is
entitled, extend any scheduled payment date for principal or release Collateral
securing the Loans (other than Collateral disposed of pursuant to Section 8.7
hereof or otherwise in accordance with the terms of this Agreement or the
Security Documents), and (vi) any such disposition shall not, without the
consent of the Borrowers' Agent, require any Obligor to file a registration
statement with the Securities and Exchange Commission to apply to qualify the
Loans or the Notes under the blue sky law of any state. Any Lender selling a
participation to any bank or other entity that is not an Affiliate of such
Lender shall give prompt notice thereof to the Borrowers' Agent.
(g) Any Lender may, in connection with any assignment, proposed assignment,
participation or proposed participation pursuant to this Section 13.1, disclose
to the assignee, participant, proposed assignee or proposed participant, any
information relating to the Obligors and their Subsidiaries furnished to such
Lender by or on behalf of the Obligors; provided that, prior to any such
disclosure, each such assignee, proposed assignee, participant or proposed
participant shall agree with the Obligors or such Lender (which in the case of
an agreement with only such Lender, the Obligors shall be recognized as a third
party beneficiary thereof) to preserve the confidentiality of any confidential
information relating to the Obligors and their Subsidiaries received from such
Lender.
(h) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time assign and pledge all or any portion of its Loans and its
Note to any Federal Reserve Bank as collateral security pursuant to Regulation A
and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Lender from its obligations hereunder.
SECTION 13.2. Representation of Lenders. Each Lender hereby represents that
it will make each Loan hereunder as a commercial loan for its own account in the
ordinary course of its business; provided, however, that subject to Section 13.1
hereof, the disposition of the Notes or other evidence of the Secured
Obligations held by any Lender shall at all times be within its exclusive
control.
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ARTICLE 14
AGENT
SECTION 14.1. Appointment of Agent. Each of the Lenders hereby irrevocably
designates and appoints Bank of America as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Agent, as the agent for such Lender to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Agent by the terms of this Agreement and such other Loan Documents,
including to make determinations as to the eligibility of Inventory and
Receivables and to adjust the advance ratios contained in the definition of
"Borrowing Base" (so long as such advance ratios, as adjusted, do not exceed
those set forth in the definition of "Borrowing Base"), together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement or such other Loan Documents, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Agent.
SECTION 14.2. Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
SECTION 14.3. Exculpatory Provisions. Neither the Agent nor any of its
trustees, officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall (a) be liable to any Lender (or any Lender's participants) for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct), (b) be responsible in
any manner to any Lender (or any Lender's participants) for any recitals,
statements, representations or warranties made by the Obligors or any of their
Subsidiaries or any officer thereof contained in this Agreement or the other
Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or the other Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of the Obligors or any of their
Subsidiaries to perform their obligations hereunder or thereunder, or (c) have
any obligation whatsoever to any of the Lenders to assure that the Collateral
exists or is owned by any Obligor or is cared for, protected or insured or has
been encumbered, or that the Agent's Liens have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Agent pursuant to any
of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion, given the Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
the Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing; provided that the foregoing clause (c) shall not relieve
the Agent of liability with respect to its gross negligence or willful
misconduct. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Obligors or any of their Subsidiaries.
SECTION 14.4. Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation
95
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including counsel to the Borrowers or any of its Subsidiaries), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless such
Note shall have been transferred in accordance with Section 13.1. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement and the other Loan Documents unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the Notes in accordance
with a request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
SECTION 14.5. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrowers'
Agent referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". In the event that the
Agent receives such a notice, the Agent shall promptly give notice thereof to
the Lenders. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) continue making Revolving Loans to
the Borrowers on behalf of the Lenders in reliance on the provisions of Section
4.7 and take such other action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 14.6. Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Obligors and their
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Obligors and their
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Obligors and their Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder or by
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Obligors and their Subsidiaries which may come into the possession of the Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
SECTION 14.7. Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Obligors and without
limiting the obligation of the Obligors to do so), ratably according to their
respective Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or
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disbursements of any kind whatsoever which may at any time (including at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or the
other Loan Documents, or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's gross
negligence or willful misconduct or resulting solely from transactions or
occurrences that occur at a time after such Lender has assigned all of its
interests, rights and obligations under this Agreement pursuant to Section 13.1
or, in the case of a Lender to which an assignment is made hereunder pursuant to
Section 13.1, at a time before such assignment. The agreements in this
subsection shall survive the payment of the Notes, the Secured Obligations and
all other amounts payable hereunder and the termination of this Agreement.
SECTION 14.8. Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Obligors and their Subsidiaries as if the Agent were
not the Agent hereunder. With respect to its Commitment, the Loans made or
renewed by it and any Note issued to it and any Letter of Credit issued by it,
the Agent shall have and may exercise the same rights and powers under this
Agreement and the other Loan Documents and is subject to the same obligations
and liabilities as and to the extent set forth herein and in the other Loan
Documents for any other Lender. The terms "Lenders" or "Required Lenders" or any
other term shall, unless the context clearly otherwise indicates, include the
Agent in its individual capacity as a Lender or one of the Required Lenders.
SECTION 14.9. Successor Agent. The Agent may resign as Agent upon five (5)
days written notice to the Lenders and the Borrowers' Agent; provided, however,
that such resignation shall not take effect until a successor agent has been
appointed. If the Agent shall resign as Agent under this Agreement, then the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders which successor agent shall be approved by the Borrowers' Agent (which
approval shall not be unreasonably withheld), whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent effective upon its appointment, and the
former Agent's rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Notes. If the Required Lenders
have failed to appoint a successor agent within thirty (30) days after the
resignation notice given by the Agent as provided above, then the Agent shall be
entitled to appoint a successor agent from among the Lenders. After any Agent's
resignation hereunder as Agent, the provisions of Article 14 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 14.10. Notices from Agent to Lenders. The Agent shall promptly,
upon the written request from any Lender, forward to each Lender copies of any
written notices, reports or other information supplied to it by the Borrowers or
other Obligors (but which the Borrowers or other Obligors are not required to
supply directly to the Lenders).
SECTION 14.11. Field Examination Reports; Disclaimer by Lenders. Each
Lender: (a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field examination report
(each a "Report" and collectively, "Reports") prepared by the Agent or its
agents; (b) expressly agrees and acknowledges that neither the Agent nor Bank of
America makes any representation or warranty as to the accuracy of any Report or
shall be liable for any information contained in any Report; (c) expressly
agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that the Agent or other party performing any audit or examination
will inspect only specific information regarding the Obligors and will rely
significantly upon the
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Obligors' books and records, as well as on representations of the Obligors'
personnel; (d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute (except to its participants) or use any
Report in any other manner; and (e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees (i) to hold the
Agent and Bank of America harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any Loans or other credit accommodations that the indemnifying
Lender has made or may make to the Obligors, or the indemnifying Lender's
participation in Letters of Credit, and (ii) to pay and protect, and indemnify,
defend and hold the Agent and Bank of America harmless from and against, the
claims, actions, proceedings, damages, costs, expenses and other amounts
(including, without limitation reasonable attorneys' fees) incurred by the Agent
and Bank of America as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.
ARTICLE 15
GUARANTEE
SECTION 15.1. Guarantee. The Guarantors hereby jointly and severally
guarantee to the Agent and the other Secured Creditors the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) of the
Loans and all of the other Secured Obligations, including any interest, fees and
expenses accrued or incurred after the filing by or against any Obligor of any
petition seeking relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, regardless of whether such interest, fees and
expenses are allowable in any such proceeding (collectively, the "Guaranteed
Obligations"), in each case strictly in accordance with the terms of this
Agreement and the other Loan Documents. The Guarantors hereby further jointly
and severally agree that if any Borrower shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Guarantors will promptly pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
SECTION 15.2. Obligations Unconditional. The obligations of the Guarantors
hereunder are absolute and unconditional, joint and several, irrespective of the
value, genuineness, validity, regularity or enforceability of the obligations of
the Borrowers under this Agreement or any other Loan Document or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
Applicable Law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 15.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional, and joint and several,
under all circumstances. Without limiting the generality of the foregoing, it is
agreed that each Guarantor's obligations hereunder shall be absolute and
unconditional irrespective of: (a) any lack of validity or enforceability of any
Loan Document or any other agreement or instrument relating thereto; (b) any
change in the time, manner or place of payments of, or in any other term of, all
or any part of the Guaranteed Obligations, or any other amendment or waiver
thereof or any consent to departure therefrom, including any increase in the
Guaranteed Obligations resulting from the extension of additional credit to any
Borrower or otherwise; (c) any taking, exchange, release or non-perfection of
any collateral, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Guaranteed Obligations; (d) any change,
restructuring or termination of the corporate structure or existence of any
Obligor; or (e) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Guarantor.
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SECTION 15.3. Waiver of Suretyship Defenses. Each Guarantor agrees that the
joint and several liability of the Guarantors provided for in Section 15.1 shall
not be impaired or affected by any modification, supplement, extension or
amendment or any contract or agreement to which the other Obligors may hereafter
agree (other than an agreement signed by the Agent and the Lenders specifically
releasing such liability), nor by any delay, extension of time, renewal,
compromise or other indulgence granted by the Agent or any Lender with respect
to any of the Guaranteed Obligations, nor by any other agreements or
arrangements whatever with the other Obligors or with anyone else, each
Guarantor hereby waiving all notice of such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each Guarantor is direct and unconditional as to
all of the Guaranteed Obligations, and may be enforced without requiring the
Agent or any Lender first to resort to any other right, remedy or security. Each
Guarantor hereby expressly waives promptness, diligence, notice of acceptance
and any other notice (except to the extent expressly provided for herein or in
another Loan Document) with respect to any of the Guaranteed Obligations, this
Agreement or any other Loan Document and any requirement that the Agent or any
Lender protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against any Borrower or any
other Person or any collateral, including any rights any Guarantor may otherwise
have under O.C.G.A. ss. 10-7-24 or any successor statute or any analogous
statute in any jurisdiction under the laws of which any Guarantor is
incorporated or in which any Guarantor conducts business.
SECTION 15.4. Reinstatement. The obligations of the Guarantors hereunder
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Obligor in respect of any of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise, and the Guarantors jointly and severally agree
that they will indemnify each of the Agent and the Lenders on demand for all
reasonable costs and expenses (including fees of counsel) incurred by the Agent
and the Lenders in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
SECTION 15.5. Remedies. The Guarantors jointly and severally agree that, as
between the Guarantors and the Agent and the Lenders, the Guaranteed Obligations
may be declared to be forthwith due and payable as provided herein (and shall be
deemed to have become automatically due and payable in the circumstances
provided herein) for purposes hereof, notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such Guaranteed Obligations
from becoming automatically due and payable) as against any Borrower and that,
in the event of such declaration (whether or not the Guaranteed Obligations are
then due and payable by any Borrower), the Guaranteed Obligations shall
forthwith become due and payable by the Guarantors for purposes hereof.
SECTION 15.6. Continuing Guaranty. The guaranty set forth herein is a
continuing guaranty, and shall apply to all Guaranteed Obligations, whenever and
howsoever arising.
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ARTICLE 16
MISCELLANEOUS
SECTION 16.1. Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the other Loan Documents, all notices and the
determinations, elections, requests or similar communications hereunder and
thereunder shall be in writing or by telephone, subsequently confirmed in
writing. Notices, determinations, elections, requests or similar communications
in writing shall be delivered personally or sent by certified or registered
mail, postage pre-paid, or by overnight courier, telex or facsimile transmission
and shall be deemed received in the case of personal delivery, when delivered,
in the case of mailing, when receipted for, in the case of overnight delivery,
on the next Business Day after delivery to the courier, and in the case of telex
and facsimile transmission, upon transmittal, provided that in the case of
notices to the Agent, notice shall be deemed to have been given only when such
notice is actually received by the Agent. A telephonic notice to the Agent, as
understood by the Agent, will be deemed to be the controlling and proper notice
in the event of a discrepancy with or failure to receive a confirming written
notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address of which all the other parties are
notified in writing:
If to a Borrower or Safety Components International, Inc.
any other Obligor: as Borrowers' Agent
Corporate Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CFO
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a courtesy copy to: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Milbank, Tweed, ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Fax:
▇▇▇-▇▇▇-▇▇▇▇
If to the Agent: Bank of America, N.A.
13th Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
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with a courtesy copy to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Suite 2400
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to a Lender: At the address of such Lender set forth on the
signature page hereof.
(a) Agent's Office. The Agent hereby designates its office located at 30th
Floor, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or any
subsequent office which shall have been specified for such purpose by written
notice to the Borrowers' Agent, as the office to which payments due are to be
made and at which Loans will be disbursed.
SECTION 16.2. Expenses. The Obligors jointly and severally agree to pay or
reimburse on demand all costs and expenses incurred by the Agent, including the
reasonable fees and disbursements of counsel or any third-party professional, in
connection with (a) the negotiation, preparation, execution, delivery,
administration, syndication, enforcement and termination of this Agreement and
each of the other Loan Documents, whenever the same shall be executed and
delivered, including (i) the actual costs and expenses incurred in connection
with the administration, syndication and interpretation of this Agreement and
the other Loan Documents; (ii) the actual costs and expenses of appraisals of
the Collateral; (iii) the actual costs and expenses of lien searches; and (iv)
all taxes, fees and other charges for recording the Mortgages and filing the
Financing Statements and continuations, and the costs and expenses of taking
other actions to perfect, protect, and continue the Security Interests; (b) the
actual costs and expenses incurred in connection with preparation, execution and
delivery of any waiver, amendment, supplement or consent by the Agent and the
Lenders relating to this Agreement or any of the other Loan Documents; (c) sums
paid or incurred to pay any amount or take any action required of the Obligors
under the Loan Documents that the Obligors fails to pay or take; (d) costs of
inspections and verifications of the Collateral, including standard per diem
fees charged by the Agent and all reasonable out-of-pocket expenses for travel,
lodging and meals in connection with inspections of the Collateral and the
Obligors' operations and books and records by the Agent's employees or agents up
to four times per year and whenever an Event of Default exists; (e) costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining each Disbursement Account, Agency
Account and Lockbox; (f) costs and expenses of preserving and protecting the
Collateral; (g) the actual costs and expenses incurred in connection with the
Chapter 11 Case; and (h) consulting, after the occurrence of a Default, with one
or more Persons, including appraisers, accountants and lawyers, concerning the
value of any Collateral for the Secured Obligations or related to the nature,
scope or value of any right or remedy of the Agent or any Lender hereunder or
under any of the other Loan Documents, including any review of factual matters
in connection therewith, which expenses shall include the reasonable fees and
disbursements of such Persons.
The Obligors further jointly and severally agree to pay or reimburse on
demand all costs and expenses incurred by the Agent, the Issuing Bank and the
Lenders, including the reasonable fees and disbursements of counsel, experts and
other consultants to the Agent, the Issuing Bank and any Lender, in connection
with (a) any Default or Event of Default or any modification, amendment, waiver,
restructuring or forbearance with respect to any of the Loan Documents in
connection with such Default or Event of Default, and (b) after the occurrence
of an Event of Default, any actions taken to obtain payment of the Secured
Obligations, enforce the Security Interests, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
prosecute or defend any claim in any way
101
arising out of, related to or connected with, this Agreement or any of the other
Loan Documents (except to the extent such reimbursement may be prohibited by the
terms of the Final Order). Additionally, the Obligors jointly and severally
agree to pay or reimburse on demand all costs and expenses incurred by the
Lenders, including the reasonable fees and disbursements of counsel, in
connection with the review of this Agreement and the other Loan Documents.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Obligors. Each Borrower
hereby authorizes the Agent and the Lenders to debit such Borrower's Loan
Accounts (by increasing the principal amount of the Revolving Loans) in the
amount of any such costs and expenses owed by the Borrowers and other Obligors
when due.
SECTION 16.3. Stamp and Other Taxes. The Obligors jointly and severally
agree to pay any and all stamp, registration, recordation and similar taxes,
fees or charges, and shall jointly and severally indemnify the Agent and the
Lenders against any and all liabilities with respect to or resulting from any
delay in the payment or omission to pay any such taxes, fees or charges, which
may be payable or determined to be payable in connection with the execution,
delivery, performance or enforcement of this Agreement and any of the other Loan
Documents or the perfection of any rights or security interest thereunder,
including the Security Interest.
SECTION 16.4. Setoff. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, during the
continuance of any Event of Default, each Lender, any participant with such
Lender in the Loans and each Affiliate of each Lender are hereby authorized by
each Obligor at any time or from time to time, without notice to any Obligor or
to any other Person, any such notice being hereby expressly waived, to setoff
and to appropriate and to apply any and all deposits (general or special,
including indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender or any participant to or for the credit or the
account of any Obligor against and on account of the Secured Obligations
irrespective or whether or not (a) the Agent or such Lender shall have made any
demand under this Agreement or any of the other Loan Documents, or (b) the Agent
or such Lender shall have declared any or all of the Secured Obligations to be
due and payable as permitted by Section 12.2 and although such Secured
Obligations shall be contingent or unmatured. Each Lender acknowledges that the
provisions of this Section shall, as between such Lender and the Agent and other
Lenders, be subject to the provisions of Section 16.24.
SECTION 16.5. Litigation. THE OBLIGORS, THE AGENT, THE ISSUING BANK AND THE
LENDERS HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN
ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION
MAY BE COMMENCED BY OR AGAINST THE OBLIGORS (OR ANY OF THEM), THE AGENT, THE
ISSUING BANK OR THE LENDERS ARISING OUT OF THIS AGREEMENT, THE COLLATERAL OR ANY
ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN
THE OBLIGORS (OR ANY OF THEM) AND THE AGENT, THE ISSUING BANK OR ANY LENDER OF
ANY KIND OR NATURE. THE OBLIGORS, THE AGENT, THE ISSUING BANK AND THE LENDERS
HEREBY AGREE THAT THE FEDERAL COURT OF DISTRICT OF DELAWARE OR, AT THE OPTION OF
THE AGENT, THE ISSUING BANK OR ANY LENDER, ANY COURT IN WHICH THE AGENT, THE
ISSUING BANK OR SUCH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND
WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY, SHALL HAVE
NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
THE OBLIGORS (OR ANY OF THEM) AND THE AGENT, THE ISSUING BANK OR SUCH LENDER,
PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT
102
OR THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. EACH OBLIGOR
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREEING
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWERS' AGENT AT THE
ADDRESS OF THE OBLIGORS SET FORTH IN SECTION 16.1. SHOULD ANY OBLIGOR FAIL TO
APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN
THIRTY (30) DAYS AFTER THE MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN
ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN
SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE NONEXCLUSIVE CHOICE OF FORUM SET
FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY
JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.
SECTION 16.6. Waiver of Rights. EACH OBLIGOR HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH SUCH OBLIGOR HAS UNDER
CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR
PROVISION OF APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR TO THE
ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE AGENT OR ANY LENDER, OR THE
SUCCESSORS AND ASSIGNS OF THE AGENT OR SUCH LENDER TO POSSESSION OF THE
COLLATERAL UPON AN EVENT OF DEFAULT. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT WHICH THE AGENT OR THE LENDERS
MAY HAVE, EACH OBLIGOR CONSENTS THAT IF THE AGENT OR ANY LENDER FILES A PETITION
FOR AN IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH SECTIONS ▇▇-▇▇-▇▇▇ AND
▇▇-▇▇-▇▇▇ OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR PROVISION OF
APPLICABLE LAW, AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH PETITION AND
ATTACHED THERETO, THE COURT BEFORE WHICH SUCH PETITION IS FILED MAY DISPENSE
WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN
IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH CHAPTER 14 OF TITLE 44 OF THE
OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY SIMILAR PROVISION OF
APPLICABLE LAW, WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE
REQUIRED BY SECTION ▇▇-▇▇-▇▇▇ OF THE OFFICIAL CODE OF GEORGIA OR BY ANY SIMILAR
PROVISION UNDER APPLICABLE LAW. EACH OBLIGOR HEREBY ACKNOWLEDGES THAT IT HAS
READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND THE EFFECT HEREOF.
SECTION 16.7. Consent to Advertising and Publicity. With the prior written
consent of the Borrowers' Agent, which consent shall not be unreasonably
withheld, the Agent, on behalf of the Lenders, may issue and disseminate to the
public information describing the credit accommodation entered into pursuant to
this Agreement, including the name and address of each Obligor, the amount,
interest rate, maturity, collateral and a general description of the Obligors'
business.
SECTION 16.8. Reversal of Payments. The Agent and each Lender shall have
the continuing and exclusive right to apply, reverse and re-apply any and all
payments to any portion of the Secured Obligations in a manner consistent with
the terms of this Agreement. To the extent any Obligor makes a payment or
payments to the Agent, for the account of the Lenders, or any Lender receives
any
103
payment or proceeds of the Collateral for the Obligors' benefit, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Secured Obligations or part thereof intended
to be satisfied shall be revived and continued in full force and effect, as if
such payment or proceeds had not been received by the Agent or such Lender.
SECTION 16.9. Injunctive Relief. Each Obligor recognizes that, in the event
such Obligor fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to the Agent and the Lenders; therefore, each Obligor agrees that if any
Event of Default shall have occurred and be continuing, the Agent and the
Lenders, if the Agent or any Lender so requests, shall be entitled to temporary
and permanent injunctive relief without the necessity of proving actual damages.
SECTION 16.10. Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including all computations utilized by the Obligors to determine
whether they are in compliance with any covenant contained herein, shall, unless
this Agreement otherwise provides or unless Required Lenders shall otherwise
consent in writing, be performed in accordance with GAAP.
SECTION 16.11. Amendments.
(a) Except as set forth in subsection (b) below, any term, covenant,
agreement or condition of this Agreement or any of the other Loan Documents may
be amended or waived, and any departure therefrom may be consented to by the
Required Lenders, if, but only if, such amendment, waiver or consent is in
writing signed by the Required Lenders and, in the case of an amendment (other
than an amendment described in Section 16.11(d)), by the Borrowers' Agent or the
Obligors, and in any such event, the failure to observe, perform or discharge
any such term, covenant, agreement or condition (whether such amendment is
executed or such waiver or consent is given before or after such failure) shall
not be construed as a breach of such term, covenant, agreement or condition or
as a Default or an Event of Default; provided that (i) without the written
consent of the Issuing Bank, no amendment or waiver shall be made to any
provision of Article 3 hereof or any of the Issuing Bank's rights or obligations
with respect to Letters of Credit, (ii) without the written consent of Bank of
America, no amendment or waiver shall be made to any of Bank of America's rights
or obligations with respect to Non-Ratable Loans, and (iii) without the written
consent of the Agent, no amendment or waiver shall be made to any provision of
Article 14 as such provisions apply to the Agent or to any other provision of
any Loan Document as such provisions relate to the rights and obligations of the
Agent. Unless otherwise specified in such waiver or consent, a waiver or consent
given hereunder shall be effective only in the specific instance and for the
specific purpose for which given. In the event that any such waiver or amendment
is requested by the Obligors, the Agent and the Lenders may require and charge a
fee in connection therewith and consideration thereof in such amount as shall be
determined by the Agent and the Required Lenders in their discretion.
(b) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Lenders, (i) no amendment, consent or waiver
shall affect the amount or extend the time of the obligation of the Lenders to
make Loans, extend the originally scheduled time or times of payment of the
principal of any Loan, alter the time or times of payment of interest on any
Loan or the amount of the principal thereof or the rate of interest thereon or
the amount of any commitment fee payable hereunder, permit any subordination of
the principal or
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interest on any Loan, permit the subordination of the Security Interests in any
material Collateral (meaning Collateral having a then fair market value in
excess of $1,000,000), or amend the provisions of Article 12 or of this Section
16.11(b), (ii) no material Collateral (meaning Collateral having a then fair
market value in excess of $1,000,000) shall be released by the Agent other than
releases of Collateral in connection with the sale of any such Collateral in the
ordinary course of an Obligor's business or as otherwise specifically permitted
in this Agreement, (iii) no amendment shall be made to the definitions of
"Commitment", "Commitment Percentage", "Proportionate", "Ratable", "Required
Lenders" or "Secured Obligations", (iv) neither the Agent nor any Lender shall
consent to any amendment to or waiver of the amortization, deferral or
subordination provisions of any Subordinated Indebtedness or any other
instrument or agreement evidencing or relating to obligations of the Obligors
that are expressly subordinate to any of the Secured Obligations if such
amendment or waiver would be adverse to the Lenders in their capacities as
Lenders hereunder; and (v) no amendment shall be made that increases the advance
rates set forth in the definition of "Borrowing Base"; provided, however, that
anything herein to the contrary notwithstanding, the Required Lenders shall have
the right to waive any Default or Event of Default (unless such Default or Event
of Default arises out of a provision of this Agreement which can only be amended
with the unanimous consent of the Lenders) and the consequences hereunder of
such Default or Event of Default and shall have the right to enter into an
agreement with the Obligors providing for the forbearance from the exercise of
any remedies provided hereunder or under the other Loan Documents without
waiving any Default or Event of Default.
(c) The making of Loans hereunder by the Lenders (or the issuance of
Letters of Credit) during the existence of a Default or Event of Default shall
not be deemed to constitute a waiver of such Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or any other Loan
Document to the contrary, no consent, written or otherwise, of the Obligors
shall be necessary or required in connection with any amendment to Article 14 or
Section 4.7, and any amendment to such provisions shall be effected solely by
and among the Agent and the Required Lenders (or Lenders, as the case may be),
provided that no such amendment shall impose any obligation on the Obligors.
SECTION 16.12. Assignment. Subject to the provisions of Article 13, all the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that no
Obligor may assign or transfer any of its rights under this Agreement.
SECTION 16.13. Performance of Obligors' Duties.
(a) The Obligors' obligations under this Agreement and each of the other
Loan Documents shall be performed by the Obligors at their sole cost and
expense.
(b) If the Obligors shall fail to do any act or thing which they have
covenanted to do under this Agreement or any of the other Loan Documents, the
Agent, on behalf of the Lenders, may (but shall not be obligated to) do the same
or cause it to be done either in the name of the Agent or the Lenders or in the
name and on behalf of the Obligors, and the Obligors hereby irrevocably
authorize the Agent so to act.
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SECTION 16.14. Indemnification. The Obligors jointly and severally agree to
reimburse the Agent, the Issuing Bank and the Lenders and each of their
Affiliates, agents, employees, officers, directors, Subsidiaries, successors and
assigns (the "Indemnitees") for all costs and expenses, including reasonable
counsel fees and disbursements, incurred, and to indemnify and hold the
Indemnitees harmless from and against all losses suffered by, any Indemnitee in
connection with (a) the exercise by the Agent, the Issuing Bank or any Lender of
any right or remedy granted to it under this Agreement or any of the other Loan
Documents, (b) any claim, and the prosecution or defense thereof, arising out of
or in any way connected with this Agreement or any of the other Loan Documents,
including any claim relating to Environmental Laws, and (c) the collection or
enforcement of the Secured Obligations or any of them, other than such costs,
expenses and liabilities arising out of such Indemnitee's gross negligence or
willful misconduct. The agreements in this Section shall survive the payment of
the Notes, the Secured Obligations and all other amounts payable hereunder and
the termination of this Agreement.
SECTION 16.15. All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to the Agent and the Lenders and any Persons
designated by the Agent or the Lenders pursuant to any provisions of this
Agreement or any of the other Loan Documents shall be deemed coupled with an
interest and shall be irrevocable so long as any of the Secured Obligations
remain unpaid or unsatisfied.
SECTION 16.16. Survival. Notwithstanding any termination of this Agreement,
(a) until all Secured Obligations have been irrevocably paid in full or
otherwise satisfied, the Agent, for the benefit of the Secured Creditors, shall
retain its Security Interest and shall retain all rights under this Agreement
and each of the Security Documents with respect to such Collateral as fully as
though this Agreement had not been terminated, (b) the indemnities to which the
Agent, the Lenders and the other indemnitees are entitled under the provisions
of this Article 16 and any other provision of this Agreement and the other Loan
Documents shall continue in full force and effect and shall protect the Agent,
the Lenders and the other indemnitees against events arising after such
termination as well as before, and (c) in connection with the termination of
this Agreement and the release and termination of the Security Interests, the
Agent, on behalf of itself as agent and the Secured Creditors, may require such
assurances and indemnities as it shall reasonably deem necessary or appropriate
to protect the Agent and the Secured Creditors against loss on account of such
release and termination, including with respect to credits previously applied to
the Secured Obligations that may subsequently be reversed or revoked.
SECTION 16.17. Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 16.18. Severability of Provisions. Any provision of this Agreement
or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 16.19. Governing Law. This Agreement, the Notes and each of the
other Loan Documents shall be construed in accordance with and governed by the
law of the State of Georgia.
SECTION 16.20. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same agreement.
106
SECTION 16.21. Reproduction of Documents. This Agreement, each of the other
Loan Documents and all documents relating thereto, including (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by the Agent or any Lender, and (c) financial statements, certificates and other
information previously or hereafter furnished to the Agent or any Lender, may be
reproduced by the Agent or such Lender by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and such
Person may destroy any original document so produced. Each party hereto
stipulates that, to the extent permitted by Applicable Law, any such
reproduction shall be as admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original shall be in
existence and whether or not such reproduction was made by the Agent or such
Lender in the regular course of business), and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 16.22. Term of Agreement. This Agreement shall remain in effect
from the Agreement Date through the Termination Date and thereafter until all
Secured Obligations shall have been irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
SECTION 16.23. Contribution and Indemnification among the Obligors. Each
Obligor is obligated to repay the Secured Obligations as joint and several
obligors under this Agreement. To the extent that any Obligor shall, under this
Agreement as a joint and several obligor, repay any of the Secured Obligations
constituting Loans made to another Obligor hereunder or other Secured
Obligations incurred directly and primarily by any other Obligor (an
"Accommodation Payment"), then the Obligor making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Obligors in an amount, for each of such other Obligors,
equal to a fraction of such Accommodation Payment, the numerator of which
fraction is such other Obligor's "Allocable Amount" (as defined below) and the
denominator of which is the sum of the Allocable Amounts of all of the Obligors.
As of any date of determination, the "Allocable Amount" of each Obligor shall be
equal to the maximum amount of liability for Accommodation Payments which could
be asserted against such Obligor hereunder without (a) rendering such Obligor
"insolvent" within the meaning of Section 101(31) of Title 11 of the United
States Code entitled "Bankruptcy" (the "Bankruptcy Code"), Section 2 of the
Uniform Fraudulent Transfer Act (the "UFTA"), Section 2 of the Uniform
Fraudulent Conveyance Act ("UFCA"), or Section 18-2-22 of the Official Code of
Georgia Annotated, (b) leaving such Obligor with unreasonably small capital or
assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of
the UFTA, or Section 4 of the UFCA, or (c) leaving such Obligor unable to pay
its debts as they become due within the meaning of Section 548 of the Bankruptcy
Code, Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification and reimbursement under this Section 16.23 shall
be subordinate in right of payment to the prior payment in full of the Secured
Obligations.
SECTION 16.24. Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express
consent of the Required Lenders, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of the Required Lenders, setoff against the
Secured Obligations, any amounts owing by such Lender to any Obligor or any
accounts of any Obligor now or hereafter maintained with such Lender. Each of
the Lenders further agrees that it shall not, unless specifically requested to
do so by the Agent, take or cause to be taken any action to enforce its rights
under this Agreement or against any Obligor, including the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.
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(b) Each Lender agrees that if, as a result of the exercise of a right of
setoff, banker's lien or counterclaim or other similar right or the receipt of a
secured claim it receives any payment in respect of the Secured Obligations, it
shall promptly notify the Agent thereof (and the Agent shall promptly notify the
other Lenders). If, as a result of such payment, such Lender receives a greater
percentage of the Secured Obligations owed to it under this Agreement than the
percentage received by any other Lender, such Lender shall purchase a
participation (which it shall be deemed to have purchased simultaneously upon
the receipt of such payment) in the Secured Obligations then held by such other
Lenders so that all such recoveries of principal and interest with respect to
all Secured Obligations owed to each Lender shall be pro rata on the basis of
its respective amount of the Secured Obligations owed to all Lenders, provided
that if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered by or on behalf of the Obligors from
such Lender, such purchase shall be rescinded and the purchase price paid for
such participation shall be returned to such Lender to the extent of such
recovery, but without interest.
(c) Each Lender which receives such a secured claim shall exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section 16.24 to share in the benefits of any
recovery on such secured claim.
(d) Each Obligor expressly consents to the foregoing arrangements and
agrees that any holder of a participation in any Secured Obligation so purchased
or otherwise acquired may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all monies owing by such Obligor to such
holder as fully as if such holder were a holder of such Secured Obligation in
the amount of the participation held by such holder.
SECTION 16.25. Agency for Perfection. Each Lender hereby appoints each
other Lender as its agent for the purpose of perfecting the Lenders' security
interest in assets which, in accordance with Article 9 of the Uniform Commercial
Code can be perfected only by possession. Should any Lender (other than the
Agent) obtain possession of any such Collateral, such Lender shall notify the
Agent thereof, and, promptly upon the Agent's request therefor shall deliver
such Collateral to the Agent or in accordance with the Agent's instructions.
SECTION 16.26. Taxes. Except as otherwise required by Applicable Law, each
payment by the Obligors under this Agreement or the other Loan Documents or in
respect of the Letters of Credit shall be made without setoff or counterclaim
and without withholding for or on account of any present or future taxes imposed
by or within the jurisdiction in which any Obligor is domiciled, any
jurisdiction from which the Obligors make any payment hereunder, or (in each
case) any political subdivision or taxing authority thereof or therein
(excluding any such tax imposed on the overall net income of the Agent or the
Lenders). If any such withholding is so required, the Obligors shall make the
withholding, pay the amount withheld to the appropriate governmental authority
before penalties attach thereto or interest accrues thereon, and forthwith pay
such additional amount as may be necessary to ensure that the net amount
actually received free and clear of such taxes (including such taxes on such
additional amount) is equal to the amount which Agent or the Lenders would have
received had such withholding not been made. If the Agent or the Lenders pay any
amount in respect of any such taxes, penalties or interest, the Obligors shall
reimburse the Agent or the Lenders (as appropriate) for that payment on demand
in the currency in which such payment was made. If an Obligor pays any such
taxes, penalties or interest, it shall deliver official tax receipts evidencing
that payment or certified copies thereof to the Agent on or before the thirtieth
day after payment.
SECTION 16.27. Final Agreement. This Agreement and the other Loan Documents
are intended by the parties hereto as the final, complete and exclusive
expression of the agreement among them
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with respect to the subject matter hereof and thereof, it being understood that
the Fee Letter shall survive the execution, delivery and closing of this
Agreement. This Agreement and the other Loan Documents supersede any and all
prior oral or written agreements between the parties hereto relating to the
subject matter hereof and thereof; provided, however, that notwithstanding the
execution and delivery hereof, this Agreement shall not be binding upon the
parties unless and until entry of the Final Order in accordance with the terms
hereof. Time is of the essence with respect to the execution and performance of
this Agreement.
SECTION 16.28. Waiver of Consequential Damages, Etc. THE OBLIGORS AGREE NOT
TO ASSERT ANY CLAIM AGAINST THE AGENT, THE ISSUING BANK, ANY LENDER, ANY OF
THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS AND AGENTS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN OR IN ANY OTHER LOAN DOCUMENT OR THE ACTUAL
OR PROPOSED USE OF THE PROCEEDS OF THE LOANS.
[Signatures commence on next page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers in several counterparts all as of the
day and year first written above.
BORROWERS: SAFETY COMPONENTS INTERNATIONAL, INC.,
a Delaware Corporation
By:
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Its:
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SAFETY COMPONENTS FABRIC
TECHNOLOGIES, INC., a Delaware corporation,
By:
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Its:
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AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, INC., a Delaware corporation,
By:
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Its:
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ASCI HOLDINGS UK (DE), INC.,
a Delaware corporation,
By:
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Its:
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ASCI HOLDINGS MEXICO (DE), INC.,
a Delaware corporation
By:
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Its:
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S-1
VALENTEC INTERNATIONAL
CORPORATION LLC,
a Delaware limited liability company
By:
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Its:
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VALENTEC SYSTEMS, INC.,
a Delaware corporation
By:
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Its:
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GALION, INC., a Delaware corporation
By:
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Its:
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AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, LIMITED,
a United Kingdom corporation
By:
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Its:
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GUARANTORS: ASCI HOLDINGS GERMANY (DE), INC.,
a Delaware corporation
By:
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Its:
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ASCI HOLDINGS CZECH (DE), INC.,
a Delaware corporation
By:
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Its:
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S-2
AGENT: BANK OF AMERICA, N.A.,
a national banking association, as Agent
By:
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Its:
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Address: Bank of America, N.A.
13th Floor
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Attn: ▇▇▇ ▇▇▇▇▇▇
LENDERS: BANK OF AMERICA, N.A.
a national banking association, as Lender
By:
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Its:
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Address: Bank of America, N.A.
13th Floor
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Attn: ▇▇▇ ▇▇▇▇▇▇
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