Exhibit 10.3
EXECUTION COPY
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POST-PETITION
LOAN AND SECURITY AGREEMENT AND GUARANTY
BY AND AMONG
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ CORPORATION,
AS BORROWER,
▇▇▇▇▇▇ MAY HOLDINGS, INC.
AND
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (CANADA) CORPORATION
AS GUARANTORS
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF JUNE 12, 2002
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION....................................................................1
1.1 Definitions.................................................................................1
1.2 Accounting Terms...........................................................................26
1.3 Code.......................................................................................26
1.4 Construction...............................................................................26
1.5 Schedules and Exhibits.....................................................................26
2. LOAN AND TERMS OF PAYMENT......................................................................26
2.1 Revolver Advances..........................................................................26
2.2 Term Loans.................................................................................28
2.3 Borrowing Procedures and Settlements.......................................................28
2.4 Payments...................................................................................34
2.5 Overadvances...............................................................................38
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations................38
2.7 Cash Management............................................................................39
2.8 Crediting Payments; Float Charge...........................................................40
2.9 Designated Account.........................................................................41
2.10 Maintenance of Loan Account; Statements of Obligations.....................................41
2.11 Fees.......................................................................................41
2.12 Letter of Credit...........................................................................42
2.13 Capital Requirements.......................................................................45
3. CONDITIONS; TERM OF AGREEMENT..................................................................46
3.1 Conditions Precedent to the Initial Extension of Credit....................................46
3.2 Conditions Subsequent to the Initial Extension of Credit...................................49
3.3 Conditions Precedent to all Extensions of Credit...........................................50
3.4 Term.......................................................................................50
3.5 Effect of Termination......................................................................50
3.6 Early Termination by Borrower..............................................................51
4. CREATION OF SECURITY INTEREST..................................................................51
4.1 Grant of Security Interest.................................................................51
4.2 Automatic Stay.............................................................................52
4.3 Super-Priority Claims......................................................................52
4.4 Negotiable Collateral......................................................................52
4.5 Collection of Accounts, General Intangibles, and Negotiable Collateral.....................52
4.6 Delivery of Additional Documentation Required..............................................53
4.7 Power of Attorney..........................................................................53
4.8 Right to Inspect...........................................................................54
4.9 Control Agreements.........................................................................54
4.10 Commercial Tort Claim......................................................................54
4.11 Grants, Rights and Remedies................................................................54
4.12 No Filings Required........................................................................54
4.13 Survival...................................................................................54
5. REPRESENTATIONS AND WARRANTIES.................................................................55
5.1 No Encumbrances............................................................................55
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5.2 Eligible Accounts..........................................................................55
5.3 Eligible Inventory.........................................................................56
5.4 Equipment..................................................................................56
5.5 Location of Inventory and Equipment........................................................56
5.6 Inventory Records..........................................................................56
5.7 Location of Chief Executive Office; FEIN...................................................56
5.8 Due Organization and Qualification; Subsidiaries...........................................56
5.9 Due Authorization; No Conflict.............................................................57
5.10 Litigation.................................................................................57
5.11 No Material Adverse Change.................................................................58
5.12 Fraudulent Transfer........................................................................58
5.13 Employee Benefits..........................................................................58
5.14 Environmental Condition....................................................................58
5.15 Brokerage Fees.............................................................................58
5.16 Intellectual Property......................................................................58
5.17 Leases.....................................................................................59
5.18 DDAs.......................................................................................59
5.19 Complete Disclosure........................................................................59
5.20 Indebtedness...............................................................................59
5.21 Administrative Priority....................................................................59
5.22 Appointment of Trustee or Examiner; Liquidation............................................60
6. AFFIRMATIVE COVENANTS..........................................................................60
6.1 Accounting System..........................................................................60
6.2 Collateral Reporting.......................................................................60
6.3 Financial Statements, Reports, Certificates, Appraisals....................................62
6.4 [Intentionally left blank.]................................................................64
6.5 Return.....................................................................................64
6.6 Maintenance of Properties..................................................................64
6.7 Taxes......................................................................................64
6.8 Insurance..................................................................................65
6.9 Location of Inventory and Equipment........................................................65
6.10 Compliance with Laws.......................................................................66
6.11 Leases.....................................................................................66
6.12 Brokerage Commissions......................................................................66
6.13 Existence..................................................................................66
6.14 Environmental..............................................................................66
6.15 Disclosure Updates.........................................................................66
6.16 Bankruptcy Court Filings...................................................................67
6.17 Minimum Excess Availability................................................................67
6.18 Bailee Letters.............................................................................67
6.19 Real Property in Quebec....................................................................67
7. NEGATIVE COVENANTS.............................................................................67
7.1 Indebtedness...............................................................................67
7.2 Liens......................................................................................68
7.3 Restrictions on Fundamental Changes........................................................68
7.4 Disposal of Assets.........................................................................68
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7.5 Change Name................................................................................68
7.6 Guarantee..................................................................................68
7.7 Nature of Business.........................................................................68
7.8 Prepayments and Amendments.................................................................69
7.9 Change of Control..........................................................................69
7.10 Consignments...............................................................................69
7.11 Distributions..............................................................................69
7.12 Accounting Methods.........................................................................69
7.13 Investments................................................................................69
7.14 Transactions with Affiliates...............................................................69
7.15 Suspension.................................................................................70
7.16 Compensation...............................................................................70
7.17 Use of Proceeds............................................................................70
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees...............................................................................70
7.19 Securities Accounts........................................................................70
7.20 Financial Covenants........................................................................70
7.21 Interim Order; Final Order; Administrative Expense Priority; Lien Priority;
Payments...................................................................................72
8. EVENTS OF DEFAULT..............................................................................73
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.........................................................76
9.1 Rights and Remedies........................................................................76
9.2 Automatic Stay.............................................................................78
9.3 Remedies Cumulative........................................................................78
10. TAXES AND EXPENSES.............................................................................78
11. WAIVERS; INDEMNIFICATION.......................................................................79
11.1 Demand; Protest; etc.......................................................................79
11.2 The Lender Group's Liability for Collateral................................................79
11.3 Indemnification............................................................................79
12. NOTICES........................................................................................80
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.....................................................81
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.....................................................82
14.1 Assignments and Participations.............................................................82
14.2 Successors.................................................................................85
15. AMENDMENTS; WAIVERS............................................................................85
15.1 Amendments and Waivers.....................................................................85
15.2 Replacement of Holdout Lender..............................................................86
15.3 No Waivers; Cumulative Remedies............................................................87
16. AGENT; THE LENDER GROUP........................................................................87
16.1 Appointment and Authorization of Agent.....................................................87
16.2 Delegation of Duties.......................................................................88
16.3 Liability of Agent.........................................................................88
16.4 Reliance by Agent..........................................................................89
16.5 Notice of Default or Event of Default......................................................89
16.6 Credit Decision............................................................................89
16.7 Costs and Expenses; Indemnification........................................................90
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16.8 Agent in Individual Capacity...............................................................90
16.9 Successor Agent............................................................................91
16.10 Lender in Individual Capacity..............................................................91
16.11 Withholding Taxes..........................................................................91
16.12 Collateral Matters.........................................................................93
16.13 Restrictions on Actions by Lenders; Sharing of Payments....................................94
16.14 Agency for Perfection......................................................................95
16.15 Payments by Agent to the Lenders...........................................................95
16.16 Concerning the Collateral and Related Post-Petition Loan Documents.........................95
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.....................................................95
16.18 Several Obligations; No Liability..........................................................96
17. GUARANTY.......................................................................................97
18. GENERAL PROVISIONS.............................................................................98
18.1 Effectiveness..............................................................................98
18.2 Section Headings...........................................................................98
18.3 Interpretation.............................................................................99
18.4 Severability of Provisions.................................................................99
18.5 Counterparts; Telefacsimile Execution......................................................99
18.6 Revival and Reinstatement of Obligations...................................................99
18.7 Integration................................................................................99
18.8 Conflicts..................................................................................99
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit I Interim Order
Exhibit W Form of Bailee Letter
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 Benefit Plans
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 7.6 Guarantees
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POST-PETITION LOAN AND SECURITY AGREEMENT AND GUARANTY
THIS POST-PETITION LOAN AND SECURITY AGREEMENT AND GUARANTY
(this "AGREEMENT"), is entered into as of June 12, 2002, between and among, on
the one hand, the lenders identified on the signature pages hereof (such
lenders, together with their respective successors and assigns, are referred to
hereinafter each individually as a "LENDER" and collectively as the "LENDERS"),
FOOTHILL CAPITAL CORPORATION, a California corporation, as the arranger and
administrative agent for the Lenders ("AGENT"), and, on the other hand,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ CORPORATION, an Illinois corporation (as the "BORROWER"), ▇▇▇▇▇▇
MAY HOLDINGS, INC., a Delaware corporation ("▇▇▇▇▇▇ MAY") and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(CANADA) CORPORATION, a Canadian corporation ("ACC CANADA") (▇▇▇▇▇▇ May,
together with ACC Canada, collectively, the "GUARANTORS").
W I T N E S S E T H:
WHEREAS, on June 12, 2002 (the "FILING DATE"), Borrower and
▇▇▇▇▇▇ May filed a voluntary petition for relief under chapter 11 of title 11 of
the United States Code in the District of Delaware;
WHEREAS, the Loan Parties desire to pursue a financial
restructuring of Borrower and ▇▇▇▇▇▇ May, and Borrower and ▇▇▇▇▇▇ May believe
that the best way to effectuate such a financial restructuring is by means of
cases under chapter 11 of the Bankruptcy Code (as hereinafter defined);
WHEREAS, an immediate and on-going need exists for Borrower to
obtain additional funds in order to continue the operation of the businesses of
Borrower and ▇▇▇▇▇▇ May as debtors-in-possession under chapter 11 of the
Bankruptcy Code and the business of ACC Canada and, accordingly, the Loan
Parties have requested that the Lenders extend post-petition financing and make
revolving credit advances to Borrower and the Lenders are willing to provide
such post-petition financing and incur such additional obligations pursuant to
sections 364(c)(1), (c)(2), (c)(3) and (d)(1) of the Bankruptcy Code and, in the
case of ACC Canada, under applicable non-bankruptcy law, but only for the
purposes and upon the terms and conditions set forth in this Agreement; and
WHEREAS, the Lenders desire to appoint Foothill as the Agent
for the Lenders hereunder.
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any loans or extensions of credit heretofore, now or
hereafter made to or for the benefit of Borrower by the Agent and the Lenders,
the parties to this Agreement agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have
the following definitions:
"ACC CANADA" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Canada) Corporation, a
Guarantor under this Agreement.
"ACCOUNT DEBTOR" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"ACCOUNTS" means all of any Loan Party's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"ACH TRANSACTIONS" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by ▇▇▇▇▇
Fargo or its Affiliates for the account of Borrower or its Subsidiaries.
"ADDITIONAL DOCUMENTS" has the meaning set forth in SECTION
4.6.
"ADDITIONAL FEES" has the meaning set forth in SECTION 2.11(A).
"ADMINISTRATIVE EXPENSE PRIORITIES" means that administrative
expenses with respect to Borrower and ▇▇▇▇▇▇ May which shall have the following
order of priority:
(a) FIRST, (i) amounts payable pursuant to 28 U.S.C. Section
1930(a)(6) and (ii) allowed fees and expenses of attorneys, accountants and
other professionals (x) retained in the Chapter 11 Cases pursuant to Section 327
and 1103 of the Bankruptcy Code, and (y) to the extent such professionals are
not otherwise retained pursuant to Section 1103 of the Bankruptcy Code, retained
by the Informal Committee of Noteholders or the Indenture Trustee but the amount
entitled to priority under this clause (ii) (the "PERMITTED PROFESSIONAL
EXPENSES") shall not exceed $1,000,000 outstanding in the aggregate at any time
(inclusive of any holdbacks required by the Bankruptcy Court) (the "PROFESSIONAL
EXPENSES CAP"); PROVIDED, HOWEVER, that after the occurrence and during the
continuance of an Event of Default hereunder or a breach under the Interim Order
or the Final Order, any payments actually made to such professionals after such
occurrence and during such continuance, under Section 330 and 331 of the
Bankruptcy Code or otherwise, shall reduce the Professional Expenses Cap on a
dollar-for-dollar basis;
(b) SECOND, all Obligations, and
(c) THIRD, all other allowed administrative expenses.
"ADVANCES" has the meaning set forth in SECTION 2.1.
"AFFILIATE" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by
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contract, or otherwise; PROVIDED, HOWEVER, that, for purposes of the definition
of Eligible Accounts and SECTION 7.14 hereof: (a) any Person which owns directly
or indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person, (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"AGENT" means Foothill, solely in its capacity as
administrative agent for the Lenders hereunder, and any successor thereto.
"AGENT'S ACCOUNT" means the account identified on SCHEDULE A-1.
"AGENT ADVANCES" has the meaning set forth in SECTION
2.3(E)(I).
"AGENT'S LIENS" means the Liens granted by the Loan Parties to
Agent for the benefit of the Lender Group under this Agreement or the other
Post-Petition Loan Documents.
"AGENT-RELATED PERSONS" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"AGREED BUDGET" means a rolling 13 week budget for revenues,
asset sale proceeds and expenses for the Loan Parties for the applicable period.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"ASSIGNEE" has the meaning set forth in SECTION 14.1.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance
in the form of EXHIBIT A-1.
"AUTHORIZED PERSON" means any officer or other employee of any
Loan Party.
"AVAILABILITY" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrower is entitled to borrow as Advances under
SECTION 2.1 (after giving effect to all then outstanding Obligations (other than
Bank Product Obligations) and all sublimits and reserves applicable hereunder).
"AVOIDANCE ACTIONS" means all causes of action of Borrower or
▇▇▇▇▇▇ May, as debtors and debtors-in-possession, arising under 11 U.S.C.
Sections 510, 542, 544, 545, 547, 548, 549, 550 and 553.
"BANK PRODUCT AGREEMENTS" means those certain cash management
service agreements entered into from time to time by Borrower or its
Subsidiaries in connection with any of the Bank Products.
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"BANK PRODUCT OBLIGATIONS" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrower or
Subsidiaries to ▇▇▇▇▇ Fargo or its Affiliates pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that Borrower is
obligated to reimburse to Agent or any member of the Lender Group as a result of
Agent or such member of the Lender Group purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to Borrower or Subsidiaries pursuant to the Bank Product Agreements.
"BANK PRODUCTS" means any service or facility extended to
Borrower or the Subsidiaries by ▇▇▇▇▇ Fargo or any Affiliate of ▇▇▇▇▇ Fargo
including: (a) credit cards, (b) credit card processing services, (c) debit
cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including
controlled disbursement, accounts or services, or (g) Hedge Agreements.
"BANK PRODUCT RESERVES" means, as of any date of determination,
the amount of reserves that Agent has established (based upon ▇▇▇▇▇ Fargo's or
its Affiliate's reasonable determination of the credit exposure in respect of
then extant Bank Products) for Bank Products then provided or outstanding;
provided that such reserves are established at the time ▇▇▇▇▇ Fargo or its
Affiliate provides such Bank Products.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as
in effect from time to time.
"BANKRUPTCY COURT" shall mean the United States Bankruptcy
Court for the District of Delaware.
"BASE RATE" means, the rate of interest announced within ▇▇▇▇▇
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"BASE RATE LOAN" means each portion of an Advance or the Term
Loans that bears interest at a rate determined by reference to the Base Rate.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate
of Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"BOARD OF DIRECTORS" means the board of directors (or
comparable managers) of any Loan Party or any committee thereof duly authorized
to act on behalf of the board.
"BOOKS" means, with respect to any Loan Party, all of such Loan
Party's now owned or hereafter acquired books and records (including all of its
Records indicating, summarizing, or evidencing its assets (including the
Collateral) or liabilities, all of such Loan
4
Party's Records relating to their business operations or consolidated financial
condition, and all of its goods or General Intangibles related to such
information).
"BORROWER" has the meaning set forth in the preamble to this
Agreement.
"BORROWING" means a borrowing hereunder consisting of Advances
(or term loans, in the case of the Term Loans) made on the same day by the
Lenders (or Agent on behalf thereof) or by a Swing Lender in the case of a Swing
Loan or by Agent in the case of an Agent Advance.
"BORROWING BASE" has the meaning set forth in SECTION 2.1.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
"BUSINESS PLAN" means that certain Short Term Reorganization
Forecast of Borrower dated as of June 5, 2002, delivered to and deemed
acceptable by the Lenders, in their sole and absolute discretion.
"CANADIAN GENERAL SECURITY AGREEMENT" means a general security
agreement executed and delivered by ACC Canada and the Agent, the form and
substance of which is satisfactory to the Lenders.
"CANADIAN GUARANTEE" means a guarantee and indemnity executed
and delivered by ACC Canada and the Agent, the form and substance of which is
satisfactory to the Lenders.
"CAPITAL LEASE" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means any Indebtedness
represented by obligations under a Capital Lease.
"CASH EQUIVALENTS" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"CASH MANAGEMENT BANK" has the meaning set forth in SECTION
2.7(A).
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"CASH MANAGEMENT ACCOUNT" has the meaning set forth in SECTION
2.7(A).
"CASH MANAGEMENT AGREEMENTS" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among Borrower, Agent, and one of the Cash Management Banks.
"CHANGE OF CONTROL" means (a) ▇▇▇▇▇▇ May ceases to own one
hundred percent (100%) of the Stock of Borrower, (b) Borrower ceases, either
directly or indirectly, to own one hundred percent (100%) of the Stock of ACC
Canada, (c) The Jordan Company, LLC, a New York limited liability company
("JORDAN"), and its affiliates (or entities advised by Jordan or its affiliates)
cease to own, in the aggregate, more than 50% of the common stock of ▇▇▇▇▇▇ May
or cease to have the power to elect at least a majority of the Board of
Directors of ▇▇▇▇▇▇ May, (d) a majority of the members of the Board of Directors
of any Loan Party do not constitute Continuing Directors of such Loan Party.
"CHAPTER 11 CASES" shall mean Borrower's and ▇▇▇▇▇▇ May's
reorganization cases under chapter 11 of the Bankruptcy Code, pending in the
Bankruptcy Court.
"CLAIM" has the meaning set forth in Section 101(5) of the
Bankruptcy Code.
"CLOSING DATE" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"CODE" means the New York Uniform Commercial Code, as in effect
from time to time.
"COLLATERAL" means all of (i) Borrower's now owned or hereafter
acquired assets and property of Borrower's estate (as defined in the Bankruptcy
Code), (ii) ▇▇▇▇▇▇ May's now owned or hereafter acquired assets and property of
▇▇▇▇▇▇ May's estate (as defined in the Bankruptcy Code), and (iii) ACC Canada's
now owned or hereafter acquired assets and property; all of the foregoing shall,
in each case, include without limitation, each such party's right, title, and
interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
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(i) In the case of Borrower and ▇▇▇▇▇▇ May upon entry of the
Final Order, Avoidance Actions,
(j) money or other assets of such party that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(k) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, Avoidance
Actions, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to the Lenders.
"COLLECTIONS" means, with respect to any Loan Party, all of
such Loan Party's cash, checks, notes, instruments, and other items of payment
(including insurance proceeds, proceeds of cash sales, rental proceeds, and tax
refunds).
"COMMERCIAL TORT CLAIM ASSIGNMENT" has the meaning set forth in
SECTION 4.10.
"COMMITMENT" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitments, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on SCHEDULE C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of EXHIBIT C-1 delivered by the chief financial officer of Borrower to
Agent.
"CONTINUING DIRECTOR" means, with respect to any Loan Party,
(a) any member of the Board of Directors who was a director (or comparable
manager) of such Loan Party on the Closing Date, and (b) any individual who
becomes a member of the Board of Directors of such Loan Party after the Closing
Date if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
such Loan Party (as such terms are used in Rule 14a-11 under the Exchange Act)
and whose initial assumption of office resulted from such contest or the
settlement thereof.
"CONTROL AGREEMENT" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by any applicable Loan
Party, Agent, and the
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applicable securities intermediary with respect to a Securities Account or bank
with respect to a deposit account.
"DAILY BALANCE" means, with respect to each day during the term
of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by Borrower.
"DEFAULT" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"DEFAULTING LENDER" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"DEFAULTING LENDER RATE" means (a) the Base Rate for the first
3 days from and after the date the relevant payment is due, and (b) thereafter,
at the interest rate then applicable to Advances that are Base Rate Loans.
"DESIGNATED ACCOUNT" means that certain DDA of Borrower
identified on SCHEDULE D-1.
"DILUTION" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior 90 days, that is
the result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts during such period, by (b) Borrower's and ACC Canada's ▇▇▇▇▇▇▇▇ with
respect to Accounts during such period (excluding extraordinary items) PLUS the
Dollar amount of clause (a).
"DILUTION RESERVE" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"DISBURSEMENT LETTER" means an instructional letter executed
and delivered by Borrower to Agent regarding the extensions of credit to be made
on the Closing Date, the form and substance of which is satisfactory to Agent.
"DOLLARS" or "$" means United States dollars.
"DUE DILIGENCE LETTER" means the due diligence letter sent by
Agent's counsel to Borrower, together with Borrower's completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
"EBITDA" means, with respect to ▇▇▇▇▇▇ May and its Subsidiaries
for any fiscal period, consolidated net earnings (or loss), MINUS extraordinary
gains, PLUS interest expense, extraordinary non-cash losses, income taxes, and
depreciation and amortization for such period, as determined in accordance with
GAAP.
8
"ELIGIBLE ACCOUNTS" means, with respect to Borrower and ACC
Canada, those Accounts created by Borrower and ACC Canada in the ordinary course
of their respective businesses, that arise out of their sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrower or ACC Canada in the
Post-Petition Loan Documents, and that are not excluded as ineligible by virtue
of one or more of the criteria set forth below; PROVIDED, HOWEVER, that such
criteria may be fixed and revised from time to time by Agent in Agent's
Permitted Discretion to address the results of any audit performed by Agent from
time to time after the Closing Date. In determining the amount to be included,
Eligible Accounts shall be calculated net of customer deposits and unapplied
cash remitted to Borrower. Eligible Accounts shall not include the following:
(a) Accounts (i) that the Account Debtor has failed to pay
within 60 days after the due date or with selling terms of more than 60 days,
and (ii) in the case of holiday-related sales, Accounts that the Account Debtor
has failed to pay within 120 days after the invoice date,
(b) Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Loan Party,
(d) Accounts arising in a transaction wherein goods are placed
on consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a ▇▇▇▇ and hold, or any other terms by reason of which the
payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars or Canadian
dollars,
(f) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States or Canada,
or (ii) is not organized under the laws of the United States, any state thereof,
Canada, or any province thereof, or (iii) is the government of any foreign
country other than Canada or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof, unless (y) the
Account is supported by an irrevocable letter of credit satisfactory to Agent
(as to form, substance, and issuer or domestic confirming bank) that has been
delivered to Agent and is directly drawable by Agent, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which the
applicable Loan Party has complied, to the reasonable satisfaction of Agent,
with the Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of
the United States (exclusive, however, of (y) Accounts owed by any state that
does not have a statutory counterpart to the Assignment of Claims Act, or (z)
Accounts owed by any state that
9
does have a statutory counterpart to the Assignment of Claims Act as to which
the applicable Loan Party has complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a
creditor of any Loan Party, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to either Borrower or ACC Canada exceed 10% (except, in the
case of Albertson's, Target Stores, Walgreens and Wal-Mart for the months of
October, November and December, 2002, 25%) (such percentage as applied to a
particular Account Debtor being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts to the extent of the obligations owing by such Account Debtor
in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of business,
or as to which such Loan Party has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such Account
Debtor,
(k) Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota or West Virginia (or any other
state that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process of such state),
unless such Loan Party has qualified to do business in New Jersey, Minnesota or
West Virginia, or such other states, or have filed a business activities report
with the applicable division of taxation, the department of revenue, or with
such other state offices, as appropriate, for the then-current year, or is
exempt from such filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected
first priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor,
(o) Accounts that represent the right to receive progress
payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of
performance by such Loan Party of the subject contract for goods or services, or
(p) Accounts which are intercompany accounts between such Loan
Party and any of its Subsidiaries.
10
"ELIGIBLE INVENTORY" means Inventory of Borrower and of ACC
Canada consisting of raw materials, first quality finished goods held for sale
in the ordinary course of Borrower's or ACC Canada's respective business located
at one of Borrower's or ACC Canada's business locations set forth on SCHEDULE
E-1 (or in-transit between any such locations), that complies with each of the
representations and warranties respecting Eligible Inventory made by Borrower
and ACC Canada in the Post-Petition Loan Documents, and that is not excluded as
ineligible by virtue of the one or more of the criteria set forth below;
PROVIDED, HOWEVER, that such criteria may be fixed and revised from time to time
by Agent in Agent's Permitted Discretion to address the results of any audit or
appraisal performed by Agent from time to time after the Closing Date. In
determining the amount to be so included, Inventory shall be valued at the lower
of cost or market on a basis consistent with Borrower's or ACC Canada's
historical accounting practices. An item of Inventory shall not be included in
Eligible Inventory if:
(a) Borrower or ACC Canada does not have good, valid, and
marketable title thereto,
(b) it is not located at one of the locations in the United
States or Canada set forth on SCHEDULE E-1 (or in transit from one such location
to another such location),
(c) it is located on real property leased by Borrower or ACC
Canada or in a contract warehouse, in each case, unless (i) it is subject to a
Collateral Access Agreement executed by the lessor, warehouseman, or other third
party, as the case may be, and it is segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises, or (ii) the
Financing Orders grant the Agent comparable rights as determined by the Agent in
its Permitted Discretion,
(d) it is not subject to a valid and perfected first priority
Agent's Lien,
(e) it consists of goods returned or rejected by Borrower's or
ACC Canada's customers, or
(f) it consists of goods that are obsolete or slow moving,
restrictive or custom items, work-in-process, or goods that constitute spare
parts, packaging and shipping materials, supplies used or consumed in Borrower's
and ACC Canada's business, ▇▇▇▇ and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date or any fund, money market
account, investment account or other account managed by a Lender or an Affiliate
of such
11
Lender, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Borrower, and (f) during the continuation of
an Event of Default, any other Person approved by Agent.
"ENTERPRISE VALUE" means (a) the enterprise value of Borrower
and its Subsidiaries taken as a whole as determined by ▇▇▇▇▇, ▇▇▇▇▇▇ and Company
LLP and set forth in its ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Corporation Due Diligence Report dated
June 4, 2002, which has been delivered prior to the date hereof, or (b) as of
any other date of determination in accordance with the terms hereof, the
enterprise value of Borrower and its Subsidiaries taken as a whole, to be
determined from time to time by a qualified appraisal company acceptable to the
Lenders.
"ENTRY DATE" means the date upon which the Interim Order is
signed by the Bankruptcy Court and entered on the docket of the Chapter 11
Cases.
"ENVIRONMENTAL ACTIONS" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Borrower or ACC Canada or any predecessor in interest, (b) from
properties or businesses adjoining the properties of Borrower or ACC Canada, or
(c) from or onto any facilities which received Hazardous Materials generated by
Borrower or ACC Canada or any predecessor in interest.
"ENVIRONMENTAL LAW" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrower, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 ET SEQ; the Toxic Substances Control Act, 15 USC, Section 2601
ET SEQ; the Clean Air Act, 42 USC Section 7401 ET SEQ.; the Safe Drinking Water
Act, 42 USC Section 3803 ET SEQ.; the Oil Pollution Act of 1990, 33 USC Section
2701 ET SEQ.; the Emergency Planning and the Community Right-to-Know Act of
1986, 42 USC Section 11001 ET SEQ.; the Hazardous Material Transportation Act,
49 USC Section 1801 ET SEQ.; and the Occupational Safety and Health Act, 29 USC
Section 651 ET SEQ. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"ENVIRONMENTAL LIEN" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
12
"EQUIPMENT" means, with respect to any Loan Party, all of such
Loan Party's now owned or hereafter acquired right, title, and interest with
respect to equipment, machinery, machine tools, motors, furniture, furnishings,
fixtures, vehicles (including motor vehicles), tools, parts, goods (other than
consumer goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"EXCESS AVAILABILITY" means the amount, as of the date any
determination thereof is to be made, equal to Availability MINUS the aggregate
amount, if any, of all post-petition trade payables of the Loan Parties aged in
excess of their historical levels with respect thereto and all book overdrafts
in excess of their historical practices with respect thereto, in each case as
determined by Agent in its Permitted Discretion.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as in
effect from time to time.
"EXISTING LENDER" means The CIT Group/Business Credit, Inc.
"FEIN" means Federal Employer Identification Number.
"FILING DATE" means June 12, 2002.
"FINAL HEARING DATE" shall mean the date set by the Bankruptcy
Court, in the Interim Order, for the hearing on the Final Order.
"FINAL ORDER" shall mean the order or judgment of the
Bankruptcy Court as entered on the docket of the clerk of the Bankruptcy Court
as entered on the docket approving this Agreement, the other Post-Petition Loan
Documents and authorizing the incurrence by Borrower of permanent post-petition
secured and superpriority indebtedness in accordance with this Agreement (for
avoidance of doubt, such order shall include the granting of Liens senior in all
respects to the Liens of the Indenture Trustee without any requirement that
proceeds of Collateral be shared with any holders of the Notes (as defined in
the Indenture)), which order or judgment
13
is in full force and effect and shall not have been vacated, reversed, modified,
amended or stayed in any respect (without the Lenders' prior approval).
"FINANCING ORDERS" means the Interim Order and the Final Order,
either individually or collectively.
"FIRST DAY ORDERS" means those orders of the Bankruptcy Court,
in form and substance reasonably satisfactory to the Lenders in their sole
discretion, which are entered in response to or relating to the applications or
motions made or filed by Borrower and ▇▇▇▇▇▇ May on or shortly following the
Filing Date.
"FOOTHILL" means Foothill Capital Corporation, a California
corporation.
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means, with respect to any Loan Party,
all of such Loan Party's now owned or hereafter acquired right, title, and
interest with respect to general intangibles (including payment intangibles,
contract rights, rights to payment, rights arising under common law, statutes,
or regulations, choses or things in action, goodwill, patents, trade names,
trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
rights to payment and other rights under any royalty or licensing agreements,
infringement claims, computer programs, information contained on computer disks
or tapes, software, literature, reports, catalogs, money, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property other
than goods, Accounts, Investment Property and Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"GUARANTOR" means either ▇▇▇▇▇▇ May or ACC Canada individually.
"HAZARDOUS MATERIALS" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable
14
substances or explosives or any radioactive materials, and (d) asbestos in any
form or electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million.
"HEDGE AGREEMENT" means any and all transactions, agreements,
or documents now existing or hereafter entered into between Borrower or its
Subsidiaries and ▇▇▇▇▇ Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging ▇▇▇▇▇▇ May's or any of its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"HYPOTEC" means a deed of movable hypotec made by ACC Canada in
favor of the Lenders, the form and substance of which is satisfactory to the
Lenders.
"INDEBTEDNESS" means, with respect to any Person, (a) all
obligations for borrowed money of such Person, (b) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments and
all reimbursement or other obligations of such Person in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations of such Person under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of such Person or its
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations of such Person for the deferred purchase price of assets
(other than trade debt incurred in the ordinary course of business and repayable
in accordance with customary trade practices), and (f) any obligation of such
Person guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse to such Person)
any obligation of any other Person.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION
11.3.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 11.3.
"INDENTURE" means that certain Indenture, dated as of July 2,
1997, by and between Borrower and The Bank of New York, as supplemented.
"INDENTURE TRUSTEE" means The Bank of New York, as trustee
under the Indenture.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any Person (i) under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law, assignments for the benefit
of creditors, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief in the United States, or (ii) seeking liquidation, dissolution,
winding up, reorganization, arrangement, protection, relief or composition of it
or any of its property or debt or making a proposal with respect to it under any
law relating to bankruptcy, insolvency, reorganization or compromise of debts or
other similar laws (including, without limitation, any application under the
COMPANIES' CREDITORS ARRANGEMENT ACT (CANADA)) or any reorganization,
arrangement or compromise of debt under the laws of Canada or any province of
Canada;
15
"INFORMAL COMMITTEE OF NOTEHOLDERS" means that certain
committee, formed prior to the Filing Date, of certain holders of the 10-1/4%
Notes issued pursuant to the Indenture.
"INTANGIBLE ASSETS" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means an
intellectual property security agreement executed and delivered by the Loan
Parties and Agent, the form and substance of which is satisfactory to Lenders.
"INTERIM ORDER" shall mean the order or judgment of the
Bankruptcy Court as entered on the docket of the clerk of the Bankruptcy Court
with respect to Borrower and ▇▇▇▇▇▇ May in the form of EXHIBIT I hereto
approving this Agreement, the other Post-Petition Loan Documents and approving
and authorizing, among other things, (a) the incurrence by Borrower of
post-petition secured and superpriority indebtedness on an interim basis in an
aggregate amount up to $28,000,000 (which shall consist of up to $20,000,000 of
the Term Loan A and the Term Loan B and up to $8,000,000 of the Revolver
Commitments), in accordance with this Agreement, (b) payment by Borrower of all
of the fees set forth in SECTION 2.11 of this Agreement, and (c) payment of all
outstanding obligations owed by Borrower to the Existing Lender.
"INTERLENDER AGREEMENT" means an interlender agreement executed
and delivered by the Lenders, the form and substance of which is satisfactory to
the Lenders.
"INVENTORY" means, with respect to any Loan Party, all of such
Loan Party's now owned or hereafter acquired right, title, and interest with
respect to inventory, including goods held for sale or lease or to be furnished
under a contract of service, goods that are leased by such Loan Party as lessor,
goods that are furnished by such Loan Party under a contract of service, and raw
materials, work in process, or materials used or consumed in such Loan Party's
business.
"INVENTORY MIX REPORT" means a report consisting of Inventory
by category as requested by the Agent, in its reasonable discretion.
"INVESTMENT" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) BONA FIDE Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"INVESTMENT PROPERTY" means, with respect to any Loan Party,
all of such Loan Party's now owned or hereafter acquired right, title, and
interest with respect to "investment property" as that term is defined in the
Code, and any and all supporting obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
16
"ISSUING LENDER" means Foothill or any other Lender that, at
the request of Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to SECTION 2.12.
"L/C" has the meaning set forth in SECTION 2.12(A).
"L/C DISBURSEMENT" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C UNDERTAKING" has the meaning set forth in SECTION 2.12(A).
"LENDER" and "LENDERS" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of SECTION 14.1.
"LENDER GROUP" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"LENDER GROUP EXPENSES" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by the Loan
Parties under any of the Post-Petition Loan Documents that are paid or incurred
by the Lender Group, (b) reasonable fees or charges paid or incurred by Lender
Group in connection with the Lender Group's transactions with any Loan Party,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the amount of any limitation) contained in this Agreement), real estate
surveys, real estate title policies and endorsements, and environmental audits,
(c) reasonable costs and expenses incurred by Agent in the disbursement of funds
to or for the account of Borrower (by wire transfer or otherwise), (d)
reasonable charges paid or incurred by Agent resulting from the dishonor of
checks, (e) reasonable costs and expenses paid or incurred by the Lender Group
to correct any default or enforce any provision of the Post-Petition Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) reasonable audit fees and expenses of Lender Group related to
audit examinations of the Books to the extent of the fees and charges (and up to
the amount of any limitation) contained in this Agreement, (g) reasonable costs
and expenses of third party claims or any other suit paid or incurred by the
Lender Group in enforcing or defending the Post-Petition Loan Documents or in
connection with the transactions contemplated by the Post-Petition Loan
Documents or the Lender Group's relationship with any Loan Party, (h) Agent's
and each Lender's reasonable fees and expenses (including attorneys fees)
incurred in advising, structuring, drafting, reviewing, administering, or
amending the Post-Petition Loan Documents, and (i) Agent's and each Lender's
reasonable fees and expenses (including attorneys' fees and disbursements)
incurred in terminating, enforcing (including attorneys fees and expenses
incurred in connection with a "workout," a "restructuring," or in exercising
rights or remedies under the Post-Petition Loan
17
Documents), or defending the Post-Petition Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the
Collateral.
"LENDER-RELATED PERSON" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the
context requires.
"LETTER OF CREDIT USAGE" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of Credit
PLUS 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.
"LIEN" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.
"LOAN PARTIES" means, collectively, Borrower and the
Guarantors.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Loan Parties taken as a
whole, (b) a material impairment of any Loan Party's ability to perform its
obligations under the Post-Petition Loan Documents to which it is a party or of
the Lender Group's ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent's Liens with respect to the Collateral as a result of an action or
failure to act on the part of any Loan Party; it being agreed, however, that the
following shall not constitute a Material Adverse Change: (i) filing of the
voluntary petition for relief under chapter 11 of the Bankruptcy Code by
Borrower and ▇▇▇▇▇▇ May on the Filing Date and (ii) the commencement of an
Insolvency Proceeding with respect to ACC Canada (whether voluntary or
involuntary), provided that arrangements have been made with respect to the
liens and claims of the Agent and the Lenders hereunder and under the other
Post-Petition Loan Documents which are satisfactory to the Lenders in their sole
discretion.
"MATURITY DATE" has the meaning set forth in SECTION 3.4.
"MAXIMUM CREDIT LINE" means $45,000,000.
"MAXIMUM REVOLVER AMOUNT" means (a) $8,000,000 prior to the
entry of the Final Order and (b) $25,000,000 from and after the entry of the
Final Order.
18
"MORTGAGES" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Agent, for the benefit of the Lender Group, in form and
substance satisfactory to Agent, that encumber the Real Property Collateral and
the related improvements thereto.
"NEGOTIABLE COLLATERAL" means, with respect to any Loan Party,
all of such Loan Party's now owned and hereafter acquired right, title, and
interest with respect to letters of credit, letter of credit rights,
instruments, promissory notes, drafts, documents, and chattel paper (including
electronic chattel paper and tangible chattel paper), and any and all supporting
obligations in respect thereof.
"NET LIQUIDATION PERCENTAGE" means the percentage of the book
value of Loan Parties' Inventory that is estimated to be recoverable in an
orderly liquidation of such Inventory net of costs and expenses, such percentage
to be as determined from time to time by a qualified appraisal company selected
by Agent.
"OBLIGATIONS" means (a) all loans (including the Term Loans),
Advances, debts, principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrower's Loan Account pursuant hereto),
obligations, fees (including, but not limited to, the Closing Fee and the Unused
Line Fee), charges, costs, Lender Group Expenses (including any fees or expenses
that, but for the provisions of the Bankruptcy Code, would have accrued), lease
payments, guaranties, covenants, and duties of any kind and description owing by
Borrower to the Lender Group pursuant to or evidenced by the Post-Petition Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all Lender
Group Expenses that Borrower is required to pay or reimburse by the
Post-Petition Loan Documents, by law, or otherwise, and (b) all Bank Product
Obligations. Any reference in this Agreement or in the Post-Petition Loan
Documents to the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable.
"OFFICERS' CERTIFICATE" means the representations and
warranties of officers form submitted by Agent to Borrower, together with
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"ORIGINATING LENDER" has the meaning set forth in SECTION
14.1(E).
"OVERADVANCE" has the meaning set forth in SECTION 2.5.
"PARTICIPANT" has the meaning set forth in SECTION 14.1(E).
"PAY-OFF LETTER" means a letter, in form and substance
satisfactory to Lenders, from the Existing Lender to Lenders respecting the
amount necessary to repay in full all of the obligations of Borrower owing to
the Existing Lender and obtain a release of all of the Liens existing in favor
of the Existing Lender in and to the assets of the Loan Parties.
19
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (or any successor
thereto).
"PERMITTED DISCRETION" means a determination made in good faith
and in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"PERMITTED DISPOSITIONS" means, with respect to any Person, (a)
sales or other dispositions by such Person of Equipment that is substantially
worn, damaged, or obsolete in the ordinary course of business, (b) sales by such
Person of Inventory to buyers in the ordinary course of business, (c) the use or
transfer of money or Cash Equivalents by such Person in a manner that is not
prohibited by the terms of this Agreement or the other Post-Petition Loan
Documents, and (d) the licensing by such Person, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of business.
"PERMITTED INVESTMENTS" means, with respect to any Person, (a)
investments in Cash Equivalents, (b) investments in negotiable instruments for
collection, and (c) advances made in connection with purchases of goods or
services in the ordinary course of business.
"PERMITTED LIENS" means (a) Liens held by Agent for the benefit
of Agent and the Lenders and all other Liens created pursuant to the
Post-Petition Loan Documents, the Financing Orders, including without
limitation, Liens securing the Post-Petition Loans, (b) Liens for unpaid taxes
that either (i) are not yet delinquent, or (ii) do not constitute an Event of
Default hereunder and are the subject of Permitted Protests, (c) Liens set forth
on SCHEDULE P-1, (d) the interests of lessors under operating leases, (e)
purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as such Lien attaches only to the asset purchased or acquired and
the proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of any Loan Party's business and not
in connection with the borrowing of money, and which Liens either (i) are for
sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g)
Liens arising from deposits made in connection with obtaining (i) worker's
compensation or other unemployment insurance in the United States and (ii)
workers safety and insurance legislation in Canada, (h) Liens or deposits to
secure performance of bids, tenders, or leases incurred in the ordinary course
of any Loan Party's business and not in connection with the borrowing of money,
(i) Liens granted as security for surety or appeal bonds in connection with
obtaining such bonds in the ordinary course of any Loan Party's business, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) Liens with respect to the Real Property Collateral that are
exceptions to the commitments for title insurance issued in connection with the
Mortgages, as accepted by Lenders, (l) with respect to any Real Property that is
not part of the Real Property Collateral, easements, rights of way, and zoning
restrictions and other restrictions, charges or encumbrances that do not
materially interfere with or impair the use or operation thereof by Borrower,
(m) Liens on cash in the amount of $600,000 in certain identified accounts
pledged to LaSalle Bank National Association for the purpose of payroll
payments, (n) Liens on cash in the amount of $189,000 in favor of the Existing
Lender with respect to letters of credit issued by the Existing Lender until
such date as an L/C is issued by the Agent in respect of such obligations, (o)
Liens on cash in the amount of $1,000,000 in favor of the Existing Lender in
connection with any debtor-in-possession financing made to any of the Sweet
20
Factory Subsidiaries until such date an L/C is issued in respect of such
obligation, and (p) second priority junior Liens in favor of the Indenture
Trustee, for the benefit of the holders of Notes (as defined in the Indenture).
"PERMITTED PRIORITY LIENS" means the Permitted Liens other than
the Permitted Liens described in clauses (j) and (p) of the definition of
"Permitted Liens" that are valid and unavoidable Liens as of the Filing Date.
"PERMITTED PROFESSIONAL EXPENSES" shall have the meaning
ascribed to such term in clause (a) of "Administrative Expense Priorities."
"PERMITTED PROTEST" means, with respect to any Loan Party, the
right of such Loan Party to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by such Loan Party, in good faith, and (c)
Lenders are satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent's
Liens.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate principal amount outstanding at any one time not in excess of
$500,000.
"PERSON" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"PERSONAL PROPERTY COLLATERAL" means all Collateral other than
Real Property.
"PETITION" means a petition for relief under chapter 11 of the
Bankruptcy Code.
"POST-PETITION LOAN DOCUMENTS" means this Agreement, the Bank
Product Agreements, the Cash Management Agreements, the Control Agreements, the
Canadian Guarantee, the Canadian General Security Agreement, the Hypotec, the
Disbursement Letter, the Due Diligence Letter, the Letters of Credit, the
Mortgages, the Officers' Certificate, the Stock Pledge Agreement, the
Intellectual Property Security Agreement, any note or notes executed by Borrower
in connection with this Agreement and payable to a member of the Lender Group,
and any other agreement entered into, now or in the future, by the Loan Parties
and the Lender Group in connection with this Agreement.
"PROFESSIONALS" means attorneys, accountants and other
professionals retained in the Chapter 11 Cases pursuant to Section 327 and 1103
of the Bankruptcy Code.
"PROFESSIONAL EXPENSES CAP" has the meaning ascribed thereto in
the definition of Administrative Expense Priorities.
21
"PRO RATA SHARE" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (x) prior to the Revolver Commitment being reduced to zero, the
percentage obtained by dividing (i) such Lender's Revolver Commitment, by (ii)
the aggregate Revolver Commitments of all Lenders, and (y) from and after the
time that the Revolver Commitment has been terminated or reduced to zero, the
percentage obtained by dividing (i) the aggregate principal amount of such
Lender's Advances by (ii) the aggregate principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, (x) prior to the Revolver Commitment being reduced to
zero, the percentage obtained by dividing (i) such Lender's Revolver Commitment,
by (ii) the aggregate Revolver Commitments of all Lenders, and (y) from and
after the time that the Revolver Commitment has been terminated or reduced to
zero, the percentage obtained by dividing (i) the aggregate principal amount of
such Lender's Advances by (ii) the aggregate principal amount of all Advances,
(c) with respect to a Lender's obligation to make the Term Loan
A and receive payments of interest, fees, and principal with respect thereto,
(x) prior to the making of the Term Loan A, the percentage obtained by dividing
(i) such Lender's Term Loan A Commitment, by (ii) the aggregate amount of all
Lenders' Term Loan A Commitments, and (y) from and after the making of the Term
Loan A, the percentage obtained by dividing (i) the principal amount of such
Lender's Term Loan A by (ii) the principal amount of the Term Loan A,
(d) with respect to a Lender's obligation to make the Term Loan
B and receive payments of interest, fees, and principal with respect thereto,
(x) prior to the making of the Term Loan B, the percentage obtained by dividing
(i) such Lender's Term Loan B Commitment, by (ii) the aggregate amount of all
Lenders' Term Loan B Commitments, and (y) from and after the making of the Term
Loan B, the percentage obtained by dividing (i) the principal amount of such
Lender's Term Loan B by (ii) the principal amount of the Term Loan B, and
(e) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under SECTION 16.7), the
percentage obtained by dividing (i) such Lender's Revolver Commitment PLUS the
unpaid principal amount of such Lender's portion of the Term Loan A PLUS the
unpaid principal amount of such Lender's portion of the Term Loan B, by (ii) the
aggregate amount of Revolver Commitments of all Lenders PLUS the unpaid
principal amount of the Term Loan A PLUS the unpaid principal amount of the Term
Loan B; provided, however, that in the event the Revolver Commitments have been
terminated or reduced to zero, Pro Rata Share shall be the percentage obtained
by dividing (A) the principal amount of such Lender's Advances PLUS the unpaid
principal amount of such Lender's Term Loan A PLUS the unpaid principal amount
of such Lender's Term Loan B by (B) the principal amount of all outstanding
Advances PLUS the unpaid principal amount of the Term Loan A PLUS the unpaid
principal amount of the Term Loan B.
22
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"REAL PROPERTY" means any estates or interests in real property
now owned or hereafter acquired by any Loan Party and the improvements thereto.
"REAL PROPERTY COLLATERAL" means the parcel or parcels of Real
Property identified on SCHEDULE R-1 and any Real Property hereafter acquired by
any Loan Party.
"RECORD" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"REMEDIAL ACTION" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"REPORT" has the meaning set forth in SECTION 16.17.
"REQUIRED AVAILABILITY" means Excess Availability and
unrestricted cash and Cash Equivalents in an amount of not less than $5,000,000.
"REQUIRED LENDERS" means, at any time, Lenders whose Pro Rata
Shares aggregate 66-2/3% of the Total Commitments, or if the Commitments have
been terminated irrevocably, 66-2/3% of the Obligations (other than Bank Product
Obligations) then outstanding; provided that Required Lenders shall at all times
consist of not less than two non-affiliated Lenders.
"REVOLVER COMMITMENT" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of SECTION 14.1.
"REVOLVER USAGE" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, PLUS (b) the then
extant amount of the Letter of Credit Usage.
"RISK PARTICIPATION LIABILITY" means, as to each Letter of
Credit, all reimbursement obligations of Borrower to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrower, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
23
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"SECURITIES ACCOUNT" means a "securities account" as that term
is defined in the Code.
"SECURITIES PURCHASE AGREEMENT" means the Securities Purchase
Agreement dated as of October 30, 1991 among Borrower, ▇▇▇▇▇▇ May and the
"Purchasers" party thereto, as amended prior to the date hereof.
"SETTLEMENT" has the meaning set forth in SECTION 2.3(F)(I).
"SETTLEMENT DATE" has the meaning set forth in SECTION
2.3(F)(I).
"SHAREHOLDERS' AGREEMENT" means the Shareholders Agreement
dated as of October 31, 1991 among ▇▇▇▇▇▇ May, Borrower and the holders of
▇▇▇▇▇▇ May's common stock, as amended prior to the date hereof .
"SOLVENT" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"STOCK PLEDGE AGREEMENT" means a stock pledge agreement, in
form and substance satisfactory to Lenders, executed and delivered by Borrower
and ▇▇▇▇▇▇ May (and any other Loan Party that hereafter acquires Stock in a
Subsidiary) to Agent.
"SUBSIDIARY" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity; provided that none of the Sweet Factory Subsidiaries shall be a
"Subsidiary" as defined hereunder.
"SWEET FACTORY SUBSIDIARIES" means Sweet Factory Group, Inc.,
Sweet Factory, Inc., SF Candy Company and SF Properties, Inc.
"SWING LENDER" means Foothill, or any other Lender that at the
request of Borrower and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"SWING LOAN" has the meaning set forth in SECTION 2.3(D)(I).
"TAXES" has the meaning set forth in SECTION 16.11(E).
24
"TERM LOANS" means, collectively, the Term Loan A and the Term
Loan B.
"TERM LOAN A" has the meaning set forth in SECTION 2.2(A).
"TERM LOAN A AMOUNT" means $10,000,000.
"TERM LOAN A COMMITMENT" means, with respect to each Lender,
its Term Loan A Commitment, and, with respect to all Lenders, their Term Loan A
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of SECTION 14.1.
"TERM LOAN B AMOUNT" means $10,000,000.
"TERM LOAN B" has the meaning set forth in SECTION 2.2(B).
"TERM LOAN B COMMITMENT" means, with respect to each Lender,
its Term Loan B Commitment, and, with respect to all Lenders, their Term Loan B
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of SECTION 14.1.
"TOTAL COMMITMENT" means, with respect to each Lender, its
Total Commitment, and, with respect to all Lenders, their Total Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on SCHEDULE C-1 attached hereto or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"UNDERLYING ISSUER" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrower.
"UNDERLYING LETTER OF CREDIT" means a letter of credit that has
been issued by an Underlying Issuer.
"VOIDABLE TRANSFER" has the meaning set forth in SECTION 17.7.
"WAREHOUSES" mean, collectively, the warehouses and storage
space leased and rented by Borrower at the following locations: (i) ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (ii) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (iii) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (iv) ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (v) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (vi) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
(vii) ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, (viii) ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and (ix) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"▇▇▇▇▇ FARGO" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
25
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Post-Petition Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Post-Petition Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular
provision of this Agreement or such other Loan Document, as the case may be.
Section, subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in the
other Post-Petition Loan Documents to any agreement, instrument, or document
shall include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). Any reference herein
to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other
Post-Petition Loan Documents shall be satisfied by the transmission of a Record
and any Record transmitted shall constitute a representation and warranty as to
the accuracy and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement and the
Financing Orders, and during the term of this Agreement, each Lender with a
Revolver Commitment agrees (severally, not jointly or jointly and severally) to
make advances ("ADVANCES") to Borrower in an amount at any one time outstanding
not to exceed such Lender's Pro Rata Share of an amount equal to THE LESSER OF
(i) the Maximum Revolver Amount LESS the Letter of Credit Usage, and (ii) the
Borrowing Base less the Letter of Credit Usage. For purposes of this Agreement,
"BORROWING BASE," as of any date of determination, shall mean the result of:
(x) an amount equal to 85% of the amount of Eligible Accounts,
net of customary reserves and the amount, if any, of the Dilution
Reserve, plus
(y) THE LOWER OF
26
(i) 65% of the value of Eligible Inventory (and, for the
months of October, November and December, 2002, 70% of the value
of Eligible Inventory), and
(ii) 90% TIMES the then extant Net Liquidation Percentage
times the book value of the Eligible Inventory (and, for the
months of October, November and December, 2002, 95% TIMES the
then extant Net Liquidation Percentage TIMES the book value of
Eligible Inventory), minus
(z) the sum of (i) the Bank Products Reserve, (ii) $1,000,000,
(iii) the aggregate amount of reserves, if any, established by the
Agent under SECTION 2.1(B), and (iv) $2,500,000.
(b) Anything to the contrary in this SECTION 2.1 notwithstanding, Agent
shall have the right to establish (and remove) reserves in such amounts, and
with respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrower is required to pay (such as taxes,
assessments, insurance premiums or rents as set forth in SECTION 6.18) and has
failed to pay under any Section of this Agreement or any other Post-Petition
Loan Document that is not otherwise stayed by operation of law, and (ii) amounts
owing by Borrower to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than any existing Permitted Lien set forth on
SCHEDULE P-1 which is specifically identified thereon as entitled to have
priority over the Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to the Agent's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for AD
VALOREM, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral. In addition to the foregoing, Agent
shall have the right to have the Inventory reappraised by a qualified appraisal
company selected by Agent from time to time after the Closing Date, (but may
only charge the Loan Parties in accordance with SECTION 2.11(D)(III)) for the
purpose of redetermining the Net Liquidation Percentage of the Eligible
Inventory portion of the Collateral and, as a result, redetermining the
Borrowing Base.
(c) The Lenders with Revolver Commitments shall have no obligation to
make additional Advances hereunder to the extent such additional Advances would
cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
(e) Notwithstanding anything to the contrary in this SECTION 2.1, prior
to the entry of the Final Order, (i) the aggregate commitment of the Lenders to
make Advances (subject to the terms and conditions of this Agreement and the
Financing Orders) shall in no event exceed $3,000,000 and (ii) any Advances of
the remaining $5,000,000 of the Maximum Revolver Amount shall be made at the
sole discretion of the Lenders.
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2.2 TERM LOANS.
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date each Lender with a Term Loan A Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "TERM
LOAN A") to Borrower in an amount equal to such Lender's Pro Rata Share of the
Term Loan A Amount. The Term Loan A shall be repaid in a single payment due on
the Maturity Date. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan A shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. Borrower may, at any time, prepay all or a portion of the Term
Loan A without penalty or premium. All amounts outstanding under the Term Loan A
shall constitute Obligations.
(b) Subject to the terms and conditions of this Agreement, on the
Closing Date, each Lender with a Term Loan B Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "TERM
LOAN B") to Borrower in an amount equal to such Lender's Pro Rata Share of the
Term Loan B Amount. Borrower may, at any time, prepay all or a portion of the
Term Loan B without penalty or premium. The outstanding unpaid principal balance
and all accrued and unpaid interest under the Term Loan B shall be due and
payable on the earlier of (i) December 31, 2002, and (ii) the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan B shall constitute
Obligations.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day that is the requested Funding Date in the case of a request for
an Advance specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day; PROVIDED, HOWEVER, that in the case
of a request for a Swing Loan in an amount of $2,500,000, or less, such notice
will be timely received if it is received by Agent no later than 10:00 a.m.
(California time) on the Business Day that is the requested Funding Date)
specifying (i) the amount of such Borrowing, and (ii) the requested Funding
Date, which shall be a Business Day. At Agent's election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such telephonic
notice to be confirmed in writing within 24 hours of the giving of such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to SECTION 2.3(A), Agent shall elect, in its discretion, (i)
to have the terms of SECTION 2.3(C) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of SECTION 2.3(D) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to SECTION 2.3(D), Agent shall elect to
have the terms of SECTION 2.3(C) apply to such requested Borrowing.
(c) Making of Advances.
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(i) Promptly after receipt of a request for a Borrowing pursuant to
SECTION 2.3(A), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount
of such Lender's Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to Agent's Account, not later than
10:00 a.m. (California time) on the Funding Date applicable thereto. After
Agent's receipt of the proceeds of such Advances (or the Term Loans, as
applicable), upon satisfaction of the applicable conditions precedent set
forth in SECTION 3 hereof, Agent shall make the proceeds thereof available
to Borrower on the applicable Funding Date by transferring immediately
available funds equal to such proceeds received by Agent to Borrower's
Designated Account; PROVIDED, HOWEVER, that, subject to the provisions of
SECTION 2.3(I), Agent shall not request any Lender to make, and no Lender
shall have the obligation to make, any Advance (or its portion of the Term
Loans) if Agent shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in SECTION 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (2) the requested Borrowing would exceed
the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at
least 1 Business Day prior to the date of such Borrowing, that such Lender
will not make available as and when required hereunder to Agent for the
account of Borrower the amount of that Lender's Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such
amount available to Agent in immediately available funds on the Funding
Date and Agent may (but shall not be so required), in reliance upon such
assumption, make available to Borrower on such date a corresponding amount.
If and to the extent any Lender shall not have made its full amount
available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrower such amount, that Lender shall
on the Business Day following such Funding Date make such amount available
to Agent, together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with respect
to amounts owing under this subsection shall be conclusive, absent manifest
error. If such amount is so made available, such payment to Agent shall
constitute such Lender's Advance on the date of Borrowing for all purposes
of this Agreement. If such amount is not made available to Agent on the
Business Day following the Funding Date, Agent will notify Borrower of such
failure to fund and, upon demand by Agent, Borrower shall pay such amount
to Agent for Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Advances composing such
Borrowing. The failure of any Lender to make any Advance on any Funding
Date shall not relieve any other Lender of any obligation hereunder to make
an Advance on such Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Advance to be made by such other
Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by Borrower to Agent for the Defaulting Lender's benefit,
and, in the
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absence of such transfer to the Defaulting Lender, Agent shall transfer any
such payments to each other non-Defaulting Lender member of the Lender
Group ratably in accordance with their Commitments (but only to the extent
that such Defaulting Lender's Advance was funded by the other members of
the Lender Group) or, if so directed by Borrower and if no Default or Event
of Default had occurred and is continuing (and to the extent such
Defaulting Lender's Advance was not funded by the Lender Group), retain
same to be re-advanced to Borrower as if such Defaulting Lender had made
Advances to Borrower. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrower for the account of such
Defaulting Lender the amount of all such payments received and retained by
it for the account of such Defaulting Lender. Solely for the purposes of
voting or consenting to matters with respect to the Post-Petition Loan
Documents, such Defaulting Lender shall be deemed not to be a "LENDER" and
such Lender's Commitment shall be deemed to be zero. This Section
shall remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders, Agent,
and Borrower shall have waived such Defaulting Lender's default in writing,
or (z) the Defaulting Lender makes its Pro Rata Share of the applicable
Advance and pays to Agent all amounts owing by Defaulting Lender in respect
thereof. The operation of this Section shall not be construed to increase
or otherwise affect the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by Borrower
of its duties and obligations hereunder to Agent or to the Lenders other
than such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Borrower at its option, upon written notice to
Agent, to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder, and agrees
to execute and deliver a completed form of Assignment and Acceptance
Agreement in favor of the substitute Lender (and agrees that it shall be
deemed to have executed and delivered such document if it fails to do so)
subject only to being repaid its share of the outstanding Obligations
(other than Bank Product Obligations) (including an assumption of its Pro
Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever; PROVIDED FURTHER, HOWEVER, that any such
assumption of the Commitment of such Defaulting Lender shall not be
deemed to constitute a waiver of any of the Lender Groups' or Borrower's
rights or remedies against any such Defaulting Lender arising out of or in
relation to such failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of Swing Lender,
as a Lender, to have the terms of this SECTION 2.3(D) apply to a requested
Borrowing as described in SECTION 2.3(B), Swing Lender as a Lender shall
make such Advance in the amount of such Borrowing (any such Advance made
solely by Swing Lender as a Lender pursuant to this SECTION 2.3(D) being
referred to as a "SWING LOAN" and such Advances being referred to
collectively as "SWING LOANS") available to Borrower on the Funding
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Date applicable thereto by transferring immediately available funds to
Borrower's Designated Account. Each Swing Loan is an Advance hereunder and
shall be subject to all the terms and conditions applicable to other
Advances, except that no such Swing Loan shall be eligible for the LIBOR
Option and all payments on any Swing Loan shall be payable to Swing Lender
as a Lender solely for its own account (and for the account of the holder
of any participation interest with respect to such Swing Loan). Subject to
the provisions of SECTION 2.3(I), Agent shall not request Swing Lender as a
Lender to make, and Swing Lender as a Lender shall not make, any Swing Loan
if Agent has actual knowledge that (i) one or more of the applicable
conditions precedent set forth in SECTION 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender as a Lender shall not
otherwise be required to determine whether the applicable conditions
precedent set forth in SECTION 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens, shall
constitute Advances and Obligations hereunder, and shall bear interest at
the rate applicable from time to time to Advances that are Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrower and the Lenders, from time
to time in Agent's sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any time that
any of the other applicable conditions precedent set forth in SECTION 3
have not been satisfied, to make Advances to Borrower on behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the Obligations
(other than the Bank Product Obligations), or (C) to pay any other amount
chargeable to Borrower pursuant to the terms of this Agreement, including
Lender Group Expenses and the costs, fees, and expenses described in
SECTION 10 (any of the Advances described in this SECTION 2.3(E) shall be
referred to as "AGENT ADVANCES"); provided, that notwithstanding anything
to the contrary contained in this SECTION 2.3(E), the aggregate principal
amount of Agent Advances outstanding at any time, when taken together with
the aggregate principal amount of Overadvances made in accordance with
SECTION 2.3(I) hereof outstanding at any time, shall not exceed an amount
equal to the lesser of (x) 10% of the Borrowing Base then in effect and (y)
$2,500,000. Each Agent Advance is an Advance hereunder and shall be subject
to all the terms and conditions applicable to other Advances, except that
all payments thereon shall be payable to Agent solely for its own account
(and for the account of the holder of any participation interest with
respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand and secured by
the Agent's Liens granted to Agent under the Post-Petition Loan Documents,
shall constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances that are Base
Rate Loans.
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(f) Settlement. It is agreed that each Lender's funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender's Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by Borrower) that in order to facilitate the
administration of this Agreement and the other Post-Petition Loan Documents,
settlement among them as to the Advances, Swing Loans, and the Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:
(i) Agent shall request settlement ("SETTLEMENT") with the Lenders on
a weekly basis, or on a more frequent basis if so determined by Agent, (1)
on behalf of Swing Lender, with respect to each outstanding Swing Loan, (2)
for itself, with respect to each Agent Advance, and (3) with respect to
Collections received, as to each by notifying the Lenders by telecopy,
telephone, or other similar form of transmission, of such requested
Settlement, no later than 2:00 p.m. (California time) on the Business Day
immediately prior to the date of such requested Settlement (the date of
such requested Settlement being the "SETTLEMENT DATE"). Such notice of a
Settlement Date shall include a summary statement of the amount of
outstanding Advances, Swing Loans and Agent Advances for the period since
the prior Settlement Date. Subject to the terms and conditions contained
herein (including SECTION 2.3(F)(III)): (y) if a Lender's balance of the
Advances, Swing Loans, and Agent Advances exceeds such Lender's Pro Rata
Share of the Advances, Swing Loans, and Agent Advances as of a Settlement
Date, then Agent shall, by no later than 12:00 p.m. (California time) on
the Settlement Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the Settlement Date,
its Pro Rata Share of the Advances, Swing Loans, and Agent Advances, and
(z) if a Lender's balance of the Advances, Swing Loans, and Agent Advances
is less than such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, such Lender shall no later than
12:00 p.m. (California time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the Settlement Date,
its Pro Rata Share of the Advances, Swing Loans, and Agent Advances. Such
amounts made available to Agent under clause (z) of the immediately
preceding sentence shall be applied against the amounts of the applicable
Swing Loan or Agent Advance and, together with the portion of such Swing
Loan or Agent Advance representing Swing Lender's Pro Rata Share thereof,
shall constitute Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable thereto
to the extent required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the Advances, Swing
Loans, and Agent Advances is less than, equal to, or greater than such
Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances as
of a Settlement Date, Agent shall, as part of the relevant Settlement,
apply to such balance the portion of payments actually received in good
funds by Agent with respect to principal, interest, fees payable by
Borrower and allocable to the Lenders hereunder, and proceeds of
Collateral. To the
32
extent that a net amount is owed to any such Lender after such application,
such net amount shall be distributed by Agent to that Lender as part of
such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent Advances
or Swing Loans are outstanding, may pay over to Swing Lender any payments
received by Agent, that in accordance with the terms of this Agreement
would be applied to the reduction of the Advances, for application to Swing
Lender's Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections received since the then immediately preceding Settlement Date
have been applied to Swing Lender's Pro Rata Share of the Advances other
than to Swing Loans, as provided for in the previous sentence, Swing Lender
shall pay to Agent for the accounts of the Lenders, and Agent shall pay to
the Lenders, to be applied to the outstanding Advances of such Lenders, an
amount such that each Lender shall, upon receipt of such amount, have, as
of such Settlement Date, its Pro Rata Share of the Advances. During the
period between Settlement Dates, Swing Lender with respect to Swing Loans,
Agent with respect to Agent Advances, and each Lender (subject to the
effect of letter agreements between Agent and individual Lenders) with
respect to the Advances other than Swing Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing Lender, Agent, or
the Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal amount of
the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than Swing Loans
and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable and Agent or Swing Lender may, but is not obligated to, knowingly and
intentionally, continue to make Advances (including Swing Loans) to Borrower
notwithstanding that an Overadvance exists or thereby would be created, so long
as (i) after giving effect to such Advances (including a Swing Loan), the
outstanding Revolver Usage does not exceed the Borrowing Base by $2,500,000,
(ii) after giving effect to such Advances (including a Swing Loan), the
outstanding Revolver Usage (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) does not exceed the
Maximum Revolver Amount, (iii) the aggregate principal amount of Overadvances
made pursuant to SECTION 2.3(I) when taken together with the
33
aggregate principal amount of Agent Advances made pursuant to SECTION 2.3(E)
does not exceed at any time an amount equal to the lesser of (x) 10% of the
Borrowing Base then in effect and (y) $2,500,000, and (iv) at the time of the
making of any such Advance (including any Swing Loan), Agent does not believe,
in good faith, that the Overadvance created by such Advance will be outstanding
for more than 90 days. The foregoing provisions are for the exclusive benefit of
Agent, Swing Lender, and the Lenders and are not intended to benefit Borrower in
any way. The Advances and Swing Loans, as applicable, that are made pursuant to
this SECTION 2.3(I) shall be subject to the same terms and conditions as any
other Advance or Swing Loan except that the rate of interest applicable thereto
shall be the rate applicable to Advances that are Base Rate Loans under SECTION
2.6(c) hereof without regard to the presence or absence of a Default or Event of
Default.
(i) In the event Agent obtains actual knowledge that the Revolver
Usage exceeds the amounts permitted by the preceding paragraph, regardless
of the amount of, or reason for, such excess, Agent shall notify Lenders as
soon as practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses) unless Agent
determines that prior notice would result in imminent harm to the
Collateral or its value), and the Lenders with Revolver Commitments
thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrower and intended to
reduce, within a reasonable time, the outstanding principal amount of the
Advances to Borrower to an amount permitted by the preceding paragraph. In
the event Agent or any Lender disagrees over the terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof
shall be implemented according to the determination of the Required
Lenders.
(ii) Each Lender with a Revolver Commitment shall be obligated to
settle with Agent as provided in SECTION 2.3(F) for the amount of such
Lender's Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
SECTION 2.3(I), and any Overadvances resulting from the charging to the
Loan Account of interest, fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) Payments by Borrower.
(i) Except as otherwise expressly provided herein, all payments by
Borrower shall be made to Agent's Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 11:00
a.m. (California time) on the date specified herein. Any payment received
by Agent later than 11:00 a.m. (California time) shall be deemed to have
been received on the following Business Day and any applicable interest or
fee shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the date on
which any payment is due to the Lenders that Borrower will not make such
payment in full as and when required, Agent may assume that Borrower has
made (or will make) such
34
payment in full to Agent on such date in immediately available funds and
Agent may (but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent Borrower does not make such
payment in full to Agent on the date when due, each Lender severally shall
repay to Agent on demand such amount distributed to such Lender, together
with interest thereon at the Defaulting Lender Rate for each day from the
date such amount is distributed to such Lender until the date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to Defaulting Lenders
and except as otherwise provided in the Post-Petition Loan Documents
(including letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the
Obligations to which such payments relate held by each Lender) and payments
of fees and expenses (other than fees or expenses that are for Agent's
separate account, after giving effect to any letter agreements between
Agent and individual Lenders) shall be apportioned ratably among the
Lenders having a Pro Rata Share of the type of Commitment or Obligation to
which a particular fee relates. All payments shall be remitted to Agent and
subject to paragraph (vi) below, all such payments (other than payments
received while no Event of Default has occurred and is continuing and which
relate to the payment of principal or interest of specific Obligations or
which relate to the payment of specific fees), and all proceeds of Accounts
or other Collateral received by Agent, shall be applied as follows:
(A) FIRST, to pay any Lender Group Expenses then due to Agent
under the Post-Petition Loan Documents, until paid in full,
(B) SECOND, to pay any Lender Group Expenses then due to the
Lenders under the Post-Petition Loan Documents, on a ratable basis,
until paid in full,
(C) THIRD, to pay any fees then due to Agent (for its separate
accounts, after giving effect to any letter agreements between Agent
and individual Lenders) under the Post-Petition Loan Documents until
paid in full,
(D) FOURTH, to pay any fees then due to any or all of the Lenders
(after giving effect to any letter agreements between Agent and
individual Lenders) under the Post-Petition Loan Documents, on a
ratable basis, until paid in full,
(E) FIFTH, to pay interest due in respect of all Agent Advances,
until paid in full,
(F) SIXTH, ratably to pay interest due in respect of the Advances
(other than Agent Advances), the Swing Loans, and first the Term Loan
A and then Term Loan B until paid in full,
(G) SEVENTH, to pay the principal of all Agent Advances until
paid in full,
35
(H) EIGHTH, ratably to pay all principal amounts then due and
payable (other than as a result of an acceleration thereof) with
respect to first the Term Loan A until paid in full and then the Term
Loan B until paid in full,
(I) NINTH, to pay the principal of all Swing Loans until paid in
full,
(J) TENTH, so long as no Event of Default has occurred and is
continuing, and at Agent's election (which election Agent agrees will
not be made if an Overadvance would be created thereby), to pay
amounts then due and owing by the Loan Parties in respect of Bank
Products, until paid in full,
(K) ELEVENTH, so long as no Event of Default has occurred and is
continuing, to pay the principal of all Advances until paid in full,
(L) TWELFTH, if an Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances until
paid in full, and (ii) to Agent, to be held by Agent, for the benefit
of ▇▇▇▇▇ Fargo or its Affiliates, as applicable, as cash collateral in
an amount up to the amount of the Bank Products Reserve established
prior to the occurrence of, and not in contemplation of, the subject
Event of Default until the Loan Parties' obligations in respect of the
then extant Bank Products have been paid in full or the cash
collateral amount has been exhausted,
(M) THIRTEENTH, if an Event of Default has occurred and is
continuing, to pay the outstanding principal balance of the Term
Loans, applicable first to the Term Loan A and then to the Term Loan B
until the Term Loans are paid in full,
(N) FOURTEENTH, if an Event of Default has occurred and is
continuing, to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter of Credit
Usage until paid in full,
(O) FIFTEENTH, to pay any other Obligations (including Bank
Product Obligations) until paid in full, and
(P) SIXTEENTH, to Borrower (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in SECTION 2.3(F).
(iii) In each instance, so long as no Event of Default has occurred
and is continuing, SECTION 2.4(B) shall not be deemed to apply to any
payment by Borrower specified by Borrower to be for the payment of specific
Obligations then due and payable (or prepayable) under any provision of
this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment of
all amounts owing under the Post-Petition Loan Documents according to the
terms thereof,
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including loan fees, service fees, professional fees, interest, default
interest, interest on interest, and expense reimbursements, whether or not
the same would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
(v) In the event of a direct conflict between the priority provisions
of this SECTION 2.4 and other provisions contained in any other
Post-Petition Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of this SECTION 2.4 shall
control and govern.
(vi) Notwithstanding anything to the contrary contained in this
Agreement or any other Post-Petition Loan Document, all proceeds received
by Agent from the sale or other disposition of, or in connection with any
casualty, loss or condemnation of, any Collateral consisting of Equipment
and owned Real Property Collateral shall be applied, first, to the
Obligations in respect of the Term Loan A then outstanding, second, to the
Obligations in respect of the Term Loan B outstanding, and the remainder of
such proceeds shall be applied in accordance with SECTION 2.4(B); provided
that, if the proceeds are from a disposition of the assets or Stock of any
Loan Party or any insurance or condemnation which disposition or proceeds
of insurance or condemnation includes both (x) Equipment and owned Real
Property Collateral and (y) other assets, such proceeds shall be applied as
follows and in the following order: (1) an amount equal to the book value,
or if greater, an amount equal to the amount of Advances supported by
Accounts Receivable and Inventory determined using the effective advance
rate under the Borrowing Base against such Accounts Receivable and
Inventory (determined at the time of such disposition or event resulting in
such insurance or condemnation proceeds) shall be applied to the Advances
until paid in full; (2) an amount equal to the book value of the Equipment
and owned Real Property Collateral (determined at the time of such
disposition or event resulting in such insurance or condemnation proceeds)
shall be applied FIRST, to the Term Loan A until paid in full, and SECOND,
to the Term Loan B until paid in full; and (3) the remaining proceeds
shall be applied FIRST, to the Advances until paid in full, SECOND, to
the Term Loan A until paid in full, THIRD, to the Term Loan B until paid
in full, and FOURTH, to all other Obligations until paid in full.
(c) Mandatory Prepayments.
(i) If at any time, the sum of the outstanding Revolver Usage, PLUS
the outstanding principal amount of the Term Loan A, PLUS the outstanding
principal amount of the Term Loan B is greater than an amount equal to 85%
TIMES the Enterprise Value of Borrower and ACC Canada, Borrower shall
immediately pay to Agent an amount equal to such excess, to be applied to
first to the Advances, then to the Term Loan A and then to the Term Loan B.
Lenders shall have the right on or after October 31, 2002 to have the
Enterprise Value redetermined from time to time by a qualified appraisal
company selected by the Lenders. So long as no Event of Default has
occurred and is continuing, such redetermination shall be conducted at
Borrower's expense no more frequently than one time. Upon the occurrence
and during the continuance of an Event of Default, the
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Lenders shall have the right to have the Enterprise Value redetermined, at
Borrower's expense, as frequently as Lenders shall determine.
(ii) If at any time Borrower receives any amounts from the Existing
Lender in respect of cash collateral deposited with the Existing Lender
pursuant to the terms of the Payoff Letter, such amounts shall be
immediately paid by Borrower to Agent, to be applied first to the Advances,
then to the Term Loan A and then to the Term Loan B.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to the Lender
Group pursuant to SECTIONS 2.1 and 2.12 is greater than either the Dollar or
percentage limitations set forth in SECTIONS 2.1 or 2.12, (an "OVERADVANCE"),
Borrower immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance with
the priorities set forth in SECTION 2.4(B). In addition, Borrower hereby
promises to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to the Lender Group as and when due and payable
under the terms of this Agreement and the other Post-Petition Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance, at a per annum rate equal to the Base Rate
plus 0.75%, (ii) if the relevant Obligation is a portion of the Term Loan A, at
a per annum rate equal to the greater of 8.25% and 3.50% above the Base Rate,
and (iii) if the relevant Obligation is a portion of the Term Loan B, at a per
annum rate equal to the greater of 9% and 4.25% above the Base Rate.
(b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in SECTION
2.12(E)) which shall accrue at a rate equal to 2.5% per annum TIMES the Daily
Balance of the undrawn amount of all outstanding Letters of Credit plus issuing
bank charges, charged monthly in arrears.
(c) Default Rate. Upon the occurrence and during the continuation of an
Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit and except
for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to 3 percentage points above the per
annum rate otherwise applicable hereunder; except that such Default Rate
shall be equal to 6 percentage points above the per annum rate otherwise
applicable hereunder upon the occurrence and during the continuation of an
Event of Default (other than an Event of Default under SECTION 8.2(II))
prior to the entry of the Final Order, and
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(ii) the Letter of Credit fee provided for above shall be increased to
3 percentage points above the per annum rate otherwise applicable
hereunder; except that such Default Rate shall be equal to 6 percentage
points above the per annum rate otherwise applicable hereunder upon the
occurrence and during the continuation of an Event of Default (other than
an Event of Default under SECTION 8.2(II)) prior to the entry of the Final
Order.
(d) Payment. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Commitments are outstanding. Borrower
hereby authorizes Agent, from time to time without prior notice to Borrower, to
charge such interest and fees, all Lender Group Expenses (as and when incurred),
the charges, commissions, fees, and costs provided for in SECTION 2.12(E) (as
and when accrued or incurred), the fees and costs provided for in SECTION 2.11
(as and when accrued or incurred), and all other payments as and when due and
payable under any Post-Petition Loan Document (including the installments due
and payable with respect to the Term Loans and including any amounts due and
payable to ▇▇▇▇▇ Fargo or its Affiliates in respect of Bank Products up to the
amount of the then extant Bank Products Reserve) to Borrower's Loan Account,
which amounts thereafter shall constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances hereunder. Any interest not
paid when due shall be compounded by being charged to Borrower's Loan Account
and shall thereafter constitute Advances hereunder and shall accrue interest at
the rate then applicable to Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the
Post-Petition Loan Documents shall be computed on the basis of a 360 day year
for the actual number of days elapsed. In the event the Base Rate is changed
from time to time hereafter, the rates of interest hereunder based upon the Base
Rate automatically and immediately shall be increased or decreased by an amount
equal to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. The Loan Parties and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; PROVIDED, HOWEVER, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, IPSO
FACTO, as of the date of this Agreement, the Loan Parties are and shall be
liable only for the payment of such maximum as allowed by law, and payment
received from the Loan Parties in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations to
the extent of such excess.
2.7 CASH MANAGEMENT.
(a) The Loan Parties shall (i) establish prior to the entry of the
Final Order, and maintain at all times thereafter, cash management services of a
type and on terms satisfactory to Agent at one or more of the banks set forth on
SCHEDULE 2.7(A) (each, a "CASH
39
MANAGEMENT BANK"), and shall request in writing and otherwise take such
reasonable steps to ensure that all of their Account Debtors forward payment of
the amounts owed by them directly to such Cash Management Bank, and (ii) deposit
or cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all Collections (including those
sent directly by Account Debtors to a Cash Management Bank) into a bank account
in Agent's name (a "CASH MANAGEMENT ACCOUNT") at one of the Cash Management
Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and the Loan Parties, in form and substance
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, the Loan Parties may amend SCHEDULE 2.7(A) to add or replace a Cash
Management Bank or Cash Management Account; PROVIDED, HOWEVER, that (i) such
prospective Cash Management Bank shall be satisfactory to Agent and Agent shall
have consented in writing in advance to the opening of such Cash Management
Account with the prospective Cash Management Bank, and (ii) prior to the time of
the opening of such Cash Management Account, the applicable Loan Party and such
prospective Cash Management Bank shall have executed and delivered to Agent a
Cash Management Agreement. The Loan Parties shall close any Cash Management
Account with a Cash Management Bank (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of such Cash Management Bank with respect to Cash Management
Accounts or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which the applicable Loan Party is hereby
deemed to have granted a Lien to Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment item by
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the
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contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day. From and
after the Closing Date, Agent shall be entitled to charge Borrower for 1
Business Day of `clearance' or `float' at the rate applicable to Base Rate Loans
under SECTION 2.6 on all Collections that are received by the Loan Parties
(regardless of whether forwarded by the Cash Management Banks to Agent). This
across-the-board 1 Business Day clearance or float charge on all Collections is
acknowledged by the parties to constitute an integral aspect of the pricing of
the financing of the Loan Parties and shall apply irrespective of whether or not
there are any outstanding monetary Obligations; the effect of such clearance or
float charge being the equivalent of charging 1 Business Day of interest on such
Collections. The parties acknowledge and agree that the economic benefit of the
foregoing provisions of this SECTION 2.8 shall be for the exclusive benefit of
Agent.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and he
Term Loans, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to SECTION 2.6(d). Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance or
Agent Advance, or Swing Loan requested by Borrower and made by Agent or the
Lenders hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrower (the "LOAN ACCOUNT") on
which Borrower will be charged with the Term Loans, all Advances (including
Agent Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrower or for Borrower's account, the Letters of Credit issued by Issuing
Lender for Borrower's account, and with all other payment Obligations hereunder
or under the other Post-Petition Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses. The Agent shall deliver to Borrower detailed records of all fees and
expenses charged to the account after entry of such amounts upon Borrower's
request. In accordance with SECTION 2.8, the Loan Account will be credited with
all payments received by Agent from the Loan Parties or for Borrower's account,
including all amounts received in the Agent's Account from any Cash Management
Bank. Upon request of Borrower, Agent shall render statements regarding the Loan
Account to Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrower and the Lender Group
unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver
to Agent written objection thereto describing the error or errors contained in
any such statements.
2.11 FEES. Borrower shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated
41
thereafter) and shall be apportioned among the Lenders in accordance with the
terms of letter agreements between Agent and individual Lenders:
(a) Closing Fee. A closing fee equal to (a) 0.75% of the Maximum
Revolver Amount plus (b) 2.50% of the Term Loan A Amount plus (c) 2.50% of the
Term Loan B Amount shall be earned in full on the Closing Date, of which an
amount equal to (x) 0.75% of the Maximum Revolver Amount plus (y) 1.50% of the
Term Loan A Amount plus (z) 1.50% of the Term Loan B Amount shall be payable on
the Closing Date, and the remaining amount (which consists of 1% of the Term
Loan A Amount and 1% of the Term Loan B Amount) (the "ADDITIONAL FEES") shall be
payable if the Final Order has not been entered within 30 days of the date of
the entry of the Interim Order. If the Final Order is entered within 30 days of
the entry of the Interim Order, payment of the Additional Fees shall be waived.
(b) Unused Line Fee. On the first day of each month during the term of
this Agreement, an unused line fee in an amount equal to 0.25% per annum TIMES
the result of (a) the Maximum Revolver Amount, LESS (b) the sum of (i) the
average Daily Balance of Advances that were outstanding during the immediately
preceding month, PLUS (ii) the average Daily Balance of the Letter of Credit
Usage during the immediately preceding month.
(c) Servicing Fee. On the first day of each month during the term of
this Agreement, a servicing fee in the amount of $8,500, due and payable monthly
in arrears.
(d) Audit, Appraisal, and Valuation Charges. Without limiting the
Agent's right to conduct audits, appraisals or valuations during the term of
this Agreement, for the separate account of Agent, audit, appraisal, and
valuation fees and charges as follows: (i) a fee of $850 per day, per auditor,
plus out-of-pocket expenses for each financial audit of Borrower performed by
personnel employed by, or selected by, Agent, such audits to be performed at
least quarterly, provided that absent an Event of Default, Borrower shall be
required to pay the fees and out-of-pocket expenses for only two audits per
year, (ii) a one time charge of $5,000 plus out-of-pocket expenses for expenses
for the establishment of electronic collateral reporting systems for Accounts,
(iii) a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for
each appraisal of the Collateral performed by personnel employed by, or selected
by, Agent, such appraisals to be performed (x) in respect of Inventory
quarterly, and (y) in respect of Equipment and Real Property and any other
Collateral, once per year (it being understood that Lender may conduct
appraisals of the Equipment and Real Property from time to time but that, absent
an Event of Default, Borrower shall be required to pay the fees and
out-of-pocket expenses for only one such appraisal per year), and (iv) the
actual charges paid or incurred by Agent if it elects to employ the services of
one or more third Persons to perform financial audits of Borrower, to appraise
the Collateral, or any portion thereof, or to assess Borrower's business
valuation.
2.12 LETTER OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrower (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C UNDERTAKING") with respect to
letters of credit issued by an Underlying Issuer (as of the
42
Closing Date, the prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the
account of Borrower. To request the issuance of an L/C or an L/C Undertaking (or
the amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension) a notice requesting the
issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
to be amended, renewed, or extended, the date of issuance, amendment, renewal,
or extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or the beneficiary of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender, Borrower
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing
Lender shall have no obligation to issue a Letter of Credit if any of the
following would result after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base less
the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $5,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum Revolver
Amount less the then extant amount of outstanding Advances.
Borrower and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances that are Base Rate Loans under SECTION 2.6. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower's obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrower pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments pursuant to
SECTION 2.12(C) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
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(b) Promptly following receipt of a notice of L/C Disbursement pursuant
to SECTION 2.12(A), each Lender with a Revolver Commitment agrees to fund its
Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection
on the same terms and conditions as if Borrower had requested such Advance and
Agent shall promptly pay to Issuing Lender the amounts so received by it from
the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter
of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitment, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share pursuant to this SECTION 2.12(B)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in SECTION 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by the Issuing Lender in respect of such Letter
of Credit as provided in this Section, Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; PROVIDED, HOWEVER, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group. Borrower agrees to be bound by the Underlying
Issuer's regulations and interpretations of any Underlying Letter of Credit or
by Issuing Lender's interpretations of any L/C issued by Issuing Lender to or
for Borrower's account, even though this interpretation may be different from
Borrower's own, and Borrower understands and agrees that the Lender Group shall
not be liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrower's instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto.
Borrower understands that the L/C Undertakings may require Issuing Lender to
indemnify the Underlying Issuer for certain costs or liabilities arising out of
claims by Borrower against such Underlying Issuer. Borrower hereby agrees to
indemnify, save, defend, and hold the Lender Group harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability incurred
by the Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; PROVIDED, HOWEVER, that Borrower shall
not be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
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(d) Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender's instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrower to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by Borrower that, as of the Closing Date, the issuance charge imposed
by the prospective Underlying Issuer is .825% per annum times the face amount of
each Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of charges
for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law, treaty, rule,
or regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or the
Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the Lender
Group any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto,
(g) and the result of the foregoing is to increase, directly or
indirectly, the cost to the Lender Group of issuing, making, guaranteeing, or
maintaining any Letter of Credit or to reduce the amount receivable in respect
thereof by the Lender Group, then, and in any such case, Agent may, at any time
within a reasonable period after the additional cost is incurred or the amount
received is reduced, notify Borrower, and Borrower shall pay on demand such
amounts as Agent may specify to be necessary to compensate the Lender Group for
such additional cost or reduced receipt, together with interest on such amount
from the date of such demand until payment in full thereof at the Base Rate
Loans. The determination by Agent of any amount due pursuant to this Section, as
set forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on all of the parties hereto.
2.13 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of
44
reducing the return on such Lender's or such holding company's capital as a
consequence of such Lender's Commitments hereunder to a level below that which
such Lender or such holding company could have achieved but for such adoption,
change, or compliance (taking into consideration such Lender's or such holding
company's then existing policies with respect to capital adequacy and assuming
the full utilization of such entity's capital) by any amount deemed by such
Lender to be material, then such Lender may notify Borrower and Agent thereof.
Following receipt of such notice, Borrower agrees to pay such Lender on demand
the amount of such reduction of return of capital as and when such reduction is
determined, payable within 90 days after presentation by such Lender of a
statement in the amount and setting forth in reasonable detail such Lender's
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error). In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The obligation
of the Lender Group (or any member thereof) to make the initial Advance (or
otherwise to extend any credit provided for hereunder), is subject to the
fulfillment, to the satisfaction of the Lenders, of each of the conditions
precedent set forth below, pursuant to the Interim Order:
(a) The Closing Date shall occur on or before June 30, 2002;
(b) Agent shall have received all financing statements required by
Agent, duly executed by Borrower, and Agent shall have received UCC, tax lien,
title searches and judgment searches, satisfactory to the Lenders (including
fixture filings);
(c) Agent shall have received each of the following documents, in form
and substance satisfactory to Agent, duly executed, and each such document shall
be in full force and effect:
(i) the Disbursement Letter,
(ii) the Due Diligence Letter,
(iii) the Canadian Guarantee,
(iv) the Canadian General Security Agreement and the Hypotec,
(v) the Mortgages and all ancillary documents required by or customary
under state and local laws in connection therewith,
(vi) the Officers' Certificate,
(vii) the Pay-Off Letter, together with UCC termination statements and
other documentation evidencing the termination by Existing Lender of its
Liens in and to the properties and assets of Borrower,
45
(viii) the Stock Pledge Agreement, together with all certificates
representing the shares of Stock pledged thereunder (except for the stock
certificate(s) of ACC Canada which are owned by Borrower), as well as Stock
powers with respect thereto endorsed in blank,
(ix) the Intellectual Property Security Agreement, and
(x) the Interlender Agreement;
(d) Agent shall have received a certificate from the Secretary of each
Loan Party attesting to the resolutions of such Loan Party's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Post-Petition Loan Documents to which such Loan Party is a party and
authorizing specific officers of such Loan Party to execute the same;
(e) Agent shall have received copies of each Loan Party's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of each such Loan Party;
(f) Agent shall have received a certificate of status with respect to
each such Loan Party, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
each such Loan Party, which certificate shall indicate that each such Loan Party
is in good standing in such jurisdiction;
(g) Agent shall have received a certificate of insurance, together with
the endorsements thereto, as required by SECTION 6.8, the form, scope and
substance of which shall be satisfactory to Agent;
(h) Agent and Lenders shall have received an opinion of the Loan
Parties' counsel concerning, among other things, corporate existence, due
authorization, execution and delivery, and to the effect that the Interim Order
has been entered and is in full force and effect as of the Closing and of ACC
Canada's counsel concerning, among other things, corporate existence,
enforceability, due authorization, execution and delivery, and perfection of the
Agent's security interest, each in form and substance satisfactory to Lenders;
(i) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of each Loan Party) that all tax
returns required to be filed by each Loan Party have been timely filed and all
taxes upon each Loan Party or its respective properties, assets, income, and
franchises (including Real Property taxes and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of a Permitted
Protest;
(j) Borrower shall have the Required Availability after giving effect
to the initial extensions of credit hereunder;
(k) Agent shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of each Loan Party's
books and records and verification of each Loan Party's representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Agent, (ii) an inspection of each of the locations where
46
Inventory is located, including, but not limited to, retail locations randomly
selected by the Agent, the results of which shall be satisfactory to Agent, and
(iii) satisfactory review of the April 2002 physical inventory results, the
results of which are acceptable to Lenders in their sole discretion;
(l) Agent shall have received completed reference checks with respect
to each Loan Party's senior management, the results of which are satisfactory to
the Lenders in their sole discretion;
(m) Agent shall have received an appraisal of the Net Liquidation
Percentage applicable to the Loan Parties' Inventory, the results of which shall
be satisfactory to Agent;
(n) Agent shall have received Borrower's Business Plan;
(o) The Loan Parties shall have received all licenses, approvals or
evidence of other actions, if any, required by any Governmental Authority in
connection with the execution and delivery by the Loan Parties of this Agreement
or any other Post-Petition Loan Document or with the consummation of the
transactions contemplated hereby and thereby;
(p) Borrower shall have provided the Agent with a draft of Borrower's
motion seeking entry of the Interim Order prior to filing such motion with the
Bankruptcy Court, and the Interim Order shall be acceptable to the Lenders in
all respects;
(q) Borrower shall have delivered to the Lenders a true and complete
copy of the Agreed Budget;
(r) All other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to the Lenders;
(s) Within five Business Days of the commencement of the Chapter 11
Cases, the Bankruptcy Court shall have entered the Interim Order and the Interim
Order shall be in full force and effect and shall not have been vacated,
reversed, modified, amended or stayed in any respect (without the Lenders' prior
approval) and, in the event that such order is the subject of any pending
appeal, the performance of any obligation of any party hereto shall not be the
subject of a stay pending appeal;
(t) Borrower shall pay all Lender Group Expenses incurred in connection
with the transactions evidenced by this Agreement;
(u) All First Day Orders and all other orders entered in the Chapter 11
Cases shall be in form and substance reasonably satisfactory to the Lenders and
their counsel;
(v) Lenders shall have received a completed Enterprise Value acceptable
to the Lenders in their sole discretion;
47
(w) Borrower and ▇▇▇▇▇▇ May shall have filed a chapter 11 plan of
reorganization with the Bankruptcy Court prior to the Closing Date acceptable to
the Lenders in all respects;
(x) Borrower shall have obtained (i) the consent of the holders of 90%
of the principal amount of the Notes (as defined in the Indenture) to the
granting of Liens senior in all respects to the Liens of the Indenture Trustee
as provided in the Interim Order, and (ii) lock-up agreements from the holders
of 83% of the principal amount of the Notes (as defined in the Indenture)
pursuant to which such holders have agreed to support the chapter 11 plan of
reorganization of Borrower and ▇▇▇▇▇▇ May; and
(y) SCHEDULES E-1 and P-1 to this Agreement shall have been completed
and delivered to the Lenders in form and substance satisfactory to the Lenders
in their sole discretion.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) Within 30 days of the date of the Interim Order, the Final Order
shall have been entered and shall be in full force and effect and shall be in
form and substance satisfactory to the Lenders and shall not have been vacated,
reversed, modified, amended or stayed in any respect, and in the event that
either such order is the subject of any pending appeal, the performance of any
obligation of any party hereto shall not be the subject of any stay pending
appeal;
(b) Prior to the date of the entry of the Final Order (or, with respect
to the Real Property Collateral located at (i) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ and (ii) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ (to include the headquarters and cabinet
shop), Chicago, Illinois, within 60 days after the Closing Date), the Lenders
shall have received mortgagee title insurance policies and surveys for Real
Property Collateral valued at more than $1,000,000 (or marked commitments to
issue the same) for the Real Property Collateral issued by a title insurance
company satisfactory to the Lenders (each a "MORTGAGE POLICY" and, collectively,
the "MORTGAGE POLICIES") in amounts satisfactory to the Lenders assuring the
Lenders that the Mortgages on such Real Property Collateral are valid and
enforceable first priority mortgage Liens on such Real Property Collateral free
and clear of all defects and encumbrances except Permitted Liens, and the
Mortgage Policies otherwise shall be in form and substance satisfactory to the
Lenders;
(c) Within 60 days of the Closing Date, the Borrower (with the
cooperation of the Agent) shall have implemented a system of electronic
collateral reporting; and
(d) prior to the date of the entry of the Final Order, Agent shall have
received each of the following documents, in form and substance satisfactory to
Agent, duly executed, and each such document shall be in full force and effect:
(i) cash management agreements executed by LaSalle Bank National
Association in form and substance reasonably acceptable to Agent, and
48
(ii) the Control Agreements, if any.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of the
Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement and
the other Post-Petition Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Loan Party, Agent, any Lender, or any of their Affiliates, and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective upon the execution and
delivery hereof by the Loan Parties, Agent, and the Lenders and the entry of the
Interim Order and shall continue in full force (unless the Final Order is not
entered) and effect for a term ending on the earliest of (i) the date which is
365 days after the Closing Date, (ii) the date on which the substantial
consummation (as defined in 11 U.S.C. Section 1101(2)) of any plan of
reorganization for Borrower in the Chapter 11 Cases which has been confirmed by
an order of the Bankruptcy Court, (iii) the date upon which a sale of all the
Collateral is consummated, (iv) a date upon which an order with respect to the
Chapter 11 Cases shall be entered by the Bankruptcy Court (a) appointing a
trustee under section 1104 or (b) appointing an examiner with enlarged powers
(beyond those set forth in section 1106(a)(3) and (4) of the Bankruptcy Code)
relating to the operation of the business under section 1106(b) of the
Bankruptcy Code, (v) the date on which an order shall be entered by the
Bankruptcy Court dismissing or converting such Chapter 11 Cases to chapter 7
cases, (vi) the date which is thirty (30) days after the entry of the Interim
Order unless the Final Order has been entered prior to such date, or (vii) the
effective date of termination of this Agreement pursuant to the terms of this
Agreement (the "MATURITY DATE"). The foregoing notwithstanding, the Lender
Group, upon the election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit and including all Bank Products
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held
49
by Agent for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect to the
then extant Bank Products Obligations). No termination of this Agreement,
however, shall relieve or discharge any Loan Party of its Obligations, or
covenants hereunder and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged and the
Lender Group's obligations to provide additional credit hereunder have been
terminated. When this Agreement has been terminated and all of the Obligations
have been fully and finally discharged and the Lender Group's obligations to
provide additional credit under the Post-Petition Loan Documents have been
terminated irrevocably, Agent will, at the Loan Parties' sole expense, execute
and deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 3 Business Days prior written notice to Agent, to terminate this Agreement
by paying to Agent, for the benefit of the Lender Group, in cash, the
Obligations (including (a) either (i) providing cash collateral to be held by
Agent for the benefit of those Lenders with a Revolver Commitment in an amount
equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender, and (b)
providing cash collateral to be held by Agent for the benefit of ▇▇▇▇▇ Fargo or
its Affiliates with respect to the then extant Bank Products Obligations), in
full. If Borrower has sent a notice of termination pursuant to the provisions of
this Section, then the Commitments shall terminate and Borrower shall be
obligated to repay the Obligations (including (a) either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender, and (b) providing cash collateral to be held by Agent for the benefit of
▇▇▇▇▇ Fargo or its Affiliates with respect to the then extant Bank Products
Obligations), in full, on the date set forth as the date of termination of this
Agreement in such notice.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST.
(a) The Obligations constitute one loan secured by the Agent's Liens on
the Collateral now or from time to time hereafter granted by the Loan Parties to
the Agent. Each Loan Party hereby grants to the Agent, for the benefit of the
Lenders, as security for the Obligations, a right of setoff against and a valid,
continuing, enforceable and fully protected (y) first priority lien (subject, in
the case of Borrower and ▇▇▇▇▇▇ May, only to Permitted Priority Liens and, in
the case of ACC Canada, Permitted Liens) and security interest (in the case of
Borrower and ▇▇▇▇▇▇ May, in accordance with sections 364(c)(2) and (3) of the
Bankruptcy Code) and (z) first priority, senior priming lien and security
interest (in the case of Borrower and ▇▇▇▇▇▇ May, in accordance with section
364(d)(1) of the Bankruptcy Code, upon all of such Loan Party's right, title and
interest in and to all Collateral and interests in Collateral of such Loan
Party, whether now owned or hereafter acquired by such Loan Party and
wheresoever located, including, without limitation: (i) all Accounts; (ii) all
Books; (iii) all Equipment; (iv) all
50
General Intangibles; (v) all Inventory; (vi) all Investment Property; (vii) all
Negotiable Collateral; (viii) all Real Property Collateral; (ix) in the case of
Borrower and ▇▇▇▇▇▇ May upon entry of the Final Order, Avoidance Actions, (x)
all documents, instruments and chattel paper; (xi) all insurance policies
relating to any of the foregoing, including without limitation business
interruption insurance; (xii) all of such Loan Party's books and records
relating to any of the foregoing; (xiii) all accessions and additions to,
substitutions for, and replacements of any of the foregoing; and (xiv) all cash
collections from, and all other cash and non-cash proceeds of, any of the
foregoing including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral and claims against
any Person for loss of, damage to, or destruction of, any or all of the
Collateral.
(b) To the extent that there is a conflict between this Agreement and
the Canadian General Security Agreement concerning the security interest granted
by ACC Canada, the terms of the Canadian General Security Agreement shall
govern.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Agent's security interests in and liens on the Collateral granted
hereunder shall be subject, as to priority, only to (i) the U.S. Trustee's fees,
(ii) Permitted Priority Liens, and (iii) the Permitted Professional Expenses
having priority over the Obligations only to the extent set forth in the
definition of Administrative Expense Priorities.
4.2 AUTOMATIC STAY. During the continuance of an Event of Default, the
automatic stay provided under section 362 of the Bankruptcy Code shall be deemed
automatically vacated to permit the Agent and the Lenders to take immediately
any action permitted under this Agreement, the other Post-Petition Loan
Documents, the Bankruptcy Code, the Code or other applicable law with respect to
the Collateral or otherwise; PROVIDED, HOWEVER, that the automatic stay shall
not be deemed vacated and modified with respect to the exercise by the Lenders
of any enforcement rights or remedies with respect to the Collateral following
an Event of Default in the absence of the applicable notice requirements set
forth in the Financing Orders.
4.3 SUPER-PRIORITY CLAIMS. The Obligations shall constitute, in accordance
with section 364(c)(1) of the Bankruptcy Code, claims against Borrower and
▇▇▇▇▇▇ May in their Chapter 11 Cases which are administrative expenses having
priority over any and all administrative expenses of the kind specified in
section 503(b) or 507(b) of the Bankruptcy Code, subject, as to priority, only
to (i) the US Trustee Fees and (ii) the Permitted Professional Expenses having
priority over the Obligations to the extent set forth in the definition of
Administrative Expense Priorities.
4.4 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, each Loan Party, immediately upon the request of
Agent, shall endorse and deliver physical possession of such Negotiable
Collateral to Agent (or, in the case of ACC Canada, take such comparable steps
or measures required by applicable law).
4.5 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE COLLATERAL.
At any time after the occurrence and during the continuation of an Event of
Default, Agent or
51
Agent's designee may (a) notify Account Debtors of each Loan Party that the
Accounts, chattel paper, or General Intangibles have been assigned to Agent or
that Agent has a security interest therein, or (b) collect the Accounts, chattel
paper, or General Intangibles directly and charge the collection costs and
expenses to the Loan Account. Each Loan Party agrees that it will hold in trust
for the Lender Group, as the Lender Group's trustee, any Collections that it
receives and immediately will deliver said Collections to Agent or a Cash
Management Bank in their original form as received by such Loan Party.
4.6 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Agent, each Loan Party shall execute and deliver to Agent, any and
all financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
Commercial Tort Claim Assignments, endorsements of certificates of title, and
all other documents (the "ADDITIONAL DOCUMENTS") that Agent may request in its
Permitted Discretion, in form and substance satisfactory to Agent, to perfect
and continue perfected or better perfect the Agent's Liens in the Collateral
(whether now owned or hereafter arising or acquired), to create and perfect
Liens in favor of Agent in any Real Property acquired after the Closing Date,
and in order to fully consummate all of the transactions contemplated hereby and
under the other Post-Petition Loan Documents, including any Mortgages. To the
maximum extent permitted by applicable law, each Loan Party authorizes Agent to
execute any such Additional Documents in such Loan Party's name and authorizes
Agent to file such executed Additional Documents in any appropriate filing
office. In addition, on such periodic basis as Agent shall require, each Loan
Party shall (a) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by such Loan
Party during the prior period, (b) cause all patents, copyrights, and trademarks
acquired or generated by such Loan Party that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of such Loan Party's ownership
thereof, and (c) cause to be prepared, executed, and delivered to Agent
supplemental schedules to the applicable Post-Petition Loan Documents to
identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.
4.7 POWER OF ATTORNEY. Each Loan Party hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as the Loan Party's true and lawful attorney, with
power to (a) if a Loan Party refuses to, or fails timely to execute and deliver
any of the documents described in SECTION 4.6, sign the name of such Loan Party
on any of the documents described in SECTION 4.6, (b) at any time that an Event
of Default has occurred and is continuing, sign such Loan Party's name on any
invoice or ▇▇▇▇ of lading relating to the Collateral, drafts against Account
Debtors, or notices to Account Debtors, (c) send requests for verification of
Accounts, (d) endorse such Loan Party's name on any Collection item that may
come into the Lender Group's possession, (e) at any time that an Event of
Default has occurred and is continuing, make, settle, and adjust all claims
under such Loan Party's policies of insurance and make all determinations and
decisions with respect to such policies of insurance, and (f) at any time that
an Event of Default has occurred and is continuing, settle and adjust disputes
and claims respecting the Accounts, chattel paper, or General Intangibles
directly with Account Debtors, for amounts and upon terms that Agent determines
to be reasonable, and Agent may cause to be executed and delivered any documents
and releases that Agent determines to be necessary. The appointment of Agent as
each Loan Party's attorney,
52
and each and every one of its rights and powers, being coupled with an interest,
is irrevocable until all of the Obligations have been fully and finally repaid
and performed and the Lender Group's obligations to extend credit hereunder are
terminated.
4.8 RIGHT TO INSPECT. In the absence of an Event of Default, during
business hours, Agent and each Lender (through any of their respective officers,
employees, or agents) shall have the right, from time to time hereafter to
inspect the Books and to check, test, and appraise the Collateral in order to
verify each Loan Party's financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.
4.9 CONTROL AGREEMENTS. Each Loan Party agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under SECTION 7.19
and, if to another securities intermediary, unless each of such Loan Party, the
Agent, and the substitute securities intermediary have entered into a Control
Agreement. No arrangement contemplated hereby or by any Control Agreement in
respect of any Securities Accounts or other Investment Property shall be
modified by any Loan Party without the prior written consent of Agent. Upon the
occurrence and during the continuance of a Default or Event of Default, Agent
may notify any securities intermediary to liquidate the applicable Securities
Account or any related Investment Property maintained or held thereby and remit
the proceeds thereof to the Agent's Account.
4.10 COMMERCIAL TORT CLAIM. If any Loan Party acquires any commercial tort
claims after the date hereof, such Loan Party shall immediately deliver to Agent
a written description of such commercial tort claim and shall deliver a written
agreement, in form and substance reasonably satisfactory to Agent, pursuant to
which such Loan Party shall pledge and collaterally assign all of its right,
title and interest in and to such commercial tort claim to Agent, for the
benefit of the Lenders, as security for the Obligations (a "COMMERCIAL TORT
CLAIM ASSIGNMENT").
4.11 GRANTS, RIGHTS AND REMEDIES. The Liens and security interests granted
by each Loan Party to Agent (for the benefit of Lender Group) by and pursuant to
SECTION 4.1 hereof and administrative priority granted by and pursuant to
SECTION 4.3 hereof may be independently granted by the Post-Petition Loan
Documents hereafter entered into.
4.12 NO FILINGS REQUIRED. The Liens and security interests granted by each
Loan Party to Agent (for the benefit of Lender Group) herein shall be deemed
valid, binding, continuing, enforceable and fuLly-perfected first priority Liens
on the Collateral by entry of the Interim Order and the Final Order, as the case
may be, subject to Permitted Priority Liens. Agent shall not be required to file
any financing statements, notices of Lien or similar instruments in any
jurisdiction or filing office or to take any other action in order to validate
or perfect the Liens and security interests granted by or pursuant to this
Agreement, the Financing Orders or any other Post-Petition Loan Document.
4.13 SURVIVAL. The Liens and security interests granted to Agent (for the
benefit of Lender Group), the priority of such Liens and security interests, and
the administrative priorities and other rights and remedies granted to Lender
Group pursuant to this Agreement, the Financing Orders, and the other
Post-Petition Loan Documents (specifically including but not limited to the
existence, perfection and priority of the Liens and security interest provided
herein and therein) and the administrative priority provided herein and therein
shall not be modified,
53
altered or impaired in any manner by any other financing or extension of credit
or incurrence of debt by any Loan Party (pursuant to Section 364 of the
Bankruptcy Code or otherwise), or by any dismissal or conversion of the Chapter
11 Cases, or by any other act or omission whatsoever. Without limitation,
notwithstanding any such order, financing, extension, incurrence, dismissal,
conversion, act or omission:
(a) except for the Permitted Professional Expenses having a priority
over the Obligations to the extent set forth in the definition of Administrative
Expense Priorities, no costs or expenses of administration which have been or
may be incurred in the Chapter 11 Cases or any conversion of the same or in any
other proceedings related thereto, and no priority claims, are or will be prior
to or on a parity with any claim of Agent and Lenders against any Loan Party in
respect of any Obligation;
(b) the Liens and security interests granted by each Loan Party to
Agent (for the benefit of Lender Group) by and pursuant to the Financing Orders
and SECTION 4.1 hereof shall constitute valid, binding, continuing, enforceable
and fully-perfected first priority Liens, subject only to Permitted Priority
Liens to which such Liens and security interests shall or may be subordinate and
junior, and shall be prior to all other Liens and interests, now existing or
hereafter arising, in favor of any other creditor or any other Person
whatsoever; and
(c) the Liens and security interests granted by each Loan Party to
Agent (for the benefit of Lender Group) by and pursuant to the Interim Order,
the Final Order and SECTION 4.1 hereof shall continue to be valid, binding,
continuing, enforceable and fully-perfected without the necessity for Agent to
file any financing statements or to otherwise perfect such Liens and security
interests under applicable non-bankruptcy law.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Loan Party makes the following representations and warranties to the Lender
Group which shall be true, correct, and complete, in all material respects, as
of the date hereof, and shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of the date of the making of
each Advance (or other extension of credit) made thereafter, as though made on
and as of the date of such Advance (or other extension of credit) (except to the
extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
5.1 NO ENCUMBRANCES. Each Loan Party has good and indefeasible title to its
Collateral and the Real Property, and valid and enforceable leasehold interests
in the Collateral that it leases, in each case, free and clear of Liens except
for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing payment
obligations of Account Debtors created by the sale and delivery of Inventory or
the rendition of services to such Account Debtors in the ordinary course of
business of Borrower or ACC Canada, as the case may be, owed to Borrower or ACC
Canada, as appropriate, without defenses, disputes, offsets, counterclaims, or
rights of return or cancellation. As to each Account that is identified by
Borrower and ACC Canada as an Eligible Account in a borrowing base report
54
submitted to Agent, such Account is not excluded as ineligible by virtue of one
or more of the excluding criteria set forth in the definition of Eligible
Accounts.
5.3 ELIGIBLE INVENTORY. All Eligible Inventory is of good and merchantable
quality, free from defects and the Eligible Inventory is not a "farm product" as
that term is defined in 7 U.S.C. Section 1631. As to each item of Inventory that
is identified by Borrower and ACC Canada as Eligible Inventory in a borrowing
base report submitted to Agent, such Inventory is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Inventory.
5.4 EQUIPMENT. All of the Equipment (other than worn or obsolete equipment
in the ordinary course of business) is used or held for use in Borrower's and
ACC Canada's business and is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. Except as set forth on SCHEDULE
5.5 and Inventory in transit, the Inventory and Equipment are not stored with a
bailee, warehouseman, or similar party and are located only at the locations
identified on SCHEDULE 5.5.
5.6 INVENTORY RECORDS. Each of Borrower and ACC Canada keeps correct and
accurate records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive offices
of Borrower and ACC Canada are located at the addresses indicated in SCHEDULE
5.7, and Borrower's FEIN is identified in SCHEDULE 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Loan Party is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a Material Adverse Change.
(b) Set forth on SCHEDULE 5.8(B), is a complete and accurate
description of the authorized capital Stock of each of the Loan Parties, by
class, and, as of the Closing Date, a description of the number of shares of
each such class that are issued and outstanding. Other than as described on
SCHEDULE 5.8(B), there are no subscriptions, options, warrants, or calls
relating to any shares of the Loan Parties' capital Stock, including any right
of conversion or exchange under any outstanding security or other instrument.
None of the Loan Parties is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of its capital Stock or
any security convertible into or exchangeable for any of its capital Stock.
(c) Set forth on SCHEDULE 5.8(C), is a complete and accurate list of
the direct and indirect Subsidiaries of each Loan Party, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such
55
class owned directly or indirectly by the Loan Parties. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on SCHEDULE 5.8(C), there are no subscriptions,
options, warrants, or calls relating to any shares of Borrower's or ACC Canada's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. None of the Loan Parties nor any
of their Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of the capital Stock of any
Subsidiary of a Loan Party or any security convertible into or exchangeable for
any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by each of the Loan
Parties of this Agreement and the Post-Petition Loan Documents to which it is a
party have been duly authorized by all necessary action on the part of each Loan
Party.
(b) Upon entry of the Financing Order, the execution, delivery, and
performance by each Loan Party of this Agreement and the Post-Petition Loan
Documents to which it is a party do not and will not (i) violate any provision
of federal, state, or local law or regulation applicable to such Loan Party, the
Governing Documents of such Loan Party, or any order, judgment, or decree of any
court or other Governmental Authority binding on such Loan Party, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of such Loan Party
(other than the Indenture and the documents executed in connection therewith,
the Securities Purchase Agreement and the Shareholders' Agreement), (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of such Loan Party, other than Permitted Liens, or
(iv) require any approval of such Loan Party's interest holders or any approval
or consent of any Person under any material contractual obligation of such Loan
Party.
(c) Upon entry of the Financing Order, other than the filing of
financing statements, fixture filings, and Mortgages, the execution, delivery,
and performance by the Loan Parties of this Agreement and the Post-Petition Loan
Documents do not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any Governmental
Authority or other Person.
(d) This Agreement and the other Post-Petition Loan Documents to which
such Loan Party is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by such Loan Party will be the legally
valid and binding obligations of such Loan Party, enforceable against such Loan
Party in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
(e) Upon entry of the Financing Orders, the Agent's Liens are validly
created, perfected, and first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on SCHEDULE 5.10, there
are no actions, suits, or proceedings pending or, to the best knowledge of such
Loan Party, threatened
56
against such Loan Party, or any of its Subsidiaries, as applicable, except for
(a) matters that are fully covered by insurance (subject to customary
deductibles), and (b) matters arising after the Closing Date that, if decided
adversely to such Loan Party, or any of its Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change. Such
Loan Party does not hold any Commercial Tort Claim as of the date hereof, except
as set forth on SCHEDULE 5.10.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to such
Loan Party that have been delivered by such Loan Party to the Lender Group have
been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, such Loan
Party's financial condition as of the date thereof and results of operations for
the period then ended. There has not been a Material Adverse Change since the
date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
5.12 FRAUDULENT TRANSFER. No transfer of property is being made by such
Loan Party and no obligation is being incurred by such Loan Party in connection
with the transactions contemplated by this Agreement or the other Post-Petition
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of such Loan Party.
5.13 EMPLOYEE BENEFITS. Except as set forth on SCHEDULE 5.13, neither such
Loan Parties nor any of its Subsidiaries or ERISA Affiliates maintains or
contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE 5.14, (a) to
such Loan Party's knowledge, such Loan Party's assets have not been used by such
Loan Party or by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any Hazardous Materials, where such
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of applicable Environmental Law, (b) to such Loan
Party's knowledge, such Loan Party's properties or assets have never been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) such Loan Party has not
received notice that a Lien arising under any Environmental Law has attached to
any revenues or to any Real Property owned or operated by such Loan Party, and
(d) such Loan Party has not received a summons, citation, notice, or directive
from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by such Loan Party
resulting in the releasing or disposing of Hazardous Materials into the
environment.
5.15 BROKERAGE FEES. Such Loan Party has not utilized the services of any
broker or finder in connection with such Loan Party's obtaining financing from
the Lender Group under this Agreement and no brokerage commission or finders fee
is payable by such Loan Party in connection herewith.
5.16 INTELLECTUAL PROPERTY. Such Loan Party owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as SCHEDULE 5.16 is a true, correct, and complete listing of all material
patents, patent applications, trademarks, trademark
57
applications, copyrights, and copyright registrations as to which such Loan
Party is the owner or is an exclusive licensee.
5.17 LEASES. Such Loan Party enjoys peaceful and undisturbed possession
under all leases material to the business of such Loan Party and to which it is
a party or under which it is operating. All of such leases are valid and
subsisting and no material default by such Loan Party exists under any of them,
which are not otherwise stayed by operation of law.
5.18 DDAS. Set forth on SCHEDULE 5.18 is a list of all of Borrower's DDAs,
including, with respect to each depository (i) the name and address of such
depository, and (ii) the account numbers of the accounts maintained with such
depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of such Loan Party in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Post-Petition Loan Documents) for purposes of or in connection with this
Agreement, the other Post-Petition Loan Documents, or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of such Loan Party in writing to
Agent or any Lender will be, true and accurate, in all material respects, on the
date as of which such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was provided.
5.20 INDEBTEDNESS. Set forth on SCHEDULE 5.20 is a true and complete list
of all Indebtedness of such Loan Party outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 ADMINISTRATIVE PRIORITY.
(a) Subject to the entry of the Financing Orders, the Obligations of
such Loan Party (in the case of Borrower and ▇▇▇▇▇▇ May) will constitute allowed
administrative expenses in the Chapter 11 Cases having priority over all other
administrative expenses of and unsecured claims against such Loan Party now
existing or hereafter arising, of any kind or nature whatsoever, including
without limitation all administrative expenses of the kind specified in Sections
503(b) and 507(b) of the Bankruptcy Code, subject, as to priority, only to the
U.S. Trustee's fees and the Permitted Professional Expenses having a priority
over the Obligations to the extent set forth in the definition of Administrative
Expense Priorities.
(b) Subject to the entry of the Financing Orders Lien and security
interest of the Agent (for the benefit of the Lender Group) on the Collateral
shall be a valid and perfected first priority Lien subject to Permitted Priority
Liens.
(c) Upon entry thereof, the Interim Order or the Final Order, as the
case may be, shall be in full force and effect, and shall not have been
appealed, reversed, stayed, modified or amended absent the written joinder or
consent of the Lenders.
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5.22 APPOINTMENT OF TRUSTEE OR EXAMINER; LIQUIDATION. No order has been
entered in either of the Chapter 11 Cases (i) for the appointment of a Chapter
11 trustee, (ii) for the appointment of an examiner with enlarged powers (beyond
those set forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code) under
Section 1106(b) of the Bankruptcy Code or (iii) to convert the Chapter 11 Cases
to a chapter 7 case or to dismiss the Chapter 11 Cases.
6. AFFIRMATIVE COVENANTS.
The Loan Parties covenant and agree that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower and ACC Canada shall and shall cause each of their
respective Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower and ACC Canada to produce financial statements in accordance with GAAP
and maintain records pertaining to the Collateral that contain information as
from time to time reasonably may be requested by Agent. Borrower and ACC Canada
also shall keep an inventory reporting system that shows all additions, sales,
claims, returns, and allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent, with
copies for each Lender) with the following documents at the following times in
form satisfactory to Agent:
================================================================================
Daily (a) a sales journal, collection journal, and credit
register since the last such schedule and a
calculation of the Borrowing Base as of such date,
and
(b) notice of all returns, disputes, or claims.
--------------------------------------------------------------------------------
Weekly (c) Inventory roll-forward specifying, in each
case, Borrower's or ACC Canada's cost and the
wholesale market value of its Inventory, by
category, with additional detail showing additions
to and deletions from the Inventory,
(d) reconciliation of actual expenditures to the
Agreed Budget for the applicable period,
(e) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously
provided to Agent, and
(f) a summary aging, by vendor, of Borrower's and
ACC Canada's accounts payable and any book
overdraft.
--------------------------------------------------------------------------------
59
--------------------------------------------------------------------------------
Monthly (not later (g) a detailed aging, by total, of the Accounts,
than the 15th day of each) together with a reconciliation to the detailed
calculation of the Borrowing Base previously
provided to Agent, and
(h) evidence of the timely payment of all rents
and other amounts payable under any leases to
which any of the Loan Parties is a party or under
which the any of the Loan Parties' property and
assets are bound.
--------------------------------------------------------------------------------
Monthly (not later than the (i) a detailed calculation of the Borrowing Base
30th day of each month) (including detail regarding those Accounts that are
not Eligible Accounts),
(j) Inventory reports specifying Borrower's or ACC
Canada's cost and the wholesale market value of
its Inventory, by category, with additional detail
showing additions to and deletions from the
Inventory,
(k) a summary aging, by vendor, of Borrower's and
ACC Canada's accounts payable and any book
overdraft,
(l) a calculation of Dilution for the prior month,
(m) Reconciliation of the general ledger to the
financial statements including Accounts, Inventory
and all accounts payable, and
(n) Inventory Mix Report.
--------------------------------------------------------------------------------
Upon request by Agent (o) a detailed list of Borrower's and ACC Canada's
customers,
(p) a report regarding the Loan Parties' accrued,
but unpaid, AD VALOREM taxes,
(q) copies of invoices in connection with the
Accounts, credit memos, remittance advices,
deposit slips, shipping and delivery documents in
connection with the Accounts and, for Inventory
and Equipment acquired by Borrower or ACC Canada,
purchase orders and invoices, and
(r) such other reports as to the Collateral, or
the financial condition of the Loan Parties, as
Agent may request.
================================================================================
In addition Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
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6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES, APPRAISALS.
Deliver to Agent, with copies to each Lender:
(a) as soon as available, but in any event within 30 days (45 days in
the case of a month that is the end of one of the first 3 fiscal quarters in a
fiscal year) after the end of each month during each of ▇▇▇▇▇▇ May's fiscal
years,
(i) company prepared consolidated and consolidating balance sheets,
income statements, and statement of cash flows covering ▇▇▇▇▇▇ May and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of Borrower
to the effect that:
(A) the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of footnotes and
being subject to year-end audit adjustments) and fairly present in all
material respects the financial condition of ▇▇▇▇▇▇ May and its
Subsidiaries,
(B) the representations and warranties of the Loan Parties
contained in this Agreement and the other Post-Petition Loan Documents
are true and correct in all material respects on and as of the date of
such certificate, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date), and
(C) there does not exist any condition or event that constitutes
a Default or Event of Default (or, to the extent of any
non-compliance, describing such non-compliance as to which he or she
may have knowledge and what action Borrower has taken, are taking, or
propose to take with respect thereto), and
(iii) for each month that is the date on which a financial covenant in
SECTION 7.20 is to be tested, a Compliance Certificate demonstrating, in
reasonable detail, compliance at the end of such period with the applicable
financial covenants contained in SECTION 7.20, and
(b) as soon as available, but in any event within 90 days after the end
of each of ▇▇▇▇▇▇ May's fiscal years,
(i) financial statements of the ▇▇▇▇▇▇ May and its Subsidiaries for
each such fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any qualifications,
by such accountants to have been prepared in accordance with GAAP (such
audited financial statements to include a balance sheet, income statement,
and statement of cash flow and, if prepared, such accountants' letter to
management),
61
(ii) a certificate of such accountants addressed to Agent and the
Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under SECTION 7.20,
(c) as soon as available, Borrower shall deliver an Agreed Budget in
form and substance reasonably satisfactory to the Lenders in their sole
discretion.
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and Form
8-K current reports,
(ii) any other filings made by any of the Loan Parties with the SEC,
(iii) copies of each Loan Party's federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service or, in the case
of ACC Canada, any other applicable Canadian taxing authority, and
(iv) any other information that is provided by the Loan Parties to
their shareholders generally,
(e) if and when filed by any of the Loan Parties and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which such Loan Party conducts business or is required to pay
any such excise tax, and either (i) where such Loan Party's failure to pay any
such applicable excise tax would result in a Lien on the properties or assets of
such Loan Party, or (ii) where any Loan Party's failure to pay any such
applicable excise tax reasonably could be expected to result in a Material
Adverse Change,
(f) as soon as a Loan Party has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that such Loan Party proposes to take with
respect thereto,
(g) as soon as a Loan Party has knowledge, but in any event within 5
Business Days, of (i) any default or event of default under any material
contract, including but not limited to any Benefit Plan or collective bargaining
agreement of such Loan Party or any of its Subsidiaries or ERISA Affiliates,
(ii) any failure to make any required contribution to any Benefit Plan, (iii)
the creation of any Lien in favor of the PBGC or any Benefit Plan, (iv) any
litigation, investigation or proceeding which may exist at any time between any
Loan Party and any Governmental Authority, or (v) any development or event which
has had or could reasonably be expected to have a Material Adverse Change;
provided that in any case, if not cured or if adversely determined, as the case
may be, could reasonably be expected to have a Material Adverse Change,
(h) each Loan Party shall cooperate at all times with Agent in
completing quarterly appraisals (which shall be conducted by an appraiser
acceptable to the Agent) of such Loan Party's Inventory; if a Default or Event
of Default has occurred and remains continuing, the Agent in its Permitted
Discretion may require additional appraisals to be completed, and
62
(i) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrower.
In addition to the financial statements referred to above, the Loan
Parties agree to deliver financial statements prepared on both a consolidated
and consolidating basis and that no Loan Party, or any Subsidiary of a Loan
Party will have a fiscal year different from that of Loan Party. The Loan
Parties agree that their independent certified public accountants are authorized
to communicate with Agent and to release to Agent and the Lenders whatever
financial information concerning the Loan Parties that Agent reasonably may
request. The Loan Parties waive the right to assert a confidential relationship,
if any, it may have with any accounting firm or service bureau in connection
with any information requested by Agent pursuant to or in accordance with this
Agreement, and agrees that Agent may contact directly any such accounting firm
or service bureau in order to obtain such information.
6.4 [INTENTIONALLY LEFT BLANK.]
6.5 RETURN. Cause returns and allowances, as between Borrower or ACC
Canada, and its respective Account Debtors, to be on the same basis and in
accordance with the usual customary practices of Borrower or ACC Canada, as they
exist at the time of the execution and delivery of this Agreement. If, at a time
when no Event of Default has occurred and is continuing, any Account Debtor
returns any Inventory to Borrower or ACC Canada, Borrower, as the case may be,
promptly shall determine the reason for such return and, if Borrower or ACC
Canada accepts such return, issue a credit memorandum (with a copy to be sent to
Agent) in the appropriate amount to such Account Debtor. If, at a time when an
Event of Default has occurred and is continuing, any Account Debtor returns any
Inventory to Borrower or ACC Canada in an amount in excess of $10,000, the
Borrower or ACC Canada, as the case may be, promptly shall determine the reason
for such return and, if Agent consents (which consent shall not be unreasonably
withheld), issue a credit memorandum (with a copy to be sent to Agent) in the
appropriate amount to such Account Debtor.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times, in all material respects, with the provisions of all leases to which it
is a party as lessee so as to prevent any loss or forfeiture thereof or
thereunder.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against any Loan
Party or any of such Loan Party's assets to be paid in full, before delinquency
or before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Each Loan Party will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including, without
limitation, those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish Agent
with proof satisfactory to Agent indicating that such Loan Party has made such
payments or deposits. Upon Agent's request, each Loan Party shall deliver
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which such Loan Party is required to pay any such excise tax.
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6.8 INSURANCE.
(a) At the Loan Parties' expense, maintain insurance respecting the
assets of the Loan Parties wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses. Borrower
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Lenders. Borrower or ACC Canada shall deliver copies of all such policies to
Agent with a satisfactory lender's loss payable endorsement naming Agent as sole
loss payee or the Lenders as additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Borrower or ACC Canada shall give the Lenders prompt notice of any
loss covered by such insurance in excess of $10,000. Agent shall have the
exclusive right to adjust any losses payable under any such insurance policies
in excess of $50,000, without any liability, in each case, to Borrower or ACC
Canada whatsoever in respect of such adjustments. Any monies received as payment
for any loss under any insurance policy mentioned above (other than liability
insurance policies) or as payment of any award or compensation for condemnation
or taking by eminent domain, shall be paid over to Agent to be applied at the
option of the Required Lenders either to the prepayment of the Obligations or
shall be disbursed to the applicable Loan Party under staged payment terms
reasonably satisfactory to the Required Lenders for application to the cost of
repairs, replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items of property destroyed prior to
such damage or destruction.
(c) The Loan Parties will not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this SECTION 6.8, unless Agent is included thereon as named insured with
the loss payable to Agent under a lender's loss payable endorsement or its
equivalent. The Loan Parties immediately shall notify Agent whenever such
separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and copies of such policies
promptly shall be provided to Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and Equipment
only at the locations identified on SCHEDULE 5.5 (or in transit between such
locations) and cause ACC Canada to keep its Inventory and Equipment only at the
locations identified in SCHEDULE 5.5 (or in transit between such locations);
PROVIDED, HOWEVER, that Borrower and ACC Canada may amend SCHEDULE 5.5 so long
as such amendment occurs by written notice to Agent not less than 30 days prior
to the date on which Inventory or Equipment is moved to such new location, so
long as such new location is within the continental United States, and so long
as, at the time of such written notification, Borrower and ACC Canada provide
any financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and also provides to Agent a
Collateral Access Agreement.
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6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 LEASES. Pay when due (including all applicable grace periods) all
rents and other amounts payable under any leases to which Borrower or ACC Canada
is a party or by which Borrower's or ACC Canada's properties and assets are
bound, unless such payments are the subject of a Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or finders
fees incurred in connection with or as a result of the Loan Parties obtaining
financing from the Lender Group under this Agreement. The Loan Parties agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of the Loan Parties, and the Loan Parties agree to
indemnify, defend, and hold Agent and the Lender Group harmless from and against
any claim of any broker or finder arising out of their obtaining financing from
the Lender Group under this Agreement.
6.13 EXISTENCE. At all times (a) preserve and keep in full force and effect
Loan Parties' valid existence and good standing and (b) take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of Borrower's and ACC Canada's business, except to the
extent that the failure to do so could not reasonably be expected, to have a
Material Adverse Change.
6.14 ENVIRONMENTAL. (a) Keep any property either owned or operated by
Borrower and ACC Canada free of any Environmental Liens or post bonds or other
financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Borrower and take any Remedial Actions required to ▇▇▇▇▇ said
release or otherwise to come into compliance with applicable Environmental Law,
and (d) promptly provide Agent with written notice within 10 days of the receipt
of any of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of Borrower or ACC Canada, (ii)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against Borrower or ACC Canada, and (iii) notice of a violation,
citation, or other administrative order which reasonably could be expected to
result in a Material Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Post-Petition Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.
65
6.16 BANKRUPTCY COURT FILINGS. Borrower shall give or cause to be given or
served on Lenders and their counsel copies of all pleadings, motions,
applications, financial information and other papers and documents filed by
Borrower and ▇▇▇▇▇▇ May in the Chapter 11 Cases. Promptly after the sending
thereof, Borrower and ▇▇▇▇▇▇ May shall give Lender copies of all written reports
given by to any official or unofficial creditors' committee in the Chapter 11
Cases.
6.17 MINIMUM EXCESS AVAILABILITY. On January 1, 2003, the Excess
Availability shall not be less than $10,000,000.
6.18 BAILEE LETTERS. Borrower shall use its best efforts to obtain bailee
letters, substantially in the form attached hereto as EXHIBIT W, or in such
other form as is acceptable to the Agent in its sole discretion, from the bailee
of each Warehouse prior to the date of entry of the Final Order. If a bailee
letter is not obtained with respect to any warehouse prior to the date of the
entry of the Final Order, the Lenders may create a reserve from the Borrowing
Base to pay the rent obligations of Borrower or ACC Canada, as applicable, with
respect to such warehouse.
6.19 REAL PROPERTY IN QUEBEC. Each Loan Party shall notify the Lenders
prior to purchasing any Real Property in the Province of Quebec and assist the
Lenders in perfecting, continue perfected or better perfect their security
interest over such Real Property, including, but not limited to executing and
delivering any Additional Documents the Lenders shall request in their Permitted
Discretion, in form and substance satisfactory to Lenders, in their sole
discretion.
7. NEGATIVE COVENANTS.
The Loan Parties covenant and agree that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, the Loan Parties will not and will not permit any of their
Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Post-Petition Loan Documents, together with Indebtedness owed to Underlying
Issuers with respect to Underlying Letters of Credit,
(b) Indebtedness set forth on SCHEDULE 5.20,
(c) Permitted Purchase Money Indebtedness,
(d) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) and (c) of this SECTION 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Agent's judgment,
materially impair the prospects of repayment of the Obligations by the Loan
Parties or materially impair their creditworthiness, (ii) such refinancings,
renewals, or extensions do not result in an increase in the principal amount of,
or interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted
66
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are materially more burdensome or
restrictive to any Loan Party, and (iv) if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to the Obligations,
then the terms and conditions of the refinancing, renewal, or extension
Indebtedness must include subordination terms and conditions that are at least
as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness;
(e) Indebtedness incurred by ACC Canada after the Closing Date to
Borrower in an aggregate amount up to $3,000,000 (inclusive of any Investments
made by Borrower in ACC Canada pursuant to SECTION 7.13); and
(f) Indebtedness comprising Permitted Investments.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under SECTION 7.1(D) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
any of the Loan Parties.
7.5 CHANGE NAME. Change the name, FEIN, corporate structure, or identity,
or add any new fictitious name of any of the Loan Parties; PROVIDED, HOWEVER, a
Loan Party may change its name upon at least 30 days prior written notice to
Agent of such change and so long as, at the time of such written notification,
such Loan Party provides any financing statements or fixture filings necessary
to perfect and continue perfected the Agent's Liens.
7.6 GUARANTEE. Except as disclosed on SCHEDULE 7.6, guarantee or otherwise
become in any way liable with respect to the obligations of any third Person
except by endorsement of instruments or items of payment for deposit to the
account of such Loan Party or which are transmitted or turned over to Agent.
7.7 NATURE OF BUSINESS. Make any change in the principal nature of any of
the Loan Parties' respective businesses.
67
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by SECTION
7.1(D), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of any Loan Party, other than the Obligations in accordance with this Agreement,
and
(b) Except in connection with a refinancing permitted by SECTION
7.1(D), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under SECTIONS
7.1(B) or (C).
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on ▇▇▇▇ and
hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of any Loan Party's Stock, of any class, whether now or
hereafter outstanding, other than (a) dividends and distributions for the
payment of directors' fees and expenses and (b) distributions and dividends from
ACC Canada to Borrower.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting (other
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrower's accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or Borrower's
financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or indirectly,
make or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; PROVIDED, HOWEVER, that
Borrower may make Investments in to ACC Canada provided that the outstanding
amount of such Investments does not exceed $3,000,000 (inclusive of any
Indebtedness of ACC Canada to Borrower incurred after the Closing Date pursuant
to SECTION 7.1(E) at any time after the Closing Date); PROVIDED, FURTHER, that
Borrower shall not have Permitted Investments (other than in the Cash Management
Accounts) in deposit accounts or Securities Accounts in excess of
$250,000outstanding at any one time unless Borrower and the applicable
securities intermediary or bank have entered into Control Agreements governing
such Permitted Investments, as Agent shall determine in its Permitted
Discretion, to perfect (and further establish) the Agent's Liens in such
Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Loan Party except for
transactions that are in the ordinary course of such Loan Party's business, upon
fair and reasonable terms, that are fully disclosed to Agent, and that are no
less favorable to such Loan Party than would be obtained in an arm's length
transaction with a non-Affiliate.
68
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 COMPENSATION. Increase the annual fee or per-meeting fees paid to the
members of its Board of Directors during any year by more than 15% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of
115% of that paid or accrued in the prior year without the consent of the
Lenders; PROVIDED, that notwithstanding the foregoing, Borrower may pay bonuses
to its officers and senior management employees under bonus plans (which bonus
plans shall be substantially similar to the bonus plans existing on the Closing
Date) and as approved by the Bankruptcy Court with the prior consent of the
Lenders.
7.17 USE OF PROCEEDS. Use the proceeds of the Advances and the Term Loans
for any purpose other than (a) on the Closing Date, (i) to repay, in full, the
outstanding principal, accrued interest, and accrued fees and expenses owing to
Existing Lender, (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Post-Petition Loan Documents, and the
transactions contemplated hereby and thereby, and (b) thereafter, other costs
consistent with the terms and conditions hereof, for its lawful and permitted
purposes and (iii) to fund working capital of the Loan Parties (including,
without limitation, payments of fees and expenses to professionals under
Sections 330 and 331 of the Bankruptcy Code and administrative expenses of the
kind specified in Section 503(b) of the Bankruptcy Code incurred in the ordinary
course of business of the Loan Parties, subject to the priorities set forth in
the definition of "Administrative Expense Priorities" herein) .
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT
WITH BAILEES. Relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to Agent and so long as, at
the time of such written notification, the applicable Loan Party provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens and also provides to Agent a Collateral Access
Agreement with respect to such new location. The Inventory and Equipment shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. None of the Loan Parties shall transfer assets out of any
Securities Account; PROVIDED, HOWEVER, that, so long as no Event of Default has
occurred and is continuing or would result therefrom, the Loan Parties may use
such assets (and the proceeds thereof) to the extent not prohibited by this
Agreement.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain:
(i) Minimum EBITDA. EBITDA, measured on a fiscal quarter-end basis, of
not less than the required amount set forth in the following table for the
applicable period set forth opposite thereto;
69
-------------------------------------------------------------------
Applicable Amount Applicable Period
-------------------------------------------------------------------
$(11,577,000) For the 4 month period
ending August 31, 2002
-------------------------------------------------------------------
$(13,524,000) For the 7 month period
ending November 30, 2002
-------------------------------------------------------------------
$9,336,000 For the 10 month period
ending March 1, 2003
-------------------------------------------------------------------
$11,561,000 For the 13 month period
ending May 31, 2003
-------------------------------------------------------------------
and if Excess Availability under the Maximum Revolver Amount is less
than $2,500,000 at any time such report shall be measured on a
cumulative monthly basis, of not less than the required amount set
forth in the following table for the applicable period set forth
opposite thereto;
--------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------
$(2,473,000) For the 1 month period
ending May 31, 2002
--------------------------------------------------------------------
$(4,988,000) For the 2 month period
ending June 30, 2002
--------------------------------------------------------------------
$(8,945,000) For the 3 month period
|ending July 31, 2002
--------------------------------------------------------------------
$(11,577,000) For the 4 month period
ending August 31, 2002
--------------------------------------------------------------------
$(13,394,000) For the 5 month period
ending September 30, 2002
--------------------------------------------------------------------
$(13,536,000) For the 6 month period
ending October 31, 2002
--------------------------------------------------------------------
$(13,524,000) For the 7 month period
ending November 30, 2002
--------------------------------------------------------------------
$8,411,000 For the 8 month period
ending December 31, 2002
--------------------------------------------------------------------
$5,188,000 For the 9 month period
ending January 31, 2003
--------------------------------------------------------------------
$9,336,000 For the 10 month period
ending March 1, 2003
--------------------------------------------------------------------
70
--------------------------------------------------------------------
$10,405,000 For the 11 month period
ending March 31, 2003
--------------------------------------------------------------------
$12,691,000 For the 12 month period
ending April 30, 2003
--------------------------------------------------------------------
$11,561,000 For the 13 month period
ending May 31, 2003
--------------------------------------------------------------------
(ii) Capital Expenditures. Capital expenditures in any fiscal year in
excess of the amount set forth in the following table for the applicable
period:
--------------------------------------------------------------
Fiscal Year ending For the 9 month period ending
August 31, 2002 May 31, 2003
--------------------------------------------------------------
$5,100,000 $8,800,000
--------------------------------------------------------------
7.21 INTERIM ORDER; FINAL ORDER; ADMINISTRATIVE EXPENSE PRIORITY; LIEN
PRIORITY; PAYMENTS.
(a) Seek, consent to or suffer to exist at any time any modification,
stay, vacation or amendment of the Interim Order or the Final Order, as the case
may be, except for modifications and amendments joined or agreed to in writing
by Lenders.
(b) Suffer to exist at any time a priority for any administrative
expense or unsecured claim against Borrower or ▇▇▇▇▇▇ May (now existing or
hereafter arising of any kind or nature whatsoever, including, without
limitation, any administrative expenses of the kind specified in Sections 503(b)
and 507(b) of the Bankruptcy Code) equal or superior to the priority of the
Lender Group in respect of the Obligations, except for Professional Expense Cap
having a priority over the Obligations to the extent set forth in the definition
of Administrative Expense Priorities.
(c) Suffer to exist at any time any Lien on any Collateral having a
priority equal or superior to the Lien of the Agent for the benefit of the
Lender Group in respect of the Collateral except for Permitted Priority Liens.
(d) Prior to the date on which the Obligations have been paid in full
in cash and the Commitments have been terminated, pay any administrative expense
claims in the Chapter 11 Cases except (A) Permitted Professional Expenses and
other payments pursuant to sub-clause (i) of clause "FIRST" of the definition of
the term "Administrative Expense Priorities", (B) any Obligations due and
payable hereunder, (C) other administrative expense claims incurred in the
ordinary course of the business of either Borrower or ▇▇▇▇▇▇ May in their
respective Chapter 11 Cases, and (D) payments of pre-petition obligations
permitted pursuant to paragraph (e) hereof, in each case to the extent and
having the order of priority set forth in the Administrative Expense Priorities.
71
(e) Make any payment of principal or interest or otherwise on account
of any Indebtedness or trade payable incurred prior to the Filing Date, PROVIDED
that such payments may be made: (i) to the holders of, or in respect of, wage,
salary, commission or other compensation and employee benefit obligations
(including expense reimbursements) to employees and independent contractors
which arose prior to the Filing Date; (ii) to landlords in connection with the
assumption of unexpired leases under Section 365 of the Bankruptcy Code in an
aggregate amount acceptable to the Agent; (iii) to lessors and non-debtor
parties to executory contracts in connection with the assumption of such leases
and contracts under Section 365 of the Bankruptcy Code; (iv) in respect of
workers' compensation benefits and liability and property insurance policies of
the Loan Parties; (v) with respect to payroll taxes, garnishment payments, sales
taxes, gift certificates, customer credits or other trust fund disbursements in
accordance with past practice of the Loan Parties; (vi) to the holders of
Permitted Priority Liens, from the proceeds of the assets subject to such
Permitted Priority Liens in connection with the sale of such assets, in each
case, after prior written notice of such payment has been given by Borrower and
▇▇▇▇▇▇ May to the Lenders and subject to approval of the Bankruptcy Court; (vii)
to critical vendors in an aggregate amount not exceeding $3,900,000; and (viii)
to vendors holding DE MINIMIS claims in an aggregate amount not exceeding
$500,000 to the extent authorized by the First Day Orders; provided that, prior
written notice is not required in the case of the payments described in clauses
(i), (iv) and (v) above.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:
8.1 If Borrower fails to pay (i) the principal of any Advance, Term Loan A
or Term Loan B when due and payable hereunder, (ii) any interest on any Advance,
Term Loan A or Term Loan B or any fees hereunder within two (2) days after the
same becomes due and payable hereunder, or (iii) reimbursement of Lender Group
Expenses, or other amounts constituting Obligations, within five (5) days after
the same becomes due and payable hereunder;
8.2 If the Loan Parties (i) fail to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in ARTICLE 7 or in
SECTIONS 6.2(C) through (R), 6.3, 6.5, 6.7, 6.8, 6.9, 6.17, and 6.19 of this
Agreement (a "MATERIAL DEFAULT") or (ii) if the Loan Parties fail to perform,
keep, or observe any term, provision, covenant or agreement contained herein or
in any of the other Post-Petition Loan Documents (other than a breach which
constitutes a Material Default) which breach is not remedied within ten Business
Days after such breach occurs;
8.3 If any material portion of any Loan Party's assets is attached, seized,
subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person;
8.4 If any Loan Party voluntarily or involuntarily dissolves or is
dissolved, liquidates or is liquidated;
8.5 If an order with respect to either of the Chapter 11 Cases shall be
entered by the Bankruptcy Court or Borrower or ▇▇▇▇▇▇ May shall file an
application for an order with respect
72
to either of the Chapter 11 Cases, (i) which, in the sole opinion of the
Lenders, would cause, either in any case or in the aggregate, a Material Adverse
Change, (ii) appointing a trustee under section 1104 or (iii) appointing an
examiner with enlarged powers (beyond those set forth in section 1106(a)(3) and
(4) of the Bankruptcy Code) relating to the operation of the business under
section 1106(b) of the Bankruptcy Code;
8.6 If Borrower or ▇▇▇▇▇▇ May fails or neglects to comply with any
provision of the Final Order or the Interim Order;
8.7 If an order with respect to either of the Chapter 11 Cases shall be
entered by the Bankruptcy Court dismissing or converting such Chapter 11 Case to
a chapter 7 case;
8.8 If a chapter 11 plan of reorganization (other than a chapter 11 plan of
reorganization filed by the Lenders or with the joint support of the Lenders) is
filed by Borrower or ▇▇▇▇▇▇ May (or by any other party with the support of the
Loan Parties) that provides the Lenders with (x) any treatment with respect to
the Obligations other than (i) payment in full in Cash on the effective date of
such plan and (ii) continuation of Liens and security interests of the Agent
until the effective date of such plan, or (y) such other treatment
unsatisfactory to the Lenders;
8.9 If an order with respect to either of the Chapter 11 Cases shall be
entered by the Bankruptcy Court without the express prior written consent of the
Lenders, (i) to revoke, reverse, stay, vacate, modify, supplement or amend any
provision of the Financing Orders or (ii) to permit any administrative expense
or any claim (now existing or hereafter arising, of any kind or nature
whatsoever) to have administrative priority as to Borrower or ▇▇▇▇▇▇ May, equal
or superior to the priority of the Lenders in respect of the Obligations, except
for allowed administrative expenses having priority over the Obligations only to
the extent set forth in the definition of Administrative Expense Priorities or
(iii) to grant or permit the grant of a Lien on the Collateral or the Inventory
(other than a Permitted Lien);
8.10 If the Bankruptcy Court enters an order granting relief from the
automatic stay applicable under section 362 of the Bankruptcy Code to the holder
of any security interest in any assets of Borrower or ▇▇▇▇▇▇ May (other than the
Agent) if, after giving effect thereto, the aggregate amount of all claims as to
which such relief has been granted since the Filing Date shall exceed $500,000;
8.11 If Borrower or ▇▇▇▇▇▇ May initiates or fails to contest any
application, motion or other request made to the Bankruptcy Court that requests
authorization or entry of an order authorizing the relief set forth in SECTIONS
8.5, 8.7, 8.8, 8.9 and 8.10;
8.12 If there shall arise (i) any other claim having priority senior to or
PARI PASSU with the claims of Lenders under the Post-Petition Loan Documents or
any other claim having priority over any or all administrative expenses of the
kind specified in section 503(b) or 507(b) of the Bankruptcy Code (other than
allowed administrative expenses having priority over the Obligations only to the
extent set forth in the definition of Administrative Expense Priorities); or
(ii) any lien on the Collateral having a priority senior to or pari passu with
the liens and security interests granted or confirmed herein;
73
8.13 If the obligations of the Guarantors under SECTION 17 hereof, the
Canadian General Security Agreement or the Canadian Guarantee, are not
enforceable or terminated by operation of law or by the Guarantors thereunder;
8.14 If (i) the Interim Order shall cease to be in full force and effect
and the Final Order shall not have been entered prior to such cessation, (ii)
the Final Order shall not have been entered by the Bankruptcy Court on or before
the 30th day following the date of the Interim Order, (iii) from and after entry
of the Final Order, the Final Order shall cease to be in full force and effect,
(iv) the Interim Order or the Final Order shall be amended, supplemented,
stayed, reversed, vacated or otherwise modified (or any of the Loan Parties
shall apply for authority to do so) without the written consent of the Lenders,
(v) any provision of the Financing Orders, this Agreement or any other
Post-Petition Loan Document shall for any reason cease to be valid and binding
or enforceable against Borrower or ▇▇▇▇▇▇ May, or Borrower or ▇▇▇▇▇▇ May shall
so state in writing, (vi) or Borrower or ▇▇▇▇▇▇ May shall commence or join in
any legal proceeding to contest in any manner that the Interim Order, the Final
Order, this Agreement or any other Post-Petition Loan Document constitutes a
valid and enforceable agreement or Borrower or ▇▇▇▇▇▇ May shall commence or join
in any legal proceeding to assert that it has no further obligation or liability
under the Interim Order, the Final Order, this Agreement or any other
Post-Petition Loan Document;
8.15 If any Loan Party is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;
8.16 If a notice of Lien, levy, or assessment is filed of record with
respect to any Loan Party's assets by the United States or Canada, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether ▇▇▇▇▇▇ or
otherwise, upon any Loan Party's assets and the same is not paid before such
payment is delinquent;
8.17 If a judgment or other claim (whether such judgment or other claim
arose before or after the Filing Date) becomes a Lien or encumbrance upon any
material portion of any Loan Party's assets in an amount in excess of $250,000;
8.18 If there is a default by any Loan Party after the Filing Date in any
material agreement to which such Loan Party is a party and such default (a)
occurs at the final maturity of the obligations thereunder, or (b) results in a
right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of the applicable Loan Party's obligations thereunder,
to terminate such agreement, or to refuse to renew such agreement pursuant to an
automatic renewal right therein;
8.19 If any Loan Party makes any payment on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;
74
8.20 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by any Loan Party, or any officer, employee, agent, or director of
any Loan Party;
8.21 If this Agreement, the Financing Orders or any other Post-Petition
Loan Document that purports to create or ▇▇▇▇▇ ▇ ▇▇▇▇, shall, for any reason,
fail or cease to create or grant a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, enforceable first priority Lien on or
security interest in the Collateral covered hereby or thereby;
8.22 Any provision of any Post-Petition Loan Document shall at any time for
any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Borrower or ▇▇▇▇▇▇ May, or a proceeding shall be
commenced by Borrower or ▇▇▇▇▇▇ May, or by any Governmental Authority having
jurisdiction over Borrower or ▇▇▇▇▇▇ May, seeking to establish the invalidity or
unenforceability thereof, or Borrower or ▇▇▇▇▇▇ May shall deny that Borrower or
▇▇▇▇▇▇ May has any liability or obligation purported to be created under any
Loan Document;
8.23 If ACC Canada shall commence or become the subject of an Insolvency
Proceeding unless arrangements have been made with respect to the liens and
claims of the Agent and the Lenders hereunder and under the other Post-Petition
Loan Documents which are satisfactory to the Lenders, in their sole discretion.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by the Loan Parties:
(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Post-Petition Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the benefit of
the Loan Parties under this Agreement, under any of the Post-Petition Loan
Documents, or under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Post-Petition Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors
for amounts and upon terms which Agent considers advisable, and in such cases,
Agent will credit Borrower's Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;
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(e) Cause Borrower or ACC Canada to hold all returned Inventory in
trust for the Lender Group, segregate all returned Inventory from all other
assets of such party or in Borrower's or ACC Canada's possession and
conspicuously label said returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Loan Party, make such payments
and do such acts as Agent considers necessary or reasonable to protect its
security interests in the Collateral. The Loan Parties agree to assemble the
Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate which
is reasonably convenient to the Agent and the Loan Parties. The Loan Parties
authorize Agent to enter the premises where the Personal Property Collateral is
located, to take and maintain possession of the Personal Property Collateral, or
any part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the Agent's Liens and to pay all
expenses incurred in connection therewith and to charge Borrower's Loan Account
therefor. With respect to any owned or leased premises, the Loan Parties hereby
grant Agent a license to enter into possession of such premises and to occupy
the same, without charge, in order to exercise any of the Lender Group's rights
or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to the Loan Parties (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of the Loan Parties held by
the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of the
Loan Parties held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral. The Loan Parties hereby grant to Agent a license
or other right to use, without charge, their labels, patents, copyrights, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Personal Property
Collateral, in completing production of, advertising for sale, and selling any
Personal Property Collateral and the Loan Parties' rights under all licenses and
all franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Agent determines is commercially reasonable. It is not necessary that the
Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal Property
Collateral as follows:
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(i) Agent shall give Borrower (for the benefit of the applicable Loan
Party) a notice in writing of the time and place of public sale, or, if the
sale is a private sale or some other disposition other than a public sale
is to be made of the Personal Property Collateral, the time on or after
which the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in SECTION 12, at least 10 days before the
earliest time of disposition set forth in the notice; no notice needs to be
given prior to the disposition of any portion of the Personal Property
Collateral that is perishable or threatens to decline speedily in value or
that is of a type customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group, may credit bid and purchase
at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and remedies available
at law or in equity or pursuant to any other Loan Document; and
(o) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrower. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Borrower (for the benefit of the applicable Loan Party).
9.2 AUTOMATIC STAY. Upon the occurrence and during the continuance of an
Event of Default, the automatic stay provided in section 362 of the Bankruptcy
Code shall be deemed automatically vacated as to the Agent and the Lenders
without further order of the Bankruptcy Court and the Agent and the Lenders
shall be immediately permitted, to, INTER ALIA, pursue any and all of their
remedies against Borrower and/or the Collateral and seek payment in respect of
all Obligations; PROVIDED, HOWEVER, that the automatic stay shall not be deemed
vacated and modified with respect to the exercise by the Lenders of any
enforcement rights or remedies with respect to the Collateral following an Event
of Default unless and until the Agent has given the notice required by the
Financing Orders.
9.3 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group under
this Agreement, the other Post-Petition Loan Documents, the Financing Orders and
all other agreements shall be cumulative. The Lender Group shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity. No exercise by the Lender Group of one right or remedy shall
be deemed an election, and no waiver by the Lender Group of any Event of Default
shall be deemed a continuing waiver. No delay by the Lender Group shall
constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
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If the Loan Parties fail to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to Borrower, may do any or all of the following: (a)
make payment of the same or any part thereof, (b) set up such reserves in
Borrower's Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with SECTION 6.8 hereof, obtain and maintain insurance policies of the
type described in SECTION 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. The Loan Parties waive demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any Loan Party may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. The Loan Parties hereby
agree that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by the Loan
Parties.
11.3 INDEMNIFICATION. The Loan Parties jointly and severally, shall pay,
indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons with respect to each Lender, each Participant, and each of their
respective officers, directors, employees, agents, and attorneys-in-fact (each,
an "INDEMNIFIED PERSON") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Post-Petition
Loan Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES"). The
foregoing to the
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contrary notwithstanding, the Loan Parties shall have no obligation to any
Indemnified Person under this SECTION 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person or its Affiliates. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which Loan Parties were required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrower with respect thereto.
WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED
BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR
OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrower (on behalf of the Loan Parties) or Agent to the other relating to this
Agreement or any other Post-Petition Loan Document shall be in writing and
(except for financial statements and other informational documents which may be
sent by first-class mail, postage prepaid) shall be personally delivered or sent
by registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as Borrower or
Agent, as applicable, may designate to each other in accordance herewith), or
telefacsimile to Borrower or Agent, as the case may be, at its address set forth
below:
If to Borrower: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ CORPORATION
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President and Chief Operating Officer
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: WINSTON & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
If to Agent: FOOTHILL CAPITAL CORPORATION
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
ABLECO FINANCE, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
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with copies to: TORYS LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
and: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
Agent and Borrower may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this SECTION 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER POST-PETITION LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK AND FEDERAL LAW, INCLUDING THE BANKRUPTCY
CODE.
(b) EXCEPT FOR ANY MATTERS TO BE ADJUDICATED BY THE BANKRUPTCY COURT,
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER POST-PETITION LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE BANKRUPTCY COURT BUT ONLY IF SUCH COURT DECLINES TO
EXERCISE JURISDICTION, THEN IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY FOR WHICH THE BANKRUPTCY
COURT HAS DECLINED TO EXERCISE JURISDICTION MAY BE BROUGHT, AT AGENT'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND THE LENDER
GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
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ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 13(B).
(c) BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE POST-PETITION LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent (provided that no
written consent of Agent shall be required in connection with any assignment and
delegation by a Lender to an Eligible Transferee) and no notice to Agent shall
be required in connection with any assignment and delegation by a Lender, to an
Affiliate of a Lender, or fund or account managed by a Lender, assign and
delegate to one or more assignees (each an "ASSIGNEE") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Post-Petition Loan Documents, in a
minimum amount of $5,000,000; except that such minimum amount shall not apply to
an Affiliate of a Lender or a fund or account managed by a Lender; provided,
HOWEVER, that Borrower and Agent may continue to deal solely and directly with
such Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions,
addresses, and related information with respect to the Assignee, have been given
to Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Borrower and Agent an Assignment and Acceptance in
form and substance satisfactory to Agent, and (iii) the assignor Lender or
Assignee has paid to Agent for Agent's separate account a processing fee in the
amount of $5,000. Anything contained herein to the contrary notwithstanding, the
consent of Agent shall not be required (and payment of any fees shall not be
required) if such assignment is in connection with any merger, consolidation,
sale, transfer, or other disposition of all or any substantial portion of the
business or loan portfolio of such Lender or the assignee is an Affiliate (other
than individuals) of, or a fund, money market account, investment account or
other account managed by a Lender or an Affiliate of a Lender.
(b) From and after the date that Agent notifies the assignor Lender
(with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the
Post-
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Petition Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Post-Petition Loan
Documents have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (except with respect to SECTION 11.3 hereof) and be
released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement and the other Post-Petition
Loan Documents, such Lender shall cease to be a party hereto and thereto), and
such assignment shall affect a novation between Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Post-Petition Loan Document
furnished pursuant hereto, (2) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Loan Parties or the performance or observance by Borrower of any of its
obligations under this Agreement or any other Post-Petition Loan Document
furnished pursuant hereto, (3) such Assignee confirms that it has received a
copy of this Agreement, together with 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, (4) such Assignee will, independently and
without reliance upon Agent, such assigning Lender 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, (5) such Assignee appoints and authorizes Agent to take
such actions and to exercise such powers under this Agreement as are delegated
to Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance and receipt and acknowledgment by Agent of
such fully executed Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender PRO TANTO.
(e) Any Lender may at any time, with the written consent of Agent, sell
to one or more commercial banks, financial institutions, or other Persons not
Affiliates of such Lender (a "PARTICIPANT") participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the "ORIGINATING LENDER") hereunder and under the other Post-Petition Loan
Documents (provided that no written consent of Agent shall be required in
connection with any sale of any such participating interests by a Lender to an
Eligible Transferee); PROVIDED, HOWEVER, that (i) the Originating Lender shall
remain a "Lender" for all purposes of this Agreement and the other Post-Petition
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and
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interests of the Originating Lender hereunder shall not constitute a "Lender"
hereunder or under the other Post-Petition Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrower, Agent, and the Lenders shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Post-Petition Loan Documents, (iv) no Lender shall transfer or grant any
participating interest under which the Participant has the right to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Post-Petition Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the
Post-Petition Loan Documents) supporting the Obligations hereunder in which such
Participant is participating, (D) postpone the payment of, or reduce the amount
of, the interest or fees payable to such Participant through such Lender, or (E)
change the amount or due dates of scheduled principal repayments or prepayments
or premiums, and (v) all amounts payable by any Loan Party hereunder shall be
determined as if such Lender had not sold such participation, except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement. The rights of any Participant
only shall be derivative through the Originating Lender with whom such
Participant participates and no Participant shall have any rights under this
Agreement or the other Post-Petition Loan Documents or any direct rights as to
the other Lenders, Agent, the Loan Parties, the Collections, the Collateral, or
otherwise in respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.
The provisions of this SECTION 14.1(E) are solely for the benefit of Lender
Group, and none of the Loan Parties shall have any rights as a third party
beneficiary of any such provisions.
(f) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may disclose all documents and information
which it now or hereafter may have relating to the Loan Parties or their
businesses.
(g) Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement (i) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law or (ii) in favor of any other Person, provided that no such
pledge or security interest shall release such Lender from its obligations
hereunder or substitute any such pledgee or secured party as a party hereto.
(h) The Agent, acting for this purpose as an agent of the Loan Parties
shall maintain at the address set forth in SECTION 12 a copy of each Assignment
and Acceptance
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delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitment of, and certain of the Obligations owing to, each
Lender pursuant to the terms hereof from time to time (the "REGISTER"). The
entries in the Register shall be conclusive, and Borrowers, Agent and Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice of the contrary In the event that any Lender sells
participations in any Obligations, such Lender shall maintain a register on
which it enters the name of all participants in such Obligations held by it (the
"PARTICIPANT Register"). Any Obligation (and the registered note, if any,
evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
registered note shall expressly so provide). Any participation of such
Obligations (and the registered note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.
(i) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, payment of the processing and
recordation fee and any required written consent to such assignment, Agent shall
accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; PROVIDED, HOWEVER,
that the Loan Parties may not assign this Agreement or any rights or duties
hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void AB INITIO. No consent to assignment by the
Lenders shall release any of the Loan Parties from its respective Obligations. A
Lender may assign this Agreement and the other Post-Petition Loan Documents and
its rights and duties hereunder and thereunder pursuant to SECTION 14.1 hereof
and, except as expressly required pursuant to SECTION 14.1 hereof, no consent or
approval by Borrower is required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Loan Parties therefrom, shall be effective unless the same
shall be in writing and signed by the Required Lenders (or by Agent at the
written request of the Required Lenders) and Borrower and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; PROVIDED, HOWEVER, that no such waiver, amendment, or
consent shall, unless in writing and signed by all of the Lenders affected
thereby and Borrower, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Post-Petition Loan Document for any payment of principal, interest, fees, or
other amounts due hereunder or under any other Post-Petition Loan Document,
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(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to take
any action hereunder,
(e) amend, modify or waive this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) change the definition of "Required Lenders" or "Pro Rata Share",
(g) change the definitions of Borrowing Base, Dilution, Dilution
Reserve, Eligible Accounts, Eligible Inventory, or Net Liquidation Percentage
that would result in an increase in the Borrowing Base (or in any definition
contained in this Agreement used in connection with the definition of the
foregoing terms that would result in an increase in the Borrowing Base),
(h) change the definitions of Administrative Expense Priorities,
Maximum Credit Line, Maximum Revolver Amount, Term Loan A Amount, Term Loan B
Amount, or change, modify or waive SECTION 2.1(B) or SECTION 2.4(B), or
(i) amend, modify or waive any of the provisions of SECTION 16 or
SECTION 2.1(A), SECTION 2.3(I) or SECTION 2.4(C);
(j) release Collateral other than as permitted by SECTION 16.12;
(k) contractually subordinate any of the Agent's liens;
(l) release any Loan Party from any obligation for the payment of
money.
and, PROVIDED FURTHER, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Post-Petition Loan Document that relates only to the relationship
of the Lender Group among themselves, and that does not affect the rights or
obligations of the Loan Parties, shall not require consent by or the agreement
of the Loan Parties.
15.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
a Lender ("HOLDOUT LENDER") fails to give its consent, authorization, or
agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to
the Holdout Lender, may permanently replace the Holdout Lender with one or more
substitute Lenders (each, a "REPLACEMENT LENDER"), and the Holdout Lender shall
have no right to refuse to be replaced hereunder. Such notice to replace the
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Holdout Lender shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is given.
(b) Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of SECTION 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Post-Petition Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances
and to purchased a participation in each Letter of Credit, in an amount equal to
its Pro Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Post-Petition Loan Documents will be cumulative and not
exclusive of any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby designates
and appoints Foothill as its representative under this Agreement and the other
Post-Petition Loan Documents and each Lender hereby irrevocably authorizes Agent
to take such action on its behalf under the provisions of this Agreement and
each other Post-Petition Loan Document and to exercise such powers and perform
such duties as are expressly delegated to Agent by the terms of this Agreement
or any other Loan Document, together with such powers as are reasonably
incidental thereto. Agent agrees to act as such on the express conditions
contained in this SECTION 16. The provisions of this SECTION 16 are solely for
the benefit of Agent, and the Lenders, and the Loan Parties shall have no rights
as a third party beneficiaries (individually or collectively) of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Post-Petition Loan Document notwithstanding,
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Post-Petition Loan Document or otherwise exist against
Agent; it being expressly understood and agreed that the use of the word "Agent"
is for convenience only, that Foothill is merely the representative of the
Lenders, and only has the contractual duties set
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forth herein. Except as expressly otherwise provided in this Agreement, Agent
shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Post-Petition Loan Documents. Without
limiting the generality of the foregoing, or of any other provision of the
Post-Petition Loan Documents that provides rights or powers to Agent, Lenders
agree that Agent shall have the right to exercise the following powers as long
as this Agreement remains in effect: (a) maintain, in accordance with its
customary business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, the Collections, and related matters, (b) execute
or file any and all financing or similar statements or notices, amendments,
renewals, supplements, documents, instruments, proofs of claim, notices and
other written agreements with respect to the Post-Petition Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the
Post-Petition Loan Documents, (d) exclusively receive, apply, and distribute the
Collections as provided in the Post-Petition Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Post-Petition Loan Documents
for the foregoing purposes with respect to the Collateral and the Collections,
(f) perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Borrower, the Obligations, the Collateral, the
Collections, or otherwise related to any of same as provided in the
Post-Petition Loan Documents, and (g) incur and pay such Lender Group Expenses
as Agent may deem necessary or appropriate for the performance and fulfillment
of its functions and powers pursuant to the Post-Petition Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this
Agreement or any other Post-Petition Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful
misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Post-Petition Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any
Subsidiary or Affiliate of any Loan Party, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Borrower or any other party to any Post-Petition Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall 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 any other Loan Document, or to inspect the Books or properties of
any Loan Party or the books or records or properties of any Loan Party's
Subsidiaries or Affiliates.
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16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation 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 Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Post-Petition Loan Document unless Agent shall
first receive such advice or concurrence of the Lenders as it deems appropriate
and until such instructions are received, Agent shall act, or refrain from
acting, as it deems advisable. If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other
Post-Petition Loan Document in accordance with a request or consent of the
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to SECTION 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with SECTION 9; PROVIDED, HOWEVER, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of the Loan
Parties, and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of any Loan Party and any other Person (other than the Lender
Group) party to a Loan Document, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to any Loan Party. Each Lender
also represents that it will, independently and without reliance upon any
Agent-Related Person 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 Post-Petition Loan Documents, and to make such investigations as it
deems
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necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of any Loan Party and any
other Person (other than the Lender Group) party to a Loan Document. Except for
notices, reports, and other documents expressly herein required to be furnished
to the Lenders by Agent, Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of any Loan Party and any other Person party to a Post-Petition
Loan Document that may come into the possession of any of the Agent-Related
Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Post-Petition Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or the Loan Parties are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of the Loan Parties and without limiting the obligation of the Loan
Parties to do so), according to their Pro Rata Shares, from and against any and
all Indemnified Liabilities; PROVIDED, HOWEVER, that no Lender shall be liable
for the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with the Loan Parties and
their Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Post-Petition Loan Documents as though Foothill were not
Agent hereunder, and, in each case, without notice to or consent of the other
members of the Lender Group. The other members of the Lender Group acknowledge
that, pursuant to such activities, Foothill or its Affiliates may receive
information regarding any of the Loan Parties or their respective Affiliates and
any other Person (other than the Lender Group) party to any Post-
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Petition Loan Documents that is subject to confidentiality obligations in favor
of any of the Loan Parties or such other Person and that prohibit the disclosure
of such information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this SECTION 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the Loan
Parties and their respective Subsidiaries and Affiliates and any other Person
(other than the Lender Group) party to any Post-Petition Loan Documents as
though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding the Loan Parties or their
respective Affiliates and any other Person (other than the Lender Group) party
to any Post-Petition Loan Documents that is subject to confidentiality
obligations in favor their respective or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender may exercise the same as though it were not the sub-agent of Agent.
16.11 WITHHOLDING TAXES. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the IRC and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and Borrower, to
deliver to Agent and Borrower:
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(i) if such Lender claims an exemption from withholding tax pursuant
to its portfolio interest exception, (a) a statement of the Lender, signed
under penalty of perjury, that it is not a (I) a "bank" as described in
Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the meaning
of Section 881(c)(3)(B) of the IRC), or (III) a controlled foreign
corporation described in Section 881(c)(3)(C) of the IRC, and (B) a
properly completed IRS Form W-8BEN, before the first payment of any
interest under this Agreement and at any other time reasonably requested by
Agent or Borrower;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Form W-8BEN before the first payment of any interest under this Agreement
and at any other time reasonably requested by Agent or Borrower;
(iii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form W-8ECI before the first
payment of any interest is due under this Agreement and at any other time
reasonably requested by Agent or Borrower;
(iv) such other form or forms as may be required under the IRC or
other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of the Loan Parties to such Lender, such Lender agrees
to notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of the Loan Parties to such Lender. To the extent of such
percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no longer
valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that Agent did not properly withhold tax
from amounts paid to or for the account of any Lender (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify Agent of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes
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imposed by any jurisdiction on the amounts payable to Agent under this Section,
together with all costs and expenses (including attorneys fees and expenses).
The obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of Agent.
(e) All payments made by the Loan Parties hereunder or under any note
will be made without setoff, counterclaim, or other defense, except as required
by applicable law other than for Taxes (as defined below). All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction (other
than the United States) or by any political subdivision or taxing authority
thereof or therein (other than of the United States) with respect to such
payments (but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (i) measured by or based on
the net income or net profits of a Lender, or (ii) to the extent that such tax
results from a change in the circumstances of the Lender, including a change in
the residence, place of organization, or principal place of business of the
Lender, or a change in the branch or lending office of the Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"TAXES"). If any Taxes are so levied or imposed, the Loan Parties agree to pay
the full amount of such Taxes, and such additional amounts as may be necessary
so that every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this SECTION 16.11(E) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, the Loan Parties shall not be required
to increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of this SECTION 16.11, or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross negligence. The Loan Parties will furnish to Agent as promptly as
possible after the date the payment of any Taxes is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by the Loan
Parties.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its option and
in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if the Loan Parties
certify to Agent that the sale or disposition is permitted under SECTION 7.4 of
this Agreement or the other Post-Petition Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which the Loan Parties owned no interest at the time
the security interest was granted or at any time thereafter, or (iv)
constituting property leased to any of the Loan Parties under a lease that has
expired or is terminated in a transaction permitted under this Agreement. Except
as provided above, Agent will not execute and deliver a release of any Lien on
any Collateral without the prior written authorization of (y) if the release is
of all or any substantial portion of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or any of the Loan
Parties at any time, the Lenders will confirm in writing Agent's authority to
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release any such Liens on particular types or items of Collateral pursuant to
this SECTION 16.12; PROVIDED, HOWEVER, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of the Loan Parties in respect
of) all interests retained by any of the Loan Parties, including, the proceeds
of any sale, all of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by any of the Loan Parties 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 Agent pursuant to any of the
Post-Petition Loan Documents, it being understood and agreed that in respect of
the Collateral, or any act, omission, or event related thereto, subject to the
terms and conditions contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent's own interest in the Collateral
in its capacity as one of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the express
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the request of Agent, set off against the Obligations, any amounts
owing by such Lender to any of the Loan Parties or any deposit accounts of any
of the Loan Parties now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
by Agent, take or cause to be taken any action, 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 the purpose of which is,
or could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Post-Petition Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter
93
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and, promptly
upon Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED POST-PETITION LOAN DOCUMENTS.
Each member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Post-Petition Loan Documents relating to the Collateral,
for the benefit of the Lender Group. Each member of the Lender Group agrees that
any action taken by Agent in accordance with the terms of this Agreement or the
other Post-Petition Loan Documents relating to the Collateral and the exercise
by Agent of its powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS BY
LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this Agreement,
each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "REPORT" and collectively, "REPORTS") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding the Loan
Parties and will rely significantly upon the Books, as well as on
representations of the Loan Parties' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding the Loan Parties and their respective Subsidiaries and
their operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrower that in any
event such Lender may make disclosures (a) to counsel for and
94
other advisors, accountants, and auditors to such Lender, (b) reasonably
required by any BONA FIDE potential or actual Assignee or Participant in
connection with any contemplated or actual assignment or transfer by such Lender
of an interest herein or any participation interest in such Lender's rights
hereunder, (c) of information that has become public by disclosures made by
Persons other than such Lender, its Affiliates, assignees, transferees, or
Participants, or (d) as required or requested by any court, governmental or
administrative agency, pursuant to any subpoena or other legal process, or by
any law, statute, regulation, or court order; PROVIDED, HOWEVER, that, unless
prohibited by applicable law, statute, regulation, or court order, such Lender
shall notify Borrower of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report 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 Borrower, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
the Loan Parties, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Post-Petition Loan Documents, to
request additional reports or information from Borrower, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender's notice to Agent, whereupon Agent promptly shall request of
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a
copy of same to such Lender, and (z) any time that Agent renders to Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of
the Post-Petition Loan Documents now or hereafter may have been or will be
executed only by or in favor of Agent in its capacity as such, and not by or in
favor of the Lenders, any and all obligations on the part of Agent (if any) to
make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Post-Petition Loan
95
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in SECTION 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.
17. GUARANTY
17.1 (a) Each of the Guarantors unconditionally and irrevocably guarantees
the due and punctual payment and performance by Borrower of the Obligations.
Each of the Guarantors further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
it will remain bound upon this guaranty notwithstanding any extension or renewal
of any of the Obligations. The obligations of the Guarantors shall be joint and
several.
(b) Each of the Guarantors waives presentation to, demand for payment
from and protest to Borrower or any other Guarantor, and also waives notice of
protest for nonpayment. The Obligations of the Guarantors hereunder shall not be
affected by (i) the failure of the Agent to assert any claim or demand or to
enforce any right or remedy against Borrower or any other Guarantor under the
provisions of this Agreement or any other Post- Petition Loan Document or
otherwise; (ii) any extension or renewal of any provision hereof or thereof;
(iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Post-Petition Loan
Documents; (iv) the release, exchange, waiver or foreclosure of any security
held by Agent for the Obligations or any of them; (v) the failure of Agent to
exercise any right or remedy against any other Guarantor; or (vi) the release or
substitution of any Guarantor or any other Company.
(c) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by Agent to
any security held for payment of the Obligations or to any balance of any
deposit, account or credit on the books of Agent in favor of Borrower or any
other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby waives any defense that it might have
based on a failure to remain informed of the financial condition of Borrower and
of any other Guarantor and any circumstances affecting the ability of Borrower
to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Obligations or any other
instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this guaranty. Agent makes no representation or warranty in respect
to any such circumstances or shall have any duty or responsibility whatsoever to
any Guarantor in respect of the management and maintenance of the Obligations.
96
(f) Subject to any notice requirements set forth in the Financing
Orders, upon the Obligations becoming due and payable (by acceleration or
otherwise), Agent shall be entitled to immediate payment of such Obligations by
the Guarantors upon written demand by Agent, without further application to or
order of the Bankruptcy Court.
17.2 The obligations of the Guarantors hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations. Without limiting the generality of the
foregoing, the obligations of the Guarantors hereunder shall not be discharged
or impaired or otherwise affected by the failure of Agent to assert any claim or
demand or to enforce any remedy under this Agreement, or any other agreement, by
any waiver or modification of any provision thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of the Guarantors or would
otherwise operate as a discharge of the Guarantors as a matter of law, unless
and until the Obligations are paid in full.
17.3 Upon payment by any Guarantor of any sums to Agent hereunder, all
rights of such Guarantor against Borrower, arising as a result thereof by way of
right of subrogation or otherwise, shall in all respects be subordinate and
junior in right of payment to the prior final and indefeasible payment in full
of all the Obligations. If any amount shall be paid to such Guarantor for the
account of Borrower, such amount shall be held in trust for the benefit of
Agent, and shall forthwith be paid to Agent to be credited and applied to the
Obligations, whether matured or unmatured.
17.4 Anything in this Agreement to the contrary notwithstanding, (i) in no
event shall the amount of the liability Guarantors hereunder exceed the maximum
amount that (after giving effect to the incurring of the obligations hereunder
and to any rights to contribution of Guarantors, as the case may be, from other
affiliates of Borrower) would not render the rights to payment of Agent
hereunder void, voidable or avoidable under any applicable fraudulent transfer
law and (ii) to the extent of a conflict between the terms of this Agreement and
the Canadian Guarantee concerning the guarantee of ACC Canada, the terms of the
Canadian Guarantee shall govern.
18. GENERAL PROVISIONS.
18.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
18.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
97
18.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
18.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
18.5 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Post-Petition Loan
Document MUTATIS MUTANDIS.
18.6 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or payment
of the Obligations or the transfer to the Lender Group of any property should
for any reason subsequently be declared to be void or voidable under any state
or federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, or other
voidable or recoverable payments of money or transfers of property
(collectively, a "VOIDABLE TRANSFER"), and if the Lender Group is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys fees
of the Lender Group related thereto, the liability of the Loan Parties
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
18.7 INTEGRATION. This Agreement, together with the other Post-Petition
Loan Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof.
18.8 CONFLICTS. IN THE EVENT OF A CONFLICT BETWEEN THIS AGREEMENT, ANY
POST-PETITION LOAN DOCUMENT AND THE FINANCING ORDERS, THE TERMS OF THE FINANCING
ORDERS SHALL GOVERN.
[Signature page to follow.]
98
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ CORPORATION,
an Illinois corporation, as Borrower
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Operating Officer
▇▇▇▇▇▇ MAY HOLDINGS, INC.,
a Delaware corporation, as a Guarantor
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Operating Officer
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (CANADA) CORPORATION,
a Canadian corporation, as a Guarantor
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Operating Officer
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
ABLECO FINANCE L.L.C.,
a Delaware limited liability company, as a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Operating Officer and
Senior Vice President
SIGNATURE PAGE FOR
POST-PETITION LOAN AND SECURITY AGREEMENT AND GUARANTY
SCHEDULE A-1
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as
the account into which Borrower shall make all payments to Agent for the benefit
of the Lender Group and into which the Lender Group shall make all payments to
Agent under this Agreement and the other Post-Petition Loan Documents; unless
and until Agent notifies Borrower and the Lender Group to the contrary, Agent's
Account shall be that certain deposit account bearing account number 323-266193
and maintained by Agent with JPMorgan Chase Bank, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ABA #▇▇▇▇▇▇▇▇▇.
SCHEDULE C-1
COMMITMENTS
========================= ====================== ====================== ====================== ======================
REVOLVER COMMITMENT TERM LOAN A TERM LOAN B TOTAL COMMITMENT
LENDER COMMITMENT COMMITMENT
------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Foothill Capital
Corporation $25,000,000 $3,000,000 $0 $28,000,000
------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Ableco Finance L.L.C. $0 $7,000,000 $10,000,000 $17,000,000
------------------------- ---------------------- ---------------------- ---------------------- ----------------------
------------------------- ---------------------- ---------------------- ---------------------- ----------------------
All Lenders $25,000,000 $10,000,000 $10,000,000 45,000,000
========================= ====================== ====================== ====================== ======================