SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
MAY 2, 2000
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
NUTRAMAX PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-18671 061200464
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) INDENTIFICATION NO.)
INCORPORATION)
51 Blackburn Drive, Gloucester, Massachusetts 01930
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(978) 282-1800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On May 2, 2000, NutraMax Products, Inc. and its subsidiaries
(collectively, "NutraMax") each filed a voluntary petition for relief under
chapter 11, title 11, of the United States Code with the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). In
addition, NutraMax filed its Joint Plan of Reorganization and related
disclosure statement with the Bankruptcy Court on May 3, 2000.
On May 3, 2000, the Bankruptcy Court approved, on an interim
basis, NutraMax's authority to obtain loans and advances under a $5 million
debtor-in-possession financing facility provided by Fleet National Bank
f/k/a BankBoston, N.A. ("Fleet"). Nutramax has also obtained commitments
from (i) The CIT Group/Business Credit, Inc. and (ii) Cape Ann, LLC,
Peritus Capital Partners, LLC and Mr. Bernard Korman, for subsequent
debtor-in-possession financings in an aggregate amount of up to $48 million
on substantially the terms of the form financing agreements attached as
Exhibits 10.2 and 10.3 to this Current Report on Form 8-K. The subsequent
debtor-in-possession financings are subject to court approval.
The foregoing summary does not purport to be complete and is
qualified in its entirety by reference to (i) the Debtors' Joint Chapter 11
Plan of Reorganization and related Disclosure Statement, each dated May 2,
2000, (ii) the Debtor-in-Possession Credit Agreement, dated as of May 2,
2000 among NutraMax and Fleet, (iii) the Order Authorizing Interim
Financing, Granting Senior Liens and Priority Administrative Expense, and
Modifying the Automatic Stay, dated May 3, 2000, (iv) form of Debtor In
Possession Credit Agreement among NutraMax Products, Inc. and its
subsidiaries, as borrowers, the lenders party thereto, as lenders, and The
CIT Group/Business Credit, Inc. as agent, (v) form of Junior Subsequent
Debtor-In-Possession Credit Agreement among NutraMax Products, Inc. and its
subsidiaries, as borrowers, and the lenders party thereto, as lenders, and
(vi) the press release, dated May 2, 2000, filed as Exhibits 2.1, 10.1,
10.2, 10.3, 99.1 and 99.2, respectively, to this Current Report on Form
8-K, which items are incorporated by reference herein.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) Exhibits.
The following exhibits are filed as part of this report:
Exhibit
Number Description
- ------- -----------
2.1 Debtors' Joint Chapter 11 Plan of Reorganization, dated May
2, 2000.
10.1 Debtor-in-Possession Credit Agreement, dated May 2, 2000,
among NutraMax Products, Inc., NutraMax Holdings, Inc,
NutraMax Holdings, Inc. II, NutraMax Ophthalmics, Inc.,
Fairton Realty Holdings, Inc., Oral Care, Inc., Powers
Pharmaceutical Corporation, Florence Realty, Inc., Certified
Corp., First Aid Products, Inc., Adhesive Coatings, Inc.,
Elmwood Park Realty, Inc. F.A. Products, L.P., NutraMax
Acquisition Corporation and Fleet National Bank.
10.2 Form of Debtor In Possession Credit Agreement among NutraMax
Products, Inc. and its subsidiaries, as borrowers, the
lenders party thereto, as lenders, and The CIT
Group/Business Credit, Inc., as agent.
10.3 Form of Junior Subsequent Debtor-In-Possession Credit
Agreement among NutraMax Products, Inc. and its
subsidiaries, as borrowers, and the lenders party thereto,
as lenders.
99.1 Interim Order Authorizing Emergency Post-Petition Secured
Financing Pursuant to Sections 364(c)(2), 364(c)(3) and
364(d) of the Bankruptcy Code, Granting Adequate Protection,
and Setting Final Hearing Pursuant to Bankruptcy Rule 4001.
99.2 Press Release, dated May 2, 2000.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Dated: May 16, 2000 By: /s/ Richard G. Glass
----------------------------
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
2.1 Debtors' Joint Chapter 11 Plan of Reorganization, dated May
2, 2000.
10.1 Debtor-in-Possession Credit Agreement, dated May 2, 2000,
among NutraMax Products, Inc., NutraMax Holdings, Inc,
NutraMax Holdings, Inc. II, NutraMax Ophthalmics, Inc.,
Fairton Realty Holdings, Inc., Oral Care, Inc., Powers
Pharmaceutical Corporation, Florence Realty, Inc., Certified
Corp., First Aid Products, Inc., Adhesive Coatings, Inc.,
Elmwood Park Realty, Inc. F.A. Products, L.P., NutraMax
Acquisition Corporation and Fleet National Bank.
10.2 Form of Debtor In Possession Credit Agreement among NutraMax
Products, Inc. and its subsidiaries, as borrowers, the
lenders party thereto, as lenders, and The CIT
Group/Business Credit, Inc., as agent.
10.3 Form of Junior Subsequent Debtor-In-Possession Credit
Agreement among NutraMax Products, Inc. and its
subsidiaries, as borrowers, and the lenders party thereto,
as lenders.
99.1 Interim Order Authorizing Emergency Post-Petition Secured
Financing Pursuant to Sections 364(c)(2), 364(c)(3) and
364(d) of the Bankruptcy Code, Granting Adequate Protection,
and Setting Final Hearing Pursuant to Bankruptcy Rule 4001.
99.2 Press Release, dated May 2, 2000.
EXHIBIT 2.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
)
In re: ) Chapter 11
)
NUTRAMAX PRODUCTS, INC. et al., ) Case No. 00--_____ ( )
) (Jointly Administered)
Debtors. )
)
-------------------------------------
DEBTORS' JOINT
CHAPTER 11 PLAN OF REORGANIZATION
-------------------------------------
Dated: Wilmington, Delaware
May _, 2000
PACHULSKI, STANG, ZIEHL,
YOUNG & JONES P.C.
Attorneys for Debtors and
Debtors-In-Possession
919 North Market Street
16th Floor
Wilmington, Delaware 19801
(302) 652-4100
Attn: Laura Davis Jones, Esq.
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON
(A Partnership Including
Professional Corporations)
Attorneys for Debtors and
Debtors-In-Possession
One New York Plaza
New York, New York 10004
(212) 859-8000
Attn: Brad Eric Scheler, Esq.
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS..................................................1
ARTICLE TWO PROVISIONS FOR TREATMENT OF ADMINISTRATIVE EXPENSES.........10
2.1. Non-DIP Administrative Expenses................................10
2.2. Senior DIP Administrative Expenses.............................10
2.3. Junior DIP Administrative Expenses.............................10
2.4. Full Settlement................................................10
ARTICLE THREE PROVISIONS FOR TREATMENT OF PRIORITY TAX CLAIMS...........11
3.1. Priority Tax Claims............................................11
ARTICLE FOUR CLASSIFICATION OF CLAIMS AND INTERESTS.....................11
4.1. Claims.........................................................11
4.2. Interests......................................................12
ARTICLE FIVE IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS
IMPAIRED AND NOT IMPAIRED BY THIS PLAN..................12
5.1. Classes of Claims and Interests Impaired by this Plan
and Entitled to Vote........................................12
5.2. Classes of Claims Not Impaired by this Plan and
Conclusively Presumed to Accept this Plan...................12
5.3. Class of Interests Impaired by this Plan and Deemed
Not to Have Accepted this Plan..............................12
ARTICLE SIX PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS...........13
6.1. Priority Claims (Class 1)......................................13
6.2. Pre-petition Credit Agreement Claims (Class 2).................13
6.3. Miscellaneous Secured Claims (Class 3).........................13
6.4. General Unsecured Claims (Class 4).............................14
6.5. Senior Subordinated Note Claim (Class 5).......................14
6.6. Old Common Stock Interests (Class 6)...........................15
6.7. Other Interests (Class 7)......................................15
6.8. Subsidiary Common Stock Interests (Class 8)....................15
ARTICLE SEVEN ACCEPTANCE OR REJECTION OF THIS PLAN; EFFECT OF
REJECTION BY ONE OR MORE IMPAIRED CLASSES OF
CLAIMS OR INTERESTS....................................16
7.1. Impaired Class of Claims and Interests Entitled to Vote........16
7.2. Acceptance by an Impaired Class of Creditors...................16
7.3. Acceptance by an Impaired Class of Interest Holders............16
7.4. Classes of Claims and Interests Not Impaired by this Plan
and Conclusively Presumed to Accept this Plan...............16
7.5. Class of Interests Deemed Not to Have Accepted this Plan.......17
7.6. Confirmation Pursuant to Section 1129(b) of the
Bankruptcy Code.............................................17
ARTICLE EIGHT UNEXPIRED LEASES AND EXECUTORY CONTRACTS..................17
8.1. Assumption and Rejection of Executory Contracts
and Unexpired Leases........................................17
8.2. Bar Date for Rejection Damages.................................17
ARTICLE NINE IMPLEMENTATION OF THIS PLAN................................18
9.1. Rights Plan....................................................18
9.2. Vesting of Property............................................18
9.3. Transactions on Business Days..................................18
9.4. Corporate Action for Reorganized Debtors.......................18
9.5. Implementation.................................................19
9.6. Issuance of New Securities.....................................19
9.7. Cancellation of Existing Securities and Agreements.............19
9.8. Board of Directors of Reorganized NutraMax.....................19
9.9. Employee Benefit Plans.........................................20
9.10. Survival of Indemnification and Contribution Obligations.......20
9.11. Litigation Trust...............................................21
9.12. Substantive Consolidation......................................21
9.13. Chilmark Consulting Agreement..................................22
ARTICLE TEN PROVISIONS COVERING DISTRIBUTIONS...........................22
10.1. Timing of Distributions Under this Plan.......................22
10.2. Allocation of Consideration...................................23
10.3. Cash Payments.................................................23
10.4. Payment of Statutory Fees.....................................23
10.5. No Interest...................................................23
10.6. Fractional Securities.........................................24
10.7. Withholding of Taxes..........................................24
10.8. Distribution Record Date......................................24
10.9. Persons Deemed Holders of Registered Securities...............24
10.10. Surrender of Existing Securities..............................25
10.11. Special Procedures for Lost, Stolen, Mutilated or
Destroyed Instruments......................................25
10.12. Undeliverable or Unclaimed Distributions......................25
ARTICLE ELEVEN PROCEDURES FOR RESOLVING DISPUTED CLAIMS.................26
11.1. Objections to Claims..........................................26
11.2. Procedure 26
11.3. Payments and Distributions With Respect to Disputed Claims....27
11.4. Individual Holder Proofs of Interest..........................27
ARTICLE TWELVE DISCHARGE, INJUNCTION, RELEASES AND SETTLEMENTS
OF CLAIMS..............................................27
12.1. Discharge of All Claims and Interests and Releases............27
12.2. Injunction 28
12.3. Exculpation...................................................29
12.4. Guaranties and Claims of Subordination........................29
ARTICLE THIRTEEN CONDITIONS PRECEDENT TO CONFIRMATION ORDER AND
EFFECTIVE DATE......................................30
13.1. Conditions Precedent to Entry of the Confirmation Order.......30
13.2. Conditions Precedent to the Effective Date....................31
13.3. Waiver of Conditions..........................................31
13.4. Effect of Failure of Conditions...............................31
ARTICLE FOURTEEN MISCELLANEOUS PROVISIONS...............................32
14.1. Bankruptcy Court to Retain Jurisdiction.......................32
14.2. Binding Effect of this Plan...................................33
14.3. Nonvoting Stock...............................................33
14.4. Authorization of Corporate Action.............................33
14.5. Retiree Benefits..............................................33
14.6. Withdrawal of this Plan.......................................33
14.7. Captions......................................................34
14.8. Method of Notice..............................................34
14.9. Dissolution of Committees.....................................35
14.10. Amendments and Modifications to Plan..........................35
14.11. Section 1125(e) of the Bankruptcy Code........................35
Exhibit A - List of Initial Board of Directors of Reorganized NutraMax
<PAGE>
NutraMax Products, Inc.; NutraMax Ophthalmics Inc. (f/k/a
Optopics Laboratories Corporation); Fairton Realty Holdings, Inc.; Powers
Pharmaceutical Corporation; Certified Corp.; Oral Care, Inc.; Florence
Realty, Inc.; First Aid Products, Inc.; Adhesive Coatings, Inc.; Elmwood
Park Realty, Inc.; NutraMax Holdings Inc.; NutraMax Holdings II Inc.; F.A.
Products, L.P.; and NutraMax Acquisition Corporation, as debtors and
debtors-in-possession (collectively, the "Debtors"), hereby propose the
following consolidated chapter 11 plan of reorganization pursuant to
section 1121(a) of the Bankruptcy Code.
ARTICLE ONE
-----------
DEFINITIONS
-----------
Whenever from the context it appears appropriate, each term
stated in either the singular or the plural shall include the singular and
the plural, and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, the feminine and the neuter. Unless the
context requires otherwise, the following words and phrases shall have the
meanings set forth below when used in initially-capitalized form in this
Plan:
Administrative Expense: (a) Any cost or expense of administration
of the Chapter 11 Cases (including, without limitation, professional fees
and expenses) asserted or arising under sections 503(b) or 507(b) of the
Bankruptcy Code, (b) a Claim given the status of an Administrative Expense
by Final Order of the Bankruptcy Court, and (c) all fees or charges
assessed against the Debtors' estates under title 28, United States Code,
Section 1930.
Affiliate: As defined in section 101(2) of the Bankruptcy Code.
Allowed: With respect to Claims and Interests, (a) any Claim
against, or Interest in, the Debtors, proof of which is timely filed or by
order of the Bankruptcy Court is not or will not be required to be filed,
(b) any Claim or Interest that has been or is hereafter listed in the
Schedules as neither disputed, contingent or unliquidated, and for which no
timely proof of claim has been filed, (c) any Interest registered in the
stock register maintained by or on behalf of the Debtors as of the Record
Date, or (d) any Claim allowed pursuant to this Plan and, in each such case
in (a), (b), and (c) above, as to which either (i) no objection to the
allowance thereof has been interposed within the applicable period of time
fixed by this Plan, the Bankruptcy Code, the Bankruptcy Rules or the
Bankruptcy Court or (ii) such an objection is so interposed and the Claim
or Interest shall have been allowed by a Final Order (but only to the
extent so allowed).
Ballot: The form distributed, together with the Disclosure
Statement, to Holders of Claims and Interests in classes that are impaired
and entitled to vote on this Plan for the purpose of indicating acceptance
or rejection of this Plan.
Bankruptcy Code: Title 11 of the United States Code, as amended
from time to time.
Bankruptcy Court: The United States Bankruptcy Court for the
District of Delaware, or any other court having jurisdiction over these
Chapter 11 Cases.
Bankruptcy Rules: The Federal Rules of Bankruptcy Procedure, as
amended, promulgated under Section 2075 of title 28 of the United States
Code and the Local Rules of the Bankruptcy Court, as applicable from time
to time during the Chapter 11 Cases.
Board: The Board of Directors of Debtors or Reorganized NutraMax,
as applicable.
Business Day: Any day other than a Saturday, Sunday or "legal
holiday" as such term is defined in Bankruptcy Rule 9006(a).
By-Laws: The By-Laws, as amended, of the Debtors.
Canceled Security: A security, note or other instrument
evidencing a Claim or Interest outstanding immediately prior to the
Effective Date, which security, note or other instrument represents a Claim
or Interest that is Impaired under this Plan.
Cash: Currency, a certified check, a cashier's check or a wire
transfer of good funds from any source, or a check drawn on a domestic bank
by the Debtors, the Reorganized Debtors or other Entity making any
distribution under this Plan.
Cash Option: As defined in Section 6.4 of this Plan.
Cause of Action: Any and all actions, causes of action, suits,
accounts, controversies, agreements, promises, rights to legal remedies,
rights to equitable remedies, rights to payment, and claims, whether known
or unknown, reduced to judgment, not reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, unsecured and whether asserted or assertable directly or
derivatively, in law, equity or otherwise.
Certificate of Incorporation: The Certificate of Incorporation of
NutraMax.
Chapter 11 Cases: The cases under chapter 11 of the Bankruptcy
Code concerning the Debtors which were commenced on the Filing Date.
Chilmark Consulting Agreement: The consulting agreement between
Reorganized NutraMax and Chilmark Partners which will be filed no later
than ten (10) business days prior to the Confirmation Date.
Claim: Any right to (a) payment from a Debtor, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (b) an equitable remedy for breach of performance
if such breach gives rise to a right to payment from a Debtor, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
Class: A class of Claims or Interests designated pursuant to this
Plan.
Confirmation Date: The date on which the Confirmation Order shall
be entered on the docket maintained by the Clerk of the Bankruptcy Court
with respect to the Chapter 11 Cases.
Confirmation Hearing: The hearing held by the Bankruptcy Court
pursuant to section 1128(a) of the Bankruptcy Code regarding the
confirmation of this Plan pursuant to section 1129 of the Bankruptcy Code.
Confirmation Order: The order of the Bankruptcy Court confirming
this Plan pursuant to section 1129 of the Bankruptcy Code.
Creditor: Any Entity that is the holder of a Claim against a
Debtor that arose on or before the order for relief in these Chapter 11
Cases or a Claim against a Debtor's estate of the kind specified in section
502(g), 502(h) or 502(i) of the Bankruptcy Code.
Creditors' Committee: Any official committee of unsecured
creditors appointed in the Chapter 11 Cases pursuant to section 1102(a) of
the Bankruptcy Code, as the same may be constituted from time to time.
Debtors: NutraMax Products, Inc.; NutraMax Ophthalmics Inc.
(f/k/a Optopics Laboratories Corporation); Fairton Realty Holdings, Inc.;
Powers Pharmaceutical Corporation; Certified Corp.; Oral Care, Inc.;
Florence Realty, Inc.; First Aid Products, Inc.; Adhesive Coatings, Inc.;
Elmwood Park Realty, Inc.; NutraMax Holdings Inc.; NutraMax Holdings II
Inc.; F.A. Products, L.P.; and NutraMax Acquisition Corporation, as debtors
and debtors-in-possession in the Chapter 11 Cases.
Disclosure Statement: The Disclosure Statement that relates to
this Plan and that has been approved by the Bankruptcy Court as containing
adequate information as required by section 1125 of the Bankruptcy Code.
Disputed: With respect to Claims, any Claim that is not Allowed.
Distributable Cash: The product of $2,750,000 multiplied by a
fraction for which (x) the numerator is the aggregate amount of Allowed
General Unsecured Claims that the holder of which has elected or have been
deemed to have elected, the Cash Option and (y) the denominator is the
aggregate amount of all Allowed General Unsecured Claims.
Distributable New Subordinated Notes: New Subordinated Notes in
an aggregate principal amount equal to the difference of (x) $5,500,000
less (y) the amount of Distributable Cash multiplied by two (2).
Distribution Record Date: The date or dates fixed by the
Bankruptcy Court for determining the Holders of Old Common Stock who are
entitled to receive distributions under this Plan.
Effective Date: The date which is 11 days after the Confirmation
Date, or, if such date is not a Business Day, the next succeeding Business
Day, or such earlier date after the Confirmation Date as agreed to in
writing between the Debtors and the holders of DIP Administrative Expenses
so long as no stay of the Confirmation Order is in effect on such date;
provided, however, that if, on or prior to such date, all conditions to the
Effective Date set forth in Article Thirteen of this Plan have not been
satisfied, or waived, then the Effective Date shall be the first Business
Day following the day on which all such conditions to the Effective Date
have been satisfied or waived.
Entity: Any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint
stock company, estate, entity, trust, trustee, United States trustee,
unincorporated organization, government, governmental unit (as defined in
the Bankruptcy Code), agency or political subdivision thereof.
Estimated General Unsecured Claims: General Unsecured Claims that
are estimated in accordance with section 502(c) of the Bankruptcy Code or
Bankruptcy Rule 3018(a).
Filing Date: [________], 2000, which was the date on which each
of the Debtors filed a voluntary petition for relief commencing the Chapter
11 Cases.
Final Decree: A final decree closing the Chapter 11 Cases as
described in Bankruptcy Rule 3022.
Final Order: An order, ruling or judgment that: (i) is in full
force and effect; (ii) is not stayed; and (iii) is no longer subject to
review, reversal, modification or amendment, by appeal or writ of
certiorari.
Fleet: Fleet National Bank.
General Unsecured Claim: Any Claim against the Debtors (other
than a Pre-petition Credit Agreement Claim, a Miscellaneous Secured Claim,
a Senior Subordinated Note Claim, a Priority Claim, a Priority Tax Claim,
an Administrative Expense, or any Claim subordinated under section 510(b)
of the Bankruptcy Code).
Holder: Any Entity that holds a Claim or Interest.
Impaired: Any Class of Claims or Interests that is impaired
within the meaning of section 1124 of the Bankruptcy Code.
ING: ING (U.S.) Capital LLC.
Initial DIP Agreement: The Debtor-in-Possession Credit Agreement,
dated as of May _, 2000, among the Debtors and Fleet National Bank f/k/a
BankBoston, N.A.
Instrument: Any share of stock, security, promissory note or
other "Instrument" within the meaning of that term, as defined in Section
9-105(1)(i) of the UCC.
Interests: The equity interests in the Debtors, including, but
not limited to, shares of common stock of the Debtors and any rights,
options, warrants, calls, subscriptions or other similar rights or
agreements, commitments or outstanding securities obligating the Debtors to
issue, transfer or sell any shares of capital stock of the Debtors.
Junior DIP Administrative Expenses: The Debtors' Administrative
Expense obligations arising under the Junior Subsequent DIP Agreement.
Junior DIP Lenders: Cape Ann Investors, LLC, Peritus Capital
Partners LLC and Mr. Bernard Korman.
Junior Subsequent DIP Agreement: The Junior Debtor-in-Possession
Credit Agreement, dated as of ____ __, 2000, among the Debtors and the
Junior DIP Lenders.
Litigation Trust: The litigation trust created by the Litigation
Trust Agreement.
Litigation Trust Agreement: The Litigation Trust Agreement
effective as of the Effective Date, to be filed with the Bankruptcy Court
at least ten (10) days prior to the Confirmation Date.
Market Rate: The rate of interest per annum (rounded upward, if
necessary, to the nearest whole 1/100 of 1%) equal to the yield equivalent
(as determined by the Secretary of the Treasury) of the average accepted
auction price for the last auction of one-year United States Treasury bills
settled at least fifteen days prior to the Effective Date.
Miscellaneous Secured Claim: Any Claim, other than a Pre-petition
Credit Agreement Claim or an Administrative Expense, that is a secured
claim within the meaning of, and to the extent allowable as a secured claim
under, section 506 of the Bankruptcy Code.
New Certificates of Incorporation: The Certificates of
Incorporation for each of the Reorganized Debtors.
New Common Stock: The shares of common stock of Reorganized
NutraMax, par value $.01 per share, to be issued by Reorganized NutraMax on
and after the Effective Date pursuant to this Plan.
New Senior Notes: The senior notes to be issued by Reorganized
NutraMax under this Plan in the aggregate principal amount of $4,000,000.
The New Senior Subordinated Notes will be secured by all assets of the
Reorganized Debtors, subject only to the liens granted or permitted under
the Reorganized Debtors' post-petition credit facility. The New Senior
Notes are senior in priority to the New Subordinated Notes. The New Senior
Subordinated Notes will bear interest from the Effective Date at a rate
equal to the prime rate announced by Fleet plus 2.5% and will mature on the
third anniversary of the Effective Date. Reorganized NutraMax will pay
interest monthly in arrears. Principal payments on the New Senior Notes
will be made as follows: (a) $1,000,000 on the first anniversary of the
Effective Date, (b) $250,000 on the last business day of each three month
period after the first anniversary of the Effective Date with the last of
such payments being made on the last business day of the twenty-first month
following the first anniversary of the Effective Date and (c) $1,250,000 on
the third anniversary of the Effective Date. The New Senior Notes shall be
substantially in the form filed with the Bankruptcy Court no later than ten
(10) days prior to the Confirmation Hearing.
New Subordinated Notes: The subordinated notes that may be issued
by Reorganized NutraMax under this Plan in an aggregate principal amount
not to exceed $5,500,000. The New Subordinated Notes will bear interest
from the Effective Date at the Market Rate and will mature on the seventh
anniversary of the Effective Date. Interest will be payable quarterly in
arrears. No principal payments will be made on the New Subordinated Notes
until the maturity thereof. The New Subordinated Notes shall be
subordinated to the prior payment in full of all senior indebtedness
(including, without limitation, the New Senior Notes). The New Subordinated
Notes shall be substantially in the form filed with the Bankruptcy Court no
later than 10 days prior to the Confirmation Hearing.
Non-DIP Administrative Expenses: All Administrative Expenses,
other than the Senior DIP Administrative Expenses and the Junior DIP
Administrative Expenses.
Note Distribution: As defined in Section 6.4 of this Plan.
NutraMax: NutraMax Products, Inc., a Delaware corporation.
Old Common Stock: The common stock of NutraMax, par value $.01
per share, issued and outstanding as of the Filing Date.
Old Common Stock Interest: Any Interest evidenced by Old Common
Stock or any Claim, if any, relating to Old Common Stock that is
subordinated under section 510(b) of the Bankruptcy Code.
Other Interest: Any Interest other than Old Common Stock
Interests or Subsidiary Common Stock Interests.
Plan: This Chapter 11 plan of reorganization of the Debtors,
together with all exhibits hereto, as the same may be amended and modified
from time to time in accordance with the terms hereof.
Pre-petition Credit Agreement: The Revolving Credit and Term Loan
Agreement, dated as of December 30, 1996, as amended, modified or
supplemented from time to time, between NutraMax, the lenders party thereto
and Fleet, as a lender and agent for the lenders.
Pre-petition Credit Agreement Claims: Any and all Claims in
respect of, or in connection with, all or any portion of the aggregate
outstanding and unpaid amount of principal and interest due and owing
under, and subject to the terms and provisions of, the Pre-petition Credit
Agreement and all other Loan Documents (as defined in the Pre-petition
Credit Agreement), including, without limitation, any and all accrued
adequate protection payments in respect thereof, and any and all interest,
costs, attorney's fees and other expenses owed by the Debtors or for which
the Debtors may be liable in connection therewith.
Priority Claim: Any Claim, other than a Priority Tax Claim or an
Administrative Expense, which is entitled to priority of payment under
section 507(a) of the Bankruptcy Code.
Priority Tax Claim: Any Claim which is entitled to priority of
payment under section 507(a)(8) of the Bankruptcy Code.
Pro Rata Share: A proportionate share, so that the ratio of the
amount of property distributed on account of an Allowed Claim or Allowed
Interest, as the case may be, in a class is the same as the ratio such
Claim or Interest bears to the total amount of all Claims or Interests
(including Disputed Claims or Disputed Interests until disallowed) in such
class.
Related Documents: This Plan and all documents necessary to
consummate the transactions contemplated by this Plan.
Reorganized Debtors: The Debtors from and after the effectiveness
of this Plan on the Effective Date.
Reorganized NutraMax: NutraMax from and after the effectiveness
of this Plan on the
Effective Date.
Reorganized NutraMax By-Laws: The by-laws of Reorganized
NutraMax, as amended and restated pursuant to this Plan, to be filed with
the Bankruptcy Court prior to the Confirmation Hearing.
Reorganized NutraMax Certificate of Incorporation: The
certificate of incorporation of Reorganized NutraMax, as amended and
restated pursuant to this Plan, in substantially the form to be filed with
the Bankruptcy Court prior to the Confirmation Hearing.
Rights: The rights to purchase New Common Stock to be issued
under the Rights Plan and in accordance with Section 9.1 of this Plan.
Rights Plan: The rights plan, substantially in the form to be
filed with the Bankruptcy Court at least 10 days prior to the Confirmation
Hearing.
Rights Issue Date: The date on which the Rights are issued to
Holders of Old Common Stock, which date shall be as soon as practicable
after the Confirmation Date.
Rights Record Date: The record date for the receipt of Rights
under the Rights Plan as set forth in the Confirmation Order, which record
date shall be on or prior to the Confirmation Date.
Schedules: The schedule of assets and liabilities filed by the
Debtors with the Bankruptcy Court in accordance with section 521(1) of the
Bankruptcy Code, and any supplements and amendments thereto.
Senior DIP Administrative Expenses: The Debtors' Administrative
Expense Obligations arising under the Senior Subsequent DIP Agreement.
Senior Subsequent DIP Lenders: The lenders under the Senior
Subsequent DIP Agreement and The CIT Group/Business Credit, Inc., a New
York corporation, as a lender and agent for the lenders.
Senior Subordinated Note Claims: Any and all Claims in respect of
all or any portion of the aggregate outstanding and unpaid amount of
principal and interest due and owing under, (including, without limitation,
any and all interest, costs, attorneys' fees and other expenses owed by the
Debtors or for which the Debtors may be liable in connection therewith) and
all other Claims against the Debtors, if any, directly or indirectly
related to or arising out of the transactions, agreements or instruments
upon which the Senior Subordinated Notes are based.
Senior Subordinated Notes: The 11-1/2% Senior Subordinated Notes
due June 30, 2004 issued by NutraMax to ING pursuant to that certain
Purchase Agreement, dated as of December 30, 1996.
Senior Subsequent DIP Agreement: The Senior Debtor-in-Possession
Credit Agreement, dated as of _____ __, 2000, among the Debtors and the
Senior Subsequent DIP Lenders.
Subsidiary Common Stock: collectively, any and all authorized
issued and outstanding Interests in each of the Debtors other than
NutraMax.
Subsidiary Common Stock Interest. Any interest evidenced by
Subsidiary Common Stock.
UCC: The Uniform Commercial Code, from time to time in effect in
the State of New York.
Unimpaired: Any Class of Claims or Interests that is not
Impaired.
Unsubscribed New Common Stock: If Class 7 votes to accept this
Plan, the New Common Stock that is not subscribed for under the Rights
Plan. If Class 7 does not vote to accept this Plan, the New Common Stock.
ARTICLE TWO
-----------
PROVISIONS FOR TREATMENT OF ADMINISTRATIVE EXPENSES
---------------------------------------------------
2.1. Non-DIP Administrative Expenses. Each allowed Non-DIP
Administrative Expense shall be paid in full in Cash on the later of (i)
the Effective Date, (ii) the date on which the Bankruptcy Court enters an
order allowing such Non-DIP Administrative Expense and (iii) the date on
which the Debtors and the Holder of such allowed Non-DIP Administrative
Expense otherwise agree; provided, however, that allowed Non-DIP
Administrative Expenses representing obligations incurred in the ordinary
course of business, consistent with past practice, or assumed by the
Debtors shall be paid in full or performed by the Debtors or Reorganized
Debtors in the ordinary course of business, consistent with past practice;
provided further, however, that allowed Non-DIP Administrative Expenses
incurred by the Debtors or Reorganized Debtors after the Confirmation Date,
including (without limitation) claims for professionals' fees and expenses,
shall not be subject to application and may be paid by the Debtors or
Reorganized Debtors, as the case may be, in the ordinary course of business
and without further Bankruptcy Court approval.
2.2. Senior DIP Administrative Expenses. All Senior DIP
Administrative Expenses are allowed in full. The Senior DIP Administrative
Expense shall be paid in full in Cash on the Effective Date.
2.3. Junior DIP Administrative Expenses. All Junior DIP
Administrative Expenses are allowed in full. The Junior DIP Lenders shall
receive the following distributions on the Effective Date in satisfaction
of the Junior DIP Administrative Expenses: (x) the proceeds of the Rights
Plan and (y) the Unsubscribed New Common Stock. The holders of the Junior
DIP Administrative Expenses have agreed to accept such distribution,
subject to the consummation of this Plan.
2.4. Full Settlement. The distributions provided for in Sections
2.1, 2.2 and 2.3 are in full settlement, release and discharge of all
Administrative Expenses.
ARTICLE THREE
-------------
PROVISIONS FOR TREATMENT OF PRIORITY TAX CLAIMS
-----------------------------------------------
3.1. Priority Tax Claims. With respect to each Allowed Priority
Tax Claim, at the sole option of the Debtors, the Holder of an Allowed
Priority Tax Claim shall be entitled to receive from the Reorganized
Debtors on account of such Claim:
(a) Cash payments made in equal annual installments
beginning on or before the first anniversary following the Effective Date
with the final installment being payable no later than the sixth
anniversary of the date of the assessment of such Allowed Priority Tax
Claim, together with interest on the unpaid balance of such Allowed
Priority Tax Claim from the Effective Date calculated at the Market Rate;
or
(b) Such other treatment agreed to by the Holder of such
Allowed Priority Tax Claim and the Debtors or Reorganized Debtors, as the
case may be.
ARTICLE FOUR
------------
CLASSIFICATION OF CLAIMS AND INTERESTS
--------------------------------------
Pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code,
set forth below is a designation of classes of Claims and Interests.
Administrative Expenses and Priority Tax Claims of the kinds specified in
sections 507(a)(1) and 507(a)(8) of the Bankruptcy Code (set forth in
Articles Two and Three above) have not been classified and are excluded
from the following classes in accordance with section 1123(a)(l) of the
Bankruptcy Code.
4.1. Claims
------
Class 1. Class 1 consists of all Priority Claims.
Class 2. Class 2 consists of the Pre-petition Credit
Agreement Claims.
Class 3. Class 3 consists of all Miscellaneous Secured
Claims.
Class 4. Class 4 consists of all General Unsecured Claims.
Class 5. Class 5 consists of all Senior Subordinated Note
Claims.
4.2. Interests
---------
Class 6. Class 6 consists of all Old Common Stock Interests.
Class 7. Class 7 consists of all Other Interests.
Class 8. Class 8 consists of all Subsidiary Common Stock
Interests.
ARTICLE FIVE
------------
IDENTIFICATION OF CLASSES OF CLAIMS AND
INTERESTS IMPAIRED AND NOT IMPAIRED BY THIS PLAN
------------------------------------------------
5.1. Classes of Claims and Interests Impaired by this Plan and
Entitled to Vote. Pre-petition Credit Agreement Claims (Class 2), General
Unsecured Claims (Class 4), Senior Subordinated Note Claims (Class 5), and
Old Common Stock Interests (Class 6) are Impaired by this Plan and the
Holders of Allowed Claims and Interests in such Classes are entitled to
vote to accept or reject this Plan.
5.2. Classes of Claims Not Impaired by this Plan and
Conclusively Presumed to Accept this Plan. Priority Claims (Class 1),
Miscellaneous Secured Claims (Class 3) and Subsidiary Common Stock
Interests (Class 8) are not Impaired by this Plan. Under section 1126(f) of
the Bankruptcy Code, the Holders of such Claims and Interests are
conclusively presumed to accept this Plan, and the acceptances of such
Holders will not be solicited.
5.3. Class of Interests Impaired by this Plan and Deemed Not to
Have Accepted this Plan. Other Interests (Class 7) are Impaired by this
Plan and do not receive or retain any property under this Plan. Under
section 1126(g) of the Bankruptcy Code, the Holders of Other Interests are
deemed not to have accepted this Plan, and the acceptance of such Holders
will not be solicited.
ARTICLE SIX
-----------
PROVISIONS FOR TREATMENT OF
CLAIMS AND INTERESTS
---------------------------
6.1. Priority Claims (Class 1).
---------------
(a) Treatment. On the latest of (a) the Effective Date, (b) the
date on which such Priority Claim becomes an Allowed Claim, and (c) the
date on which the Debtors and the Holder of such Allowed Priority Claim
otherwise agree, each Holder of an Allowed Priority Claim shall be entitled
to receive Cash in an amount sufficient to render such Allowed Priority
Claim Unimpaired under section 1124 of the Bankruptcy Code.
(b) Full Settlement. The distribution provided for in this
Section 6.1 is in full settlement, release and discharge of each Holder's
Priority Claim.
Class 1 is not Impaired.
6.2. Pre-petition Credit Agreement Claims (Class 2).
------------------------------------
(a) Treatment. On the Effective Date, the Holders of Allowed
Pre-petition Credit Agreement Claims shall be entitled to receive the New
Senior Notes. The Pre-petition Credit Agreement Claims are held by the
Pre-petition Lenders and the Junior DIP Lenders. The Junior Subsequent DIP
Lenders have agreed that all the New Senior Notes shall be distributed to
the Pre-petition Lenders.
(b) Full Settlement. The distribution provided for in this
Section 6.2 is in full settlement, release and discharge of the
Pre-petition Credit Agreement Claim.
Class 2 is Impaired.
6.3. Miscellaneous Secured Claims (Class 3).
----------------------------
(a) Treatment. On the latest of (a) the Effective Date, (b) the
date on which such Miscellaneous Secured Claim becomes an Allowed Claim,
and (c) the date on which the Debtors and the Holder of such Allowed
Miscellaneous Secured Claim otherwise agree, at the election of the Debtors
prior to the Effective Date, each Holder of an Allowed Miscellaneous
Secured Claim shall be entitled to receive on account of such Holder's
Allowed Miscellaneous Secured Claim one of the following treatments: (i)
the legal, equitable and contractual rights to which such Allowed
Miscellaneous Secured Claim entitles such Holder shall remain unaltered,
(ii) such Holder's Allowed Miscellaneous Secured Claim shall be reinstated
and rendered Unimpaired in accordance with section 1124(2) of the
Bankruptcy Code, or (iii) such other treatment as mutually agreed to by the
Debtors and such Holder.
(b) Full Settlement. The distribution provided for in this
Section 6.3 is in full settlement, release and discharge of each Holder's
Miscellaneous Secured Claim.
Class 3 is not Impaired.
6.4. General Unsecured Claims (Class 4).
------------------------
(a) Treatment. With the express consent of the Holders of the
Pre-petition Credit Agreement Claims, provided that Class 4 accepts this
Plan, as soon as practicable following the later of (i) the Effective Date
and (ii) the date on which all Disputed General Unsecured Claims have been
resolved by a Final Order of the Bankruptcy Court, each Holder of such an
Allowed General Unsecured Claim shall receive, at its sole option, for each
$1,000 of Allowed General Unsecured Claims that it holds,(x) such Holder's
Pro Rata Share of the Distributable New Subordinated Notes in a principal
amount not to exceed $500 (the "Note Distribution"); or (y) its Pro Rata
Share of the Distributable Cash in an amount not to exceed $250 (the "Cash
Option"); provided, that, if such Holder's Allowed General Unsecured Claim
is less than $500, such Holder shall be deemed to have elected the Cash
Option; provided, however, that in the event Class 4 does not accept this
Plan, the Holders of General Unsecured Claims shall receive no distribution
of any kind in respect of such General Unsecured Claims. The election of
the Cash Option may be made by each Holder of an Allowed General Unsecured
Claim solely by indicating such Holder's preference on its Ballot, provided
that such Holder may elect only one of the treatments set forth in clauses
(x) and (y) above for its entire Allowed General Unsecured Claim. If a
Holder of an Allowed General Unsecured Claim fails to make an election or
elects more than one option, such Holder shall be deemed to have elected
the Cash Option.
(b) Full Settlement. The distribution provided for in this
Section 6.4 is in full settlement, release and discharge of each Holder's
General Unsecured Claim.
Class 4 is Impaired.
6.5. Senior Subordinated Note Claim (Class 5).
------------------------------
(a) Treatment. With the express consent of the Holders of the
Pre-petition Credit Agreement Claims, provided that Class 5 accepts this
Plan, on the Effective Date, or as soon as thereafter is practicable, the
Holders of the Senior Subordinated Note Claim shall receive an aggregate of
$2,000,000 in Cash; provided, however, that in the event Class 5 does not
accept this Plan, the Holders of the Senior Subordinated Note Claim shall
receive no distribution of any kind in respect of such Senior Subordinated
Note Claim.
(b) Full Settlement. The distribution provided for in this
Section 6.5 is in full settlement, release and discharge of each Holder's
Senior Subordinated Note Claim.
Class 5 is Impaired.
6.6. Old Common Stock Interests (Class 6).
--------------------------
(a) Treatment. With the express consent of the Holders of the
Pre-petition Credit Agreement Claims, provided that Class 6 accepts this
Plan, (i) on the Rights Issue Date, each holder of Allowed Old Common Stock
Interests as of the Rights Record Date will receive its Pro Rata Share of
Rights to purchase up to 100% of the New Common Stock on the terms of the
Rights Plan, and (ii) as soon as practicable following the Effective Date,
each holder of Allowed Old Common Stock Interests, shall receive its Pro
Rata Share of the beneficial interests in the Litigation Trust; provided,
however, that in the event that Class 6 does not accept the Plan, (x)the
holder of such Old Common Stock Interests shall receive no distribution of
any kind in respect of such Old Common Stock Interests and (y) the
beneficial interests in the Litigation Trust shall be distributed to
Reorganized NutraMax.
(b) Full Settlement. The distribution provided for in this
Section 6.6 is in full settlement, release and discharge of each Holder's
Old Common Stock Interest.
Class 6 is Impaired.
6.7. Other Interests (Class 7). On the Effective Date, all Other
Interests will be extinguished and no distributions will be made in respect
of such Other Interests.
Class 7 is Impaired.
6.8. Subsidiary Common Stock Interests (Class 8).
---------------------------------
(a) On the Effective Date, each holder of a Subsidiary Common
Stock Interest shall retain such Interest and its respective share or
shares of common stock of the Debtors representing such Interest.
(b) Full Settlement. The distribution provided for in this
Section 6.8 is in full settlement, release and discharge of each Holder's
Subsidiary Common Stock Interest.
Class 8 is not Impaired.
ARTICLE SEVEN
-------------
ACCEPTANCE OR REJECTION OF THIS PLAN;
EFFECT OF REJECTION BY ONE OR MORE IMPAIRED
CLASSES OF CLAIMS OR INTERESTS
-------------------------------------------
7.1. Impaired Class of Claims and Interests Entitled to Vote. The
Holders of Allowed Claims in each Impaired Class of Claims (Class 2 -
Pre-petition Credit Agreement Claims; Class 4 - General Unsecured Claims;
Class 5 - Senior Subordinated Note Claims); and Interests (Class 6 - Old
Common Stock Interests) are entitled to vote to accept or reject this Plan.
7.2. Acceptance by an Impaired Class of Creditors. Consistent
with section 1126(c) of the Bankruptcy Code and except as provided in
section 1126(e) of the Bankruptcy Code, an Impaired Class of Claims shall
have accepted this Plan if this Plan is accepted by Holders of at least
two-thirds in dollar amount and more than one-half in number of the Allowed
Claims in such Class that have timely and properly voted to accept or
reject this Plan.
7.3. Acceptance by an Impaired Class of Interest Holders.
Consistent with section 1126(d) of the Bankruptcy Code and except as
provided in section 1126(e) of the Bankruptcy Code, Class 6 (Old Common
Stock Interests) shall have accepted this Plan if this Plan is accepted by
Holders of at least two-thirds in amount of the Allowed Interests in Class
6 that have timely and properly voted to accept or reject this Plan.
7.4. Classes of Claims and Interests Not Impaired by this Plan
and Conclusively Presumed to Accept this Plan. Priority Claims (Class 1),
Miscellaneous Secured Claims (Class 3). Subsidiary Common Stock Interest
(Class 8) are not Impaired by this Plan. Under section 1126(f) of the
Bankruptcy Code, the Holders of such Claims and Interests are conclusively
presumed to accept this Plan, and the acceptances of such Holders will not
be solicited.
7.5. Class of Interests Deemed Not to Have Accepted this Plan.
Other Interests (Class 7) are Impaired by this Plan and do not receive or
retain any property under this Plan. Under section 1126(g) of the
Bankruptcy Code, the Holders of such Other Interests are deemed not to have
accepted this Plan, and the acceptance of such Holders will not be
solicited.
7.6. Confirmation Pursuant to Section 1129(b) of the Bankruptcy
Code. With respect to Class 7 and any Impaired Class that does not accept
this Plan, the Debtors intend to request that the Bankruptcy Court confirm
this Plan in accordance with section 1129(b) of the Bankruptcy Code.
ARTICLE EIGHT
-------------
UNEXPIRED LEASES AND EXECUTORY CONTRACTS
----------------------------------------
8.1. Assumption and Rejection of Executory Contracts and
Unexpired Leases. The Debtors and Reorganized Debtors shall have until the
six-month anniversary of the Effective Date to assume or reject executory
contracts and unexpired leases that have not been previously assumed or
rejected. Each executory contract or unexpired lease that has not been
expressly assumed or rejected with approval by order of the Bankruptcy
Court on or prior to the six-month anniversary of the Effective Date shall,
as of such date, be deemed to have been assumed by the Debtors unless there
is then pending before the Bankruptcy Court a motion to reject such
unexpired lease or executory contract.
8.2. Bar Date for Rejection Damages. Unless otherwise provided by
an order of the Bankruptcy Court entered prior to the Confirmation Date, a
proof of claim with respect to any Claim against the Debtors arising from
the rejection of any executory contract or unexpired lease pursuant to an
order of the Bankruptcy Court must be filed with the Bankruptcy Court
within the later of (a) the time period established by the Bankruptcy Court
in an order of the Bankruptcy Court approving such rejection, or (b) if no
such time period is or was established, thirty (30) days from the date of
entry of such order of the Bankruptcy Court approving such rejection. Any
Entity that fails to file a proof of claim with respect to its Claim
arising from such a rejection within the period set forth above shall be
forever barred from asserting a Claim against the Debtors, Reorganized
Debtors or the property or interests in property of the Debtors or
Reorganized Debtors. All Allowed Claims arising from the rejection of
executory contracts or unexpired leases shall be classified as a General
Unsecured Claim (Class 4) under this Plan.
ARTICLE NINE
------------
IMPLEMENTATION OF THIS PLAN
---------------------------
9.1. Rights Plan. Pursuant to the Rights Plan, and with the
express consent of the Holders of the Pre-petition Credit Agreement Claims,
each Holder of Old Common Stock as of the Rights Record Date shall receive
on the Rights Issue Date, Rights to purchase, such Holder's Pro Rata Share
(determined as of the Rights Record Date) of up to 100% of the shares of
New Common Stock to be issued and outstanding on the Effective Date. The
Rights will be exercisable at a price per share equal to the amounts
outstanding under the Junior DIP Agreement on the Confirmation Date divided
by the number of shares of New Common Stock to be issued and outstanding on
the Effective Date. The Rights, which will not be issued prior to the
Confirmation Date, shall not be transferable (other than as expressly set
forth in the Rights Plan or as ordered by the Bankruptcy Court) and shall
be exercisable through the date that is fifteen (15) days after the Rights
Issue Date. The net proceeds of the Rights Plan, together with the
Unsubscribed New Common Stock, will be distributed to the Junior DIP
Leaders pursuant to Section 2.3 of this Plan.
9.2. Vesting of Property. Except as set forth in Section 9.13
below and as otherwise provided in this Plan, on the Effective Date, title
to all property of the Debtors' estates shall pass to the applicable
Reorganized Debtors free and clear of all Claims, Interests, and liens.
Confirmation of this Plan (subject to the occurrence of the Effective Date)
shall be binding and the Debtors' debts shall, without in any way limiting
Section 12.1 of this Plan, be discharged as provided in section 1141 of the
Bankruptcy Code.
9.3. Transactions on Business Days. If the Effective Date or any
other date on which a transaction may occur under this Plan shall occur on
a day that is not a Business Day, the transactions contemplated by this
Plan to occur on such day shall instead occur on the next succeeding
Business Day.
9.4. Corporate Action for Reorganized Debtors. On the Effective
Date, NutraMax shall be incorporated in the State of Delaware as
Reorganized NutraMax. On the Effective Date or as soon thereafter as is
practicable, Reorganized NutraMax shall file with the Secretary of State of
the State of Delaware, in accordance with sections 103 and 303 of the
Delaware General Corporation Law, Reorganized NutraMax Certificate of
Incorporation and such certificate shall be the certificate of
incorporation for Reorganized NutraMax. On the Effective Date, Reorganized
NutraMax By-Laws shall become the by-laws of Reorganized NutraMax. On the
Effective Date or as soon thereafter as practicable, each of the
Reorganized Debtors (other than NutraMax) shall file with the Secretary of
State of the State of Delaware, in accordance with sections 103 and 303 of
the Delaware General Corporation Law, the New Certificates of
Incorporation.
9.5. Implementation. Pursuant to the Confirmation Order and upon
confirmation of this Plan, the Debtors shall be authorized to take all
necessary steps, and perform all necessary acts, to consummate the terms
and conditions of this Plan. On or before the Effective Date, the Debtors
may file with the Bankruptcy Court such agreements and other documents as
may be necessary or appropriate to effectuate or further evidence the terms
and conditions of this Plan and the other agreements referred to herein.
The Debtors or the Reorganized Debtors, as the case may be, may, are hereby
authorized and shall, execute such documents and take such other actions as
are necessary to effectuate the transactions provided for in this Plan.
9.6. Issuance of New Securities. The issuance and distribution of
the Rights, New Senior Subordinated Secured Notes, New Subordinated Notes
and New Common Stock by Reorganized NutraMax is hereby authorized and
directed without the need for any further corporate action, under
applicable law, regulation, order, rule or otherwise.
9.7. Cancellation of Existing Securities and Agreements. On the
Effective Date, the Senior Subordinated Notes, the Old Common Stock, the
Other Interests and any rights, options, warrants, calls, subscriptions, or
other similar rights or other agreements or commitments, contractual or
otherwise, obligating the Debtors to issue, transfer, or sell any shares of
Old Common Stock or any other capital stock of the Debtors shall be
canceled.
9.8. Board of Directors of Reorganized NutraMax. On the Effective
Date, the operation of Reorganized NutraMax shall become the general
responsibility of Board of Directors of Reorganized NutraMax, subject to,
and in accordance with, the Reorganized NutraMax Certificate of
Incorporation and the Reorganized NutraMax By-Laws. The Reorganized
NutraMax Certificate of Incorporation will provide for, among other things,
a nine (9) member board. The initial Board of Reorganized NutraMax shall
consist of the individuals identified on Exhibit A to this Plan which will
be filed with the Bankruptcy Court prior to the hearing to approve the
adequacy of the Disclosure Statement. Such directors shall be deemed
elected or appointed, as the case may be, pursuant to the Confirmation
Order, but shall not take office and shall not be deemed to be elected or
appointed until the occurrence of the Effective Date. Those directors and
officers not continuing in office shall be deemed removed therefrom as of
the Effective Date pursuant to the Confirmation Order.
9.9. Employee Benefit Plans. Subject to the occurrence of the
Effective Date, all employee benefit plans, policies, and programs of the
Debtors, and the Debtors' obligations thereunder, shall survive
confirmation of this Plan, remain unaffected thereby, and not be
discharged; except to the extent such plans, policies and programs held Old
Common Stock Interests or Other Interests (which Interests would be
cancelled and entitled to the treatment set forth in Sections 6.6 and 6.7
of this Plan). Employee benefit plans, policies, and programs shall
include, without limitation, all savings plans, retirement pension plans,
health care plans, disability plans, severance benefit plans, life,
accidental death, and dismemberment insurance plans (to the extent not
executory contracts assumed under this Plan), but shall exclude all
employee equity, or equity-based incentive plans.
9.10. Survival of Indemnification and Contribution
Obligations. Notwithstanding anything to the contrary contained in this
Plan, the obligations of the Debtors to indemnify and/or provide
contribution to its directors, officers, agents, employees and
representatives who are serving in such capacity on the Confirmation Date,
pursuant to the Certificate of Incorporation, By-Laws, applicable statutes
or contractual obligations, in respect of all past, present and future
actions, suits and proceedings against any of such directors, officers,
agents, employees and representatives, based upon any act or omission
related to service with, for or on behalf of the Debtors, shall not be
discharged or impaired by confirmation or consummation of this Plan but
shall survive unaffected by the reorganization contemplated by this Plan.
9.11. Litigation Trust. (a) On the Effective Date, the Debtors
shall be deemed to have transferred and assigned to the Litigation Trust,
any and all Causes of Action of the Debtors against its officers, directors
and independent accountants, if any, other than those expressly released or
compromised as part of, or under, this Plan.
(b) On the Effective Date, in consideration for the right to
receive the Rights and beneficial interests in the Litigation Trust
pursuant to Section 6.6 above, each Holder of Old Common Stock Interests
shall be deemed to have transferred to the Litigation Trust, any and all
Causes of Action such Holder may have, against any party in connection
with, or in any way related to, such Old Common Stock Interests, other than
those Causes of Action released or compromised as part of, or under, this
Plan.
(c) The Litigation Trust shall be managed by a litigation
trustee to be appointed by the Board of Directors which trustee have the
exclusive right to enforce and prosecute the Causes of Action assigned and
transferred to the Litigation Trust.
(d) If Class 6 accepts the Plan, the beneficial interests in the
Litigation Trust will be distributed to the Holders of Old Common Stock. If
Class 6 does not accept the Plan, the beneficial interests in the
Litigation Trust will be distributed to Reorganized NutraMax.
9.12. Substantive Consolidation. The Plan contemplates and is
predicated upon entry of the Confirmation Order effecting the substantive
consolidation of the Cases of the Debtors into a single chapter 11 case
solely for the purposes of all actions associated with confirmation and
consummation of the Plan. On the Confirmation Date or such other date as
may be set by a Final Order of the Bankruptcy Court, but subject to the
occurrence of the Effective Date: (a) all intercompany Claims by and among
the Debtors shall be eliminated and extinguished; (b) solely for the
purposes of this Plan and the distributions and transactions contemplated
hereby, all assets and liabilities of the Debtors shall be treated as
though they were merged; (c) all prepetition cross-corporate guarantees of
the Debtors shall be eliminated; (d) any obligation of any Debtor and all
guarantees thereof executed by one or more of the Debtors shall be deemed
to be one obligation of the consolidated Debtors; (e) any Claims filed or
to be filed in connection with any such obligation and such guarantees
shall be deemed one Claim against the consolidated Debtors; (f) each and
every Claim filed in the individual Chapter 11 Case of any of the Debtors
shall be deemed filed against the consolidated Debtors in the consolidated
Case and shall be deemed a single obligation of all of the Debtors under
the Plan on and after the Conformation Date; (g) all duplicative claims
(identical in both amount and subject matter) filed against more than one
of the Debtors will be automatically expunged so that only one Claim
survives against the consolidated Debtors but in no way shall be deemed
Allowed by reason of this Section 9.14; and (h) the consolidated Debtors
will be deemed, for purposes of determining the availability of the right
of set-off under section 553 of the Bankruptcy Code, to be one entity, so
that, subject to other provisions of section 553 of the Bankruptcy Code,
the debts due to a particular Debtor may be offset against claims against
such Debtor or another Debtor. On the Confirmation Date, and in accordance
with the terms of the Plan and the consolidation of the assets and
liabilities of the Debtors, all Claims based upon guarantees of collection,
payment or performance made by the Debtors as to the obligations of another
Debtor or of any other Person shall be discharged, released and of no
further force and effect; provided, however, that nothing herein shall
affect the obligations of each of the Debtors under the Plan.
Notwithstanding the provisions of this paragraph, each of the Debtors
shall, as Reorganized Debtors, continue to exist after the Effective Date
as separate corporate entities.
9.13. Chilmark Consulting Agreement. The Chilmark Consulting
Agreement shall become effective on the Effective Date.
ARTICLE TEN
-----------
PROVISIONS COVERING DISTRIBUTIONS
---------------------------------
10.1. Timing of Distributions Under this Plan. Except as
otherwise provided in this Plan and without in any way limiting Sections
9.7, 10.6, 10.11, 11.3 and 12.1 of this Plan, payments and distributions in
respect of (a) Allowed General Unsecured Claims shall be made by the
Reorganized Debtors or their designee as soon as practicable following the
date on which all Disputed General Unsecured Claims have been resolved by a
Final Order of the Bankruptcy Court, (b) all other Allowed Claims which are
required by the this Plan to be made on the Effective Date shall be made by
the Reorganized Debtors or their designee on, or as soon as practicable
following, the Effective Date and (c) Allowed Old Common Stock Interests
shall be made as follows: (i) on the Rights Issue Date, the Rights shall be
distributed to Holders of Old Common Stock Interests in accordance with
Section 6.6 hereof and (ii) as soon as practicable following the Effective
Date, the beneficial interests in the Litigation Trust shall be distributed
to Holders of Old Common Stock Interests in accordance with Section 6.6
hereof.
10.2. Allocation of Consideration. The aggregate consideration to
be distributed to the Holders of Allowed Claims in each Class under this
Plan shall be treated as first satisfying an amount equal to the stated
principal amount of the Allowed Claim for such Holders and any remaining
consideration as satisfying accrued, but unpaid, interest, if any.
10.3. Cash Payments. Cash payments made pursuant to this Plan
will be in U.S. dollars. Cash payments of $1,000,000 or more to be made
pursuant to this Plan will, to the extent requested in writing no later
than ten days after the Confirmation Date, be made by wire transfer from a
domestic bank. Cash payments to foreign creditors may be made, at the
option of the Debtors or Reorganized NutraMax, in such funds and by such
means as are necessary or customary in a particular foreign jurisdiction.
Cash payments made pursuant to this Plan in the form of checks issued by
Reorganized NutraMax shall be null and void if not cashed within 120 days
of the date of the issuance thereof. Requests for reissuance of any check
shall be made directly to Reorganized NutraMax or its designee as set forth
in Section 10.13 below.
10.4. Payment of Statutory Fees. All fees payable to the United
States Trustee pursuant to 28 U.S.C.ss.1930 as determined by the Bankruptcy
Court at the Confirmation Hearing shall be paid by the Debtors on or before
the Effective Date.
10.5. No Interest. Except with respect to holders of Unimpaired
Claims entitled to interest under applicable non-bankruptcy law or as
expressly provided herein, no Holder of an Allowed Claim or Interest shall
receive interest on the distribution to which such Holder is entitled
hereunder, regardless of whether such distribution is made on the Effective
Date or thereafter.
10.6. Fractional Securities. Notwithstanding any other provision
of this Plan, only whole numbers of shares of New Common Stock will be
issued or transferred, as the case may be, pursuant to this Plan.
Reorganized NutraMax will not distribute any fractional shares of New
Common Stock. For purposes of distribution, fractional shares of New Common
Stock shall be rounded up to the nearest share of New Common Stock.
10.7. Withholding of Taxes. Reorganized NutraMax shall withhold
from any property distributed under this Plan any property which must be
withheld for taxes payable by the Entity entitled to such property to the
extent required by applicable law. As a condition to making any
distribution under this Plan, Reorganized NutraMax or its designee, as the
case may be, may request that the Holder of any Allowed Claim provide such
Holder's taxpayer identification number and such other certification as may
be deemed necessary to comply with applicable tax reporting and withholding
laws.
10.8. Distribution Record Date. As of the close of business on
the Distribution Record Date, the transfer register for the Old Common
Stock maintained by the Debtors, or its respective agents, will be closed.
Reorganized NutraMax and its designees will have no obligation to recognize
the transfer of any Old Common Stock occurring after the Distribution
Record Date and will be entitled for all purposes relating to this Plan to
recognize and deal only with those Holders of record as of the close of
business on the Distribution Record Date.
10.9. Persons Deemed Holders of Registered Securities. Except as
otherwise provided herein and subject to Sections 9.6 and 10.10, the
Debtors, Reorganized NutraMax or its designee, shall be entitled to treat
the record holder of a registered security as the Holder of the Interest in
respect thereof for purposes of all notices, payments or other
distributions under this Plan unless the Debtors, Reorganized NutraMax or
its designee, as the case may be, shall have received written notice
specifying the name and address of any new Holder thereof (and the nature
and amount of the interest of such new Holder) at least ten (10) Business
Days prior to the date of such notice, payment or other distribution. In
the event of any dispute regarding the identity of any party entitled to
any payment or distribution in respect of any Interest under this Plan, no
payments or distributions will be made in respect of such Interest until
the Bankruptcy Court resolves that dispute pursuant to a Final Order.
10.10. Surrender of Existing Securities. As a condition to
receiving any distribution under this Plan, each Holder of a Senior
Subordinated Note, Old Common Stock Interest, or other instrument
evidencing a Claim or equity Interest must surrender such Senior
Subordinated Note, Old Common Stock Interest, or other instrument to
Reorganized NutraMax or its designee. Any Holder of a Claim or Interest
that fails to (a) surrender such instrument or (b) execute and deliver an
affidavit of loss and/or indemnity reasonably satisfactory to Reorganized
NutraMax before the later to occur of (i) the second anniversary of the
Effective Date and (ii) six months following the date such Holder's Claim
becomes an Allowed Claim, shall be deemed to have forfeited all rights,
Claims, and/or Interests and may not participate in any distribution under
this Plan.
10.11. Special Procedures for Lost, Stolen, Mutilated or
Destroyed Instruments. In addition to any requirements under NutraMax's
Certificate of Incorporation or By-laws, any Holder of a Claim or an
Interest evidenced by an Instrument that has been lost, stolen, mutilated
or destroyed shall be required to, in lieu of surrendering such Instrument,
deliver to the Reorganized Debtors or their designee: (a) evidence
satisfactory to Reorganized Debtors or their designee, as the case may be,
of the loss, theft, mutilation or destruction; and (b) such security or
indemnity as may be required by the Reorganized Debtors or their designee,
as the case may be, to hold the Reorganized Debtors and/or their designee,
as applicable, harmless from any damages, liabilities or costs incurred in
treating such individual as a Holder of an Instrument. Upon compliance with
this Section 10.11, the Holder of a Claim or Interest evidenced by any such
lost, stolen, mutilated or destroyed Instrument will, for all purposes
under this Plan, be deemed to have surrendered such Instrument.
10.12. Undeliverable or Unclaimed Distributions. (a) Any Entity
that is entitled to receive a Cash distribution under this Plan but that
fails to cash a check within 120 days of its issuance shall be entitled to
receive a reissued check from the Reorganized Debtors for the amount of the
original check, without any interest, if such Entity requests the
Reorganized Debtors or their designee to reissue such check and provides
the Reorganized Debtors or their designee, as the case may be, with such
documentation as the Reorganized Debtors or its designee requests to verify
that such Entity is entitled to such check, prior to the second anniversary
of the Effective Date. If an Entity fails to cash a check within 120 days
of its issuance and fails to request reissuance of such check prior to the
later to occur of (i) the second anniversary of the Effective Date and (ii)
six months following the date such Holder's Claim becomes an Allowed Claim,
such Entity shall not be entitled to receive any distribution under this
Plan. If the distribution to any Holder of an Allowed Claim or Allowed
Interest is returned to the Reorganized Debtors or their designee as
undeliverable, no further distributions will be made to such Holder unless
and until the Reorganized Debtors or their designee is notified in writing
of such Holder's then-current address. Undeliverable distributions will
remain in the possession of the Reorganized Debtors or their designee
pursuant to Section 10.1 of this Plan until such time as a distribution
becomes deliverable.
(b) All claims for undeliverable distributions must be made on or
before the later to occur of (i) the second anniversary of the Effective
Date and (ii) six months following the date such Holder's Claim or Interest
becomes an Allowed Claim or Allowed Interest. After such date, all
unclaimed property shall revert to the Reorganized Debtors and the claim of
any Holder or successor to such Holder with respect to such property shall
be discharged and forever barred notwithstanding any federal or state
escheat laws to the contrary.
ARTICLE ELEVEN
--------------
PROCEDURES FOR RESOLVING DISPUTED CLAIMS
----------------------------------------
11.1. Objections to Claims. Only the Debtors and the Reorganized
Debtors shall have the authority to file objections to Claims after the
Effective Date. Subject to an order of the Bankruptcy Court providing
otherwise, the Reorganized Debtors may object to a Claim by filing an
objection with the Bankruptcy Court and serving such objection upon the
Holder of such Claim not later than one hundred and twenty (120) days after
the Effective Date or one hundred and twenty (120) days after the filing of
the proof of such Claim, whichever is later, or such other date determined
by the Bankruptcy Court upon motion to the Bankruptcy Court, which motion
may be made without further notice or hearing.
11.2. Procedure. Unless otherwise ordered by the Bankruptcy Court
or agreed to by written stipulation of the Debtors or the Reorganized
Debtors, or until an objection thereto by the Debtors or by Reorganized
Debtors is withdrawn, the Debtors or Reorganized Debtors shall litigate the
merits of each Disputed Claim until determined by a Final Order; provided,
however, that, (a) prior to the Effective Date, the Debtors, subject to the
approval of the Bankruptcy Court, and (b) after the Effective Date, the
Reorganized Debtors, subject to the approval of the Bankruptcy Court, may
compromise and settle any objection to any Claim.
11.3. Payments and Distributions With Respect to Disputed Claims.
No payments or distributions shall be made in respect of (a) a Disputed
General Unsecured Claim until all Disputed General Unsecured Claims have
been resolved by final order of the Bankruptcy Court and (b) any other
Disputed Claim until such Disputed Claim becomes an Allowed Claim.
11.4. Individual Holder Proofs of Interest. Individual Holders of
Allowed Old Common Stock Interests are not required to file proofs of such
Interests unless they disagree with the number of shares set forth on the
Debtor's stock register.
ARTICLE TWELVE
--------------
DISCHARGE, INJUNCTION, RELEASES AND SETTLEMENTS OF CLAIMS
---------------------------------------------------------
12.1. Discharge of All Claims and Interests and Releases.
--------------------------------------------------
(a) Except as otherwise specifically provided by this Plan, the
confirmation of this Plan (subject to the occurrence of the Effective Date)
shall discharge and release the Debtors, the Reorganized Debtors, their
successors and assigns and their respective assets and properties from any
debt, charge, Cause of Action, liability, encumbrances, security interest,
Claim, Interest, or other cause of action of any kind, nature or
description (including, but not limited to, any claim of successor
liability) that arose before the Confirmation Date, and any debt of the
kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code,
whether or not a proof of Claim is filed or is deemed filed, whether or not
such Claim is Allowed, and whether or not the Holder of such Claim has
accepted this Plan.
(b) Furthermore, but in no way limiting the generality of the
foregoing, except as otherwise specifically provided by this Plan,
effective as of the Effective Date, the distributions and rights that are
provided in this Plan to Classes 1,2,3,4,5,6 and 8, shall be in complete
satisfaction, discharge and release, of (i) all Claims and Causes of Action
against, liabilities of, liens on, charges, encumbrances, security
interests, obligations of and Interests in the Debtors, Reorganized
Debtors, or the direct or indirect assets and properties of the Debtors or
Reorganized Debtors, whether known or unknown, and (ii) all Causes of
Action, whether known or unknown, either directly or derivatively through
the Debtors or the Reorganized Debtors, against successors and assigns of
the Debtors, present Affiliates of the Debtors, and their present officers,
directors, agents, attorneys, advisors, partners, financial advisors,
investment bankers, independent accountants, employees of the Debtors and
its Affiliates and any Affiliate of any of the foregoing, based on the same
subject matter as any Claim or Interest, or based on any act or omission,
transaction or other activity or security, instrument or other agreement of
any kind or nature occurring, arising or existing prior to the Effective
Date that was or could have been the subject of any Claim or Interest, in
each case regardless of whether a proof of Claim or Interest was filed,
whether or not Allowed and whether or not the Holder of the Claim or
Interest has voted to accept or reject this Plan.
(c) In addition, but in no way limiting the generality of the
foregoing, except as otherwise specifically provided by this Plan, any
Holder of a Claim or Interest in Classes 1,2,3,4,5,6 and 8 accepting any
distribution pursuant to this Plan shall be presumed conclusively to have
released (i) the Debtors, Reorganized Debtors, successors and assigns of
the Debtors, the present Affiliates of the Debtors, and present directors,
officers, agents, attorneys, independent accountants, advisors, financial
advisors, investment bankers and employees of the Debtors and their
Affiliates, and any Entity claimed to be liable derivatively through any of
the foregoing, and (ii) in consideration for its acceptance of the
treatments set forth in Sections 2.2 and 6.2 above of the DIP
Administrative Expenses and Pre-petition Credit Agreement Claims, each
holder of a Junior Subsequent DIP Administrative Expense or Pre-petition
Credit Agreement Claim, and its successors and assigns, its Affiliates,
their directors, officers, agents, attorneys, independent accountants,
advisors, financial advisors, investment bankers and employees, from any
Cause of Action based on the same subject matter as the Claim on which the
distribution is received. The release described in the preceding sentence
shall be enforceable as a matter of contract against any Entity that
accepts any distribution pursuant to this Plan.
(d) Notwithstanding anything herein to the contrary, any and all
Causes of Action of the Debtors against their former directors, former
officers, and former independent accountants are expressly preserved and
assigned and transferred to the Litigation Trust pursuant to Section 9.13
of this Plan.
(e) Without in any way limiting Section 12.2 of this Plan, all
injunctions or stays entered in the Chapter 11 Case and existing
immediately prior to the Confirmation Date shall remain in full force and
effect until the Effective Date.
12.2. Injunction. The satisfaction, release and discharge
pursuant to Sections 12.1, 12.3 and 12.4 of this Plan, shall act as an
injunction against any Entity commencing or continuing any action,
employment of process, or act to collect, offset or recover any Claim or
Cause of Action satisfied, released or discharged under this Plan. The
injunction, discharge and releases described in Sections 12.1, 12.2, 12.3
and 12.4 of this Plan shall apply regardless of whether or not a proof of
Claim or Interest based on any Claim, debt, liability or Interests is filed
or whether or not a Claim or Interest based on such Claim, debt, liability
or Interest is Allowed, or whether or not such Entity voted to accept or
reject this Plan.
12.3. Exculpation. In consideration of the distributions under
this Plan, upon the Effective Date, each Holder of a Claim or Interest will
be deemed to have released the Debtors and their directors, officers,
agents, attorneys, independent accountants, advisors, financial advisors,
investment bankers and employees (as applicable) employed by the Debtors
from and after the Filing Date from any and all Causes of Action (other
than the right to enforce the Debtors' obligations under this Plan and the
right to pursue a Claim based on any willful misconduct) arising out of
actions or omissions during the administration of the Debtors' estate.
12.4. Guaranties and Claims of Subordination.
--------------------------------------
(a) Guaranties. The classification and the manner of satisfying
all Claims under this Plan takes into consideration the possible existence
of any alleged guaranties by the Debtors of obligations of any Entity or
Entities, and that the each Debtor may be a joint obligor with another
Entity or Entities with respect to the same obligation. All Claims against
the Debtors based upon any such guaranties shall be satisfied, discharged
and released in the manner provided in this Plan and the Holders of Claims
shall be entitled to only one distribution with respect to any given
obligation of the Debtors.
(b) Claims of Subordination. (i) Except as expressly provided for
in this Plan, to the fullest extent permitted by applicable law, all Claims
against and Interests in the Debtors, and all rights and Claims between or
among Holders of Claims and Interests relating in any manner whatsoever to
Claims against or Interests in the Debtors, based on any contractual, legal
or equitable subordination rights, shall be terminated on the Effective
Date and discharged in the manner provided in this Plan, and all such
Claims, Interests and rights so based and all such contractual, legal and
equitable subordination rights to which any Entity may be entitled shall be
irrevocably waived by the acceptance by such Entity (or, unless the
Confirmation Order provides otherwise, the Class of which such Entity is a
member) of this Plan or of any distribution pursuant to this Plan. Except
as otherwise provided in this Plan and to the fullest extent permitted by
applicable law, the rights afforded and the distributions that are made
pursuant to this Plan in respect of any Claims or Interests shall not be
subject to levy, garnishment, attachment or like legal process by any
Holder of a Claim or Interest by reason of any contractual, legal or
equitable subordination rights, so that, notwithstanding any such
contractual, legal or equitable subordination, each Holder of a Claim or
Interest shall have and receive the benefit of the rights and distributions
set forth in this Plan.
(ii) Pursuant to Bankruptcy Rule 9019 and any applicable state
law and as consideration for the distributions and other benefits provided
under this Plan, the provisions of this Section 12.4(b) shall constitute a
good faith compromise and settlement of any Causes of Action relating to
the matters described in this Section 12.4(b) which could be brought by any
Holder of a Claim or Interest against or involving another Holder of a
Claim or Interest, which compromise and settlement is in the best interests
of Holders of Claims and Interests and is fair, equitable and reasonable.
This settlement shall be approved by the Bankruptcy Court as a settlement
of all such Causes of Action. Entry of the Confirmation Order shall
constitute the Bankruptcy Court's approval of this settlement pursuant to
Bankruptcy Rule 9019 and its finding that this is a good faith settlement
pursuant to any applicable state law, including, without limitation, the
laws of the States of Massachusetts and Delaware, given and made after due
notice and opportunity for hearing, and shall bar any such Cause of Action
by any Holder of a Claim or Interest against or involving another Holder of
a Claim or Interest.
ARTICLE THIRTEEN
----------------
CONDITIONS PRECEDENT TO CONFIRMATION
ORDER AND EFFECTIVE DATE
------------------------------------
13.1. Conditions Precedent to Entry of the Confirmation Order.
The following conditions must occur and be satisfied or waived in
accordance with Section 13.3 of this Plan on or before the Confirmation
Date for this Plan to be confirmed on the Confirmation Date.
(a) The Confirmation Order is in form and substance reasonably
acceptable to the Debtors, and the holders of DIP Administrative Expenses.
(b) The Initial DIP Agreement shall have been terminated in
accordance with its terms and all obligations of the Debtors thereunder
shall have been satisfied in full.
(c) The loans and transactions contemplated by the Subsequent DIP
Agreement shall have been made and consummated in accordance with the terms
thereof. (d) The Debtors' Massachusetts Industrial Finance Agency Series A
and B Variable Rate Industrial Development Revenue Bonds shall have been
satisfied and fully discharged.
13.2. Conditions Precedent to the Effective Date. The following
conditions must occur and be satisfied or waived by the Debtors on or
before the Effective Date for this Plan to become effective on the
Effective Date.
(a) Final Order. The Confirmation Order shall have become a Final
Order.
(b) Working Capital Facility. The Reorganized Debtors shall have
executed an agreement for a satisfactory working capital facility.
(c) Certificate of Incorporation. The Reorganized NutraMax
Certificate of Incorporation shall have been filed with the Secretary of
State of the State of Delaware, in accordance with sections 103 and 303 of
the Delaware General Corporation Law.
(d) Authorizations, Consents and Approvals. All authorizations,
consents and regulatory approvals required, if any, in connection with this
Plan's effectiveness shall have been obtained.
(e) The Rights Plan shall have been consummated in accordance
with its terms.
13.3. Waiver of Conditions. The Debtors may waive one or more of
the conditions precedent to the confirmation or effectiveness of this Plan
set forth in Sections 13.1 and 13.2 of this Plan.
13.4. Effect of Failure of Conditions. If all the conditions to
effectiveness and the occurrence of the Effective Date have not been
satisfied or duly waived on or before the first Business Day that is more
than 179 days after the date the Court enters an order confirming this
Plan, or by such later date as is proposed and approved, after notice and a
hearing, by the Court, then upon motion by the Debtors or any party in
interest made before the time that all of the conditions have been
satisfied or duly waived, the order confirming this Plan may be vacated by
the Court; provided, however, that notwithstanding the filing of such a
motion, the order confirming this Plan shall not be vacated if each of the
conditions to consummation is either satisfied or duly waived before the
Court enters an order granting the relief requested in such motion. If the
order confirming this Plan is vacated pursuant to this section, this Plan
shall be null and void in all respects, and nothing contained in this Plan
shall (a) constitute a waiver or release of any claims against or equity
interests in the Debtors or (b) prejudice in any manner the rights of the
Holder of any claim or equity interest in the Debtors.
ARTICLE FOURTEEN
----------------
MISCELLANEOUS PROVISIONS
------------------------
14.1. Bankruptcy Court to Retain Jurisdiction. The business and
assets of the Debtors shall remain subject to the jurisdiction of the
Bankruptcy Court until the Effective Date. From and after the Effective
Date, the Bankruptcy Court shall retain and have exclusive jurisdiction of
all matters arising out of, and related to the Chapter 11 Case or this Plan
pursuant to, and for purposes of, subsection 105(a) and section 1142 of the
Bankruptcy Code and for, among other things, the following purposes: (a) to
determine any and all disputes relating to Claims and Interests and the
allowance and amount thereof; (b) to determine any and all disputes among
creditors with respect to their Claims; (c) to consider and allow any and
all applications for compensation for professional services rendered and
disbursements incurred in connection therewith; (d) to determine any and
all applications, motions, adversary proceedings and contested or litigated
matters pending on the Effective Date and arising in or related to the
Chapter 11 Case or this Plan; (e) to remedy any defect or omission or
reconcile any inconsistency in the Confirmation Order; (f) to enforce the
provisions of this Plan relating to the distributions to be made hereunder;
(g) to issue such orders, consistent with section 1142 of the Bankruptcy
Code, as may be necessary to effectuate the consummation and full and
complete implementation of this Plan; (h) to enforce and interpret any
provisions of this Plan; (i) to determine such other matters as may be set
forth in the Confirmation Order or that may arise in connection with the
implementation of this Plan; (j) to determine the amounts allowable as
compensation or reimbursement of expenses pursuant to section 503(b) of the
Bankruptcy Code; (k) to hear and determine disputes arising in connection
with the interpretation, implementation, or enforcement of this Plan and
the Related Documents; (l) to hear and determine any issue for which this
Plan or any Related Document requires a Final Order of the Bankruptcy
Court; (m) to hear and determine matters concerning state, local, and
federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code; (n) to hear and determine any issue related to the
composition of the initial Board of Reorganized NutraMax; (o) to hear any
other matter not inconsistent with the Bankruptcy Code; and (p) to enter a
Final Decree closing the Chapter 11 Case.
14.2. Binding Effect of this Plan. The provisions of this Plan
shall be binding upon and inure to the benefit of the Debtors, the
Reorganized Debtors, any Holder of a Claim or Interest, their respective
predecessors, successors, assigns, agents, officers, managers and directors
and any other Entity affected by this Plan.
14.3. Nonvoting Stock. In accordance with section 1123(a)(6) of
the Bankruptcy Code, the Reorganized Debtors Certificate of Incorporation
shall contain a provision prohibiting the issuance of nonvoting equity
securities by the Reorganized Debtors for a period of one year following
the Effective Date.
14.4. Authorization of Corporate Action. The entry of the
Confirmation Order shall constitute a direction and authorization to and of
the Debtors and the Reorganized Debtors to take or cause to be taken any
action necessary or appropriate to consummate the provisions of this Plan
and the Related Documents prior to and through the Effective Date
(including, without limitation, the filing of the Reorganized NutraMax
Certificate of Incorporation) and all such actions taken or caused to be
taken shall be deemed to have been authorized and approved by the
Bankruptcy Code.
14.5. Retiree Benefits. On and after the Effective Date, to the
extent required by section 1129(a)(13) of the Bankruptcy Code, the
Reorganized Debtors shall continue to pay all retiree benefits, if any, as
the term "retiree benefits" is defined in section 1114(a) of the Bankruptcy
Code, maintained or established by the Debtors prior to the Confirmation
Date.
14.6. Withdrawal of this Plan. The Debtors reserves the right, at
any time prior to the entry of the Confirmation Order, to revoke or
withdraw this Plan. If the Debtors revoke or withdraw this Plan, if the
Confirmation Date does not occur, or if the Effective Date does not occur
then (i) this Plan will be deemed null and void and (ii) this Plan shall be
of no effect and shall be deemed vacated, and the Chapter 11 Case shall
continue as if this Plan had never been filed and, in such event, the
rights of any Holder of a Claim or Interest shall not be affected nor shall
such Holder be bound by, for purposes of illustration only, and not
limitation, (a) this Plan, (b) any statement, admission, commitment,
valuation or representation contained in this Plan, the Disclosure
Statement, or the Related Documents or (c) the classification and proposed
treatment (including any allowance) of any Claim in this Plan.
14.7. Captions. Article and Section captions used in this Plan
are for convenience only and will not affect the construction of this Plan.
14.8. Method of Notice. All notices required to be given under
this Plan, if any, shall be in writing and shall be sent by facsimile
transmission (with hard copy to follow), by first class mail, postage
prepaid, by hand delivery or by overnight courier to:
If to the Debtors to:
NutraMax Products, Inc.
51 Blackburn Drive
Gloucester, Massachusetts 01932
Attn: Richard G. Glass
Fax No.: (978) 281-0483
with copies to:
Pachulski, Stang, Ziehl, Young
& Jones P.C.
Attorneys for the Debtors and
Debtors-in-Possession
919 North Market Street
16th Floor
Wilmington, Delaware 19801
Attn: Laura Davis Jones, Esq.
Fax No.: (302) 652-4400
and
Fried, Frank, Harris, Shriver & Jacobson
(A Professional Partnership Including Professional Corporations)
One New York Plaza
New York, New York 10004
Attn: Gerald C. Bender, Esq.
Fax No.: (212) 859-4000
Any of the above may, from time to time, change its address for future
notices and other communications hereunder by filing a notice of the change
of address with the Bankruptcy Court. Any and all notices given under this
Plan shall be effective when received.
14.9. Dissolution of Committees. On the Effective Date, any
committees appointed in the Chapter 11 Cases pursuant to section 1102 of
the Bankruptcy Code shall cease to exist and its members and employees or
agents (including, without limitation, attorneys, investment bankers,
financial advisors, accountants and other professionals) shall be released
and discharged from further duties, responsibilities and obligations
relating to and arising from and in connection with these Chapter 11 Cases.
14.10. Amendments and Modifications to Plan. This Plan may be
altered, amended or modified by the Debtors, before or after the
Confirmation Date, as provided in section 1127 of the Bankruptcy Code.
14.11. Section 1125(e) of the Bankruptcy Code. (a) The Debtors
have, and upon confirmation of this Plan shall be deemed to have, solicited
acceptances of this Plan in good faith and in compliance with the
applicable provisions of the Bankruptcy Code and (b) the Debtors and each
of the members of the Creditors' Committee, if any (and each of their
respective affiliates, agents, directors, officers, employees, advisors,
and attorneys) have participated in good faith and in compliance with the
applicable provisions of the Bankruptcy Code in the offer, issuance, sale,
and purchase of the securities offered and sold under this Plan, and
therefore are not, and on account of such offer, issuance, sale,
solicitation, and/or purchase will not be, liable at any time for the
violation of any applicable law, rule, or regulation governing the
solicitation of acceptances or rejections of this Plan or the offer,
issuance, sale, or purchase of the securities offered and sold under this
Plan.
Dated: May _, 2000
Respectfully submitted,
NUTRAMAX PRODUCTS, INC.
NUTRAMAX OPHTHALMICS INC. (f/k/a
Optopics Laboratories Corporation)
FAIRTON REALTY HOLDINGS, INC.
POWERS PHARMACEUTICAL CORPORATION
CERTIFIED CORP.
ORAL CARE, INC.
FLORENCE REALTY, INC.
FIRST AID PRODUCTS, INC.
ADHESIVE COATINGS, INC.
ELMWOOD PARK REALTY, INC.
NUTRAMAX HOLDINGS INC.
NUTRAMAX HOLDINGS II INC.
F.A. PRODUCTS, L.P.
NUTRAMAX ACQUISITION CORPORATION,
Debtors and Debtors-In-Possession
By: /s/ Richard G. Glass
-------------------------------
PACHULSKI, STANG, ZIEHL, YOUNG
& JONES P.C.
Attorneys for the Debtors and
Debtors-in-Possession
919 North Market Street
16th Floor
Wilmington, Delaware 19801
(302) 652-4100
By: /s/ Laura Davis Jones
-----------------------------
Laura Davis Jones, Esq.
FRIED, FRANK, HARRIS, SHRIVER &
JACOBSON
(A Partnership Including
Professional Corporations)
Attorneys for the Debtors and
Debtors-in-Possession
One New York Plaza
New York, New York 10004
(212) 859-8000
By: /s/ Gerald C. Bender
-----------------------------
Gerald C. Bender, Esq.
EXHIBIT 10.1
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT
among
NUTRAMAX PRODUCTS, INC.
NUTRAMAX HOLDINGS, INC.
NUTRAMAX HOLDINGS II, INC.
NUTRAMAX OPHTHALMICS, INC.
NUTRAMAX ACQUISITION CORPORATION
FAIRTON REALTY HOLDINGS, INC.
ORAL CARE, INC.
POWERS PHARMACEUTICAL CORP.
FLORENCE REALTY, INC.
CERTIFIED CORP.
FIRST AID PRODUCTS, INC.
ADHESIVE COATINGS, INC.
ELMWOOD PARK REALTY, INC.
F.A. PRODUCTS, L.P.
and
FLEET NATIONAL BANK
Dated May , 2000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
1. DEFINITIONS AND RULES OF INTERPRETATION...................1
ss.1.1. Definitions...............................................1
ss.1.2. Rules of Interpretation...................................9
2. THE LOANS................................................10
ss.2.1. Commitment to Make Loans.................................10
ss.2.2. The Note.................................................10
ss.2.3. Interest on Loans........................................10
ss.2.4. Requests for Loans.......................................10
ss.2.5. Maturity.................................................10
ss.2.6. Mandatory Repayments of Loans............................11
ss.2.7. Optional Prepayments of Loans............................11
3. LETTERS OF CREDIT 11
ss.3.1. Establishment of Letter of Credit Sublimits..............11
ss.3.2. Documentary Letter of Credit Fees........................12
ss.3.3. Standby Letter of Credit Fees............................12
ss.3.4. Effect of Drawing Under Letter of Credit.................12
ss.3.5. Requests for Issuance of Letters of Credit...............13
ss.3.6. Indemnity................................................13
ss.3.7. Additional Provisions Relating to Letters of Credit......14
4. CERTAIN GENERAL PROVISIONS...............................16
ss.4.1. Closing Fee..............................................16
ss.4.2. Funds for Payments.......................................16
ss.4.3. Computations.............................................17
ss.4.4. Additional Costs, Etc....................................17
ss.4.5. Capital Adequacy.........................................18
ss.4.6. Certificate..............................................18
ss.4.7. Interest After Default...................................18
5. COLLATERAL SECURITY......................................18
6. REPRESENTATIONS AND WARRANTIES...........................18
ss.6.1. Corporate Authority; Etc.................................19
ss.6.2. Governmental Approvals...................................19
ss.6.3. Litigation...............................................20
ss.6.4. No Materially Adverse Contracts, Etc.....................20
ss.6.5. Compliance With Other Instruments, Laws, Etc.............20
ss.6.6. Tax Status...............................................20
ss.6.7. Capitalization...........................................20
ss.6.8. Leases...................................................21
ss.6.9. No Event of Default......................................21
ss.6.10. Holding Company and Investment Company Acts..............21
ss.6.11. Absence of UCC Financing Statements, Etc.................21
ss.6.12. Title to Collateral......................................21
ss.6.13. Certain Transactions.....................................21
ss.6.14. Employee Benefit Plans; Multiemployer Plans;
Guaranteed Pension Plans.................................21
ss.6.15. Regulations U and X......................................22
ss.6.16. Subsidiaries.............................................22
ss.6.17. Loan Documents...........................................22
7. AFFIRMATIVE COVENANTS OF THE BORROWER....................22
ss.7.1. Punctual Payment.........................................22
ss.7.2. Maintenance of Office....................................22
ss.7.3. Records and Accounts.....................................22
ss.7.4. Financial Statements, Certificates and Information.......22
ss.7.5. Notices..................................................23
ss.7.6. Location of Records and Collateral; Name Change..........25
ss.7.7. Existence; Maintenance of Properties.....................25
ss.7.8. Insurance................................................25
ss.7.9. Taxes....................................................26
ss.7.10. Inspection of Properties and Books.......................26
ss.7.11. Compliance with Laws, Contracts, Licenses, and Permits...26
ss.7.12. Use of Proceeds..........................................27
ss.7.13. Bank Accounts............................................27
ss.7.14. Engagement of Agents.....................................27
ss.7.15. Further Assurances.......................................27
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS..............27
ss.8.1. Restrictions on Indebtedness.............................28
ss.8.2. Restrictions on Liens, Etc...............................28
ss.8.3. Restrictions on Investments..............................29
ss.8.4. Merger, Consolidation....................................29
ss.8.5. Sale and Leaseback.......................................30
ss.8.6. Compliance with Environmental Laws.......................30
ss.8.7. Distributions............................................30
ss.8.8. Subsidiaries.............................................30
ss.8.9. Fiscal Year..............................................30
ss.8.10. Loans and Advances.......................................30
ss.8.11. Terms of Subordinated Indebtedness.......................30
ss.8.12. Agreements with Affiliated Persons.......................31
ss.8.13. Return of Property.......................................31
9. FINANCIAL COVENANTS OF THE BORROWERS.....................31
ss.9.1. Capital Expenditures.....................................31
ss.9.2. Maximum Borrowings.......................................31
ss.9.3. Cumulative Sales.........................................32
ss.9.4. Minimum Eligible Accounts Receivable.....................32
10. CLOSING CONDITIONS.......................................32
ss.10.1. Loan Documents...........................................33
ss.10.2. Resolutions..............................................33
ss.10.3. Incumbency Certificate; Authorized Signers...............33
ss.10.4. Borrowing Order..........................................33
ss.10.5. Adequate Protection Stipulation..........................33
ss.10.6. Litigation...............................................33
ss.10.7. Evidence of Insurance....................................33
ss.10.8. Financial Statements.....................................34
ss.10.9. Settlement of Pre-Petition Obligations...................34
ss.10.10. Commitment Letters.......................................34
ss.10.11. Approval Motions.........................................34
ss.10.12. Compliance with Law......................................34
ss.10.13. Payment of Fees..........................................34
ss.10.14. Additional Documents.....................................34
11. CONDITIONS TO ALL BORROWINGS.............................34
ss.11.1. Representations True; No Event of Default................34
ss.11.2. No Legal Impediment......................................35
ss.11.3. Governmental Regulation..................................35
ss.11.4. Proceedings and Documents................................35
12. EVENTS OF DEFAULT; ACCELERATION; ETC.....................35
ss.12.1. Events of Default and Acceleration.......................35
ss.12.2. Termination of Commitments...............................37
ss.12.3. Remedies.................................................38
ss.12.4. Distribution of Collateral Proceeds......................38
13. SETOFF...................................................39
14. EXPENSES.................................................39
15. INDEMNIFICATION..........................................39
16. SURVIVAL OF COVENANTS, ETC...............................40
17. ASSIGNMENT AND PARTICIPATION.............................40
ss.17.1. Conditions to Assignment by Lenders......................40
ss.17.2. Participations...........................................41
ss.17.3. Pledge by Lender.........................................41
ss.17.4. No Assignment by Borrowers...............................41
ss.17.5. Disclosure...............................................41
18. NOTICES, ETC.............................................41
19. GOVERNING LAW............................................42
20. HEADINGS.................................................42
21. COUNTERPARTS.............................................42
22. ENTIRE AGREEMENT, ETC....................................42
23. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS...........42
24. CONSENTS, AMENDMENTS, WAIVERS, ETC.......................43
25. SEVERABILITY.............................................43
26. ADDITIONAL WAIVERS.......................................43
<PAGE>
EXHIBITS
A. Form of Borrowing Order
B. Business Plan
C. Form of Note
D. Form of Loan Request
E. Form of Adequate Protection Stipulation
<PAGE>
SCHEDULES
6.7 Capital Stock
6.8 Leases
6.13 Affiliate Transactions
6.14 Employee Benefit Plans
6.16 Subsidiaries
7.6 Locations
7.8 Insurance
8.1 Outstanding Indebtedness
8.2 Outstanding Liens
8.3 Outstanding Investments
8.4 Certain Transactions
<PAGE>
DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT
-----------------------------------------------
This DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT is made as of the
___ day of May, 2000, by and among, NUTRAMAX PRODUCTS, INC., NUTRAMAX
HOLDINGS, INC., NUTRAMAX HOLDINGS II, INC., NUTRAMAX OPHTHALMICS, INC.,
NUTRAMAX ACQUISITION CORPORATION, FAIRTON REALTY HOLDINGS, INC., ORAL CARE,
INC., POWERS PHARMACEUTICAL CORP., FLORENCE REALTY, INC., CERTIFIED CORP.,
FIRST AID PRODUCTS, INC., ADHESIVE COATINGS, INC., ELMWOOD PARK REALTY,
INC., and F.A. PRODUCTS, L.P. as debtors and debtors-in-possession
(individually, a "BORROWER" and collectively, the "BORROWERS"), and FLEET
NATIONAL BANK (the "LENDER").
1. DEFINITIONS AND RULES OF INTERPRETATION.
---------------------------------------
ss.1.1. Definitions. The following terms shall have the meanings set
forth in this ss.1 or elsewhere in the provisions of this Agreement
referred to below:
ACCOUNTS. "Accounts" as defined in the UCC and also all rights to
payment for goods sold or leased or services rendered, all sums of money or
other proceeds due or becoming due thereon (including, without limitation,
all accounts receivable, notes, bills, drafts, acceptances, instruments,
documents, chattel paper and all other debts, obligations and liabilities
in whatever form owing to any Person for goods sold by it or services
rendered by it), all guaranties and security therefor, and all right, title
and interest of such Person in the goods or services giving rise thereto
and the rights pertaining to such goods, including rights of reclamation
and stoppage in transit, and all related insurance, whether any of the
foregoing be now existing or hereafter arising, now or hereafter received
by or owing or belonging to such Person.
AFFILIATE. With reference to any Person, (i) any director, officer or
employee of that Person, (ii) any other Person controlling, controlled by
or under direct or indirect common control with that Person, (iii) any
other Person directly or indirectly holding 5% or more of any class of
capital stock or other equity interests (including options, warrants,
convertible securities and similar rights) of that Person and (iv) any
other Person 5% or more of any class of whose capital stock or other equity
interests (including options, warrants, convertible securities and similar
rights) is held directly or indirectly by that Person.
AGREEMENT. This Debtor-in-Possession Revolving Credit Agreement,
including the SCHEDULES and EXHIBITS hereto, all as modified, amended,
supplemented or restated.
ASSET SALE. Any sale, lease, conveyance, transfer or other disposition
by any Borrower or or any of its Subsidiaries (including by way of merger,
consolidation or a sale-leaseback transaction) in any transaction or group
of transactions that are part of a common plan, of any asset (other than
sales, leases, and other dispositions of inventory in the ordinary course
of business).
BASE RATE. The greater of (i) the variable per annum rate of interest
announced from time to time by the Lender as its "prime rate" , and (ii)
the Federal Funds Effective Rate plus 1/2 of 1% per annum. The "prime rate"
is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer.
BORROWER(S). As defined in the preamble hereto.
BORROWING ORDER. An order entered by the Bankruptcy Court in the
Proceedings in substantially the form annexed hereto as EXHIBIT A (as any
such Order may from time to time be amended with the written consent of the
Lender).
BUSINESS DAY. Any day, other than a Saturday or Sunday, or legal
holiday on which banking institutions in Boston, Massachusetts are open for
the conduct of a substantial part of their commercial banking business.
BUSINESS PLAN. The Borrower's business plan annexed hereto as EXHIBIT
B and any revision or amendment thereto to which the Lender has provided
its written consent.
CAPITAL EVENT. The issuance by any Borrower or any of its Subsidiaries
on or after the Closing Date (i) of Indebtedness for borrowed money or (ii)
of any equity interest. Nothing contained in this definition or in any
provision relating to Capital Events shall permit or be deemed to permit
any Borrower or any of its Subsidiaries to effectuate a Capital Event which
is otherwise prohibited hereunder or under the Borrowing Order.
CAPITAL EXPENDITURES. To the extent capitalized in accordance with
Generally Accepted Accounting Principles, all expenditures for fixed assets
including assets being constructed (whether or not completed), leasehold
improvements, capital leases under Generally Accepted Accounting
Principles, installment purchases of machinery and equipment, acquisitions
of real estate and other similar expenditures including (i) in the case of
a purchase, the entire purchase price, whether or not paid during the
fiscal period in question, (ii) in the case of a capital lease, the
capitalized amount thereon determined in accordance with Generally Accepted
Accounting Principles, and (iii) without duplication, expenditures in or
from any construction-in-progress account of any Borrower or its
Subsidiaries.
CHANGE IN CONTROL. Any of the following events shall constitute a
"Change of Control" hereunder:
(a) any "person" (other than the Investors), as such term is used in
Sections 13(d) and 14(d) of the Securities Act of 1933, as amended (other
than a Borrower, any of its Subsidiaries, or any trustee, fiduciary or
other Person holding securities under any employee benefit plan or trust of
a Borrower or any of its Subsidiaries), together with all "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 under the Securities
Act of 1933, as amended) of such person, shall become the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Securities Act)
directly or indirectly, of securities of Nutramax representing 25% or more
of either (i) the combined voting power of Nutramax's then outstanding
securities having a right to vote in an election of Nutramax's Board of
Directors or (ii) the then outstanding shares of common stock of Nutramax
(in either case other than as a result of acquisition of securities
directly from Nutramax); or
(b) individuals who on the Closing Date constituted the Board of
Directors of Nutramax (together with any new directors whose election by
such Board of Directors or whose nomination for election by the
stockholders of Nutramax was approved by a vote of the majority of the
directors then still in office who were either directors on the Closing
Date or whose election or nomination for election was previously s
approved) cease, for any reason to constitute a majority of the Board of
Directors of Nutramax then in office.
CLOSING DATE. The first date on which the conditions set forth inss.10
andss.11 have been satisfied and any Loans are to be made.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively as the same may be supplemented or amended and in
effect from time to time.
COLLATERAL. All assets of the Borrowers, whenever acquired, real and
personal, tangible and intangible. "Collateral" includes, without
limitation, all Real Estate, Accounts, Inventory, Equipment, Investment
Property and General Intangibles.
CONSOLIDATED AND CONSOLIDATING. Shall have the respective meanings
ascribed to them in accordance with Generally Accepted Accounting
Principles.
CONSULTANT shall mean Policano & Manzo, L.L.C. which has been engaged
by the Lender, or any replacement thereof, to review and advise the Lender
with respect to the Borrowers' business, results of operation, financial
condition, the Collateral and such other matters as the Lender may request.
DEFAULT. An event or condition that, but for the requirement that time
elapse or notice be given or both, would constitute an Event of Default.
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of any Borrower, other
than dividends payable solely in shares of common stock of a Borrower; the
purchase, redemption, or other retirement of any shares of any class of
capital stock of any Borrower, directly or indirectly by a Borrower through
a Subsidiary of a Borrower or otherwise; the return of capital by a
Borrower to its shareholders as such; or any other distribution on or in
respect of any shares of any class of capital stock of a Borrower.
DOCUMENTARY LETTERS OF CREDIT. Letters of credit issued by the Lender
pursuant to this Agreement, the drawing under which requires the delivery
of bills of lading, airway bills or other similar types of documents of
title.
DOLLARS OR $. Dollars in lawful currency of the United States of
America.
DRAWDOWN DATE. The date on which any Loan is made or is to be made.
EBITDA. In relation to the Borrowers for any period, an amount equal
to consolidated net income determined in accordance with Generally Accepted
Accounting Principles (with Inventory being determined on a "first-in,
first-out" basis) for such period, plus the following to the extent
deducted in computing such consolidated net income for such period: (i)
Interest Charges for such period, (ii) taxes in income for such period,
(iii) depreciation for such period, and (iv) amortization for such period;
but minus all extraordinary gains (and, subject to the prior approval of
the Lender), plus all extraordinary losses) attributable to the sale or
other disposition of assets.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by a Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
ENVIRONMENTAL LAWS. Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations,
ordinances, policies and common law (whether now existing or hereafter
enacted or promulgated), of all federal, state and local governmental
authorities, agencies, commissions, boards, bureaus or departments which
may now or hereafter have jurisdiction over any Borrower or any of its
Subsidiaries or any lanlord under any real estate lease under which a
Borrower or such Subsidiary is a tenant, and all applicable judicial and
administrative and regulatory decrees, judgments and orders, incuding
common law rulings and determinations, relating to injury to, or the
protection of, real or personal property or human health or the
environment, including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous
Substances, whether solid, liquid or gaseous in nature, into the
environment or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of such Hazardous
Substances.
EQUIPMENT. "Equipment" as defined in the UCC and all rolling stock,
machinery, office equipment, plant equipment, tools, dies, molds, store
fixtures, furniture, and other goods, property, and assets which are used
and/or were purchased for use in the operation or furtherance of the
Borrowers' business and any and all accessions and additions thereto and
substitutions therefor.
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively as the same may be
supplemented or amended and in effect from time to time.
ERISA AFFILIATE. Any Person which is treated as a single employer with
any Borrower under ss.414 of the Code.
EVENT OF DEFAULT. See ss.12.1.
FEDERAL FUNDS EFFECTIVE RATE. For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is
a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by the Lender.
FINAL BORROWING ORDER. The Borrowing Order entered in the Proceedings
after notice and a final hearing pursuant to Rule 4001(c) of the Federal
Rules of Bankruptcy Procedure.
GENERAL INTANGIBLES. "General Intangibles" as defined in the UCC;
contractual rights; records; customer lists; telephone numbers; goodwill;
causes of action; judgments; licenses; franchises; patents, patent
applications, patents pending and other intellectual property; computer
software programs, including the source and object codes therefor;
tradenames, trademarks and service marks and all goodwill relating thereto;
and all amounts due to the Borrowers not constituting Accounts.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. Principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to
time.
GUARANTEES. As applied to any Person, without duplication, all
guarantees, endorsements or other contingent or surety obligations with
respect to obligations of others whether or not reflected on such Person's
consolidated balance sheet, including any obligation to furnish funds,
directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods,
supplies or services, or by way of stock purchase, capital contribution,
advance or loan, or to enter into a contract for any of the foregoing, for
the purpose of payment of obligations of any other Person.
HAZARDOUS SUBSTANCES. Any substance (i) the presence of which requires
or may hereafter require notification, investigation or remediation under
any Environmental Law; (ii) which is or becomes defined as a "hazardous
waste," hazardous material" or "hazardous substance" or "controlled
industrial waste" or "pollutant" or "contaminant" under any present or
future Environmental Law or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and any applicable local
statutes and the regulations promulgated thereunder; (iii) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency or
instrumentality of any foreign country, the United States, any state of the
United States, or any political subdivision thereof to the extent any of
the foregoing has or had jurisdiction over the Company; or (iv) without
limitation, which contains gasoline, diesel fuel or other petroleum
products, asbestos or polychlorinated biphenyls ("PCB's").
INDEBTEDNESS. As applied to any Person: (a) all obligations for
borrowed money or other extensions of credit whether or not secured or
unsecured, absolute or contingent, including, without limitation, unmatured
reimbursement obligations with respect to letters of credit or guarantees
issued for the account of or on behalf of such Person and all obligations
representing the deferred purchase price of property, other than accounts
payable arising in the ordinary course of business (b) all obligations
evidenced by bonds, notes, debentures or other similar instruments; (c) all
obligations secured by any mortgage, pledge, security interest, lien,
charge, or other encumbrance existing on property owned or acquired subject
thereto, whether or not the obligations secured thereby shall have been
assumed; and (d) that portion of all obligations arising under capital
leases that is required to be capitalized on the consolidated balance sheet
of such Person and (e) all Guarantees, and (f) all obligations that are
immediately due and payable out of the proceeds of or production from
property now or hereafter owned or acquired by such Person.
INTEREST CHARGES. For any period, means, without duplication, all
interest expense (including commitment fees, balance deficiency fees and
similar expenses) on any particular Indebtedness for which such
calculations are being made, all as determined in accordance with Generally
Accepted Accounting Principles.
INTEREST PAYMENT DATE. The first day of each month.
INTERIM BORROWING ORDER. The Borrowing Order entered in the
Proceedings prior to notice and a final hearing pursuant to Rule 4001(c) of
the Federal Rules of Bankruptcy Procedure.
INVENTORY. "Inventory" as defined in the UCC and all goods,
merchandise, and other personal property now owned or hereafter acquired by
a Person, which are held for sale or lease or are furnished or to be
furnished under a contract of sale or service, or are raw materials, work
in process or materials used or consumed or to be used or consumed in such
Person's business.
INVESTMENTS. As applied to any Person, the purchase or acquisition of
any shares of capital stock, partnership interests, limited liability
company membership interests, evidence of Indebtedness or other equity
securities of any other Person, any loans, advances, extensions of credit
to, or contribution of the capital of, any other Person, any real estate
held for sale or investment, any commodities futures contracts held other
than in connection with bona fide hedging transactions, any other
investment in any other Person, and the maknig of any commitment or
acquisition of any option to make an Investment.
INVESTMENT PROPERTY. "Investment Property" as defined in the UCC.
INVESTORS. Collectively, Cape Ann Investors, LLC, Peritus Capital
Partners, LLC and Bernard Korman
LENDER. See the Preamble hereto.
LETTERS OF CREDIT. Documentary Letters of Credit and Standby Letters
of Credit.
LOAN DOCUMENTS. This Agreement, the Note, the Security Documents,
all Letters of Credit, and all other instruments, documents and agreements
executed in connection therewith, as each may be modified, amended,
supplemented or restated.
LOANS. The loans to be made by the Lender pursuant to ss.2 hereof.
MATURITY DATE. The earliest or (x) June 30, 2000 or (y) confirmation
of a plan of reorganization in the Proceedings, or (z) such earlier date on
which the Loans shall become due and payable pursuant to the terms hereof.
MAXIMUM DRAWING AMOUNT. With respect to the aggregate of all
Outstanding Letters of Credit, the sum of $1,000,000.00.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning
of ss.3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
NET PROCEEDS. The aggregate amount of cash proceeds from any Asset
Sale or Capital Event (after payment of any senior liens, if any, secured
by the property sold, and payment of associated fees and expenses
(including, without limitation, reasonable fees and expenses of counsel,
accountants, appraisers, and underwriter's discounts)) received or
receivable by any Borrower or its Subsidiaries and cash proceeds paid from
time to time with respect to any promissory note or other instrument or
security delivered in connection with said transaction.
NOTE. Has the meaning set forth in ss.2.2 hereof.
NUTRAMAX. NutraMax Products, Inc.
OBLIGATIONS. All indebtedness, obligations and liabilities of the
Borrowers and their Subsidiaries to the Lender under this Agreement or any
of the other Loan Documents or in respect of any of the Loans or the Note
or other instruments at any time evidencing any thereof, whether existing
on the date of this Agreement or arising or incurred hereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract,
operation of law of otherwise.
OUTSTANDING. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by ss.8.2.
PERSON. Any individual, company, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture,
business, trust, estate, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PRE-PETITION LOAN AGREEMENT. The Revolving Credit and Term Loan
Agreement among Nutramax, the lenders party thereto and Fleet National Bank
(f/k/a BankBoston, N.A.), as Agent dated December 30, 1996, as amended and
in effect (including, without limitation, pursuant to a Forbearance
Agreement and Amendment dated as of December 1, 1999 and pursuant to a
Second Forbearance Agreement and Amendment dated as of February 5, 2000).
PRE-PETITION REVOLVER. The revolving loans (including principal,
interest, and fees) made pursuant to the Pre-Petition Loan Agreement.
PRE-PETITION TERM LOAN. The term loans (including principal, interest
and fees) made pursuant to the Pre-Petition Loan Agreement.
PROCEEDINGS. The cases, pursuant to Chapter 11 of the Bankruptcy Code,
initiated by the Borrowers in the United States Bankruptcy Court for the
District of Delaware (Case No. ________).
REAL ESTATE. All real property at any time owned or leased (as lessee
or sublessee) by the Borrowers or any of their Subsidiaries.
RELEASE. Any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, storing, escaping, leaching, dumping, or
discarding, burying, abandoning, or disposing into the environment.
REVOLVING CREDIT CEILING. $5,000,000.00, less (a) the amount of any
"carve out" as set forth in the Borrowing Order and (b) the amount by which
the Overadvance under the Pre-Petition Loan Agreement exceeds Three Million
Dollars ($3,000,000.00).
SECURITY DOCUMENTS. All security agreements, mortgages, deeds of
trust, and other instruments, documents, and agreements from the Borrowers
and/or any Subsidiary, granting a lien, security interest or other right in
favor of the Lender in any asset of the Borrowers or their Subsidiaries to
secure the Obligations, whether such agreements now exist or hereafter
arise.
STANDBY LETTERS OF CREDIT. Letters of Credit issued by the Lender
pursuant to this Agreement, the drawing under which does not require the
delivery of bills of lading, airway bills or other similar types of
documents of title, or which are customarily referred to as Standby Letters
of Credit.
SUBORDINATED INDEBTEDNESS. Indebtedness which is expressly
subordinated in right of payment, in form and on terms approved by the
Lender in writing, to the prior payment in full of the Loans.
SUBSIDIARY. Any corporation, association, partnership, trust, or other
business entity of which the designated parent shall at any time own
directly or indirectly through a Subsidiary or Subsidiaries at least a
majority (by number of votes or controlling interests) of the outstanding
Voting Interests.
UCC. The Uniform Commercial Code as enacted in The Commonwealth of
Massachusetts, as such may be supplemented or amended and in effect from
time to time.
VOTING INTERESTS. Stock or similar ownership interests, of any class
or classes (however designated), the holders of which are at the time
entitled, as such holders, (a) to vote for the election of a majority of
the directors (or persons performing similar functions) of the corporation,
association, partnership, trust or other business entity involved, or (b)
to control, manage, or conduct the business of the corporation,
partnership, association, trust or other business entity involved.
ss.1.2. Rules of Interpretation.
-----------------------
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or
supplemented from time to time in accordance with its
terms and the terms of this Agreement.
(b) The singular includes the plural and the plural
includes the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by Generally Accepted
Accounting Principles.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by
Generally Accepted Accounting Principles, which terms
are defined in the UCC, have the meanings assigned to
them therein.
(h) Reference to a particular "ss." refers to that section
of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole
and not to any particular section or subdivision of
this Agreement.
2. THE LOANS.
---------
ss.2.1. Commitment to Make Loans. Subject to the terms and conditions
set forth in this Agreement, the Lender agrees to lend to the Borrowers and
the Borrowers may borrow, repay, and reborrow from time to time between the
Closing Date and the Maturity Date upon notice by Nutramax to the Lender
given in accordance with ss.2.4, such sums as are requested by the
Borrowers (each a " LOAN") provided that the aggregate principal amount of
Loans Outstanding (after giving effect to all amounts requested), together
with the stated amount of all Outstanding Letters of Credit shall at any
one time not exceed the Revolving Credit Ceiling. Each request for a Loan
hereunder shall constitute a representation and warranty by the Borrowers
that the conditions set forth in ss.10 and ss.11, in the case of the
initial Loan, and ss.11, in the case of all other Loans, have been
satisfied on the date of such request.
ss.2.2. The Note. The Loans shall be evidenced by a promissory note of
the Borrowers in substantially the form of EXHIBIT C hereto (the "NOTE"),
dated as of the Closing Date and completed with appropriate insertions. The
Outstanding amount of the Loans set forth in the Lender's record shall be
prima facie evidence of the principal amount thereof owing and unpaid to
the Lender.
ss.2.3. Interest on Loans.
-----------------
(a) Each Loan shall bear interest for the period commencing
with the Drawdown Date thereof at a rate equal to the
aggregate of the Base Rate plus two percent (2%) per
annum.
(b) The Borrowers shall pay interest on each Loan in
arrears on each Interest Payment Date with respect
thereto.
ss.2.4. Requests for Loans. Nutramax shall give to the Lender
telephonic notice (confirmed in writing in the form of EXHIBIT D hereto) of
each Loan requested hereunder. Each such notice shall be irrevocable and
binding on the Borrowers and shall obligate the Borrowers to accept the
Loan requested from the Lender on the proposed Drawdown Date. Notices for
any Loans shall be furnished to the Lender no later than 10:00 a.m. (Boston
time) one Business Day prior to the proposed Drawdown Date.
ss.2.5. Maturity. The Borrowers promise to pay on the Maturity Date,
and there shall become absolutely due and payable on the Maturity Date, all
of the Loans Outstanding on such date, together with any and all accrued
and unpaid interest thereon.
ss.2.6. Mandatory Repayments of Loans. (a) If at any time the
aggregate Outstanding principal balance of the Loans exceeds the Revolving
Credit Ceiling, then the Borrowers shall immediately pay the amount of such
excess to the Lender for application to the Loans.
(b) The Borrowers shall cause all proceeds of the Collateral and
from any other assets or source (including, without limitation, Asset
Sales, Capital Events, casualties and condemnations) to be directed to a
lockbox, blocked account, or other recipient over which the Lender has
control, with such proceeds to be applied FIRST to the Obligations under
this Agreement; and SECOND, after payment of the Obligations, to the
Pre-Petition Revolver, the Pre-Petition Term Loans and the other
obligations under the Pre-Petition Loan Agreement in the manner set forth
therein. Any amounts prepaid (other than from proceeds of the collection of
Accounts or sale of Inventory in the ordinary course) may not be
reborrowed.
ss.2.7. Optional Prepayments of Loans.
-----------------------------
The Borrowers shall have the right, at their election, to repay the
Outstanding amount of the Loans, as a whole or in part, at any time without
penalty or premium. No prepayment made hereunder shall postpone the time
for any subsequent payment on account of the Obligations.
3. LETTERS OF CREDIT
-----------------
ss.3.1. Establishment of Letter of Credit Sublimits.
-------------------------------------------
(a) Subject to the terms and conditions of the within
Agreement, the Lender, upon written request of the
Borrower, agrees to issue Letters of Credit for the
account of the Borrowers until the earlier of (i) five
(5) Business Days prior to the Maturity Date, or (ii)
the occurrence of any Default, each such Letter of
Credit to be in such form as the Borrower and the
Lender may agree from time to time.
(b) The amount which the beneficiaries under all Letters of
Credit then Outstanding may draw thereunder shall not
at any time exceed the Maximum Drawing Amount.
(c) The aggregate of (i) the Outstanding amount of the
Loans and (ii) the stated amount of all Outstanding
Letters of Credit (after giving effect to all amounts
requested) shall not at any time exceed the Revolving
Credit Ceiling.
(d) No Letter of Credit shall be issued for the benefit of
Richard Glass (i) unless and until the Bankruptcy Court
in the Proceedings has entered a final order approving
Mr. Glass' current employment contract with the
modification requested by the Lenders regarding the
conditions to posting the Letter of Credit, and (ii) in
amounts aggregating in excess of $350,000.00 (or, at
the Lender's discretion, up to an amount not to exceed
$500,000.00).
ss.3.2. Documentary Letter of Credit Fees.
---------------------------------
(a) The Borrower will pay to the Lender a fee for each
Documentary Letter of Credit in an amount equal to 2%
per annum of the stated amount of each such Documentary
Letter of Credit, such fee to be paid monthly in
advance on the first day of each month.
(b) In addition to the fees payable pursuant to Subsection
(a), above, the Borrower shall pay to the Lender
standard processing, fronting, amendment, and
administrative fees on account of each Documentary
Letter of Credit at the Lender's customary rates
therefor.
(c) All fees provided for in this Section shall be
calculated in accordance with the provisions of Section
hereof, shall be deemed fully earned on the date due
for payment thereof and shall not be refunded in whole
or in part to the Borrower in any event.
ss.3.3. Standby Letter of Credit Fees.
-----------------------------
(a) The Borrower will pay to the Lender a fee for each
Standby Letter of Credit equal to 2% per annum of the
stated amount of each such Standby Letter of Credit.
Such fees shall be payable by the Borrower monthly in
advance on the first day of each month. Such fees shall
be calculated in accordance with the provisions of
Section 4.3 hereof, shall be deemed fully earned on the
date due for payment thereof and shall not be refunded
in whole or in part to the Borrower in any event.
(b) In addition to the fees payable pursuant to subsection
(a), above, the Borrower shall pay to the Lender
standard processing, fronting, amendment and
administrative fees on account of each Standby Letter
of Credit at the Lender's customary rates therefor.
ss.3.4. Effect of Drawing Under Letter of Credit.
----------------------------------------
The Borrowers shall reimburse the Lender for the amount of any
honoring of a Letter of Credit issued for the account of the Borrower and
honored in accordance with the terms of such Letter of Credit and of the
within Agreement. Any drawing or presentation which is not so reimbursed by
the Borrowers on the Business Day when so honored, shall constitute, a
Loan. If, as the result of the making of any loan hereunder, the Revolving
Credit Ceiling is then exceeded, the Borrowers shall make a mandatory
prepayment in the amount and manner described in Section 2.6(a) hereof.
ss.3.5. Requests for Issuance of Letters of Credit.
------------------------------------------
(a) The Borrowers shall give the Lender such prior
telephone, electronic, or written notice of each
request for Letter of Credit issuances as the Lender
may reasonably require, which notice shall include,
without limitation, the amount thereof, the requested
issuance date, and other information necessary to cause
the Letter of Credit to be issued. Each request for the
issuance of a Letter of Credit shall be irrevocable.
(b) Each request for the issuance of a Letter of Credit
hereunder shall constitute a representation by the
Borrowers that the applicable conditions set forth in
Articles 10 and 11, below, have been satisfied on the
date of such request.
(c) The Borrowers shall execute and deliver to the Lender
such further documents and instruments in connection
with any Letter of Credit as the Lender, in accordance
with the Lender's then customary practices with respect
to similar facilities, reasonably may request.
ss.3.6. Indemnity. The Borrower agrees to indemnify the Lender and its
correspondents and hold them harmless from and against any and all claims,
damages, losses, liabilities, costs and expenses whatsoever which they may
incur or suffer by reason of or in connection with the execution and
delivery or assignment of or payment or presentation under or in respect of
any Letter of Credit issued by the Lender or any action taken or omitted to
be taken with respect to any Letter of Credit issued by the Lender, except
to the extent that any such claims, damages, losses, liabilities, costs or
expenses shall be caused by the willful misconduct, gross negligence or bad
faith of the Lender or such correspondents, it being understood that (x) in
making such payment, the Lender's or its correspondent's exclusive reliance
in good faith on the documents presented to and believed to be genuine by
it in accordance with the terms of such Letter of Credit as to any and all
matters set forth therein, including, without limitation, reliance in good
faith on any affidavit presented pursuant to such Letter of Credit and on
the amount of any sight draft presented pursuant to any Letter of Credit
whether or not any statement or any other documents presented pursuant to
such Letter of Credit proves to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein proves to be untrue or
inaccurate in any respect whatsoever and (y) any such noncompliance in a
nonmaterial respect shall, in each case, not be deemed willful misconduct,
gross negligence or bad faith of the Lender. Upon demand by the Lender at
any time, the Borrowers shall reimburse the Lender for any reasonable legal
or other expenses incurred in connection with investigating or defending
against any of the foregoing, except if the same is due to the Lender's
gross negligence, bad faith, or willful misconduct as aforesaid. Without
limiting the foregoing, the Borrowers' indemnification provided herein
shall include any claims, damages, losses, liabilities, costs, or expenses
whatsoever which may be incurred by the Lender to any correspondent
utilized by the Lender with respect to any Letter of Credit. The
indemnities contained herein shall survive the expiration or termination of
the Letters of Credit and this Agreement and shall be payable upon demand.
ss.3.7. Additional Provisions Relating to Letters of Credit.
---------------------------------------------------
(a) The obligations of the Borrowers with respect to
Letters of Credit shall be absolute and unconditional
and shall rank pari passu with the obligations of the
Borrower to repay all other Obligations. The Lender's
rights, powers, privileges and immunities specified in
or arising under this Agreement and the other Loan
Documents are in addition to any heretofore or at any
time hereafter otherwise created or arising, whether by
statute or rules of law or contract.
(b) The Borrowers will
(i) promptly examine the copy of any Letter of Credit (and
any amendments thereto) sent to it by the Lender;
(ii) promptly examine all instruments and documents
delivered to it from time to time by the Lender; and
(iii) within two (2) Business Days of receipt thereof,
provide the Lender with written notice of any irregularity or claim of
non-compliance with the instructions of the Borrowers.
The Borrowers are conclusively deemed to have waived any such claim
against the Lender and its correspondents unless such notice is so timely
given.
(c) None of the Lender, the Lender's correspondents, any
advising, negotiating, or paying bank with respect to
any Letter of Credit shall be responsible in any way
for:
(i) performance by any beneficiary under any Letter of
Credit of that beneficiary's obligations to the Borrowers; or
(ii) the form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the legal effect of; any
documents called for under any Letter of Credit if (with respect to the
foregoing) such documents on their face appear to be in order.
(d) The Lender may honor, as complying with the terms of
any Letter of Credit and of any drawing thereunder, any
drafts or other documents otherwise in order, but
signed or issued by an administrator, executor,
conservator, trustee in bankruptcy, debtor in
possession, assignee for the benefit of the creditors,
liquidator, receiver, or other legal representative of
the party authorized under such Letter of Credit to
draw or issue such drafts or other documents.
(e) Unless otherwise agreed to, in the particular instance,
the Borrowers hereby authorizes the Lender to (i)
select an advising bank, if any; (ii) select a paying
bank, if any; and (iii) select a negotiating bank.
(f) All directions, correspondence, and funds transfers
relating to any Letter of Credit are at the risk of the
Borrowers. The Lender shall have discharged its
respective obligations under any Letter of Credit
which, or the drawing under which, includes payment
instructions, by the initiation of the method of
payment called for in, and in accordance with, such
instruments (or by any other commercially reasonable
and comparable method). The Lender does not assume any
responsibility for any inaccuracy, interruption, error,
or delay in transmission or delivery by post, telegraph
or cable, or for any inaccuracy of translation.
(g) The Lender's rights, powers, privileges and immunities
specified in or arising under this Agreement are in
addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or
rule of law or contract.
(h) The Letters of Credit, except to the extent otherwise
expressly provided hereunder or agreed to in writing by
the Lender and the account party of the subject Letter
of Credit, will be governed by the Uniform Customs and
Practice for Documentary Credits, International Chamber
of Commerce, Publication No. 500, and any subsequent
revisions thereof.
(i) The obligations of the Borrowers under the within
Agreement with respect to the Letters of Credit are
absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof
under all circumstances, whatsoever including, without
limitation, the following:
(i) Any lack of validity or enforceability or restriction,
restraint or stay in the enforcement of the within Agreement, any Letter of
Credit, or any other agreement or instrument relating thereto.
(ii) Any amendment or waiver of, or consent to the departure
from, all or any of the above.
(iii) The existence of any claim, set-off, defense, or other
right which any Borrower may have at any time against the beneficiary of
any Letter of Credit.
4. CERTAIN GENERAL PROVISIONS.
--------------------------
ss.4.1. Closing Fee.
-----------
The Borrowers agrees to pay to the Lender on the Closing Date a
closing fee in the sum of $100,000. Such fee shall be deemed fully earned
on payment and shall not be refundable in whole or in part under any
circumstances.
ss.4.2. Funds for Payments.
------------------
(a) All payments of principal, interest, commitment fees,
closing fees and any other amounts due hereunder or
under any of the other Loan Documents shall be made to
the Lender, at its office at 100 Federal Street,
Boston, Massachusetts 02110, or at such other location
that the Lender may from time to time designate, in
each case in immediately available funds.
(b) The Borrowers authorize the Lender, without further
notice to or consent from any Borrower, to charge to
any deposit account which any Borrower may maintain
with the Lender for the principal, interest, fees,
charges, taxes, expenses and other obligations provided
for in this Agreement and the other Loan Documents.
(c) All payments by the Borrowers hereunder and under any
of the other Loan Documents shall be made without
setoff or counterclaim and free and clear of and
without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or
taxing or other authority therein unless the Borrowers
are compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the
Borrowers with respect to any amount payable by them
hereunder or under any of the other Loan Documents, the
Borrowers will pay to the Lender on the date on which
such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars
as shall be necessary to enable the Lender to receive
the same net amount which the Lender would have
received on such due date had no such obligation been
imposed upon the Borrowers. The Borrowers will deliver
promptly to the Lender certificates or other valid
vouchers for all taxes or other charges deducted from
or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
ss.4.3. Computations. All computations of interest on the Loans and of
other fees payable by the Borrowers to the extent applicable shall be based
on a 360-day year and paid for the actual number of days elapsed. Each
change in the Base Rate shall be effective, for purposes of the
determination of interest hereunder, contemporaneously with the
effectiveness of such change in the Base Rate. Whenever a payment hereunder
or under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension.
The Outstanding amount of the Loans as reflected on the Lender's records
from time to time shall be considered prima facie evidence of the amounts
owing and unpaid to the Lender.
ss.4.4. Additional Costs, Etc. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent court
or by any governmental or other regulatory body or official charged with
the administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made
upon or otherwise issued to the Lender by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law),
shall:
(a) subject the Lender to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, the Lender's commitment or the
Loans (other than taxes based upon or measured by the income or
profits of the Lender); or
(b) materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to the Lender of the
principal of or the interest on any Loans or any other amounts payable
to the Lender under this Agreement or the other Loan Documents; or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or commitments of an office of the Lender; or
(d) impose on the Lender any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans,
the Lender's commitment, or any class of loans or commitments of which
any of the Loans or such Lender's commitment forms a part;
and the result of any of the foregoing is
(i) to increase the cost to the Lender of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Lender's Commitment; or
(ii) to reduce the amount of principal, interest or other amount
payable to the Lender hereunder on account of such Lender's Commitment
or any of the Loans; or
(iii) to require the Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by the Lender
from the Borrowers hereunder,
then, and in each such case, the Borrowers will, upon demand made by the
Lender at any time and from time to time and as often as the occasion
therefor may arise, pay to the Lender such additional amounts as will be
sufficient to compensate the Lender for such additional cost, reduction,
payment or foregone interest or other sum.
ss.4.5. Capital Adequacy. If any present or future law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) or the interpretation thereof by a court or governmental
authority with appropriate jurisdiction affects the amount of capital
required or expected to be maintained by the Lender or any corporation
controlling the Lender and the Lender determines that the amount of capital
required to be maintained by it is increased by or based upon the existence
of the Loans or the commitments made or deemed to be made pursuant hereto,
then the Lender may notify the Borrowers of such fact, and the Borrowers
shall pay to the Lender from time to time on demand, as an additional fee
payable hereunder, such amount as the Lender shall determine in good faith
and certify in a notice in accordance with ss.4.6 to the Borrowers to be an
amount that will adequately compensate the Lender in light of these
circumstances for its increased costs of maintaining such capital.
ss.4.6. Certificate. A certificate setting forth any additional
amounts payable pursuant to ss.ss.or and a brief explanation of such
amounts which are due, submitted by the Lender to the Borrowers, shall be
prima facie evidence that such amounts are due and owing.
ss.4.7. Interest After Default. Following the occurrence of an Event
of Default, principal and (to the extent permitted by applicable law)
interest on the Loans and all other amounts payable hereunder or under any
of the other Loan Documents, at the option of the Lender, shall bear
interest (compounded daily) payable on demand at a rate per annum equal to
the aggregate of the Base Rate plus six percent (6%) per annum.
5. COLLATERAL SECURITY. The Obligations shall be secured by a
perfected first priority security interest to be held by the Lender
(subject only to Permitted Liens) in the Collateral.
6. REPRESENTATIONS AND WARRANTIES. The Borrowers represent and warrant
to the Lender as follows.
ss.6.1. Corporate Authority; Etc.
-------------------------
(a) Incorporation; Good Standing. The Borrowers (i) are
corporations or limited partnerships, as applicable,
validly existing and in good standing under the laws of
the state of their incorporation or organization (ii)
have all requisite power to own their property and
conduct their business as now conducted and as
presently contemplated, and (iii) are in good standing
as a foreign corporation and are duly authorized to do
business in each jurisdiction where Collateral is
located and in each other jurisdiction where such
qualification is necessary except where a failure to be
so qualified in such other jurisdiction would not have
a materially adverse effect on the business, assets or
financial condition of the Borrowers.
(b) Authorization. The execution, delivery and performance
of this Agreement and the other Loan Documents to which
the Borrowers are or are to become a party and the
transactions contemplated hereby and thereby (i) are
within the authority of each Borrower, (ii) have been
duly authorized by all necessary proceedings, (iii) do
not and will not conflict with or result in any breach
or contravention of any provision of law, statute,
rule, regulation or agreement to which any Borrower is
subject or any judgment, order, writ, injunction,
license or permit applicable to any Borrower, and (iv)
do not and will not conflict with any provision of any
Borrower's organization documents or other charter
documents or bylaws of, or any agreement or other
instrument binding upon, any Borrower, except where
such conflict would not have a materially adverse
effect on the business, assets or financial condition
of the Borrowers.
(c) Enforceability. The execution and delivery of this
Agreement and the other Loan Documents to which the
Borrowers are or are to become a party will result in
valid and legally binding obligations of each Borrower
enforceable against it in accordance with the
respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of
creditors' rights and except to the extent that
availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be
brought.
ss.6.2. Governmental Approvals. The execution, delivery and
performance by the Borrowers of this Agreement and the other Loan Documents
to which the Borrowers are or are to become a party and the transactions
contemplated hereby and thereby do not require the approval or consent of,
or filing with, any governmental agency or authority other than the
Borrowing Order and those already obtained and the filing of related
financing statements in the appropriate records office with respect
thereto.
ss.6.3. Litigation. Except for any litigation which is stayed by the
commencement of the Proceedings, there are no actions, suits, proceedings
or investigations of any kind pending or, to the knowledge of the
Borrowers, threatened against the Borrowers or any of their Subsidiaries
before any court, tribunal or administrative agency or board that, if
adversely determined, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition or
business of the Borrower or materially impair the right of the Borrowers
and their Subsidiaries to carry on business substantially as now conducted
by them, or result in any substantial liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the balance
sheet of the Borrowers and their Subsidiaries, or which question the
validity of this Agreement or any of the other Loan Documents, or any
action taken or to be taken pursuant hereto or thereto.
ss.6.4. No Materially Adverse Contracts, Etc. None of the Borrowers or
any of their Subsidiaries is subject to any charter, corporate or other
legal restriction, or any judgment, decree, order, rule or regulation that
has a materially adverse effect on the business, assets or financial
condition of the Borrowers or their Subsidiaries.
ss.6.5. Compliance With Other Instruments, Laws, Etc. None of the
Borrowers or any of their Subsidiaries is in violation of any provision of
its charter or other organization documents, by-laws, or any agreement or
instrument to which any of them may be subject or by which any of them or
any of their properties may be bound or any decree, order, judgment,
statute, license, ruler regulation, in any of the foregoing cases in a
manner that could materially and adversely affect the financial condition,
properties or business of the Borrowers and their Subsidiaries, the
enforcement of any of which is not stayed by the commencement of the
Proceedings.
ss.6.6. Tax Status. The Borrowers (a) have made or filed all federal
and state income and all other tax returns, reports and declarations
required by any jurisdiction to which they are subject, (b) have paid all
taxes and other governmental assessments and charges shown or determined to
be due on such returns, reports and declarations, except those being
contested in good faith and by appropriate proceedings and (c) have set
aside on its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. Except for taxes being contested as provided in
clause (b), above, there are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of
the Borrowers know of no basis for any such claim.
ss.6.7. Capitalization. On and as of the Closing Date, the authorized
capital stock of Nutramax and its Subsidiaries shall consist of the number
of shares of common stock and preferred stock set forth on Schedule 6.7
hereto. The identity and holdings of the owners of the outstanding shares
of such authorized stock is reflected on said Schedule 6.7 (provided that
in the case of Nutramax, only the identity and holdings of its executive
officers, key employees and Affiliates is required to be so disclosed). All
such outstanding shares have been duly and validly issued, are fully paid
and are non-assessable.
ss.6.8. Leases. Schedule 6.8 hereto contains a complete list of all
leases, occupancy agreements and all amendments thereto and all other
documents affecting rights and obligations thereunder, including, without
limitation, assignments and subleases pursuant to which any Borrower or
Subsidiary leases real property, and license agreements pursuant to which a
third party would have the right to enter upon the leased premises. To the
knowledge of the Borrowers, no default or event of default exists under any
of the leases (other than by virtue of the commencement of the
Proceedings).
ss.6.9. No Event of Default. No Default or Event of Default has
occurred and is continuing.
ss.6.10. Holding Company and Investment Company Acts. None of the
Borrowers or any of their Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935; nor are they an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment
company", as such terms are defined in the Investment Company Act of 1940.
ss.6.11. Absence of UCC Financing Statements, Etc. To the knowledge of
the Borrowers, except with respect to Permitted Liens, there is no
financing statement, security agreement, chattel mortgage, real estate
mortgage or other document filed or recorded with any filing records,
registry, or other public office, that purports to cover, affect or give
notice of any present or possible future lien on, or security interest in,
any Collateral or rights thereunder.
ss.6.12. Title to Collateral. To the knowledge of the Borrowers, the
Borrowers are the owner of the Collateral free from any lien, security
interest, encumbrance, and any other claim or demand, except for Permitted
Liens.
ss.6.13. Certain Transactions. Other than as set forth in SCHEDULE
6.13, none of the officers, trustees, directors, or employees of the
Borrowers or any of their Subsidiaries is presently a party to any
transaction with the Borrowers or any such Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, trustee, director or
such employee or any corporation, partnership, trust or other entity in
which any officer, trustee, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
ss.6.14. Employee Benefit Plans; Multiemployer Plans; Guaranteed
Pension Plans. None of the Borrowers or any ERISA Affiliate maintains or
contributes to any Employee Benefit Plan, Multiemployer Plan or Guaranteed
Pension Plan other than as set forth in SCHEDULE 6.14 hereof.
ss.6.15. Regulations U and X. No portion of any Loan is to be used for
the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
ss.6.16. Subsidiaries. SCHEDULE 6.16 sets forth all of the
Subsidiaries of the Borrowers. A Borrower or a Subsidiary is the owner,
free and clear of all liens and encumbrances, of all of the issued and
outstanding capital stock of each Subsidiary. All shares of such stock have
been validly issued and are fully paid and nonassessable and no rights to
subscribe to any additional shares have been granted, and no options,
warrants, or similar rights are outstanding.
ss.6.17. Loan Documents. All of the representations and warranties of
the Borrowers made in the other Loan Documents or any document or
instrument delivered to the Lender or the Lenders pursuant to or in
connection with any of such Loan Documents are true and correct in all
material respects.
7. AFFIRMATIVE COVENANTS OF THE BORROWERS. The Borrowers covenants and
agrees that, so long as any Obligation is Outstanding or the Lender has any
obligation to make any Loan or issue any Letter of Credit:
ss.7.1. Punctual Payment. The Borrowers will duly and punctually pay
or cause to be paid the principal and interest on the Loans and all
interest, fees and other Obligations provided for in this Agreement, all in
accordance with the terms of this Agreement and the Note, as well as all
other sums owing pursuant to the Loan Documents.
ss.7.2. Maintenance of Office. The Borrowers will maintain their chief
executive offices in Gloucester, Massachusetts, or at such other place in
the United States of America as the Borrowers shall designate upon not less
than forty five (45) days prior written notice to the Lender.
ss.7.3. Records and Accounts. The Borrowers will (a) keep, and cause
each of their Subsidiaries to keep, true and accurate records and books of
account in which full, true and correct entries will be made in accordance
with Generally Accepted Accounting Principles and (b) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation
and amortization of their properties and the properties of their
Subsidiaries, contingencies, and other reserves.
ss.7.4. Financial Statements, Certificates and Information. The
Borrowers will deliver to the Lender in a form similar to that previously
delivered under the Pre-Petition Loan Agreement:
(a) As soon as practicable, but in any event not later than
forty-five (45) days after the end of each of Nutramax's fiscal
quarters, copies of the unaudited consolidated balance sheet of
Nutramax and its Subsidiaries as of the end of such quarter, and the
related unaudited consolidated statements of income and cash flow for
such quarter and that portion of Nutramax's fiscal year then elapsed,
all in reasonable detail and prepared in accordance with Generally
Accepted Accounting Principles, together with a certification by the
principal financial or accounting officer of Nutramax that the
information contained in such financial statements fairly presents the
financial position of Nutramax and its Subsidiaries on the date
thereof (subject to year-end adjustments) and that no Default or Event
of Default then exists (or if a Default or Event of Default then
exists, specifying the nature thereof).
(b) As soon as practicable, but in any event not later than
twenty (20) days after the end of each month, copies of the unaudited
consolidated balance sheet of Nutramax and its Subsidiaries as of the
end of such month, and the related unaudited consolidated statements
of income and cash flow for such month and that portion of Nutramax's
fiscal year then elapsed, all in reasonable detail and prepared in
accordance with Generally Accepted Accounting Principles, but
excluding footnotes, together with a certification by the principal
financial or accounting officer of Nutramax that the information
contained in such financial statements fairly presents the financial
position of Nutramax and its Subsidiaries on the date thereof (subject
to year-end adjustments which shall not be material in amount).
(c) Weekly, on Tuesday of each week as of the immediately
preceding Friday, a copy of the Borrowing Base Report furnished under
the Pre-Petition Loan Agreement and adequate protection stipulation
entered into by the Borrowers with respect thereto.
(d) Weekly, on Tuesday of each week, (A) an accounts receivable
aging, and (B) a variance report reflecting deviations from the
Business Plan for the subject week and year to date.
(e) Contemporaneously with the filing or mailing thereof, copies
of all material of a financial nature filed with the Securities and
Exchange Commission or sent to the stockholders of Nutramax.
(f) Contemporaneously with the Borrowers' receipt thereof, copies
of all accountants' management letters.
(g) From time to time such other financial data and information
as the Lender may reasonably request.
ss.7.5. Notices.
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(a) Defaults. The Borrowers will promptly, upon becoming
aware thereof, notify the Lender in writing of the
occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action
in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement
or, to the extent not stayed by the commencement of the
Proceedings, under any note, evidence of indebtedness,
indenture or other obligation to which or with respect
to which the Borrowers or any of their Subsidiaries is
a party or obligor, whether as principal or surety,
(b) and such default would permit the holder of such note
or obligation or other evidence of indebtedness to
accelerate the maturity thereof, the Borrowers shall
forthwith give written notice thereof to the Lender
describing the notice or action and the nature of the
claimed default.
(c) Environmental Events. The Borrowers will promptly give
notice to the Lender, upon becoming aware thereof, of
any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential
environmental liability, or any federal, state or local
environmental agency or board, that in either case has
the potential to materially affect the assets,
liabilities, financial condition or operations of the
Borrowers or the Lender's security interests pursuant
to the Security Documents.
(d) Notification of Claims against Collateral. The
Borrowers will, immediately upon becoming aware
thereof, notify the Lender in writing of (i) any
setoff, claims, withholdings or other defenses to which
any of the Collateral, or the rights of the Lender with
respect thereto, are subject, and (ii) any other
material events relating to the Collateral or the
rights of the Lender with respect thereto.
(e) Notice of Litigation and Judgments. The Borrowers will,
and will cause each of their Subsidiaries to, give
notice to the Lender in writing of any litigation or
proceedings threatened or any pending litigation and
proceedings affecting the Borrowers or any of their
Subsidiaries or to which any Borrower or any of its
Subsidiaries is or is to become a party involving an
claim against the Borrowers or any of their
Subsidiaries or that could reasonably be expected to
have a materially adverse effect on the Borrowers and
such Subsidiaries and stating the nature and status of
such litigation or proceedings. The Borrowers will, and
will cause each of their Subsidiaries to, give notice
to the Lender, in writing, in form and detail
satisfactory to the Lender, of any judgment, final or
otherwise, against the Borrowers or any of its
Subsidiaries.
(f) Notice of Offers etc. The Borrowers shall furnish
counsel to the Lender within five (5) Business Days
after the Borrower's receipt thereof, with copies of
(i) all offers, letters of intent, and purchase and
sale agreements for any of the Borrowers' assets
(including drafts, executed documents, and any
amendments or modifications thereof), and (ii) all
proposals, commitments, loan documents and other
material items (including any changes thereto or the
termination of previously issued commitments therefor)
with respect to the refinancing of the Obligations and
the obligations under the Pre-Petition Loan Agreement
(including both drafts, executed documents and any
amendments or modifications thereof). In addition, the
Borrowers shall promptly (prior to delivery of the
foregoing to the Lender's counsel) advise the Lender
telephonically or by facsimile transmission of any of
the foregoing events.
(g) Copies of Pleadings. The Borrowers shall provide the
Lender and the Lender's counsel (to the extent not
served on the Lender or its counsel) with copies, when
so filed or submitted, of any pleading filed in the
Proceedings by or on behalf of the Borrowers or the
submission by or on behalf of the Borrowers of any
report or financing statement to the Bankruptcy Court
in which the Proceedings are pending, the office of the
United States Trustee, or any committee appointed in
the Proceedings.
ss.7.6. Location of Records and Collateral; Name Change. The Borrowers
will give the Lender written notice of each location at which Collateral is
or will be kept and each office of each Borrower and Subsidiary at which
records of the Borrowers and such Subsidiary are kept. Except as such
notice is given, all Collateral owned by the Borrowers and each Subsidiary
is and shall be kept, and all records of the Borrowers and each Subsidiary
shall be maintained, at the locations set forth on SCHEDULE 7.6 hereto. The
Borrowers shall give the Lender thirty days' prior written notice of any
change in its name or corporate form or any change in the name or names
under which the Borrowers' or any Subsidiary's business is transacted.
ss.7.7. Existence; Maintenance of Properties. The Borrowers will do or
cause to be done all things necessary to preserve and keep in full force
and effect its existence as corporations and/or limited partnerships, as
applicable, under the laws of the jurisdictions of their incorporation or
formation. The Borrowers will do or cause to be done all things necessary
to preserve and keep in full force all of its rights and franchises and
those of their Subsidiaries, except where such failure would not have a
material adverse effect on the business, assets or financial condition of
the Borrowers or their Subsidiaries. The Borrowers (a) will cause all of
their properties and those of their Subsidiaries used or useful in the
conduct of their business or the business of their Subsidiaries to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment, ordinary wear and tear excepted, (b)
will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, as may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times, and (c) will, and will cause each of
their Subsidiaries to, continue to engage primarily in the businesses now
conducted by them and in related businesses.
ss.7.8. Insurance. SCHEDULE 7.8 sets forth all presently existing
insurance maintained by the Borrowers (the "Insurance"). The Borrowers will
maintain the Insurance. The Lender shall be named as mortgagee, loss payee
and additional insured and shall be given thirty days' prior written notice
of any cancellation or modification of the Insurance. If the Borrowers fail
to maintain such Insurance, the Lender, in its sole discretion, may provide
such Insurance and charge the cost thereof to any account maintained by the
Borrowers with the Lender or may treat such as a Loan hereunder.
ss.7.9. Taxes. The Borrowers will duly pay and discharge, or cause to
be paid and discharged, before the same shall become overdue, all
post-petition taxes, assessments and other governmental charges imposed
upon them and their real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, except for those taxes,
assessments or charges which the Borrowers are contesting in good faith by
appropriate proceedings and with respect to which appropriate reserves have
been established and are being maintained in accordance with Generally
Accepted Accounting Principles and as to which no lien shall have been
filed.
ss.7.10. Inspection of Properties and Books. (a) The Borrowers shall
permit the Lender or any of the Lenders' other designated representatives
(at the Borrowers' expense) to visit and inspect any of the properties of
the Borrowers or any of their Subsidiaries to examine the books of account
of the Borrowers and their Subsidiaries (and to make copies thereof and
extracts therefrom) and to discuss the affairs, finances and accounts of
the Borrowers and their Subsidiaries with, and to be advised as to the same
by, its officers, all at such reasonable times and intervals as the Lender
may reasonably request.
(b) Without limiting the rights of the Lender under ss.7.10(a),
above, the Borrowers shall permit the Lender, at the Borrower's expense,
(i) to undertake commercial finance examinations; (ii) to obtain appraisals
of any of the Borrowers' assets in form and substance and by appraisers
satisfactory to the Lender; and (iii) to obtain environmental site
assessments of any of the Borrowers' properties, all of the foregoing at
such times and intervals as the Lender may request.
(c) The Borrowers shall continue to cooperate with the Consultant
and shall furnish the Consultant with such information as the Consultant
may request. All reasonable fees, costs and expenses of the Consultant
shall be for the Borrowers' account and the Borrowers shall reimburse the
Lender for such fees, costs and expenses on demand.
ss.7.11. Compliance with Laws, Contracts, Licenses, and Permits. The
Borrowers will comply with, and will cause each of their Subsidiaries to
comply with (a) all applicable laws and regulations now or hereafter in
effect wherever their business is conducted, (b) the provisions of their
corporate charter and other charter documents and by-laws, (c) all
agreements and instruments to which they are a party or by which they or
any of their properties may be bound and (d) all applicable decrees,
orders, and judgments, including, without limitation, those entered in the
Proceedings. If at any time while any Obligation is Outstanding or the
Lender has any obligation to make Loans hereunder, any authorization,
consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in
order that the Borrowers may fulfill any of their obligations hereunder,
the Borrowers will promptly take or cause to be taken all reasonable steps
within the power of the Borrowers to obtain such authorization, consent,
approval, permit or license and furnish the Lender with evidence thereof.
ss.7.12. Use of Proceeds. The Borrowers will use the proceeds of the
Loans solely for the purposes set forth in the Business Plan, however in no
event shall proceeds in excess of Three Hundred and Forty Thousand dollars
($340,000.00) be used to pay professional expense included in which shall
be One and Sixty Thousand Dollars ($160,000.00) for professional expenses
incurred by the Lender.
ss.7.13. Bank Accounts. To permit the Lender to monitor the financial
performance of the Borrowers and each of the Borrowers' Subsidiaries, the
Borrowers shall, and shall cause each of their Subsidiaries to, maintain
all of its deposit accounts with the Lender. Further, and without limiting
the foregoing, the Borrowers shall comply with the cash dominion provisions
(ss.4) of the Security Agreement executed in connection herewith.
ss.7.14. Engagement of Agents. (a) Within ten (10) Business Days after
the Lender's request, the Borrowers shall engage a crisis manager and/or a
business broker reasonably acceptable to the Lender for the purpose of
managing the Borrowers' businesses and/or seeking, and negotiating with, a
purchaser for the Borrowers' business units, provided that the Lender shall
not request the Borrowers to engage a crisis manager or business broker
unless and until an Event of Default has occurred and is continuing.
(b) The Borrower shall cause its agents, including those engaged
hereunder, to discuss with the Lender the status and results of their
efforts, including, without limitation the status and results of their
efforts to dispose of the Borrowers' business units, any offers or
proposals which have been received and all material developments with
respect thereto, at such intervals as the Lender may reasonably request.
ss.7.15. Further Assurances. The Borrowers will cooperate with, and
will cause each of its Subsidiaries to cooperate with the Lender and
execute such further instruments and documents as the Lender shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, the Borrowers acknowledge that
the Lender will does not intend to presently require the Borrowers to
execute separate mortgages financing statements and other documents to
reflect the Lender's interest in the Collateral but rather will rely upon
the terms of the Borrowing Order therefor; nevertheless the Lender may at
any time require the Borrowers to execute such Security Documents and to
take such action (such as the obtaining of title insurance) as the Lender
may reasonably require to evidence or more fully perfect the Lender's
rights in the Collateral.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. The Borrower covenants
and agrees that, so long as any Obligation is Outstanding or the Lender has
any obligation to make any Loans or issue any Letter of Credit:
ss.8.1. Restrictions on Indebtedness. The Borrowers will not, and will
not permit any of their Subsidiaries to, create, incur, assume, guarantee
or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(a) Indebtedness to the Lender arising under any of the Loan
Documents;
(b) current liabilities of the Borrowers or their Subsidiaries
incurred in the ordinary course of business but not incurred through
(i) the borrowing of money, or (ii) the obtaining of credit except for
credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of ss.6.9;
(d) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which the
Borrowers shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Indebtedness existing on the date of this Agreement and
listed and described on SCHEDULE 8.1 hereto;
(g) Indebtedness arising prior to the commencement of the
Proceedings; and
(h) Subordinated Indebtedness.
ss.8.2. Restrictions on Liens, Etc. The Borrowers will not, and will
not permit any of theiR Subsidiaries to, (a) create or incur or suffer to
be created or incurred or to exist any lien, encumbrance, mortgage, pledge,
charge, restriction or other security interest of any kind upon any of
their property or assets of any character whether now owned or hereafter
acquired, or upon the income or profits therefrom; (b) transfer any of
their property or assets or the income or profits therefrom for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors; (c)
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more
than thirty (30) days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over their general creditors; or (e) sell, assign, pledge or
otherwise transfer any accounts, contract rights, general intangibles,
chattel paper or instruments, with or without recourse; provided that the
Borrowers and any Subsidiary of the Borrowers may create or incur or suffer
to be created or incurred or to exist:
(i) liens in favor of a Borrower on all or part of the
assets of Subsidiaries of a Borrower securing Indebtedness owing by
Subsidiaries of any Borrower to a Borrower;
(ii) liens on properties to secure taxes, assessments and
other government charges or claims for labor, material or supplies in
respect of obligations not overdue;
(iii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iv) liens on properties in respect of judgments or awards,
the Indebtedness with respect to which is permitted byss.8.1(d);
(v) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in respect of
obligations not overdue;
(vi) encumbrances on properties consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which a Borrower or a
Subsidiary of a Borrower is a party, and other minor liens or
encumbrances none of which interferes materially with the use of the
property affected in the ordinary conduct of the business of the
Borrowers and their Subsidiaries, which defects do not individually or
in the aggregate have a materially adverse effect on the business of
any Borrower individually or of the Borrowers and their Subsidiaries
on a consolidated basis.
(vii) presently outstanding liens listed on SCHEDULE 8.2
hereto; and
(viii) liens in favor of the Lender under the Loan Documents.
ss.8.3. Restrictions on Investments. The Borrowers will not, and will
not permit any of their Subsidiaries to, make or permit to exist or to
remain outstanding any Investment except Investments in which the Lender
has a perfected first priority security interest and which constitute
Investments existing on the date hereof and listed on SCHEDULE 8.3 hereto.
ss.8.4. Merger, Consolidation. The Borrowers will not, and will not
permit any of their Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or disposition
or stock acquisition or disposition (other than the acquisition or
disposition of assets in the ordinary course of business consistent with
past practices) except (i) the merger or consolidation of one or more of
the Subsidiaries of any Borrower with and into a Borrower, or (ii) the
merger or consolidation of two or more Subsidiaries of any Borrower, and
(iii) the transaction described on SCHEDULE 8.4 hereto.
ss.8.5. Sale and Leaseback. The Borrowers will not, and will not
permit any of their Subsidiaries to, enter into any arrangement, directly
or indirectly, whereby any Borrower or any Subsidiary of any Borrower shall
sell or transfer any property owned by it in order then or thereafter to
lease such property or lease other property that a Borrower or any
Subsidiary of any Borrower intends to use for substantially the same
purpose as the property being sold or transferred.
ss.8.6. Compliance with Environmental Laws. The Borrowers will not,
and will not permit any of their Subsidiaries to (a) do any of the
following, except in material compliance with all Environmental Laws and in
the ordinary course of business: (i) use any of the Real Estate or any
portion thereof as a facility for the handling, processing, storage or
disposal of Hazardous Substances, (ii) cause or permit to be located on any
of the Real Estate any underground tank or other underground storage
receptacle for Hazardous Substances, (iii) generate or dispose of any
Hazardous Substances on any of the Real Estate, or (b) conduct any activity
at any Real Estate or use any Real Estate in any manner so as to cause a
Release.
ss.8.7. Distributions. The Borrowers will not make any Distributions.
ss.8.8. Subsidiaries. The Borrowers shall not acquire, form, or
otherwise invest in any Subsidiary that is not a Borrower, without the
prior written consent of the Lender. Without limiting the foregoing, the
Borrower acknowledges that the Lender's consent may be conditioned upon,
among other things, the Lender's receipt of a security interest in the
Subsidiary's capital stock and assets in order to secure the Obligations.
ss.8.9. Fiscal Year. The fiscal year of the Borrowers and their
Subsidiaries presently ends on September 30 of each year. The Borrowers and
their Subsidiaries shall not change their fiscal year end without
furnishing prior written notice thereof to, and first obtaining the consent
of, the Lender.
ss.8.10. Loans and Advances. The Borrowers will not and will not
permit any of their Subsidiaries to, make any loans or advances to any
Person other than (a) deposits to the Borrowers' suppliers in the ordinary
course of business, and (b) advances to the Borrowers' or their
Subsidiaries' employees in the ordinary course of business for reasonable
expenses to be incurred by such employees for the benefit of the Borrowers
or such Subsidiaries.
ss.8.11. Terms of Subordinated Indebtedness. Neither the Borrower nor
its Subsidiaries shall:
(a) effect or permit any changes in or amendment to (i) the terms
by which any Subordinated Indebtedness purports to be subordinated to
the payment and performance of the Obligations or (ii) the terms
relating to the repayment of any Subordinated Indebtedness; or
(b) directly or indirectly make any payment of any principal,
interest, fees or other amounts with respect to, or in redemption,
retirement, or repurchase of, any Subordinated Indebtedness.
ss.8.12. Agreements with Affiliated Persons. Except as disclosed on
SCHEDULE 6.13, neither any Borrower or any of its Subsidiaries shall enter
into any agreement with any director, officer, trustee, or employee, or any
Person in which such director, officer, trustee or employee has an interest
other than in the ordinary course of business and on terms that are not
less favorable than the Borrowers or such Subsidiary could obtain from an
unrelated Person at such time.
ss.8.13. Return of Property. Without the prior written consent of the
Lender, the Borrowers shall not consent to or suffer the entry of an order
in the Proceedings which authorize the return of any of the Borrowers'
property pursuant to ss.546(g)* of the Bankruptcy Code.
9. FINANCIAL COVENANTS OF THE BORROWERS. The Borrowers covenant and
agree that, so long as any Obligation is Outstanding or the Lender has any
obligation to make any Loans:
ss.9.1. Capital Expenditures. None of the Borrowers or any of its
Subsidiaries shall make or incur any Capital Expenditures in excess of
$100,000.00 in the aggregate after the Closing Date.
ss.9.2. Maximum Borrowings. The Borrowers shall not permit the sum of
the Outstanding Loans made, and Letters of Credit issued, hereunder to
exceed the following amounts as of the following dates:
Week Ending Maximum Amount
May 5, 2000 $2,250,000
May 12, 2000 $3,000,000
May 19, 2000 $3,000,000
May 26, 2000 $4,000,000
June 2, 2000 $4,000,000
June 9, 2000 $4,500,000
June 16, 2000 $4,500,000
June 23, 2000 $5,000,000
ss.9.3. Cumulative Sales. The Borrowers shall not permit their total
shipments of finished goods Inventory to their unaffiliated customers for
sales made after April 24 , 2000 calculated on a cumulative basis, to be
less than the following amounts for the periods indicated:
Week Ending Amount
May 12, 2000 $4,000,000
May 19, 2000 $5,700,000
May 26, 2000 $7,000,000
June 2, 2000 $8,900,000
June 9, 2000 $10,500,000
June 16, 2000 $12,700,000
June 23, 2000 $14,300,000
June 30, 2000 $15,900,000
ss.9.4. Minimum Eligible Accounts Receivable. The Borrowers shall not
permit the aggregate Net Outstanding Amount of Base Accounts (as defined in
the Pre-Petition Loan Agreement) to be less than the following as of the
period indicated:
Week Ending Minimum Accounts
Receivable
May 19, 2000 $11,400,000
May 26, 2000 $11,250,000
June 2, 2000 $11,000,000
June 9, 2000 $10,800,000
June 16, 2000 $10,900,000
June 23, 2000 $10,800,000
June 30, 2000 $10,800,000
10. CLOSING CONDITIONS. The obligations of the Lender to make the
Loans on the Closing Date and thereafter shall be subject to satisfaction
of the following conditions precedent:
ss.10.1. Loan Documents. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto and, shall be
in full force and effect and shall be in form and substance satisfactory to
the Lender.
ss.10.2. Resolutions. All action on the part of the Borrowers
necessary for the valid execution, delivery and performance by the
Borrowers of this Agreement and the other Loan Documents to which they are
or are to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Lender shall have been provided to the
Lender. The Lender shall have received from the Borrowers true copies of
the Borrowers' resolutions adopted by the Borrowers' board of directors,
general partners or other governing body authorizing the transactions
described herein, certified by the Borrowers' secretary or general partners
as of a recent date to be true and complete.
ss.10.3. Incumbency Certificate; Authorized Signers. The Lender shall
have received from the Borrowers an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrowers and
giving the name and bearing a specimen signature of each individual who
shall be authorized: (a) to sign, in the name and on behalf of the
Borrowers, each of the Loan Documents to which the Borrowers are or are to
become a party; (b) to make requests for Loans; and (c) to give notices and
to take other action on behalf of the Borrowers under the Loan Documents.
ss.10.4. Borrowing Order. There shall have been entered in the
Proceedings an Interim Borrowing Order, which order shall not have been
stayed, modified, appealed, reversed or otherwise affected.
ss.10.5. Adequate Protection Stipulation. There shall have been
entered in the Proceedings an order approving a Stipulation, substantially
in the form of EXHIBIT E hereto, pursuant to which the agent and the
lenders under the Pre-Petition Loan Agreement shall be afforded adequate
protection during the Proceedings with respect to the Pre-Petition
Revolver, the Pre-Petition Term Loan and the other obligations under the
Pre-Petition Loan Agreement, which order shall not have been stayed,
modified, appealed, reversed, or otherwise affected.
ss.10.6. Litigation. There shall be no pending or threatened
litigation involving the Borrowers or any of their Subsidiaries which has
not been stayed in the Proceedings and which, in the judgment of the
Lender, could have a material adverse effect on the Borrowers or any of
their Subsidiaries or the ability of the Borrowers or their Subsidiaries to
perform their obligations under the Loan Documents, and no judgment, order,
injunction or other similar injunction or other similar restraint
prohibiting any of the transactions contemplated hereby shall exist.
ss.10.7. Evidence of Insurance. The Lender shall have received
evidence, in form, scope and substance and with such insurance carriers,
satisfactory to the Lender, for all insurance policies required under any
of the Loan Documents, naming the Lender as loss payee or mortgagee, as
applicable.
ss.10.8. Financial Statements. The Lenders shall have received the
Business Plan and such other information as the Lender shall have
reasonably requested, and the information shall be satisfactory to the
Lender.
ss.10.9. Settlement of Pre-Petition Obligations. The lenders under the
Pre-Petition Loan Agreement shall have entered into an agreement with the
Borrowers and with the Investors for the settlement of such lenders' claims
under the Pre-Petition Agreement.
ss.10.10. Commitment Letters. The Borrowers shall have delivered to
the Lender (a) a commitment letter from The CIT Group/Commercial Services,
Inc. and from the Investors, on terms satisfactory to the Lender and to the
lenders under the Pre-Petition Loan Agreement for the refinancing of the
Obligations and the funding of the settlement described in ss.10.9 hereof.
ss.10.11. Approval Motions. The Borrower shall have filed motions with
the Bankruptcy Court in the Proceedings seeking approval of the settlement
described in ss.10.9 hereof and the financing transactions described in
ss.10.10 hereof.
ss.10.12. Compliance with Law. The Lender shall be satisfied that the
Borrowers have obtained all material and appropriate authorizations and
approvals of all governmental authorities required for the due execution,
delivery and performance by the Borrowers of each of the Loan Documents to
which they are or will be a party and for the perfection of or the exercise
by the Lender of its rights and remedies under the Loan Documents.
ss.10.13. Payment of Fees. The Borrowers shall pay to the Lender, the
closing fee pursuant to ss. and shall have reimbursed the Lender for all
costs and expenses, including attorneys' fees, incurred by the Lender.
ss.10.14. Additional Documents. The Borrowers shall have provided such
additional instruments and documents to the Lender as the Lender and the
Lender's counsel may have reasonably requested.
11. CONDITIONS TO ALL BORROWINGS. The obligations of the Lender to
make any Loan , whether on or after the Closing Date, shall also be subject
to the satisfaction of the following conditions precedent:
ss.11.1. Representations True; No Event of Default. Each of the
representations and warranties of the Borrowers and their Subsidiaries
contained in this Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Agreement shall
be true as of the date as of which they were made and shall also be true at
and as of the time of the making of such Loan, with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated and permitted by this Agreement and the other
Loan Documents and changes occurring in the ordinary course of business
that singly or in the aggregate are not materially adverse, and except to
the extent that such representations and warranties relate expressly to an
earlier date) and no Default or Event of Default shall have occurred and be
continuing. The Lender shall have received a certificate of the Borrowers
signed by an authorized officer of the Borrowers to such effect.
ss.11.2. No Legal Impediment. No change shall have occurred in any law
or regulations thereunder or interpretations thereof that in the reasonable
opinion of the Lender would make it illegal for the Lender to make such
Loan.
ss.11.3. Governmental Regulation. The Lender shall have received such
statements in substance and form reasonably satisfactory to the Lender as
the Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of
the Federal Reserve System.
ss.11.4. Proceedings and Documents. All proceedings in connection with
the transactions contemplated by this Agreement, the other Loan Documents
and all other documents incident thereto shall be reasonably satisfactory
in substance and in form to the Lender and to the Lender's counsel, and the
Lender and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Lender may reasonably request.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
------------------------------------
ss.12.1. Events of Default and Acceleration. If any of the following
events ("EVENTS OF DEFAULT") shall occur:
(a) the Borrowers shall fail to pay any principal of the Loans,
any interest on the Loans or any other sums due hereunder or under any
of the other Loan Documents, when the same shall become due and
payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(b) the Borrowers shall fail to comply with any of their
covenants contained in ss.ss. 7.1, 7.5(e), 7.10, 7.12, 7.13, 7.14, 8
or 9 hereof;
(c) the Borrowers shall fail to comply with any of their
covenants contained in (i) ss.7.4 hereof for two (2) Business Days
after the date when due or (ii) ss.7.8 hereof for five (5) Business
Days;
(d) the Borrowers or any of their Subsidiaries shall fail to
perform any other term, covenant or agreement contained herein (other
than those specified elsewhere in this ss.12) or any of the covenants
contained in any other Loan Documents (other than those specified
elsewhere in this ss.12) for fifteen (15) days after written notice of
such failure has been given to the Borrowers by the Lender;
(e) any representation or warranty of the Borrowers or any of
their Subsidiaries in this Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Agreement is determined by the Lender to
have been false in any material respect upon the date when made or
deemed to have been made or repeated;
(f) any Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any post-petition
obligation for borrowed money or credit received or in respect of any
capital leases, or fail to observe or perform any term, covenant or
agreement contained in any agreement by which it is bound, evidencing
or securing borrowed money or credit received or in respect of any
capital leases for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the
maturity thereof;
(g) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
post-petition final judgments in excess of $100,000 in the aggregate
against any Borrower or any of its Subsidiaries;
(h) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of any Borrower or any of
its Subsidiaries, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof;
(i) any Borrower or any Subsidiary shall be indicted for a
federal crime, a punishment for which could include the forfeiture of
any assets of any Borrower or such Subsidiaries;
(j) there shall have occurred any material adverse change, as
determined by the Lender in good faith, in or to the assets,
liabilities, financial condition, business operations, or prospects of
the Borrowers and its Subsidiaries, taken as a whole;
(k) Any Change in Control;
(l) Unless the transactions described in ss.10.9 and 10.10 have
been consummated and the Obligations theretofore paid in full, the
failure of the Borrowers to have obtained a Final Borrowing Order on
or before June 10, 2000;
(m) The failure of the Borrowers to have obtained a final order
from the Bankruptcy Court in the Proceedings on or before June 15,
2000 approving the transactions described in ss.ss.10.9 and 10.10
hereof; or the entry of an order of the Bankruptcy Court at any time
denying approval of the transactions described in ss.ss.10.9 and 10.10
hereof;
(n) The termination of any of the commitments described in
ss.10.10 hereof for any reason, including, but not limited to, a
notice from any Investor stating that it is not in a position to fund
its entire commitment in accordance with the terms thereof;
(o) The failure of the Borrowers and the other parties thereto to
have consummated the transactions described in ss.ss.10.9 and 10.10
hereof on or before June 30, 2000 (or such later date as the Lender
may agree in writing);
(p) The entry of an order in the Proceedings, which order
constitutes the stay, modification, appeal, or reversal of any
Borrowing Order or which otherwise affects the effectiveness of any
Borrowing Order;
(q) The appointment in the Proceedings of a trustee or of any
examiner having expanded powers to operate all or any part of any
Borrower's business;
(r) The conversion of the Proceedings to a case under Chapter 7
of the Bankruptcy Code; or
(s) The entry of any order which provides relief from the
automatic stay otherwise imposed pursuant to Section 362 of the
Bankruptcy Code, which order permits any creditor, other than the
Lender , to realize upon, or to exercise any right or remedy with
respect to, any material asset of any Borrower or to terminate any
license, franchise, or similar agreement, where such termination could
have a material adverse effect on any Borrower's financial condition
or ability to conduct its business in the ordinary course; or
(t) An "event of default" shall arise under the Stipulation,
substantially in the form of EXHIBIT E hereto, pursuant to which the
agent and the lenders under the Pre-Petition Loan Agreement shall be
afforded adequate protection during the Proceedings with respect to
the Pre-Petition Revolver, the Pre-Petition Term Loan and the other
obligations under the Pre-Petition Loan Agreement.
then, and in any such event, so long as the same may be continuing, subject
to the terms of the Borrowing Order, the Lender, may, by notice in writing
to the Borrowers declare all amounts owing with respect to this Agreement,
the Note and the other Loan Documents to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived by the Borrowers.
ss.12.2. Termination of Commitments. If any Event of Default shall
have occurred and be continuing, subject to the terms of the Borrowing
Order, the Lender may by notice to the Borrowers, terminate its commitment
hereunder, and upon such notice being given such commitment shall terminate
immediately and the Lender shall be relieved of all further obligations to
make Loans and to issue Letters of Credit. No termination of the credit
hereunder shall relieve the Borrowers of any of the Obligations or any of
its existing obligations to the Lender arising under other agreements or
instruments. Furthermore, in the event of termination of the commitments
hereunder, the Borrowers shall furnish the Lender with cash collateral for
all Outstanding Letters of Credit in an amount equal to one hundred five
percent of the maximum stated amount of all Outstanding Letters of Credit.
Such cash collateral may be immediately applied against any drawing under
any such Letter of Credit without further notice to or consent from the
Borrowers and, to the extent not utilized for such purpose, shall secure
and may be applied against any and all Obligations hereunder.
ss.12.3. Remedies. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Lender shall
have accelerated the maturity of the Loans pursuant to ss., the Lender may,
subject to the terms of the Borrowing Order, proceed to protect and enforce
its rights and remedies under this Agreement, the Note or any of the other
Loan Documents by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to the Lender are evidenced,
including to the full extent permitted by applicable law the obtaining of
the ex parte appointment of a receiver, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of the Lender. No remedy
herein conferred upon the Lender or the holder of the Note is intended to
be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder
or now or hereafter existing at law or in equity or by statute or any other
provision of law.
ss.12.4. Distribution of Collateral Proceeds. In the event that,
following the occurrence or during the continuance of any Event of Default,
the Lender receives any monies in connection with the enforcement of any of
the Security Documents, or otherwise with respect to the realization upon
any of the Collateral, such monies shall be distributed by the Lender for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, the Lender for or in respect of all reasonable
costs, expenses, disbursements and losses which shall have been
incurred or sustained by the Lender in connection with the collection
of such monies by the Lender, for the exercise, protection or
enforcement by the Lender of all or any of the rights, remedies,
powers and privileges of the Lender under this Agreement or any of the
other Loan Documents or in respect of the Collateral or in support of
any provision of adequate indemnity to the Lender against any taxes or
liens which by law shall have, or may have, priority over the rights
of the Lender to such monies;
(b) Second, to all other Obligations in such order or preference
as the Lender may determine; provided, however, that the Lender may in
its discretion make proper allowance to take into account any
Obligations not then due and payable;
(c) Third, to payment of all obligations under the Pre-Petition
Revolver, the Pre-Petition Term Loan and the Pre-Petition Loan
Agreement in the manner and order set forth therein.
(d) Fourth, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lender of all of
the Obligations, to the payment of any obligations required to be paid
pursuant to ss.9-504(1)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts; and
(e) Fifth, the excess, if any, shall be returned to the Borrowers
or to such other Persons as are entitled thereto.
13. SETOFF. Regardless of the adequacy of any collateral, whether or
not any Event of Default exists, any deposits (general or specific, time or
demand, provisional or final, regardless of currency, maturity, or the
branch of where such deposits are held) or other sums credited by or due
from any of the Lender to any Borrower and any securities or other property
of any Borrower in the possession of the Lender may be applied to or set
off against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, of the Borrowers to the Lender.
14. EXPENSES. The Borrowers agree to pay (a) any taxes (including any
interest and penalties in respect thereto) payable by the Lender (other
than taxes based upon the Lender's net income), including any recording,
mortgage, documentary or intangibles taxes in connection with the Loan
Documents, or other taxes payable on or with respect to the transactions
contemplated by this Agreement, including any taxes payable by the Lender
after the Closing Date (the Borrowers hereby agreeing to indemnify the
Lender with respect thereto), (b) all reasonable appraisal fees, engineer's
fees, and the reasonable fees, expenses and disbursements of the Lender's
counsel or any local counsel to the Lender incurred in connection with the
preparation, administration or interpretation of the Loan Documents and
amendments, modifications, approvals, consents or waivers hereto or
hereunder, (c) the fees, expenses and disbursements of the Lender incurred
by the Lender in connection with the preparation, administration or
interpretation of the Loan Documents and other instruments mentioned
herein, (d) all reasonable out-of-pocket expenses (including reasonable
attorneys' and consultants' fees and costs and the fees and costs of
appraisers, engineers, investment bankers, business brokers, or other
experts retained by the Lender) incurred by the Lender in connection with
(i) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrowers or any of their Subsidiaries or the
administration thereof (whether prior to or after the occurrence of an
Event of Default) and (ii) any litigation, proceeding or dispute whether
arising hereunder or otherwise, in any way related to the Lender's
relationship with the Borrowers or any of their Subsidiaries and (e) all
reasonable fees, expenses and disbursements of the Lender incurred in
connection with UCC searches, UCC filings or mortgage recordings. The
covenants of this ss.14 shall survive payment or satisfaction of payment of
amounts owing with respect to the Note.
15. INDEMNIFICATION. The Borrowers agree to indemnify and hold
harmless the Lender from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character
arising out of this Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (a) any
actual or proposed use by the Borrowers or any of their Subsidiaries of the
proceeds of any of the Loans, (b) any actual or alleged infringement of any
patent, copyright, trademark, service mark or similar right of the
Borrowers or any of their Subsidiaries comprised in the Collateral, (c) the
Borrowers or any of their Subsidiaries entering into or performing this
Agreement or any of the other Loan Documents or (d) with respect to the
Borrowers and their Subsidiaries and their respective properties and
assets, the violation of any Environmental Law, the Release or threatened
Release of any Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to claims with respect to wrongful
death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding; provided however that the
Lender shall not be entitled to indemnification if a court of competent
jurisdiction finally determines (all appeals having been exhausted or
waived) that the Lender acted in bad faith or with willful misconduct. In
litigation, or the preparation therefor, the Lender shall be entitled to
select its own counsel and, in addition to the foregoing indemnity, the
Borrowers agree to pay promptly the reasonable fees and expenses of such
counsel. If, and to the extent that the obligations of the Borrowers under
this ss.15 are unenforceable for any reason, the Borrowers hereby agree to
make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The provisions of
this ss.16 shall survive the repayment of the Loan and the termination of
the obligations of the Lender hereunder.
16. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Note, in any of the
other Loan Documents or in any documents or other papers delivered by or on
behalf of the Borrowers or any of their Subsidiaries pursuant hereto shall
be deemed to have been relied upon by the Lender, notwithstanding any
investigation heretofore or hereafter made by it, and shall survive the
making by the Lender of any of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this
Agreement or the Note or any of the other Loan Documents remains
Outstanding or the Lender has any obligation to make any Loans. The
indemnification obligations of the Borrowers provided herein and the other
Loan Documents shall survive the full repayment of amounts due and the
termination of the obligations of the Lender hereunder and thereunder to
the extent provided herein and therein. All statements contained in any
certificate or other paper delivered to the Lender at any time by or at the
direction of the Borrowers or any of their Subsidiaries pursuant hereto or
in connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrowers or such Subsidiary
hereunder.
17. ASSIGNMENT AND PARTICIPATION.
----------------------------
ss.17.1. Conditions to Assignment by Lenders. The Lender may assign
all or a portion of its interests, rights and obligations under this
Agreement, provided that, prior to the occurrence of an Event of Default
such assignee may consist only of any or all of National Bank of Canada,
The Sumitomo Bank Limited, Senior Debt Portfolio or any of their
affiliates. From and after the effective date specified in each assignment
(i) the assignee thereunder shall be a party hereto and, to the extent
provided in such assignment, have the rights and obligations of a Lender
hereunder, and (ii) the assigning Lender shall, to the extent provided in
such assignment be released from its obligations under this Agreement.
ss.17.2. Participations. The Lender may sell participations to one or
more banks or other entities in all or a portion of the Lenders' rights and
obligations under this Agreement and the other Loan Documents; provided
that (a) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Borrowers, (b) the only
rights granted to the participant pursuant to such participation
arrangements with respect to waivers, amendments or modifications of the
Loan Documents shall be the rights to approve waivers, amendments or
modifications that would reduce the principal of or the interest rate on
any Loans, extend the term, or reduce the amount of any fees to which such
participant is entitled, (c) no such participant shall constitute a
"Lender" for purposes of this Agreement, and (d) no participant shall have
the right to grant further participations or assign its rights, obligations
or interests under such participation to other Persons without the prior
written consent of the Lender.
ss.17.3. Pledge by Lender. The Lender may at any time pledge all or
any portion of its interest and rights under this Agreement (including all
or any portion of its Note) to any of the twelve Federal Reserve Lenders
organized under ss.4 of the Federal Reserve Act, 12 U.S.C. ss.341. No such
pledge or the enforcement thereof shall release the Lender from its
obligations hereunder or under any of the other Loan Documents.
ss.17.4. No Assignment by Borrowers. The Borrowers shall not assign or
transfer any of their rights or obligations under any of the Loan Documents
without the prior written consent of the Lender.
ss.17.5. Disclosure. The Borrowers agree that in addition to
disclosures made in accordance with standard banking practices any Lender
may disclose information obtained by the Lender pursuant to this Agreement
to assignees or participants and potential assignees or participants
hereunder.
18. NOTICES, ETC. Except as otherwise expressly provided in this
Agreement, all notices and other communications made or required to be
given pursuant to this Agreement, the Note or the other Loan Documents
shall be in writing and shall be delivered in hand, mailed by United States
registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, telefax or telex and
confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrowers, at 51 Blackburn Drive, Gloucester,
Massachusetts 01930, Attention: Mr. Richard Glass (Telecopier:
978-281-0565), or at such other address for notice as the Borrowers
shall last have furnished in writing to the Person giving the notice;
and
(b) if to the Lender, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Mr. Robert J. Riley
(Telecopier:617-434-1508), or such other address for notice as the
Lender shall last have furnished in writing to the Borrowers.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight
courier or facsimile to a responsible officer of the party to which it is
directed, at the time of the receipt thereof by such officer or the sending
of such facsimile and (ii) if sent by registered or certified first-class
mail, postage prepaid, on the third Business Day following the mailing
thereof.
19. GOVERNING LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL
FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF SUCH COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE
OF LAW).
20. HEADINGS. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
21. COUNTERPARTS. This Agreement and any amendment hereof may be
executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument. In
proving this Agreement it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom enforcement
is sought.
22. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except as provided inss.23. 8.
23. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. THE BORROWERS
HEREBY WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
THE BORROWERS HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES. THE BORROWERS (A) CERTIFY THAT NO
REPRESENTATIVE, THE LENDER, OR ATTORNEY OF THE LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGE THAT
THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
24. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval
required or permitted by this Agreement may be given, and any term of this
Agreement or of any other instrument related hereto or mentioned herein may
be amended, and the performance or observance by the Borrowers of any terms
of this Agreement or such other instrument or the continuance of any
Default or Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Lender.
No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or
delay or omission on the part of the Lender in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrowers shall entitle the Borrowers to other or
further notice or demand in similar or other circumstances.
25. SEVERABILITY. The provisions of this Agreement are severable, and
if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity
or unenforceability shall affect only such clause or provision, or part
thereof, in such jurisdiction, and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or
provision of this Agreement in any jurisdiction.
26. ADDITIONAL WAIVERS.
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(i) The Obligations are the joint and several obligations of
each Borrower. To the fullest extent permitted by applicable law, the
obligations of each Borrower hereunder shall not be affected by (i)
the failure of the Lender to assert any claim or demand or to enforce
or exercise any right or remedy against any other Borrower under the
provisions of this Agreement, any other Loan Document or otherwise,
(ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, this Agreement, any
other Loan Document, or any other agreement, including with respect to
any other Borrower of the Obligations under this Agreement, or (iii)
the failure to perfect any security interest in, or the release of,
any of the security held by or on behalf of the Lender.
(ii) The obligations of each Borrower hereunder shall not be
subject to any reduction, limitation, impairment or termination for
any reason (other than the indefeasible payment in full in cash of the
Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, 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 or otherwise. Without limiting the
generality of the foregoing, the obligations of each Borrower
hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Lender to assert any claim or demand or to enforce
any remedy under this Agreement, any other Loan Document or any other
agreement, by any waiver or modification of any provision of any
thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or omission that
may or might in any manner or to any extent vary the risk of any
Borrower or that would otherwise operate as a discharge of any
Borrower as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations).
(iii) To the fullest extent permitted by applicable law, each
Borrower waives any defense based on or arising out of any defense of
any other Borrower or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the
liability of any other Borrower, other than the indefeasible payment
in full in cash of all the Obligations. The Lender may, at its
election, foreclose on any security held by one or more of them by one
or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of
the Obligations, make any other accommodation with any other Borrower,
or exercise any other right or remedy available to them against any
other Borrower, without affecting or impairing in any way the
liability of any Borrower hereunder except to the extent that all the
Obligations have been indefeasibly paid in full in cash. Pursuant to
applicable law, each Borrower waives any defense arising out of any
such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement
or subrogation or other right or remedy of such Borrower against any
other Borrower, as the case may be, or any security.
(iv) Upon payment by any Borrower of any Obligations, all
rights of such Borrower against any other Borrower arising as a result
thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior
in right of payment to the prior indefeasible payment in full in cash
of all the Obligations. In addition, any indebtedness of any Borrower
now or hereafter held by any other Borrower is hereby subordinated in
right of payment to the prior payment in full of the Obligations. None
of the Borrowers will demand, sue for, or otherwise attempt to collect
any such indebtedness. If any amount shall erroneously be paid to any
Borrower on account of (a) such subrogation, contribution,
reimbursement, indemnity or similar right or (b) any such indebtedness
of any Borrower, such amount shall be held in trust for the benefit of
the Lender and shall forthwith be paid to the Lender to be credited
against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
NUTRAMAX PRODUCTS, INC.
NUTRAMAX HOLDINGS, INC.
NUTRAMAX HOLDINGS II, INC.
NUTRAMAX OPHTHALMICS, INC.
NUTRAMAX ACQUISITION CORPORATION
FAIRTON REALTY HOLDINGS, INC.
ORAL CARE, INC.
POWERS PHARMACEUTICAL CORP.
FLORENCE REALTY, INC.
CERTIFIED CORP.
FIRST AID PRODUCTS, INC.
ADHESIVE COATINGS, INC.
ELMWOOD PARK REALTY, INC.
F.A. PRODUCTS, L.P.
By: /s/ Richard G. Glass
----------------------------------
Name: Richard G. Glass
Title: CEO
FLEET NATIONAL BANK
By: /s/ Robert J. Riley
----------------------------------
Name: Robert J. Riley
Title: Vice President
EXHIBIT 10.2
DEBTOR IN POSSESSION CREDIT AGREEMENT
among
NUTRAMAX PRODUCTS, INC.
AND CERTAIN SUBSIDIARIES,
as borrowers,
THE LENDERS PARTY HERETO,
as lenders,
and
THE CIT GROUP/BUSINESS CREDIT, INC.,
as agent
_____________, 2000
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
------- ----
SECTION 1: INTERPRETATION.................................................2
1.1 Defined Terms.....................................2
1.2 Uniform Commercial Code Terms....................17
1.3 Accounting Terms.................................18
1.4 Computation of Time Periods......................18
1.5 Headings and References..........................18
1.6 Construction.....................................19
SECTION 2: CREDIT........................................................19
2.1 Credit Facilities................................19
2.2 Loan and Letter of Credit Procedures.............23
2.3 Repayment of Loans; Evidence of Debt.............24
2.4 Interest on Loans................................26
2.5 Conversion and Continuation of Loans.............26
2.6 Reduction of Revolving Commitment; Prepayments...27
2.7 Fees.............................................29
2.8 Pro Rata Treatment...............................30
2.9 No Discharge; Survival of Claims.................30
SECTION 3: CHANGE IN CIRCUMSTANCES; INCREASED COSTS......................31
3.1 Reserve Requirements; Change in Circumstances....31
3.2 Change in Legality...............................32
3.3 Taxes............................................32
3.4 Inability to Determine LIBOR.....................34
3.5 Funding Losses...................................35
SECTION 4: PRIORITY; COLLATERAL..........................................35
4.1 Priority and Liens...............................35
4.2 Collateral.......................................36
4.3 Security Interest in Accounts....................37
4.4 Further Assurances...............................37
SECTION 5: CONDITIONS OF LENDING.........................................38
5.1 Conditions Precedent to Initial Loans and
Letters of Credit................................38
5.2 Conditions Precedent to Each Loan and Each
Letter of Credit.................................41
SECTION 6: REPRESENTATIONS AND WARRANTIES................................42
6.1 Organization and Authority.......................42
6.2 Due Execution....................................42
6.3 Disclosure.......................................42
6.4 Financial Statements.............................42
6.5 Subsidiaries.....................................43
6.6 Liens............................................43
6.7 Compliance with Law..............................43
6.8 Insurance........................................43
6.9 The Final Order..................................44
6.10 Use of Proceeds..................................44
6.11 Litigation.......................................44
6.12 Governmental Regulation..........................44
6.13 Payment of Taxes.................................44
6.14 Assets and Properties............................45
6.15 Bank Accounts....................................45
SECTION 7: REPORTING REQUIREMENTS........................................45
7.1 Financial Statements and Reports.................45
7.2 Borrowing Base Certificate.......................47
SECTION 8: AFFIRMATIVE COVENANTS.........................................48
8.1 Existence........................................48
8.2 Compliance with Laws.............................48
8.3 Insurance........................................49
8.4 Obligations and Taxes............................49
8.5 Notice of Default................................49
8.6 Access to Books and Records......................49
8.7 Maintenance of Financial Statements..............49
8.8 Audits...........................................49
8.9 ERISA Compliance.................................50
8.10 Maintenance of Property..........................50
8.11 Condemnation.....................................50
8.12 Borrowing Base...................................50
8.13 Change in Collateral; Collateral Records.........50
8.14 Cash Management System...........................50
8.15 Leases...........................................51
8.16 Post-Closing Requirements........................51
SECTION 9: NEGATIVE COVENANTS............................................52
9.1 Liens............................................52
9.2 Mergers or Consolidations........................52
9.3 Indebtedness.....................................52
9.4 Use of Proceeds..................................52
9.5 Capital Expenditures.............................52
9.6 Guarantees and Other Liabilities.................52
9.7 Chapter 11 Claims................................53
9.8 Dividends; Capital Stock.........................53
9.9 Transactions with Affiliates.....................53
9.10 Investments......................................53
9.11 Disposition of Assets............................53
9.12 Nature of Business...............................53
9.13 Sales and Leasebacks; Operating Leases...........53
9.14 ERISA............................................54
9.15 Environmental....................................54
9.16 Amendment of Certain Documents...................55
9.17 Matters Respecting the Cases.....................55
9.18 Restricted Payments..............................55
SECTION 10: FINANCIAL COVENANTS..........................................55
10.1 Tangible Net Worth...............................56
10.2 Fixed Charge Coverage Ratio......................56
SECTION 11: EVENTS OF DEFAULT; REMEDIES..................................56
11.1 Events of Default................................56
11.2 Remedies.........................................59
11.3 Right of Set-Off.................................60
SECTION 12: THE AGENT....................................................60
12.1 Administration by Agent..........................60
12.2 Advances and Payments............................60
12.3 Sharing of Setoffs...............................61
12.4 Agreement of Required Lenders....................61
12.5 Liability of Agent...............................61
12.6 Reimbursement and Indemnification................62
12.7 Rights of Agent..................................62
12.8 Independent Lenders..............................62
12.9 Notice of Transfer...............................63
12.10 Successor Agent..................................63
SECTION 13: GENERAL......................................................63
13.1 Notices..........................................63
13.2 Survival of Agreement, Representations
and Warranties...................................63
13.3 Successors and Assigns...........................63
13.4 Confidentiality..................................65
13.5 Expenses.........................................66
13.6 Indemnity........................................66
13.7 CHOICE OF LAW....................................67
13.8 No Waiver........................................67
13.9 Extension of Maturity............................67
13.10 Amendments.......................................67
13.11 Severability.....................................68
13.12 Execution in Counterparts........................68
13.13 Prior Agreements.................................68
13.14 Further Assurances...............................68
13.15 WAIVER OF JURY TRIAL.............................................68
<PAGE>
ATTACHMENTS
Annex A Revolving Commitments
Exhibit A Form of Promissory Note
Exhibit B Form of Final Order
Exhibit C Form of Depository Account Notice
Exhibit D Form of Blocked Account Agreement
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Borrowing Base Certificate
Exhibit G Budget
Schedule 1 Adequate Protection Obligations
Schedule 2 Existing Agreements
Schedule 6.4 Financial Statements
Schedule 6.5 Subsidiaries
Schedule 6.6 Existing Liens
Schedule 6.7 Compliance with Laws
Schedule 6.11 Litigation
Schedule 6.13 Payment of Taxes
Schedule 6.14 Intellectual Property
Schedule 6.15 Bank Accounts
Schedule 8.13 Locations of Collateral
Schedule 9.9 Transactions with Affiliates
Schedule 13.1 Notices
<PAGE>
DEBTOR IN POSSESSION CREDIT AGREEMENT
This Debtor in Possession Credit Agreement, dated as of ___________,
2000 (this "Agreement"), is among NutraMax Products, Inc., a Delaware
corporation and a debtor and debtor-in-possession in a case pending under
chapter 11 of the United States Bankruptcy Code (the "Parent"), and each of
the Parent's direct or indirect domestic subsidiaries party hereto and each
a debtor and debtor-in-possession in a case pending under chapter 11 of the
United States Bankruptcy Code, as borrowers (together with the Parent,
collectively, the "Borrowers" and each a "Borrower"), the financial
institutions from time to time party hereto, as lenders (collectively, the
"Lenders" and each a "Lender"), and The CIT Group/Business Credit, Inc., a
New York corporation, as agent for the Lenders (in such capacity, the
"Agent").
PRELIMINARY STATEMENTS:
1. On May __, 2000 (the "Petition Date"), each Borrower filed a
voluntary petition with the United States Bankruptcy Court for the District
of Delaware initiating the chapter 11 cases of the Borrowers (collectively,
the "Cases" and each a "Case") and has continued in the possession of its
assets and in the management of its businesses pursuant to sections 1107
and 1108 of the United States Bankruptcy Code, 11 U.S.C. ss.ss.101-1330
(the "Bankruptcy Code").
2. The Borrowers have applied to the Agent and the Lenders for a
revolving credit, term loan and letter of credit facility in an aggregate
principal amount not to exceed $30,000,000, the proceeds of which will be
used for repayment of certain existing secured indebtedness of the
Borrowers, fees and expenses relating to the Cases and working capital
requirements of the Borrowers, each in accordance with the terms of this
Agreement.
3. To provide security for the repayment of the loans, the
reimbursement of any draft drawn under a letter of credit and the payment
of the other obligations of the Borrowers under this Agreement and any
other related agreement, instrument or document, the Borrowers will provide
the Agent and the Lenders with the following (each as more fully described
in this Agreement):
(A) an allowed administrative expense claim in the Cases pursuant to
section 364(c)(1) of the Bankruptcy Code having priority over all
administrative expenses of the kind specified in sections 105,
326, 328, 503(b), 506(c), 507(a), 507(b) and 726 of the
Bankruptcy Code;
(B) a perfected first priority lien, pursuant to section 364(c)(2) of
the Bankruptcy Code, upon all unencumbered property of each
Borrower and on all cash and cash equivalents in the Cash
Collateral Account, the Concentration Account and each Depository
Account (each as defined in this Agreement);
(C) a perfected lien, pursuant to section 364(c)(3) of the Bankruptcy
Code, upon all property of each Borrower (other than the property
referred to in clause (d) below that is subject to the ----------
valid and perfected liens that presently secure the Borrowers'
and their respective Subsidiaries' pre-petition indebtedness
under the Existing Agreements (as defined in this Agreement))
that is subject to (i) valid and perfected liens in existence on
the Petition Date, (ii) valid liens in existence on the Petition
Date that are perfected subsequent to the Petition Date as
permitted by section 546(b) of the Bankruptcy Code and (iii)
liens expressly permitted by this Agreement, in each case junior
to such valid and perfected liens; and
(D) perfected first priority priming liens, pursuant to section
364(d)(1) of the Bankruptcy Code, upon all property of each
Borrower, including, without limitation, accounts receivable,
instruments, contract rights, chattel paper, general intangibles,
inventory, equipment, fixtures, documents of title, intellectual
property, rights under license agreements, real estate (whether
owned or leased) and all proceeds thereof, that is subject to (i)
the existing liens that presently secure the Borrowers' and their
respective Subsidiaries' prepetition indebtedness under or in
connection with the Existing Agreements (but subject to any liens
to which the liens being primed by this Agreement are subject on
the Petition Date or become subject subsequent to the Petition
Date as permitted by section 546(b) of the Bankruptcy Code) and
(ii) any liens granted after the Petition Date to provide
adequate protection in respect of the Existing Agreements, which
first priority priming liens in favor of the Agent and the
Lenders shall be senior in all respects to all of such existing
liens under or in connection with the Existing Agreements and to
any Liens granted after the Petition Date to provide adequate
protection in respect thereof.
4. All of the claims and the security interests and liens granted
under this Agreement in the Cases to the Agent and the Lenders are subject
to the carve-out to the extent provided in Section 4.1.
AGREEMENT:
In consideration of the premises and the mutual agreements contained
in this Agreement, the Borrowers, the Lenders and the Agent agree as
follows:
SECTION 1: INTERPRETATION
1.1 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below (such meanings to apply equally to both
the singular and plural forms of the terms defined; whenever the context
may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms):
"Account" has the meaning set forth in the Uniform Commercial Code and
includes, without limitation, all present and future rights of a Borrower
to payment, whether or not they have been earned by performance, for goods
sold or for services rendered that are not evidenced by instruments or
chattel paper.
"Adequate Protection Obligations" means each of the payments, claims
or Liens, if any, granted to the Existing Lenders and described on Schedule 1.
"Adjusted LIBOR" means, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the quotient of (i) LIBOR in effect for
such Interest Period divided by (ii) a percentage (expressed as a decimal)
equal to 100% minus the Eurodollar Reserve Percentage.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person
(a "Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise. Unless
the context otherwise requires, each reference to an Affiliate in this
Agreement is a reference to an Affiliate of a Borrower.
"Agent" has the meaning set forth in the Preamble.
"Agent Account" means an account in the name of the Agent designated
to the Borrowers from time to time into which the Borrowers shall make all
payments required to made to the Agent under this Agreement.
"Agreement" has the meaning set forth in the Preamble. 1.16
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition by a Borrower, in one or a series of related
transactions, of any property of such Borrower to any Person, other than
(i) sales of Inventory in the ordinary course of business and (ii) sales,
issuances, conveyances, transfers, leases or other dispositions to a
Borrower.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit E.
"Availability Reserves" means, as of any date of determination, such
amounts as the Agent may from time to time establish and revise in good
faith and in its reasonable discretion reducing the Borrowing Base for such
matters as the Agent, in its discretion, deems appropriate, including,
without limitation, (i) to reflect events, conditions, contingencies or
risks that, as determined by the Agent, do or may affect either (a) the
Collateral or its value, (b) the assets, business or prospects of the
Borrowers or (c) the Liens and other rights of the Agent in the Collateral
(including the enforceability, perfection and priority thereof), (ii) to
reflect the Agent's good faith belief that any Borrowing Base Certificate,
collateral report or financial information furnished by or on behalf of a
Borrower to the Agent is or may have been incomplete, inaccurate or
misleading in any material respect, (iii) in respect of any state of facts
that the Agent determines in good faith constitutes a Default or Event of
Default or (iv) to reflect unpaid taxes that are due and owing and future
unpaid rental and other payments on leases and warehouse arrangements.
"Bankruptcy Code" has the meaning set forth in the first Preliminary
Statement.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware or any other court having jurisdiction over the Cases
from time to time.
["Base Rate" means, on any date, a fluctuating interest rate per annum
equal to the rate of interest that the Reference Bank announces at its
principal office from time to time as its prime commercial lending rate
(whether or not such rate is actually charged by the Reference Bank), which
rate is not necessarily the lowest rate of interest charged by the
Reference Bank with respect to commercial loans. Any change in the Base
Rate announced by the Reference Bank is effective as of the effective date
specified in the public announcement by the Reference Bank of such change.]
"Base Rate Loan" means any Loan or Borrowing bearing interest at a
rate determined by reference to the Base Rate in accordance with the
provisions of Section 2.
"Borrowers" has the meaning set forth in the Preamble.
"Borrowing" means the incurrence of Loans of a single Type made from
all the Lenders on a single date and having, in the case of Eurodollar
Loans, a single Interest Period (with any Base Rate Loan made under Section
3.2 being considered a part of the related Borrowing of Eurodollar Loans).
"Borrowing Base" means, as of any date of determination, an amount
equal to (i) up to 85% of the face amount (less discounts, credits,
allowances and payments) of Eligible Accounts plus (ii) the lesser of (a)
$7,000,000, (b) the sum of (1) up to 55% of the cost, determined on a
first-in, first-out basis, of Eligible Inventory consisting of finished
goods and (2) up to 15% of the cost, determined on a first-in, first-out
basis, of Eligible Inventory consisting of raw materials and supplies and
(c) 80% of the appraised orderly liquidation value of all Inventory minus
(iii) the amount of the Carve-Out, as determined by the Agent in its
reasonable discretion minus (iv) any Availability Reserves. Notwithstanding
anything in this Agreement to the contrary, the Agent may elect at any
time, in its reasonable discretion, to change the foregoing method of
calculating the Borrowing Base by reducing advances against Eligible
Accounts and Eligible Inventory.
"Borrowing Base Certificate" means a certificate, in the form of
Exhibit F or otherwise satisfactory in form and substance to the Agent,
executed and certified by a Responsible Officer of the Parent, which shall
include appropriate exhibits and schedules as referred to in such
certificate.
"Budget" means, collectively, (i) the cash budget detailing the
Borrowers' and its Subsidiaries' anticipated cash receipts and
disbursements for the period commencing on the Closing Date and (ii) the
projected financial statements, in each case attached as Exhibit G.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks in the State of Illinois and New York are required or
permitted to close (and, for a Letter of Credit, other than a day on which
the Letter of Credit Issuer is closed); provided that when used in
connection with a Eurodollar Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar deposits
on the London interbank market.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether paid in cash and not theretofore accrued subsequent
to the Closing Date or accrued as liabilities during such period and
including that portion of Capitalized Leases that are capitalized on the
consolidated balance sheet of the Borrowers) net of cash amounts received
by the Borrowers from other Persons during such period in reimbursement of
Capital Expenditures made by the Borrowers, excluding interest capitalized
during construction, by the Borrowers during such period that, in
conformity with GAAP, are required to be included in or reflected by the
property, plant, equipment or intangibles or similar fixed asset accounts
reflected in the consolidated balance sheet of the Borrowers (including
equipment that is purchased simultaneously with the trade-in of existing
equipment owned by any Borrower to the extent of the gross amount of such
purchase price less the book value of the equipment being traded in at such
time), but excluding expenditures made in connection with the replacement
or restoration of assets, to the extent reimbursed or financed from
insurance proceeds paid on account of the loss of or the damage to the
assets being replaced or restored, or from awards of compensation arising
from the taking by condemnation or eminent domain of such assets being
replaced.
"Capitalized Lease" means, as applied to any Person, any lease of
property by such Person as lessee that would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
"Carve-Out" means, collectively, (i) in the event of the occurrence
and during the continuance of a Default or Event of Default, the payment of
allowed and unpaid professional fees and disbursements incurred by the
Borrowers and any statutory committees appointed in the Cases in an
aggregate amount not in excess of $1,000,000 and (ii) the payment of unpaid
fees pursuant to 28 U.S.C. ss. 1930 and to the Clerk of the Bankruptcy
Court.
"Cases" has the meaning set forth in the first Preliminary Statement.
"Cash Collateral Account" means the account established by the
Borrowers under the sole and exclusive control of the Agent maintained at
the Office and designated as the "NutraMax Products, Inc. Cash Collateral
Account" and used solely for the purposes set forth in Sections 2.1(C)(xii)
and 2.6(B).
"Change of Control" means (i) the acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended, a "Controlling Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended), other than, individually
or in the aggregate, the Junior Lenders, of more than 20% of the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors of the Parent, (ii) during any
period of up to 24 consecutive months, commencing before or after the
Closing Date, individuals who at the beginning of such 24-month period were
directors of the Parent shall cease for any reason (other than due to
death, disability or previously established mandatory retirement) to
constitute a majority of the board of directors of the Parent, (iii) the
Junior Lenders, individually or in the aggregate, cease to have beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) of greater than 51% of the
outstanding capital stock of the Parent and (iv) the chief executive
officer, chief financial officer, chief operating officer or president of
the Parent on the Closing Date cease to serve in such capacity and a
replacement officer satisfactory to the Agent is not appointed within 60
days of thereof.
"Closing Date" means the date on which this Agreement has been
executed and the conditions precedent to the making of the initial Loans
set forth in Section 5.1 have been satisfied or waived.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property and interests in property now owned or
hereafter acquired by any Borrower in or upon which a Lien has been granted
under any of the Loan Documents.
"Commitment Fee" has the meaning set forth in Section 2.7(B).
"Commitment Percentage" means at any time, with respect to each Lender,
the percentage obtained by dividing its Revolving Commitment at such time
by the Total Revolving Commitment at such time.
"Concentration Account" means the deposit account maintained by the
Agent at The Chase Manhattan Bank, which deposit account is under the sole
dominion and control of the Agent.
"Consummation Date" means the date of the substantial consummation (as
defined in section 1101 of the Bankruptcy Code and that for purposes of
this Agreement shall be no later than the effective date) of a
Reorganization Plan of any Borrower that is confirmed pursuant to an order
of the Bankruptcy Court.
"Default" means any event that, with lapse of time or notice or lapse
of time and notice, will constitute an Event of Default.
"Depository Account" means the depository accounts maintained by a
Borrower for the collection of cash of the Borrowers and the proceeds from
Collateral.
"Dollars" and "$" means lawful money of the United States of America.
"EBITDA" means, for any period, all as determined in accordance with
GAAP, the consolidated net income (or net loss) of the Borrowers for such
period plus (i) the sum of (a) depreciation expense, (b) amortization
expense, (c) other non-cash expenses, (d) net total federal, state and
local income tax expense, (e) gross interest expense for such period less
gross interest income for such period, (f) extraordinary losses, (g) any
non-recurring charge or restructuring charge, (h) the cumulative effect of
any change in accounting principles and (i) "Chapter 11 expenses" (or
"administrative costs reflecting Chapter 11 expenses") as shown on the
Borrowers' consolidated statement of income for such period minus (ii)
extraordinary gains plus or minus (iii) the amount of cash received or
expended in such period in respect of any amount that, under clauses (c)
and (g) above, was taken into account in determining EBITDA for such or any
prior period.
"Eligible Accounts" means Accounts of each Borrower that at the time
of determination meet all the following qualifications and is otherwise
acceptable by the Agent as eligible, based on criteria that the Agent may
from time to time otherwise establish and adjust in its sole credit
judgment:
(i) it is lawfully owned by such Borrower and not subject to any
senior Lien or prior assignment, other than a Lien in favor of
the Agent that secures the payment of the Obligations;
(ii) it is not unpaid 90 days after the invoice date therefor;
(iii) it is not owing by a single Account Debtor if 20% or more of
the balance owing by such Account Debtor to the Borrower
remains unpaid 90 days after the invoice date therefor;
(iv) the account debtor of which (a) is not a director, officer,
employee, Subsidiary or Affiliate of such Borrower, (b) is not
the United States of America or any department, agency or
instrumentality thereof, (c) is not the subject of bankruptcy
or a similar insolvency proceeding or has made an assignment
for the benefit of creditors or whose assets have been conveyed
to a receiver or trustee, (d) has asserted a counterclaim or
has a right of setoff or (e) is a resident of the United States
of America or the Canadian provinces of Alberta, British
Columbia, Manitoba, Ontario or Saskatchewan unless (1) such
account debtor has supplied the applicable Borrower with an
irrevocable letter of credit, issued by a financial institution
satisfactory to the Agent or (2) the applicable Borrower has
assigned to the Agent a credit insurance policy from an insurer
satisfactory to the Agent, in each case sufficient to cover
such Account in form and substance satisfactory to the Agent;
and
(v) for which the prospect of payment or performance by the account
debtor of which is not or will not be (a) conditional upon the
account debtor's approval or otherwise subject to any
repurchase obligation or return right (as with sales made on a
bill-and-hold, guaranteed sale, sale-or-return, sale on
approval or consignment basis) or (b) otherwise impaired as
determined by the Agent in its sole credit judgement.
If any Account at any time ceases to be an Eligible Account by reason of
its failure to meet any of the foregoing, or its failure to meet any other
eligibility criteria established by the Agent in its sole credit judgment
upon notice to the Parent, such Account shall promptly be excluded from the
calculation of Eligible Accounts. With respect to any Eligible Account, if
the Agent or the Required Lenders at any time after the Closing Date
determine in their reasonable discretion that the prospect of payment or
performance by the account debtor with respect thereto is materially
impaired for any reason whatsoever, such Account shall cease to be an
Eligible Account after notice of such determination is given to the Parent.
"Eligible Assignee" means (i) a commercial bank having total assets in
excess of $1,000,000,000, (ii) a finance company, insurance company or
other financial institution or fund, in each case acceptable to the Agent,
that in the ordinary course of business extends credit of the type
contemplated in this Agreement and has total assets in excess of
$200,000,000 and whose becoming an assignee would not constitute a
prohibited transaction under Section 4975 of ERISA or (iii) any other
financial institution satisfactory to the Borrowers and the Agent.
"Eligible Inventory" means Inventory of each Borrower (other than work
in progress) that at the time of determination meets all the following
qualifications and is otherwise acceptable as eligible, based on criteria
that the Agent may from time to time otherwise establish and adjust in its
sole credit judgment:
(i) it is lawfully owned by such Borrower and not subject to any
Lien or prior assignment, other than a Lien in favor of the
Agent that secures the payment of the Obligations, and it is
not held on consignment and may be lawfully sold;
(ii) it is (a) located in such Borrower's distribution center,
warehouses or retail locations listed on Schedule 8.13 or (b)
located in other locations in the continental United States of
America as the Agent shall have approved in writing from time
to time, which approval shall be given upon such Borrower
providing the Agent (1) with evidence, reasonably satisfactory
to the Agent, of the Agent's perfected, first priority Lien on
all Inventory of such Borrower located in such locations, (2)
with evidence, reasonably satisfactory to the Agent, of the
absence of any other Liens on any Inventory of such Borrower
located in such locations and (3) to the extent such Inventory
location is owned or operated by Person other than such
Borrower and such Borrower is not a lessee with respect to such
location, a bailment agreement, bailor/bailee financing
statements and such other documentation and filings with
respect to such location, in each case in form and substance
acceptable to the Agent;
(iii) it is not Inventory returned or rejected by such Borrower's
customers (other than Inventory that is undamaged and resalable
in the ordinary course of business) or returned to any of such
Borrower's suppliers;
(iv) it is not (a) Inventory constituting fruits, vegetables,
produce, livestock products meats or meat products, (b)
Inventory constituting pharmaceutical products that are subject
to regulation by a Governmental Authority and not substantially
similar to pharmaceutical products maintained by the Borrowers
in recent historical operations prior to the Closing Date and
(c) Inventory constituting perishable goods with a shelf-life
of less than seven months; and
(v) it is determined in the reasonable judgment of the Agent to be,
when taken as a whole, substantially similar in quality and mix
(giving effect to the seasonal nature of the Borrowers'
businesses) to the Inventory maintained by such Borrower and
described in the appraisal dated February 8, 2000, and prepared
by Hilco/Great American.
If any Inventory at any time ceases to be Eligible Inventory by reason of
its failure to meet any of the foregoing, or its failure to meet any other
eligibility criteria established by the Agent in its sole credit judgment
upon notice to the Parent, such Inventory shall promptly be excluded from
the calculation of Eligible Inventory. With respect to any Eligible
Inventory, if the Agent or the Required Lenders at any time after the
Closing Date determine in their reasonable discretion that the value as
collateral for lending purposes with respect thereto is materially impaired
for any reason whatsoever, such Inventory shall cease to be Eligible
Inventory after notice of such determination is given to the Parent.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (i) any liability under federal or state environmental laws
or regulations or (ii) damages arising from or costs incurred by such
Governmental Authority in response to a release or threatened release of a
hazardous or toxic waste, substance or constituent or other substance into
the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is a member of a group of which a Borrower is a member
and that is under common control within the meaning of Section 414(b) or
(c) of the Code and the regulations promulgated and rulings issued
thereunder.
"Eurodollar Loan" means any Loan or Borrowing bearing interest at a
rate determined by reference to Adjusted LIBOR in accordance with the
provisions of Section 2.
"Eurodollar Reserve Percentage" means on any date the percentage
(expressed as a decimal) established by the Board of Governors of the
Federal Reserve System of the United States and any other banking authority
that is the then stated maximum rate for all reserves (including but not
limited to any emergency, supplemental or other marginal reserve
requirements) applicable to any member bank of the Federal Reserve System
in respect of "Eurocurrency Liabilities" (as defined in Regulation D issued
by such Board of Governors), or any successor category of liabilities under
Regulation D issued by such Board of Governors, as in effect from time to
time. The Eurodollar Reserve Percentage shall be adjusted automatically on
and as of the effective date of any change in such percentage.
"Event of Default" has the meaning set forth in Section 11.1.
"Excess Cash Flow" means (i) EBITDA for any fiscal year of the
Borrowers and their respective Subsidiaries minus (ii) for each such fiscal
year for the Borrowers and their respective Subsidiaries, the sum of (a)
all scheduled and required payments of principal of Indebtedness of the
Borrowers and their respective Subsidiaries (including, without limitation,
required principal payments of the Term Loan and Capital Leases) that were
paid during such fiscal year plus (b) gross interest expense paid in cash
for such fiscal year plus (c) total federal, state and local income tax
expense paid in cash during such fiscal year plus (d) actual Capital
Expenditures made during such fiscal year, in each case determined on a
consolidated basis in accordance with GAAP.
"Existing Agreements" means the Revolving Credit and Term Loan
Agreement dated as of December 30, 1996, among the Parent, the lenders
party thereto and Fleet National Bank (as successor to The First National
Bank of Boston), as agent, and includes all promissory notes, letters of
credit, interest rate protection agreements, indemnity agreements, cash
management agreements, reimbursement agreements and the agreements granting
security interests and Liens in property and assets of any Borrower or any
Subsidiary to the Existing Lenders, including, without limitation, the
security agreements, mortgages, leasehold mortgages, pledge agreements and
guaranty agreements listed on Schedule 2, each of which documents was
executed and delivered (to the extent party thereto) by a Borrower or a
Subsidiary prior to the Petition Date, as each may have been amended or
modified from time to time.
"Existing Lender Claim" means the $4,000,000 portion of the claim
under the Existing Agreements that is retained by the Existing Lenders.
"Existing Lenders" means, collectively, those lenders to the Borrowers
and their respective Subsidiaries (to the extent party thereto) under the
Existing Agreements, and any agents therefor, together with any successors
or assigns thereof.
"Fees" means, collectively, the Commitment Fees and other fees
described in Section 2.7.
"Final Order" means an order of the Bankruptcy Court entered in the
Cases after a final hearing under Bankruptcy Rule 4001(c)(2) granting final
approval of this Agreement and the other Loan Documents and granting the
Liens and Superpriority Claim described in Section 4.1.
"Fixed Charge Coverage Ratio" means, as of any date, the ratio of (i)
an amount equal to (a) EBITDA minus (b) net total federal, state and local
income tax expense to the extent included in the determination of net
income (or net loss) of the Borrowers during such period to (ii) the sum of
(a) gross interest expense for such period less gross interest income for
such period plus (b) all scheduled, required payments of principal of
Indebtedness of the Borrowers and their respective Subsidiaries (including,
without limitation, required principal payments of the Term Loan) that were
due and payable during such period plus (c) Capital Expenditures made
during such period, in each case determined on a consolidated basis in
accordance with GAAP.
"Foreign Subsidiary" means a Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America, any State
or Commonwealth thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants Standards Board or in
such other statements by such other entity as may be in general use by
significant segments of the accounting profession as in effect on the
Closing Date, subject to the provisions of Section 1.3.
"Governmental Authority" means any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States of
America or foreign.
"Indebtedness" means, at any time and with respect to any Person, (i)
all indebtedness of such Person for borrowed money, (ii) all indebtedness
of such Person for the deferred purchase price of property or services
(other than property, including inventory, and services purchased, and
expense accruals and deferred compensation items arising, in the ordinary
course of business), (iii) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments (other than
performance, surety and appeal bonds arising in the ordinary course of
business), (iv) all indebtedness of such Person created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (v) all obligations of
such Person under Capitalized Leases, (vi) all reimbursement, payment or
similar obligations of such Person, contingent or otherwise, under
acceptance, letter of credit or similar facilities and all obligations of
such Person in respect of (a) currency swap agreements, currency future or
option contracts and other similar agreements designed to hedge against
fluctuations in foreign interest rates and (b) interest rate swap, cap or
collar agreements and interest rate future or option contracts, (vii) all
Indebtedness referred to in clauses (i) through (vi) above guaranteed
directly or indirectly by such Person or in effect guaranteed directly or
indirectly by such Person through an agreement (a) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase of
such Indebtedness, (b) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss in respect of such Indebtedness,
(c) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (d)
otherwise to assure a creditor against loss in respect of such Indebtedness
and (viii) all Indebtedness referred to in clauses (i) through (vii) above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness.
"Insufficiency" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA.
"Interest Payment Date" means (i) as to any Eurodollar Loan, the last
day of each Interest Period and (ii) as to all Base Rate Loans, the first
Business Day of each month and the date on which any Base Rate Loans are
converted to Eurodollar Loans under Section 2.5.
"Interest Period" means, as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan (including as a result of a
conversion to Base Rate Loans) or on the last day of the preceding Interest
Period applicable to such Eurodollar Loan and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in
the calendar month that is one, two or three months thereafter, as the
Parent may elect in the related notice delivered under Sections 2.2(A) or
2.5; provided that (i) if any Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (ii) no Interest Period shall end later
than the Maturity Date.
"Inventory" has the meaning set forth in the Uniform Commercial Code
and includes, without limitation, any and all goods, including, without
limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by a Borrower, which are held for sale or lease,
furnished under any contract of service, or held as raw materials, work in
process or supplies, and all materials used or consumed in a Borrower's
business, and includes such property the sale or other disposition of which
has given rise to Accounts and which has been returned to or repossessed or
stopped in transit by a Borrower.
"Investment" means (i) to purchase, hold or acquire all or
substantially all of the assets of a business conducted by another Person,
any capital stock of any other Person, any evidences of Indebtedness or
other securities of another Person, (ii) to make or permit to exist any
loans or advances to another Person or (iii) to make or permit to exist any
investment in any other Person.
"Junior Facility" means a subordinated debtor in possession loan made
to the Borrowers by the Junior Lenders.
"Junior Lenders" means, collectively, Cape Ann Investors LLC, Pelitus
Capital Partners LLC and Mr. Bernard J. Korman.
"Lenders" has the meaning set forth in the Preamble.
"Letter of Credit" means any irrevocable letter of credit issued under
Section 2.1(C), which letter of credit shall be (i) a standby or import
documentary letter of credit, (ii) issued for purposes that are consistent
with the ordinary course of business of the Borrowers or any of their
respective Subsidiaries or for such other purposes as are reasonably
acceptable to the Agent and (iii) denominated in Dollars.
"Letter of Credit Application and Reimbursement Agreement" means an
application fora Letter of Credit and a reimbursement agreement therefor
(whether in a single or several documents, taken together) as the Letter of
Credit Issuer may request.
"Letter of Credit Guaranty" means one or more guaranty agreements
delivered by the Agent to the Letter of Credit Issuer, guaranteeing the
Borrowers' Reimbursement Obligations, which guaranty agreements shall be in
form and substance acceptable in all respects to the Agent, in its sole
discretion, all amendments, restatements, substitutions, extensions and
other modifications from time to time entered into with respect thereto.
"Letter of Credit Issuer" means The Chase Manhattan Bank as an issuer
of Letters of Credit under this Agreement and each other issuer of Letters
of Credit under this Agreement that is approved by the Agent and the
Borrowers.
"Letter of Credit Outstandings" means, at any time, the sum of (i) the
aggregate undrawn stated amount of all Letters of Credit then outstanding
plus (ii) all Reimbursement Obligations.
"LIBOR" means the rate of interest per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) specified by notice to the Agent by the
Reference Bank at which deposits in Dollars are offered by the Reference
Bank in London, England to major banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of the Interest Period for the Eurodollar Loan to be
outstanding during such Interest Period and in an amount substantially
equal to the amount of such Eurodollar Loan.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or
other title retention agreement or any lease in the nature thereof).
"Loans" means, collectively, the Revolving Loans and the Term Loan.
"Loan Documents" means this Agreement, the Final Order, any promissory
note issued under Section 2.3(F), the Letters of Credit, the Letter of
Credit Guaranties, the Letter of Credit Application and Reimbursement
Agreements and any other instrument or agreement executed and delivered in
connection with this Agreement.
"Material Adverse Effect" means (i) a material adverse effect upon the
condition (financial or otherwise), operations, assets, business,
properties, performance or prospects of the Borrowers, taken as a whole,
(ii) a material adverse effect on the ability of any of the Borrowers to
perform their respective obligations under the Loan Documents or (iii) a
material adverse effect on the ability of the Lenders or the Agent to
enforce the Loan Documents.
"Maturity Date" means the second anniversary of the Closing Date.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which a Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a Single Employer Plan that (i) is
maintained for employees of a Borrower or an ERISA Affiliate and at least
one Person other than a Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which a Borrower or an ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such Plan
has been or were to be terminated.
"Net Casualty Proceeds" means, with respect to any damage, destruction
or condemnation, as the case may be, of any property of such Person, the
excess of (i) the gross amount of all insurance proceeds or condemnation
awards received by such Person as a result of such damage destruction or
condemnation over (ii) the sum (without duplication) of (a) the reasonable
and customary legal and other professional fees and expenses actually
incurred in connection with the receipt of such proceeds or awards and (b)
all taxes and other governmental costs and expenses actually paid or
estimated by such Person (in good faith) to be payable in cash in
connection with the receipt of such proceeds or awards; provided that if,
after the payment of all taxes and other governmental costs and expenses
with respect to such proceeds, the amount of estimated taxes and other
governmental costs and expenses, if any, under clause (ii)(b) above
exceeded the amount actually paid in cash in respect of such proceeds, the
aggregate amount of such excess shall, within two Business Days thereafter,
be payable, under Section 2.6(B)(iv) as Net Casualty Proceeds.
"Net Disposition Proceeds" means, in respect of any sale of assets,
the proceeds of such sale after the payment of or reservation for expenses
that are directly related to (or the need for which arises as a result of)
the transaction of sale, including, without limitation, related severance
costs, taxes payable, brokerage commissions, professional expenses, other
similar costs that are directly related to the sale and the amount secured
by valid and perfected Liens, if any, that are senior to the Liens on such
assets held by the Agent on behalf of the Lenders.
"Obligations" means (i) the due and punctual payment of principal of
and interest on the Loans and Reimbursement Obligations and (ii) the due
and punctual payment of the Fees and all other present and future, fixed or
contingent, monetary obligations of the Borrowers to the Lenders and the
Agent under the Loan Documents.
"Office" when used in connection with the Agent means its office
located at 10 South LaSalle Street, Chicago, Illinois, or at such other
office or offices of the Agent as may be designated in writing from time to
time by the Agent to the Parent and when used in connection with a Lender
or the Letter of Credit Issuer means the office of such entity designated
in writing from time to time by the Agent to the Parent.
"Other Taxes" has the meaning set forth in Section 3.3.
"Parent" has the meaning set forth in the Preamble.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency or entity performing substantially the same functions.
"Pension Plan" means a defined benefit pension or retirement plan that
meets and is subject to the requirements of Section 401(a) of the Code.
"Permitted Investments" means, collectively:
(i) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the
United States of America), in each case maturing within twelve
months from the date of acquisition thereof;
(ii) without limiting the provisions of clause (iv) below,
investments in commercial paper maturing within six months from
the date of acquisition thereof and having, at such date of
acquisition, a rating of at least "A-2" or the equivalent
thereof from Standard & Poor's Rating Group or of at least
"P-2" or the equivalent thereof from Moody's Investors Service,
Inc.;
(iii) investments in certificates of deposit, banker's acceptances
and time deposits (including Eurodollar time deposits) maturing
within six months from the date of acquisition thereof issued
or guaranteed by or placed with (a) any domestic office of the
Agent or the bank with whom the Borrowers maintain their cash
management system; provided that if such bank is not a --------
Lender under this Agreement, such bank shall have entered into
an agreement with the Agent pursuant to which such bank waives
all rights of setoff and confirmed that such bank does not
have, nor shall it claim, a security interest therein or (b)
any domestic office of any other commercial bank of recognized
standing organized under the laws of the United States of
America or any State thereof that has a combined capital and
surplus and undivided profits of not less than $250,000,000 and
is the principal banking Subsidiary of a bank holding company
having a long-term unsecured debt rating of at least "A-2" or
the equivalent thereof from Standard & Poor's Ratings Group or
at least "P-2" or the equivalent thereof from Moody's Investors
Service, Inc.;
(iv) investments in commercial paper maturing within six months from
the date of acquisition thereof and issued by (a) the holding
company of the Agent or (b) the holding company of any other
commercial bank of recognized standing organized under the laws
of the United States of America or any State thereof that has
(1) a combined capital and surplus in excess of $250,000,000
and (2) commercial paper rated at least "A-2" or the equivalent
thereof from Standard & Poor's Rating Group or of at least
"P-2" or the equivalent thereof from Moody's Investors Service,
Inc.;
(v) investments in repurchase obligations with a term of not more
than seven days for underlying securities of the types
described in clause (i) above entered into with any office of a
bank or trust company meeting the qualifications specified in
clause (iii) above;
(vi) investments in money market funds substantially all the assets
of which are comprised of securities of the types described in
clauses (i) through (v) above; and
(vii) to the extent owned on the Petition Date, investments in the
capital stock of any direct or indirect Subsidiary of a
Borrower.
"Permitted Liens" means, collectively,
(i) Liens imposed by law (other than Environmental Liens and any
Lien imposed under ERISA) for taxes, assessments or charges of
any Governmental Authority for claims not yet due or that are
being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(ii) Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens (other than
Environmental Liens and any Lien imposed under ERISA) in
existence on the Petition Date or thereafter imposed by law and
created in the ordinary course of business;
(iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including,
without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other
similar obligations or arising as a result of progress payments
under government contracts;
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and zoning
and other restrictions, charges or encumbrances (whether or not
recorded) and interest of ground lessors, that do not interfere
materially with the ordinary conduct of the business of the
Borrowers and that do not materially detract from the value of
the property to which they attach or materially impair the use
thereof to the Borrowers;
(v) purchase money Liens (including Capitalized Leases) upon or in
any property acquired or held in the ordinary course of
business to secure the purchase price of such property or to
secure Indebtedness permitted by Section 9.3(iii) solely for
the purpose of financing the acquisition of such property; and
(vi) extensions, renewals or replacements of any Lien referred to in
clauses (i) through (v) above; provided that the principal
amount of the obligation secured thereby is not increased and
that any such extension, renewal or replacement is limited to
the property originally encumbered thereby.
"Person" means any natural person, corporation, division of a
corporation, partnership, trust, joint venture, association, company,
estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Petition Date" has the meaning set forth in the first Preliminary
Statement.
"Plan" means a Single Employer Plan or a Multiemployer Plan.
"Reference Bank" means The Chase Manhattan Bank.
"Register" has the meaning set forth in Section 13.3(D).
"Reimbursement Obligations" means, as to the Borrowers, the aggregate
reimbursement or repayment obligations of the Borrowers under a Letter of
Credit Application and Reimbursement Agreement or other similar document
with respect to amounts drawn under Letters of Credit.
"Reorganization Plan" means a plan of reorganization in any of the
Cases.
"Required Lenders" means, at any time, Lenders holding at least 51% of
the sum of (i) the aggregate outstanding principal amount of the Term Loan
and (ii) the aggregate principal amount of Revolving Loans outstanding or,
if no Revolving Loans are outstanding, the Total Revolving Commitment.
"Responsible Officer" means any executive officer of the Parent or any
other officer of any Borrower designated in writing by the chief executive
officer or chief financial officer of the Parent to the Agent as
responsible for overseeing or reviewing compliance with this Agreement or
any other Loan Document.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender under this Agreement in the amount set forth
opposite its name on Annex A or as may subsequently be set forth in the
Register from time to time, as such commitment may be reduced from time to
time under this Agreement.
"Revolving Loans" has the meaning set forth in Section 2.1(A)(i).
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of a
Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of
which a Borrower could have liability under Section 4069 of ERISA in the
event such Plan has been or were to be terminated.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity (whether now existing or hereafter
organized) of which at least a majority of the securities or other
ownership interests having ordinary voting power for the election of
directors is, at the time as of which any determination is being made,
owned or controlled, directly or indirectly, by such Person. Unless the
context otherwise requires, each reference to a Subsidiary in this
Agreement is a reference to a Subsidiary of a Borrower.
"Superpriority Claim" means a claim against any Borrowers in any of
the Cases that is an administrative expense claim having priority over any
or all administrative expenses of the kind specified in sections 105, 326,
328, 503(b), 506(c), 507(a), 507(b) and 726 of the Bankruptcy Code.
"Tangible Net Worth" means, at any time, an amount equal to the
Borrower's total assets minus total liabilities, determined on a
consolidated basis in accordance with GAAP; provided that the resulting
amount will be decreased by (i) the book value of all general intangibles
of the Borrowers, including, without limitation, patents, trademarks, trade
names, copyrights, deferred charges, non-competition payments, goodwill,
unamortized loan and organization costs and other assets that are properly
classified as "intangible assets" in accordance with GAAP, (ii) all loans
by the Borrowers to its officers, directors and employees, (iii)
Investments in Affiliates and (iv) all obligations owed to the Borrowers by
any Affiliate or Subsidiary.
"Taxes" has the meaning set forth in Section 3.3.
"Term Loan" has the meaning set forth in Section 2.1(B).
"Termination Date" means the earliest to occur of (i) the Maturity
Date, (ii) the Consummation Date and (iii) the acceleration of the Loans
and the termination of the Total Revolving Commitment in accordance with
the terms of this Agreement.
"Termination Event" means (i) a "reportable event", as such term is
described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "reportable event" not subject to the provision for 30-day
notice to the PBGC under Section 4043 of ERISA or such regulations) or an
event described in Section 4068 of ERISA excluding events described in
Section 4043(c)(9) of ERISA or 29 CFR ss.ss.2615.21 or 2615.23 and
excluding events that could not be reasonably likely (as reasonably
determined by the Agent) to have a material adverse effect on the financial
condition, operations, business, properties or assets of the Borrowers
taken as a whole, (ii) the withdrawal of a Borrower or any ERISA Affiliate
from a Multiple Employer Plan during a plan year in which it was a
"substantial employer", as such term is defined in Section 4001(c) of ERISA
or the incurrence of liability by a Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan,
(iii) providing notice of intent to terminate a Plan under Section 4041(c)
of ERISA or the treatment of a Plan amendment as a termination under
Section 4041 of ERISA, (iv) the institution of proceedings to terminate a
Plan by the PBGC under Section 4042 of ERISA or (v) any other event or
condition (other than the commencement of the Cases and the failure to have
made any contribution accrued as of the Petition Date but not paid) that
could reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the imposition of any liability under Title IV of
ERISA (other than for the payment of premiums to the PBGC).
"Total Revolving Commitment" means, at any time, the sum of the
Revolving Commitments at such time. The Total Revolving Commitment on the
Closing Date is $20,000,000.
"Type" when used in respect of any Loan or Borrowing refers to the
rate of interest (either Adjusted LIBOR or Base Rate) by reference to which
interest on such Loan or on the Loans comprising such Borrowing is
determined.
"Uniform Commercial Code" means the Uniform Commercial Code as enacted
in the State of Illinois, as it may be amended from time to time.
"Unused Total Commitment" means, at any time, (i) the Total Revolving
Commitment less (ii) the sum of (a) the outstanding principal amount of all
Revolving Loans and (b) all Letter of Credit Outstandings.
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
1.2 Uniform Commercial Code Terms. Except as otherwise indicated, all
terms not specifically defined in this Agreement that are defined, or used,
in Article 9 of the Uniform Commercial Code have the respective meanings
assigned to such terms in Article 9 of the Uniform Commercial Code.
1.3 Accounting Terms. Except as otherwise indicated, all accounting
terms not specifically defined in this Agreement shall be construed in
accordance with, and certificates of compliance with covenants shall be
based upon, GAAP; provided that for purposes of determining compliance with
any covenant set forth in Section 10, such terms shall be construed in
accordance with GAAP as in effect on the date of this Agreement applied on
a basis consistent with the application used in the Borrower's audited
financial statements referred to in Section 6.4. If any changes in
accounting principals or practices from those used by the Borrowers on the
Closing Date are occasioned after the Closing Date by the promulgation of
rules, regulations, pronouncements and opinions by or required by the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or any successor or agencies with similar functions),
which results in a material change in the method of accounting in the
financial statements required to be furnished to the Agent under this
Agreement or in the calculation of financial covenants, standards or terms
contained in this Agreement or any other Loan Document, the Agent and the
Parent agree to enter into negotiations in good faith to amend such
provisions so as equitably to reflect such changes to the end that the
criteria for evaluating the financial condition and performance of the
Borrowers will be the same after such changes as they were before such
changes. If the parties fail to agree on the amendment of such provisions,
the Borrowers will furnish financial statements in accordance with such
changes but will provide calculations for all financial covenants, perform
all financial covenants and otherwise observe all financial standards and
terms in accordance with applicable accounting principles and practices in
effect immediately prior to such changes. Calculations with respect to
financial covenants required to be stated in accordance with applicable
accounting principles and practices in effect immediately prior to such
change will be reviewed and certified by the Borrowers' accountants.
1.4 Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the
words "from" or "commencing on" means "from and including" and the words
"to," "through," "ending on" and "until" each mean "to but excluding."
1.5 Headings and References. Section and other headings are for
reference only, and do not affect the interpretation or meaning of any
provision of this Agreement. Any Section or clause references are to this
Agreement, unless otherwise specified. References to an annex, schedule or
exhibit are, unless otherwise specified, to an Annex, Schedule or Exhibit
attached to this Agreement. References in this Agreement and the other Loan
Documents or any other agreement include this Agreement and the other Loan
Documents and other agreements as the same may be amended, restated,
supplemented or otherwise modified from time to time under their respective
terms. A reference to any law, statute or regulation mean that law, statute
or regulation as it may be amended, supplemented or otherwise modified from
time to time, and any successor law, statute or regulation. A reference to
a Person includes the successors and assigns of such Person, but such
reference shall not increase, decrease or otherwise modify in any way the
provisions in this Agreement or any other Loan Document governing the
assignment of rights and obligations under or the binding effect of any
provision of this Agreement or any other Loan Document. The provisions of
this Agreement relating to Subsidiaries apply only during such times as a
Borrower has one or more Subsidiaries.
1.6 Construction. Each covenant contained in this Agreement shall be
construed (absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision in this
Amendment or any other Loan Document refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by
such Person. The term "including" is not limiting and means "including
without limitation."
SECTION 2: CREDIT
2.1 Credit Facilities. Upon the terms and subject to the conditions
set forth in this Agreement (including, without limitation, the provisions
of Section 2.2(D)), the Lenders, severally and not jointly with the other
Lenders, agree to extend the following credit facilities to the Borrowers:
(A) Revolving Loans. Each Lender will make revolving loans
(collectively, the "Revolving Loans" and each a "Revolving Loan") to the
Borrowers, on a joint and several basis, at any time and from time to time
during the period commencing on the Closing Date and ending on the
Termination Date in an aggregate principal amount not to exceed, when added
to such Lender's Commitment Percentage of the then aggregate Letter of
Credit Outstandings, the Revolving Commitment of such Lender, which
Revolving Loans may be repaid and reborrowed in accordance with the
provisions of this Agreement. At no time shall the outstanding aggregate
principal amount of all Revolving Loans plus the aggregate Letter of Credit
Outstandings exceed the lesser of (i) the Total Revolving Commitment then
in effect and (ii) the Borrowing Base then in effect. Each Revolving Loan
shall be made by the Lenders pro rata in accordance with their respective
Revolving Commitments; provided that the failure of any Lender to make any
Revolving Loan shall not relieve the other Lenders of their obligations to
lend.
(B) Term Loan. The Lenders will make a term loan (the "Term Loan") to
the Borrowers, on a joint and several basis, on the date the Final Order is
entered by the Bankruptcy Court in the original principal amount of
$10,000,000. The Term Loan shall be repaid in monthly installments of
$166,666.67 on the first Business Day of each month (commencing on the
first Business Day of the fourth month after the Closing Date, including
the month in which the Closing Date occurs), with all remaining outstanding
principal of the Term Loan, together with any accrued and unpaid interest
thereon, payable on the Termination Date. No portion of the Term Loan that
has been repaid may be reborrowed. Notwithstanding anything in this
Agreement or the other Loan Documents to the contrary, the Obligations in
connection with the Term Loan become immediately due and payable on the
Termination Date.
(C) Letters of Credit. To assist the Borrowers in establishing or
opening Letters of Credit with the Letter of Credit Issuer, the Borrowers
have requested the Agent join in the applications for such Letters of
Credit or guarantee payment or performance of such Letters of Credit and
any drafts or acceptances under such Letters of Credit through the issuance
of a guaranty. The Agent agrees to issue a Letter of Credit Guaranty on
behalf of the Borrowers for one or more Letters of Credit during the period
from the Closing Date to the date that is 30 days prior to the Maturity
Date. The Agent shall not have any obligation to arrange for a Letter of
Credit Guaranty at any time:
(a) if the aggregate Letter of Credit Obligations, after giving
effect to the issuance of Letters of Credit requested under
Section 2.2(C), exceeds $2,500,000 or if the aggregate
outstanding principal amount of the Revolving Loans plus the
then aggregate Letter of Credit Obligations exceeds the lesser
of the Total Revolving Commitment then in effect and the
Borrowing Base then in effect;
(b) if the Agent receives written notice from the Required Lenders
at or before 12:00 p.m. (Chicago, Illinois time) on the third
Business Day immediately preceding the date on which the
proposed Letter of Credit will be issued that one or more of
the conditions precedent contained in Section 5 would not on
such date be satisfied;
(c) if the requested Letter of Credit has an expiration date later
than the earlier of (1) the date that occurs 180 days following
the date of issuance with respect to a commercial Letter of
Credit or the date that occurs 360 days following the date of
issuance with respect to a standby Letter of Credit or (2) the
15th Business Day immediately preceding the Maturity Date; or
(d) if the applicable Letter of Credit is in a currency other than
Dollars.
(ii) Notwithstanding any provisions to the contrary in any Letter of
Credit Application and Reimbursement Agreement, (a) the Borrowers shall
reimburse the Letter of Credit Issuer for amounts drawn under each Letter
of Credit no later than the date (the "Reimbursement Date") that is one
Business Day after the Parent receives written notice from the Letter of
Credit Issuer that a draft has been presented under such Letter of Credit
by the beneficiary thereof and (b) all Reimbursement Obligations with
respect to any Letter of Credit shall bear interest at the rate applicable
to Base Rate Loans that are Revolving Loans in accordance with Section
2.4(A) from the date of the relevant drawing under such Letter of Credit
until the Reimbursement Date and thereafter at the rate applicable to Base
Rate Loans that are Revolving Loans in accordance with Section 2.4(D).
(iii) Immediately upon the issuance by the Letter of Credit Issuer of
any Letter of Credit in accordance with the procedures set forth in this
Section 2.1(C), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Agent, without recourse or
warranty, an undivided interest and participation, to the extent of such
Lender's Commitment Percentage, in all obligations of the Agent with
respect to such Letter of Credit.
(iv) In the event that (a) any amount, charge, fee, commission, cost
or expense is charged to the Agent for the account of the Borrowers by the
Letter of Credit Issuer in connection with or arising out of Letters of
Credit for the amount of any and all indebtedness, liability or obligation
of any kind (including indemnification for breakage costs, capital adequacy
and reserve requirement charges) incurred by the Agent or the Lenders under
the Letter of Credit Guaranty upon payment by the Agent under the Letter of
Credit Guaranty or (b) upon the occurrence of an Event of Default, the
Letter of Credit Obligations exceeds the amount of the cash collateral in
the Cash Collateral Account, then each Lender shall promptly and
unconditionally pay to the Agent, in immediately available funds, the
amount of such Lender's Commitment Percentage of such payment, pursuant to
this Section 2.1(C)(iv). All such payments shall constitute Revolving Loans
made to the Borrowers pursuant to Section 2.1(A) (irrespective of the
satisfaction of the conditions in Section 5.2 or the requirement in Section
2.2(A) to deliver a notice of Borrowing, which conditions and requirement,
for the purpose of refunding any Reimbursement Obligation owing to the
Lenders, the Lenders irrevocably waive). If a Lender does not make its
Commitment Percentage of the amount of such payment available to the Agent,
such Lender agrees to pay to the Agent, forthwith on demand, such amount
together with interest thereon, for each day from the date such payment was
due until the date such amount is paid to the Agent, at the customary rate
set by the Agent for the correction of errors among banks for three
Business Days and thereafter at the rate applicable to Base Rate Loans that
are Revolving Loans in accordance with Section 2.4(A). The failure of any
such Lender to make available to the Agent its Commitment Percentage of any
such payment shall neither relieve any other Lender of its obligation under
this Agreement to make available to the Agent such other Lender's
Commitment Percentage of any payment on the date such payment is to be made
nor increase the obligation of any other Lender to make such payment to the
Agent. This Section 2.1(C)(iv) does not relieve any Borrower of its
obligation to pay or repay any Lender funding its Commitment Percentage of
such payment pursuant to this Section 2.1(C)(iv) interest on the amount of
such payment from such date such payment is to be made until the date on
which payment is repaid in full.
(v) The obligations of a Lender to make payments to the Agent with
respect to a Letter of Credit shall be irrevocable, not subject to any
qualification or exception whatsoever and shall be made in accordance with,
but not subject to, the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(a) any lack of validity or enforceability of this Agreement or any
of the other Loan Documents;
(b) the existence of any claim, setoff, defense or other right that
the Borrowers may have at any time against a beneficiary named
in a Letter of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the
Agent, Letter of Credit Issuer, any Lender or any other Person,
whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated in this Agreement or any
unrelated transactions (including any underlying transactions
between a Borrower or any other party and the beneficiary named
in any Letter of Credit);
(c) any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(d) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents;
(e) any failure by the Agent to provide any notices required under
this Agreement relating to Letters of Credit; or
(f) the occurrence of any Default or Event of Default.
(vi) The Borrowers agree that any action taken by the Agent or any
Lender, if taken in good faith, and any action taken by the Letter of
Credit Issuer, under or in connection with the Letters of Credit, the
Letter of Credit Guaranty, the Letter of Credit Application and
Reimbursement Agreement, the guarantees, the drafts or acceptances or the
goods purported to be represented by any documents, shall be binding on the
Borrowers (with respect to the Letter of Credit Issuer, the Agent and the
Lenders) and shall not put the Agent or any Lender in any resulting
liability to the Borrowers. In furtherance of the foregoing, (a) the Agent
shall have the full right and authority to: clear and resolve any questions
of non-compliance of documents; give any instructions as to acceptance or
rejection of any documents or goods; execute any and all guaranties (and
applications therefore), indemnities or delivery orders; grant any
extensions of the maturity of, time of payment for, or time of presentation
of, any drafts, acceptances, or documents; and agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances, all in the Agent's sole name and (b) the Letter of Credit
Issuer shall be entitled to comply with and honor any and all such
documents or instruments executed by or received solely from the Agent, all
without any notice to or any consent from the Borrowers.
(vii) None of the Agent, the Letter of Credit Issuer or any of the
Lenders shall be responsible for: the existence, character, quality,
quantity, condition, packing, value or delivery of the goods purporting to
be represented by any documents; any difference or variation in the
character, quality, quantity, condition, packing, value or delivery of the
goods from that expressed in the documents; the validity, sufficiency or
genuineness of any documents or of any endorsements thereof even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; the time, place, manner or order in
which shipment is made; partial or incomplete shipments or failure or
omission to ship any or all of the goods referred to in the Letters of
Credit or documents; any deviation from instructions; delay, default or
fraud by the shipper or anyone else in connection with any such goods or
the shipping thereof; or any breach of contract between the shipper or
vendors and the Borrowers. Furthermore, without being limited by the
foregoing, none of the Agent, the Letter of Credit Issuer or any of the
Lenders shall be responsible for any act or omission with respect to or in
connection with any goods covered by Letters of Credit.
(viii) Without the Agent's prior consent and endorsement in writing,
the Borrowers agree (a) not to: execute any applications for steamship or
airway guaranties, indemnities or delivery orders; grant any extensions of
the maturity of, time of payment for, or time of presentation of, any
drafts, acceptances or documents; or agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or
acceptances and (b) after the occurrence of an Event of Default, not to
clear and resolve any questions of non-compliance of documents or give any
instructions as to acceptances or rejection of any documents or goods.
(ix) The Borrowers agree that any necessary and material import,
export or other license or certificates for the import or handling of
Inventory will have been promptly procured, all foreign and domestic
governmental laws and regulations in regard to the shipment and importation
of Inventory or the financing thereof will have been promptly and fully
complied with, and any certificates in that regard that the Agent may at
any time reasonably request will be promptly furnished. In this connection,
each Borrower represents and warrants that all shipments made under any
such Letters of Credit are in accordance with the laws and regulations of
the countries in which the shipments originate and terminate and are not
prohibited by any such laws and regulations. As between the Borrowers, on
the one hand, and the Agent, the Lenders and the Letter of Credit Issuer,
on the other hand, the Borrowers assume all risk, liability and
responsibility for, and agree to pay and discharge, all present and future
local, state, federal or foreign taxes, duties or levies. As between the
Borrowers, on the one hand, and the Agent, the Lenders and the Letter of
Credit Issuer, on the other hand, any embargo, restriction, laws, customs
or regulations of any country, state, city, or other political subdivision,
where such Inventory is or may be located, or wherein payments are to be
made, or wherein drafts may be drawn, negotiated, accepted or paid, shall
be solely the Borrowers' risk, liability and responsibility.
(x) Upon any payments made to the Letter of Credit Issuer under the
Letter of Credit Guaranty, the Agent shall, without prejudice to its rights
under this Agreement, acquire by subrogation, any rights, remedies, duties
or obligations granted or undertaken by the Borrowers to the Letter of
Credit Issuer in any application for Letters of Credit, any standing
agreement relating to Letters of Credit or otherwise, all of which shall be
deemed to have been granted to the Agent and apply in all respects to the
Agent and shall be in addition to any rights, remedies, duties or
obligations contained in this Agreement.
(xi) In the event that the Borrowers are required to provide cash
collateral for any Letter of Credit, the Borrowers shall deposit such cash
collateral in the Cash Collateral Account, which cash collateral shall be
held in the Cash Collateral Account until all Obligations have been paid in
full in cash; provided that, when the Borrowers elect, and are not required
to provide cash collateral for a Letter of Credit, the cash collateral for
such Letter of Credit shall be returned to the Borrowers if at such time
(a) a Default or Event of Default has not occurred and is not continuing
and (b) no Letter of Credit is outstanding and all Reimbursement
Obligations have been paid in full.
(xii) If upon the Termination Date any Letter of Credit will remain
outstanding, the Borrowers will, on or prior to the Termination Date, (i)
cause all Letters of Credit that expire after the Termination Date to be
returned to the Letter of Credit Issuer undrawn and marked "canceled" or
(ii) if the Borrowers are unable to do so in whole or in part, either (a)
provide a "back-to-back" letter of credit to the Letter of Credit Issuer in
a form satisfactory to the Letter of Credit Issuer and the Agent (in their
sole discretion), issued by a bank satisfactory to the Letter of Credit
Issuer and the Agent (in their sole discretion), in an amount equal to 105%
of the then undrawn stated amount of all outstanding Letters of Credit
issued by the Letter of Credit Issuer or (b) deposit cash in the Cash
Collateral Account in an amount equal to 105% of the Letter of Credit
Outstandings, such cash to be remitted to the Borrowers upon the
expiration, cancellation or other termination or satisfaction of the Letter
of Credit Outstandings.
2.2 Loan and Letter of Credit Procedures.
------------------------------------
(A) Making of Revolving Loans. The Parent, on behalf of the Borrowers,
shall give the Agent prior notice of each Borrowing of Revolving Loans
under this Agreement of at least three Business Days for Eurodollar Loans
and one Business Day for Base Rate Loans, Such notice of Borrowing shall be
irrevocable and shall specify the amount of the proposed Borrowing (which
shall not be less than $1,000,000 in the case of Eurodollar Loans and
$100,000 in the case of Base Rate Loans) and the date of such Borrowing
(which shall be a Business Day) and shall contain disbursement
instructions. Such notice, to be effective, must be received by the Agent
not later than 12:00 p.m. (Chicago, Illinois time) on the third Business
Day in the case of Eurodollar Loans and the first Business Day in the case
of Base Rate Loans, preceding the date on which such Borrowing is to be
made. Such notice of Borrowing shall specify whether the Borrowing then
being requested is to be a Borrowing of Base Rate Loans or Eurodollar
Loans. If no election is made as to the Type of Revolving Loan, such notice
shall be deemed a request for Borrowing of Base Rate Loans. The Agent shall
promptly notify each Lender of its proportionate share of such Borrowing,
the date of such Borrowing, the Type of Borrowing or Loans being requested
and the Interest Period or Interest Periods applicable thereto, as
appropriate. On the borrowing date specified in such notice, each Lender
shall make its share of the Borrowing available at the Office no later than
12:00 noon (Chicago, Illinois time) in immediately available funds. Upon
receipt of the funds made available by the Lenders to fund any borrowing
under this Agreement, the Agent shall disburse such funds in the manner
specified in the notice of borrowing delivered by the Parent and shall use
reasonable efforts to make the funds so received from the Lenders available
to the Borrowers no later than 2:00 p.m. (Chicago, Illinois time).
(B) Making of the Term Loan. The Term Loan will be made on the Closing
Date. On or prior to the Closing Date, the Parent will give the Agent a
notice of Borrowing that will specify whether the Term Loan is to be a
Borrowing of Base Rate Loans, Eurodollar Loans or both. If no election is
made as to the Type of Loan, such notice shall be deemed a request for
Borrowing of Base Rate Loans. The Agent shall promptly notify each Lender
of its proportionate share of the Term Loan, the Type of Borrowing being
requested and the Interest Period or Interest Periods applicable thereto,
as appropriate. On the Closing Date, each Lender shall make its share of
the Term Loan available at the Office no later than 12:00 noon (Chicago,
Illinois time) in immediately available funds. Upon receipt of such funds,
the Agent shall disburse such funds in the manner specified in the notice
of Borrowing delivered by the Parent and shall use reasonable efforts to
make the funds so received from the Lenders available to the Borrowers no
later than 2:00 p.m. (Chicago, Illinois time).
(C) Issuance of Letters of Credit. The Parent, on behalf of the
Borrowers, shall give the Agent written notice that it is requesting that
the Letter of Credit Issuer issue a Letter of Credit and that the Agent
issue a Letter of Credit Guaranty not later than 12:00 p.m. (Chicago time)
at least ten Business Days preceding the requested date for issuance of
such Letter of Credit. Such notice of Letter of Credit shall specify (i)
that the requested Letter of Credit is either a commercial Letter of Credit
or a standby Letter of Credit, (ii) the face amount of the Letter of Credit
requested, (iii) the effective date (which shall be a Business Day) of
issuance of such Letter of Credit, (iv) the date on which such Letter of
Credit is to expire, (v) the Person for whose benefit such Letter of Credit
is to be issued, (vi) other relevant terms of such Letter of Credit and
(vii) the amount of the then outstanding Letter of Credit Obligations. The
Agent shall promptly notify each Lender of such request for a Letter of
Credit and the proposed date of issuance for such Letter of Credit.
(D) Use of Cash Collateral. Notwithstanding anything in this Agreement
to the contrary, the Borrowers shall not be permitted (i) to request a
Borrowing under Section 2.2(A) or request the issuance of a Letter of
Credit under Section 2.2(C) unless the Bankruptcy Court shall have entered
the Final Order or (ii) to request a Borrowing under Sections 2.2(A) or
2.2(B) or request the issuance of a Letter of Credit under Section 2.2(C)
unless the Borrowers shall at that time have the use of all cash collateral
subject to an order of the Bankruptcy Court for the purposes described in
Section 6.10.
2.3 Repayment of Loans; Evidence of Debt. Each Borrower
unconditionally promises, jointly and severally, to pay to the Agent for
the account of each Lender, in Dollars, (i) the principal amount of each
Loan, interest and other amounts payable by the Agent in connection with
any Loan and (ii) the amount of all Reimbursement Obligations, interest and
other amounts payable by the Agent under or in connection with any Letter
of Credit Guaranty, in each case when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right that the
Borrowers may have at any time against the Agent or any other Person.
Subject to the provisions of Section 11, upon the maturity (whether by
acceleration or otherwise) of any of the Obligations under this Agreement
or any of the other Loan Documents, the Lenders shall be entitled to
immediate payment of such Obligations without further application to or
order of the Bankruptcy Court.
(B) All payments and prepayments to be made in respect of principal,
interest, Fees or other amounts due from the Borrowers under this Agreement
or the other Loan Documents shall be payable at or before 12:00 p.m.
(Chicago, Illinois time) on the day when due without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived.
Such payments shall be made to the Agent for the account of the Agent or
the Lenders, as the case may be, at the Agent Account in funds immediately
available at the Office without setoff, counterclaim or other deduction of
any nature. The Agent shall maintain a separate loan account (the
"Borrowers' Account") on its books in the name of the Borrowers in which
the Borrowers will be charged with Loans made by the Agent or the Lenders
to the Borrowers and with any other Obligations. The Borrowers and the
Lenders authorize the Agent to, and the Agent may, from time to time charge
the Borrowers' Account with any interest, Fees, expenses and other
Obligations that are due and payable under this Agreement or any Loan
Document. The Borrowers' Account will be credited one Business Day after
receipt of immediately available funds in the Agent Account for all amounts
actually received by the Agent. The Agent shall use reasonable efforts to
provide the Borrowers with copies or other evidence of all charges to the
Borrowers' Account promptly after such charges are made, provided that the
failure to provide such copies or other evidence to the Borrowers shall not
relieve the Borrowers of any of its obligations under this Agreement.
(C) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the Indebtedness of the Borrowers to such
Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(D) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made under this Agreement, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to
each Lender under this Agreement and (iii) the amount of any sum received
by the Agent under this Agreement for the account of the Lenders and each
Lender's share thereof.
(E) The entries made in the accounts maintained under Sections 2.3(C)
or 2.3(D) shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or
the Agent to maintain such accounts or any error therein shall not in any
manner affect the obligation of the Borrowers to repay the Obligations in
accordance with the terms of this Agreement.
(F) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrowers shall execute and deliver to
such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) in the
form of Exhibit A. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment under
Section 13.3) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).
2.4 Interest on Loans. (A) Subject to the provisions of Section 2.4(D),
(i) each Revolving Loan that is a Base Rate Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of
360 days) at a rate per annum equal to the Base Rate plus 1.00% and (ii)
each Borrowing under the Term Loan that is a Base Rate Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal to the Base Rate plus 2.00%.
(B) Subject to the provisions of Section 2.4(D), (i) each Revolving
Loan that is a Eurodollar Loan shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) at a rate per
annum equal, during each Interest Period applicable thereto, to Adjusted
LIBOR for such Interest Period in effect for such Borrowing plus 3.50% and
(ii) each Borrowing under the Term Loan that is a Eurodollar Loan shall
bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal, during each Interest
Period applicable thereto, to Adjusted LIBOR for such Interest Period in
effect for such Borrowing plus 4.50%.
(C) Accrued interest on all Loans shall be payable in arrears on each
Interest Payment Date applicable thereto, at maturity (whether by
acceleration or otherwise), after such maturity on demand and, with respect
to Eurodollar Loans, upon any repayment or prepayment thereof (on the
amount prepaid). Interest in respect of any Loan under this Agreement shall
accrue from and including the date of such Loan to but excluding the date
on which such Loan is paid in full or converted to a Loan of a different
Type under Section 2.5.
(D) Effective immediately upon the occurrence of any Event of Default
and for as long thereafter as such Event of Default shall be continuing,
the principal balance of all Loans and of all other Obligations, shall bear
interest at a rate that is 2.00% per annum in excess of the rate of
interest that is otherwise applicable to such Loans and other Obligations
from time to time.
2.5 Conversion and Continuation of Loans. Loans shall be either Base
Rate Loans or Eurodollar Loans as the Borrowers may request subject to and
in accordance with Sections 2.2(A), 2.5(B) and 2.5(C); provided that all
Loans made pursuant to the same Borrowing shall, unless otherwise
specifically provided in this Agreement, be Loans of the same Type. Each
Lender may fulfill its Revolving Commitment or its commitment to make the
Term Loan with respect to any Eurodollar Loan or Base Rate Loan by causing
any lending office of such Lender to make such Loan; provided that any such
use of a lending office shall not affect the obligation of the Borrowers to
repay such Loan in accordance with the terms of this Agreement. Each Lender
shall, subject to its overall policy considerations, use reasonable efforts
(but shall not be obligated) to select a lending office that will not
result in the payment of increased costs by the Borrowers under Section
3.1. Subject to the provisions of Sections 2.2(A), 2.5(B) and 2.5(C),
Borrowings of Loans of more than one Type may be incurred at the same time;
provided that no more than three Borrowings of Eurodollar Loans may be
outstanding at any time.
(B) The Borrowers have the right, at any time, on three Business Days'
prior irrevocable notice to the Agent (which notice, to be effective, must
be received by the Agent not later than 1:00 p.m. (Chicago, Illinois time)
on the third Business Day preceding the date of any such conversion or
continuation), (i) to convert any outstanding Borrowing or Borrowings of
Loans of one Type (or a portion thereof) with a Borrowing of Loans of the
other Type or (ii) to continue an outstanding Borrowing of Eurodollar Loans
for an additional Interest Period, subject to the following:
(a) as a condition to the conversion of Base Rate Loans to
Eurodollar Loans and to the continuation of Eurodollar Loans
for an additional Interest Period, no Default or Event of
Default shall have occurred and be continuing at the time of
such conversion or continuation;
(b) if less than a full Borrowing of Loans shall be converted or
continued, such conversion or continuation shall be made pro
rata among the Lenders in accordance with the respective
principal amounts of the Loans comprising such Borrowing held
by the Lenders immediately prior to such conversion or
continuation;
(c) the aggregate principal amount of Loans being converted shall
be at least $1,000,000; provided that no partial conversion of
a Borrowing of Eurodollar Loans shall result in the Eurodollar
Loans remaining outstanding pursuant to such Borrowing being
less than $1,000,000 in aggregate principal amount;
(d) each Lender shall effect each conversion or continuation by
applying the proceeds of its new Eurodollar Loan or Base Rate
Loan, as the case may be, to its Loan being converted or
continued;
(e) the Interest Period with respect to a Borrowing of Eurodollar
Loans effected by a conversion or in respect to the Borrowing
of Eurodollar Loans being continued as Eurodollar Loans shall
commence on the date of conversion or the expiration of the
current Interest Period applicable to such continuing
Borrowing, as the case may be;
(f) a Borrowing of Eurodollar Loans may be converted or continued
only on the last day of an Interest Period applicable thereto;
and
(g) each request for a conversion or continuation of a Borrowing of
Eurodollar Loans that fails to state an applicable Interest
Period shall be deemed to be a request for an Interest Period
of one month.
(C) In the event that the Borrowers shall not give notice to
conversion of any Borrowing of Eurodollar Loans or to continue such
Borrowing as Eurodollar Loans or shall not be entitled to convert or
continue such Borrowing as Eurodollar Loans, in each case as provided
above, such Borrowing shall automatically be converted with a Borrowing of
Base Rate Loans at the expiration of the then-current Interest Period. The
Agent shall, after it receives notice from the Borrowers, promptly give
each Lender notice of any conversion or continuation, in whole or part, of
any Loan made by such Lender.
2.6 Reduction of Revolving Commitment; Prepayments.
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(A) Reduction and Termination of Revolving Commitment. Upon at least
two Business Days' prior written notice to the Agent, the Borrowers may at
any time in whole permanently terminate, or from time to time in part
permanently reduce, the Unused Total Commitment. Each such reduction of the
Revolving Commitments shall be in the principal amount of $1,000,000 or any
integral multiple thereof; provided that the Borrowers may not reduce the
Total Revolving Commitment below $10,000,000 without reducing the Total
Revolving Commitment in full. Simultaneously with each reduction or
termination of the Revolving Commitments, the Borrowers shall pay to the
Agent for the account of each Lender the Commitment Fee accrued on the
amount of the Revolving Commitment of such Lender so terminated or reduced
through the date thereof. Any reduction of the Revolving Commitments under
this Section 2.6(A) shall be applied pro rata to reduce the Revolving
Commitment of each Lender.
(B) Mandatory Prepayments. (i) If at any time the aggregate principal
amount of the outstanding Revolving Loans plus the aggregate Letter of
Credit Outstandings exceeds the lesser of (a) the Total Revolving
Commitment and (b) the Borrowing Base, the Borrowers will within three
Business Days (1) prepay the Revolving Loans in an amount necessary to
cause the aggregate principal amount of the outstanding Revolving Loans
plus the aggregate Letter of Credit Outstandings to be equal to or less
than the Total Revolving Commitment or Borrowing Base, as the case may be,
and (2) if, after giving effect to the prepayment in full of the aggregate
of the Revolving Loans, the aggregate Letter of Credit Outstandings in
excess of the amount of cash held in the Cash Collateral Account exceeds
the Total Revolving Commitment or the Borrowing Base, as the case may be,
deposit into the Cash Collateral Account an amount equal to 105% of the
amount by which the aggregate Letter of Credit Outstandings in excess of
the amount of cash held in the Cash Collateral Account so exceeds the Total
Revolving Commitment or the Borrowing Base, as the case may be.
(ii) The Borrowers agree to make a prepayment of the Term Loan for
each fiscal year (commencing with the fiscal year ending September 30,
2000), on the date the financial statements described in Section 7.1(A) are
due for such fiscal year, in an amount equal to 50% of Excess Cash Flow for
such fiscal year. Any such prepayments of the Term Loan pursuant to this
Section 2.6(B)(ii) shall be applied to the remaining installments thereof
in the inverse order of maturity.
(iii) As soon as practicable, but no later than three Business Days
after the receipt of any Net Disposition Proceeds by any Borrower or
Subsidiary, the Borrowers will deliver to the Agent a calculation of the
amount of such Net Disposition Proceeds and make a mandatory prepayment of
the Loans in an amount equal to 100% of such Net Disposition Proceeds to be
applied as follows: first, to the remaining installments of the Term Loan
in the inverse order of maturity until repaid in full; second, to repay
Revolving Loans until reduced to zero, and third to be deposited into the
Cash Collateral Account an amount equal to 105% of the amount by which the
aggregate Letter of Credit Outstandings is in excess of the amount of cash
held in the Cash Collateral Account.
(iv) As soon as practicable, but no later than 60 days following the
receipt by any Borrower or Subsidiary of any Net Casualty Proceeds in
excess of $50,000 (individually or in the aggregate over the course of a
calendar year), the Borrowers will make a mandatory prepayment of the Loans
in an amount equal to 100% of all Net Casualty Proceeds, to be applied as
follows: first, to the remaining installments of the Term Loan in the
inverse order of maturity until repaid in full; second, to repay Revolving
Loans until reduced to zero, and third to be deposited into the Cash
Collateral Account an amount equal to 105% of the amount by which the
aggregate Letter of Credit Outstandings is in excess of the amount of cash
held in the Cash Collateral Account; provided that (viii) no mandatory
prepayment of Net Casualty Proceeds shall be required (a) if the Parent
notifies the Agent no later than 60 days following the date of the casualty
of the Borrowers' good faith intention to apply any Net Casualty Proceeds
relating to such casualty to the rebuilding or replacement of such damaged,
destroyed or condemned assets or property and (b) to the extent the
Borrowers use such Net Casualty Proceeds to begin rebuilding or replacing
the damaged, destroyed or condemned assets or property within 180 days
following the receipt of such Net Casualty Proceeds and continues
diligently to complete such rebuilding or replacement of such damaged,
destroyed or condemned assets or property within the time reasonably
required therefor (the "Rebuilding and Replacement Work"), with the amount
of Net Casualty Proceeds unused after the completion of such Rebuilding and
Replacement Work being applied to the Loans as set forth in this Section
2.6(B)(iv).
(v) Simultaneously with the reduction of the Total Revolving
Commitment to zero under Section 2.6(A), the Borrowers will make a
mandatory prepayment of the outstanding principal amount of the Term Loan.
(C) Optional Prepayments. The Borrowers have the right at any time and
from time to time to prepay any Loans, in whole or in part, (i) with
respect to Eurodollar Loans, upon at least three Business Days' prior
written notice to the Agent and (ii) with respect to Base Rate Loans on the
same Business Day if written notice is received by the Agent prior to 12:00
noon (Chicago, Illinois time) and thereafter upon at least one Business
Day's prior written notice to the Agent; provided that (a) each such
partial prepayment shall be in multiples of $100,000, (b) no prepayment of
Eurodollar Loans shall be permitted under this Section 2.6(C) other than on
the last day of an Interest Period applicable thereto unless such
prepayment is accompanied by the payment of the amounts described in
Section 3.5(A) and (c) no partial prepayment of a Borrowing of Eurodollar
Loans shall result in the aggregate principal amount of the Eurodollar
Loans remaining outstanding pursuant to such Borrowing being less than
$1,000,000. Each notice of prepayment shall specify the prepayment date,
the principal amount of the Loans to be prepaid and in the case of
Eurodollar Loans, the Borrowing or Borrowings pursuant to which made, shall
be irrevocable and shall commit the Borrowers to prepay such Loan by the
amount and on the date stated therein. The Agent shall, promptly after
receiving notice from a Borrower under this Section 2.6(C), notify each
Lender of the principal amount of the Loans held by such Lender that are to
be prepaid, the prepayment date and the manner of application of the
prepayment.
(D) Application of Payments. Any partial prepayment of the Loans by
the Borrowers under Sections 2.6(C) or 3.5 shall be applied as specified by
the Borrowers or, in the absence of such specification, as determined by
the Agent; provided that in the latter case no Eurodollar Loans shall be
prepaid under Section 2.6(C) to the extent that such Loan has an Interest
Period ending after the required date of prepayment unless and until all
outstanding Base Rate Loans and Eurodollar Loans with Interest Periods
ending on such date have been repaid in full.
2.7 Fees.
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(A) Facility Fee. The Borrower shall pay to the Agent, for the
respective accounts of the Agent and the Lenders, a facility fee of
$750,000 payable on the Closing Date. The Agent acknowledges receipt of
$250,000 prior to the Closing Date that will be applied to the fee
described in this Section 2.7(A).
(B) Commitment Fee. The Borrower shall pay to the Agent, for the
respective accounts of the Agent and the Lenders, a commitment fee (the
"Commitment Fee") for the period commencing on the Closing Date to the
Termination Date, computed (on the basis of the actual number of days
elapsed over a year of 360 days) at the rate of 0.50% per annum on the
average daily Unused Total Commitment. Such Commitment Fee, to the extent
then accrued, shall be payable (i) monthly, in arrears, on the first
calendar day of each month, (ii) on the Termination Date and (iii) as
provided in Section 2.6(A), upon any reduction or termination in whole or
in part of the Total Revolving Commitment.
(C) Letter of Credit Fees. The Borrower shall pay with respect to each
Letter of Credit (i) to the Agent on behalf of the Lenders a fee calculated
(on the basis of the actual number of days elapsed over a year of 360 days)
at the rate of 2.00% per annum on the undrawn face amount of such Letter of
Credit Outstandings and (ii) to the Agent for the account of the Letter of
Credit Issuer, such fees and charges in connection with the issuance and
processing of the Letters of Credit issued by the Letter of Credit Issuer
as are customarily imposed by the Letter of Credit Issuer from time to time
in connection with letter of credit transactions. Accrued fees described in
clause (i) above in respect of each Letter of Credit shall be due and
payable monthly in arrears on the first calendar day of each month and on
the Termination Date. Accrued fees described in clause (ii) above in
respect of each Letter of Credit shall be payable at times to be determined
by the Letter of Credit Issuer and the Agent.
(D) Agent's Fee. The Borrower shall pay to the Agent, for its own
account, an annual agency fee of $100,000 payable on the Closing Date and
each anniversary thereof.
(E) Audit Fees. The Borrowers will pay to the Agent, on the last day
of each month in which an audit, Account verification, inventory analysis
or other business analysis is performed by or for the benefit of the Agent
with respect to any Borrower, an amount equal to the sum of (i) audit fees
in an amount equal to $750 per day for each person employed to perform such
audit, verification or analysis and (ii) all reasonable out-of-pocket costs
or expenses incurred by the Agent in the performance of any such audit,
verification or analysis.
(G) Nature of Fees. All Fees shall be paid on the dates due, in
immediately available funds, to the Agent for the respective accounts of
the Agent and the Lenders, as provided in this Agreement. Once paid, none
of the Fees shall be refundable under any circumstances.
2.8 Pro Rata Treatment. All payments and repayments of principal and
interest in respect of the Loans (except as provided in Sections 3.1 and
3.2) shall be made pro rata among the Lenders in accordance with the then
outstanding principal amount of the Loans or participations in any Letter
of Credit Guaranty and all Letter of Credit Outstandings and all payments
of Commitment Fees and Letter of Credit Fees (other than those payable to
the Letter of Credit Issuer) shall be made pro rata among the Lenders in
accordance with their respective Commitments. All payments by the Borrowers
under this Agreement shall be (i) net of any tax applicable to the
Borrowers and (ii) made in Dollars in immediately available funds at the
Office by 12:00 noon (Chicago, Illinois time) on the date on which such
payment shall be due.
2.9 No Discharge; Survival of Claims. Each Borrower agrees that (i)
its obligations under this Agreement shall not be discharged by the entry
of an order confirming a Plan of Reorganization (and each of the Borrowers,
under section 1141(d)(4) of the Bankruptcy Code, waives any such discharge)
and (ii) the Superpriority Claim granted to the Agent and the Lenders
pursuant to the Final Order and described in Section 4.1 and the Liens
granted to the Agent pursuant to the Final Order and described in Section 4
shall not be affected in any manner by the entry of an order confirming a
Plan of Reorganization.
SECTION 3: CHANGE IN CIRCUMSTANCES; INCREASED COSTS
3.1 Reserve Requirements; Change in Circumstances. (A) Notwithstanding
any other provision in this Agreement to the contrary, if after the Closing
Date any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force
of law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any
fees or other amounts payable under this Agreement (other than changes in
respect of Taxes, Other Taxes and taxes imposed on, or measured by, the net
income or overall gross receipts or franchise taxes of such Lender by the
jurisdiction in which such Lender has its principal office or in which the
applicable lending office for such Eurodollar Loan is located or by any
political subdivision or taxing authority therein, or by any other
jurisdiction or by any political subdivision or taxing authority therein
other than a jurisdiction in which such Lender would not be subject to tax
but for the execution and performance of this Agreement), or shall impose,
modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or
credit extended by such Lender (except any such reserve requirement that is
reflected in Adjusted LIBOR) or shall impose on such Lender or the London
interbank market any other condition affecting this Agreement or the
Eurodollar Loans made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or to reduce the amount of any sum received
or receivable by such Lender under this Agreement (whether of principal,
interest or otherwise) by an amount deemed by such Lender to be material,
then the Borrowers will pay to such Lender in accordance with Section
3.1(C) such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered.
(B) If any Lender shall have determined that the adoption or
effectiveness after the Closing Date of any law, rule, regulation or
guideline regarding capital adequacy, or any change in any of the foregoing
or in the interpretation or administration of any of the foregoing by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or
any lending office of such Lender) or any Lender's holding company with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's
capital or on the capital of such Lender's holding company, if any, as a
consequence of this Agreement, the Loans made by such Lender, such Lender's
Revolving Commitment or the issuance of, or participation in, any Letter of
Credit by such Lender to a level below that such Lender or such Lender's
holding company could have achieved but for such adoption, change or
compliance (taking into account Lender's policies and the policies of such
Lender's holding company with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time the Borrowers
shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such
reduction suffered.
(C) A certificate of a Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender or its holding company as
specified in Sections 3.1(A) and 3.1(B), as the case may be, shall be
delivered to the Parent and shall be conclusive absent manifest error. The
Borrowers shall pay each Lender the amount shown as due on any such
certificate delivered to it within 10 days after its receipt of the same.
Any Lender receiving any such payment shall promptly make a refund thereof
to the Borrowers if the law, regulation, guideline or change in
circumstances giving rise to such payment is subsequently deemed or held to
be invalid or inapplicable.
(D) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction
in return on capital with respect to any period shall not constitute a
waiver of such Lender's right to demand compensation with respect to such
period or any other period. The protection of this Section 3.1 shall be
available to each Lender regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or
other change or condition that has occurred or been imposed.
3.2 Change in Legality. (A) Notwithstanding anything in this Agreement
to the contrary. if (i) any change after the date of this Agreement in any
law or regulation or in the interpretation thereof by any Governmental
Authority charged with the administration thereof shall make it unlawful
for a Lender to make or maintain a Eurodollar Loan or to give effect to its
obligations as contemplated by this Agreement with respect to a Eurodollar
Loan or (ii) at any time any Lender determines that the making or
continuance of any of its Eurodollar Loans has become impracticable as a
result of a contingency occurring after the Closing Date that adversely
affects the London interbank market or the position of such Lender in such
market, then, by written notice to the Parent, such Lender may (a) declare
that Eurodollar Loans will not thereafter be made by such Lender under this
Agreement, whereupon any request by the Borrowers for a Eurodollar Loan
shall, as to such Lender only, be deemed a request for an Base Rate Loan
unless such declaration shall be subsequently withdrawn and (b) require
that all outstanding Eurodollar Loans made by it be converted to Base Rate
Loans, in which event all such Eurodollar Loans shall be automatically
converted to Base Rate Loans as of the effective date of such notice as
provided in Section 3.2(B). In the event any Lender shall exercise its
rights under clause (a) or (b) above, all payments and prepayments of
principal that would otherwise have been applied to repay the Eurodollar
Loans that would have been made by such Lender or the converted Eurodollar
Loans of such Lender shall instead be applied to repay the Base Rate Loans
made by such Lender in lieu of, or resulting from the conversion of, such
Eurodollar Loans.
(B) A notice to the Parent by any Lender under Section 3.2(A) shall be
effective, if lawful and if any Eurodollar Loans shall then be outstanding,
on the last day of the then-current Interest Period, otherwise, such notice
shall be effective on the date of receipt by the Parent.
3.3 Taxes. (A) Any and all payments by a Borrower under this Agreement
shall be made free and clear of and without deduction for any and all
current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) taxes
imposed on or measured by the net income or overall gross receipts of the
Agent or any Lender (or any transferee or assignee thereof, including a
participation holder (any such entity being called a "Transferee")) and
franchise taxes imposed on the Agent or any Lender (or Transferee) by the
United States of America or any jurisdiction under the laws of which the
Agent or any such Lender (or Transferee) is organized or in which the
applicable lending office of any such Lender (or Transferee) is located or
any political subdivision thereof or by any other jurisdiction or by any
political subdivision or taxing authority therein other than a jurisdiction
in which the Agent or such Lender would not be subject to tax but for the
execution and performance of this Agreement and (ii) taxes, levies,
imposts, deductions, charges or withholdings ("Amounts") with respect to
payments under this Agreement to a Lender (or Transferee) in accordance
with laws in effect on the later of the Closing Date and the date such
Lender (or Transferee) becomes a Lender (or Transferee, as the case may
be), but not excluding, with respect to such Lender (or Transferee), any
increase in such Amounts solely as a result of any change in such laws
occurring after such later date or any Amounts that would not have been
imposed but for actions (other than actions contemplated by this Agreement)
taken by the Borrowers after such later date (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities,
"Taxes"). If a Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable under this Agreement to the Lenders (or
any Transferee) or the Agent, (i) the sum payable shall be increased by the
amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) such
Lender (or Transferee) or the Agent (as the case may be) shall receive an
amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers
shall pay the full amount deducted to the relevant taxing authority or
other Governmental Authority in accordance with applicable law.
(B) In addition, the Borrowers agree to pay any current or future
stamp or documentary taxes or any other excise or property taxes, charges,
assessments or similar levies that arise from any payment made under this
Agreement or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Document (all such
changes, "Other Taxes").
(C) The Borrowers will indemnify each Lender (or Transferee) and the
Agent for the full amount of Taxes and Other Taxes paid by such Lender (or
Transferee) or the Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other Governmental Authority.
Such indemnification shall be made within 30 days after the date any Lender
(or Transferee) or the Agent, as the case may be, makes written demand
therefor. If a Lender (or Transferee) or the Agent shall become aware that
it is entitled to receive a refund in respect of Taxes or Other Taxes as to
which it has been indemnified by the Borrowers under this Section 3.3(C),
it shall promptly notify the Parent of the availability of such refund and
shall, within 30 days after receipt of a request by a Borrower, apply for
such refund at the Borrowers' expense. If any Lender (or Transferee) or the
Agent receives a refund in respect of any Taxes or Other Taxes as to which
it has been indemnified by the Borrowers under this Section 3.3(C), it
shall promptly notify the Parent of such refund and shall, within 30 days
after receipt of a request by a Borrower (or promptly upon receipt, if a
Borrower has requested application for such refund under this Section
3.3(C)), repay such refund to the Borrowers (to the extent of amounts that
have been paid by the Borrowers under this Section 3.3(C) with respect to
such refund plus interest that is received by the Lender (or Transferee) or
the Agent as part of the refund), net of all out-of-pocket expenses of such
Lender (or Transferee) or the Agent and without additional interest
thereon; provided that the Borrowers, upon the request of such Lender (or
Transferee) or the Agent, agree to return such refund (plus penalties,
interest or other charges) to such Lender (or Transferee) or the Agent in
the event such Lender (or Transferee) or the Agent is required to repay
such refund. Nothing contained in this Section 3.3(C) shall require any
Lender (or Transferee) or the Agent to make available any of its tax
returns (or any other information relating to its taxes that it deems to be
confidential).
(D) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by a Borrower in respect of any payment to any Lender (or
Transferee) or the Agent, the Borrowers will furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof.
(E) Without prejudice to the survival of any other agreement contained
in this Section 3.3, such agreements and obligations survive the payment in
full of the principal of and interest on all Loans.
(F) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction outside the United States of America shall, if legally able to
do so, prior to the immediately following due date of any payment by a
Borrower under this Agreement, deliver to the Parent such certificates,
documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including (i) Internal Revenue Service
Form W-8 or W-9 and (ii) Internal Revenue Service Form 1001 or Form 4224
and any other certificate or statement of exemption required by Treasury
Regulation Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any subsequent
version thereof or successors thereto, properly completed and duly executed
by such Lender (or Transferee) establishing that such payment is (a) not
subject to United States federal withholding tax under the Code because
such payment is effectively connected with the conduct by such Lender (or
Transferee) of a trade or business in the United States of America or (b)
totally exempt from United States federal withholding tax or subject to a
reduced rate of such tax under a provision of an applicable tax treaty.
Unless the Borrowers and the Agent have received forms or other documents
satisfactory to them indicating that such payments under this Agreement are
not subject to United States federal withholding tax or are subject to such
tax at a rate reduced by an applicable tax treaty, the Borrowers or the
Agent shall withhold taxes from such payments at the applicable statutory
rate.
(G) The Borrowers shall not be required to pay any additional amounts
to any Lender (or Transferee) in respect of United States federal
withholding tax under Section 3.3(A) if the obligation to pay such
additional amounts would not have arisen but for a failure by such Lender
(or Transferee) to comply with the provisions of Section 3.3(F).
(H) Any Lender (or Transferee) claiming any additional amounts payable
under this Section 3.3 shall use reasonable efforts (consistent with legal
and regulatory restrictions) to file any certificate or document requested
by the Borrowers or to change the jurisdiction of its applicable lending
office if the making of such a filing or change would avoid the need for or
reduce the amount of any such additional amounts that may thereafter accrue
and would not, in the sole reasonable determination of such Lender, be
otherwise materially disadvantageous to such Lender (or Transferee).
3.4 Inability to Determine LIBOR. In the event, and on each occasion,
that on the day two Business Days prior to the commencement of any Interest
Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers absent
manifest error) that reasonable means do not exist for ascertaining
Adjusted LIBOR, the Agent shall, as soon as practicable thereafter, give
written or telegraphic notice of such determination to the Parent and the
Lenders, and any request by the Borrowers for a Borrowing of Eurodollar
Loans (including pursuant to a conversion or continuation of Eurodollar
Loans) under Section 2.2, 2.5(B) or 2.5(C) shall be deemed a request for a
Borrowing of Base Rate Loans. After such notice shall have been given and
until the circumstances giving rise to such notice no longer exist, each
request for a Borrowing of Eurodollar Loans shall be deemed to be a request
for a Borrowing of Base Rate Loans.
3.5 Funding Losses. (A) The Borrowers shall reimburse each Lender on
demand for any loss incurred or to be incurred by it in the reemployment of
the funds released (i) resulting from any prepayment (for any reason
whatsoever, including, without limitation, refinancing with Base Rate
Loans) of any Eurodollar Loan required or permitted under this Agreement,
if such Loan is prepaid other than on the last day of the Interest Period
for such Loan (including, without limitation, any such prepayment in
connection with the syndication of the credit facility evidenced by this
Agreement) or (ii) in the event that after the Borrowers deliver a notice
of borrowing under Section 2.2 in respect of Eurodollar Loans, such Loans
are not made on the first day of the Interest Period specified in such
notice of borrowing for any reason other than a breach by such Lender of
its obligations under this Agreement. Such loss shall be the amount as
reasonably determined by such Lender as the excess, if any, of (a) the
amount of interest which would have accrued to such Lender on the amount so
paid or not borrowed at a rate of interest equal to Adjusted LIBOR for such
Loan, for the period from the date of such payment or failure to borrow to
the last day (1) in the case of a payment or conversion of Base Rate Loans
other than on the last day of the Interest Period for such Loan, of the
then current Interest Period for such Loan or (2) in the case of such
failure to borrow, of the Interest Period for such Loan which would have
commenced on the date of such failure to borrow over (b) the amount of
interest which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
London interbank market. Each Lender shall deliver to the Parent from time
to time one or more certificates setting forth the amount of such loss as
determined by such Lender.
(B) In the event the Borrowers fail to prepay any Loan on the date
specified in any prepayment notice delivered under Section 2.6(C), the
Borrowers on demand by any Lender shall pay to the Agent for the account of
such Lender any amounts required to compensate such Lender for any loss
incurred by such Lender as a result of such failure to prepay, including,
without limitation, any loss, cost or expenses incurred by reason of the
acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment, but without
duplication of any amounts paid under Section 3.5(A). Each Lender shall
deliver to the Borrowers from time to time one or more certificates setting
forth the amount of such loss as determined by such Lender.
SECTION 4: PRIORITY; COLLATERAL
4.1 Priority and Liens. Each Borrower covenants, represents and
warrants that, upon entry of the Final Order, the Obligations (i) pursuant
to section 364(c)(1) of the Bankruptcy Code, shall at all times constitute
allowed administrative expense claims in the Cases having priority over all
administrative expenses of the kind specified in sections 105, 326, 328,
503(b), 506(c), 507(a), 507(b) and 726 of the Bankruptcy Code, (ii)
pursuant to section 364(c)(2) of the Bankruptcy Code, shall at all times be
secured by a perfected first priority Lien on all unencumbered prepetition
and postpetition property of the Borrowers (other than the portion of the
capital stock of each Foreign Subsidiary that is not subject to a Lien
securing the Existing Agreements) and on all cash maintained in the Cash
Collateral Account, the Concentration Account and each Depository Account
and any direct investments of the funds contained therein, (iii) pursuant
to section 364(c)(3) of the Bankruptcy Code, shall be secured by a
perfected Lien upon all prepetition and postpetition property of the
Borrowers (other than the property that is subject to existing Liens that
presently secure the obligations of the Borrowers and their respective
Subsidiaries under the Existing Agreements, as to which the Lien in favor
of the Agent and the Lenders will be as described in clause (iv) below)
that is subject to valid and perfected Liens in existence on the Petition
Date or to valid Liens in existence on the Petition Date that are perfected
subsequent to the Petition Date as permitted by section 546(b) of the
Bankruptcy Code or to Permitted Liens, junior to such valid and perfected
Liens and (iv) pursuant to section 364(d)(1) of the Bankruptcy Code, shall
be secured by a perfected first priority, senior priming Lien on all
property of the Borrowers, including without limitation, Accounts,
instruments, contract rights, chattel paper, general intangibles
(including, without limitation, causes of action), Inventory, equipment,
fixtures, documents of title, intellectual property, rights under license
agreements, real estate (whether owned or leased) and all proceeds thereof,
upon which a Lien has been granted (a) under the Existing Agreements to
secure the Borrowers' and their respective Subsidiaries' prepetition
Indebtedness under the Existing Agreements and (b) in connection with
Adequate Protection Obligations, in all cases subject only to (1) the
Carve-Out and (2) any Liens in existence on the Petition Date to which the
Liens described in clauses (a) and (b) above are subject or become subject
subsequent to the Petition Date as permitted by section 546(b) of the
Bankruptcy Code. The Lenders agree that so long as no Default or Event of
Default shall have occurred, the Borrowers shall be permitted to pay
compensation and reimbursement of expenses allowed and payable under 11
U.S.C. ss. 330 and 11 U.S.C. ss. 331, as the same may be due and payable,
and such payments shall not reduce the Carve-Out; provided that following
the Termination Date amounts in the Cash Collateral Account shall not be
subject to the Carve-Out.
4.2 Collateral. (A) To secure payment of the Obligations and
performance of its obligations under this Agreement and the other Loan
Documents, each Borrower grants, mortgages, hypothecates and pledges to the
Agent on behalf of the Lenders a continuing lien upon and security interest
in all of such Borrower's property, wherever located, whether now or
hereafter existing, owned, licensed, leased (to the extent of such
Borrower's leasehold interest in such property), consigned (to the extent
of such Borrower's ownership interest in such property), arising or
acquired, including, without limitation, all of such Borrower's right,
title and interest in all Accounts, general intangibles (including without
limitation such Borrower's causes of action, contract rights, intellectual
property, rights under licencing agreements and tax refunds), chattel
paper, instruments, documents, documents of title, Inventory, equipment,
deposit accounts, goods, investment property, insurance proceeds of or
relating to any of the foregoing, actions with respect to preferential
transfers, fraudulent conveyances and other avoidance power claims and any
recoveries of cash or proceeds of property representing recoveries under
sections 544, 547, 548, 549, 550 or 553 of the Bankruptcy Code, books and
records relating to any of the foregoing and accessions and additions to,
substitutions for, and replacements, products and proceeds of any of the
foregoing.
(B) To secure payment of the Obligations and performance of its
obligations under this Agreement and the other Loan Documents, each
Borrower assigns and conveys as security, grants a security interest in,
hypothecates, mortgages, pledges and sets over unto the Agent on behalf of
the Lenders all of the right, title and interest of such Borrower in all
real property the title to which is held by a Borrower, or the possession
of which is held by the Borrowers under a leasehold interest, together in
each case with all of the right, title and interest of such Borrower in and
to all buildings, improvements, and fixtures related thereto, any lease or
sublease thereof, all general intangibles relating thereto and all proceeds
thereof. If at any time after the Closing Date any Borrower acquires any
fee interest in real property, such Borrower shall promptly notify the
Agent thereof.
(C) To secure payment of the Obligations and performance of its
obligations under this Agreement and the other Loan Documents, each
Borrower grants, mortgages, hypothecates and pledges to the Agent for the
benefit of the Lenders a continuing lien upon and security interest in (i)
all of the outstanding shares of capital stock of any Subsidiary of such
Borrower (other than the portion of the capital stock of each Foreign
Subsidiary that is not subject to a Lien securing the Existing Agreements),
(ii) any securities, dividends or distributions and any other right or
property at any time and from time to time receivable or otherwise
distributed in respect of or in exchange for any or all of the foregoing
and any other property substituted or exchanged for the foregoing and (iii)
any and all products or proceeds of the foregoing.
4.3 Security Interest in Accounts. Pursuant to section 364(c)(2) of
the Bankruptcy Code, each Borrower assigns and pledges to the Agent, for
its benefit and for the ratable benefit of the Lenders, and grants to the
Agent, for its benefit and for the ratable benefit of the Lenders, a first
priority security interest, senior to all other Liens, if any, in all of
such Borrower's right, title and interest in and to the Cash Collateral
Account, the Concentration Account and each Depository Account and any
direct investment of the funds contained therein. Cash held in the Cash
Collateral Account, the Concentration Account or any Depository Account
shall not be available for use by the Borrowers, whether pursuant to
section 363 of the Bankruptcy Code or otherwise.
4.4 Further Assurances. (A) Each Borrower acknowledges that, pursuant
to the Final Order, the Liens in favor of the Agent on behalf of the
Lenders in all of the Borrower's property shall be perfected without the
recordation of any financing statements or instruments of mortgage or
assignment. Each Borrower further agrees that, upon the request of the
Agent, such Borrower shall execute, acknowledge and deliver, at the sole
cost and expense of the Borrowers, all such further acts, deeds,
conveyances, mortgages, assignments, estoppel certificates, financing
statements, notices of assignment, transfers and assurances as the Agent
may require from time to time in order (i) to carry out more effectively
the purposes of this Agreement or any other Loan Document, (ii) to subject
to valid and perfected first priority Liens all the Collateral, (iii) to
perfect and maintain the validity, effectiveness and priority of any of the
Loan Documents and the Lien intended to be created thereby and (iv) to
better assure, convey, grant, assign, transfer and confirm unto the Agent,
the Lenders and the Letter of Credit Issuer the rights now or hereafter
intended to be granted to the Agent, the Lenders and the Letter of Credit
Issuer under this Agreement, any Loan Document or any other instrument
under which any Borrower may be or may hereafter become bound to convey,
mortgage or assign to the Agent, the Lenders and the Letter of Credit
Issuer.
(B) Without limiting the generality of Section 4.4(A), each Borrower
agrees that, upon the request of the Agent, it will (i) promptly execute,
deliver and record a first priority leasehold mortgage, leasehold deed of
trust or assignment of lease, in any case in form and substance acceptable
to the Agent, in favor of the Agent with respect to any lease of real
property, whether such Borrower is lessee or lessor (including, without
limitation, under a so-called ground lease or net lease), which Lease shall
expressly permit the mortgaging thereof to the Agent, contain
non-disturbance provisions reasonably satisfactory to the Agent and include
such other customary lender protections as may be reasonably required by
the Agent, (ii) promptly execute, deliver and record a first priority
mortgage or deed of trust (subject only to Permitted Liens) in favor of the
Agent covering such Borrower's real property interest in any real property
now or hereafter owned in fee simple, in form and substance satisfactory to
the Agent, and provide the Agent with a title insurance policy covering
such real property interest in an amount equal to the purchase price
thereof, a current ALTA survey thereof, a surveyor's certificate and such
other certificates, opinions and documents as may be requested by the
Agent, in each case in form and substance satisfactory to the Agent and
(iii) use its commercially reasonable efforts (but not requiring any
payment to be made by the Borrowers) to deliver to the Agent a landlord
waiver, in form and substance satisfactory to the Agent, executed by each
of the Borrowers' lessors of real property.
SECTION 5: CONDITIONS OF LENDING
5.1 Conditions Precedent to Initial Loans and Letters of Credit. The
obligation of the Lenders to make the initial Loans or the Letter of Credit
Issuer to issue the initial Letter of Credit is subject to the following
conditions precedent (which conditions precedent must be satisfied no later
than the earlier of (i) 60 days following the Petition Date and (ii) two
days after the entry of the Final Order):
(A) Loan Documents and other Closing Documents. The Agent shall have
received all of the following, each duly executed and dated the Closing
Date (or such earlier date as shall be satisfactory to the Agent), in form
and substance satisfactory to the Agent:
(i) this Agreement, any promissory notes requested under Section
2.3(F) and each other Loan Document;
(ii) the Budget; and
(iii) a certificate signed by a Responsible Officer on behalf of the
Borrowers dated as of the Closing Date, affirming the matters
set forth in Sections 5.2(C) and 5.2(D) as of the Closing Date.
(B) Supporting Documents. The Agent shall have received for each
Borrower:
(i) a copy of such Borrower's articles certificate of
incorporation, certificate of limited partnership, certificate
of formation or other instrument of organization, in each case
as amended, certified as of a recent date by the Secretary of
State of the state of its organization;
(ii) a certificate of such Secretary of State, dated as of a recent
date, as to the good standing of and payment of taxes by such
Borrower and as to the charter documents on file in the office
of such Secretary of State; and
(iii) a certificate of the secretary or an assistant secretary of
such Borrower dated the Closing Date and certifying (a) that
attached thereto is a true and complete copy of the by-laws,
partnership agreement, limited liability company agreement or
other operative document of such Borrower as in effect on the
Closing Date, (b) that attached thereto is a true and complete
copy of resolutions adopted by the board of directors, general
partner, managing member or other governing body of such
Borrower authorizing the Borrowings and Letter of Credit
extensions under this Agreement, the execution, delivery and
performance of this Agreement and the other Loan Documents and
the granting of the security interest in the Cash Collateral
Account, the Concentration Account and each Depository Account
and other Liens contemplated by the Loan Documents, (c) that
the charter documents of such Borrower have not been amended
since the date of the last amendment thereto indicated on the
certificate of the Secretary of State furnished under clause
(i) above and (d) as to the incumbency and specimen signature
of each officer of that entity executing this Agreement and the
other Loan Documents (such certificate to contain a
certification by another officer of such Borrower as to the
incumbency and signature of the officer signing the certificate
referred to in this clause (iii)).
(C) Final Order. At the time of the making of the initial Loans or at
the time of the issuance of the initial Letters of Credit, whichever first
occurs, the Agent and the Lenders shall have received a certified copy of
the Final Order in substantially the form of Exhibit B (with such
modifications as the Agent may approve in its discretion), which Final
Order will (i) have been entered by the Bankruptcy Court no later than 45
days after the Petition Date, (ii) have been entered, with the consent or
non-objection of a preponderance, as determined by the Agent in its sole
judgment, of the Existing Lenders, upon an application or motion of the
Borrowers reasonably satisfactory in form and substance to the Agent, on
such prior notice to such parties (including the Existing Lenders) as may
in each case be reasonably satisfactory to the Agent, (iii) grant the Agent
and the Lenders the Superpriority Claim and the Liens described in Section
4.1. (iv) approve this Agreement and the other Loan Documents, (v) approve
the payment by the Borrowers of all of the Fees set forth in Section 2.7,
(vi) be in full force and effect and (vii) not have been stayed, reversed,
modified or amended in any respect. If the Final Order is the subject of a
pending appeal in any respect, neither the making of Loans nor the issuance
of Letters of Credit nor the performance by the Borrowers of any of their
respective obligations under this Agreement or the other Loan Documents or
under any other instrument or agreement referred to in this Agreement shall
be the subject of a presently effective stay pending appeal.
(D) Superpriority Claim. No other claim having a priority superior or
pari passu with those granted by the Final Order to the Agent and the
Lenders shall be granted while any portion of the Loans (or refinancing
thereof) or the commitment under this Agreement remains outstanding.
(E) Adequate Protection Obligations. The order of the Bankruptcy Court
with respect to the Adequate Protection Obligations shall be in form and
substance satisfactory to the Agent in its sole discretion.
(F) Bankruptcy Court Orders; Petitions. All of the Bankruptcy Court's
orders entered in the Cases (including, without limitation, the "first day
orders" entered by the Bankruptcy Court at the time of the commencement of
the Cases) and the voluntary petitions filed by each Borrower to commence
its Case shall be reasonably satisfactory in form and substance to the
Agent.
(G) Excess Availability. (i) The lesser of the Borrowing Base on the
Closing Date and the Total Revolving Commitment minus (ii) all Revolving
Loans and Letters of Credit to be made or issued on the Closing Date is
greater than or equal to $5,000,000.
(H) Interim Financing; Existing Lenders. All indebtedness, obligations
and liabilities of the Borrowers under the interim financing provided to
the Borrowers by the Existing Lenders on or about the Petition Date have
been repaid in full (or will be repaid with the proceeds of the Loans). The
Existing Lenders' claim under the Existing Agreements will have been
reduced by up to $36,500,000 as a result of (i) up to a $32,500,000 cash
payment from the Borrowers to the Existing Lenders on the Closing Date and
(ii) the retention by the Existing Lenders of the Existing Lender Claim.
Immediately after such reduction, the Existing Lenders will assign all of
their respective right, title and interest in and to the claim represented
by the Existing Agreements (other than that represented by the Existing
Lender Claim) to the Junior Lenders. The terms and conditions of the
Existing Lender Claim shall be satisfactory to the Agent. The Existing
Lender Claim shall be subordinated to the Obligations pursuant to a
subordination agreement in form and substance satisfactory to the Agent.
The Bankruptcy Court shall have entered an order in form and substance
satisfactory to the Agent with respect to the Existing Lender Claim and
such order shall (i) be in full force and effect and (ii) not have been
stayed, reversed, modified or amended in any respect without the prior
written consent of the Agent and the Required Lenders.
(I) Junior Facility. The Borrowers have received at least $18,000,000
from the Junior Facility, the terms and conditions of which are
satisfactory to the Agent. The Junior Facility shall be subordinated to the
Obligations pursuant to a subordination agreement in form and substance
satisfactory to the Agent. The Bankruptcy Court shall have entered an order
in form and substance satisfactory to the Agent with respect to the Junior
Facility and such order shall (i) be in full force and effect and (ii) not
have been stayed, reversed, modified or amended in any respect without the
prior written consent of the Agent and the Required Lenders.
(J) Corporate and Judicial Proceedings. All corporate, partnership,
limited liability company and similar proceedings, and all judicial
proceedings, and all instruments and agreements in connection with the
transactions among the Borrowers, the Agent and the Lenders contemplated by
this Agreement shall be reasonably satisfactory in form and substance to
the Agent, and the Agent shall have received all information and copies of
all documents and papers, including records of corporate and judicial
proceedings, which the Agent may have reasonably requested in connection
therewith, such documents and papers where appropriate to be certified by
proper corporate, governmental or judicial authorities.
(K) Cash Management System. The cash management system of the
Borrowers shall be satisfactory to the Agent and such cash management
system has been approved by the Bankruptcy Court pursuant to an order
acceptable to the Agent. The Borrowers shall have delivered to the Agent
(i) original depository account notices substantially in the form of
Exhibit C and (ii) blocked account agreements substantially in the form of
Exhibit D, in each case duly executed by the appropriate Borrowers, for
each of the financial institutions at which a Depository Account is
maintained on the Closing Date.
(L) Compliance with Laws. The Borrowers shall have granted the Agent
access to and the right to inspect all reports, audits and other internal
information of the Borrowers relating to environmental matters, and any
third party verification of certain matters relating to compliance with
environmental laws and regulations requested by the Agent, and the Agent
shall be reasonably satisfied that the Borrowers are in compliance in all
material respects with all applicable environmental laws and regulations
and be satisfied with the costs of maintaining such compliance.
(M) Other Conditions. Each of the conditions precedent set forth in
Section 5.2 have been satisfied. The Agent shall have received such other
documents as the Agent may reasonably request.
(N) Other Information. The Agent shall have received such information
(financial or otherwise) as may be reasonably requested by the Agent and
shall have discussed the Borrowers' business plan previously delivered to
the Agent with the Borrowers' management and shall be satisfied with the
nature and substance of such discussions.
5.2 Conditions Precedent to Each Loan and Each Letter of Credit. The
obligation of the Lenders to make each Loan and of the Letter of Credit
Issuer to issue each Letter of Credit, including the initial Revolving
Loans, the initial Letters of Credit and the Term Loan, is subject to the
following conditions precedent:
(A) Notice. The Agent shall have received a notice with respect to
such borrowing or issuance, as the case may be, as required by Section 2.2.
(B) Letter of Credit Application. With respect a request for a Letter
of Credit, the Borrowers shall have executed and delivered to the Letter of
Credit Issuer a Letter of Credit Application and Reimbursement Agreement,
in form and substance satisfactory to the Agent, together with such other
certificates, documents and other papers and information as the Letter of
Credit Issuer or Agent may request and the terms of the proposed Letter of
Credit shall be satisfactory to the Agent in the exercise of its reasonable
discretion.
(C) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Loan Documents shall be true and
correct in all material respects on and as of the date of each Borrowing or
the issuance of each Letter of Credit with the same effect as if made on
and as of such date except to the extent such representations and
warranties expressly relate to an earlier date.
(D) No Default. On the date of each Borrowing or the issuance of each
Letter of Credit, no Default or Event of Default shall have occurred and be
continuing.
(E) Orders. The Final Order shall be in full force and effect and
shall not have been stayed, reversed, modified or amended in any respect
without the prior written consent of the Agent and the Required Lenders. If
the Final Order is the subject of a pending appeal in any respect, neither
the making of the Loans nor the issuance of any Letter of Credit nor the
performance by any Borrower of any of their respective obligations under
any of the Loan Documents shall be the subject of a presently effective
stay pending appeal.
(F) Payment of Fees. The Borrowers shall have paid to the Agent the
then unpaid balance of all accrued and unpaid Fees then payable under this
Agreement.
(G) Borrowing Base Certificate. The Agent shall have received the
timely delivery of the most recent Borrowing Base Certificate (dated no
more than 14 days prior to the making of a Loan or the issuance of a Letter
of Credit) required to be delivered under this Agreement, which Borrowing
Base Certificate shall include supporting schedules as required by the
Agent.
The request by the Borrowers for, and the acceptance by the Borrowers
of, each extension of credit under the Agreement shall be deemed to be a
representation and warranty by the Borrowers that the conditions specified
in this Section 5.2 have been satisfied or waived at that time.
SECTION 6: REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to make Loans and issue or participate
in Letters of Credit, each Borrower jointly and severally represents and
warrants to the Agent and the Lenders as follows:
6.1 Organization and Authority. Each Borrower (i) is an organization
duly organized and validly existing under the laws of the State of its
organization and is duly qualified as a foreign organization and is in good
standing in each jurisdiction in which the failure to so qualify would have
a Material Adverse Effect, (ii) subject to the entry by the Bankruptcy
Court of the Final Order, has the requisite organizational power and
authority to effect the transactions contemplated by this Agreement and the
other Loan Documents and (iii) subject to the entry by the Bankruptcy Court
of the Final Order, has all requisite organizational power and authority
and the legal right to own, pledge, mortgage and operate its properties and
to conduct its business as now or currently proposed to be conducted.
6.2 Due Execution. Upon the entry by the Bankruptcy Court of the Final
Order, the execution, delivery and performance by each Borrower of the Loan
Documents to which it is a party (i) are within the respective
organizational powers of such Borrower, have been duly authorized by all
necessary organizational action, including the consent of shareholders
where required, and do not (a) contravene the charter or by-laws of
Borrower, (b) violate any law (including, without limitation, the
Securities Exchange Act of 1934, as amended) or regulation (including,
without limitation, Regulations T, U or X of the Board of Governors of the
Federal Reserve System of the United States) or any order or decree of any
court or Governmental Authority, (c) conflict with or result in a breach
of, or constitute a default under, any material indenture, mortgage or deed
of trust entered into after the Petition Date or any material lease,
agreement or other instrument entered into after the Petition Date binding
on such Borrower or any of its properties or (d) result in or require the
creation or imposition of any Lien upon any of the property of such
Borrower other than the Liens granted under the Loan Documents. The
execution, delivery and performance by each Borrower of each of the Loan
Documents to which it is a party do not require the consent, authorization
by or approval of or notice to or filing or registration with any
Governmental Authority other than the entry of the Final Order. Upon the
entry by the Bankruptcy Court of the Final Order, this Agreement has been
duly executed and delivered by each Borrower. This Agreement is, and each
of the other Loan Documents to which each Borrower is or will be a party,
when delivered, will be, a legal, valid and binding obligation of such
Borrower, enforceable against such Borrower in accordance with its terms
and the Final Order.
6.3 Disclosure. The information that has been delivered in writing by
the Borrowers or any of their respective Subsidiaries to the Agent or to
the Bankruptcy Court in connection with any Loan Document and any financial
statement delivered under any Loan Document (other than to the extent that
any such statements constitute projections), taken as a whole and in light
of the circumstances in which made, contains no untrue statement of a
material fact and does not omit to state a material fact necessary to make
such statements not misleading and, to the extent that any such information
constitutes projections, such projections were prepared in good faith on
the basis of assumptions, methods, data, tests and information believed by
the Borrowers or such Subsidiaries to be reasonable at the time such
projections were furnished.
6.4 Financial Statements. The Borrowers have furnished the Lenders
with copies of each financial statement described on Schedule 6.4. Such
financial statements present fairly the financial condition and results of
operations of the Borrowers and their respective Subsidiaries on a
consolidated basis as of such dates and for such periods and such balance
sheets and the notes thereto disclose all liabilities, direct or
contingent, of the Borrowers and their respective Subsidiaries as of the
dates thereof required to be disclosed by GAAP and such financial
statements were prepared in a manner consistent with GAAP, subject (in the
case of such fiscal quarter statement) to normal year end adjustments. No
Material Adverse Effect has occurred from that set forth in the Borrowers'
reviewed consolidated balance sheet dated January 29, 2000, other than
those that customarily occur as a result of events leading up to and
following the commencement of a proceeding under chapter 11 of the
Bankruptcy Code and the commencement of the Cases (including, without
limitation, those reflected in the financial projections previously made
available to the Agent).
6.5 Subsidiaries. No Borrower owns a Subsidiary, whether directly or
indirectly, other than as listed on Schedule 6.5. Each of the Persons
listed on Schedule 6.5 is a wholly owned, direct or indirect Subsidiary of
a Borrower.
6.6 Liens. Except for Liens existing on the Petition Date as reflected
on Schedule 6.6, there are no Liens of any nature whatsoever on any assets
of the Borrowers or any of their respective Subsidiaries other than (i)
Liens granted pursuant to the Existing Agreements, (ii) Permitted Liens,
(iii) Liens permitted under Section 9.1(ii) and (iv) Liens in favor of the
Agent and the Lenders. Neither a Borrower nor any Subsidiary is a party to
any contract, agreement, lease or instrument the performance of which,
either unconditionally or upon the happening of an event, will result in or
require the creation of a Lien on any assets of a Borrower or a Subsidiary
or otherwise result in a violation of this Agreement other than the Liens
granted to the Agent and the Lenders as provided for in the Loan Documents.
6.7 Compliance with Law. (A) (i) Except as set forth in Schedule 6.7,
to the Borrowers' knowledge the operations of the Borrowers comply in all
material respects with all applicable environmental, health and safety
statutes and regulations, including, without limitation, regulations
promulgated under the Resource Conservation and Recovery Act, 42 U.S.C.
ss.ss. 6901 et seq., (ii) to the Borrowers' knowledge, none of the
operations of the Borrowers is the subject of any federal or state
investigation evaluating whether any remedial action involving a material
expenditure by a Borrower or any of its Subsidiaries is needed to respond
to a release of any Hazardous Waste or Hazardous Substance (as such terms
are defined in any applicable state or federal environmental law or
regulations) into the environment and (iii) to the Borrowers' knowledge,
the Borrowers do not have any material contingent liability in connection
with any release of any Hazardous Waste or Hazardous Substance into the
environment.
(B) No Borrower is, to the best of its knowledge, in violation of any
law, rule or regulation or in default with respect to any judgment, writ,
injunction or decree of any Governmental Authority the violation of which,
or a default with respect to which, could reasonably be expected to have a
Material Adverse Effect.
6.8 Insurance. All policies of insurance of any kind or nature owned
by or issued to the Borrowers, including, without limitation, policies of
life, fire, theft, product liability, public liability, property damage,
other casualty, employee fidelity, workers' compensation, employee health
and welfare, title, property and liability insurance, are in full force and
effect and are of a nature and provide such coverage as is customarily
carried by companies of the size and character of the Borrowers.
6.9 The Final Order. On the date of the making of any Loan or the
issuance of any Letter of Credit, the Final Order shall have been entered
and shall not have been amended, stayed, vacated or rescinded. Upon the
maturity (whether by the acceleration or otherwise) of any of the
Obligations, the Lenders shall, subject to the provisions of Section 11.2,
be entitled to immediate payment of such Obligations, and to enforce the
remedies provided for under the Loan Documents, without further application
to or order by the Bankruptcy Court.
6.10 Use of Proceeds. The proceeds of the Loans shall be used (i) to
repay in full the interim financing provided to the Borrowers by the
Existing Lenders on or about the Petition Date in an amount up to
$5,000,000, (ii) to repay in part the Existing Lenders with respect to the
Existing Agreements on the Closing Date in an amount, together with the
proceeds of the Junior Facility, not to exceed $32,500,000 in the
aggregate, which repayment will be made in accordance with the Final Order
and as described in Section 5.2(H) (provided that the total repayments
permitted under clause (i) above and this clause (ii) may not exceed
$37,000,000), (iii) to pay fees and expenses relating to the Cases and (iv)
for working capital requirements of the Borrowers and their respective
Subsidiaries. The proceeds of the Term Loan may not be used for any purpose
other than to repay the Existing Lenders with respect to the Existing
Agreements as described in the preceding sentence. The proceeds of the
Loans and Letters of Credit may not be advanced to or funded to the Foreign
Subsidiaries; provided that the Borrowers may, from and after the Petition
Date, purchase product and inventory from the Foreign Subsidiaries and pay
for such purchases in the ordinary course of business on customary trade
terms consistent with past practice.
6.11 Litigation. Other than as set forth on Schedule 6.11, there are
no unstayed actions, suits or proceedings pending or, to the knowledge of
any Borrower or Subsidiary, threatened against or affecting any Borrower or
Subsidiary or any of their respective properties, before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that could reasonably be expected to
have a Material Adverse Effect.
6.12 Governmental Regulation. No Borrower is limited in its ability to
incur Indebtedness or its ability to consummate the transactions
contemplated by the Loan Documents by reason of regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, or the Investment Company Act of 1940, or any other federal
or state statute or regulation. No Borrower is an entity that is required
to be registered as an investment company under the Investment Company Act
of 1940.
6.13 Payment of Taxes. Except as set forth on Schedule 6.13, all tax
returns and reports of each of the Borrowers required to be filed have been
timely filed (after giving effect to any extensions) and all taxes,
assessments, fees and other governmental charges shown to be due and
payable on said returns have been timely paid and all other taxes,
assessments, fees and other governmental charges imposed upon it or any of
its property by any Governmental Authority have been timely paid other than
any taxes, assessments, fees or other charges (i) which are being contested
in good faith by such Borrower by appropriate proceedings diligently
instituted and conducted and without danger of any material risk to the
Collateral and (ii) with respect to which a reserve or other appropriate
provision, if any, as is required in conformity with GAAP shall have been
made. No Borrower has any knowledge of any proposed assessment against it
or any other Borrower that has or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
6.14 Assets and Properties. Each Borrower has good and marketable
title or leasehold interests, as applicable, to all of its material assets
and property (tangible and intangible), and all such assets and property
are free and clear of all Liens except Liens securing the Obligations and
Permitted Liens. Substantially all of the assets and property owned by,
leased to or used by such Borrower are in good operating condition and
repair, ordinary wear and tear excepted, are free and clear of any known
defects except such defects as do not substantially interfere with the
continued use thereof in the conduct of normal operations, and are able to
serve the function for which they are currently being used, except in each
case where the failure of such asset to meet such requirements would not
have or is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect. Neither this Agreement nor any other Loan
Document, nor any transaction contemplated under any Loan Document, will
affect any right, title or interest of such Borrower in and to any of such
assets in a manner that would have or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect. The Borrowers'
registered patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark rights and
copyrights, and all licenses therefor, are listed on Schedule 6.14.
6.15 Bank Accounts. The Borrowers' Depository Accounts are listed on
Schedule 6.15(A). Except for the Depository Accounts, the Cash Collateral
Account, the Concentration Account and as set forth on Schedule 6.15(B), no
Borrower maintains a bank account or deposits funds with any financial
institution other than the Agent.
SECTION 7: REPORTING REQUIREMENTS
From the Closing Date and for so long as any Revolving Commitment is
in effect, any Letter of Credit remains outstanding (in a face amount in
excess of the amount of cash then held in the Cash Collateral Account or in
excess of the face amount of back-to-back letters of credit delivered, in
each case under Section 2.1(C)(xii)) or any amount remains outstanding or
unpaid under this Agreement, each Borrower agrees that, unless the Required
Lenders otherwise consent in writing, the Borrowers will, and will cause
their respective Subsidiaries to:
7.1 Financial Statements and Reports. Deliver to the Agent and each of
the Lenders:
(A) within 90 days after the end of each fiscal year, the Borrowers'
consolidated and consolidating balance sheet and related statement of
income and, with respect to the Borrowers' consolidated balance sheet, cash
flows, showing the financial condition of the Borrowers and their
respective Subsidiaries on a consolidated and consolidating basis as of the
close of such fiscal year and the results of their respective operations
during such year, such financial statements to be audited by independent
public accountants of recognized national standing acceptable to the Agent
and accompanied by an opinion of such accountants (which shall not be
qualified in any material respect other than with respect to the Cases or a
going concern qualification) and to be certified by a Responsible Officer
to the effect that such financial statements fairly present the financial
condition and results of operations of the Borrowers and their respective
Subsidiaries on a consolidated and consolidating basis in accordance with
GAAP;
(B) within 30 days after the end of each calendar month, the
Borrowers' consolidated and consolidating balance sheets and related
statements of income and, with respect to the Borrowers' consolidated
balance sheet, cash flows, showing the financial condition of the Borrowers
and their respective Subsidiaries on a consolidated and consolidating basis
as of the close of such month and the results of their operations during
such month, each certified by a Responsible Officer as fairly presenting
the financial condition and results of operations of the Borrowers and
their respective Subsidiaries on a consolidated and consolidating basis in
accordance with GAAP, subject to normal year-end audit adjustments;
(C) concurrently with any delivery of financial statements under
Section 7.1(A) or 7.11(B), as applicable, (i) a certificate of a
Responsible Officer (a) certifying that no Default or Event of Default has
occurred or, if such a Default or Event of Default has occurred, specifying
the nature and extent thereof and any corrective action taken or proposed
to be taken with respect thereto and (b) setting forth computations in
reasonable detail satisfactory to the Agent demonstrating compliance with
the provisions of Sections 10 and (ii) a certificate (which certificate may
be limited to accounting matters and disclaim responsibility for legal
interpretations) of such accountants accompanying the audited financial
statements delivered under Section 7.1(A) certifying that, in the course of
the regular audit of the business of the Borrowers and their respective
Subsidiaries, such accountants have obtained no knowledge that an Event of
Default has occurred and is continuing, or if, in the opinion of such
accountants, an Event of Default has occurred and is continuing, specifying
the nature thereof and all relevant facts with respect thereto;
(D) as soon as available, but no more than 30 days after the end of
each month, the unaudited monthly cash flow reports of the Borrowers and
their respective Subsidiaries on a consolidated basis and as of the close
of such fiscal month and the results of their operations during such fiscal
period and the then elapsed portion of the fiscal year;
(E) within 30 days after the end of each calendar quarter, quarterly
financial projections for the following six fiscal month period;
(F) as soon as possible, and in any event within 45 days of the
Closing Date, a consolidated and consolidating pro forma balance sheet of
the Borrowers' and their respective Subsidiaries' financial condition as of
the Petition Date;
(G) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
it with the Securities and Exchange Commission, or any governmental
authority succeeding to any of or all the functions of such commission or
with any national securities exchange, as the case may be;
(H) as soon as available and in any event (i) within 30 days after any
Borrower or any ERISA Affiliate knows or has reason to know that any
Termination Event described in clause (i) of the definition of Termination
Event with respect to any Single Employer Plan of a Borrower or an ERISA
Affiliate has occurred and (ii) within 10 days after any Borrower or any
ERISA Affiliate knows or has reason to know that any other Termination
Event with respect to any such Plan has occurred, a statement of a
Responsible Officer describing such Termination Event and the action, if
any, which such Borrower or such ERISA Affiliate proposes to take with
respect thereto;
(I) promptly and in any event within 10 days after receipt thereof by
any Borrower or any ERISA Affiliates from the PBGC, copies of each notice
received by such Borrower or any such ERISA Affiliate of the PBGC's
intention to terminate any Single Employer Plan of such Borrower or such
ERISA Affiliate or to have a trustee appointed to administer any such Plan;
(J) if requested by the Agent, promptly and in any event within 30
days after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) with respect to each Single Employer Plan of any Borrower or any
ERISA Affiliate;
(K) within 10 days after notice is given or required to be given to
the PBGC under Section 302(f)(4)(A) of ERISA of the failure of any Borrower
or any ERISA Affiliate to make timely payments to a Plan, a copy of any
such notice filed and a statement of a Responsible Officer setting forth
(i) sufficient information necessary to determine the amount of the Lien
under Section 302(f)(3) of ERISA, (ii) the reason for the failure to make
the required payments and (iii) the action, if any, which such Borrowers or
such ERISA Affiliate proposes to take with respect thereto;
(L) promptly and in any event within 10 days after receipt thereof by
any Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor, a
copy of each notice received by a Borrower or an ERISA Affiliate concerning
(i) the imposition of Withdrawal Liability by a Multiemployer Plan, (ii)
the determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (iii) the
termination of a Multiemployer Plan within the meaning of Title IV of ERISA
or (iv) the amount of liability incurred, or which may be incurred, by the
Borrower or any ERISA Affiliate in connection with any event described in
clause (i), (ii) or (iii) above;
(M) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of any Borrower or any
of their respective Subsidiaries, or compliance with the terms of any
material loan or financing agreements as the Agent, at the request of any
Lender, may reasonably request; and
(N) furnish to the Agent and its counsel promptly after the same is
available, copies of all pleadings, motions, applications, judicial
information, financial information and other documents filed by or on
behalf of a Borrower or any Subsidiary with the Bankruptcy Court in the
Cases or distributed by or on behalf of a Borrower or any Subsidiary to any
official committee appointed in the Cases.
7.2 Borrowing Base Certificate.
(A) By 12:00 p.m. (Chicago, Illinois time) (i) three Business Days
after the Saturday of each week and (ii) 25 days after the end of each
fiscal month (and on any other date on which the Agent reasonably
requests), the Borrowers shall furnish to the Agent a Borrowing Base
Certificate certified as true and correct by a Responsible Officer, setting
forth the Borrowing Base and the other information required therein as of
the Borrowers' close of business on the Saturday of the immediately
preceding week (in the case of the weekly Borrowing Base Certificates) or
as of the Borrowers' close of business on the last day of each fiscal month
(in the case of subsequent monthly Borrowing Base Certificates), in each
case together with such other information with respect to the Eligible
Accounts and Eligible Inventory of the Borrowers as the Agent may
reasonably request; it being understood that Inventory reports contained in
the monthly Borrowing Base Certificates will be reconciled, but the
Inventory reports contained in the weekly Borrowing Base Certificates will
not.
(B) In the event of any dispute about the eligibility of any asset for
inclusion in the Borrowing Base or the valuation thereof, the Agent's good
faith judgment controls.
(C) The Borrowing Base set forth in a Borrowing Base Certificate is
effective from and including the date such Borrowing Base Certificate is
duly received by the Agent to but not including the date on which a
subsequent Borrowing Base Certificate is duly received by the Agent, unless
the Agent disputes the eligibility of any asset for inclusion in the
Borrowing Base or the valuation thereof by notice of such dispute to the
Parent, in which case the value of such asset shall, at the discretion of
the Borrowers, either not be included in the Borrowing Base or be included
in the Borrowing Base with a value reasonably acceptable to the Agent.
(D) Each Borrowing Base Certificate shall be accompanied by backup
schedules showing the derivation thereof and containing such detail and
such other and further information as the Agent may reasonably request from
time to time.
(E) Concurrently with the delivery of each Borrowing Base Certificate,
the Borrowers shall give notice to the Agent of any mandatory prepayment
required pursuant to Section 2.6(B)(i), which notice shall specify a
prepayment date no later than the earlier of the date on which such
Borrowing Base Certificate is given and the date on which such Borrowing
Base Certificate is required to be provided to the Lenders hereunder.
(F) Notwithstanding anything to the contrary in this Section 7.2, in
no event shall any single element of value or asset be counted twice in
determining the Borrowing Base.
SECTION 8: AFFIRMATIVE COVENANTS
From the Closing Date and for so long as any Revolving Commitment is
in effect, any Letter of Credit remains outstanding (in a face amount in
excess of the amount of cash then held in the Cash Collateral Account or in
excess of the face amount of back-to-back letters of credit delivered, in
each case under Section 2.1(C)(xii)) or any amount remains outstanding or
unpaid under this Agreement, each Borrower agrees that, unless the Required
Lenders shall otherwise consent in writing, the Borrowers will, and will
cause their respective Subsidiaries to:
8.1 Existence. Preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business
except (i) if in the reasonable business judgment of such Borrower it is in
its best economic interest not to preserve and maintain such rights,
privileges, qualifications, permits, licenses and franchises and (ii) such
failure to preserve such rights, privileges, qualifications, permits,
licenses and franchises could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
8.2 Compliance with Laws. Comply with the charter and by-laws or other
organizational or governing documents of such Person and any law, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject, including, without limitation, the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended,
Regulations T, U or X of the Board of Governors of the Federal Reserve
System of the United States of America, ERISA, the Fair Labor Standards Act
and any certificate of occupancy, zoning ordinance, building, environmental
or land use requirement, permit or environmental, labor, employment,
occupational safety or health law, rule or regulation.
8.3 Insurance. (i) Keep its insurable properties insured at all times,
against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies of the same or similar
size in the same or similar businesses and maintain in full force and
effect public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with
the use of any properties owned, occupied or controlled by the Borrowers or
any Subsidiary, as the case may be, in such amounts and with such
deductibles as are customary with companies of the same or similar size in
the same or similar businesses and in the same geographic area and (ii)
maintain such other insurance or self insurance as may be required by law.
8.4 Obligations and Taxes. Pay all its material obligations arising
after the Petition Date promptly and in accordance with their terms and pay
and discharge promptly all material taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in
respect of its property arising after the Petition Date, before the same
shall become in default, as well as all material lawful claims for labor,
materials and supplies or otherwise arising after the Petition Date that,
if unpaid, would become a Lien or charge upon such properties or any part
thereof; provided that the Borrowers and their respective Subsidiaries
shall not be required to pay and discharge or to cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof is contested in good faith by appropriate
proceedings and the Borrowers and their respective Subsidiaries have set
aside on their books adequate reserves therefor.
8.5 Notice of Default. Promptly give to the Agent notice in writing of
any Default or Event of Default.
8.6 Access to Books and Records. Maintain or cause to be maintained at
all times true and complete books and records of the financial operations
of the Borrowers and their respective Subsidiaries and provide the Agent
and its representatives access to all such books and records during regular
business hours, in order that the Agent may examine and make abstracts from
such books, accounts, records and other papers for the purpose of verifying
the accuracy of the various reports delivered by the Borrowers or their
respective Subsidiaries to the Agent or the Lenders under this Agreement or
for otherwise ascertaining compliance with this Agreement. At any
reasonable time and from time to time during regular business hours, upon
reasonable notice, the Borrower will permit the Agent and any agents or
representatives (including, without limitation, appraisers) thereof to
visit the properties of the Borrowers and to conduct examinations of and to
monitor the Collateral.
8.7 Maintenance of Financial Statements. Keep or cause to be kept
financial statements in accordance with GAAP.
8.8 Audits. At any time upon the request of the Agent or the Required
Lenders through the Agent, permit the Agent or professionals (including
consultants, accountants and appraisers) retained by the Agent to conduct
evaluations and appraisals of (i) the Borrowers' practices in the
computation of the Borrowing Base and (ii) the assets included in the
Borrowing Base, and pay the reasonable fees and expenses in connection
therewith.
8.9 ERISA Compliance. Establish, maintain and operate, and cause each
of its ERISA Affiliates to establish, maintain and operate, all Plans to
comply in all material respects with the provisions of ERISA, the Code, all
other applicable laws and the regulations and interpretations thereunder
and the respective requirements of the governing documents for such Plans.
8.10 Maintenance of Property. Maintain in all material respects all of
its owned and leased property in good, safe and insurable condition and
repair and in accordance with any applicable manufacturers' specifications
and recommendations, not permit, commit or suffer to exist any waste
(except in the ordinary course of business) or abandonment of any such
property and, from time to time, make or cause to be made all material
repairs, renewal and replacements thereof; provided that such property may
be altered or renovated in the ordinary course of business.
8.11 Condemnation. Immediately upon learning of the institution of any
proceeding for the condemnation or other taking of any of its owned or
leased real property, notify the Agent of the pendency of such proceeding,
permit the Agent to participate in any such proceeding and, from time to
time, deliver to the Agent all instruments reasonably requested by the
Agent to permit the Agent's participation in such proceedings.
8.12 Borrowing Base. Maintain all Revolving Loans and Letters of
Credit in compliance with the then current Borrowing Base.
8.13 Change in Collateral; Collateral Records. Provide the Agent with
not less than thirty days' prior written notice of any change in the
location of any Collateral, other than to locations listed on Schedule
8.13. The Borrowers shall also advise the Agent promptly, in sufficient
detail, of any material adverse change relating to the type, quantity or
quality of the Collateral or the Liens granted on the Collateral. Each
Borrower agrees to execute and deliver to the Agent for the benefit of the
Agent from time to time, solely for the Agent's convenience in maintaining
a record of the Collateral, such written statements and schedules as the
Agent may reasonably require, designating, identifying or describing the
Collateral; provided that any Borrower's failure to promptly give the Agent
such statements or schedules shall not affect, diminish, modify or
otherwise limit the Agent's Lien in the Collateral.
8.14 Cash Management System.
----------------------
(A) The Borrowers shall maintain their cash management system as such
system exists on the Closing Date or as such system may be modified by the
terms of this Agreement. The Borrower shall (i) cause all cash and all
proceeds from Accounts and the sale of Inventory to be deposited into the
Depository Accounts in the ordinary course of business, (ii) cause all
funds in the Depository Accounts to be transferred into the Concentration
Account on a daily basis, (iii) cause all cash deposited in the
Concentration Account to be sent by wire transfer to the Agent Account on a
daily basis, (iv) instruct the Agent to cause all funds transferred to the
Agent Account to be credited to the Borrowers and applied to reduce the
Obligations as set forth in Section 2.3(B), (v) take all such actions as
the Agent deems necessary or advisable to send all cash, all proceeds from
the sale of Inventory, all proceeds from the collection of Accounts, and
all other remittances and other proceeds of Collateral to the Agent Account
to be applied to the Obligations as set forth in Section 2.3(B) and (vi)
from and after the Closing Date, take such actions as the Agent deems
necessary or advisable to grant to the Agent dominion and control over the
funds in the Concentration Account. The Borrowers shall promptly, and in
any event not later than three days after the opening of any such new
account, notify the Agent in writing of the creation of any new Depository
Account and shall at the time of such notice execute and deliver to the
Agent a depository account notice and blocked account agreement, in each
case as described in Section 5.1(K).
(B) Upon receipt by any Borrower of collections of cash and any
proceeds of Collateral, such Borrower shall immediately deposit all such
payments into the Concentration Account or any Depository Account. The
Borrowers shall cause all funds in the Depository Accounts to be promptly
transferred to the Concentration Account.
8.15 Leases. Upon the request of the Agent, provide the Agent with a
copy of each lease of real property to which a Borrower is a party, whether
as lessor or lessee. Each Borrower shall (i) comply in all material aspects
with all of its respective obligations under such leases, (ii) not modify,
amend, extend or otherwise change any of the terms, covenants or conditions
of any such leases if such modification, amendment, extension or other
change could have a Material Adverse Effect, (iii) not assign, sublease,
terminate or cancel any of such leases, (iv) upon the request of the Agent,
provide the Agent with a copy of each notice of default under any such
lease received by such Borrower immediately upon receipt thereof and
deliver to the Agent a copy of each notice of default sent by such Borrower
under any such lease simultaneously with its delivery of such notice under
such lease, (v) notify the Agent, not later than 60 days prior to the last
date on which any Borrower may exercise any renewal or extension option
granted to such Borrower under any such lease, that such Borrower has
exercised its right to renew or extend such lease or not to renew or extend
any such lease and, if such Borrower intends to renew such lease, the terms
and conditions of such renewal, (vi) notify the Agent at least 14 days
prior to the date such Borrower becomes liable under any new lease for real
property and (vii) promptly notify the Agent of such Borrower's receipt of
any notice or other knowledge of the commencement or threat of commencement
of any foreclosure or other repossession action by any holder of a mortgage
or deed of trust encumbering any fee simple interest with respect to which
such Borrower leases or conducts other operations.
8.16 Post-Closing Requirements. As soon as possible after the Closing
Date, but in any event no later than June 16, 2000, the Borrowers will
deliver to the Agent, and the Agent must be satisfied (in its discretion)
with, (i) the Borrowers' re-stated financial statements for the fiscal year
ended September 30, 1999, which re-stated financial statements and the
information presented therein will be consistent with the Borrowers'
internally prepared financial statements for such fiscal year provided to
the Agent prior to April 27, 2000, and (ii) the "reviewed" financial
statements of the Borrowers for the period from October 1, 1999, through
March 31, 2000, which "reviewed" financial statements and the information
presented therein will be consistent with the Borrowers' internally
prepared financial statements for such period provided to the Agent prior
to April 27, 2000 (or, in the case of the "reviewed" financial statements
for March 31, 2000, the Borrowers' internally prepared financial statements
for March 31, 2000, provided to the Agent prior to the Closing Date), such
review to be performed by Arthur Andersen or such other public accounting
firm mutually agreed upon by the Parent and the Agent and who is retained
by the Borrowers (and consented to by the Agent) and paid for by the
Borrowers. As soon as possible, but no later than ___ days after the
Closing Date, the Borrowers will substantially comply with the recommended
remedial actions set forth in (a) the letters dated April 5, 2000, from
Clayton Group Services, Inc. to the Agent (copies of which have been
provided to the Borrowers) with respect to the Borrowers' Northampton,
Massachusetts and Brockton, Massachusetts locations and (b) the letter
dated March 24, 2000, from Clayton Group Services, Inc. to the Agent (a
copy of which have been provided to the Borrowers) with respect to the
Borrowers' Elmwood Park, New Jersey.
SECTION 9: NEGATIVE COVENANTS
From the Closing Date and for so long as any Revolving Commitment is
in effect, any Letter of Credit under remains outstanding (in a face amount
in excess of the amount of cash then held in the Cash Collateral Account or
in excess of the face amount of back-to-back Letters of Credit delivered,
in each case under Section 2.1(C)(xii)) or any amount remains outstanding
or unpaid under this Agreement, each Borrower agrees that, unless the
Required Lenders otherwise consent in writing, the Borrowers will not (and
will not apply to the Bankruptcy Court for authority to) and will not
permit their respective Subsidiaries to:
9.1 Liens. Incur, create, assume or suffer to exist any Lien on any
asset of a Borrower or a Subsidiary now owned or hereafter acquired by a
Borrower or a Subsidiary, other than (i) Liens which were existing on the
Petition Date as reflected on Schedule 6.6 and Liens granted under the
Existing Agreements, (ii) Liens granted in connection with the Adequate
Protection Obligations; provided that the Final Order provides that the
holder of such Liens shall not be permitted to take any action to foreclose
with respect to such Liens so long as any amounts shall remain outstanding
under this Agreement or any Revolving Commitment shall be in effect, (iii)
Permitted Liens, (iv) Liens in favor of the Junior Lenders under the Junior
Facility, (v) Liens in favor of the Agent and the Lenders and (vi) Liens
securing purchase money Indebtedness or Capitalized Leases permitted by
Section 9.3(iii).
9.2 Mergers or Consolidations. Be, or permit any Subsidiary to be, a
party to any merger or consolidation, or purchase or otherwise acquire all
or substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person; provided that
any Borrower may merge with any other Borrower and any wholly owned
Subsidiary of a Borrower may mer with such Borrower so long as the Borrower
is the surviving entity of such merger.
9.3 Indebtedness. Contract, create, incur, assume or suffer to exist
any Indebtedness, other than (i) Indebtedness under this Agreement, (ii)
Indebtedness incurred prior to the Petition Date (including existing
Capitalized Leases), (iii) Indebtedness incurred subsequent to the Petition
Date secured by purchase money Liens or Capitalized Leases in an aggregate
amount not to exceed $500,000 during any twelve-month period, (iv)
Indebtedness incurred in connection with the Junior Facility or, to the
extent applicable, the Existing Lender Claim and (v) Indebtedness arising
from Investments among the Borrowers that are permitted under the
Agreement.
9.4 Use of Proceeds. Use the proceeds of (i) the Revolving Loans or
the Letters of Credit for purposes other than those set forth in Section
6.10 or (ii) any Loan to purchase or carry "margin stock" as such term is
defined in Regulations U and X of the Board of Governors of the Federal
Reserve System of the United States.
9.5 Capital Expenditures. Make cumulative Capital Expenditures in an
aggregate amount in excess $1,000,000 in any twelve-month period.
9.6 Guarantees and Other Liabilities. Purchase or repurchase (or
agree, contingently or otherwise, so to do) the Indebtedness of, or assume,
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance of any obligation or capability
of so doing, or otherwise), endorse or otherwise become liable, directly or
indirectly, in connection with the obligations, stock or dividends of any
Person, other than (i) for any guaranty of Indebtedness or other
obligations of any Borrower and if such Borrower could have incurred such
Indebtedness or obligations under this Agreement and (ii) by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business.
9.7 Chapter 11 Claims. Incur, create, assume, suffer to exist or
permit any other Superpriority Claim that is pari passu with or senior to
the claims of the Agent and the Lenders against the Borrowers under this
Agreement, other than the Carve-Out.
9.8 Dividends; Capital Stock. Declare or pay, directly or indirectly,
any dividends or make any other distribution or payment, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any
options, warrants, rights or other equity securities or agreements relating
to any capital stock), or set apart any sum for the aforesaid purposes;
provided that any of a Borrower's Subsidiaries may pay dividends to such
Borrower.
9.9 Transactions with Affiliates. Except as set forth on Schedule 9.9,
sell or transfer any property or assets to, or otherwise engage in any
other material transactions with, any of its Affiliates other than the
Borrowers and other than in the ordinary course of business at prices and
on terms and conditions not less favorable to such Borrower than could be
obtained on an arm's-length basis from unrelated third parties.
9.10 Investments. Make any Investment, other than (i) ownership by the
Borrowers of the capital stock of each of the Subsidiaries listed on
Schedule 6.5, (ii) Permitted Investments, (iii) deposits to vendors and
suppliers not to exceed $1,000,000 outstanding at any time and (iv)
advances and loans among the Borrowers and its Subsidiaries in the ordinary
course of business.
9.11 Disposition of Assets. Sell or otherwise dispose of any assets
(including, without limitation, the capital stock of any of its
Subsidiaries) except for (i) sales of inventory, fixtures and equipment in
the ordinary course of business, (ii) sales of obsolete or worn-out
inventory or equipment and (iii) sales of surplus equipment no longer used
in production.
9.12 Nature of Business. Modify or alter in any material manner the
nature and type of its business as conducted at or prior to the Petition
Date or the manner in which such business is conducted (except as required
by the Bankruptcy Code).
9.13 Sales and Leasebacks; Operating Leases. Become liable, by
assumption or otherwise, with respect to any lease, whether an operating
lease or a Capitalized Lease, of any property (whether real or personal or
mixed) (i) that such Borrower has sold or transferred or will sell or
transfer to any other Person or (ii) that such Borrower intends to use for
substantially the same purposes as any other asset which it has sold or
transferred or will sell or transfer to any other Person in connection with
such lease. No Borrower shall become liable in any way, whether directly or
by assignment or otherwise, for the obligations of a lessee under any lease
of any property (whether real, personal or mixed) by that Person as lessee
which is not a Capitalized Lease unless, immediately after giving effect to
the incurrence of liability with respect to such lease, the aggregate
amount of the annual obligations and indebtedness of the Borrowers in
respect of leases of property (whether real, personal or mixed) other than
Capitalized Leases does not exceed $250,000.
9.14 ERISA. Do any of the following to the extent that such act or
failure to act would result in the aggregate, after taking into account any
other such acts or failure to act, in a Material Adverse Effect:
(i) engage, or knowingly permit any Borrower to engage, in any
prohibited transaction described in Sections 406 of ERISA or
4975 of the Code for which a class exemption is not available
or a private exemption has not been previously obtained from
the United States Department of Labor or any Person succeeding
to the functions thereof;
(ii) permit to exist any accumulated funding deficiency (as defined
in Sections 302 of ERISA or 412 of the Code), with respect to
any Plan, that has not been waived;
(iii) fail, or permit any Borrower to fail, to pay timely required
contributions or annual installments due with respect to any
waived funding deficiency to any Plan if such failure could
result in the imposition of a Lien;
(iv) terminate, or permit any Borrower to terminate, any Plan that
would result in any liability of any Borrower or any ERISA
Affiliate under Title IV of ERISA or under such Plan; or
(v) fail, or permit any Borrower to fail, to pay any required
installment under Section 412(m) of the Code or any other
payment required under Section 412 of the Code or Section 302
of ERISA on or before the due date for such installment or
other payment, if such failure could result in the imposition
of a Lien.
9.15 Environmental. Become legally obligated, whether by settlement,
stipulation, nonappealable judgment, nonappealable conclusion of an
administrative proceeding or statute, for any liabilities and costs
(including, without limitation, all liabilities, obligations,
responsibilities, losses, damages, personal injury, death costs, punitive
damages, economic damages, consequential damages, treble damages,
intentional, willful or wanton injury, damage or threat to the environment,
natural resources or public health or welfare, costs and expenses
(including, without limitation, attorney, expert and consulting fees and
costs of investigation, feasibility or studies), fines, penalties and
monetary sanctions, interest, direct or indirect, known or unknown,
absolute or contingent, past, present or future) that exceed $150,000 in
the aggregate arising out of or relating to (i) the release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment or
into or out of any property (a "Release") or threatened Release at any
location of any waste, pollutant (as that term is defined in 42 U.S.C.
9601(33) or in 33 U.S.C. 1362(13)), hazardous substance (as that term is
defined in 42 U.S.C. 9601(14)), hazardous chemical (as that term is defined
by 29 CFR Section 1910.1200(c)), toxic substance, hazardous waste (as that
term is defined in 42 U.S.C. 6901), radioactive material, special waste,
petroleum, including crude oil or any petroleum-derived substance, waste,
or breakdown or decomposition product thereof, or any constituent of any
such substance or waste, including, without limitation, polychlorinated
biphenyls, and asbestos ("Contaminants") into the environment, including
the movement of Contaminants through or in the air, soil, surface water,
groundwater or Property, (ii) any action required to (a) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care or (iii) any violation of any federal,
state or local law, ordinance, rule, regulation, permit, license or other
binding determination of any Governmental Authority relating to, imposing
liability or standards concerning, or otherwise addressing the environment,
health or safety, including but not limited to the Clean Air Act, the Clean
Water Act, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., the Occupational
Safety and Health Act, 29 U.S.C. ss.ss. 651 et seq., the Resource
Conservation and Recovery Act of 1986, 42 U.S.C. ss.ss. 6901 et seq., any
so-called "Superfund" or "Superlien" law and the Toxic Substances Control
Act, each as from time to time hereafter in effect and together with any
amendments thereto, any successor statutes, and any regulations promulgated
thereunder.
9.16 Amendment of Certain Documents. Amend, supplement or otherwise
change (i) its articles or certificate of incorporation, partnership
agreement, certificate of limited partnership, certificate of limited
liability or operating agreement (or the equivalent organizational
documents), (ii) the by-laws (or the equivalent governing documents) and
(iii) any document setting forth the designation, amount or relative
rights, limitations and preferences of any class or series of its capital
stock, partnership interests or membership interests, as the case may be,
in each case in any material respect.
9.17 Matters Respecting the Cases. (i) Seek, consent to or suffer to
exist any modification, stay, vacation or amendment to the Final Order,
(ii) prior to the date on which the Obligations have been paid in full in
cash and the Revolving Commitments have been terminated, pay any
administrative expenses, except for (a) administrative expense claims
incurred in the ordinary course of the business of the Borrowers in
accordance with the terms of the Final Order and (b) expenses included
within the Carve-Out in accordance with the terms of the Final Order or
(iii) prior to the date on which the Obligations have been paid in full in
cash and the Revolving Commitments have been terminated, make any payments
or transfer any property in excess of $250,000 in the aggregate on account
of claims asserted by any of the Borrowers' vendors for reclamation in
accordance with Section 2-702 of the Uniform Commercial Code and Section
546(h) of the Bankruptcy Code.
9.18 Restricted Payments. Make any payment or other distribution,
whether in cash, property, securities or a combination thereof, (i) to the
Junior Lenders with respect to the Junior Facility other than in accordance
with the subordination agreement described in Section 5.1(H), (ii) to the
Junior Lenders or any other equity holder of the Parent's capital stock for
any other reason, including, without limitation, management, advisor or
other similar fees or reimbursement of costs and expenses, (iii) to the
Existing Lenders with respect to the Existing Lender Claim other than in
accordance with the subordination agreement described in Section 5.1(I) or
(iv) with respect to Adequate Protection Obligations.
SECTION 10: FINANCIAL COVENANTS
From the Closing Date and for so long as any Revolving Commitment is
in effect, any Letter of Credit remains outstanding (in a face amount in
excess of the amount of cash then held in the Cash Collateral Account or in
excess of the face amount of back-to-back Letters of Credit delivered, in
each case under Section 2.1(C)(xii)) or any amount remains outstanding or
unpaid under this Agreement, each Borrower agrees that, unless the Required
Lenders otherwise consent in writing, the Borrowers will not and will not
permit the Subsidiaries to:
10.1 Tangible Net Worth. Permit Tangible Net Worth, as measured on the
last day of each fiscal quarter, to be less than [TO COME].
10.2 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio, as measured on the last day of each month to be less than [TO COME].
10.3 Compliance with the Budget. Prior to the date that the Borrowers'
deliver, and the Agent accepts the satisfaction of, all of the financial
statements described in Section 8.16, the Borrowers will [TO COME].
SECTION 11: EVENTS OF DEFAULT; REMEDIES
11.1 Events of Default. Each of the following shall constitute an
event of default (each, an "Event of Default") under this Agreement:
(A) any material representation or warranty made by a Borrower in
this Agreement or in any Loan Document or in connection with
this Agreement or the credit extensions under this Agreement or
any material statement or representation made in any report,
financial statement, certificate or other document furnished by
a Borrower or any Subsidiary to the Agent or the Lenders under
or in connection with this Agreement, shall prove to have been
false or misleading in any material respect when made or
delivered;
(B) default shall be made in the payment of any (i) Fees or
interest on the Loans when due and such default shall continue
unremedied for more than two Business Days or (ii) principal of
the Loans or other amounts payable by the Borrower under this
Agreement (including, without limitation, Reimbursement
Obligations or cash collateralization in respect of Letters of
Credit), when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise;
(C) default shall be made by a Borrower or any Subsidiary in the
due observance or performance of any covenant, condition or
agreement contained in Section 7, 8.5, 8.12, 8.13, 8.14, 9 or
10;
(D) default shall be made by the Borrower or any of its
Subsidiaries in the due observance or performance of any other
covenant, condition or agreement to be observed or performed
pursuant to the terms of this Agreement or any of the other
Loan Documents and not set forth in Section 11.1(A), 11.1(B) or
11.1(C) and such default shall continue unremedied for more
than 15 days after the occurrence thereof;
(E) any of the Cases shall be dismissed or converted to a case
under chapter 7 of the Bankruptcy Code; a trustee under chapter
7 or chapter 11 of the Bankruptcy Code, a responsible officer
or an examiner with enlarged powers relating to the operation
of the business (powers beyond those set forth in section
1106(a)(3) and (4) of the Bankruptcy Code) under section
1106(b) of the Bankruptcy Code shall be appointed in any of the
Cases and the order appointing such trustee, responsible
officer or examiner shall not be reversed or vacated within 30
days after the entry thereof; or an application shall be filed
by a Borrower for the approval of any other Superpriority Claim
(other than the Carve-Out) in any of the Cases that is pari
passu with or senior to the claims of the Agent and the Lenders
against the Borrowers or there shall arise or be granted any
such pari passu or senior Superpriority Claim;
(F) the Bankruptcy Court shall enter an order or orders granting
relief from the automatic stay applicable under section 362 of
the Bankruptcy Code to the holder or holders of any security
interest to permit foreclosure (or the granting of a deed in
lieu of foreclosure or the like) on any assets of any Borrower
that have a value in excess of $25,000 in the aggregate;
(G) an order with respect to the Cases shall be entered by the
Bankruptcy Court confirming a Reorganization Plan that does not
contain a provision for termination of the Revolving
Commitments and payment in full in cash of all Obligations on
or before the effective date of, or substantial consummation
of, such Reorganization Plan;
(H) a Change of Control occurs;
(I) any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on a Borrower or a
Borrower shall so assert in any pleading filed in any court;
(J) a Borrower files any pleading seeking, or otherwise consenting
to, (i) the invalidation, subordination or other challenging of
the Liens granted to secure the Obligations under this
Agreement or the other Loan Documents or (ii) any relief under
section 506(c) of the Bankruptcy Code against the Agent or any
Lender with respect to any property which secures the
Obligations under this Agreement or the other Loan Documents;
(K) a Loan Document under which a Borrower or any Affiliate
purports to grant to the Agent a Lien on any of its property
shall for any reason fail or cease to create a valid and
perfected and, except to the extent permitted by the terms of
the Loan Documents, first priority Lien on or security interest
in any Collateral purported to be covered thereby;
(L) a Borrower, or any Affiliate of any Borrower that is a party to
any Loan Document, shall fail to pay when due any principal,
interest, premium or other payment obligation with respect to
any Indebtedness the aggregate outstanding principal balance of
which exceeds of $150,000, whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise, and
such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to
such Indebtedness; or any other default under any agreement or
instrument relating to any such Indebtedness, or any other
event, shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to
accelerate, cause a mandatory prepayment or repurchase of such
Indebtedness or to permit the acceleration of the maturity of
such Indebtedness or permit the holders to require a mandatory
prepayment or repurchase of such Indebtedness; or any such
Indebtedness in excess of such amount shall be declared to be
due and payable, or required to be prepaid, repurchased or
redeemed (other than by a regularly scheduled required
prepayment or redemption), prior to the stated maturity
thereof;
(M) an order of the Bankruptcy Court shall be entered reversing,
amending, supplementing, staying for a period in excess of 10
days, vacating or otherwise modifying the Final Order or
terminating the use of cash collateral by the Borrowers;
(N) any judgment or order as to a post-petition liability or debt
for the payment of money in excess of $100,000 shall be
rendered against a Borrower and the enforcement thereof shall
not have been stayed;
(O) any non-monetary judgment or order with respect to a
post-petition event shall be rendered against the Borrower or
any of its Subsidiaries that does or could reasonably be
expected to have a Material Adverse Effect and there shall be
any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(P) except as permitted by the orders entered by the Bankruptcy
Court prior to the Closing Date and the Final Order, the
Borrowers shall make any payment (by way of adequate protection
or otherwise) of principal or interest or otherwise on account
of any prepetition Indebtedness or trade payables or other
prepetition claims against a Borrower, including, without
limitation, reclamation claims and any amount due to a Foreign
Subsidiary that arose prior to the Petition Date, other than
payments authorized by the Bankruptcy Court (i) in respect of
accrued payroll and related expenses and employee benefits as
of the Petition Date and (ii) in respect of Adequate Protection
Obligations;
(Q) any Termination Event described in clauses (iii) or (iv) of the
definition of Termination Event shall have occurred and shall
continue unremedied for more than 10 days and the sum
(determined as of the date of occurrence of such Termination
Event) of the Insufficiency of the Plan in respect of which
such Termination Event shall have occurred and be continuing
and the Insufficiency of any and all other Plans with respect
to which such a Termination Event (described in such clauses
(iii) or (iv)) shall have occurred and then exist is equal to
or greater than $100,000;
(R) (i) a Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan, (ii)
such Borrower or such ERISA Affiliate does not have reasonable
grounds to contest such Withdrawal Liability and is not in fact
contesting such Withdrawal Liability in a timely and
appropriate manner and (iii) the amount of such Withdrawal
Liability specified in such notice, when aggregated with all
other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the
date of such notification), exceeds $100,000 allocable to
post-petition obligations or requires payments exceeding
$50,000 per annum in excess of the annual payments made with
respect to such Multiemployer Plans by such Borrower or such
ERISA Affiliate for the plan year immediately preceding the
plan year in which such notification is received;
(S) a Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, if as a result of such
reorganization or termination the aggregate annual
contributions of such Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being
terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan years that
include the date hereof by an amount exceeding $100,000;
(T) a Borrower or any ERISA Affiliate shall have committed a
failure described in Section 302(f)(1) of ERISA (other than the
failure to make any contribution accrued and unpaid as of the
Petition Date) and the amount determined under Section
302(f)(3) of ERISA is equal to or greater than $100,000; or
(U) it shall be determined (whether by the Bankruptcy Court or by
any other judicial or administrative forum) that a Borrower or
any of its Subsidiaries is liable for the payment of claims
arising out of any failure to comply (or to have complied) with
applicable environmental laws or regulations the payment of
which could reasonably be expected to have a Material Adverse
Effect and the enforcement thereof shall not have been stayed;
11.2 Remedies. If an Event of Default occurs, and at any time
thereafter during the continuance of such Event of Default, then without
further order of or application to the Bankruptcy Court the Agent may, and
at the request of the Required Lenders, shall, by notice to the Borrower
(with a copy to counsel for any statutory committee appointed in the Cases,
to counsel for the Existing Lenders and to the United States Trustee for
the District of Delaware), take one or more of the following actions at the
same or different times (provided that with respect to clause (D) below and
the enforcement of Liens or other remedies with respect to the Collateral
under clause (E) below, the Agent shall provide the Borrower (with a copy
to counsel for any statutory committee in the Cases, to counsel for the
Existing Lenders and to the United States Trustee for the District of
Delaware) with five Business Days' written notice prior to taking the
action contemplated thereby):
(A) immediately terminate the Total Revolving Commitment;
(B) declare the Loans then outstanding to be immediately due and
payable, whereupon the principal of the Loans together with
accrued interest thereon and any unpaid accrued Fees and all
other liabilities of the Borrowers accrued under this Agreement
and the other Loan Document, shall become immediately due and
payable, without presentment, demand, protest or any other
notice of any kind, all of which are expressly waived by the
Borrowers notwithstanding anything contained in this Agreement
or the other Loan Document to the contrary;
(C) require the Borrowers upon demand to immediately deposit in the
Cash Collateral Account cash in an amount which, together with
any amounts then held in the Cash Collateral Account, is equal
to the sum of 105% of the then outstanding Letters of Credit
(and to the extent the Borrowers shall fail to furnish such
funds as demanded by the Agent, the Agent shall be authorized
to debit the accounts of the Borrowers maintained with the
Agent in such amount five Business Days' after the giving of
the notice referred to in this Section 11.2);
(D) set-off amounts in the Cash Collateral Account or any other
accounts maintained with the Agent and apply such amounts to
the obligations of the Borrowers under this Agreement and the
other Loan Documents; and
(E) exercise any and all remedies under this Agreement and the Loan
Documents and under applicable law available to the Agent and
the Lenders.
11.3 Right of Set-Off. Subject to the provisions of Section 11.2, upon
the occurrence and during the continuance of any Event of Default, the
Agent and each Lender is authorized at any time and from time to time, to
the fullest extent permitted by law and without further order of or
application to the Bankruptcy Court, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by the Agent and each
such Lender to or for the credit or the account of the Borrowers against
any and all of the obligations of the Borrowers now or hereafter existing
under the Loan Documents, irrespective of whether or not such Lender shall
have made any demand under any Loan Document and although such obligations
may not have been accelerated. Each Lender and the Agent agrees promptly to
notify the Parent after any such set-off and application made by such
Lender or by the Agent, as the case may be; provided that the failure to
give such notice shall not affect the validity of such set-off and
application. The rights of each Lender and the Agent under this Section
11.3 are in addition to other rights and remedies which such Lender and the
Agent may have upon the occurrence and during the continuance of any Event
of Default.
SECTION 12: THE AGENT
12.1 Administration by Agent. The general administration of the Loan
Documents shall be by the Agent. Each Lender irrevocably authorizes the
Agent, at its discretion, to take or refrain from taking such actions as
agent on its behalf and to exercise or refrain from exercising such powers
under the Loan Documents as are delegated by the terms of the Loan
Documents, as appropriate, together with all powers reasonably incidental
thereto (including the release of Collateral in connection with any
transaction that is expressly permitted by the Loan Documents). The Agent
shall have no duties or responsibilities except as set forth in this
Agreement and the other Loan Documents.
12.2 Advances and Payments. (A) On the date of each Loan, the Agent
shall be authorized (but not obligated) to advance, for the account of each
of the Lenders, the amount of the Loan to be made by it in accordance with
its Revolving Commitment. Should the Agent do so, each of the Lenders
agrees immediately to reimburse the Agent in immediately available funds
for the amount so advanced on its behalf by the Agent, together with
interest at the Federal Funds Effective Rate if not so reimbursed on the
date due from and including such date but not including the date of
reimbursement.
(B) Any amounts received by the Agent in connection with this
Agreement (other than amounts to which the Agent is entitled under Sections
2.7(A), 2.7(D), 2.7(E), 2.7(F), 12.6, 13.5 and 13.6), the application of
which is not otherwise provided for in this Agreement shall be applied:
first, to the payment of any Fees, expenses or other Obligations (other
than principal and interest on the Loans) due and payable to the Lenders
under the Loan Documents; second, to the payment of interest due on the
Obligations; and third, to the payment of principal due on the Loans
(provided that scheduled payments of principal under the Term Loan will be
made to the Term Loan in accordance with Section 2.1(B)), in each case in
accordance with Section 2.8. All amounts to be paid to a Lender by the
Agent shall be credited to that Lender, after collection by the Agent, in
immediately available funds either by wire transfer or deposit in that
Lender's correspondent account with the Agent, as such Lender and the Agent
shall from time to time agree.
12.3 Sharing of Setoffs. Each Lender agrees that if it shall, through
the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, including, but not limited to, a secured claim under section
506 of the Bankruptcy Code or other security or interest arising from, or
in lieu of, such secured claim and received by such Lender under any
applicable bankruptcy, insolvency or other similar law, or otherwise,
obtain payment in respect of its Loans as a result of which the unpaid
portion of its Loans is proportionately less than the unpaid portion of the
Loans of any other Lender (i) it shall promptly purchase at par (and shall
be deemed to have thereupon purchased) from such other Lender a
participation in the Loans of such other Lender, so that the aggregate
unpaid principal amount of each Lender's Loans and its participation in
Loans of the other Lenders shall be in the same proportion to the aggregate
unpaid principal amount of all Loans then outstanding as the principal
amount of its Loans prior to the obtaining of such payment was to the
principal amount of all Loans outstanding prior to the obtaining of such
payment and (ii) such other adjustments shall be made from time to time as
shall be equitable to ensure that the Lenders share such payment pro rata;
provided that if any such non-pro rata payment is thereafter recovered or
otherwise set aside such purchase of participations shall be rescinded
(without interest). The Borrowers expressly consent to the foregoing
arrangements and agree that any Lender holding (or deemed to be holding) a
participation in a Loan may exercise any and all rights of banker's lien,
setoff (in each case, subject to Section 11.3) or counterclaim with respect
to any and all moneys owing by the Borrowers to such Lender as fully as if
such Lender was the original obligee thereon, in the amount of such
participation.
12.4 Agreement of Required Lenders. Upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the
part of the Required Lenders, action shall be taken by the Agent for and on
behalf or for the benefit of all Lenders upon the direction of the Required
Lenders, and any such action shall be binding on all Lenders. No amendment,
modification, consent, or waiver shall be effective except in accordance
with the provisions of Section 13.10.
12.5 Liability of Agent. (A) The Agent when acting on behalf of the
Lenders, may execute any of its respective duties under this Agreement by
or through any of its respective officers, agents, and employees, and
neither the Agent nor its directors, officers, agents, employees or
Affiliates shall be liable to the Lenders or any of them for any action
taken or omitted to be taken in good faith, or be responsible to the
Lenders or to any of them for the consequences of any oversight or error of
judgment, or for any loss, unless the same shall happen through its gross
negligence or willful misconduct. The Agent and its respective directors,
officers, agents, employees and Affiliates shall in no event be liable to
the Lenders or to any of them for any action taken or omitted to be taken
by them pursuant to instructions received by them from the Required Lenders
or in reliance upon the advice of counsel selected by it. Without limiting
the foregoing, neither the Agent, nor any of its respective directors,
officers, employees, agents or Affiliates shall be responsible to any
Lender for the due execution, validity, genuineness, effectiveness,
sufficiency or enforceability of, or for any statement, warranty, or
representation in, this Agreement, any Loan Document or any related
agreement, document or order, or shall be required to ascertain or to make
any inquiry concerning the performance or observance by the Borrowers of
any of the terms, conditions, covenants, or agreements of this Agreement or
any other Loan Document.
(B) Neither the Agent nor any of its respective directors, officers,
employees, agents or Affiliates shall have any responsibility to the
Borrowers on account of the failure or delay in performance or breach by
any Lender or by the Borrowers of any of their respective obligations under
this Agreement or any other Loan Document.
(C) The Agent, in its capacity as Agent, shall be entitled to rely on
any communication, instrument or document reasonably believed by such
Person to be genuine or correct and to have been signed or sent by a person
or persons believed by such Person to be the proper person or persons and
such Person shall be entitled to rely on advice of legal counsel,
independent public accountants and other professional advisers and experts
selected by such Person.
12.6 Reimbursement and Indemnification. Each Lender agrees (i) to
reimburse (a) the Agent for such Lender's pro rata portion, in accordance
with the then outstanding principal amount of the Loans or participations
in any Letter of Credit Guaranty and all Letter of Credit Outstandings, of
any expenses and fees incurred for the benefit of the Lenders under this
Agreement and any of the Loan Documents, including, without limitation,
counsel fees and compensation of agents and employees paid for services
rendered on behalf of the Lenders, and any other expense incurred in
connection with the operations or enforcement thereof not reimbursed by the
Borrowers and (b) the Agent for such Lender's pro rata portion, in
accordance with the then outstanding principal amount of the Loans or
participations in any Letter of Credit Guaranty and all Letter of Credit
Outstandings, of any expenses of the Agent incurred for the benefit of the
Lenders that the Borrower has agreed to reimburse pursuant to Section 13.5
and has failed to so reimburse and (ii) to indemnify and hold harmless the
Agent and any of its directors, officers, employees, agents or Affiliates,
on demand, in the amount of its proportionate share, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against it or
any of them in any way relating to or arising out of this Agreement or any
of the Loan Documents or any action taken or omitted by it or any of them
under this Agreement or any of the Loan Documents to the extent not
reimbursed by the Borrowers (except such as shall result from their
respective gross negligence or willful misconduct).
12.7 Rights of Agent. It is understood and agreed that the Agent shall
have the same rights and powers under this Agreement (including the right
to give such instructions) as the other Lenders and may exercise such
rights and powers, as well as its rights and powers under other agreements
and instruments to which it is or may be party, and engage in other
transactions with the Borrowers or any of their respective Subsidiaries, as
though it were not the Agent of the Lenders under this Agreement.
12.8 Independent Lenders. Each Lender acknowledges that it has decided
to enter into this Agreement and to make the Loans based on its own
analysis of the transactions contemplated by this Agreement and of the
creditworthiness of the Borrowers and agrees that the Agent shall bear no
responsibility therefor.
12.9 Notice of Transfer. The Agent may deem and treat a Lender party
to this Agreement as the owner of such Lender's portion of the Loans for
all purposes, unless and until a written notice of the assignment or
transfer thereof executed by such Lender has been received by the Agent.
12.10 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Parent. Upon any such
resignation, the Required Lenders shall have the right to appoint a
successor Agent, which shall be reasonably satisfactory to the Borrowers.
If no successor Agent shall have been so appointed by the Required Lenders
and shall have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation, the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of a least $100,000,000,
which shall be reasonably satisfactory to the Borrowers. Upon the
acceptance of any appointment as Agent under this Agreement by a successor
Agent, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agent's resignation under this
Agreement as Agent, the provisions of this Section 12 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
SECTION 13: GENERAL
13.1 Notices. Notices and other communications provided for in this
Agreement shall be in writing (including telex, facsimile or cable
communication) and shall be mailed, telexed, transmitted, cabled or
delivered to the appropriate Person at its address set forth Schedule 13.1
or such other address as such person may from time to time designate by
giving written notice to the other parties under this Section 13.1. All
notices and other communications given to any Person in accordance with the
provisions of this Agreement shall be deemed to have been given on the
fifth Business Day after the date when sent by registered or certified
mail, postage prepaid, return receipt requested, if by mail, or when
receipt is acknowledged, if by any telegraphic communications or facsimile
equipment of the sender, in each case addressed to such Person as provided
in this Section 13.1 or in accordance with the latest unrevoked written
direction from such party; provided that notices to the Agent under
Sections 2 and 3 and with respect to a change in address will be effective
only when received by the Agent.
13.2 Survival of Agreement, Representations and Warranties. All
warranties, representations and covenants made by the Borrowers in any Loan
Document or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have
been relied upon by the Lenders and shall survive the making of the Loans
regardless of any investigation made by any Lender or on its behalf and
shall continue in full force and effect so long as any amount due or to
become due under this Agreement is outstanding and unpaid and so long as
the Revolving Commitments have not been terminated.
13.3 Successors and Assigns. (A) This Agreement shall be binding upon
and inure to the benefit of the Borrowers, the Agent and the Lenders and
their respective successors and assigns. The Borrowers may not assign or
transfer any of their rights or obligations under this Agreement without
the prior written consent of all of the Lenders. Each Lender may sell
participations to any Person in all or part of any Loan, or all or part of
its Revolving Commitment, in which event, without limiting the foregoing,
the provisions of Section 3.1 shall inure to the benefit of each purchaser
of a participation (provided that such participant shall look solely to the
seller of such participation for such benefits and the Borrowers'
liability, if any, under Sections 3.1 and 3.3 shall not be increased as a
result of the sale of any such participation) and the pro rata treatment of
payments, as described in Section 2.8, shall be determined as if such
Lender had not sold such participation. In the event any Lender shall sell
any participation, such Lender shall retain the sole right and
responsibility to enforce the obligations of the Borrowers relating to the
Loans, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement (provided that
such Lender may grant its participant the right to consent to such Lender's
execution of amendments, modifications or waivers that (i) reduce any Fees
payable to the Lenders, (ii) reduce the amount of any scheduled principal
payment on any Loan or reduce the principal amount of any Loan or the rate
of interest payable under this Agreement or (iii) extend the maturity of
the Borrower's obligations under this Agreement ). The sale of any such
participation shall not alter the rights and obligations of the Lender
selling such participation with respect to the Borrower.
(B) Each Lender may assign to one or more Lenders or Eligible
Assignees all or a portion of its interests, rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Revolving Commitment and the same portion of the related Loans at the time
owing to it); provided that (i) such assignment is made pro rata among the
Revolving Loans, Term Loan and Revolving Commitment held by such Lender,
(ii) other than in the case of an assignment to a Person at least 50% owned
by the assignor Lender, or by a common parent of both, or to another
Lender, the Agent and the Letter of Credit Issuer must give their
respective prior written consent to such assignment, which consent will not
be unreasonably withheld, (iii) the aggregate amount of the Revolving
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Agent) shall, unless otherwise agreed
to in writing by the Borrowers and the Agent, in no event be less than
$5,000,000, (iv) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance with blanks appropriately completed, together
with a processing and recordation fee of $3,500 (for which the Borrowers
shall have no liability) and (v) The CIT Group/Business Credit, Inc. and
its Affiliates will hold, after giving effect to any assignment under this
Section 13.3, at least 66% of the outstanding Revolving Loans, the
outstanding Term Loan and the Total Revolving Commitment. Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date
shall be within ten Business Days after the execution thereof (unless
otherwise agreed to in writing by the Agent), (a) the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender under this
Agreement and (b) the Lender thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party to this Agreement).
(C) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties to this Agreement as follows: (i)
other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of
any adverse claim, such Lender assignor makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the
other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any of the other
Loan Documents; (ii) such Lender assignor makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of any Borrower or the performance or observance by any Borrower
of any of its obligations under this Agreement or any of the other Loan
Documents; (iii) such assignee confirms that it has received a copy of this
Agreement and the other Loan Documents, together with copies of the
financial statements referred to in Section 6.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
Lender assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement;
(v) such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by this Agreement and reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all obligations that by the terms of this Agreement are required to
be performed by it as a Lender.
(D) The Agent shall maintain at its office a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the
names and addresses of the Lenders and the Revolving Commitments of, and
principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrowers, the Agent and the Lenders
shall treat each Person the name of which is recorded in the Register as a
Lender for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(E) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and the assignee thereunder together with the fee payable
in respect thereto, the Agent shall, if such Assignment and Acceptance has
been completed with blanks appropriately filled and consented to by the
Agent and the Letter of Credit Issuer (to the extent such consent is
required), (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt written
notice thereof to the Parent (together with a copy thereof). No assignment
shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this Section 13.3(E).
(F) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 13.3,
disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers furnished to such
Lender by or on behalf of the Borrowers; provided that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree in writing to be bound by the provisions of Section
13.4.
(G) Upon the request of the Agent, the Borrowers agree to cooperate
with the Agent in the Agent's efforts to sell participations in this
Agreement (as described in Section 13.3(A)) and assign to one or more
Lenders or Eligible Assignees a portion of its interests, rights and
obligations under this Agreement (as set forth in Section 13.3(B)).
13.4 Confidentiality. Each Lender agrees to keep any information
delivered or made available by any Borrower to it confidential from anyone
other than persons employed or retained by such Lender who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing in this Section 13.4 shall
prevent any Lender from disclosing such information (i) to any other
Lender, (ii) upon the order of any court or administrative agency, (iii)
upon the request or demand of any regulatory agency or authority, (iv) that
has been publicly disclosed other than as a result of a disclosure by the
Agent or any Lender which is not permitted by this Agreement, (v) in
connection with any litigation to which the Agent, any Lender, or their
respective Affiliates may be a party to the extent reasonably required,
(vi) to the extent reasonably required in connection with the exercise of
any remedy under this Agreement, (vii) to such Lender's legal counsel and
independent auditors and (viii) to any actual or proposed participant or
assignee of all or part of its rights subject to Section 13.3(F). Each
Lender shall use reasonable efforts to notify the Parent of any required
disclosure under clause (ii) above.
13.5 Expenses. The Borrowers agree to pay all reasonable and
documented out-of-pocket expenses incurred by the Agent (including but not
limited to the reasonable fees and disbursements of counsel to the Agent
and any internal or third-party appraisers, consultants and auditors
advising the Agent) in connection with the preparation, execution, delivery
and administration of this Agreement and the other Loan Documents, the
making of the Loans and the issuance of the Letters of Credit, the
perfection of the Liens contemplated by this Agreement and the other Loan
Documents, the syndication of the transactions contemplated by this
Agreement and the other Loan Documents, the reasonable and customary costs,
fees and expenses of the Agent in connection with its monthly and other
periodic field audits, monitoring of assets (including reasonable and
customary internal collateral monitoring fees) and publicity expenses and,
following the occurrence of an Event of Default, all reasonable
out-of-pocket expenses incurred by the Lenders and the Agent in the
enforcement or protection of the rights of any one or more of the Lenders
or the Agent in connection with this Agreement or the other Loan Documents,
including but not limited to the reasonable fees and disbursements of any
counsel for the Lenders or the Agent. Such payments shall be made on the
date of the Final Order and thereafter on demand upon delivery of a
statement setting forth such costs and expenses. The obligations of the
Borrowers under this Section 13.5 survive the termination of this Agreement
or the payment of the Loans.
13.6 Indemnity. (A) Each Borrower agrees to indemnify and hold
harmless the Agent and the Lenders and their directors, officers,
employees, agents and Affiliates (each an "Indemnified Party") from and
against any and all expenses, losses, claims, damages and liabilities
incurred by such Indemnified Party arising out of claims made by any Person
in any way relating to the transactions contemplated by this Agreement and
the other Loan Documents, but excluding therefrom all expenses, losses,
claims, damages, and liabilities to the extent that they are determined by
the final judgment of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnified Party.
The obligations of the Borrowers under this Section 13.6(A) survive the
termination of this Agreement or the payment of the Loans.
(B) The Borrowers agree, jointly and severally, to unconditionally
indemnify the Agent and each Lender for, and to hold the Agent and each
Lender harmless from, any and all loss, claim or liability incurred by the
Agent or any such Lender arising from any transaction or occurrence
relating to any Letter of Credit or any draft thereunder, the Letter of
Credit Guaranty or the Letter of Credit Application and Reimbursement
Agreement, including any loss or claim due to any action taken by the
Letter of Credit Issuer, other than for any such loss, claim or liability
arising out of the gross negligence or willful misconduct of the Agent or
such Lender as determined by a final judgment of a court of competent
jurisdiction. The Borrowers further agree to hold the Agent and each Lender
harmless from any errors or omission, negligence or misconduct by the
Letter of Credit Issuer. The Borrowers' unconditional obligation to the
Agent and each Lender under this Section 13.6(B) shall not be modified or
diminished for any reason or in any manner whatsoever and survive the
termination of this Agreement or the payment of the Loans. The Borrowers
agree that any charges incurred by Agent for the Borrowers' account by the
Letter of Credit Issuer shall be conclusive and binding on the Borrowers
absent manifest error.
13.7 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
13.8 No Waiver. No failure on the part of the Agent or any of the
Lenders to exercise, and no delay in exercising, any right, power or remedy
under this Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power
or remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law.
13.9 Extension of Maturity. Should any payment of principal of or
interest or any other amount due under this Agreement become due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, in the case of principal,
interest shall be payable thereon at the rate herein specified during such
extension.
13.10 Amendments. No modification, amendment or waiver of any
provision of this Agreement, and no consent to any departure by the
Borrowers therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the
purpose for which given; provided that:
(i) no such modification or amendment shall without the written
consent of all of the Lenders (a) amend or modify any provision
of this Agreement which provides for the unanimous consent or
approval of the Lenders, (b) amend this Section 13.10 or the
definition of Required Lenders, (c) amend or modify the
Superpriority Claim status of the Lenders contemplated by
Section 4.1 or (d) release all or any substantial portion of
the Liens granted to the Agent under the Loan Documents;
(ii) no such modification or amendment shall without the written
consent of the Lender affected thereby (a) increase the
Revolving Commitment of a Lender (it being understood that a
waiver of an Event of Default shall not constitute an increase
in the Revolving Commitment of a Lender) or (b) reduce the
principal amount of any Loan or the rate of interest payable
thereon, or extend any date for the payment of interest under
this Agreement or reduce any Fees payable under this Agreement
or extend the final maturity of the Borrower's obligations
under this Agreement; or
(iii) no such amendment or modification may adversely affect the
rights and obligations of the Agent or the Letter of Credit
Issuer without its prior written consent.
No notice to or demand on the Borrowers shall entitle the Borrowers to any
other or further notice or demand in the same, similar or other
circumstances. Any consent by a Lender shall bind any Person subsequently
acquiring an interest on the Loans held by such Lender. No amendment to
this Agreement shall be effective against a Borrower unless signed by such
Borrowers.
13.11 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
13.12 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same instrument.
13.13 Prior Agreements. This Agreement and the other Loan Documents
represent the entire agreement of the parties with regard to the subject
matter of this Agreement and the terms of any letters and other
documentation entered into among the Borrowers and any Lender or the Agent
prior to the execution of this Agreement which relate to loans to be made
under this Agreement shall be replaced by the terms of this Agreement.
13.14 Further Assurances. Whenever and so often as reasonably
requested by the Agent, the Borrowers will promptly execute and deliver or
cause to be executed and delivered all such other and further instruments,
documents or assurances, and promptly do or cause to be done all such other
and further things, as may be necessary and reasonably required in order to
further and more fully vest in the Agent all rights, interests, powers,
benefits, privileges and advantages conferred or intended to be conferred
by this Agreement and the other Loan Documents.
13.15 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT AND EACH
LENDER IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
<PAGE>
Executed and delivered in Chicago, Illinois as of the day and the year
first above written.
PARENT:
NUTRAMAX PRODUCTS, INC.
By:
----------------------------------
Title:
AGENT:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
----------------------------------
Title:
LENDERS:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
----------------------------------
Title:
BORROWERS:
ADHESIVE COATINGS, INC.
By:
----------------------------------
Title:
ELMWOOD PARK REALTY, INC.
By:
----------------------------------
Title:
CERTIFIED CORP.
By:
----------------------------------
Title:
POWERS PHARMACEUTICAL CORPORATION
By:
----------------------------------
Title:
FAIRETON REALTY HOLDINGS, INC.
By:
----------------------------------
Title:
FIRST AID PRODUCTS, INC.
By:
----------------------------------
Title:
NUTRAMAX HOLDINGS, INC.
By:
----------------------------------
Title:
NUTRAMAX HOLDINGS II, INC.
By:
----------------------------------
Title:
F.A. PRODUCTS, L.P.
By: FIRST AID PRODUCTS, INC.,
its general partner
By:
----------------------------------
Title:
FLORENCE REALTY, INC.
By:
----------------------------------
Title:
NUTRAMAX ACQUISITION CORPORATION
By:
----------------------------------
Title:
NUTRAMAX ORTHALMICS INC.
By:
----------------------------------
Title:
ORAL CARE, INC.
By:
----------------------------------
Title:
EXHIBIT 10.3
JUNIOR SUBSEQUENT DEBTOR-IN-POSSESSION CREDIT AGREEMENT
among
NUTRAMAX PRODUCTS, INC.
AND CERTAIN SUBSIDIARIES,
as borrowers, and
THE JUNIOR LENDERS PARTY HERETO,
as lenders,
_____________, 2000
<PAGE>
JUNIOR SUBSEQUENT DEBTOR-IN-POSSESSION CREDIT AGREEMENT
This Junior Subsequent Debtor-In-Possession Credit Agreement, dated as
of ___________, 2000 (this "Agreement"), is among NutraMax Products, Inc.,
a Delaware corporation and a debtor and debtor-in-possession in a case
pending under chapter 11 of the United States Bankruptcy Code (the
"Parent"), and each of the Parent's direct or indirect domestic
subsidiaries party hereto and each a debtor and debtor-in-possession in a
case pending under chapter 11 of the United States Bankruptcy Code, as
borrowers (together with the Parent, collectively, the "Borrowers" and each
a "Borrower") and the lender parties hereto (collectively, the "Junior
Lenders" and each a "Junior Lender").
PRELIMINARY STATEMENTS
1. On April __, 2000 (the "Petition Date"), each Borrower filed a
voluntary petition with the United States Bankruptcy Court for the District
of Delaware initiating the chapter 11 cases of the Borrowers (collectively,
the "Cases" and each a "Case") and has continued in the possession of its
assets and in the management of its businesses pursuant to sections 1107
and 1108 of the United States Bankruptcy Code, 11 U.S.C. sections 101-1330
(the "Bankruptcy Code").
2. The Borrowers have applied to a group of financial lenders for a
senior secured debtor-in-possession revolving credit, term loan and letter
of credit facility (the "Senior Loans") in an aggregate principal amount
not to exceed $30,000,000 (the "Senior Subsequent DIP Agreement"), the
proceeds of which will be used for repayment of certain existing secured
indebtedness of the Borrowers, fees and expenses relating to the Cases and
working capital requirements of the Borrowers.
3. The Borrowers have applied to the Junior Lenders for a term loan in
the amount of $18,000,000 (the "Term Loan"), the proceeds of which will be
used for repayment of certain existing secured indebtedness of the
Borrowers.
4. To provide security for the repayment of the Term Loan and the
payment of the other obligations of the Borrowers under this Agreement and
any other related agreement, instrument or document, the Borrowers will
provide the Junior Lenders with the following (each as more fully described
in this Agreement):
(A) an allowed administrative expense claim in the Cases pursuant to
section 364(c)(1) of the Bankruptcy Code having priority over all
administrative expenses of the kind specified in sections 105,
326, 328, 503(b), 506(c), 507(a), 507(b) and 726 of the
Bankruptcy Code other than those administrative expenses incurred
pursuant to the Senior Subsequent DIP Agreement;
(B) a perfected lien, pursuant to section 364(c)(2) of the Bankruptcy
Code, upon all unencumbered property of each Borrower and on all
cash and cash equivalents in the Cash Collateral Account, the
Concentration Account and each Depository Account (each as
defined in this Agreement), junior in priority only to liens
incurred pursuant to the Senior Subsequent DIP Agreement or the
Existing Lender Claim;
(C) a perfected lien, pursuant to section 364(c)(3) of the Bankruptcy
Code, upon all property of each Borrower (other than the property
referred to in clause (d) below that is subject to the ----------
valid and perfected liens that presently secure the Borrowers'
and their respective Subsidiaries' pre-petition indebtedness
under the Existing Agreements) that is subject to (i) valid and
perfected liens in existence on the Petition Date, (ii) valid
liens in existence on the Petition Date that are perfected
subsequent to the Petition Date as permitted by section 546(b) of
the Bankruptcy Code, (iii) liens expressly permitted by this
Agreement and (iv) liens incurred pursuant to the Senior
Subsequent DIP Agreement or the Existing Lender Claim; and
(D) perfected priming liens junior in priority only to liens incurred
pursuant to the Senior Subsequent DIP Agreement or the Existing
Lender Claim, pursuant to section 364(d)(1) of the Bankruptcy
Code, upon all property of each Borrower, including, without
limitation, accounts receivable, instruments, contract rights,
chattel paper, general intangibles, inventory, equipment,
fixtures, documents of title, intellectual property, rights under
license agreements, real estate (whether owned or leased) and all
proceeds thereof, that is subject to (i) the existing liens that
presently secure the Borrowers' and their respective
Subsidiaries' pre-petition indebtedness under or in connection
with the Existing Agreements (but subject to any liens to which
the liens being primed by this Agreement are subject on the
Petition Date or become subject subsequent to the Petition Date
as permitted by section 546(b) of the Bankruptcy Code) and (ii)
any liens granted after the Petition Date to provide adequate
protection in respect of the Existing Agreements, which perfected
priming liens in favor of the Junior Lenders shall be senior in
all respects to all of such existing liens under or in connection
with the Existing Agreements and to any Liens granted after the
Petition Date to provide adequate protection in respect thereof.
4. All of the claims and the security interests and liens granted
under this Agreement in the Cases to the Junior Lenders are subject to the
carve-out to the extent provided in Section 3.1.
AGREEMENT:
In consideration of the premises and the mutual agreements
contained in this Agreement, the Borrowers and the Junior Lenders agree as
follows:
SECTION 1: INTERPRETATION
1.1. Defined Terms.
--------------
As used in this Agreement, the following terms have the meanings
specified below (such meanings to apply equally to both the singular and
plural forms of the terms defined; whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter
forms):
"Account" has the meaning set forth in the Uniform Commercial Code and
includes, without limitation, all present and future rights of a Borrower
to payment, whether or not they have been earned by performance, for goods
sold or for services rendered that are not evidenced by instruments or
chattel paper.
"Adequate Protection Obligations" means each of the payments, claims
or Liens, if any, granted to the Existing Lenders and described on Schedule
1.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person
(a "Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise. Unless
the context otherwise requires, each reference to an Affiliate in this
Agreement is a reference to an Affiliate of a Borrower.
"Agent" has the meaning assigned to such term in the Senior Subsequent
DIP Agreement.
"Agreement" has the meaning set forth in the Preamble.
"Bankruptcy Code" has the meaning set forth in the first Preliminary
Statement.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware or any other court having jurisdiction over the Cases
from time to time.
"Base Rate" means, on any date, a fluctuating interest rate per annum
equal to the rate of interest that the Reference Bank announces at its
principal office from time to time as its prime commercial lending rate
(whether or not such rate is actually charged by the Reference Bank), which
rate is not necessarily the lowest rate of interest charged by the
Reference Bank with respect to commercial loans. Any change in the Base
Rate announced by the Reference Bank is effective as of the effective date
specified in the public announcement by the Reference Bank of such change.
"Borrowers" has the meaning set forth in the Preamble.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks in the State of Illinois and New York are required or
permitted to close.
"Capitalized Lease" means, as applied to any Person, any lease of
property by such Person as lessee that would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
"Carve-Out" means, collectively, (i) in the event of the occurrence
and during the continuance of a Default or Event of Default, the payment of
allowed and unpaid professional fees and disbursements incurred by the
Borrowers and any statutory committees appointed in the Cases in an
aggregate amount not in excess of $1,000,000 and (ii) the payment of unpaid
fees pursuant to 28 U.S.C. section 1930 and to the Clerk of the Bankruptcy
Court.
"Cases" has the meaning set forth in the first Preliminary Statement.
"Cash Collateral Account" has the meaning assigned to such term in the
Senior Subsequent DIP Agreement.
"Closing Date" means the date on which this Agreement has been
executed and the Term Loan has been made.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property and interests in property now owned or
hereafter acquired by any Borrower in or upon which a Lien has been granted
under any of the Loan Documents.
"Concentration Account" has the meaning assigned to such term in the
Senior Subsequent DIP Agreement.
"Consummation Date" means the date of the substantial consummation (as
defined in section 1101 of the Bankruptcy Code and that for purposes of
this Agreement shall be no later than the effective date) of a
Reorganization Plan of any Borrower that is confirmed pursuant to an order
of the Bankruptcy Court.
"Default" means any event that, with lapse of time or notice or lapse
of time and notice, will constitute an Event of Default.
"Depository Account" has the meaning assigned to such term in the
Senior Subsequent DIP Agreement.
"Dollars" and "$" means lawful money of the United States of America.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (i) any liability under federal or state environmental laws
or regulations or (ii) damages arising from or costs incurred by such
Governmental Authority in response to a release or threatened release of a
hazardous or toxic waste, substance or constituent or other substance into
the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Event of Default" has the meaning set forth in Section 5.1.
"Existing Agreements" means the Revolving Credit and Term Loan
Agreement (the "Pre-Petition Credit Agreement") dated as of December 30,
1996, among the Parent, the lenders party thereto and Fleet National Bank
(as successor to The First National Bank of Boston), as agent, and includes
all promissory notes, letters of credit, interest rate protection
agreements, indemnity agreements, cash management agreements, reimbursement
agreements and the agreements granting security interests and Liens in
property and assets of any Borrower or any Subsidiary to the Existing
Lenders, including, without limitation, the security agreements, mortgages,
leasehold mortgages, pledge agreements and guaranty agreements listed on
Schedule 2, each of which documents was executed and delivered (to the
extent party thereto) by a Borrower or a Subsidiary prior to the Petition
Date, as each may have been amended or modified from time to time.
"Existing Lender Claim" means the $4,000,000 portion of the claim
under the Existing Agreements that is retained by the Existing Lenders.
"Existing Lenders" means, collectively, those lenders to the Borrowers
and their respective Subsidiaries (to the extent party thereto) under the
Existing Agreements, and any agents therefor, together with any successors
or assigns thereof.
"Facility Fee" has the meaning set forth in Section 2.5.
"Final Order" means an order of the Bankruptcy Court entered in the
Cases after a final hearing under Bankruptcy Rule 4001(c)(2) granting final
approval of this Agreement and the other Loan Documents and granting the
Liens and Superpriority Claim described in Section 3.1.
"Foreign Subsidiary" means a Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America, any State
or Commonwealth thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants Standards Board or in
such other statements by such other entity as may be in general use by
significant segments of the accounting profession as in effect on the
Closing Date, subject to the provisions of Section 1.3.
"Governmental Authority" means any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States of
America or foreign.
"Indebtedness" means, at any time and with respect to any Person, (i)
all indebtedness of such Person for borrowed money, (ii) all indebtedness
of such Person for the deferred purchase price of property or services
(other than property, including inventory, and services purchased, and
expense accruals and deferred compensation items arising, in the ordinary
course of business), (iii) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments (other than
performance, surety and appeal bonds arising in the ordinary course of
business), (iv) all indebtedness of such Person created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (v) all obligations of
such Person under Capitalized Leases, (vi) all reimbursement, payment or
similar obligations of such Person, contingent or otherwise, under
acceptance, letter of credit or similar facilities and all obligations of
such Person in respect of (a) currency swap agreements, currency future or
option contracts and other similar agreements designed to hedge against
fluctuations in foreign interest rates and (b) interest rate swap, cap or
collar agreements and interest rate future or option contracts, (vii) all
Indebtedness referred to in clauses (i) through (vi) above guaranteed
directly or indirectly by such Person or in effect guaranteed directly or
indirectly by such Person through an agreement (a) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase of
such Indebtedness, (b) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss in respect of such Indebtedness,
(c) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (d)
otherwise to assure a creditor against loss in respect of such Indebtedness
and (viii) all Indebtedness referred to in clauses (i) through (vii) above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness.
"Inventory" has the meaning set forth in the Uniform Commercial Code
and includes, without limitation, any and all goods, including, without
limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by a Borrower, which are held for sale or lease,
furnished under any contract of service, or held as raw materials, work in
process or supplies, and all materials used or consumed in a Borrower's
business, and includes such property the sale or other disposition of which
has given rise to Accounts and which has been returned to or repossessed or
stopped in transit by a Borrower.
"Junior Lenders" has the meaning set forth in the Preamble.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or
other title retention agreement or any lease in the nature thereof).
"Loan Documents" means this Agreement, the Final Order, any promissory
note issued under this Agreement and any other instrument or agreement
executed and delivered in connection with this Agreement.
"Material Adverse Effect" means (i) a material adverse effect upon the
condition (financial or otherwise), operations, assets, business,
properties, performance or prospects of the Borrowers, taken as a whole,
(ii) a material adverse effect on the ability of any of the Borrowers to
perform their respective obligations under the Loan Documents or (iii) a
material adverse effect on the ability of the Lenders or the Agent to
enforce the Loan Documents.
"Maturity Date" means the second anniversary of the Closing Date.
"Obligations" means the due and punctual payment of all present and
future, fixed or contingent, monetary obligations of the Borrowers to the
Lenders under the Loan Documents.
"Other Taxes" has the meaning set forth in Section 2.8(B).
"Parent" has the meaning set forth in the Preamble.
"Permitted Liens" means, collectively,
(i) Liens imposed by law (other than Environmental Liens and any
Lien imposed under ERISA) for taxes, assessments or charges of
any Governmental Authority for claims not yet due or that are
being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(ii) Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens (other than
Environmental Liens and any Lien imposed under ERISA) in
existence on the Petition Date or thereafter imposed by law and
created in the ordinary course of business;
(iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including,
without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other
similar obligations or arising as a result of progress payments
under government contracts;
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and zoning
and other restrictions, charges or encumbrances (whether or not
recorded) and interest of ground lessors, that do not interfere
materially with the ordinary conduct of the business of the
Borrowers and that do not materially detract from the value of
the property to which they attach or materially impair the use
thereof to the Borrowers;
(v) purchase money Liens (including Capitalized Leases) upon or in
any property acquired or held in the ordinary course of
business to secure the purchase price of such property solely
for the purpose of financing the acquisition of such property;
and
(vi) extensions, renewals or replacements of any Lien referred to in
clauses (i) through (v) above; provided that the principal
amount of the obligation secured thereby is not increased and
that any such extension, renewal or replacement is limited to
the property originally encumbered thereby.
"Person" means any natural person, corporation, division of a
corporation, partnership, trust, joint venture, association, company,
estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Petition Date" has the meaning set forth in the first Preliminary
Statement.
"Reference Bank" means The Chase Manhattan Bank.
"Reorganization Plan" means a plan of reorganization in any of the
Cases.
"Reorganized Parent" means Parent, as reorganized under the Bankruptcy
Code.
"Required Lenders" means, at any time, Junior Lenders holding 100% of
the aggregate outstanding principal amount of the Term Loan.
"Rights" means the rights of holders of common stock of Parent to
purchase their pro rata share of 100% of the common stock in Reorganized
Parent to be issued and outstanding on the Consummation Date. If 100% of
the Rights are exercised, the estate of Parent will receive an amount of
net cash proceeds equal to the amount of outstanding Obligations under the
Loan Documents.
"Senior Loans" has the meaning set forth in the second Preliminary
Statement.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity (whether now existing or hereafter
organized) of which at least a majority of the securities or other
ownership interests having ordinary voting power for the election of
directors is, at the time as of which any determination is being made,
owned or controlled, directly or indirectly, by such Person. Unless the
context otherwise requires, each reference to a Subsidiary in this
Agreement is a reference to a Subsidiary of a Borrower.
"Superpriority Claim" means a claim against any Borrowers in any of
the Cases that is an administrative expense claim having priority over any
or all administrative expenses of the kind specified in sections 105, 326,
328, 503(b), 506(c), 507(a), 507(b) and 726 of the Bankruptcy Code.
"Taxes" has the meaning set forth in Section 3.3.
"Term Loan" has the meaning set forth in the third Preliminary
Statement.
"Termination Date" means the earliest to occur of (i) the Maturity
Date, (ii) the Consummation Date and (iii) the acceleration of the Term
Loan in accordance with the terms of this Agreement.
"Uniform Commercial Code" means the Uniform Commercial Code as enacted
in the State of Illinois, as it may be amended from time to time.
1.2 Uniform Commercial Code Terms. Except as otherwise indicated, all
terms not specifically defined in this Agreement that are defined, or used,
in Article 9 of the Uniform Commercial Code have the respective meanings
assigned to such terms in Article 9 of the Uniform Commercial Code.
1.3 Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the
words "from" or "commencing on" means "from and including" and the words
"to," "through," "ending on" and "until" each mean "to but excluding."
1.4 Headings and References. Section and other headings are for
reference only, and do not affect the interpretation or meaning of any
provision of this Agreement. Any Section or clause references are to this
Agreement, unless otherwise specified. References to an annex, schedule or
exhibit are, unless otherwise specified, to an Annex, Schedule or Exhibit
attached to this Agreement. References in this Agreement and the other Loan
Documents or any other agreement include this Agreement and the other Loan
Documents and other agreements as the same may be amended, restated,
supplemented or otherwise modified from time to time under their respective
terms. A reference to any law, statute or regulation mean that law, statute
or regulation as it may be amended, supplemented or otherwise modified from
time to time, and any successor law, statute or regulation. A reference to
a Person includes the successors and assigns of such Person, but such
reference shall not increase, decrease or otherwise modify in any way the
provisions in this Agreement or any other Loan Document governing the
assignment of rights and obligations under or the binding effect of any
provision of this Agreement or any other Loan Document. The provisions of
this Agreement relating to Subsidiaries apply only during such times as a
Borrower has one or more Subsidiaries.
1.5 Construction. Each covenant contained in this Agreement shall be
construed (absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision in this
Amendment or any other Loan Document refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by
such Person. The term "including" is not limiting and means "including
without limitation."
SECTION 2: TERM LOAN
2.1 Term Loan. Upon the terms and subject to the conditions set forth
in this Agreement, the Junior Lenders, severally in proportion to the
respective commitments set forth next to their signatures hereto and not
jointly, agree to extend the Term Loan to the Borrowers on the Closing Date
in the original principal amount of $18,000,000.
2.2 Closing Date. The Closing Date will occur promptly upon
satisfaction of the conditions set forth in Section 4.1, but in no event
later than (a) the 60th day after the Petition Date or (b) two days after
the Final Order becomes a final order. The closing of the transaction
contemplated by the Loan Documents will take place at a time and place to
be determined by the parties.
2.3 Repayment of Loans; Evidence of Debt. (A) Each Borrower
unconditionally promises, jointly and severally, to pay to the Junior
Lenders, in Dollars (except as provided in Section 2.3(B)), the principal
amount of the Term Loan, all interest accrued thereon irrespective of any
claim, setoff, defense or other right that the Borrowers may have at any
time against any other Person. Subject to the provisions of Section 5, upon
the maturity (whether by acceleration or otherwise) of any of the
Obligations under this Agreement or any of the other Loan Documents, the
Lenders shall be entitled to immediate payment of such Obligations without
further application to or order of the Bankruptcy Court. The Term Loan
shall at all times be evidenced by promissory notes to each Junior Lender
in the form of Exhibit A.
(B) On the Consummation Date, the Obligations of the Borrowers to pay
the principal on the Term Loan will be satisfied and discharged in full by
the transfer to the Junior Lenders of:
(i) 100% of the net cash proceeds that the Borrowers receive
from the exercise of the Rights; and
(ii) 100% of the common stock of Reorganized Parent that has not
been subscribed for pursuant to the exercise of the Rights.
In the event that the Consummation Date has not occurred on or prior
to the Maturity Date, the Term Loan will be paid in cash on the Maturity
Date.
2.4 Interest on Term Loan. (A) The Term Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of
360 days) at a rate per annum equal to the Base Rate plus 2.00%. Interest
shall accrue but not be payable until the Termination Date, as set forth in
Section 2.4(B) below.
(B) Accrued interest on the Term Loan, the Facility Fee and any fees
or expenses payable to the Junior Lenders hereunder (including, without
limitation, pursuant to Section 6.4) will be paid in cash on the
Termination Date, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived. Such payments shall be made
to the Junior Lenders in funds immediately available without setoff,
counterclaim or other deduction of any nature. The Term Loan shall accrue
interest from and including the Closing Date to but excluding the
Termination Date.
(C) Effective immediately upon the occurrence of any Event of Default
(whether or not the Junior Lenders are entitled to accelerate the Term
Loan) and for as long thereafter as such Event of Default shall be
continuing, the Term Loan shall bear interest at a rate per annum equal to
the Base Rate plus 4.00%.
2.5 Facility Fee. The Borrower shall pay to the Junior Lenders a
facility fee of $360,000 (the "Facility Fee") payable on the Termination
Date. The Facility Fee shall not be refundable under any circumstances.
2.6 Pro Rata Treatment. All payments of principal and interest and the
Facility Fee shall be made pro rata among the Junior Lenders in accordance
with their relative portion of the principal amount of the Term Loan.
2.7 No Discharge; Survival of Claims. Each Borrower agrees that (i)
its obligations under this Agreement shall not be discharged by the entry
of an order confirming a Plan of Reorganization (and each of the Borrowers,
under section 1141(d)(4) of the Bankruptcy Code, waives any such discharge)
and (ii) the Superpriority Claim granted to the Junior Lenders pursuant to
the Final Order and described in Section 3.1 and the Liens granted to the
Junior Lenders pursuant to the Final Order and described in Section 3.2
shall not be affected in any manner by the entry of an order confirming a
Plan of Reorganization.
2.8 Taxes. (A) Any and all payments by a Borrower under this Agreement
shall be made free and clear of and without deduction for any and all
current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) taxes
imposed on or measured by the net income or overall gross receipts of the
Junior Lenders and franchise taxes imposed on the Junior Lenders by the
United States of America or any jurisdiction under the laws of which any
such Junior Lender is organized or any political subdivision thereof or by
any other jurisdiction or by any political subdivision or taxing authority
therein other than a jurisdiction in which such Junior Lender would not be
subject to tax but for the execution and performance of this Agreement and
(ii) taxes, levies, imposts, deductions, charges or withholdings
("Amounts") with respect to payments under this Agreement to a Junior
Lender in accordance with laws in effect on the Closing Date, but not
excluding, with respect to such Junior Lender, any increase in such Amounts
solely as a result of any change in such laws occurring after such later
date or any Amounts that would not have been imposed but for actions (other
than actions contemplated by this Agreement) taken by the Borrowers after
such later date (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities, "Taxes"). If a Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
under this Agreement to the Junior Lenders, (i) the sum payable shall be
increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section) such Junior Lender shall receive an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrowers shall make such deductions and (iii) the Borrowers shall pay the
full amount deducted to the relevant taxing authority or other Governmental
Authority in accordance with applicable law.
(B) In addition, the Borrowers agree to pay any current or future
stamp or documentary taxes or any other excise or property taxes, charges,
assessments or similar levies that arise from any payment made under this
Agreement or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Document (all such
charges, "Other Taxes").
(C) The Borrowers will indemnify each Lender for the full amount of
Taxes and Other Taxes paid by such Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other Governmental Authority.
Such indemnification shall be made within 30 days after the date any Junior
Lender makes written demand therefor. If a Junior Lender shall become aware
that it is entitled to receive a refund in respect of Taxes or Other Taxes
as to which it has been indemnified by the Borrowers under this Section
2.8(C), it shall promptly notify the Parent of the availability of such
refund and shall, within 30 days after receipt of a request by a Borrower,
apply for such refund at the Borrowers' expense. If any Junior Lender
receives a refund in respect of any Taxes or Other Taxes as to which it has
been indemnified by the Borrowers under this Section 2.8(C), it shall
promptly notify the Parent of such refund and shall, within 30 days after
receipt of a request by a Borrower (or promptly upon receipt, if a Borrower
has requested application for such refund under this Section 2.8(C)), repay
such refund to the Borrowers (to the extent of amounts that have been paid
by the Borrowers under this Section 2.8(C) with respect to such refund plus
interest that is received by the Junior Lender as part of the refund), net
of all out-of-pocket expenses of such Junior Lender and without additional
interest thereon; provided that the Borrowers, upon the request of such
Junior Lender, agree to return such refund (plus penalties, interest or
other charges) to such Junior Lender in the event such Junior Lender is
required to repay such refund. Nothing contained in this Section 2.8(C)
shall require any Junior Lender to make available any of its tax returns
(or any other information relating to its taxes that it deems to be
confidential).
SECTION 3: PRIORITY; COLLATERAL
3.1 Priority and Liens. Each Borrower covenants, represents and
warrants that, upon entry of the Final Order, the Obligations (i) pursuant
to section 364(c)(1) of the Bankruptcy Code, shall at all times constitute
allowed administrative expense claims in the Cases having priority over all
administrative expenses of the kind specified in sections 105, 326, 328,
503(b), 506(c), 507(a), 507(b) and 726 of the Bankruptcy Code, (ii)
pursuant to section 364(c)(2) of the Bankruptcy Code, shall at all times be
secured by a perfected Lien on all unencumbered pre-petition and
post-petition property of the Borrowers (other than the portion of the
capital stock of each Foreign Subsidiary that is not subject to a Lien
securing the Existing Agreements) and on all cash maintained in the Cash
Collateral Account, the Concentration Account and each Depository Account
and any direct investments of the funds contained therein, (iii) pursuant
to section 364(c)(3) of the Bankruptcy Code, shall be secured by a
perfected Lien upon all pre-petition and post-petition property of the
Borrowers (other than the property that is subject to existing Liens that
presently secure the obligations of the Borrowers and their respective
Subsidiaries under the Existing Agreements, as to which the Lien in favor
of the Junior Lenders will be as described in clause (iv) below) that is
subject to valid and perfected Liens in existence on the Petition Date or
to valid Liens in existence on the Petition Date that are perfected
subsequent to the Petition Date as permitted by section 546(b) of the
Bankruptcy Code or to Permitted Liens, junior to such valid and perfected
Liens and (iv) pursuant to section 364(d)(1) of the Bankruptcy Code, shall
be secured by a perfected priming Lien on all property of the Borrowers,
including without limitation, Accounts, instruments, contract rights,
chattel paper, general intangibles (including, without limitation, causes
of action), Inventory, equipment, fixtures, documents of title,
intellectual property, rights under license agreements, real estate
(whether owned or leased) and all proceeds thereof, upon which a Lien has
been granted (a) under the Existing Agreements to secure the Borrowers' and
their respective Subsidiaries' prepetition Indebtedness under the Existing
Agreements and (b) in connection with Adequate Protection Obligations, in
all cases subject only to (1) the Carve-Out, (2) any Liens in existence on
the Petition Date to which the Liens being primed by the Loan Documents are
subject or become subject subsequent to the Petition Date as permitted by
section 546(b) of the Bankruptcy Code, (3) Liens incurred pursuant to the
Senior Subsequent DIP Agreement and (4) the Existing Lender Claim. The
Junior Lenders agree that so long as no Default or Event of Default shall
have occurred, the Borrowers shall be permitted to pay compensation and
reimbursement of expenses allowed and payable under 11 U.S.C. section 330
and 11 U.S.C. section 331, as the same may be due and payable, and such
payments shall not reduce the Carve-Out; provided that following the
Termination Date amounts in the Cash Collateral Account shall not be
subject to the Carve-Out.
3.2 Collateral. (A) To secure payment of the Obligations and
performance of its obligations under this Agreement and the other Loan
Documents, each Borrower grants, mortgages, hypothecates and pledges to the
Junior Lenders a continuing lien (which shall be junior in priority to all
Liens incurred pursuant to the Senior Subsequent DIP Agreement and the
Existing Lender Claim) upon and security interest in all of such Borrower's
property, wherever located, whether now or hereafter existing, owned,
licensed, leased (to the extent of such Borrower's leasehold interest in
such property), consigned (to the extent of such Borrower's ownership
interest in such property), arising or acquired, including, without
limitation, all of such Borrower's right, title and interest in all
Accounts, general intangibles (including without limitation such Borrower's
causes of action, contract rights, intellectual property, rights under
licensing agreements and tax refunds), chattel paper, instruments,
documents, documents of title, Inventory, equipment, deposit accounts,
goods, investment property, insurance proceeds of or relating to any of the
foregoing, actions with respect to preferential transfers, fraudulent
conveyances and other avoidance power claims and any recoveries of cash or
proceeds of property representing recoveries under sections 544, 547, 548,
549, 550 or 553 of the Bankruptcy Code, books and records relating to any
of the foregoing and accessions and additions to, substitutions for, and
replacements, products and proceeds of any of the foregoing.
(B) To secure payment of the Obligations and performance of its
obligations under this Agreement and the other Loan Documents, each
Borrower assigns and conveys as security, grants a security interest in,
hypothecates, mortgages, pledges and sets over unto the Junior Lenders all
of the right, title and interest of such Borrower in all real property the
title to which is held by a Borrower, or the possession of which is held by
the Borrowers under a leasehold interest, together in each case with all of
the right, title and interest of such Borrower in and to all buildings,
improvements, and fixtures related thereto, any lease or sublease thereof,
all general intangibles relating thereto and all proceeds thereof, subject
in each case to Liens incurred pursuant to the Senior Subsequent DIP
Agreement or the Existing Lender Claim. If at any time after the Closing
Date any Borrower acquires any fee interest in real property, such Borrower
shall promptly notify the Junior Lenders thereof.
(C) To secure payment of the Obligations and performance of its
obligations under this Agreement and the other Loan Documents, each
Borrower grants, mortgages, hypothecates and pledges to the Junior Lenders
a continuing lien upon and security interest (which lien and security
interest shall be junior in priority to all liens incurred pursuant to the
Senior Subsequent DIP Agreement or the Existing Lender Claim) in (i) all of
the outstanding shares of capital stock of any Subsidiary of such Borrower
(other than the portion of the capital stock of each Foreign Subsidiary
that is not subject to a Lien securing the Existing Agreements), (ii) any
securities, dividends or distributions and any other right or property at
any time and from time to time receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing and any other
property substituted or exchanged for the foregoing and (iii) any and all
products or proceeds of the foregoing.
3.3 Security Interest in Accounts. Pursuant to section 364(c)(2) of
the Bankruptcy Code, each Borrower assigns and pledges to the Junior
Lenders a security interest, senior to all other Liens (other than Liens
incurred pursuant to the Senior Subsequent DIP Agreement or the Existing
Lender Claim) in all of such Borrower's right, title and interest in and to
the Cash Collateral Account, the Concentration Account and each Depository
Account and any direct investment of the funds contained therein. Cash held
in the Cash Collateral Account, the Concentration Account or any Depository
Account shall not be available for use by the Borrowers, whether pursuant
to section 363 of the Bankruptcy Code or otherwise.
3.4 Further Assurances. (A) Each Borrower acknowledges that, pursuant
to the Final Order, the Liens in favor of the Junior Lenders in all of the
Borrower's property shall be perfected without the recordation of any
financing statements or instruments of mortgage or assignment. Each
Borrower further agrees that, upon the request of the Required Lenders,
such Borrower shall execute, acknowledge and deliver, at the sole cost and
expense of the Borrowers, all such further acts, deeds, conveyances,
mortgages, assignments, estoppel certificates, financing statements,
notices of assignment, transfers and assurances as the Required Lenders may
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Document, (ii) to subject to
valid and perfected Liens all the Collateral, (iii) to perfect and maintain
the validity, effectiveness and priority of any of the Loan Documents and
the Lien intended to be created thereby and (iv) to better assure, convey,
grant, assign, transfer and confirm unto the Junior Lenders the rights now
or hereafter intended to be granted to the Junior Lenders under this
Agreement, any Loan Document or any other instrument under which any
Borrower may be or may hereafter become bound to convey, mortgage or assign
to the Junior Lenders.
(B) Without limiting the generality of Section 3.4(A), each Borrower
agrees that, upon the request of the Required Lenders, it will (i) promptly
execute, deliver and record a leasehold mortgage, leasehold deed of trust
or assignment of lease (which shall be senior in priority to all other
mortgages, deeds of trust or assignment of lease, other than Liens incurred
pursuant to the Senior Subsequent DIP Agreement or the Existing Lender
Claim) in any case in form and substance acceptable to the Required
Lenders, in favor of the Junior Lenders with respect to any lease of real
property, whether such Borrower is lessee or lessor (including, without
limitation, under a so-called ground lease or net lease), which lease shall
expressly permit the mortgaging thereof to the Junior Lenders, contain
non-disturbance provisions reasonably satisfactory to the Required Lenders
and include such other customary lender protections as may be reasonably
required by the Required Lenders, (ii) promptly execute, deliver and record
a mortgage or deed of trust (subject only to Permitted Liens) first in
priority to all other mortgages or deeds of trust, other than those
incurred pursuant to the Senior Subsequent DIP Agreement or the Existing
Lender Claim, in favor of the Junior Lenders covering such Borrower's real
property interest in any real property now or hereafter owned in fee
simple, in form and substance satisfactory to the Required Lenders, and
provide the Junior Lenders with a title insurance policy covering such real
property interest in an amount equal to the purchase price thereof, a
current ALTA survey thereof, a surveyor's certificate and such other
certificates, opinions and documents as may be requested by the Required
Lenders, in each case in form and substance satisfactory to the Required
Lenders and (iii) use its commercially reasonable efforts (but not
requiring any payment to be made by the Borrowers) to deliver to the Junior
Lenders a landlord waiver, in form and substance satisfactory to the
Required Lenders, executed by each of the Borrowers' lessors of real
property.
SECTION 4: CONDITIONS PRECEDENT TO TERM LOAN
4.1 Conditions Precedent to Term Loan. The obligation of each Junior
Lenders to make its several portion of the Term Loan is subject to the
satisfactions or waiver of the following conditions precedent:
(A) Loan Documents and Other Closing Documents. The Junior Lenders
shall have received this Agreement, promissory notes evidencing the Term
Loan and each other Loan Document, each duly executed and dated the Closing
Date (or such earlier date as shall be satisfactory to the Junior Lenders),
in form and substance satisfactory to the Junior Lenders.
(B) Final Order. Prior to making the Term Loan, the Junior Lenders
shall have received a certified copy of the Final Order in substantially
the form of Exhibit B (with such modifications as the Required Lenders may
approve in their discretion), which Final Order will (i) have been entered
by the Bankruptcy Court no later than 60 days after the Petition Date, on
such prior notice to such parties (including the Existing Lenders) as may
in each case be reasonably satisfactory to the Required Lenders, (ii) grant
the Junior Lenders the Superpriority Claim and the Liens described in
Section 3, (iii) approve this Agreement and the other Loan Documents, (iv)
approve the payment by the Borrowers of all of the fees and expenses
payable hereunder, (v) be in full force and effect, (vi) find and conclude
that this Agreement was negotiated in good faith and that the Junior
Lenders shall be entitled to the protections of Section 364(e) of the
Bankruptcy Code and (vi) not have been stayed, reversed, modified or
amended in any respect. If the Final Order is the subject of a pending
appeal in any respect, neither the making of the Term Loan nor the
performance by the Borrowers of any of their respective obligations under
this Agreement or the other Loan Documents or under any other instrument or
agreement referred to in this Agreement shall be the subject of a presently
effective stay pending appeal.
(D) Superpriority Claim. No claim having a priority superior or pari
passu with those granted by the Final Order (other than those incurred
pursuant to the Senior Subsequent DIP Agreement or the Existing Lender
Claim) shall be granted while the Term Loan remains outstanding.
(E) Adequate Protection Obligations. The order of the Bankruptcy Court
with respect to the Adequate Protection Obligations shall be in form and
substance satisfactory to the Required Lenders in their sole discretion.
(F) Bankruptcy Court Orders; Petitions. All of the Bankruptcy Court's
orders entered in the Cases (including, without limitation, the "first day
orders" entered by the Bankruptcy Court at the time of the commencement of
the Cases) and the voluntary petitions filed by each Borrower to commence
its Case shall be reasonably satisfactory in form and substance to the
Required Lenders.
(G) Interim Financing; Existing Lenders. All indebtedness, obligations
and liabilities of the Borrowers under the interim financing provided to
the Borrowers by the Existing Lenders on or about the Petition Date will
have been repaid in full (or will be repaid with proceeds of the Senior
Subsequent DIP Agreement). The Existing Lenders will have executed all
documentation necessary to effect the transactions described in the
following two sentences. The Existing Lenders' claim under the Existing
Agreements will have been reduced by up to $36,500,000 as a result of (i)
up to a $32,500,000 cash payment from the Borrowers to the Existing Lenders
on the Closing Date and (ii) the retention by the Existing Lenders of the
Existing Lender Claim. Immediately after such reduction, the Existing
Lenders will assign all of their respective right, title and interest in
and to the claim represented by the Existing Agreements (other than that
represented by the Existing Lender Claim) to the Junior Lenders. The terms
and conditions of the Existing Lender Claim shall be satisfactory to the
Required Lenders. The Existing Lender Claim shall be subordinated to the
Obligations pursuant to a subordination agreement in form and substance
satisfactory to the Required Lenders. The Bankruptcy Court shall have
entered an order in form and substance satisfactory to the Required Lenders
with respect to the Existing Lender Claim and such order shall (i) be in
full force and effect and (ii) not have been stayed, reversed, modified or
amended in any respect without the prior written consent of the Required
Lenders.
(H) Senior Subsequent DIP Agreement. The Senior Subsequent DIP
Agreement will be in full force and effect.
(I) Judicial Proceedings. All judicial proceedings shall be reasonably
satisfactory to the Required Lenders.
(J) No Default. No Default or Event of Default shall have occurred and
be continuing.
SECTION 5: EVENTS OF DEFAULT
5.1 Events of Default. Each of the following shall constitute an event
of default (each, an "Event of Default") under this Agreement:
(A) default shall be made in the payment of any (i) fees or interest
on the Term Loan when due and such default shall continue unremedied for
more than two Business Days or (ii) principal of the Term Loan or other
amounts payable by the Borrower under this Agreement, when and as the same
shall become due and payable, whether at the due date thereof or by
acceleration thereof or otherwise;
(B) default shall be made by the Borrower or any of its Subsidiaries
in the due observance or performance of any covenant, condition or
agreement to be observed or performed pursuant to the terms of this
Agreement or any of the other Loan Documents and such default shall
continue unremedied for more than five days after the occurrence thereof;
(C) any of the Cases shall be dismissed or converted to a case under
chapter 7 of the Bankruptcy Code; a trustee under chapter 7 or chapter 11
of the Bankruptcy Code, a responsible officer or an examiner with enlarged
powers relating to the operation of the business (powers beyond those set
forth in section 1106(a)(3) and (4) of the Bankruptcy Code) under section
1106(b) of the Bankruptcy Code shall be appointed in any of the Cases and
the order appointing such trustee, responsible officer or examiner shall
not be reversed or vacated within 30 days after the entry thereof; or an
application shall be filed by a Borrower for the approval of any other
Superpriority Claim (other than pursuant to the Senior Subsequent DIP
Agreement, the Existing Lender Claim or the Carve-Out) in any of the Cases
that is pari passu with or senior to the claims of the Junior Lenders
against the Borrowers or there shall arise or be granted any such pari
passu or senior Superpriority Claim;
(D) an order with respect to the Cases shall be entered by the
Bankruptcy Court confirming a Reorganization Plan that does not contain a
provision for termination of the Term Loan and payment of all Obligations
as provided herein on or before the effective date of, or substantial
consummation of, such Reorganization Plan;
(E) any material provision of any Loan Document shall, for any reason,
cease to be valid and binding on a Borrower or a Borrower shall so assert
in any pleading filed in any court;
(F) a Loan Document under which a Borrower or any Affiliate purports
to grant to the Junior Lenders a Lien on any of its property shall for any
reason fail or cease to create a valid and perfected and, except to the
extent permitted by the terms of this Agreement or the Loan Documents,
priority Lien on or security interest in any Collateral purported to be
covered thereby;
(G) an order of the Bankruptcy Court shall be entered reversing,
amending, supplementing, staying for a period in excess of 10 days,
vacating or otherwise modifying any of the Final Order or terminating the
use of cash collateral by the Borrowers;
(H) any Default or Event of default shall have occurred under the
Senior Subsequent DIP Agreement; or
(I) the Senior Loans shall have been repaid in full.
Section 5.2 Remedies. If an Event of Default occurs, and at any time
thereafter during the continuance of such Event of Default, then without
further order of or application to the Bankruptcy Court the Required
Lenders may, by notice to the Borrower (with a copy to counsel for any
statutory committee appointed in the Cases, to counsel for the Existing
Lenders and to the United States Trustee for the District of Delaware),
take one or more of the following actions at the same or different times
with five Business Days' written notice prior to taking the action
contemplated thereby:
(i) declare the Term Loan to be immediately due and payable,
whereupon the principal of the Term Loan together with
accrued interest thereon and any unpaid accrued fees and
expenses and all other liabilities of the Borrowers accrued
under this Agreement and the other Loan Documents, shall
become immediately due and payable, without presentment,
demand, protest or any other notice of any kind, all of
which are expressly waived by the Borrowers notwithstanding
anything contained in this Agreement or the other Loan
Document to the contrary; and
(ii) exercise any and all remedies under this Agreement and the
Loan Documents and under applicable law available to the
Junior Lenders.
Notwithstanding anything to the contrary contained herein, for so long
as the Senior Subsequent DIP Agreement remains in full force and effect,
the Junior Lenders: (i) will not declare the Term Loan to be immediately
due and payable until such time as the lenders under the Senior Subsequent
DIP Agreement have declared all loans under the Senior Subsequent DIP
Agreement to be immediately due and payable and (ii) will rescind any such
declaration as promptly as practicable upon receipt of written notice from
the Agent that any declaration of loans made pursuant to the Senior
Subsequent DIP Agreement has been rescinded.
5.3 Right of Set-Off. Subject to the provisions of Section 5.2, upon
the occurrence and during the continuance of any Event of Default, each
Junior Lender is authorized at any time and from time to time, to the
fullest extent permitted by law and without further order of or application
to the Bankruptcy Court, to set off and apply any indebtedness at any time
owing by each Junior Lender to or for the credit or the account of the
Borrowers against any and all of the obligations of the Borrowers now or
hereafter existing under the Loan Documents, irrespective of whether or not
such Junior Lender shall have made any demand under any Loan Document and
although such obligations may not have been accelerated. Each Junior Lender
agrees promptly to notify the Parent after any such set-off and application
made by such Junior Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights
of each Junior Lender under this Section 5.3 are in addition to other
rights and remedies which such Junior Lender may have upon the occurrence
and during the continuance of any Event of Default.
SECTION 6: GENERAL
6.1 Notices. Notices and other communications provided for in this
Agreement shall be in writing (including telex, facsimile or cable
communication) and shall be mailed, telexed, transmitted, cabled or
delivered to the appropriate Person at the following address:
[TO BE PROVIDED]
All notices and other communications given to any Person in accordance with
the provisions of this Agreement shall be deemed to have been given on the
fifth Business Day after the date when sent by registered or certified
mail, postage prepaid, return receipt requested, if by mail, or when
receipt is acknowledged, if by any telegraphic communications or facsimile
equipment of the sender, in each case addressed to such Person as provided
in this Section 6.1 or in accordance with the latest unrevoked written
direction from such party.
6.2 Successors; No Assignment.This Agreement shall be binding upon and
inure to the benefit of the Borrowers and the Junior Lenders and their
successors. The Borrowers may not assign or transfer any of their rights or
obligations under this Agreement without the prior written consent of the
Required Lenders. A Junior Lender may not assign or transfer any of its
rights or obligations under this Agreement without the prior written
consent of the other Junior Lenders.
6.3. Confidentiality.
---------------
Each Junior Lender agrees to keep any information delivered or made
available by any Borrower to it confidential from anyone other than persons
employed or retained by such Junior Lender who are or are expected to
become engaged in evaluating, approving, structuring or administering the
Term Loan; provided that nothing in this Section 6.3 shall prevent any
Junior Lender from disclosing such information (i) to any other Junior
Lender, (ii) upon the order of any court or administrative agency, (iii)
upon the request or demand of any regulatory agency or authority, (iv) that
has been publicly disclosed other than as a result of a disclosure by such
Junior Lender which is not permitted by this Agreement, (v) in connection
with any litigation to which a Junior Lender, or its Affiliates may be a
party to the extent reasonably required, (vi) to the extent reasonably
required in connection with the exercise of any remedy under this
Agreement, (vii) to such Junior Lender's legal counsel and independent
auditors and (viii) to any actual or proposed assignee. Each Junior Lender
shall use reasonable efforts to notify the Parent of any required
disclosure under clause (ii) above.
6.4 Expenses.
--------
The Borrowers agree to pay all reasonable and documented out-of-pocket
expenses incurred by the Junior Lenders (including but not limited to the
reasonable fees and disbursements of counsel to the Junior Lenders, Insight
Consulting and any internal or third-party appraisers, consultants and
auditors advising the Junior Lenders) in connection with the Junior
Lenders' due diligence and the preparation, execution, delivery and
administration of this Agreement and the other Loan Documents, the
reasonable and customary costs, fees and expenses of the Junior Lenders in
connection with any monthly and other periodic field audits, monitoring of
assets (including reasonable and customary internal collateral monitoring
fees) and publicity expenses and, following the occurrence of an Event of
Default, all reasonable out-of-pocket expenses incurred by the Junior
Lenders in the enforcement or protection of their rights in connection with
this Agreement or the other Loan Documents, including but not limited to
the reasonable fees and disbursements of any counsel for the Junior
Lenders. Such payments shall be made on the date of the Final Order and
thereafter on demand upon delivery of a statement setting forth such costs
and expenses. The obligations of the Borrowers under this Section 6.4
survive the Termination Date.
6.5. Indemnity.
---------
(A) Each Borrower agrees to indemnify and hold harmless each of the
Junior Lenders and their directors, officers, employees, agents and
Affiliates (each an "Indemnified Party") from and against any and all
expenses, losses, claims, damages and liabilities incurred by such
Indemnified Party arising out of claims made by any Person in any way
relating to the transactions contemplated by this Agreement and the other
Loan Documents, but excluding therefrom all expenses, losses, claims,
damages, and liabilities to the extent that they are determined by the
final judgment of a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of such Indemnified Party. The
obligations of the Borrowers under this Section 6.5 will survive the
termination of this Agreement or the payment of the Loans.
6.6 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
6.7 No Waiver. No failure on the part of any of the Junior Lenders to
exercise, and no delay in exercising, any right, power or remedy under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
6.8 Extension of Maturity. Should any payment of principal of or
interest or any other amount due under this Agreement become due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, in the case of principal,
interest shall be payable thereon at the rate herein specified during such
extension.
6.9 Amendments. No modification, amendment or waiver of any provision
of this Agreement, and no consent to any departure by the Borrowers
therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for
which given; provided that:
(i) no such modification or amendment shall without the written
consent of all of the Junior Lenders (a) amend or modify any
provision of this Agreement which provides for the unanimous
consent or approval of the Lenders, (b) amend this Section 6.9 or
the definition of Required Lenders, (c) amend or modify the
Superpriority Claim status of the Junior Lenders contemplated by
Section 3.1 or (d) release all or any substantial portion of the
Liens granted to the Junior Lenders under the Loan Documents; or
(ii) no such modification or amendment shall without the written
consent of the Junior Lender affected thereby reduce the
principal amount of any portion of the Term Loan or the rate of
interest payable thereon, or extend any date for the payment of
interest under this Agreement or reduce any fees payable under
this Agreement or extend the final maturity of the Term Loan.
No notice to or demand on the Borrowers shall entitle the Borrowers to
any other or further notice or demand in the same, similar or other
circumstances. No amendment to this Agreement shall be effective against a
Borrower unless signed by such Borrowers.
6.10 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
6.11 Execution in Counterparts.This Agreement may be executed in any
number of counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same instrument.
6.12 Prior Agreements. This Agreement and the other Loan Documents
represent the entire agreement of the parties with regard to the subject
matter of this Agreement and the terms of any letters and other
documentation entered into among the Borrowers and any Junior Lender prior
to the execution of this Agreement which relate to loans to be made under
this Agreement shall be replaced by the terms of this Agreement.
6.13 Further Assurances. Whenever and so often as reasonably requested
by the Required Lenders, the Borrowers will promptly execute and deliver or
cause to be executed and delivered all such other and further instruments,
documents or assurances, and promptly do or cause to be done all such other
and further things, as may be necessary and reasonably required in order to
further and more fully vest in the Junior Lenders all rights, interests,
powers, benefits, privileges and advantages conferred or intended to be
conferred by this Agreement and the other Loan Documents.
6.14 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND EACH JUNIOR
LENDER IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
Executed and delivered in Chicago, Illinois as of the day and the year
first above written.
PARENT:
NUTRAMAX PRODUCTS, INC.
By:
------------------------------
Title:
JUNIOR LENDERS:
CAPE ANN INVESTORS LLC
By:
------------------------------
Title:
Amount of commitment:
$8,100,000
PERITUS CAPITAL PARTNERS LLC
By:
------------------------------
Title:
Amount of commitment:
$8,100,000
BERNARD J. KORMAN
Amount of commitment:
$1,800,000
BORROWERS:
ADHESIVE COATINGS, INC.
By:
------------------------------
Title:
ELMWOOD PARK REALTY, INC.
By:
------------------------------
Title:
CERTIFIED CORP.
By:
------------------------------
Title:
POWERS PHARMACEUTICAL CORPORATION
By:
------------------------------
Title:
FAIRETON REALTY HOLDINGS, INC.
By:
------------------------------
Title:
FIRST AID PRODUCTS, INC.
By:
------------------------------
Title:
NUTRAMAX HOLDINGS, INC.
By:
------------------------------
Title:
NUTRAMAX HOLDINGS II, INC.
By:
------------------------------
Title:
F.A. PRODUCTS, L.P.
By:
------------------------------
FIRST AID PRODUCTS, INC.,
its general partner
By:
------------------------------
Title:
FLORENCE REALTY, INC.
By:
------------------------------
Title:
NUTRAMAX ACQUISITION CORPORATION
By:
------------------------------
Title:
NUTRAMAX ORTHALMICS INC.
By:
------------------------------
Title:
ORAL CARE, INC.
By:
------------------------------
Title:
<PAGE>
SECTION PAGE
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ATTACHMENTS
Exhibit A Form of Promissory Note
Exhibit B Form of Final Order
Schedule 1 Adequate Protection Obligations
Schedule 2 Existing Agreements
EXHIBIT 99.1
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
**********************************x
CHAPTER 11
In Re: CASE NOS.
NUTRAMAX PRODUCTS, INC. (Jointly Administered)
NUTRAMAX HOLDINGS, INC.,
NUTRAMAX HOLDINGS II, INC,
NUTRAMAX OPHTHALMICS, INC.,
NUTRAMAX ACQUISITION CORPORATION,
FAIRTON REALTY HOLDINGS, INC.,
ORAL CARE, INC.,
POWERS PHARMACEUTICAL CORP.,
FLORENCE REALTY, INC.,
CERTIFTED CORP.,
FIRST AID PRODUCTS, INC.,
ADHESIVE COATINGS, INC.,
ELMWOOD PARK REALTY, INC. AND
F.A. PRODUCTS, L.P.
DEBTORS
**********************************x
INTERIM ORDER
AUTHORIZING EMERGENCY POST-PETITION SECURED FINANCING PURSUANT TO SECTIONS
364(C)(2),364(C)(3) AND 364(D) OF THE BANKRUPTCY CODE, GRANTING ADEQUATE
PROTECTION, AND SETTING FINAL HEARING PURSUANT TO BANKRUPTCY RULE 4001
THIS MATTER having come before the Court upon the Motion (the
"MOTION") of the Debtors NutraMax Products, Inc. Nutramax Holdings, Inc.,
Nutramax Holdings II, Inc, Nutramax Ophthalimcs, Inc., Nutramax Acquisition
Corporation, Fairton Realty Holdings, Inc., Oral Care, Inc., Powers
Pharmaceutical Corp., Florence Realty, Inc., Certified Corp., First Aid
Products, Inc., Adhesive Coatings, Inc., Elmwood Park Realty, Inc., and
F.A. Products, L.P. (collectively the "DEBTORS") seeking the entry of an
order including authority to:
(i) Obtain credit and incur debt secured by liens (as defined in
Section 101(37) of Title 11,U.S.C., as amended (the "BANKRUPTCY CODE") and
referred to herein as "LIENS") on property of the Debtors' estate pursuant
to Sections 364(c)(2), 364(c)(3) and 364(d) of the Bankruptcy Code and with
priority, as to administrative expenses, as provided in Section 364(c)(1)
of the Bankruptcy Code.
(ii) Establish that financing arrangement (the "DIP CREDIT FACILITY")
with Fleet National Bank, ("FLEET") with offices at 100 Federal Street,
Boston Massachusetts, which is contemplated by the Debtor-In-Possession
Revolving Credit Agreement (the "Loan Agreement"), substantially the form
annexed to the Motion as EXHIBIT A which DIP Credit Facility provides for
financing on an interim basis until approved at a hearing (the "FINAL
HEARING") to be held hereafter.
(iii) Provide Fleet with Liens upon the Debtors' property as provided
in and as contemplated by the Loan Agreement, as supplemented by this Order
(the Loan Agreement and all such instruments and documents as may be
executed and delivered in connection therewith or which relate thereto
being referred to hereinafter collectively, as the "LOAN DOCUMENTS").
(iv) Grant the Fleet a Super-Priority Claim over any and all
administrative expenses other than as set forth in Paragraph 11, below.
Upon the Affidavit of Richard G. Glass, it appearing that absent the
relief requested herein, the Debtors will suffer immediate and irreparable
harm; and it further appearing that notice of the Motion is sufficient and
complies with the requirements of Bankruptcy Rules 4001(c) and 4001(d); and
for good cause shown;
THE COURT HEREBY FINDS THAT:
----------------------------
A. On May __, 2000, the Debtors each filed a voluntary petition under
Chapter 11 of the Bankruptcy Code.
B. The Debtors have continued in the management and operation of their
business and property as debtors in possession pursuant to Bankruptcy Code
Sections 1107 and 1108. No trustee or examiner has been appointed in this
case and no official creditors committee has been formed as of the date
hereof.
C. This Court has jurisdiction, pursuant to 28 U.S.C.ss.ss.157(b) and
1334, over these proceedings, and over the persons and property affected
hereby.
D. An immediate need exists for the Debtors to obtain funds with which
to purchase inventory, continue Debtors operation, and administer and
preserve the value of their estate. The ability of the Debtors to finance
their operations requires the additional availability of working capital,
the absence of which would immediately and irreparably harm the Debtors,
their estate, and their creditors and the possibility for a successful
reorganization.
E. The Debtors are unable to obtain unsecured credit allowable under
Bankruptcy Code Section 503(b)(1) as an administrative expense.
F. The Debtors are also unable to obtain secured credit, allowable
only under Bankruptcy Code Sections 364(c)(2) and 364(c)(3), except under
the terms and conditions provided in this Order. The Debtors arc unable to
obtain credit for borrowed money without the Debtors' granting to Fleet (i)
Liens on the assets of the Debtors pursuant to Bankruptcy Code Sections
364(c)(2), 364(c)(3), and 364(d); and (ii) a super-priority administrative
expense claim status pursuant to Bankruptcy Code Section as provided in
Section 364(c)(1) of the Bankruptcy Code (such super-priority
administrative expense claim having priority as provided herein) and as
provided by this Order.
G. The ability of the Debtors to finance their operations and the
availability of sufficient working capital through the incurrence of
indebtedness for borrowed money and other financial accommodations is vital
to the Debtors' ability to preserve and maintain the Debtors' going concern
value and the Debtors ability to consummate a successful reorganization.
H. The relief requested in the Motion is necessary, essential, and
appropriate for the continued operation of the Debtors' business and the
management and preservation of Debtors property.
I. It is in the best interest of Debtors' estate to be allowed to
establish the DIP Credit Facility contemplated by the Loan Documents.
J. The terms and Conditions of the DIP Credit Facility, including
those which provide for the payment of interest to, and fees of, at the
times, and in the mariner provided under the DIP Credit Facility, are
believed to be fair, reasonable, and the best available under the
circumstances.
K. Credit to be extended under the DIP Credit Facility will be so
extended in good faith, in consequence of which Fleet is entitled to the
protection and benefits of Bankruptcy Code Section 364(e).
L. As of the commencement of the Proceedings, Nutramax Products, Inc.
is party to a Revolving Credit and Term Loan Agreement dated December 30,
1996 (as amended and in effect, the "Pre-Petition Agreement"), the
obligations under which have been guaranteed by the other Debtors (other
than Nutramax Acquisition Corporation). As of the date of the filing of the
Proceedings, the aggregate amount due and owing under the Pre-Petition
Agreement was approximately $75 million.
M. The Debtors' obligations under the Pre-Petition Agreement are
secured by security interests and liens on all of the Debtors'(other than
Nutramax Acquisition Corp.'s) real and personal property (the "PRE-PETITION
COLLATERAL").
N. Fleet National Bank f/k/a BankBoston, N.A., National Bank of
Canada, Fleet National Bank, The Sumitomo Bank Limited, and Senior Debt
Portfolio (hereinafter collectively, the "PRIOR LENDERS"), the pre-petition
secured lenders to the Debtors under the Pre-Petition Agreement, have
consented to the Motion, subject to the entry of an order approving a
Stipulation with the Debtors concerning Adequate Protection.
O. The notice of the Hearing at which the Order was entered, which
notice was provided by the Debtors to Riemer & Braunstein, LLP, counsel to
Fleet and the Prior Lenders, the United States Trustee, Jones, Day, Reavis
& Pogue, counsel for The CIT Group/Business Credit, Inc., Mayer, Brown &
Platt, counsel to ING (US) Capital, LLC, Cleary, Gottlieb, Steen &
Hamilton, counsel to the Junior Subsequent DIP Lenders, and the twenty
largest unsecured creditors of the Debtors constitutes adequate notice
under the circumstances in accordance with Bankruptcy Rule 4001(c) and
Bankruptcy Code Section 102(l), as required by Bankruptcy Code Sections
364(c) in light of the emergency nature of the interim relief requested in
the Motion. No further notice of the relief sought in the Motion is
required.
P. Good and sufficient cause bas been shown for the entry of this
Order. Among other things, the entry of this Order will: enable the Debtors
to continue the operation of Debtors business; increase the possibility for
a successful reorganization; and be in the best interest of the Debtors,
their creditors, and their estate.
NOW, THEREFORE, on the Motion of the Debtors and the record before the
Court with respect to the Motion, and with the consent of the Debtors and
Fleet to the form and entry of this Order, and good cause appearing,
IT IS ON THIS ___ day of May, 2000 ORDERED that:
APPROVAL OF AND AQIHORIZATION AS TO BORROWING
---------------------------------------------
1. The terms and the conditions of the DIP Credit Facility are hereby
approved. The Debtors are authorized to:
(a) Establish the DIP Credit Facility.
(b) Execute each of the Loan Documents to which the Debtors are
parties.
(c) Borrow up to Five Million Dollars ($5,000,000.00) under the
DIP Credit Facility, the proceeds of which are to be used by the Debtors in
the ordinary course of their business and in accordance with the terms and
conditions of the Loan Documents.
2. The Debtors are hereby authorized, empowered, and directed to do
and perform all acts and to make, execute, and deliver all instruments and
documents which may be requisite or necessary for the performance by the
Debtors under the Loan Documents and the creation and perfection of the
Liens described in and provided for by the Loan Documents.
3. The Debtors are hereby authorized to grant to Fleet valid, binding,
enforceable and perfected Liens in and to all collateral security (the
"COLLATERAL") to be provided pursuant to the Loan Documents, including,
without limitation,
All inventory, accounts, equipment, real estate,
general intangibles, Investment Property, chattel
paper, and goods (respectively as defined in the
Uniform Commercial Code) now owned or in which the
Debtors have any interest (and without regard to
whether acquired prior or subsequent to the Filing
Date) or hereafter acquired or in which the Debtors
obtain an interest; all present and future leasehold
interests in which the Debtors have an interests (and
without regard to whether acquired prior or subsequent
to the Filing Date); and the products and proceeds
thereof, but excluding any proceeds of avoidance
actions under Chapter 5 of the Bankruptcy Code.
4. The automatic stay imposed under Bankruptcy Code Section 362(a)(4)
is hereby lifted to permit the Debtors to grant the aforesaid Liens and to
perform the Debtors' liabilities and obligations to Fleet under the DIP
Credit Facility.
5. Each officer of each Debtor, acting singly, and such other
individuals as may be so authorized by the Board of Directors of each
Debtor, likewise acting singly, is hereby authorized to execute and deliver
each of the Loan Documents, such execution and delivery to be conclusive of
their respective authority to act in the name of and on behalf of each
Debtor.
6. The Liens to be created and granted to Fleet, as provided in
Paragraph 4, above, are created pursuant to Bankruptcy Code Sections
364(c)(2), 364(c)(3) and 364(d). With the exception of the property of the
estate which, at the initiation of this Case, was to subject to a valid and
perfected lien (a list of which is attached to the Loan Agreement), other
than any lien or mortgage of the Prior Lender, which liens and mortgages
are specifically subordinated to the Liens granted Fleet pursuant to the
terms of this order, the Liens to be created and granted to Fleet, as
provided in Paragraph 4, above, are first, prior, perfected, and superior
to any security, mortgage, or collateral interest or lien or claim to the
Collateral.
7. This Order shall be sufficient and conclusive evidence of the
validity, perfection, and priority of Fleet's Liens upon the Collateral,
without the necessity of filing or recording any financing statement or
other instrument or document which may otherwise be required under the law
or any jurisdiction or the taking of any other action to validate or
perfect the Liens of Fleet in and to the Collateral or to entitle Fleet to
the priorities granted herein, provided, however, the Debtors may execute
and Fleet may rile or record financing statements or other instruments to
evidence and to perfect the Liens authorized hereby, provided further,
however, no such filing or recondition shall be necessary or required in
order to create or perfect any such Lien.
8. Fleet, in Fleet's discretion, may file a xerographic copy of this
Order as a financing statement with any recording officer designated to
file financing statements or with any registry of deeds or similar office
in any jurisdiction in which the Debtors have real or personal property,
and in such event, the subject filing or recording officer is authorized
and directed to file or record such copy of this Order.
9. The Loan Agreement, each of the Loan Documents, and each obligation
thereunder respectively shall constitute and evidence the valid and binding
obligations of the Debtors, which obligations shall be enforceable against
the Debtors in accordance with their terms.
ADMINISTRATIVE CLAIM
--------------------
10. The obligations under the Loan Agreement and other Loan Documents
shall be an allowed administrative expense claim (the "SUPER-PRIORITY
CLAIM") with priority (except as otherwise provided in Section 11, below,
with respect to the Carve-Out) under Bankruptcy Code Section 364(c)(1) and
otherwise over all administrative expense claims and unsecured claims
against the Debtors, now existing or hereafter arising, of any kind or
nature whatsoever including, without limitation, administrative expenses of
the kinds specified in or ordered pursuant to Bankruptcy Code Sections 105,
326, 330, 331, 503(a), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d), and
1114.
11. Except for
(a) the statutory fees of the United States Trustee provided for in
28 U.S.C.ss.1930(a); and
(b) the Carve Out (as defined in paragraph 13 below): and
(c) collateral interests in property of the estate which, at the
initiation of the Proceedings, was subject to a valid and
perfected lien, as described in the Loan Agreement (other than
any lien of the Prior Lenders under the Pre-Petition Agreement),
no costs or expenses of administration including, without limitation,
professional fees allowed and payable under Bankruptcy Code Sections 330
and 331 that have been or may be incurred in these proceedings, or in any
case or cases pursuant to Chapter 7 of the Bankruptcy Code into which this
case may be converted, or in any other proceeding related thereto
(hereinafter, any "SUCCESSOR CASE"), and no priority claims to the
Collateral are, or will be, prior to or on a parity with the obligations
under the Loan Agreement and other Loan Documents, or with any other claims
of Fleet arising hereunder.
12. No cost or expense which may be incurred in connection with or on
account of the preservation and/or disposition of any Collateral or which
otherwise could be chargeable to Fleet or the Collateral pursuant to
Bankruptcy Code Section 506(c) or otherwise, shall be so chargeable except
in accordance with an Order of the Court after notice and hearing.
13. There is hereby established a Carve Out in favor of all
professionals employed at the expense or the Debtor's estate in the course
of these Proceedings. The term "CARVE OUT" means the sum of $150,000.00.
Any amounts paid to the Professionals prior to the occurrence of an Event
of Default shall not be credited or applied against the Carve Out. The
Carve Out shall in any event exclude any fees and expenses (x) arising out
of or related to the prosecution(but not the investigation) of any claims
or causes of action against Fleet and/or the Prior Lenders, and (y) arising
as to services rendered after conversion of the Chapter ll cases to cases
under Chapter 7 or after the appointment of a trustee. The payment of the
Carve Out shall not reduce, or be deemed applied in reduction of, the DIP
Credit facility or any obligations owed to the Prior Lenders.
14. Unless Fleet has provided its prior written consent or all
obligations have been paid in full, there shall not be entered in these
proceedings, or in any Successor Case, any order which authorizes any of
the following:
(a) The obtaining of credit or the incurring of indebtedness that
is
(i) secured by a security, mortgage, or collateral interest
or other Lien on all or any portion of the Collateral; and/or
(ii) entitled to priority administrative status which is
equal or senior to that granted to Fleet herein.
(b) The enforcement or any claimed security, mortgage, or
collateral interest or other Lien of any person other than of Fleet on
all or any portion of the Collateral.
(c) the Debtors' return of goods pursuant to Section 546(h)
[Section 546(g)] of the Bankruptcy Code.
15. Without limiting the provisions and protections of Paragraph 14,
above, if at any time prior to the repayment in full of all obligations and
the termination of Fleet's obligation to make loans and advances under the
Loan Documents, including subsequent to the confirmation of any plan of
reorganization respecting the Debtors, the Debtors or any Trustee
subsequently appointed shall obtain credit or incur debt pursuant to
Bankruptcy Code Section 364(b), 364(c) or 364(d), then all of the
consideration for such credit or debt shall immediately be turned over to
Fleet in reduction of the obligations.
16. All obligations of the Debtors to Fleet are due and payable upon
the earliest to occur of the following:
(a) June 10, 2000, unless Final Order (as defined in the Loan
Agreement) has been entered by that date.
(b) June 30, 2000.
(c) The occurrence of an Event of Default (as defined in the
Loan Agreement).
(d) The effective date of a plan of reorganization for the
Debtors.
Unless and until the obligations are repaid in full, the protections
afforded to Fleet under the Loan Documents, and any actions taken pursuant
thereto, shall survive the entry of any order confirming a plan of
reorganization or converting this case into a Successor Case, and the Liens
in and to the Collateral and the Super-Priority Claim shall continue in
these proceedings and in any Successor Case, and such security, mortgage,
and collateral interests and other Liens, and Super-Priority Claim shall
maintain their priority as provided by this Order until the obligations
have been satisfied in full.
17. The time and manner of payment of the obligations pursuant to the
Loan Agreement and the security, mortgage, and collateral interests and
other Liens in and to the Collateral and the Super-Priority Claim shall not
be altered or impaired by any plan of reorganization which may hereafter be
confirmed or by any further order which may hereafter be entered.
EVENTS OF DEFAULT
-----------------
18. Any automatic stay otherwise applicable to Fleet is hereby
modified so that upon the occurrence of any Event of Default (as defined in
the Loan Agreement) and at any time thereafter, with five (5) business days
notice of such occurrence given to the Debtors, counsel to any Creditor's
Committee appointed in these Proceedings, and the United States Trustee,
Fleet shall be entitled to exercise Fleet rights and remedies on default.
Following the giving of notice by the Lender of the occurrence of an Event
of Default:
(a) The Debtors shall deliver and cause the delivery of the
proceeds of Collateral to Fleet.
(b) Fleet shall continue to apply such proceeds in accordance
with the provisions of this Order, the Loan Agreement and the Prior
Lenders' Stipulation regarding Adequate Protection.
(c) The Debtors shall have no right to use any of such proceeds,
not any other cash collateral (as defined in Bankruptcy Code 363(a))
other than towards the satisfaction of the Obligations.
(d) Any obligation otherwise imposed on Fleet to provide any loan
or advance to the Debtors pursuant to the DIP Credit Facility shall be
suspended.
19. In Fleet's exercise of Fleet's rights and remedies upon default,
Fleet may retain one or more agents to sell, lease, or otherwise dispose of
the Collateral in accordance with the provisions of applicable law and the
Loan Documents.
20. In connection with Fleet's or any such agent's conduct of any sale
or other disposition of Collateral, in furtherance of the provisions of
Section 362 of the Bankruptcy Code, all parties and persons of every nature
and description, including, but not limited to, landlords, utilities,
governmental agencies, sheriffs, marshals, and other public officers,
creditors, and all those acting for or on their respective behalf, are
precluded from taking any action affecting property of the estate,
including the Collateral and Fleet's and the Prior Lenders' rights therein
and remedies with respect thereto, without further order of the Court.
Nothing herein is intended to limit the police powers of any governmental
agency.
21. Nothing included herein shall prejudice, impair, or otherwise
affect Fleet's right to seek any other or supplemental relief in respect of
the Debtors nor Fleet's right, as provided in the Loan Agreement, to
suspend or terminate the making of loans under the Loan Agreement.
MISCELLANEOUS PROVISIONS
------------------------
22. The Debtors shall, on or before May 4, 2000, serve by overnight
courier copies of the notice of approval of this Interim Order, together
with a copy of this Interim Order and the proposed Final Order to (i)
parties having been given notice of the emergency hearing, (ii) any other
party which has filed a request for special notice with this Court and
served such request upon the Debtors' counsel, (iii) counsel for any
statutory committee, (iv) all creditors who have recorded a UCC-1 financing
statement or a mortgage on the real or personal property of the Debtors,
(iv) all landlords that are parties to leases with the Debtors, (v) the
Internal Revenue Service, (vi) the United States Trustee and (vii) the
Securities and Exchange Commission. The notice of approval of this Interim
Order shall state that any party in interest objecting to the approval of
the Final Order shall file written objections with the United States
Bankruptcy Court Clerk for the District of Delaware no later than June 2,
2000, which objections shall be served so that same are received by no
later than 4:00 p.m.(eastern time) on such date by the United States
Trustee, counsel for the Debtors and counsel for Fleet. A hearing to
consider the approval of the Final Order will be held June 9, 2000, at 4:00
p.m.
23. If any provision of this Order is hereafter modified, vacated or
stayed by subsequent order of this or any other Court for any reason, such
modification, vacation, or stay shall not affect the validity of any
obligation incurred pursuant to this Order and prior to the later of (a)
the effective date of such modification, vacation, or stay, or (b) the
entry of the order pursuant to which such modification, vacation, or stay
was established, nor the validity, priority, or enforceability of any Len
granted by the Debtors to Fleet.
24. The payments made, and the Liens and Super-Priority Claims granted
to Fleet under the DIP Credit Facility and this Order, and the priority
thereof shall be binding on the Debtors, any successor trustee for the
Debtors, and all creditors of the Debtors, as provided in Bankruptcy Code
Section 364(e), even if this Order is reversed or modified on appeal.
25. Fleet's failure to seek relief or otherwise exercise its rights
and remedies under the DIP Credit Facility or this Order shall not
constitute a waiver of any of Fleet's rights hereunder, thereunder, or
otherwise.
26. The Debtors and Fleet may amend or waive any provision of the DIP
Credit Facility, provided that such amendment or waiver, in the judgement
of the Debtors and Fleet, is either nonprejudicial to the rights of third
parties or is not material. Except as otherwise provided herein, no waiver,
modification or amendment of any of the provisions hereof shall be
effective unless set forth in writing, signed by the parties hereto and
approved by the Court.
27. In the event of any inconsistency between the terms and conditions
of any Loan Document and of this Order, the provisions of this Order shall
govern and control.
28. The Interim Order shall remain in full force and effect through
June 30, 2000 unless (i) an objection is filed by May 19, 2000 at noon (in
which case a further hearing on the interim approval will be held at the
next omnibus hearing date on May 23, 2000 at 4:00 p.m.) or (ii) the Final
Order is entered.
SO ORDERED by the Court this 3d day of May, 2000.
/s/ Mary F. Walrath
-------------------
JUDGE
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
Contact: Edelman PR Worldwide
Hollis Rafkin-Sax, 212-704-4559
Jim McNamara, 212-704-8270
NUTRAMAX FILES TO REORGANIZE UNDER CHAPTER 11:
OBTAINS COMMITMENT FOR $18 MILLION EQUITY INFUSION AND $30
MILLION IN NEW BANK FINANCING AS PART OF ITS REORGANIZATION
Gloucester, MA - May 2, 2000 - NUTRAMAX PRODUCTS, INC. (BB: NMPC) and its
subsidiaries today each filed voluntary petitions under Chapter 11 of the
U.S. Bankruptcy Code. The Company has arranged a pre-negotiated agreement
with its existing bank lenders, its subordinated lender, and its principal
equity holders and has submitted it to the bankruptcy court as the
Company's Chapter 11 plan of reorganization. That plan, which provides for
an $18 million junior loan from the Company's principal shareholders that
may be converted into equity upon emergence from bankruptcy, is the
catalyst for a reorganization that produces a substantial debt reduction
and proposes a recovery to unsecured creditors. All shareholders will also
be permitted, under the plan, to subscribe to their share of new NutraMax
common stock. At the same time, the Company has secured a commitment for $5
million in interim debtor-in-possession (DIP) financing from one of its
existing bank lenders, which will be replaced by a $30 million commitment
from The CIT Group/Business Credit Inc. upon final approval by the court.
Of that $30 million, up to $15 million will be used to fund transactions
contemplated as part of the reorganization. A hearing with respect to the
proposed financing and other matters has been scheduled for Wednesday, May
3, 2000.
Under the terms of the proposed reorganization, NutraMax has reached
agreements, subject to court approval, to restructure debt from
approximately $80 million to approximately $30 million. Unsecured creditors
would receive up to 50% of the amount of their claim in the form of a note,
based upon current claim estimates. While the reorganization will result in
the cancellation of the Company's existing common stock, the reorganization
plan also provides that existing NutraMax shareholders would receive
subscription rights in a common stock offering in the newly reorganized
company and would additionally have beneficial rights to a pro rata share
of a litigation trust. All terms of the proposed financing and
reorganization plan are presently subject to court approval, and may be
modified.
Richard G. Glass, NutraMax's Chief Executive Officer said, "This is a very
positive development for NutraMax as it will enable us to secure our
position as an innovative and valued supplier to our customers. The filing
of our reorganization plan follows an extensive evaluation of our business
and financial structure. By significantly reducing our debt and
implementing cost savings and efficiency programs, NutraMax will emerge
from this process as a stronger and more competitive company. We are
particularly gratified by the support of our principal shareholders who are
stepping up to lead a significant new investment in the Company. Their $18
million commitment reinforces the strength of our prospects and gives us a
stable platform from which to build our business."
Glass added, "The Chapter 11 process will allow us to continue our day to
day operations while we address the steps necessary to achieve our
financial restructuring. With the support of our customers and suppliers,
and through the hard work and dedication of our 830 employees, I am very
confident in our ability to reach new levels of performance in the future."
As part of the Company's overall reorganization plans, there are many
positive components that will support a successful emergence from Chapter
11:
o A new executive management team led by Mr. Glass, and including David
Radeke, President and Chief Operating Officer, Dawn Larson, Chief
Financial Officer, and David Goldstein, Vice President, Sales &
Marketing.
o Implementation of a combination of price increases and cost savings
programs with an annualized benefit to the Company of approximately $4
million.
o Development of short term strategies to improve management and control
of day to day business; and long term strategies to drive profitable
growth in the future.
NutraMax is a leading consumer health care products company and the number
one manufacturer and marketer of Store-Brand Disposable Douches,
ready-to-use Enemas, Pediatric Electrolyte Oral Maintenance Solutions,
Disposable Baby Bottle Liners, Cough Drops, and Throat Lozenges. The
Company also markets a broad line of Toothbrushes, Dental Floss, and
various First Aid Products for the hospital and industrial safety markets.
In addition, the Company offers a broad range of pharmaceutical
manufacturing capabilities to a select group of contract customers.
NutraMax products are sold by supermarkets, drug chains, and mass
merchandisers under both store brand and control brands, including Powers,
Sweet `n Fresh(R), Pure & Gentle, Fresh `n Easy, Pro Dental, American White
Cross, and NutraMax.
The Company and its subsidiaries filed their Chapter 11 petition in the
U.S. Bankruptcy Court in Wilmington, Delaware.
For additional information, visit NutraMax on the Internet at
http://www.nutramax.com
-END-
