EXHIBIT 10.1
POST-PETITION LOAN AND SECURITY AGREEMENT
THIS POST-PETITION LOAN AND SECURITY AGREEMENT is made on October 11,
2000, by and among DRYPERS CORPORATION, a Delaware corporation and a Chapter 11
debtor-in-possession ("Borrower"); the financial institutions listed on the
signature pages hereof and their respective successors and assigns which become
"Lenders" as provided herein (such financial institutions and their respective
successors and assigns referred to collectively herein as "Lenders," and
individually as a "Lender"); and FLEET CAPITAL CORPORATION, a Rhode Island
corporation, in its capacity as collateral and administrative agent for the
Lenders pursuant to SECTION 12 hereof (together with its successors in such
capacity, "Agent"). Capitalized terms used in this Agreement have the meanings
assigned to them in Appendix A, General Definitions.
R E C I T A L S:
Borrower is debtor-in-possession under Chapter 11 of the Bankruptcy Code
in a case (the "Chapter 11 Case") pending in the United States Bankruptcy Court
for the Southern District of Texas, Houston Division (the "Court"). Borrower has
requested that Lenders extend financing to Borrower in connection with the
Chapter 11 Case in accordance with the provisions of this Agreement.
Lenders are willing to make loans and other extensions of credit to
Borrower, subject to the terms and conditions of this Agreement and subject to
the terms and conditions set forth in orders of the Court approving the proposed
financing.
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, receipt of which is acknowledged, the parties hereto, intending
to be legally bound hereby, agree as follows:
SECTION 1. DIP FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other DIP
Financing Documents, Lenders severally agree to the extent and in the manner
hereinafter set forth to make their respective Pro Rata shares of the
Commitments available to Borrower, in an aggregate amount up to $25,000,000, as
follows:
1.1. REVOLVER FACILITY.
1.1.1. REVOLVER LOANS. Subject to the terms and conditions of this
Agreement, each Lender agrees, severally to the extent of its Commitment and not
jointly with the other Lenders, upon the terms and subject to the conditions set
forth herein, to make Revolver Loans to Borrower on any Business Day during the
period from the date hereof through the day before the last day of the DIP Term,
not to exceed in an aggregate principal
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amount outstanding at any time such Lender'sCommitment at such time, which
Revolver Loans may be repaid and reborrowed in accordance with the provisions of
this Agreement; PROVIDED, HOWEVER, that Lenders shall have no obligation
whatsoever to make any Revolver Loan if at the time of the proposed funding
thereof the aggregate principal amount of all of the Revolver Loans and Pending
Revolver Loans then outstanding exceeds, or would exceed after the funding of
such Revolver Loan, the lesser of (a) the aggregate principal amount of the
Commitments or (b) the Borrowing Base. Each Borrowing of Revolver Loans shall be
funded by Lenders on a Pro Rata basis in accordance with their respective
Commitments. Subject to the foregoing limitations, and the other terms and
conditions of this Agreement, Borrower may borrow, repay, prepay and reborrow
under Revolver Loans. The Revolver Loans shall bear interest as set forth in
SECTION 2.1 hereof, shall be secured by all of the Collateral and shall be
evidenced by the Revolver Notes.
1.1.2. OUT-OF-FORMULA LOANS. If the unpaid balance of Revolver Loans
outstanding at any time should exceed the Borrowing Base at such time (an
"Out-of-Formula Condition"), such Revolver Loans shall nevertheless constitute
Obligations that are secured by the Collateral and are entitled to all of the
benefits of the DIP Financing Documents and Financing Orders. In the event that
Lenders are willing in their sole and absolute discretion to make Out-of-Formula
Loans, such Out-of-Formula Loans shall be payable ON DEMAND and shall bear
interest as provided in this Agreement for Revolver Loans generally.
1.1.3 PROFESSIONAL EXPENSE ADVANCES. If, on the Commitment
Termination Date, the amount of accrued and unpaid Professional Expenses
(whether or not such Professional Expenses have been allowed by order of the
Court on such date) exceeds the balance in the Professional Expense Escrow on
such date, then, notwithstanding any termination of the Commitments, any Default
or Event of Default or non-compliance with any conditions precedent, Lenders
shall, if they receive a request in writing to do so from Borrower within 30
days after the Commitment Termination Date, fund Revolver Loans in an aggregate
amount equal to the lesser of (i) the excess of the accrued and unpaid
Professional Expenses on the Commitment Termination Date over the balance in the
Professional Expense Escrow on such date or (ii) the amount of the Professional
Expense Reserve on the date of request for funding by Lenders. Promptly after
the Commitment Termination Date, Borrower shall report to Agent and Lenders the
balance on hand in the Professional Expense Escrow as of the Commitment
Termination Date, shall solicit from each Professional Person a statement of all
accrued and unpaid Professional Expenses owing to such Professional Person as of
the Commitment Termination Date and shall report to Agent and Lenders in writing
the amount of Professional Expense Advances, if any, that Lenders are required
to make pursuant to the provisions of this SECTION 1.1.3. The funding of such
Revolver Loans after the Commitment Termination Date shall not operate to waive
any Default or Event of Default, reinstate any Commitment or otherwise waive any
right or remedy Agent or Lenders may have under any of the DIP Financing
Documents, and all such Professional Expense Advances shall be treated as
Revolver Loans and shall be entitled to all of the benefits and security of the
DIP Financing Documents and the Financing Orders. Balances on hand in the
Professional Expense Escrow shall be disbursed to pay Professional Expenses to
the extent permitted by the Financing Orders, the Fee Procedure Order or
specifically allowed by other orders of the Court. Lender's obligations
hereunder shall terminate if after the date hereof and during the pendency of
the Chapter 11 Case Borrower repays all of the Obligations with loan proceeds
extended to Borrower by a new lender.
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1.1.4. USE OF PROCEEDS. The proceeds of the Revolver Loans shall be
used by Borrower during the pendency of the Chapter 11 Case exclusively for one
or more of the following purposes: (i) to pay expenditures described in the
Budgets or, with Agent's and Lenders' consent after the occurrence of an Event
of Default, to fund the costs of an orderly liquidation of the Collateral to the
extent approved by Agent and Lenders; (ii) to pay fees required to be paid to
the office of the United States Trustee; (iii) to pay, or to fund deposits to
the Professional Expense Escrow pursuant to the Financing Orders for the payment
of, Professional Expenses of Professional Persons subject to allowance by order
of the Court and Borrower's receipt of an itemized billing and expense statement
from such Professional Person; (iv) to pay any fees, expenses or reimbursement
obligations to Bank or Fleet pursuant to the Pre-Petition Loan Documents with
respect to any Letter of Credit; (v) to pay any of the Obligations; (vi) to pay
adequate protection payments to holders of Claims secured by valid Liens on any
pre-Petition Date assets of Borrower, to the extent authorized by order of the
Court; (vii) to pay the Claims of Critical Vendors, to the extent authorized by
order of the Court; (viii) to make payments to P&G pursuant to the Pre-Petition
P&G Settlement; and (ix) to pay other expenses authorized by order of the Court.
Notwithstanding anything to the contrary contained herein, in no event shall
proceeds of Revolver Loans be used to pay Professional Expenses incurred in
connection with the assertion of or joinder in any claim, counterclaim, action,
contested matter, objection, defense or other proceeding, the purpose of which
is to seek or the result of which would be to obtain any order, judgment,
declaration, or similar relief (a) invalidating, setting aside, avoiding or
subordinating, in whole or in part, any of the Pre-Petition Debt or Obligations
or Liens and security interests in any of the Collateral granted to Agent under
this Agreement or the Financing Orders or under any of the Pre-Petition Loan
Documents; (b) declaring any of the DIP Financing Documents or Pre-Petition Loan
Documents to be invalid, not binding or unenforceable in any respect; (c)
preventing, enjoining, hindering or otherwise delaying Agent's or any Lender's
enforcement of any of the DIP Financing Documents or Pre-Petition Loan Documents
or any realization upon any Collateral (unless such enforcement or realization
is in direct violation of an explicit provision in any of the Financing Orders);
(d) declaring any Liens granted or purported to be granted under any of the DIP
Financing Documents or Pre-Petition Loan Documents to have a priority other than
the priority set forth therein; (e) objecting to the amount or method of
calculation by Agent or Lenders of the Pre-Petition Debt or any of the
Obligations or any accounting rendered by Agent or Lenders with respect to any
of those obligations; or (f) seeking to use the cash proceeds of any of the
Collateral without the prior written consent of Agent and the Required Lenders.
Nothing in this SECTION 1.1.4 shall be construed to waive Agent's or any
Lender's right to object to any requests, motions or applications made in or
filed with the Court, including any applications for interim or final allowances
of Professional Expenses.
1.1.5. REVOLVER NOTES. The Revolver Loans made by each Lender and
interest accruing thereon shall be evidenced by the records of Agent and such
Lender and by the Revolver Note payable to such Lender (or the assignee of such
Lender), which shall be executed by Borrower, completed in conformity with this
Agreement and delivered to such Lender on the Closing Date. All outstanding
principal amounts and accrued interest under the Revolver Notes
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shall be due and payable as set forth in SECTION 4.2 hereof.
SECTION 2. INTEREST, FEES AND CHARGES
2.1. INTEREST.
2.1.1. RATES OF INTEREST. Borrower agrees to pay interest in respect
of all unpaid principal amounts of the Revolver Loans from the respective dates
such principal amounts are advanced until paid (whether at stated maturity, on
acceleration or otherwise) at a rate per annum equal to the lesser of (i) 1%
plus the Base Rate in effect from time to time or (ii) the Maximum Rate.
The rate of interest for all Revolver Loans shall be increased or
decreased, as the case may be, by an amount equal to any increase or decrease in
the Base Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Base Rate becomes effective. If
a Revolver Loan is repaid on the same day made, one day's interest shall be paid
on such Revolver Loan. The Base Rate on the date hereof is 9.5% per annum and,
therefore, the rate of interest in effect hereunder on the date hereof,
expressed in simple interest terms, is 10.5% per annum with respect to any
portion of the Revolver Loans.
2.1.2. DEFAULT RATE OF INTEREST. >From and after the occurrence of
any Event of Default, the principal amount of the Obligations (and, to the
extent permitted by Applicable Law, all past due interest) shall bear interest
at the Default Rate. Borrower acknowledges that the cost and expense to Agent
and each Lender attendant upon the occurrence of an Event of Default are
difficult to ascertain or estimate and that the Default Rate is a fair and
reasonable estimate to compensate Agent and Lender for such added cost and
expense.
2.2. FEES.
2.2.1. COMMITMENT FEE. Borrower shall pay to Agent, for the Pro Rata
benefit of Lenders, a commitment fee of 1% of the Commitments, which shall be
fully earned and, except to the extent otherwise required by Applicable Law,
non-refundable and shall be paid concurrently with the entry of the Interim
Financing Order.
2.2.2. UNUSED LINE FEE. Borrower shall pay to Agent, for the Pro
Rata benefit of Lenders, a fee equal to 0.25% per annum of the amount by which
the Average Loan Balance for any month (or portion thereof that the Commitments
are in effect) is less than $25,000,000, such fee to be paid on the first day of
the following month; but if the Commitments are terminated on a day other than
the first day of a month, then any such fee payable for the month in which
termination shall occur shall be paid on the effective date of such termination.
2.2.3. LC FACILITY FEES. Borrower shall pay all costs, fees and
expenses at any time payable to Bank, Fleet or any other Pre-Petition Lender
with respect to Letters of Credit in accordance with the Pre-Petition Loan
Documents.
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2.2.4. AUDIT AND APPRAISAL FEES. Borrower shall
be obligated to reimburse Agent and Lenders for all reasonable costs and
expenses incurred by Agent or any Lender in connection with all audits and
appraisals of any Obligor's books and records and such other matters pertaining
to any Obligor or any Collateral as Agent or any such Lender shall deem
appropriate.
2.2.5. COLLATERAL MONITORING FEE. In consideration of Agent's role
in monitoring Collateral, Borrower shall pay to Agent an annual collateral
monitoring fee of $35,000 per year, which fee shall be payable monthly in
advance in an amount equal to 1/12th of such fee, commencing on the Closing Date
and on the first day of each month thereafter.
2.2.6. GENERAL PROVISIONS. All fees shall be fully earned by the
identified recipient thereof pursuant to the foregoing provisions of this
Agreement on the due date thereof and, except as otherwise set forth herein or
required by Applicable Law, shall not be subject to rebate, refund or proration.
All fees provided for in SECTION 2.2 are and shall be deemed to be compensation
for services and are not, and shall not be deemed to be, interest or any other
charge for the use, forbearance or detention of money.
2.3. COMPUTATION OF INTEREST AND FEES. Interest shall
be calculated on a daily basis, commencing on the date hereof, and shall be
payable monthly, in arrears, on the first day of each month. All interest, fees
and other charges provided for in this Agreement shall be calculated daily and
shall be computed on the actual number of days elapsed over a year of 360 days.
Borrower acknowledges that the calculation of interest on the basis of a 360-day
year, as opposed to a year of 365 days, results in a higher effective rate of
interest hereunder. For purposes of computing interest hereunder, all Payment
Items received by Agent shall be deemed applied by Agent on account of the
Obligations (subject to Full Payment of such items) one Business Day after Agent
receives such items in immediately available funds in the Payment Account, and
Agent shall be deemed to have received such Payment Item on the date specified
in SECTION 4.6 hereof.
2.4. REIMBURSEMENT OBLIGATIONS.
2.4.1. Borrower shall reimburse Agent and each Lender for all
reasonable legal, accounting, appraisal and other fees and expenses incurred by
Agent or any Lender in connection with (i) the negotiation and preparation of
any of the DIP Financing Documents, any amendment or modification thereto, any
waiver of any Default or Event of Default thereunder, or any restructuring or
forbearance with respect thereto; (ii) the administration of the DIP Financing
Documents and the transactions contemplated thereby, to the extent that such
fees and expenses are expressly provided for in this Agreement or any of the
other DIP Financing Documents; (iii) action taken to perfect or maintain the
perfection or priority of any of Agent's Liens with respect to any of the
Collateral; (iv) any inspection of or audits conducted with respect to any of
Borrower's books and records or any of the Collateral; (v) any effort to verify,
protect, preserve, or restore any of the Collateral or to collect, sell,
liquidate or otherwise dispose of or realize upon
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any of the Collateral; (vi) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by or against Agent, any Lender, any Obligor or
any other Person) in any way arising out of or relating to any of the Collateral
(or the validity, perfection or priority of any of Agent's Liens thereon), any
of the DIP Financing Documents or the validity, allowance or amount of any of
the Obligations; (vii) the protection or enforcement of any rights or remedies
of Agent or any Lender in any Insolvency Proceeding; and (viii) any other action
taken by Agent or any Lender to enforce any of the rights or remedies of Agent
or such Lender against any Obligor or any Account Debtors to enforce collection
of any of the Obligations or payments with respect to any of the Collateral. All
amounts chargeable to Borrower under this SECTION 2.4 shall constitute
Obligations that are secured by all of the Collateral and shall be payable ON
DEMAND to Agent. Borrower shall also reimburse Agent for reasonable expenses
incurred by Agent in its administration of any of the Collateral to the extent
and in the manner provided in SECTION 7 hereof or in any of the other DIP
Financing Documents. The foregoing shall be in addition to, and shall not be
construed to limit, any other provision of any of the DIP Financing Documents
regarding the reimbursement by Borrower of costs, expenses or liabilities
suffered or incurred by Agent or any Lender.
2.4.2. If at any time Agent or (with the consent of Agent) any
Lender shall agree to indemnify any Person (including Bank) against losses or
damages that such Person may suffer or incur in its dealings or transactions
with Borrower, or shall guarantee any liability or obligation of Borrower to
such Person, or otherwise shall provide assurances of Borrower's payment or
performance under any agreement with such Person, including indemnities,
guaranties or other assurances of payment or performance given by Agent or any
Lender with respect to Cash Management Agreements or Letters of Credit, then the
Contingent Obligation of Agent or any Lender providing any such indemnity,
guaranty or other assurance of payment or performance, together with any payment
made or liability incurred by Agent or any Lender in connection therewith, shall
constitute Obligations that are secured by the Collateral and Borrower shall
repay, ON DEMAND, any amount so paid or any liability incurred by Agent or any
Lender in connection with any such indemnity, guaranty or assurance. Nothing
herein shall be construed to impose upon Agent or any Lender any obligation to
provide any such indemnity, guaranty or assurance. The foregoing agreement of
Borrower shall apply regardless of Borrower's knowledge of the existence
thereof, and shall be in addition to any of the provision of the DIP Financing
Documents regarding reimbursement by Borrower of costs, expenses or liabilities
suffered or incurred by Agent or any Lender.
2.5. BANK CHARGES. Borrower shall pay to Agent, ON
DEMAND, any and all fees, costs or expenses which Agent or any Lender pays to a
bank or other similar institution (including any fees paid by Agent or any
Lender to any Participant) arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower by Agent or any
Lender of proceeds of Revolver Loans made by Lenders to Borrower pursuant to
this Agreement and (ii) the depositing for collection by Agent or any Lender of
any Payment Item received or delivered to Agent or any Lender on account of the
Obligations. Borrower acknowledges and agrees that Agent may charge such costs,
fees and expenses to Borrower based upon Agent's good faith estimate of such
costs, fees and expenses as they are incurred by
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Agent or any Lender.
2.6. CAPITAL ADEQUACY. If any Lender determines that
after the date hereof (a) the adoption of any Applicable Law regarding capital
requirements for banks or bank holding companies or the subsidiaries thereof,
(b) any change in the interpretation or administration of any such Applicable
Law by any Governmental Authority, central bank, or comparable agency charged
with the interpretation or administration thereof, or (c) compliance by such
Lender or its holding company with any request or directive of any such
Governmental Authority, central bank or comparable agency regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on such Lender's capital to a level below that which such Lender
could have achieved (taking into consideration such Lender's and its holding
company's policies with respect to capital adequacy immediately before such
adoption, change or compliance and assuming that such Lender's capital was fully
utilized prior to such adoption, change or compliance) but for such adoption,
change or compliance as a consequence of such Lender's commitment to make the
Revolver Loans pursuant hereto by any amount deemed by such Lender to be
material:
(i) Agent shall promptly, after its receipt of a
certificate from such Lender setting forth such Lender's determination of
such occurrence, give notice thereof to Borrower and Lenders; and
(ii) Borrower shall pay to Agent, for the account of such
Lender, as an additional fee from time to time, ON DEMAND, such amount as
such Lender certifies to be the amount reasonably calculated to compensate
such Lender for such reduction.
A certificate of such Lender claiming entitlement to compensation as set
forth above will be conclusive in the absence of manifest error. Such
certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to such Lender
(including the basis for such Lender's determination of such amount), and the
method by which such amounts were determined. In determining such amount, such
Lender may use any reasonable averaging and attribution method. For purposes of
this SECTION 2.6 all references to a Lender shall be deemed to include any bank
holding company or bank parent of such Lender.
2.7. MAXIMUM INTEREST. In no event whatsoever shall the aggregate of all
amounts deemed interest hereunder or under the Notes and charged or collected
pursuant to the terms of this Agreement or pursuant to the Notes exceed the
Maximum Rate, nor shall any provisions hereof be construed as a contract to pay,
for the use, forbearance or detention of money with interest at a rate or in an
amount in excess of the Maximum Rate. If any provisions of this Agreement or the
Notes contravene any such law, such provisions shall be deemed amended to
conform to such law. Notwithstanding anything to the contrary contained herein,
no provision of this Agreement or the Notes shall require the payment or permit
the collection of interest in excess of the Maximum Rate. If any excess of
interest in such respect is herein provided for, or shall be adjudicated to be
so provided, in this Agreement, the Notes or otherwise in connection
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with this loan transaction, the provisions of this paragraph shall govern and
prevail, and neither Borrower nor the sureties, guarantors, successors or
assigns of Borrower shall be obligated to pay the excess amount of such
interest, or any other excess sum paid for the use, forbearance or detention of
sums loaned pursuant hereto. If for any reason interest in excess of the Maximum
Rate shall be deemed charged, required or permitted by any court of competent
jurisdiction, any such excess shall be applied as a payment and reduction of the
principal of indebtedness evidenced by this Agreement and the Notes; and, if the
principal amount hereof has been paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest paid
or payable exceeds the Maximum Rate, Borrower and Agent shall, to the extent
permitted by applicable law, (i) characterize any non-principal payment as an
expense, fee, or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the indebtedness evidenced by this Agreement and the
Notes so that the interest for the entire term does not exceed the Maximum Rate.
SECTION 3. LOAN ADMINISTRATION
3.1. MANNER OF BORROWING AND FUNDING REVOLVER LOANS. Borrowings under
the Commitments established pursuant to SECTION 1 hereof shall be made and
funded as follows:
3.1.1. NOTICE OF BORROWING.
(i) Whenever Borrower desires to make a Borrowing under
this Agreement, Borrower shall give Agent prior written notice (or
telephonic notice promptly confirmed in writing) of such Borrowing request
(a "Notice of Borrowing"), which shall be in the form of EXHIBIT B annexed
hereto and signed by an authorized officer of such Borrower. Such Notice
of Borrowing shall be given by Borrower no later than 11:00 a.m. at the
office of Agent designated by Agent from time to time on the Business Day
of the requested funding date of such Borrowing. Notices received after
11:00 a.m. shall be deemed received on the next Business Day. Each Notice
of Borrowing (or telephonic notice thereof) shall be irrevocable and shall
specify (a) the principal amount of the Borrowing and (b) the date of
Borrowing (which shall be a Business Day).
(ii) Unless payment is otherwise timely made by Borrower,
the becoming due of any amount required to be paid under this Agreement or
any of the other DIP Financing Documents with respect to the Obligations
(whether as principal, accrued interest, fees or other charges, including
the repayment of any LC Outstandings) shall be deemed irrevocably to be a
request for Revolver Loans on the due date of, and in an aggregate amount
required to pay, such principal, accrued interest, fees or other charges,
and the proceeds of such Revolver Loans may be disbursed by way of direct
payment of the relevant Obligation. Neither Agent nor any Lender shall
have any obligation to Borrower to honor any deemed request for a Revolver
Loan when an Out-of-Formula Condition exists or would result therefrom,
but may do so in their discretion and without regard to the existence of,
and without being deemed to have waived, any Default or
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Event of Default.
(iii) As an accommodation to Borrower, Agent and Lenders
may permit telephonic requests for Borrowings and electronic transmittal
of instructions, authorizations, agreements or reports to Agent by
Borrower. Neither Agent nor any Lender shall have any liability to
Borrower for any loss or damage suffered by Borrower as a result of
Agent's or any Lender's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have
been sent to Agent or Lenders by Borrower and neither Agent nor any Lender
shall have any duty to verify the origin of any such communication or the
identity or authority of the Person sending it.
3.1.2. FUNDINGS BY LENDERS. Subject to its receipt of notice from
Agent of a Notice of Borrowing as provided in SECTION 3.1.1(I) (except in the
case of a deemed request by Borrower for a Revolver Loan as provided in SECTION
3.1.1(II) hereof, in which event no Notice of Borrowing need be submitted), each
Lender shall timely honor its Commitment by funding its Pro Rata share of each
Borrowing of Revolver Loans that is properly requested by Borrower and that
Borrower is entitled to receive under this Agreement. Agent shall endeavor to
notify Lenders of each Notice of Borrowing (or deemed request for a Borrowing
pursuant to SECTION 3.1.1(II) hereof), by 12:00 noon on the proposed funding
date. Each Lender shall deposit with Agent an amount equal to its Pro Rata share
of the Borrowing requested or deemed requested by Borrower at Agent's designated
bank in immediately available funds not later than 2:00 p.m. on the date of
funding of such Borrowing, unless Agent's notice to Lenders is received after
12:00 noon on the proposed funding date of a Revolver Loan, in which event
Lenders shall deposit with Agent their respective Pro Rata shares of the
requested Borrowing on or before 11:00 a.m. of the next Business Day. Subject to
its receipt of such amounts from Lenders, Agent shall make the proceeds of the
Revolver Loans received by it available to Borrower by disbursing such proceeds
in accordance with Borrower's disbursement instructions set forth in the
applicable Notice of Borrowing. Unless Agent shall have been notified in writing
by a Lender prior to the proposed time of funding that such Lender does not
intend to deposit with Agent an amount equal such Lender's Pro Rata share of the
requested Borrowing (or deemed request for a Borrowing pursuant to SECTION
3.1.1(II) hereof), Ag ent may assume that such Lender has deposited or promptly
will deposit its share with Agent and Agent may in its discretion disburse a
corresponding amount to Borrower on the applicable funding date. If a Lender's
Pro Rata share of such Borrowing is not in fact deposited with Agent, then, if
Agent has disbursed to Borrower an amount corresponding to such share, then such
Lender agrees to pay, and in addition Borrower agrees to repay, to Agent
forthwith ON DEMAND such corresponding amount, together with interest thereon,
for each day from the date such amount is disbursed by Agent to or for the
benefit of Borrower until the date such amount is paid or repaid to Agent, (a)
in the case of Borrower, at the interest rate applicable to such Borrowing and
(b) in the case of such Lender, at the Federal Funds Rate. If such Lender repays
to Agent such corresponding amount, such amount so repaid shall constitute a
Revolver Loan, and if both such Lender and Borrower shall have repaid such
corresponding amount, Agent shall promptly return to Borrower such corresponding
amount in same day funds. A notice of Agent
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submitted to any Lender with respect to amounts owing under this SECTION 3.1.2
shall be conclusive, absent manifest error.
3.1.3. DISBURSEMENT AUTHORIZATION. Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each Revolver Loan requested by
Borrower, or deemed to be requested pursuant to SECTION 3.1.1, as follows: (i)
the proceeds of each Revolver Loan requested under SECTION 3.1.1(I) shall be
disbursed by Agent in accordance with the terms of the written disbursement
letter from Borrower in the case of the initial Borrowing, and, in the case of
each subsequent Borrowing, by wire transfer to the Funding Account or such bank
account as may be agreed upon by Borrower and Agent from time to time in
writing; and (ii) the proceeds of each Revolver Loan requested under SECTION
3.1.1(II) shall be disbursed by Agent by way of direct payment of the relevant
interest or other Obligation. Any proceeds disbursed in payment of any of the
Obligations shall be deemed to have been received by Borrower.
3.2. DEFAULTING LENDER. If any Lender shall, at any
time, fail to make any payment to Agent or Fleet that is required hereunder,
Agent may, but shall not be required to, retain payments that would otherwise be
made to such defaulting Lender hereunder and apply such payments to such
defaulting Lender's defaulted obligations hereunder, at such time, and in such
order, as Agent may elect in its sole discretion. With respect to the payment of
any funds from Agent to a Lender or from a Lender to Agent, the party failing to
make the Full Payment when due pursuant to the terms hereof shall, upon demand
by the other party, pay such amount together with interest on such amount at the
Federal Funds Rate. The failure of any Lender to fund its portion of any
Revolver Loan shall not relieve any other Lender of its obligation, if any, to
fund its portion of the Revolver Loan on the date of Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make any Revolver
Loan to be made by such Lender on the date of any Borrowing. Solely for purposes
of voting or consenting to matters with respect to any of the DIP Financing
Documents, Collateral or any Obligations and determining a defaulting Lender's
Pro Rata share of payments and proceeds of Collateral, a defaulting Lender shall
not be deemed to be a "Lender" and such Lender's Commitment shall be deemed to
be zero (0). The provisions of this SECTION 3.2 shall be solely for the benefit
of Agent and Lenders and may not be enforced by Borrower.
3.3. ALL REVOLVER LOANS TO CONSTITUTE ONE OBLIGATION.
The Revolver Loans shall constitute one general Obligation of Borrower and shall
be secured by Agent's Lien upon all of the Collateral; PROVIDED, however, that
Agent and each Lender shall be deemed to be a creditor of Borrower and the
holder of a separate claim against Borrower to the extent of any Obligations
owed by Borrower to Agent or such Lender.
SECTION 4. PAYMENTS
4.1. GENERAL PAYMENT PROVISIONS. All payments (including all prepayments)
of principal of and interest on the Revolver Loans and other Obligations that
are payable to Agent or any Lender shall be made to Agent in Dollars without any
offset or counterclaim and free and clear of (and without deduction for) any
present or future Taxes, and, with respect to payments
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made other than by application of balances in the Payment Account, in
immediately available funds not later than 12:00 noon on the due date (and
payment made after such time on the due date to be deemed to have been made on
the next succeeding Business Day). All payments received by Agent shall be
distributed by Agent in accordance with SECTION 4.6 hereof, subject to the
rights of offset that Agent may have as to amounts otherwise to be remitted to a
particular Lender by reason of amounts due Agent from such Lender under any of
the DIP Financing Documents.
4.2. REPAYMENT OF REVOLVER LOANS.
4.2.1. PAYMENT OF PRINCIPAL. The outstanding principal amounts
with respect to the Revolver Loans shall be due and payable as follows:
(i) The Revolver Loans shall be paid by Borrower to Agent,
for the Pro Rata benefit of Lenders, immediately upon (a) each receipt by
Agent, any Lender or Borrower of any proceeds of any of the Accounts or
Inventory, to the extent either (1) the Revolving Credit Advances have
been paid in full or (2) the same are proceeds of post-petition Accounts
or Inventory and (b) the Commitment Termination Date. Such payments
pursuant to clause (a) above shall not be a permanent reduction of the
Commitments.
(ii) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if an Out-of-Formula Condition shall exist,
Borrower shall, on the sooner to occur of Agent's demand or the first
Business Day after Borrower has obtained knowledge of such Out-of-Formula
Condition, repay the outstanding Revolver Loans in an amount sufficient to
reduce the aggregate unpaid principal amount of all Revolver Loans by an
amount equal to such excess.
4.2.2. PAYMENT OF INTEREST. Interest accrued on each Revolver Loan
shall be due and payable on the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month. Accrued interest shall also be paid by Borrower on the
Commitment Termination Date.
4.3. PAYMENT OF OTHER OBLIGATIONS. The balance of the
Obligations requiring the payment of money, including Extraordinary Expenses
incurred by Agent or any Lender, shall be repaid by Borrower to Agent for
allocation among Agent and Lenders as provided in this Agreement, as and when
provided in the DIP Financing Documents, or, if no date of payment is otherwise
specified in the DIP Financing Documents, ON DEMAND.
4.4. MARSHALING; PAYMENTS SET ASIDE. Neither Agent nor any Lender shall be
under any obligation to marshall any assets in favor of any Obligor or against
or in payment of any or all of the Obligations. To the extent that Borrower
makes a payment or payments to Agent or Lenders or any of such Persons receives
payment from the proceeds of any Collateral or exercises its right of setoff,
and such payment or payments or the proceeds of Collateral or setoff
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or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party, then to the extent of such recovery, the Obligations or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred. The
provisions of the immediately preceding sentence of this SECTION 4.4 shall
survive any termination of the Commitments and Full Payment of the Obligations.
4.5. AGENT'S ALLOCATION OF PAYMENTS AND COLLECTIONS.
4.5.1. ALLOCATION OF PAYMENTS. All monies to be applied to the
Obligations, whether such monies represent voluntary payments by one or more
Obligors or are received pursuant to demand for payment or realized from any
disposition of Collateral, shall be allocated among Agent and such of the
Lenders as are entitled thereto (and, with respect to monies allocated to
Lenders, on a Pro Rata basis unless otherwise provided herein): (i) first, to
Agent to pay principal and accrued interest on any portion of the Revolver Loans
which Agent may have advanced on behalf of any Lender and for which Agent has
not been reimbursed by such Lender or Borrower; (ii) second, to Agent to pay the
amount of Extraordinary Expenses and amounts owing to Agent pursuant to SECTION
14.10 hereof that have not been reimbursed to Agent by Borrower or Lenders,
together with interest accrued thereon at the rate applicable to Revolver Loans;
(iii) third, to Agent to pay any Indemnified Amount that has not been paid to
Agent by Obligors or Lenders, together with interest accrued thereon at the rate
applicable to Revolver Loans; (iv) fourth, to Agent to pay any fees due and
payable to Agent; (v) fifth, to Lenders for any Indemnified Amount that they
have paid to Agent and any Extraordinary Expenses that they have reimbursed to
Agent or themselves incurred, to the extent that Lenders have not been
reimbursed by Obligors therefor; (vi) sixth, to Fleet to pay principal and
interest with respect to LC Outstandings, which payment shall be shared Pro Rata
among Lenders; and (vii) seventh, to Lenders in payment of any other Obligations
then outstanding to be shared among Lenders on a Pro Rata basis, or on such
other basis as may be agreed upon in writing by Lenders (which agreement or
agreements may be entered into without notice to or the consent or approval of
Borrower). The allocations set forth in this SECTION 4.5 are solely to determine
the rights and priorities of Agent and Lenders as among themselves and may be
changed by Agent and Lenders without notice to or the consent or approval of
Borrower or any other Person. Notwithstanding anything herein to the contrary,
Agent may, as provided in the Financing Orders, apply any proceeds of Collateral
in existence on the Petition Date to the Pre-Petition Debt before application of
same to the Obligations.
4.5.2. ERRONEOUS ALLOCATION. Agent shall not be liable for any
allocation or distribution of payments made by it in good faith and, if any such
allocation or distribution is subsequently determined to have been made in
error, the sole recourse of any Lender to whom payment was due but not made
shall be to recover from the other Lenders any payment in excess of the amount
to which such other Lenders are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them).
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4.6. APPLICATION OF PAYMENTS AND COLLECTIONS. All Payment Items received
by Agent by 12:00 noon, Dallas, Texas time, on any Business Day shall be deemed
received on that Business Day. All Payment Items received by Agent after 12:00
noon, Dallas, Texas time, on any Business Day shall be deemed received on the
following Business Day. Except to the extent that the manner of application to
the Obligations of payments or proceeds of Collateral is expressly governed by
other provisions of this Agreement, Borrower irrevocably waives the right to
direct the application of any and all payments and Collateral proceeds at any
time or times received by Agent or any Lender from or on behalf of Borrower, and
Borrower does hereby irrevocably agree that Agent shall have the continuing
exclusive right to apply and reapply any and all such payments and Collateral
proceeds received at any time or times hereafter by Agent or its agent against
the Obligations, in such manner as Agent may deem advisable, notwithstanding any
entry by Agent upon any of its books and records. If as the result of Agent's
collection of proceeds of Accounts and other Collateral as authorized by SECTION
7.2.6 a credit balance exists, such credit balance shall not accrue interest in
favor of Borrower, but shall be available to Borrower at any time or times for
so long as no Default or Event of Default exists.
4.7. LOAN ACCOUNTS; THE REGISTER; ACCOUNT STATED.
4.7.1. LOAN ACCOUNTS. Each Lender shall maintain in accordance with
its usual and customary practices an account or accounts (a "Loan Account")
evidencing the Debt of Borrower to such Lender resulting from each Loan owing to
such Lender from time to time, including the amount of principal and interest
payable to such Lender from time to time hereunder and under each Note payable
to such Lender. Any failure of a Lender to record in the Loan Account, or any
error in doing so, shall not limit or otherwise affect the obligation of
Borrower hereunder (or under any Note) to pay any amount owing hereunder to such
Lender.
4.7.2. THE REGISTER. Agent shall maintain a register (the
"Register") which shall include a master account and a subsidiary account for
each Lender and in which accounts (taken together) shall be recorded (i) the
date and amount of each Borrowing made hereunder, (ii) the effective date and
amount of each Assignment and Acceptance delivered to and accepted by it and the
parties thereto, (iii) the amount of any principal or interest due and payable
or to become due and payable from Borrower to each Lender hereunder or under the
Notes, and (iv) the amount of any sum received by Agent from Borrower or any
other Obligor and each Lender's share thereof. The Register shall be available
for inspection by Borrower or any Lender at the offices of Agent at any
reasonable time and from time to time upon reasonable prior notice.
4.7.3. ENTRIES BINDING. The entries made in the Register and each
Loan Account shall constitute rebuttably presumptive evidence of the information
contained therein; PROVIDED, HOWEVER, that if a copy of information contained in
the Register or any Loan Account is provided to any Obligor, or any Obligor
inspects the Register or any Loan Account, at any time or from time to time,
then the information contained in the Register or the Loan Account, as
applicable, shall be conclusive and binding on such Obligor for all purposes
absent manifest error, unless such Obligor notifies Agent in writing within 30
days after such Obligor's receipt of
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such copy or such Obligor's inspection of the Register or Loan Account of its
intention to dispute the information contained therein.
4.8. PREPAYMENTS. The Borrower may prepay the Revolver Loans at any time
without premium or penalty.
SECTION 5. DIP TERM AND TERMINATION OF COMMITMENTS
5.1. TERM OF COMMITMENTS. Subject to each Lender's right to cease
making Revolver Loans to Borrower when any Default exists or upon the Commitment
Termination Date, the Commitments shall be in effect for the DIP Term. The DIP
Term may be extended by written agreement among Borrower, Agent and Lenders
without further notice or hearing or order by the Court.
5.2. TERMINATION.
5.2.1. TERMINATION BY AGENT. Agent may (and upon the direction
of the Required Lenders, shall) terminate the DIP Facility (and all
Commitments thereunder) at any time, without notice to Borrower, upon or
after the occurrence of an Event of Default.
5.2.2. TERMINATION BY BORROWER. Borrower may terminate the DIP
Facility at any time upon 20 days prior written notice to Agent; provided,
HOWEVER, no such termination by Borrower shall be effective until all of the
Obligations and Pre-Petition Debt are paid in full. Any notice of termination
given by Borrower shall be irrevocable unless Agent otherwise agrees in writing.
Borrower may elect to terminate the DIP Facility in its entirety only. Agent and
the Lenders irrevocably waive any early termination fee that would otherwise be
payable upon payment of the Pre-Petition Debt and early termination of
Pre-Petition Loan Agreement.
5.2.3. EFFECT OF TERMINATION. On the Commitment Termination Date,
all of the Obligations (including Contingent Obligations) shall be immediately
due and payable, and Lenders shall have no further obligation to make any Loans.
All undertakings, agreements, covenants, warranties and representations of
Borrower contained in the DIP Financing Documents shall survive any such
termination and Agent shall retain its Liens in the Collateral and all of its
rights and remedies under the DIP Financing Documents notwithstanding such
termination until Full Payment of the Obligations. With respect to any
Obligations that are Contingent Obligations (including Obligations to repay any
Professional Expense Advances if and when made pursuant to SECTION 1.1.3 hereof
and to reimburse Fleet for any amounts paid pursuant to any outstanding LC
Support), Borrower shall either deposit with Agent cash or procure and deliver
to Agent a direct pay letter of credit naming Agent as beneficiary (to be in
form and substance, and from an issuing bank, satisfactory to Agent), in each
case in an amount not less than 105% of the aggregate amount of all such
Contingent Obligations to Agent and Lenders. Notwithstanding the Full Payment of
the Obligations, Agent shall not be required to terminate its security interests
in any of the Collateral unless, with respect to any loss or damage Agent may
incur as a result of the dishonor or return of any Payment Items applied to the
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Obligations, Agent shall have received either (i) a written agreement, executed
by Borrower and any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Agent and Lenders from
any such loss or damage; or (ii) such monetary reserves and Liens on the
Collateral for such period of time as Agent, in its reasonable discretion, may
deem necessary to protect Agent from any such loss or damage. The provisions of
SECTIONS 2.4, 2.6, 4.4, and this SECTION 5.2.3 and all obligations of Borrower
to indemnify Agent or any Lender pursuant to this Agreement shall in all events
survive any termination of the Commitments.
SECTION 6. COLLATERAL SECURITY
6.1. GRANT OF SECURITY INTEREST IN COLLATERAL. To
secure the prompt and Full Payment and performance of all of the Obligations,
Borrower hereby grants to Agent, for the benefit of itself as Agent and for the
Pro Rata benefit of Lenders, a continuing security interest in and Lien upon all
of the following Property and interests in Property of Borrower, whether now
owned or existing or hereafter created, acquired or arising (irrespective of
whether the same existed on or was created or acquired after the Petition Date):
(i) all Accounts;
(ii) all Inventory;
(iii) all Equipment;
(iv) all General Intangibles;
(v) all Instruments;
(vi) all Chattel Paper;
(vii) all Documents;
(viii) all Investment Property;
(ix) all monies and other Property of any kind, now or
at any time or times hereafter in the possession
or under the control of Agent or a Lender or a
bailee or Affiliate of a Lender, including any
Cash Collateral in the Cash Collateral Account;
(x) all cash and non-cash proceeds of (i) through (x)
above, including proceeds of and unearned premiums
with respect to insurance policies insuring any of
the Collateral; and
(xi) all books and records (including customer lists,
files, correspondence, tapes, computer programs,
print-outs, and other computer materials and
records) of Borrower pertaining to any of (i)
through (x) above.
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In no event shall the Collateral include any Avoidance Claims or proceeds
thereof and in no event shall the Liens described herein extend to the
Professional Expense Escrow.
6.2. OTHER COLLATERAL. In addition to the items of Property referred to in
SECTION 6.1 above, the Obligations shall also be secured by the Cash Collateral
to the extent provided herein and all of the other items of Property from time
to time described in any of the Security Documents as security for any of the
Obligations.
6.3. LIEN ON DEPOSIT ACCOUNTS. As additional security for the Full Payment
and performance of the Obligations, Borrower hereby grants to Agent, for the
benefit of itself as Agent and for the Pro Rata benefit of Lenders, a continuing
security interest in and Lien upon, and hereby collaterally assigns to Agent,
all of Borrower's right, title and interest in and to any deposits or other sums
at any time credited to each such Deposit Account. In connection with the
foregoing, Borrower hereby authorizes and directs each such bank or other
depository to pay or deliver to Agent upon its written demand therefor made at
any time upon the occurrence and during the continuation of an Event of Default
and without further notice to Borrower (such notice being hereby expressly
waived), all balances in each Deposit Account maintained by such Borrower with
such depository for application to the Obligations then outstanding, and the
rights given Agent in this Section shall be cumulative with and in addition to
Agent's other rights and remedies in regard to the foregoing Property as
proceeds of Collateral. Borrower hereby irrevocably appoints Agent as Borrower's
attorney-in-fact to collect any and all such balances to the extent any such
payment is not made to Agent by such bank or other depository after demand
thereon is made by Agent pursuant hereto.
6.4. GUARANTIES BY SUBSIDIARIES. Within 15 days after the date of this
Agreement, each Person which is or hereafter becomes a Subsidiary shall execute
and deliver to Agent (i) a guaranty in form and substance satisfactory to Agent,
pursuant to which such Subsidiary guarantees the prompt payment and performance
in full of all of the Obligations and (ii) documentation satisfactory to Agent
pursuant to which such Subsidiary pledge its assets in support of this
guarantee. With regard to each Person which is now or, with Agent's consent,
hereafter becomes a Subsidiary of Borrower, Borrower shall execute or cause to
be executed a pledge agreement in form and substance satisfactory to Agent,
pursuant to which Agent, for itself and for the Pro Rata benefit of Lenders, is
granted a first priority security interest in all of the Equity Interests in
such Subsidiary. Borrower shall cause to be executed and delivered to Agent such
legal opinions of foreign counsel, corporate and partnership documents and
certificates as Agent or its counsel may require in connection with the
documents executed and delivered pursuant to this Section. Notwithstanding the
foregoing, this Section 6.4 shall be limited to requiring any Subsidiary to
reaffirm its existing documentation executed in connection with the Pre-Petition
Debt and affirming that the obligations secured thereby include the Obligations.
6.5. LIEN PERFECTION; FURTHER ASSURANCES. Promptly after Agent's request
therefor, but subject to SECTION 9.1.21, Borrower shall execute or cause to be
executed and deliver to Agent such instruments, assignments, title certificates
or other documents as are necessary under
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the UCC or other Applicable Law (including any motor vehicle certificates of
title act) to perfect (or continue the perfection of) Agent's Lien upon the
Collateral, and shall take such other action as may be requested by Agent to
give effect to or carry out the intent and purposes of this Agreement. Unless
prohibited by Applicable Law, Borrower hereby authorizes Agent to execute and
file any such financing statement on Borrower's behalf. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof.
6.6. LIENS UNDER FINANCING ORDERS. The Liens and security interests
granted to Agent pursuant to the provisions of this SECTION 6 and pursuant to
any of the other DIP Financing Documents shall be in addition to all Liens
conferred upon Agent, for itself and for the Pro Rata benefit of Lenders,
pursuant to the terms of the Financing Orders.
6.7. LIEN PRIORITY. The Liens and security interests granted to Agent
pursuant to the provisions of this SECTION 6 and pursuant to any of the DIP
Financing Documents shall be first priority Liens and security interests in the
Collateral owned by Borrower, except as expressly provided otherwise in the
Financing Orders.
SECTION 7. COLLATERAL ADMINISTRATION
7.1. GENERAL PROVISIONS.
7.1.1. LOCATIONS OF COLLATERAL. All tangible items of Collateral,
other than Inventory in transit, shall at all times be kept by Borrower at one
or more of the business locations of Borrower described in SCHEDULE 7.1.1 hereof
and shall not be moved therefrom, without the prior written approval of Agent,
except that prior to an Event of Default and acceleration of the maturity of the
Obligations in consequence thereof, Borrower may (i) make sales or other
dispositions of any Collateral to the extent authorized by SECTION 9.2.4 hereof
and (ii) may move Inventory or any record relating to any Collateral to a
location in the United States other than those described in SCHEDULE 7.1.1, so
long as Borrower has given Agent at least 30 days prior written notice of such
new location and prior to moving any Inventory to such location Borrower has
executed and delivered to Agent UCC-1 financing statements and any other
appropriate documentation to perfect or continue the perfection of Agent's Liens
with respect to such Inventory and all proceeds thereof.
7.1.2. INSURANCE OF COLLATERAL; CONDEMNATION PROCEEDS. Borrower
shall maintain and pay for insurance upon all Collateral, wherever located,
covering casualty, hazard, public liability, and such other risks in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. All proceeds payable under each such policy shall be payable to Agent for
application to the Obligations. Borrower shall deliver the originals or
certified copies of such policies to Agent with lender's loss payable
endorsements reasonably satisfactory to Agent, naming Agent as sole loss payee,
assignee or additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Agent in the event of cancellation of the policy
for any
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reason whatsoever and a clause specifying that the interest of Agent shall not
be impaired or invalidated by any act or neglect of Borrower or the owner of the
Property or by the occupation of the premises for purposes more hazardous than
are permitted by said policy. If Borrower fails to provide and pay for such
insurance, Agent may, at its option, but shall not be required to, procure the
same and charge Borrower therefor. Borrower agrees to deliver to Agent, promptly
as rendered, true copies of all reports made in any reporting forms to insurance
companies. For so long as no Event of Default exists, Borrower shall have the
right to settle, adjust and compromise any claim with respect to any insurance
maintained by Borrower provided that all proceeds thereof are applied in the
manner specified in this Agreement, and Agent agrees promptly to provide any
necessary endorsement to any checks or drafts issued in payment of any such
claim. At any time that an Event of Default exists, only Agent shall be
authorized to settle, adjust and compromise such claims. Agent shall have all
rights and remedies with respect to such policies of insurance as are provided
for in this Agreement and the other DIP Financing Documents.
7.1.3. PROTECTION OF COLLATERAL. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping any
Collateral, all Taxes imposed under any Applicable Law on any of the Collateral
or in respect of the sale thereof, and all other payments required to be made by
Agent to any Person to realize upon any Collateral shall be borne and paid by
Borrower. If Borrower fails to pay promptly any portion thereof when due, Agent
may, at its option, but shall not be required to, pay the same and charge
Borrower therefor. Agent shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Agent's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever, but the same shall be at Borrower's sole risk.
7.1.4. DEFENSE OF TITLE TO COLLATERAL. Borrower shall at all
times defend its title to the Collateral and Agent's Liens therein against
all Persons and all claims and demands whatsoever.
7.2. ADMINISTRATION OF ACCOUNTS.
7.2.1. RECORDS AND SCHEDULES OF ACCOUNTS. Borrower shall keep
accurate and complete records of its Accounts and all payments and collections
thereon and shall submit to Agent on such periodic basis as Agent shall request
a sales and collections report for the preceding period, in form satisfactory to
Agent. On or before the 20th day of each month from and after the date hereof,
Borrower shall deliver to Agent and Lenders, in form acceptable to Agent and
Lenders, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Agent's request therefor, copies of
proof of delivery and a copy of all documents, including repayment histories and
present status reports relating to the Accounts so scheduled and such other
matters and information relating to the status of then existing Accounts as
Agent shall
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reasonably request. In addition, if Accounts in an aggregate face amount in
excess of $200,000 cease to be Eligible Accounts in whole or in part, Borrower
shall notify Agent of such occurrence promptly (and in any event within 2
Business Days) after Borrower's having obtained knowledge of such occurrence and
the Borrowing Base shall thereupon be adjusted to reflect such occurrence. At
the request of Agent made at any time, each Borrower shall deliver to Agent
copies of invoices or invoice registers related to all of its Accounts.
7.2.2. DISCOUNTS, DISPUTES AND RETURNS. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be to Agent as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $100,000 are in dispute
between Borrower and any Account Debtor, or if any returns are made in excess of
$100,000 with respect to any Accounts owing from an Account Debtor, Borrower
shall provide Agent with written notice thereof at the time of submission of the
next Schedule of Accounts, explaining in detail the reason for the dispute or
return, all claims related thereto and the amount in controversy. Upon and after
the occurrence of an Event of Default, Agent shall have the right to settle or
adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of any Accounts comprising
a part of the Collateral upon such terms and conditions as Agent may deem
advisable, and to charge the deficiencies, costs and expenses thereof, including
attorney's fees, to Borrower.
7.2.3. TAXES. If an Account of Borrower includes a charge for any
Taxes payable to any governmental taxing authority, Agent is authorized, in its
sole discretion, to pay the amount thereof to the proper taxing authority for
the account of Borrower and to charge Borrower therefor; PROVIDED, HOWEVER, that
neither Agent nor Lenders shall be liable for any Taxes that may be due by
Borrower.
7.2.4. ACCOUNT VERIFICATION. Whether or not a Default or an Event of
Default exists, Agent shall have the right at any time, in the name of Agent,
any designee of Agent or Borrower to verify the validity, amount or any other
matter relating to any Accounts of Borrower by mail, telephone, telegraph or
otherwise. Borrower shall cooperate fully with Agent in an effort to facilitate
and promptly conclude any such verification process.
7.2.5. MAINTENANCE OF DOMINION ACCOUNT. Borrower shall maintain a
Dominion Account pursuant to a lockbox or other arrangement acceptable to Agent
and, in the case of such Dominion Account and lockbox arrangement, with Bank or
with such other bank as may be selected by Borrower and be acceptable to Agent.
Borrower shall issue to each such lockbox bank an irrevocable letter of
instruction directing such bank to deposit all payments or other remittances
received in the lockbox to the Dominion Account. Borrower shall enter into
agreements, in form satisfactory to Agent, with each bank at which a Dominion
Account is maintained by which such bank shall immediately transfer to the
Payment Account all monies deposited to the Dominion Account. All funds
deposited in each Dominion Account shall be subject to Agent's Lien. Borrower
shall obtain the agreement (in favor of and in form and content satisfactory to
Agent and Lenders) by each bank at which a Dominion Account is
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maintained to waive any offset rights against the funds deposited into such
Dominion Account, except offset rights in respect of charges incurred in the
administration of such Dominion Account. Neither Agent nor Lenders assume any
responsibility to Borrower for such lockbox arrangement or Dominion Account,
including any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
7.2.6. COLLECTION OF ACCOUNTS AND PROCEEDS OF COLLATERAL. To
expedite collection, Borrower shall endeavor in the first instance to make
collection of Borrower's Accounts for Agent and Lenders. All Payment Items
received by Borrower in respect of its Accounts, together with the proceeds of
any other Collateral, shall be held by Borrower as trustee of an express trust
for Agent's benefit and Borrower shall immediately deposit same in kind in the
Dominion Account. Agent retains the right at all times after the occurrence of a
Default or an Event of Default to notify Account Debtors of Borrower that
Accounts have been assigned to Agent and to collect Accounts directly in its own
name and to charge to Borrower the collection costs and expenses, incurred by
Agent or Lenders, including reasonable attorneys' fees. Agent may participate in
and observe each physical count or inventory, which participation shall be at
Borrower's expense at any time that an Event of Default exists.
7.3. ADMINISTRATION OF INVENTORY.
7.3.1. RECORDS AND REPORTS OF INVENTORY. Borrower shall keep
accurate and complete records of its Inventory and shall furnish Agent and
Lenders inventory reports, including (i) daily reports listing Borrower's daily
sales and collections; (ii) daily reports listing Borrower's finished goods
Inventory and (iii) weekly reports listing Borrower's raw materials Inventory,
all in form and detail satisfactory to Agent and certified to be true and
correct by the chief financial officer (or any other officer acceptable to Agent
in its sole discretion) of Borrower. Borrower shall conduct a physical inventory
of Borrower's Inventory no less frequently than annually and periodic cycle
counts consistent with Borrower's historical practices, and shall provide to
Agent and Lenders a report based on each such physical inventory and cycle count
promptly after completion thereof, together with such supporting information as
Agent shall request.
7.3.2. RETURNS OF INVENTORY. Borrower shall not return any of its
Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the ordinary course of business of Borrower and
such Person; (ii) no Default or Event of Default exists or would result
therefrom; (iii) the return of such Inventory will not result in an
Out-of-Formula Condition; (iv) Borrower promptly notifies Agent thereof if the
aggregate Value of all Inventory returned in any month exceeds $100,000; (v) any
payments received by Borrower in connection with any such return as promptly
turned over to Agent for application to the Obligations; and (vi) such return is
not made for the purpose of allowing such Person to credit its claim against
Borrower arising prior to the Petition Date.
7.4. ADMINISTRATION OF EQUIPMENT.
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7.4.1. RECORDS AND SCHEDULES OF EQUIPMENT. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
cost of its Equipment and all dispositions made in accordance with SECTION 7.4.2
hereof, and shall furnish Agent and Lenders with a current schedule containing
the foregoing information on at least an annual basis and more often if
requested by Agent. Promptly after request therefor by Agent, Borrower shall
deliver to Agent and Lenders any and all evidence of ownership, if any, of any
of the Equipment.
7.4.2. DISPOSITIONS OF EQUIPMENT. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Agent; PROVIDED, HOWEVER, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive 12-month period, has a fair market value or book value,
whichever is less, of $250,000 or less, provided that all Net Proceeds thereof
are remitted to Agent for application first to any Pre-Petition Debt outstanding
in such order of application as Agent may elect and then to the Obligations, or
(ii) replacements of Equipment that is substantially worn, damaged or obsolete
with Equipment of like kind, function and value, provided that the replacement
Equipment shall be acquired prior to or concurrently with any disposition of the
Equipment that is to be replaced, the replacement Equipment shall be free and
clear of Liens other than Permitted Liens that are not Purchase Money Liens, and
Borrower shall have given Agent at least 10 days prior written notice of such
disposition.
7.4.3. CONDITION OF EQUIPMENT. The Equipment is in good operating
condition and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved, reasonable wear and tear excepted. Borrower will
not permit any of the Equipment to become affixed to any real Property leased to
Borrower so that an interest arises therein under the real estate laws of the
applicable jurisdiction unless the landlord of such real Property has executed a
landlord waiver or leasehold mortgage in favor of and in form acceptable to
Agent, and Borrower will not permit any of the Equipment to become an accession
to any personal Property that is subject to a Lien unless the Lien is a
Permitted Lien.
7.5. BORROWING BASE CERTIFICATES. On the Closing Date and on or before the
third Business Day of each week after the Closing Date (or with such greater
frequency as Agent may request), Borrower shall deliver to Agent a Borrowing
Base Certificate, prepared as of the close of business of the previous week, and
at such other times as Agent may request. All calculations of Availability in
connection with any Borrowing Base Certificate shall originally be made by
Borrower and certified by a Senior Officer to Agent, provided that Agent shall
have the right to review and adjust, in the exercise of its reasonable credit
judgment, any such calculation (i) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein and (ii) to the
extent that such calculation is not in accordance with this Agreement or does
not accurately reflect the amount of the Availability Reserve.
SECTION 8. REPRESENTATIONS AND WARRANTIES
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8.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders
to enter into this Agreement and to make available the Commitments, Borrower
warrants and represents to Agent and Lenders that:
8.1.1. ORGANIZATION AND QUALIFICATION. Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its organization, has the power to own Properties and to transact the
business in which it is presently engaged or proposed to be engaged and is duly
qualified and in good standing in each jurisdiction in which it presently is, or
proposes to be, engaged in business.
8.1.2. POWER AND AUTHORITY. The execution, delivery and performance
by Borrower of the DIP Financing Documents are within Borrower's corporate
power, has been duly authorized by all necessary or proper corporate action and,
on the date of initial funding of Loans hereunder, will be authorized by the
Interim Financing Order pursuant to Sections 363 and 364 of the Bankruptcy Code;
are not in contravention of any provision of their own Organizational Documents;
will not violate any Applicable Law (following entry of the Interim Financing
Order); does not require the consent or approval of any Governmental Authority
or any other Person other than the entry by the Court of the Interim Financing
Order and thereafter the Final Financing Order.
8.1.3. ENFORCEABLE AGREEMENTS. Each of the DIP Financing Documents
has been duly executed and delivered by Borrower and constitutes a legal, valid
and binding obligation of Borrower, enforceable against each Borrower in
accordance with its terms.
8.1.4. PRIORITY OF LIENS. Upon entry of the Interim Financing Order,
and thereafter upon entry of the Final Financing Order, the security interests
granted pursuant to the DIP Financing Documents constitute valid, enforceable,
perfected and first priority Liens on the Collateral owned by Borrower, except
to the extent otherwise expressly provided in the Financing Orders and except
for Permitted Liens.
8.1.5. PLACES OF BUSINESS. Borrower has no office or place of
business, nor does Borrower store any Collateral, at any location other than
those identified in SCHEDULE 7.1.1.
8.1.6. COMPLIANCE WITH LAWS. All of Borrower's business, operations
and Properties are conducted, maintained and owned in accordance with Applicable
Law, including all Environmental Laws, except to the extent that any such
noncompliance could not reasonably be expected to have a Material Adverse Effect
and except as heretofore described by Borrower in filings with the SEC.
8.1.7. GOVERNMENTAL APPROVALS. Borrower has obtained and holds in
full force and effect all Governmental Approvals necessary for the operation of
its business as presently and proposed to be constructed to the extent that the
failure to obtain same could not reasonably be expected to have a Material
Adverse Effect.
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8.1.8. NO ADVERSE CHANGES. Since the Petition Date, no event
has occurred that has or could reasonably be expected to have a Material
Adverse Effect.
8.1.9. TAXES. The FEIN of Borrower is as shown in the Pre-Petition
Loan Agreement, and Borrower has filed all federal, state and local tax returns
and other reports that it is required by Applicable Law to file and has paid, or
made for provision of the payment of, all Taxes upon it, its income and
properties as and when such Taxes are due and payable, except to the extent
being Properly Contested.
8.1.10. BROKERS. There are no claims for brokerage commissions,
finders' fees or investment banking fees in connection with the transactions
contemplated by this Agreement or any of the other DIP Financing Documents.
8.1.11. NO DEFAULT. No Default or Event of Default exists at
the time, or would result from the funding, of any Revolver Loan or other
extension of credit hereunder;
8.1.12. ACCOUNTS. With respect to each Account of Borrower that is
included by Borrower in its calculation of the Borrowing Base and for so long as
it is so included, such Account is genuine and in all respects what it purports
to be and is not evidenced by a judgment; arises out of a completed sale and
delivery of goods or rendition of services by Borrower in the Ordinary Course of
Business and substantially in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and forming a
part of the contract between Borrower and the Account Debtor; is for a sum
certain maturing, as stated in the duplicate invoice covering such sale, a copy
of which is available to Agent upon request; such Account is absolutely owing to
such Borrower and is not contingent in any respect or for any reason, and the
Account is not subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition, except for disputes resulting in
returned goods where the amount in controversy is deemed by Agent to be
immaterial; the contract under which such Account arose does not condition or
restrict Borrower's right to assign to Agent the right to payment thereunder;
Borrower has not made any agreement with any Account Debtor thereunder for any
extension, compromise, settlement or modification of any such Account or any
deduction therefrom, other than deductions, discounts and allowances that are
granted in the ordinary course of business for prompt payment and are reflected
in the calculation of the net amount of each respective invoice related thereto
and reflected in the Schedule of Accounts submitted to Agent pursuant to this
Agreement; to the best of Borrower's knowledge, such Account Debtor is Solvent;
and there are no facts, events or occurrences that are reasonably likely to
impair the validity or enforceability of any such Accounts or reduce the amount
payable thereunder from the face amount of the invoice with respect thereto.
8.1.13. INTELLECTUAL PROPERTY. Each of Borrower and its Subsidiaries
owns or has the lawful right to use all Intellectual Property necessary for the
present and planned future conduct of its business without any conflict with the
rights of others; there is no objection to, or pending (or, to Borrower's
knowledge, threatened) Intellectual Property Claim with respect to, Borrower's
or any Subsidiary's right to use any such Intellectual Property and Borrower is
not
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aware of any grounds for challenge or objection thereto; and, except as may be
disclosed on SCHEDULE 8.1.13, neither Borrower nor any Subsidiary pays any
royalty or other compensation to any Person for the right to use any
Intellectual Property. All such Intellectual Property and other similar rights
are listed on SCHEDULE 8.1.13 hereto, to the extent they are registered under
any Applicable Law or are otherwise material to Borrower's or any Subsidiary's
business.
8.1.14. BURDENSOME CONTRACTS. Neither Borrower nor any of the
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which has or could be reasonably expected to have a
Material Adverse Effect. Neither Borrower nor any of the Subsidiaries is a party
or subject to any Restrictive Agreements, except as set forth on SCHEDULE 8.1.14
hereto (which may be updated on or before 14 days following the Petition Date),
none of which prohibit the execution or delivery of any of the DIP Financing
Documents by any Obligor or the performance by any Obligor of its obligations
under any of the DIP Financing Documents to which it is a party, in accordance
with the terms of such DIP Financing Documents.
8.1.15. ERISA. Except as disclosed on SCHEDULE 8.1.15 hereto,
neither Borrower nor any of the Subsidiaries has any Plan on the date hereof.
Borrower and each of its Subsidiaries is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that is reasonably likely to result in a
material adverse change in the financial condition of Borrower or any of the
Subsidiaries exists in connection with any Plan. Neither Borrower nor any of its
Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
8.1.16. LABOR MATTERS. Except as described on SCHEDULE 8.1.16
hereto, neither Borrower nor any of the Subsidiaries is a party to any
collective bargaining agreement on the date hereof. On the date hereof, there
are no material grievances, disputes or controversies with any union or any
other organization of Borrower's or any Subsidiary's employees, or, to
Borrower's knowledge, any threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
8.1.17. NOT A REGULATED ENTITY. No Obligor is (i) an "investment
company" or a "person directly or indirectly controlled by or acting on behalf
of an investment company" within the meaning of the Investment Company Act of
1940; (ii) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935; or (iii) subject to regulation under the Federal Power Act, the
Interstate Commerce Act, any public utilities code or any other Applicable Law
regarding its authority to incur Debt.
8.1.18. MARGIN STOCK. Neither Borrower nor any of the Subsidiaries
is engaged, principally or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any Margin Stock.
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8.1.19. CUSTOMER AND TRADE RELATIONS. There exists no actual or
threatened termination, cancellation or limitation of, or any materially adverse
modification or change in, the business relationship between Borrower and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower, or with any material
supplier or group of suppliers, and there exists no condition or state of facts
or circumstances which is reasonably likely to have a Material Adverse Effect or
prevent Borrower from conducting such business after the consummation of the
transactions contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted.
8.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES.
All of the foregoing representations and warranties made by Borrower in this
Agreement or in any of the other DIP Financing Documents shall survive the
execution and delivery of this Agreement and such other DIP Financing Documents,
and shall be deemed to have been remade and reaffirmed on each day that any
Obligations are outstanding or that Borrower requests or is deemed to have
requested the funding of a Revolver Loan under the DIP Facility, except for
changes that may occur after the date hereof in the Ordinary Course of Business
as long Agent and Lenders have consented to such changes or such changes are not
violative of any provision of this Agreement.
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
9.1. AFFIRMATIVE COVENANTS. During the DIP Term and
thereafter until Full Payment of the Obligations, Borrower covenants that it
shall and shall cause each of its Subsidiaries to:
9.1.1. BUSINESS AND EXISTENCE. Preserve and maintain its separate
corporate existence and all rights, privileges, and franchises in connection
therewith, and maintain its qualification and good standing in all states in
which such qualification is necessary to the ownership of its Properties or the
conduct of its businesses.
9.1.2. BUSINESS RECORDS. Keep adequate records and books of
account with respect to its business activities in which proper entries are
made in accordance with GAAP reflecting all financial transactions.
9.1.3. VISITS AND INSPECTIONS. Permit representatives of Agent or
Lenders, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit and inspect the Properties of Borrower,
inspect and make extracts from Borrower's books and records, and discuss with
Borrower's officers, its employees and its independent accountants, Borrower's
business, assets, liabilities, financial condition, business prospects and
results of operations.
9.1.4. FURTHER ASSURANCES. At Agent's or any Lender's request,
promptly execute or cause to be executed and deliver to Agent or such Lender any
and all documents, instruments and agreements deemed necessary by Agent or such
Lender to give effect to or carry
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out the terms or intent of this Agreement or any of the DIP Financing Documents.
9.1.5. COMPLIANCE WITH ORDERS. To the extent having applicability to
Borrower, comply with the Interim Financing Order, the Final Financing Order and
all other orders entered by the Court in the Chapter 11 Case.
9.1.6. FINANCIAL STATEMENTS. Keep adequate records and books of
account with respect to its business activity in which proper entries are made
in accordance with GAAP reflecting all of its financial transactions; and cause
to be prepared and to be furnished to Agent and Lenders the following (all to be
prepared in accordance with GAAP applied on a consistent basis, unless
Borrower's certified public accountants concur in any change therein, such
change is disclosed to Agent and Lenders and is consistent with GAAP.
(i) as soon as available, and in any event within 90 days
after the close of each Fiscal Year, unqualified (except for a going
concern qualification) audited balance sheets of Borrower as of the end of
such Fiscal Year and related statements of income, shareholders' equity
and cash flow, certified without material qualification by a firm of
independent certified public accountants of recognized national standing
selected by Borrower but reasonably acceptable to Agent and Lenders
(except for a qualification for a change in accounting principles with
which such accountants concur), and setting forth in each case in
comparative form the corresponding figures for the preceding Fiscal Year;
(ii) as soon as available, and in any event within 30 days
after the end of each month hereafter, including the last month of
Borrower's Fiscal Year, unaudited interim financial statements of Borrower
as of the end of such month and the related unaudited statements of income
and cash flow for such month and for the portion of Borrower's Fiscal Year
then elapsed, certified by the principal financial officer of Borrower as
prepared in accordance with GAAP and fairly presenting the financial
position and results of operations of Borrower for such month and period
subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes;
(iii) promptly after the filing thereof, copies of any
annual report to be filed in accordance with ERISA in connection with each
Plan;
(iv) such other data and information (financial or
otherwise) as Agent or Lenders, from time to time, may reasonably request,
bearing upon or related to the Collateral or Borrower's financial
condition or results of operations; and
(v) promptly after the sending or filing thereof, as the
case may be, copies of any 10Qs, 10Ks and any proxy statements, financial
statement or reports which Borrower has made generally available to its
shareholders and copies of any regular, periodic and special reports or
registration statements which Borrower files with the SEC
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(or any other Governmental Authority which may be substituted therefor),
or any national securities exchange.
Concurrently with the delivery of the financial statements described in
clauses (i) and (ii) of this SECTION 9.1.6, or more frequently if requested by
Agent or Lenders during any period that a Default or Event of Default exists,
Borrower shall cause to be prepared and furnish to Agent and Lenders a
Compliance Certificate.
9.1.7. NOTICES. Notify Agent and Lenders in writing, promptly after
Borrower's obtaining knowledge thereof, of the termination or breach of any
Material Contract; the occurrence of any Default or Event of Default; Borrower's
violation (or asserted violation) of any Applicable Law (including the
Bankruptcy Code or any Environmental Law); any claim that Borrower may make
under any policy of insurance with respect to the Collateral; any pleading filed
with the Court seeking from stay or conversion or dismissal of the Chapter 11
Case; any default or claimed default under any License Agreement or the
assertion of any Intellectual Property Claim; and any proposed sale of any of
the Collateral (including with such notice copies of drafts of all instruments
and agreements applicable to any such sale), which shall specify the identity of
the proposed purchaser, the terms of the proposed sale and the expected date of
closing, subject to Court approval. Borrower shall provide, or shall cause its
counsel in the Chapter 11 Case to provide, Agent's and each Lender's counsel
with copies of all pleadings, motions, reports, applications and other papers
filed by Borrower with the Court as well as copies of all billing and expense
statements received from any Professional Person. Borrower shall include counsel
for Agent on any "Special Notice List" or other similar list of parties to be
served with papers in the Chapter 11 Case.
9.1.8. INSURANCE. In addition to the insurance required herein with
respect to the Collateral, maintain with financially sound and reputable
insurers, insurance with respect to its Properties and business against such
casualties and contingencies of such type (including product liability, business
interruption, larceny, embezzlement or other criminal misappropriation
insurance) and in such amounts as is customary in the business of Borrower.
9.1.9. COMPLIANCE WITH LAWS. Comply with all Applicable Law,
including ERISA, FLSA, OSHA, all Environmental Laws, the Bankruptcy Code and all
laws, statutes, regulations and ordinances regarding the collection, payment and
deposit of Taxes, and obtain and keep in force any and all Governmental
Approvals necessary to the ownership of its Properties or to the conduct of its
business, to the extent that any such failure to comply, obtain or keep in force
could be reasonably expected to have a Material Adverse Effect. Without limiting
the generality of the foregoing, if any Environmental Release shall occur at or
on any of the Properties of Borrower or any Subsidiary, Borrower shall, or shall
cause the applicable Subsidiary to, act immediately to investigate and report to
Agent and all appropriate Governmental Authorities the extent of, and to make
appropriate remedial action to eliminate, such Environmental Release, whether or
not ordered or otherwise directed to do so by any Governmental Authority.
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9.1.10. TAXES. Pay and discharge all Taxes prior to the date on
which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.
9.1.11. LICENSE AGREEMENTS. Keep each License Agreement (including
any License Agreement under the Pre-Petition P&G Settlement) in full force and
effect for so long as Borrower has any Inventory, the manufacture, sale or
distribution of which is in any manner governed by or subject to such License
Agreement and pay, on a timely basis, all royalties, fees and other amounts due
under each such License Agreement. Agent and Lenders may from time to time, but
shall have no obligation to, disburse the proceeds of Revolver Loans directly to
P&G in payment of any royalties, fees or other amounts due under the
Pre-Petition P&G Settlement.
9.1.12. REPORTS TO THE U.S. TRUSTEE. As soon as available, and in
any event within 2 Business Days after the filing thereof, provide to Agent a
copy of each report filed by Borrower with the office of the United States
Trustee.
9.1.13. PROPOSED SALE OF ASSETS. Promptly upon receipt thereof,
provide to Agent any and all documentation that in any way relates to a written
solicitation, offer, or proposed sale or disposition of any material amount of
real or personal Property of Borrower or any of its Subsidiaries, including
letters of inquiry, solicitations, letters of intent or asset purchase
agreements.
9.1.14. UTILITY DEPOSITS. To the extent Borrower has made or makes
any deposits for the benefit of utilities companies or any other Person,
Borrower acknowledges that Agent, for itself and for the Pro Rata benefit of
Lenders has been granted a first priority perfected Lien in such deposits,
subject to any right of setoff by such utility company. Borrower shall not use
or transfer such deposits, and Borrower hereby assigns and sets over all such
deposits to Agent, for itself and for the Pro Rata benefit of Lenders, subject
to any right of setoff by such utility company.
9.1.15. PAYMENT OF ADMINISTRATIVE EXPENSES. Make all payments of (a)
post-petition operating costs and expenses as and when due and (b)
administrative costs and expenses within two Business Days of the date upon
which such administrative costs and expenses are due and payable, as approved by
the Court.
9.1.16. COMPLIANCE WITH BUDGETS. Comply with the terms and
requirements of the Budgets, PROVIDED THAT the total expenses paid by Borrower
may exceed the total expenses set forth in the Budgets by not more than 5%, and
provide an update to the Permanent Budget to Agent and Lenders every 30 days
following the effective date of the Permanent Budget, which updates shall be
satisfactory to Agent and Lenders in their sole discretion.
9.1.17. EQUIPMENT LEASES. Make all scheduled payments under the
Equipment Leases; PROVIDED, HOWEVER, that if the Court approves a motion of
Borrower to reject any Equipment Lease, Borrower may discontinue payments that
become due under such
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Equipment Lease after the date of such rejection.
9.1.18. [Intentionally Omitted.]
9.1.19. CASH MANAGEMENT SYSTEM. Borrower shall establish a cash
management system with Bank, and all collections with respect to such cash
management system shall be applied daily in payment of the Revolver Loans,
subject to Borrower's right to reborrow under Revolver Loans as set forth in
this Agreement.
9.1.20. ALLOCATION OF NET PROCEEDS OF FOREIGN ASSET SALES. To the
extent a Foreign Asset Sale occurs, the Net Proceeds of such Foreign Asset Sale
shall be applied as follows: (i) first, to the Capital Expenditure Loan, (ii)
second, to the Term Loan, (iii) third, to the Revolving Credit Advances if any
are still outstanding, and (iv) fourth, to the Revolver Loans (as a permanent
reduction of the Commitments); provided, however, that Net Proceeds of a Foreign
Asset Sale may be paid to P&G in accordance with the Pre-Petition P&G
Settlement.
9.1.21. PLEDGE AND GUARANTY BY FOREIGN SUBSIDIARIES. Borrower
acknowledges that it will cooperate, and will cause each Foreign Subsidiary to
cooperate, with Agent in executing all collateral documents and taking all
actions to enable Agent to obtain, for the benefit of the Lenders and in
accordance with the laws of the applicable foreign jurisdictions (i) valid,
enforceable and perfected Liens in all real and personal assets owned by each
Foreign Subsidiary and (ii) guarantees of the Pre-Petition Debt and the
Obligations, in each case on or before November 15, 2000. Borrower's failure to
exert its diligent good faith efforts to achieve compliance with this SECTION
9.1.21 by November 15, 2000 shall constitute an Event of Default.
9.1.22. SALE OF ASSETS BY FOREIGN SUBSIDIARIES. Use commercially
reasonable efforts to sell the assets and/or capital stock associated with the
business operations of Borrower and the Subsidiaries located in foreign
countries in accordance with the reasonable business judgment of Borrower and
the Subsidiaries, any of which sales shall be subject to the approval of Agent
and Lenders pursuant to SECTION 9.2.4 hereof. Borrower agrees to provide Agent
and Lenders with periodic updates, which shall be at least monthly updates,
regarding the progress of such efforts to sell such foreign operations.
9.1.23. MONTHLY ROYALTY ESTIMATES. Within 10 days following the end
of each month, provide an estimate to Agent of all royalties due and payable to
P&G under the Pre-Petition P&G Settlement resulting from sales of Inventory
during such month.
9.1.24 OTHER INFORMATION. Promptly (and in any event within 5
Business Days) after any request of Agent, deliver to Agent and any Lender, such
additional financial or other information concerning the acts, conduct,
properties, assets, liabilities, operations, businesses, financial condition or
transactions of Borrower or any of its Subsidiaries, or concerning any matter
which may affect the administration of Borrower's bankruptcy estate, as Agent or
any Lender may from time to time reasonably request.
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9.2 NEGATIVE COVENANTS. During the DIP Term and
thereafter, until Full Payment of the Obligations, Borrower covenants that it
shall not and shall not permit any Subsidiary to:
9.2.1. FUNDAMENTAL CHANGES. Merge, reorganize, consolidate or
amalgamate with any Person, or liquidate, wind up its affairs or dissolve
itself, except pursuant to an Acceptable Plan and except for mergers or
consolidations of any Subsidiary with another Subsidiary; change Borrower's name
or conduct business under any new fictitious name; or change Borrower's FEIN.
9.2.2. LOANS. Make any loans or other advances of money (other than
for salary, travel advances, advances against commissions and other similar
advances in the Ordinary Course of Business) to any Person.
9.2.3. LIMITATION ON LIENS. Create or suffer to exist any Lien upon
any of its Property, income or profits, whether now owned or hereafter acquired,
except: (i) Liens at any time granted in favor of Pre-Petition Agent and
Pre-Petition Lenders or Agent and other Liens in existence on the Petition Date
that were not created or suffered to exist in violation of the Pre-Petition Loan
Documents; (ii) Liens for Taxes (excluding any Lien imposed pursuant to any of
the provisions of ERISA) not yet due or being Properly Contested; (iii)
statutory Liens (excluding Liens imposed pursuant to any of the provisions of
ERISA) securing the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons for labor, materials, supplies or
rentals incurred in the Ordinary Course of Business, but only if the payment
thereof is not at the time required or the Debt secured by such Lien is being
Properly Contested; (iv) Liens resulting from deposits made in the Ordinary
Course of Business in connection with workmen's compensation, unemployment
insurance, social security and other like laws; (v) reservations, exceptions,
easements, rights-of-way, and other similar encumbrances affecting real Property
of Borrower that were in existence on the Petition Date and do not violate any
terms of the Pre-Petition Loan Documents; (vi) Purchase Money Liens securing
Permitted Purchase Money Debt; (vii) replacement Liens in favor of the Term
Lenders (as defined in the Pre-Petition Loan Agreement) as granted pursuant to
the Financing Orders that are all junior to the respective Liens of Pre-Petition
Agent and Agent; (viii) such other Liens as Agent and each Lender may consent to
in writing from time to time, in their sole and absolute discretion; and (ix)
subordinate liens in favor of holders of reclamation claims if approved by order
of the Court.
9.2.4. DISPOSITION OF ASSETS. Sell, lease or otherwise dispose of
any of the Collateral, including any disposition of the Collateral as part of a
sale and leaseback transaction, to or in favor of any Person, except (i) sales
of Inventory in the Ordinary Course of Business for so long as no Event of
Default exists hereunder, (ii) dispositions of Equipment as authorized by
SECTION 7.4 hereof, (iii) dispositions of Property that is not Collateral or
that is consented to in writing by Agent and Lenders, and authorized by the
Court after notice and hearing, (iv) dispositions which result in Full Payment
of all of the Pre-Petition Debt (to the extent not theretofore paid) and all of
the Obligations and (v) the rejection pursuant to Section 365 of the Bankruptcy
Code of unexpired leases and executory contracts.
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9.2.5. COMPROMISE OF ACCOUNTS. Compromise or settle, or extend the
time of payment of, any Account without Agent's prior written consent; provided
that Borrower may compromise or settle any ineligible Account, so long as the
amount of such Account is $150,000 or less prior to such compromise or
settlement.
9.2.6. PAYMENT OF CLAIMS. Make any payment of principal or interest
on account of any Claim against Borrower that arose prior to the Petition Date,
other than the Pre-Petition Debt to Agent and Lenders, rent under leases in
existence on the Petition Date, Claims permitted to be paid by the Budgets and
"first day orders" to the extent approved by order of the Court and the Claims
of Critical Vendors to the extent approved by order of the Court.
9.2.7. FILING OF MOTIONS AND APPLICATIONS. Apply to the Court for
authority to (i) take any action that is prohibited by the terms of any of the
DIP Financing Documents, (ii) refrain from taking any action that is required to
be taken by the terms of any of the DIP Financing Documents or the Financing
Orders (iii) permit any Debt or Claim to be PARI PASSU with or senior to any of
the Obligations, or (iv) use any cash proceeds of the Collateral other than in
payment of the Pre-Petition Debt or the Obligations or as otherwise expressly
authorized herein.
9.2.8. MODIFICATIONS TO ORDERS. Seek or consent to any amendment,
supplement or any other modification of any of the terms of the Financing
Orders.
9.2.9. RESTRICTED INVESTMENTS. Make or have any new Restricted
Investment.
9.2.10. DISTRIBUTIONS. Make any Distribution, except Distributions
by a Subsidiary to Borrower in cash.
9.2.11. PERMITTED DEBT. Incur or suffer to exist any Debt other than
Claims and Debt in existence on the Petition Date to the extent not incurred in
violation of the Pre-Petition Loan Documents; the Obligations; Capitalized Lease
Obligations not to exceed $100,000.00 and Permitted Purchase Money Debt; Debt
(other than Debt for Money Borrowed, Capitalized Lease Obligations and Permitted
Purchase Money Debt) incurred in the Ordinary Course of Business of Borrower
during the Chapter 11 Case, including royalties and other amounts at any time
due under the Post-Petition P&G Settlement, and Professional Expenses, so long
as such Debts are not past due and payable and are not secured by any Lien that
is not a Permitted Lien; Permitted Contingent Obligations; Debt of Foreign
Subsidiaries existing on the Petition Date; and super-priority Claims in favor
of the Term Lenders (as defined in the Pre-Petition Loan Agreement) to the
extent approved by the Court, but subordinate to any super-priority Claims in
favor of the Pre-Petition Lenders and the Lenders.
9.2.12. CONDUCT OF BUSINESS. Engage in any business other than the
business engaged in by it on the Petition Date and any business or activities
that are substantially similar, related or incidental thereto.
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9.2.13. USE OF PROCEEDS. Use any proceeds of Revolver Loans for a
purpose that is not expressly permitted by SECTION 1.1.4.
9.2.14. TAX CONSOLIDATION. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary.
9.2.15. ACCOUNTING CHANGES. Make any significant change in
accounting treatment or reporting practices, except as may be required by GAAP,
or establish a fiscal year different from the Fiscal Year.
9.2.16. ORGANIZATION DOCUMENTS. Amend, modify or otherwise change
any of the terms or provisions in any of its Organization Documents as in effect
on the date hereof, except for changes that do not affect in any way Borrower's
or such Subsidiary's rights and obligations to enter into and perform the DIP
Financing Documents to which it is a party and to pay all of the Obligations and
that do not otherwise have a Material Adverse Effect.
9.2.17. RESTRICTIVE AGREEMENTS. Enter into or become party to any
Restrictive Agreement other than those disclosed in SCHEDULE 8.1.14 hereto,
provided that none of such disclosed agreements shall be amended without prior
notice to and the consent of Agent.
9.2.18. ADVANCES AND TRANSFERS TO SUBSIDIARIES. Notwithstanding
anything in this Agreement to the contrary, while Revolver Loans are outstanding
or while any Commitments exist, make any loans, advances or transfers to any
Subsidiaries.
SECTION 10. CONDITIONS PRECEDENT
10.1. CONDITIONS PRECEDENT TO INITIAL CREDIT Extensions.
Notwithstanding any other provision of this Agreement or any of the other DIP
Financing Documents, and without affecting in any manner the rights of Agent and
Lenders under other sections of this Agreement, Lenders shall not be required to
fund any Loan requested by Borrower, unless, on or before October 11, 2000, each
of the following conditions has been and continues thereafter to be satisfied:
10.1.1. All of the DIP Financing Documents (unless Section 9.1.21
applies) shall have been executed in form and substance satisfactory to Agent
and Lenders by each of the signatories thereto and accepted by Agent and
Lenders, and each Obligor shall be in compliance with all of the terms thereof,
and all representations and warranties contained therein shall be true and
correct in all material respects.
10.1.2. No Default or Event of Default shall exist at the time of,
and would not result from the funding of, any requested Loan, and no event shall
have occurred and no condition shall exist since the Petition Date that has had
or could reasonably be expected to have a Material Adverse Effect.
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10.1.3. Agent shall have determined, and Lenders shall be satisfied
that, immediately after Lenders have made the initial Revolver Loans, Borrower
has paid (or made provision for the payment of) all closing costs incurred in
connection with the Commitments.
10.1.4. The Interim Financing Order shall have been entered, shall
be in full force and effect and shall not have been vacated, reversed, modified
or stayed in any respect (and, if such Order is the subject of a pending appeal,
no performance of any obligation of any party shall have been stayed pending
such appeal).
10.1.5. All fees and expenses required to be paid by Borrower
hereunder on the Closing Date shall have been paid in full with Court approval
to the extent required.
10.1.6. Agent and Lenders shall have received satisfactory proof of
insurance by Borrower, in accordance with the terms of this Agreement, together
with loss payable endorsements on Agent's standard form of loss pay endorsement,
naming Agent as loss payee with respect to each policy and certified copies of
Borrower's liability insurance policies, together with endorsements naming Agent
as an additional insured.
10.1.7. All of the "first day orders" involving payments that will
be made from proceeds of Revolver Loans presented to the Court at or about the
time of the commencement of the Chapter 11 Case (including orders with respect
to maintenance of Borrower's cash management system) shall be satisfactory in
form and substance to Agent and Lenders.
10.1.8. Borrower and P&G shall have entered into the Pre-Petition
P&G Settlement, under such terms to be satisfactory to Agent in its sole
discretion.
10.1.9. Agent shall have received an initial Borrowing Base Report
certified by Borrower's chief financial officer, in form and substance
satisfactory to Agent.
10.1.10. Agent shall have received the Interim Budget and found it
to be acceptable in form and substance.
10.1.11. Agent shall have received a reconciliation between the
inventory reports provided to Agent as of August 31, 2000, and the financial
statements provided to Agent as of August 31, 2000, which reconciliation shall
be satisfactory to Agent in its sole discretion.
10.1.12. Agent shall have received such other approvals, opinions or
documents as Agent or any Lender may reasonably request, subject to SECTION
9.1.21 hereof.
10.2. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Notwithstanding any
other provision of this Agreement or any of the other DIP Financing Documents,
and without affecting in any manner the rights of Agent and Lenders under other
sections of this Agreement, no Lender shall be required to fund any Loans,
unless and until each of the following conditions has
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been and continues to be satisfied:
10.2.1. No Default or Event of Default exists at the time, or would
result from the funding, of any Revolver Loan or other extension of credit.
10.2.2. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court
or Governmental Authority to enjoin, restrain or prohibit any of the DIP
Financing Documents or the consummation of any of the transactions contemplated
thereby.
10.2.3. Agent shall have received each Borrowing Base Certificate
required by the terms of this Agreement or otherwise requested by Agent.
10.2.4. No event shall have occurred and no condition shall exist
that could reasonably be expected to have a Material Adverse Effect.
10.2.5. With respect to all Revolver Loans requested after the
sooner to occur of (i) the final hearing on the DIP Motion or (ii) 45 days
following the entry of the Interim Financing Order, the Final Financing Order
shall have been entered, shall be in full force and effect and shall not have
been vacated, reversed, modified, amended or stayed without the prior written
consent of Agent and the Required Lenders.
10.2.6. Agent shall have received an officer's certificate from
Borrower (i) demonstrating Borrower's compliance with the Budgets, (ii)
certifying that Borrower shall apply the proceeds of the Revolver Loans only to
Budgeted Expenses and (iii) containing a comparison of the Budgeted Expenses to
actual expenditures for the most recent week then ended, all certified by
Borrower's chief financial officer, in form and substance satisfactory to Agent.
The certificate required by this Section shall be provided to Agent on a weekly
basis.
10.2.7. Borrower shall have paid in full all outstanding fees and
expenses of Agent and Lenders, including attorneys' fees and expenses, with
Court approval to the extent required.
10.2.8. For Revolver Loans requested more than 21 days following the
Petition Date, the Pre-Petition P&G Settlement shall have been approved by the
Court within 21 days following the Petition Date.
10.2.9 All representations and warranties contained within the
Agreement shall be true and correct in all material respects.
10.3. LIMITED WAIVER OF CONDITIONS PRECEDENT. If
Lenders shall make any Revolver Loan or otherwise extend any credit to Borrower
under this Agreement at a time when any of the foregoing conditions precedent
are not satisfied (regardless of whether the failure of satisfaction of any of
such conditions precedent is known or unknown to Agent or
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Lender), the funding of such Revolver Loans shall not operate as a waiver of the
right of Agent and Lenders to insist upon the satisfaction of all conditions
precedent with respect to each subsequent Borrowing requested by Borrower or a
waiver of any Default or Event of Default as a consequence of the failure of any
such conditions to be satisfied.
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1. EVENTS OF DEFAULT. The occurrence of any one or more
of the following events shall constitute an "Event of Default":
11.1.1. PAYMENT OF OBLIGATIONS. Borrower shall fail to pay (a) the
principal of or accrued interest with respect to any Revolver Loan on the due
date thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise) or (b) any of the other Obligations on the due date thereof (whether
due at stated maturity, upon acceleration or otherwise), but if no due date is
specified therefor, within three Business Days after demand for payment of such
Obligation.
11.1.2. MISREPRESENTATIONS. Any warranty, representation, or other
statement made or furnished to Agent or any Lender by or on behalf of Borrower
or in any instrument, certificate or financial statement furnished in compliance
with or in reference to this Agreement or any of the DIP Financing Documents
proves to have been false or misleading in any material respect when made or
furnished.
11.1.3. BREACH OF SPECIFIC COVENANTS. Borrower shall fail or neglect
to perform, keep or observe any covenant contained in SECTIONS 1.1.4, 6.5,
7.1.1, 7.1.2, 7.2.1, 7.2.2, 7.3, 7.4.2., 7.5, 9.1.1, 9.1.3, 9.1.4, 9.1.5, 9.1.6,
9.1.8, 9.1.9, 9.1.10, 9.1.11, 9.1.20, or 9.2 hereof on the date that Borrower is
required to perform, keep or observe such covenant.
11.1.4. BREACH OF OTHER COVENANTS. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in SECTION 11.1 hereof) and
the breach of such other covenant is not cured to Agent's and Lenders'
satisfaction within 15 days after the sooner to occur of any Senior Officer's
receipt of notice of such breach from Agent or any Lender or the date on which
such failure or neglect first becomes known to any Senior Officer; PROVIDED,
HOWEVER, that such notice and opportunity to cure shall not apply in the case of
any failure to perform, keep or observe any covenant which is not capable of
being cured at all or within such 15-day period or which is a willful and
knowing breach by Borrower or which was the subject of a breach during the prior
6-month period.
11.1.5. DEFAULT UNDER OTHER DIP FINANCING DOCUMENTS. Any event of
default shall occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any of
the other DIP Financing Documents and such default shall continue (i) beyond any
applicable period of grace, or (ii) if no grace period is
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specified within such DIP Financing Documents, within 15 days after the sooner
to occur of any Senior Officer's receipt of notice of such breach from Agent or
any Lender or the date on which such failure or neglect first becomes known to
any Senior Officer.
11.1.6. CROSS-DEFAULTS. There shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument,
which is entered into after the Petition Date and which relates to any Debt for
Money Borrowed.
11.1.7. UNINSURED LOSSES; UNAUTHORIZED DISPOSITIONS. There shall
occur any material loss, theft, damage or destruction not fully covered by
insurance (as required by this Agreement and subject to such deductibles as
Agent shall have agreed to in writing), or any sale, lease or encumbrance of any
of the Collateral or the making of any levy, seizure, or attachment thereof or
thereon, except as may be specifically permitted by other provisions of this
Agreement.
11.1.8. CERTAIN BANKRUPTCY EVENTS. Borrower shall fail to comply
with any of the provisions of the Financing Orders in any material respect; a
trustee shall be appointed in the Chapter 11 Case; an examiner shall be
appointed in the Chapter 11 Case with enlarged powers (powers beyond those set
forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section
1106(b) of the Bankruptcy Code; the Chapter 11 Case shall be dismissed or
converted to a case under Chapter 7; Borrower or any Affiliate shall obtain
Court approval of a disclosure statement for a Reorganization Plan other than an
Acceptable Plan or a Confirmation Order shall be entered with respect to a
Reorganization Plan proposed by a Person other than Borrower if such
Reorganization Plan is not an Acceptable Plan; there shall be filed by Borrower
any motion to sell all or a substantial part of the Collateral on terms that are
not acceptable to Lenders in their sole discretion; any substantial part of
Borrower's assets, other than the Collateral, shall be sold by Borrower and, as
a consequence of such sale, Borrower is not able to continue its business
operations in substantially the same manner as was conducted by it prior to such
sale; Borrower shall file any motion to alter, amend, vacate, supplement,
modify, or reconsider, in any respect, either of the Financing Orders or,
without each Lender's prior written consent, either of the Financing Orders is
amended, vacated, stayed, reversed or otherwise modified; the Court shall enter
an order granting to any Person (other than Agent, any Lender or any lessor
under an equipment lease) relief from the automatic stay to foreclose upon a
Lien with respect to any Property of Borrower that has an aggregate book value
in excess of $250,000; an order shall be entered for the substantive
consolidation of the Estate of Borrower with any other Person; Borrower shall
not have sufficient Availability to pay on any date or within two Business Days
of such date, or shall otherwise fail to pay as and when due and payable, all
administrative costs or expenses incurred by it in the Chapter 11 Case that are
due and payable on such date; Borrower shall file a motion or other request with
the Court seeking authority to use any cash proceeds of the Collateral or to
obtain any financing under Section 364(d) of the Bankruptcy Code secured by a
priming Lien (in each case (i) without Agent's or Lenders' prior written consent
or (ii) if such motion fails to contemplate payment in full of the Obligations),
or Lien of equal priority with Agent's Liens, upon any Collateral, in each case
without Agent's and Lenders'
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prior written consent; an application shall be filed by Borrower for the
approval of any superpriority claim in the Chapter 11 Case that is PARI PASSU
with or senior to the Obligations or any of the Pre-Petition Debt or there shall
arise or be granted any such PARI PASSU or senior superpriority claim; Borrower
shall challenge the validity, perfection or priority of any Liens of Agent
securing the Pre-Petition Debt or the validity or enforceability of any of the
Pre-Petition Loan Documents; or, without Agent's and the Required Lender's
consent, Borrower shall discontinue or suspend all or any material part of its
business operations or commence an orderly wind-down or liquidation of any
material part of the Collateral.
11.1.9. DEFAULT UNDER SETTLEMENT AGREEMENTS. An event of default
shall occur under or with respect to the Pre-Petition P&G Settlement.
11.1.10. JUDGMENTS. One or more judgments or orders for the payment
of money in an amount that exceeds, individually or in the aggregate, $100,000
shall be rendered against Borrower and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment or order or (ii) there
should be any period of 30 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.
11.1.11. FAILURE OF DIP FINANCING DOCUMENTS. Any material covenant,
agreement or obligation of Borrower contained in or evidenced by any of the DIP
Financing Documents shall cease to be enforceable or shall be determined to be
unenforceable in accordance with its terms; Borrower shall deny or disaffirm its
obligations under any of the DIP Financing Documents or Liens granted in
connection therewith; or the Liens granted in any of the Collateral owned by
Borrower shall be determined to be voidable, invalid or subordinated or shall be
determined, with respect to any material part of the Collateral owned by
Borrower, to be unperfected or not to have the priority contemplated by this
Agreement.
11.1.12. GUARANTOR DEFAULTS. Any Guarantor shall revoke or attempt
to revoke the Guaranty signed by such Guarantor, shall repudiate such
Guarantor's liability thereunder, or shall be in default under the terms
thereof, or shall fail to confirm in writing, promptly after receipt of Agent's
written request therefor, such Guarantor's ongoing liability under the Guaranty
in accordance with the terms thereof; or any Insolvency Proceeding shall be
commenced by or against any Guarantor.
11.1.13. MATERIAL ADVERSE EFFECT. Any event shall occur or any
condition shall exist that could reasonably be expected to have a Material
Adverse Effect.
11.1.14. CRIMINAL FORFEITURE. Any Obligor shall be convicted under
any criminal law that could lead to a forfeiture of any Property of such
Obligor.
11.1.15. DEFAULT UNDER EQUIPMENT LEASES. Borrower shall fail to make
any payment that becomes due and payable under any Equipment Lease prior to the
entry of an order of the Court approving Borrower's rejection of such Equipment
Lease.
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11.2 ACCELERATION OF THE OBLIGATIONS. Without in any way
limiting the right of Agent or any Lender to demand payment of any portion of
the Obligations payable on demand in accordance with this Agreement, upon or at
any time after the occurrence of an Event of Default as above provided, Agent
may, in its discretion (and, upon receipt of written instructions to do so from
the Required Lenders, shall), (i) subject at all times to any limitations in the
Financing Orders, including any notice required by the Financing Orders, declare
the principal of and any accrued interest on the Revolver Loans and all other
Obligations owing under any of the DIP Financing Documents to be, whereupon the
same shall become, without further notice or demand (all of which notice and
demand Borrower expressly waives), forthwith due and payable and Borrower shall
forthwith pay to Agent the entire principal of and accrued and unpaid interest
on the Revolver Loans and other Obligations plus reasonable attorneys' fees and
expenses if such principal and interest are collected by or through an
attorney-at-law; and (ii) terminate the Commitments.
11.3 REMEDIES. Upon or at any time after the occurrence of
an Event of Default, but subject at all times to any limitations in the
Financing Orders, including any notice required by the Financing Orders, Agent
may, in its discretion (and, upon receipt of written direction of the Required
Lenders, shall), exercise from time to time all rights and remedies available to
Agent under the Pre-Petition Loan Documents to enforce collection of any
Pre-Petition Debt then outstanding as well as the following rights and remedies
to enforce collection of the Obligations (without prejudice to the rights of
Agent or Lenders to enforce their respective Claims against any or all
Obligors):
11.3.1. All of the rights and remedies of a secured party under the
UCC or under other Applicable Law, and all other legal and equitable rights to
which Agent may be entitled under any of the DIP Financing Documents or the
Financing Orders, all of which rights and remedies shall be cumulative and shall
be in addition to any other rights and remedies contained in this Agreement or
any of the other DIP Financing Documents, and none of which shall be exclusive.
11.3.2. The right to collect Accounts, Chattel Paper, Instruments
and General Intangibles and all other rights of Borrower to the payment of money
from any Person obligated therefor.
11.3.3. The right to take immediate possession of all tangible items
of the Collateral and (i) to require Borrower to assemble such Collateral, at
Borrower's expense, and make it available to Agent at a place designated by
Agent that is reasonably convenient to both parties and (ii) to enter any of the
premises of Borrower or wherever any of the Collateral shall be located, and to
keep and store the same on said premises until sold (and if said premises be the
Property of Borrower, Borrower agrees not to charge Agent for storage thereof).
11.3.4. The right to sell or otherwise dispose of all or any
Inventory in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as
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Agent, in its sole discretion, may deem advisable; Borrower agrees that 7 days
written notice to Borrower of any public or private sale or other disposition of
such Collateral shall be reasonable notice thereof, and such sale shall be at
such locations as Agent may designate in said notice. Agent shall have the right
to conduct such sales on Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with Applicable Law;
Agent may sell, lease or otherwise dispose of such Collateral, or any part
thereof, for cash, credit or any combination thereof, and Agent may purchase all
or any part of such Collateral at public or, if permitted by Applicable Law,
private sale and, in lieu of actual payment of such purchase price, may set off
the amount of such price against the Obligations.
11.3.5. The right to require Borrower to deposit with Lender funds
equal to the LC Outstandings and, if Borrower fails promptly to make such
deposit, Agent or Lenders may advance such amount as a Revolver Loan (whether or
not an Out-of-Formula Condition exists or is created thereby). Any such deposit
or advance shall be held by Agent as a reserve to fund future payments on any LC
Support. At such time as the LC Support has been paid or terminated and all
Letters of Credit have been drawn upon or expired, any amounts remaining in such
reserve shall be applied against any outstanding Obligations, or, if all
Obligations have been indefeasibly paid in full, returned to Borrower.
11.4. LICENSES AND SALE OF COLLATERAL. Agent is hereby
irrevocably granted a license or other right to use, without charge, which
license or right can only be exercised upon an Event of Default, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets,
tradenames, trademarks and advertising matter, or any Property of a similar
nature, as it pertains to the Collateral, in advertising for sale and selling
any Collateral and Borrower's rights under all licenses and all franchise
agreements shall inure to Agent's and Lenders' benefit. Any proceeds realized
from the sale of any Collateral, to the extent the same are not applied to the
Pre-Petition Debt, may be applied to the Obligations, after allowing 2 Business
Days for collection, to principal, interest, fees and expenses (including
Extraordinary Expenses) in such order and manner as Agent and Lenders, in their
sole discretion, may determine, provided that, as among Agent and Lenders, all
payments and proceeds shall be allocated as provided in SECTION 4.6 of this
Agreement.
11.5. SETOFF. In addition to any Liens granted under any of the DIP
Financing Documents and any rights now or hereafter available under Applicable
Law, Agent and each Lender (and each of their respective Affiliates) is hereby
authorized by Borrower at any time that an Event of Default exists, without
notice, except as required by the Financing Orders, to Borrower or any other
Person (any such notice being hereby expressly waived) to set off and to
appropriate and to apply any and all deposits, general or special (including
Debt evidenced by certificates of deposit whether matured or unmatured (but not
including trust accounts)) and any other Debt at any time held or owing by
Agent, such Lender or any of their Affiliates to or for the credit or the
account of Borrower against and on account of the Obligations of Borrower
arising under the DIP Financing Documents to Agent, such Lender or any of their
Affiliates, including all Loans and LC Outstandings and all claims of any nature
or description arising out of or in connection with this Agreement, irrespective
of whether or not (i) Agent or such Lender
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shall have made any demand hereunder, (ii) Agent, at the request or with the
consent of the Required Lenders, shall have declared the principal of and
interest on the Revolver Loans and other amounts due hereunder to be due and
payable as permitted by this Agreement and even though such Obligations may be
contingent or unmatured or (iii) the Collateral for the Obligations is adequate.
Notwithstanding the foregoing, each of Agent and Lenders agree with each other
that it shall not, without the express consent of the Required Lenders, and that
it shall (to the extent that it is lawfully entitled to do so) upon the request
of the Required Lenders, exercise its setoff rights hereunder against any
accounts of Borrower now or hereafter maintained with Agent, such Lender or any
Affiliate of any of them, but Borrower shall have no claim or cause of action
against Agent or any Lender for any setoff made without the consent of the
Required Lenders and the validity of any such setoff shall not be impaired by
the absence of such consent. If any party (or its Affiliate) exercises the right
of setoff provided for hereunder, such party shall be obligated to share any
such setoff in the manner and to the extent required by SECTION 12.5.
11.6 REMEDIES CUMULATIVE; NO WAIVER.
11.6.1. All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of Borrower contained in this
Agreement and the other DIP Financing Documents, or in any document referred to
herein or contained in any agreement supplementary hereto or in any schedule or
in any Guaranty given to Agent or any Lender or contained in any other agreement
between Agent or any Lender and Borrower, heretofore, concurrently, or hereafter
entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The rights and remedies of Agent and Lenders under
this Agreement and the other DIP Financing Documents and the Pre-Petition Loan
Documents shall be cumulative and not exclusive of any rights or remedies that
Agent or any Lender would otherwise have.
11.6.2. The failure or delay of Agent or any Lender to require
strict performance by Borrower of any provision of any of the DIP Financing
Documents or to exercise or enforce any rights, Liens, powers or remedies under
any of the DIP Financing Documents or with respect to any Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Agent and Lenders shall have been fully satisfied.
None of the undertakings, agreements, warranties, covenants and representations
of Borrower contained in this Agreement or any of the other DIP Financing
Documents and no Event of Default by Borrower under this Agreement or any other
DIP Financing Documents shall be deemed to have been suspended or waived by
Agent or any Lender, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of Agent or such Lender and directed to Borrower.
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11.6.3. If Agent or any Lender shall accept performance by Borrower,
in whole or in part, of any obligation that Borrower is required by any of the
DIP Financing Documents to perform only when a Default or Event of Default
exists, or if Agent or any Lender shall exercise any right or remedy under any
of the DIP Financing Documents that may not be exercised other than when a
Default or Event of Default exists, Agent's or Lender's acceptance of such
performance by Borrower or Agent's or Lender's exercise of any such right or
remedy shall not operate to waive any such Event of Default or to preclude the
exercise by Agent or any Lender of any other right or remedy, unless otherwise
expressly agreed in writing by Agent or such Lender, as the case may be.
SECTION 12. AGENT
12.1. APPOINTMENT, AUTHORITY AND DUTIES OF AGENT.
12.1.1. Each Lender hereby irrevocably appoints and designates Fleet
as Agent to act as herein specified. Agent may, and each Lender by its
acceptance of a Note shall be deemed irrevocably to have authorized Agent to,
enter into all DIP Financing Documents to which Agent is or is intended to be a
party on the Closing Date and all amendments hereto and all Security Documents
at any time executed by Borrower, for its benefit and the Pro Rata benefit of
Lenders and, except as otherwise provided in this SECTION 12, to exercise such
rights and powers under this Agreement and the other DIP Financing Documents as
are specifically delegated to Agent by the terms hereof and thereof, together
with such other rights and powers as are reasonably incidental thereto. Each
Lender agrees that any action taken by Agent or the Required Lenders in
accordance with the provisions of this Agreement or the other DIP Financing
Documents, and the exercise by Agent or the Required Lenders of any of the
powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all Lenders.
Without limiting the generality of the foregoing, Agent shall have the sole and
exclusive right and authority to (a) act as the disbursing and collecting agent
for Lenders with respect to all payments and collections arising in connection
with this Agreement and the other DIP Financing Documents; (b) execute and
deliver as Agent each DIP Financing Document and accept delivery of each such
agreement delivered by Borrower or any other Obligor; (c) act as collateral
agent for Lenders for purposes of the perfection of all security interests and
Liens created by this Agreement or the Security Documents with respect to all
material items of the Collateral and, subject to the direction of the Required
Lenders, for all other purposes stated therein, PROVIDED that Agent hereby
appoints, authorizes and directs each Lender to act as a collateral sub-agent
for Agent and the other Lenders for purposes of the perfection of all security
interests and Liens with respect to Borrower's Deposit Accounts maintained with,
and all cash and Cash Equivalents held by, such Lender; (d) subject to the
direction of the Required Lenders, manage, supervise or otherwise deal with the
Collateral; and (e) except as may be otherwise specifically restricted by the
terms of this Agreement and subject to the direction of the Required Lenders,
exercise all remedies given to Agent with respect to any of the Collateral under
the DIP Financing Documents relating thereto, Applicable Law or otherwise.
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The duties of Agent shall be ministerial and administrative in nature, and Agent
shall not have by reason of this Agreement or any other DIP Financing Document a
fiduciary relationship with any Lender (or any Lender's participants). Unless
and until its authority to do so is revoked in writing by Required Lenders,
Agent alone shall be authorized to determine whether any Accounts or Inventory
constitute Eligible Accounts or Eligible Inventory (basing such determination in
each case upon the meanings given to such terms in Appendix A), or whether to
impose or release any reserve, and to exercise its own credit judgment in
connection therewith, which determinations and judgments, if exercised in good
faith, shall exonerate Agent from any liability to Lenders or any other Person
for any errors in judgment.
12.1.2. Agent (which term, as used in this sentence, shall include
reference to Agent's officers, directors, employees, attorneys, agents and
Affiliates and to the officers, directors, employees, attorneys and agents of
Agent's Affiliates) shall not: (a) have any duties or responsibilities except
those expressly set forth in this Agreement and the other DIP Financing
Documents or (b) be required to take, initiate or conduct any litigation,
foreclosure or collection proceedings hereunder or under any of the other DIP
Financing Documents except to the extent directed to do so by the Required
Lenders during the continuance of any Event of Default. The conferral upon Agent
any right hereunder shall not imply a duty on Agent's part to exercise any such
right unless instructed to do so by the Required Lenders in accordance with this
Agreement.
12.1.3. Agent may perform any of its duties by or through its agents
and employees and may employ one or more Agent Professionals and shall not be
responsible for the negligence or misconduct of any such Agent Professionals
selected by it with reasonable care. Borrower shall promptly (and in any event,
ON DEMAND) reimburse Agent for all reasonable expenses (including all
Extraordinary Expenses) incurred by Agent pursuant to any of the provisions
hereof or of any of the other DIP Financing Documents or in the execution of any
of Agent's duties hereby or thereby created or in the exercise of any right or
power herein or therein imposed or conferred upon it or Lenders (excluding,
however, general overhead expenses), and each Lender agrees promptly to pay to
Agent, ON DEMAND, such Lender's Pro Rata share of any such reimbursement for
expenses (including Extraordinary Expenses) that is not timely made by Borrower
to Agent.
12.1.4. The rights, remedies, powers and privileges conferred upon
Agent hereunder and under the other DIP Financing Documents may be exercised by
Agent without the necessity of the joinder of any other parties unless otherwise
required by Applicable Law. If Agent shall request instructions from the
Required Lenders with respect to any act or action (including the failure to
act) in connection with this Agreement or any of the other DIP Financing
Documents, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from the Required
Lenders; and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any of the DIP Financing Documents pursuant to or in
accordance with the instructions of the Required Lenders except for Agent's own
gross negligence or willful misconduct in connection with any action taken by
it. Notwithstanding
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anything to the contrary contained in this Agreement, Agent shall not be
required to take any action that is in its opinion contrary to Applicable Law or
the terms of any of the DIP Financing Documents or that would in its reasonable
opinion subject it or any of its officers, employees or directors to personal
liability; PROVIDED, HOWEVER, that if Agent shall fail or refuse to take action
that is not contrary to Applicable Law or to any of the terms of any of the DIP
Financing Documents even if such action in Agent's opinion would subject it to
potential liability, the Required Lenders may remove Agent and appoint a
successor Agent in the same manner and with the same effects as is provided in
this Agreement with respect to Agent's resignation.
12.1.5. Agent shall promptly, upon receipt thereof, forward to each
Lender (i) copies of any significant written notices, reports, certificates and
other information received by Agent from any Obligor (but only if and to the
extent such Obligor is not required by the terms of the DIP Financing Documents
to supply such information directly to Lenders) and (ii) copies of the results
of any field audits by Agent with respect to Borrower. Agent shall conduct field
audits of Borrower at any time or times reasonably requested by any Lender (but
in no event shall Agent be obliged to honor such requests more frequently than
twice a calendar year unless a Default or Event of Default exists). Agent shall
have no liability to any Lender for any errors in or omissions from any field
audit or other examination of Borrower or the Collateral, unless such error or
omission was the direct result of Agent's willful misconduct.
12.2. AGREEMENTS REGARDING COLLATERAL. Each Lender shall
have a Pro Rata interest in the security interests and Liens in and to the
Collateral and any other Property granted and assigned to Agent under the DIP
Financing Documents. Lenders hereby irrevocably authorize Agent, at its option
and in its discretion, to release any Lien upon any Collateral (i) upon the
termination of the Commitments and payment or satisfaction of all of the
Obligations or (ii) constituting Property sold or disposed of in accordance with
the terms of this Agreement if Borrower certifies to Agent that the sale
disposition is made in compliance with the terms of this Agreement (and Agent
may rely conclusively on any such certificate, without further inquiry). Agent
shall have no obligation whatsoever to any of Lenders to assure that any of the
Collateral exists or is owned by Borrower or is cared for, protected or insured
or has been encumbered, or that Agent's Liens have been properly or sufficiently
or lawfully created, perfected, protected or enforced or entitled to any
particular priority or to exercise at all or in any manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of the rights or
powers granted or available to Agent pursuant to this Agreement or any of the
other DIP Financing Documents, it being understood and agreed that, in respect
of the Collateral, or any act, omission or event related thereto, Agent may act
(subject to any specific limitation or requirement set forth in this Agreement)
in any manner it may deem appropriate, in its discretion, given Agent's own
interests in the Collateral in its capacity as one of the Lenders. Each Lender
(and each Eligible Assignee and Participant), by its acceptance of a Note (or a
participation interest in any Obligations), shall be deemed irrevocably to have
authorized Agent to execute, deliver, and perform all of Agent's obligations.
12.3. RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in so relying, upon any certification, notice or other
communication (including any thereof by
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telephone, telex, telegram, telecopier message or cable) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and statements of Agent Professionals
selected by Agent. As to any matters not expressly provided for by this
Agreement or any of the other DIP Financing Documents, Agent shall in all cases
be fully protected in acting or refraining from acting hereunder and thereunder
in accordance with the instructions of Lenders, and such instructions of Lenders
and any action taken or failure to act pursuant thereto shall be binding upon
Lenders.
12.4. ACTION UPON DEFAULT. Agent shall not be deemed to have knowledge of
the occurrence of a Default or an Event of Default unless it has received
written notice from a Lender or Borrower specifying the occurrence of such
Default or Event of Default. If Agent shall receive such a notice of the
occurrence of a Default or an Event of Default or shall otherwise acquire actual
knowledge of any Default or Event of Default, Agent shall promptly notify
Lenders in writing and Agent shall take such action and assert such rights under
this Agreement and the other DIP Financing Documents, or shall refrain from
taking such action and asserting such rights, as the Required Lenders shall
direct from time to time. If any Lender shall receive a notice of the occurrence
of a Default or an Event of Default or shall otherwise acquire actual knowledge
of any Default or Event of Default, such Lender shall promptly notify Agent and
the other Lenders in writing. As provided in SECTION 12.3 hereof, Agent shall
not be subject to any liability by reason of acting or refraining to act
pursuant to any request of the Required Lenders except for its own willful
misconduct or gross negligence. Before directing Agent to take or refrain from
taking any action or asserting any rights under this Agreement and the other DIP
Financing Documents, each Lender shall consult with and seek the advice of (but
without having to obtain the consent of) each other Lender, and promptly after
directing Agent to take or refrain from taking any such action or asserting any
such rights, the Required Lenders will so advise each other Lender of the action
taken or refrained from being taken and, upon request of any Lender, will supply
information concerning actions taken or not taken. In no event shall the
Required Lenders, without the prior written consent of each Lender, direct Agent
to accelerate and demand payment of the Revolver Loans held by one Lender
without accelerating and demanding payment of all other Revolver Loans. Each
Lender agrees that, except as otherwise provided in any of the DIP Financing
Documents, it will not take any legal action or institute any action or
proceeding against any Obligor with respect to any of the Obligations or
Collateral or accelerate or otherwise enforce its portion of the Obligations
unless consented to in writing by Agent and the Required Lenders.
12.5. RATABLE SHARING. If any Lender shall obtain any payment or reduction
(including any amounts received as adequate protection of a bank account deposit
treated as cash collateral under the Bankruptcy Code) of any Obligation of
Borrower hereunder (whether voluntary, involuntary, through the exercise of any
right of set-off or otherwise) in excess of its Pro Rata share of payments or
reductions on account of such Obligations obtained by all of the Lenders, such
Lender shall forthwith (i) notify the other Lenders and Agent of such receipt
and (ii) purchase from the other Lenders such participations in the affected
Obligations as shall be necessary to cause such purchasing Lender to share the
excess payment or reduction, net of costs incurred in connection therewith, on a
Pro Rata basis, provided that if all or any portion of such
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excess payment or reduction is thereafter recovered from such purchasing Lender
or additional costs are incurred, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery or such additional costs,
but without interest. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this SECTION 12.5 may, to the
fullest extent permitted by Applicable Law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of Borrower in the amount of
such participation.
12.6. INDEMNIFICATION OF AGENT.
12.6.1. Each Lender severally agrees to indemnify and defend the
Agent Indemnitees (to the extent not reimbursed by Borrower under this
Agreement, but without limiting the indemnification obligation of Borrower under
this Agreement), on a Pro Rata basis, and to hold each of the Agent Indemnitees
harmless from and against, any and all Claims which may be imposed on, incurred
by or asserted against any of the Agent Indemnitees in any way related to or
arising out of this Agreement or any of the other DIP Financing Documents or any
other document contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and expenses
that Borrower is obligated to pay under SECTION 14.2 hereof or amounts Agent may
be called upon to pay in connection with any lockbox or Dominion Account
arrangement contemplated hereby) or the enforcement of any of the terms hereof
or thereof or of any such other documents, provided that no Lender shall be
liable to any Agent Indemnitee for any of the foregoing to the extent that they
result solely from the willful misconduct or gross negligence of such Agent
Indemnitee or any other Agent Indemnitee.
12.6.2. Without limiting the generality of the foregoing provisions
of this SECTION 12.6, if Agent should be sued by any receiver, trustee in
bankruptcy, debtor-in-possession or other Person on account of any alleged
preference or fraudulent transfer received or alleged to have been received from
Borrower or any other Obligor as the result of any transaction under the DIP
Financing Documents, then in such event any monies paid by Agent in settlement
or satisfaction of such suit, together with all Extraordinary Expenses incurred
by Agent in the defense of same, shall be promptly reimbursed to Agent by
Lenders to the extent of each Lender's Pro Rata share.
12.6.3. Without limiting the generality of the foregoing provisions
of this SECTION 12.6, if at any time (whether prior to or after the Commitment
Termination Date) any action or proceeding shall be brought against any of the
Agent Indemnitees by an Obligor or by any other Person claiming by, through or
under an Obligor, to recover damages for any act taken or omitted by Agent under
any of the DIP Financing Documents or in the performance of any rights, powers
or remedies of Agent against Obligor, any Account Debtor, the Collateral or with
respect to any Revolver Loans, or to obtain any other relief of any kind on
account of any transaction involving any Agent Indemnitees under or in relation
to any of the DIP Financing Documents, Lenders agree to indemnify, defend and
hold the Agent Indemnitees harmless with respect thereto and to pay to the Agent
Indemnitees their respective Pro Rata shares of such amount as the Agent
Indemnitees shall be required to pay by reason of a judgment, decree, or
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other order entered in such action or proceeding or by reason of any compromise
or settlement agreed to by the Agent Indemnitees, including all interest and
costs assessed against the Agent Indemnitees in defending or compromising such
action, together with attorneys' fees and other legal expenses paid or incurred
by the Agent Indemnitees in connection therewith; PROVIDED, HOWEVER, that no
Lender shall be liable to any Agent Indemnitee for any of the foregoing to the
extent that they arise solely from the willful misconduct or gross negligence of
such Agent Indemnitee or any other Agent Indemnitee. In Agent's discretion,
Agent may also reserve for or satisfy any such judgment, decree or order from
proceeds of Collateral prior to any distributions therefrom to or for the
account of Lenders.
12.7. LIMITATION ON RESPONSIBILITIES OF AGENT. Agent
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall have received further assurances to its satisfaction from
Lenders of their indemnification obligations under SECTION 12.6 hereof against
any and all Claims which may be incurred by Agent by reason of taking or
continuing to take any such action. Agent shall not be liable to Lenders (or any
Lender's participants) for any action lawfully taken or omitted to be taken
under or in connection with this Agreement or the other DIP Financing Documents
except as a result of actual gross negligence or willful misconduct on the part
of Agent. Agent does not assume any responsibility for any failure or delay in
performance or breach by any Obligor or any Lender of its obligations under this
Agreement or any of the other DIP Financing Documents. Agent does not make to
Lenders, and no Lender makes to Agent or the other Lenders, any express or
implied warranty, representation or guarantee with respect to the Revolver
Loans, the Collateral, the DIP Financing Documents or any Obligor. Agent shall
not be responsible to Lenders, and no Lender shall be responsible to Agent or
the other Lenders, for: (i) any recitals, statements, information,
representations or warranties contained in any of the DIP Financing Documents or
in any certificate or other document furnished pursuant to the terms hereof;
(ii) the execution, validity, genuineness, effectiveness or enforceability of,
any of the DIP Financing Documents; (iii) the validity, genuineness,
enforceability, collectibility, value, sufficiency or existence of any
Collateral, or the perfection or priority of any Lien therein; or (iv) the
assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor or any Account Debtor. Agent
shall have no obligation to any Lender to ascertain or inquire into the
existence of any Default or Event of Default, the observance or performance by
any Obligor of any of the duties or agreements of such Obligor under any of the
DIP Financing Documents or the satisfaction of any conditions precedent
contained in any of the DIP Financing Documents. Agent may consult with and
employ legal counsel, accountants and other experts and shall be entitled to act
upon, and shall be fully protected in any action taken in good faith reliance
upon, any advice given by such experts.
12.8. SUCCESSOR AGENT AND CO-AGENTS.
12.8.1. Subject to the appointment and acceptance of a successor
Agent as provided below, Agent may resign at any time by giving written notice
thereof to each Lender and Borrower. Upon any such resignation, the Required
Lenders, after prior consultation with (but without having to obtain consent of)
each Lender, shall have the right to appoint a successor
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Agent which shall be (i) a Lender, (ii) a United States based Affiliate of a
Lender, or (iii) a commercial bank that is organized under the laws of the
United States or of any State thereof and has a combined capital surplus of at
least $100,000,000 and, provided no Default or Event of Default then exists, is
reasonably acceptable to Borrower (and for purposes hereof, any successor to
Fleet shall be deemed acceptable to Borrower). Upon the acceptance by a
successor Agent of an appointment as an Agent hereunder, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent without further act, deed or
conveyance, and the retiring Agent shall be discharged from its duties and
obligations hereunder. If a successor Agent shall not have been appointed within
30 days after Agent's delivery of written notice of its resignation, then Agent
shall have the right to appoint a successor Agent from the group of existing
Lenders, which successor Agent shall thereupon become the Agent. After any
retiring Agent's resignation hereunder as Agent, the provisions of this SECTION
12 (including the provisions of SECTION 12.6 hereof) shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent. Notwithstanding anything to the contrary contained
in this Agreement, any successor by merger or acquisition of the stock or assets
of Fleet shall continue to be Agent hereunder unless such successor shall resign
in accordance with the provisions hereof.
12.8.2. It is the purpose of this Agreement that there shall be no
violation of any Applicable Law denying or restricting the right of financial
institutions to transact business as agent in any jurisdiction. It is recognized
that, in case of litigation under any of the DIP Financing Documents, or in case
Agent deems that by reason of present or future laws of any jurisdiction Agent
might be prohibited from exercising any of the powers, rights or remedies
granted to Agent or Lenders hereunder or under any of the DIP Financing
Documents or from holding title to or a Lien upon any Collateral or from taking
any other action which may be necessary hereunder or under any of the DIP
Financing Documents, Agent may appoint an additional Person as a separate
collateral agent or co-collateral agent which is not so prohibited from taking
any of such actions or exercising any of such powers, rights or remedies. If
Agent shall appoint an additional Person as a separate collateral agent or
co-collateral agent as provided above, each and every remedy, power, right,
claim, demand or cause of action intended by any of the DIP Financing Documents
to be exercised by or vested in or conveyed to Agent with respect thereto shall
be exercisable by and vested in such separate collateral agent or co-collateral
agent, but only to the extent necessary to enable such separate collateral agent
or co-collateral agent to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such separate
collateral agent or co-collateral agent shall run to and be enforceable by
either of them. Should any instrument from Lenders be required by the separate
collateral agent or co-collateral agent so appointed by Agent in order more
fully and certainly to vest in and confirm to him or it such rights, powers,
duties and obligations, any and all of such instruments shall, on request, be
executed, acknowledged and delivered by Lenders whether or not a Default or
Event of Default then exists. In case any separate collateral agent or
co-collateral agent, or a successor to either, shall die, become incapable of
acting, resign or be removed, all the estates, properties, rights, powers,
duties and obligations of such separate collateral agent or co-collateral agent,
so far as permitted by Applicable Law, shall vest in and be exercised by Agent
until the appointment of a new collateral agent or successor to such separate
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collateral agent or co-collateral agent.
12.9. CONSENTS, AMENDMENTS AND WAIVERS.
12.9.1. No amendment or modification of any provision of this
Agreement shall be effective without the prior written agreement of the Required
Lenders and Borrower, and no waiver of any Default or Event of Default shall be
effective without the prior written consent of the Required Lenders; PROVIDED,
HOWEVER, that, (i) without the prior written consent of Agent, no amendment or
waiver shall be effective with respect to any provision in any of the DIP
financing Agreements (including SECTION 12 hereof) to the extent such provision
relates to the rights, duties or immunities of Agent; (ii) without the prior
written consent of all Lenders, no waiver of any Default or Event of Default
shall be effective if the Default or Event of Default relates to Borrower's
failure to observe or perform any covenant that may not be amended without the
unanimous written consent of Lenders as hereinafter set forth in this SECTION
12.9.1; and (iii) the written agreement of all Lenders shall be required to
effectuate any amendment, modification or waiver that would (a) alter the
provisions of SECTIONS 2.6, 4.5, 4.6, 5.1, 12, 14.2 OR 14.3, the definitions of
"Availability Reserve," "Borrowing Base" and the other defined terms used in
such definition, "Pro Rata," "Required Lenders" or any provision of this
Agreement obligating Agent to take certain actions at the direction of the
Required Lenders, or any provision of this Agreement regarding the Pro Rata
treatment or obligations of Lenders, (b) increase or otherwise modify any of the
Commitments (other than to reduce proportionately each Lender's Commitment in
connection with any overall reduction in the amount of the Commitments), (c)
alter or amend (other than to increase) the rate of interest payable in respect
of the Revolver Loans (except as may be expressly authorized by the DIP
Financing Documents or as may be necessary, in Agent's judgement, to comply with
Applicable Law), (d) waive or agree to defer collection of any fee, termination
charge or other charge provided for under any of the DIP Financing Documents or
the unused line fee in SECTION 2.2.2 hereof, (e) subordinate the payment of any
of the Obligations to any other Debt or the priority of any Liens granted to
Agent under any of the DIP Financing Documents to Liens granted to any other
Person, except for Liens granted by an Obligor to financial institutions with
respect to amounts on deposit with such financial institutions to cover returned
items, processing and analysis charges and other charges in the ordinary course
of business that relate to Deposit Accounts with such financial institutions,
(f) alter the time or amount of repayment of any of the Obligations or waive any
Event of Default resulting from nonpayment of the Obligations on the due date
thereof (or within any applicable period of grace), (g) forgive any of the
Obligations, except any portion of the Obligations held by a Lender who consents
in writing to such forgiveness, (h) release any Obligor from liability for any
of the Obligations or (i) release any Collateral, except as provided in this
Agreement. No Lender shall be authorized to amend or modify any Note held by it
unless such amendment or modification is consented to in writing by all Lenders;
PROVIDED, HOWEVER, that the foregoing shall not be construed to prohibit an
amendment or modification to any provision of this Agreement that may be
effected pursuant to this SECTION 12.9.1 by agreement of Borrower and the
Required Lenders even though such an amendment or modification results in an
amendment or modification of the Notes by virtue of the incorporation by
reference in each of the Notes of this Agreement. The making of any Loans
hereunder by any Lender during the
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existence of a Default or Event of Default shall not be deemed to constitute a
waiver of such Default or Event of Default. Any waiver or consent granted by
Lenders hereunder shall be effective only if in writing and then only in the
specific instance and for the specific purpose for which it was given.
12.9.2. In connection with any proposed amendment to any of the DIP
Financing Documents or waiver of any of the terms thereof or any Default or
Event of Default thereunder, Borrower shall not solicit, request or negotiate
for or with respect to any such proposed amendment or waiver of any of the
provisions of this Agreement or any of the other DIP Financing Documents unless
each Lender shall be informed thereof by Borrower or Agent (to the extent known
by Agent) and shall be afforded an opportunity of considering the same and
supplied by Borrower with sufficient information to enable it to make an
informed decision with respect thereto. Borrower shall not, directly or
indirectly, pay or cause to be paid any remuneration or other thing of value,
whether by way of supplemental or additional interest, fee or otherwise, to any
Lender (in its capacity as a Lender hereunder) as consideration for or as an
inducement to the consent to or agreement by such Lender with any waiver or
amendment of any of the terms and provisions of this Agreement or any of the
other DIP Financing Documents unless such remuneration or thing of value is
concurrently paid, on the same terms, on a Pro Rata basis to all Lenders.
12.10. DUE DILIGENCE AND NON-RELIANCE. Each Lender hereby
acknowledges and represents that it has, independently and without reliance upon
Agent or the other Lenders, and based upon such documents, information and
analyses as it has deemed appropriate, made its own credit analysis of each
Obligor and its own decision to enter into this Agreement, to fund the Revolver
Loans to be made by it hereunder, and each Lender has made such inquiries
concerning the DIP Financing Documents, the Collateral and each Obligor as such
Lender feels necessary and appropriate, and has taken such care on its own
behalf as would have been the case had it entered into the other DIP Financing
Documents without the intervention or participation of the other Lenders or
Agent. Each Lender hereby further acknowledges and represents that the other
Lenders and Agent have not made any representations or warranties to it
concerning any Obligor, any of the Collateral or with respect to the legality,
validity, sufficiency or enforceability of any of the DIP Financing Documents.
Each Lender also hereby acknowledges that it will, independently and without
reliance upon the other Lenders or Agent, and based upon such financial
statements, documents and information as it deems appropriate at the time,
continue to make and rely upon its own credit decisions in making Revolver Loans
and in taking or refraining to take any other action under this Agreement or any
of the other DIP Financing Documents. Except for notices, reports and other
information expressly required to be furnished to Lenders by Agent hereunder,
Agent shall not have any duty or responsibility to provide any Lender with any
notices, reports or certificates furnished to Agent by any Obligor or any credit
or other information concerning the affairs, financial condition, business or
Properties of any Obligor (or any of its Affiliates) which may come into
possession of Agent or any of Agent's Affiliates.
12.11. REPRESENTATIONS AND WARRANTIES OF LENDERS. By its
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execution of this Agreement, each Lender hereby represents and warrants to
Borrower and the other Lenders that it has the power to enter into and perform
its obligations under this Agreement and the other DIP Financing Documents, and
that it has taken all necessary and appropriate action to authorize its
execution and performance of this Agreement and the other DIP Financing
Documents will be binding upon it and the obligations imposed upon it herein or
therein will be enforceable against it in accordance with the respective terms
of such documents.
12.12. THE REQUIRED LENDERS. As to any provisions of this Agreement or the
other DIP Financing Documents under which action may or is required to be taken
upon direction or approval of the Required Lenders, the direction or approval of
the Required Lenders shall be binding upon each Lender to the same extent and
with the same effect as if each Lender had joined therein. Notwithstanding
anything to the contrary contained in this Agreement, Borrower shall not be
deemed to be a beneficiary of, or be entitled to enforce, sue upon or assert as
a defense to any of the Obligations, any provisions of this Agreement that
requires Agent or any Lender to act, or conditions their authority to act, upon
the direction or consent of the Required Lenders; and any action taken by Agent
or any Lender that requires the consent or direction of the Required Lenders as
a condition to taking such action shall, insofar as Borrower is concerned, be
presumed to have been taken with the requisite consent or direction of the
Required Lenders.
12.13. SEVERAL OBLIGATIONS. The obligations and commitments of each Lender
under this Agreement and the other DIP Financing Documents are several and
neither Agent nor any Lender shall be responsible for the performance by the
other Lenders of its obligations or commitments hereunder or thereunder.
Notwithstanding any liability of Lenders stated to be joint and several to third
Persons under any of the DIP Financing Documents, such liability shall be
shared, as among Lenders, Pro Rata according to the respective Commitments of
Lenders.
12.14. AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its obligation to
lend under this Agreement, the Revolver Loans made by it and each Note issued to
it, Agent shall have the same rights and powers hereunder and under the other
DIP Financing Documents as any other Lender or holder of a Note and may exercise
the same as though it were not performing the duties specified herein; and the
terms "Lenders," "Required Lenders," or any similar term shall, unless the
context clearly otherwise indicates, include Agent in its capacity as a Lender.
Agent and its Affiliates may each accept deposits, maintain deposits or credit
balances for, invest in, lend money to, act as trustee under indentures of,
serve as financial advisor to, and generally engage in any kind of business with
Borrower or any other Obligor, or any affiliate of Borrower or any other
Obligor, as if it were any other bank and without any duty to account therefor
(or for any fees or other consideration received in connection therewith) to the
other Lenders. Lenders acknowledge and agree that Revolver Advances may be made
by Agent for its sole account for administrative convenience, with periodic
weekly settlements made with the Lenders in accordance with this SECTION 12;
provided that until such periodic settlements have occurred, Agent shall be the
sole Lender for such Revolver Loans.
12.15. NO THIRD PARTY BENEFICIARIES. This SECTION 12 is not intended to
confer any rights or benefits upon Borrower or any other Person except Lenders
and Agent, and no Person
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(including Borrower) other than Lenders and Agent shall have any right to
enforce any of the provisions of this SECTION 12, except as expressly provided
in SECTION 12.17 hereof. As between Borrower and Agent, any action that Agent
may take or purport to take on behalf of Lenders under any of the DIP Financing
Documents shall be conclusively presumed to have been authorized and approved by
Lenders as herein provided.
12.16. NOTICE OF TRANSFER. Agent may deem and treat a Lender party to this
Agreement as the owner of such Lender's portion of the Revolver Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Lender has been received by Agent.
12.17. REPLACEMENT OF CERTAIN LENDERS. If a Lender ("Affected Lender")
shall have failed to fund its Pro Rata share of any Revolver Loan requested by
Borrower which such Lender is obligated to fund under the terms of this
Agreement and which such failure has not been cured, then, in any such case and
in addition to any other rights and remedies that Agent, any other Lender or any
Borrower may have against such Affected Lender, Borrower or Agent may make
written demand on such Affected Lender (with a copy to Agent in the case of a
demand by Borrower and a copy to Borrower in the case of a demand by Agent) for
the Affected Lender to assign, and such Affected Lender shall assign pursuant to
one or more duly executed Assignment and Acceptances within 5 Business Days
after the date of such demand, to one or more Lenders willing to accept such
assignment or assignments, or to one or more Eligible Assignees designated by
Agent, all of such Affected Lender's rights and obligations under this Agreement
(including its Commitments and all Revolver Loans owing to it) in accordance
with SECTION 13 hereof. Agent is hereby irrevocably authorized to execute one or
more Assignment and Acceptances as attorney-in-fact for any Affected Lender
which fails or refuses to execute and deliver the same within 5 Business Days
after the date of such demand. The Affected Lender shall be entitled to receive,
in cash and concurrently with execution and delivery of each such Assignment and
Acceptance, all amounts owed to the Affected Lender hereunder or under any other
DIP Financing Document, including the aggregate outstanding principal amount of
the Revolver Loans owed to such Lender, together with accrued interest thereon
through the date of such assignment. Upon the replacement of any Affected Lender
pursuant to this SECTION 12.17, such Affected Lender shall cease to have any
participation in, entitlement to, or other right to share in the Liens of Agent
in any Collateral and such Affected Lender shall have no further liability to
Agent, any Lender or any other Person under any of the DIP Financing Documents
(except as provided in SECTION 12.6 hereof as to events or transactions which
occur prior to the replacement of such Affected Lender), including any
commitment to make Loans.
12.18. REMITTANCE OF PAYMENTS AND COLLECTIONS.
12.18.1. All payments by any Lender to Agent shall be made not later
than the time set forth elsewhere in this Agreement on the Business Day such
payment is due; PROVIDED, HOWEVER, that if such payment is due on demand by
Agent and such demand is made on the paying Lender after 11:00 a.m. on such
Business Day, then payment shall be made by 11:00 a.m. on the next Business Day.
Payment by Agent to any Lender shall be made by wire transfer,
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promptly following Agent's receipt of funds for the account of such Lender and
in the type of funds received by Agent; PROVIDED, HOWEVER, that if Agent
receives such funds at or prior to 12:00 noon, Agent shall pay such funds to
such Lender by 2:00 p.m. on such Business Day, but if Agent receives such funds
after 12:00 noon, Agent shall pay such funds to such Lender by 2:00 p.m. on the
next Business Day.
12.18.2. With respect to the payment of any funds from Agent to a
Lender or from a Lender to Agent, the party failing to make Full Payment when
due pursuant to the terms hereof shall, on demand by the other party, pay such
amount together with interest thereon at the Federal Funds Rate. In no event
shall Borrower be entitled to receive any credit for any interest paid by Agent
to any Lender, or by any Lender to Agent, at the Federal Funds Rate as provided
herein.
12.18.3. If Agent pays any amount to a Lender in the belief or
expectation that a related payment has been or will be received by Agent from an
Obligor and such related payment is not received by Agent, then Agent shall be
entitled to recover such amount from each Lender that receives such amount. If
Agent determines at any time that any amount received by it under this Agreement
or any of the other DIP Financing Documents must be returned to an Obligor or
paid to any other Person pursuant to any Applicable Law, court order or
otherwise, then, notwithstanding any other term or condition of this Agreement
or any of the other DIP Financing Documents, Agent shall not be required to
distribute such amount to any Lender.
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
13.1. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Borrower, Agent and Lenders and their respective
successors and assigns (which, in the case of Agent, shall include any successor
Agent appointed pursuant to SECTION 12.8 hereof), except that (i) Borrower shall
not have the right to assign its rights or delegate performance of any of its
obligations under any of the DIP Financing Documents and (ii) any assignment by
any Lender must be made in compliance with SECTION 13.3 hereof. Agent may treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until such payee complies with SECTION 13.3 in the case of an assignment thereof
or, in the case of any other transfer, a written notice of the transfer is filed
with Agent. Any assignee or transferee of a Note agrees by acceptance thereof to
be bound by all the terms and provisions of the DIP Financing Documents. Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of a Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
13.2. PARTICIPATIONS.
13.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
ordinary course of its business and in accordance with Applicable Law, at any
time sell to one or more
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banks or other financial institutions (each a "Participant") a participating
interest in any of the Obligations owing to such Lender, any Commitment of such
Lender or any other interest of such Lender under any of the DIP Financing
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the DIP Financing Documents
shall remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any Note for all purposes under the DIP Financing Documents, all
amounts payable by Borrower under this Agreement and any of the Notes shall be
determined as if such Lender had not sold such participating interests, and
Borrower and Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under the DIP Financing
Documents. If a Lender sells a participation to a Person other than an Affiliate
of such Lender, then such Lender shall give prompt written notice thereof to
Borrower and the other Lenders.
13.2.2. VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the DIP Financing Documents other than an amendment,
modification or waiver with respect to any Loans or Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the stated interest rate or the stated rates at which fees are payable
with respect to any such Loan or Commitment, postpones the Commitment
Termination Date, or any date fixed for any regularly scheduled payment of
interest or fees on such Loan or Commitment, or releases from liability Borrower
or any Guarantor or releases any substantial portion of any of the Collateral.
13.2.3. BENEFIT OF SET-OFF. Borrower agrees that each Participant
shall be deemed to have the right of set-off provided in SECTION 11.4 hereof in
respect of its participating interest in amounts owing under the DIP Financing
Documents to the same extent and subject to the same requirements under this
Agreement (including SECTION 12.5) as if the amount of its participating
interest were owing directly to it as a Lender under the DIP Financing
Documents, provided that each Lender shall retain the right of set-off provided
in SECTION 11.4 hereof with respect to the amount of participating interests
sold to each Participant. Lenders agree to share with each Participant, and each
Participant by exercising the right of set-off provided in SECTION 11.4 agrees
to share with each Lender, any amount received pursuant to the exercise of its
right of set-off, such amounts to be shared in accordance with SECTION 12.5
hereof as if each Participant were a Lender.
13.2.4. NOTICES. Each Lender shall be solely responsible for
notifying its Participants of any matters relating to the DIP Financing
Documents to the extent that any such notice may be required, and neither Agent
nor any other Lender shall have any obligation, duty or liability to any
Participant of any other Lender. Without limiting the generality of the
foregoing, neither Agent nor any Lender shall have any obligation to give
notices or to provide documents or information to a Participant of another
Lender.
13.3. ASSIGNMENTS.
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13.3.1. PERMITTED ASSIGNMENTS. Subject to its giving at least 2
Business Days notice to Agent, any Lender may, in accordance with Applicable
Law, at any time assign to any Eligible Assignee all or any part of its rights
and obligations under the DIP Financing Documents, so long as (i) each
assignment is of a constant, and not a varying, ratable percentage of all of the
transferor Lender's rights and obligations under the DIP Financing Documents
with respect to the Revolver Loans and, in the case of a partial assignment, is
in a minimum principal amount of $1,000,000 and integral multiples of $500,000
in excess of that amount; (ii) except in the case of an assignment in whole of a
Lender's rights and obligations under the DIP Financing Documents or an
assignment by one original signatory to this Agreement to another such
signatory, immediately after giving effect to any assignment, the aggregate
amount of the Commitments retained by the transferor Lender shall in no event be
less than $500,000; and (iii) the parties to each such assignment shall execute
and deliver to Agent, for its acceptance and recording, an Assignment and
Acceptance. No assignment shall become effective until such time as notice
thereof is given to Borrower and Agent in substantially the form of EXHIBIT E
attached hereto. Nothing contained herein shall limit in any way the right of
Lenders to assign all or any portion of the Revolver Loans owing to it to any
Federal Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors and any Operating Circular
issued by such Federal Reserve Bank, provided that any payment in respect of
such assigned Revolver Loans made by Borrower to the assigning Lender in
accordance with the terms of this Agreement shall satisfy Borrower's obligations
hereunder in respect of such assigned Revolver Loans to the extent of such
payment, but no such assignment shall release the assigning Lender from its
obligations hereunder. Each assignee shall be deemed to have consented and be
subject to, and to be bound by the terms of, all of the DIP Financing Documents.
13.3.2. EFFECT; EFFECTIVE DATE. Upon (i) delivery to Agent of a
notice of assignment substantially in the form attached as EXHIBIT E hereto,
together with any consents required by SECTION 13.3. and (ii) payment of a
$5,000 fee to Agent for processing any assignment to an Eligible Assignee that
is not an Affiliate of the transferor Lender, such assignment shall become
effective on the effective date specified in such notice of assignment. On and
after the effective date of such assignment, such Eligible Assignee shall for
all purposes be a Lender party to the Agreement and any other DIP Financing
Document executed by Lenders and shall have all the rights and obligations of
Lenders under the DIP Financing Documents to the same extent as if it were an
original party thereto, and no further consent or action by Borrower, Lenders or
Agent shall be required to release the transferor Lender with respect to the
Commitment (or portion thereof) of such Lender and Obligations assigned to such
Eligible Assignee. Upon the consummation of any assignment to an Eligible
Assignee pursuant to this SECTION 13.3.2, the transferor Lender, Agent and
Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Eligible Assignee, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment. The transferring Lender shall continue to be entitled to the
benefits of all indemnities applicable to the period prior to the effective date
of the assignment.
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13.3.3. DISSEMINATION OF INFORMATION. Borrower authorizes each
Lender and Agent to disclose to any Participant, any Eligible Assignee or any
other Person acquiring an interest in the DIP Financing Documents by operation
of law (each a "Transferee"), and any prospective Transferee, any and all
information in Agent's or such Lender's possession concerning Borrower, the
Subsidiaries of Borrower or the Collateral, subject to appropriate
confidentiality undertakings on the part of such Transferee.
SECTION 14. MISCELLANEOUS
14.1. POWER OF ATTORNEY. Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
designee, may, without notice to Borrower and in either Borrower's or Agent's
name, but at the cost and expense of Borrower:
14.1.1. At such time or times as Agent or said designee, in its sole
discretion, may determine, endorse Borrower's name on any Payment Item or
proceeds of the Collateral which come into the possession of Agent or under
Agent's control.
14.1.2. At any time that an Event of Default exists: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Agent
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of Lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Agent may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to any Accounts or Inventory of any Obligor and
any other Collateral; (ix) use Borrower's stationery and sign the name of
Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts, Inventory
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Agent's
determination, to fulfill Borrower's obligations under this Agreement.
14.2. GENERAL INDEMNITY. Borrower hereby agrees to indemnify and defend
the
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Indemnitees and to hold the Indemnitees harmless from and against any Claim ever
suffered or incurred by any of the Indemnitees arising out of or related to this
Agreement or any of the other DIP Financing Documents, the performance by Agent
or Lenders of their duties or the exercise of any of their rights or remedies
hereunder, or the result of Borrower's failure to observe, perform or discharge
any of Borrower's duties hereunder. Borrower shall also indemnify and defend the
Indemnitees against and save the Indemnitees harmless from all Claims of any
Person arising out of, related to, or with respect to any transactions entered
into pursuant to this Agreement or Agent's Lien arising from the DIP Financing
Documents upon the Collateral. Without limiting the generality of the foregoing,
these indemnities shall extend to any Claims asserted against any of the
Indemnitees by any Person under any Environmental Laws or similar laws by reason
of Borrower's or any other Person's failure to comply with laws applicable to
solid or hazardous waste materials or other toxic substances. Additionally, if
any Taxes (excluding Taxes imposed upon or measured solely by the net income of
Agent and Lenders, but including, any intangibles tax, stamp tax, recording tax
or franchise tax) shall be payable by Agent, Lender or any Obligor on account of
the execution or delivery of this Agreement, or the execution, delivery,
issuance or recording of any of the other DIP Financing Documents, or the
creation or repayment of any of the Obligations hereunder, by reason of any
Applicable Law now or hereafter in effect, Borrower shall pay (or will promptly
reimburse Agent and Lenders for the payment of) all such Taxes, including any
interest and penalties thereon, and will indemnify and hold Indemnitees harmless
from and against liability in connection therewith. The foregoing indemnities
shall not apply to protect any of the Indemnitees for the consequences of their
own gross negligence or willful misconduct.
14.3. SURVIVAL OF ALL INDEMNITIES. Notwithstanding anything to the
contrary in this Agreement or any of the other DIP Financing Documents, the
obligation of Borrower and each Lender with respect to each indemnity given by
it in this Agreement, whether given by Borrower to Agent Indemnitees, Lender
Indemnitees or Fleet Indemnitees or by any Lender to any Agent Indemnitees or
Fleet Indemnitees, shall survive the Full Payment of the Obligations and the
termination of any of the Commitments.
14.4. INDULGENCES NOT WAIVERS. Agent's or any Lender's failure at any time
or times hereafter, to require strict performance by Borrower of any provision
of this Agreement shall not waive, affect or diminish any right of Agent or any
Lender thereafter to demand strict compliance and performance therewith.
14.5. MODIFICATION OF AGREEMENT. This Agreement may not be modified,
altered or amended, except by an agreement in writing signed by Borrower, Agent
and Lenders (or, where otherwise allowed by SECTION 12 hereof, the Required
Lenders); PROVIDED, HOWEVER, that no consent, written or otherwise, of Borrower
shall be necessary or required in connection with any amendment of any of the
provisions of SECTIONS 4.5 OR 12 (other than SECTION 12.17) or any other
provision of this Agreement that affects only the rights, duties and
responsibilities of Lenders and Agent as among themselves so long as no such
amendment imposes any additional obligations on Borrower.
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14.6. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
14.7. CUMULATIVE EFFECT; CONFLICT OF TERMS. To the fullest extent
permitted by Applicable Law, the provisions of the Other Agreements and the
Security Documents are hereby made cumulative with the provisions of this
Agreement. Except as otherwise provided in any of the other DIP Financing
Documents by specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other DIP Financing Documents,
the provision contained in this Agreement shall govern and control.
14.8. EXECUTION IN COUNTERPARTS. This Agreement and any amendments hereto
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument.
14.9. AGENT'S OR REQUIRED LENDERS' CONSENT. Whenever Agent's, Lenders' or
Required Lenders' consent is required to be obtained under this Agreement or any
of the other DIP Financing Documents as a condition to any action, inaction,
condition or event, Agent and each Lender shall be authorized to give or
withhold its consent in its sole and absolute discretion and to condition its
consent upon the giving of additional collateral security for the Obligations,
the payment of money or any other matter.
14.10. NOTICES. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal delivery against receipt or by telecopier or
other facsimile transmission and shall be deemed to have been validly served,
given or delivered when delivered against receipt or 3 Business Days after
deposit in the U.S. mail, certified mail postage prepaid, or, in the case of
facsimile transmission, when received (if on a Business Day and, if not received
on a Business Day, then on the next Business Day after receipt) at the office
where the noticed party's telecopier is located, in each case addressed to the
noticed party at the address shown for such party on the signature page hereof
or, in the case of a Person who becomes a Lender after the date hereof, at the
address shown on the Assignment and Acceptance by which such Person became a
Lender. Notwithstanding the foregoing, no notice to or upon Agent pursuant to
SECTIONS 3.1 OR 5.2.2 shall be effective until after actually received by the
individual to whose attention at Agent such notice is required to be sent. Any
written notice or demand that is not sent in conformity with the provisions
hereof shall nevertheless be effective on the date that such notice is actually
received by the noticed party.
14.11. PERFORMANCE OF BORROWER'S OBLIGATIONS. If Borrower shall fail to
discharge any covenant, duty or obligation hereunder or under any of the other
DIP Financing Documents, Agent may, in its sole discretion at any time or from
time to time, for Borrower's account and at
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Borrower's expense, pay any amount or do any act required of Borrower hereunder
or under any of the DIP Financing Documents or otherwise lawfully requested by
Agent to enforce any of the DIP Financing Documents or Obligations, preserve,
protect, insure or maintain any of the Collateral, or preserve, defend, protect
or maintain the validity or priority of Agent's Liens in any of the Collateral,
including the payment of any judgement against Borrower, any insurance premium,
any warehouse charge, any finishing or processing charge, any landlord claim,
any other Lien upon or with respect to any of the Collateral. All payments that
Agent may make under this Section and all out-of-pocket costs and expenses
(including Extraordinary Expenses) that Agent pays or incurs in connection with
any action taken by it hereunder shall be reimbursed to Agent by Borrower on
demand with interest from the date such payment is made or such costs or
expenses are incurred to the date of payment thereof at the Default Rate
applicable for Revolver Loans. Any payment made or other action taken by Agent
under this Section shall be without prejudice to any right to assert, and
without waiver of, an Event of Default hereunder and to proceed thereafter as
provided herein or in any of the other DIP Financing Documents.
14.12. TIME OF ESSENCE. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
14.13. ENTIRE AGREEMENT; APPENDIX A, EXHIBITS AND SCHEDULES. This
Agreement and the other DIP Financing Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written. Appendix A, each of
the Exhibits and each of the Schedules attached hereto are incorporated into
this Agreement and by this reference made a part hereof.
14.14. INTERPRETATION. No provision of this Agreement or any of the other
DIP Financing Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having, or being deemed to have, structured,
drafted or dictated such provision.
14.15. OBLIGATIONS OF LENDERS SEVERAL. The obligations of each Lender
hereunder are several, and no Lender shall be responsible for the obligations or
Commitment of any other Lender. Nothing contained in this Agreement and no
action taken by Lenders pursuant hereto shall be deemed to constitute Lenders to
be a partnership, association, joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled, to the extent not otherwise
restricted hereunder, to protect and enforce its rights arising out of this
Agreement and any of the other DIP Financing Documents and it shall not be
necessary for Agent or any other Lender to be joined as an additional party in
any proceeding for such purpose.
14.16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
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14.17. WAIVERS BY BORROWER. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, BORROWER WAIVES (I) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND EACH LENDER
HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO ANY OF THE DIP FINANCING DOCUMENTS, THE OBLIGATIONS
OR THE COLLATERAL; (II) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE,
SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY AGENT ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER AGENT MAY DO IN THIS REGARD; (III) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO EXERCISE ANY OF
AGENT'S REMEDIES; (IV) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (V) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND LENDER'S ENTERING
INTO THIS AGREEMENT AND THAT AGENT AND LENDERS ARE RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT IN WHICH SUCH LITIGATION IS BROUGHT.
14.18. LIMITED FORBEARANCE. For so long as no Event of Default exists,
Agent and Lenders will forbear from exercising any rights and remedies against
the Subsidiaries and any of the assets of the Subsidiaries with respect to any
Pre-Petition Debt or the Obligations.
14.19 NON-APPLICATION OF CHAPTER 346 OF TEXAS FINANCE CODE. The provisions
of Chapter 346 of the Texas Finance Code are specifically declared by the
parties hereto not to be applicable to this Agreement or any of the other DIP
Financing Documents or to the transactions contemplated hereby.
14.20 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, THE FINANCING ORDERS
AND THE OTHER DIP FINANCING DOCUMENTS REFERRED TO HEREIN REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO.
[REMAINDER OF PAGE IS BLANK. SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year specified at the beginning of this Agreement.
BORROWER:
--------
DRYPERS CORPORATION
By:
---------------------------------
Title: Executive Vice President and
Chief Financial Officer
Address:
5300 Memorial, Suite 900
Houston, Texas 77007
Attention: Brian Fontana
Telecopier No.: 713-803-5554
LENDERS:
FLEET CAPITAL CORPORATION
Commitment: $16,238,320
By:__________________________________
Pro Rata Share: 64.95328%
Title:____________________________
Lending Office:
5950 Sherry Lane, Suite 300
Dallas, Texas 75225
Attention: Mike Wills
Telecopier No.: (214) 706-7066
THE CIT GROUP/BUSINESS
CREDIT, INC.
Commitment: $8,761,680.00 By:_________________________________
Pro Rata Share: 35.04672%
Title:____________________________
Lending Office:
Two Lincoln Center
5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
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Attention: Alan Schnacke
Telecopier No.: (972) 455-1690
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AGENT:
FLEET CAPITAL CORPORATION,
as Agent
By:_________________________________
Title:______________________________
Address:
5950 Sherry Lane, Suite 300
Dallas, Texas 75225
Attention: Mike Wills
Telecopier No.: (214) 706-7066
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APPENDIX A
GENERAL DEFINITIONS
When used in the Post-Petition Loan and Security Agreement dated October
11, 2000 (as at any time amended, the "Agreement"), by and among DRYPERS
CORPORATION ("Borrower"), a Delaware corporation and a Chapter 11
debtor-in-possession; each financial institution listed on the signature pages
thereto and its successors and assigns which become "Lenders" as provided
therein (such financial institutions and its successors and assigns referred to
collectively herein as "Lenders," and individually as a "Lender"), and FLEET
CAPITAL CORPORATION, in its capacity as collateral and administrative agent for
itself and the Lenders (in such capacity, "Agent"), the following terms shall
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
ACCEPTABLE PLAN - a Reorganization Plan which provides for Full
Payment of all Obligations and any then outstanding Pre-Petition Debt on
the effective date of such Reorganization Plan, provides for an effective
date no later than 45 days after the date of entry of the Confirmation
Order with respect to such Reorganization Plan, and provides for a full
and complete release of any and all Claims existing as of the Petition
Date that either Borrower or the Estate might have or assert against
Pre-Petition Agent or any Pre-Petition Lender, or which is otherwise
acceptable to Agent and each Lender, in their sole and absolute
discretion.
ACCOUNT - shall have the meaning ascribed to "account" in the UCC
and shall include a right to payment for goods sold or leased or for
services rendered that is not evidenced by an Instrument or Chattel Paper,
whether or not any such right to payment has been earned by performance.
ACCOUNT DEBTOR - any Person who is or may become obligated under or
on account of an Account.
ACCOUNTS FORMULA AMOUNT - on any date of determination thereof, an
amount equal to 75% of the net amount of Eligible Accounts on such date.
As used herein, the phrase "net amount of Eligible Accounts" shall mean
the face amount of such Accounts on any date less any and all returns,
rebates, discounts (which may, at Agent's option, be calculated on
shortest terms), credits, allowances or Taxes (including sales, excise or
other Taxes) at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with, or any interest
accrued on the amount of, such Accounts at such date; PROVIDED THAT to the
extent Dilution exceeds 18% for any month, the percentage of net Eligible
Accounts permitted by this formula for subsequent months shall decrease by
1% for each percentage point that Dilution exceeds 15%, but if
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thereafter Dilution is equal to or less than 15% for three consecutive
months, the Accounts Formula Amount shall increase to the prior amount of
75% of the net amount of Eligible Accounts on such date.
ADDITIONAL LIQUIDITY AMOUNT - during the period from the date of the
Agreement through December 10, 2000, an amount equal to, on any date, the
lesser of (i) $1,500,000 or (ii) 10% of the sum of the Accounts Formula
Amount and Inventory Formula Amount on such date, and after December 10,
2000, an amount equal to (i) zero or (ii) such amount as Agent may
determine in its sole discretion.
AFFILIATE - a Person (other than a Subsidiary): (i) which directly
or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, another Person; (ii) which
beneficially owns or holds 10% or more of any class of the Equity
Interests of another Person; or (iii) 10% or more of the Equity Interests
of which is beneficially owned or held by another Person or a Subsidiary
of another Person.
AGENT INDEMNITEES - Agent in its capacity as collateral and
administrative agent for Lenders under the DIP Financing Documents and all
of Agent's officers, directors and agents.
AGENT PROFESSIONALS - attorneys, accountants, appraisers, business
valuation experts, environmental engineers or consultants, turnaround
consultants and other professionals or experts retained by Agent.
AGREEMENT - the Post-Petition Loan and Security Agreement referred
to in the first sentence of this Appendix A, all Exhibits and Schedules
thereto and this Appendix A.
APPLICABLE LAW - all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant or DIP Financing Documents in
question, including all applicable common law and equitable principles;
all provisions of all applicable state and federal constitutions,
statutes, rules, regulations and orders of governmental bodies; and
orders, judgments and decrees of all courts and arbitrators.
ASSIGNMENT AND ACCEPTANCE - an assignment and acceptance entered
into by a Lender and an Eligible Assignee and accepted by Agent, in the
form of EXHIBIT D.
AVAILABILITY - on any date, an amount equal to the difference
derived when the sum of the principal amount of Revolver Loans then
outstanding (including any amounts that Agent or Lenders may have paid for
the account of Borrower pursuant to any of the DIP Financing Documents and
that have not been reimbursed by Borrower) is subtracted from the
Borrowing Base on such date. If the amount outstanding is equal to or
greater than the Borrowing Base, Availability is 0.
AVAILABILITY RESERVE - on any date of determination thereof, an
amount equal to the sum of the following (without duplication): (i) the
amount of the Revolving Credit Advances under the Pre-Petition Debt
outstanding as of the opening of business on such
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date; (ii) any amount that Borrower is obligated to pay pursuant to the
provisions of any of the DIP Financing Documents that Agent or Lenders
elect to pay for the account of Borrower in accordance with authority
contained in any of the DIP Financing Documents and that has not been
funded through a Revolver Loan; (iii) the Professional Expense Reserve;
(iv) the Letter of Credit Reserve; (v) the P&G Settlement Reserve; (vi)
the Inventory Reserve; (vii) the P&G Quarterly Reserve; (xiii) such
additional reserves, if any, as Agent may, in its sole credit judgment,
determine to be appropriate from time to time; and (ix) for so long as any
Event of Default exists, such additional reserves as Agent, in its sole
and absolute discretion, may elect to impose from time to time, without
waiving any such Event of Default or Agent's entitlement to accelerate the
maturity of the Obligations as a consequence thereof. Notwithstanding the
foregoing, (a) to the extent the amounts referenced in the P&G Settlement
Reserve are to be paid to P&G, the P&G Settlement Reserve shall be
released in order to permit such payment, (b) to the extent the amounts
referenced in the P&G Quarterly Reserve are to be paid to P&G, the P&G
Quarterly Reserve shall be released in order to permit such payment and
(c) to the extent the amounts referenced in clause (i) above are to be
paid to Pre-Petition Lenders, the Availability Reserve in clause (i) shall
be released in order to permit such payment.
AVERAGE LOAN BALANCE - for any period, the amount obtained by adding
the aggregate of unpaid balance of Loans at the end of each day for the
period in question and by dividing such sum by the number of days in such
period.
AVOIDANCE CLAIM - any claim that could be asserted by or on behalf
of Borrower or the Estate against a Person under 11 U.S.C. ss.ss. 544,
546, 547, 548, 549, 550 or 553.
BANK - Fleet National Bank.
BANKRUPTCY CODE - title 11 of the United States Code.
BASE RATE - the rate of interest announced or quoted by Bank from
time to time as its prime rate, which rate might not be the lowest rate
charged by Bank; and, if such prime rate for commercial loans is
discontinued by Bank as a standard, a comparable reference rate designated
by Bank as a substitute therefor shall be the Base Rate.
BOARD OF GOVERNORS - the Board of Governors of the Federal Reserve
Board.
BORROWING - a borrowing consisting of Revolver Loans made on the
same day by Lenders.
BORROWING BASE - on any date of determination thereof, an amount
equal to the lesser of: (a) the aggregate amount of the Commitments on
such date MINUS (i) the aggregate unpaid Revolving Credit Advances and
(ii) the aggregate undrawn amount of the Letters of Credit under the
Pre-Petition Debt or (b) an amount equal to (i) the sum of the Accounts
Formula Amount PLUS the Inventory Formula Amount PLUS the Additional
Liquidity Amount on such date MINUS (ii) the Availability Reserve on such
date.
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BORROWING BASE CERTIFICATE - a certificate, in the form requested by
Agent, by which Borrower shall certify to Agent and Lenders, with such
frequency as Agent may request, the amount of the Borrowing Base as of the
date of the certificate and the calculation of such amount.
BUDGETED EXPENSES - expenses permitted to be paid by Borrower in the
amounts and for the purposes set forth in the Budgets.
BUDGETS - collectively, the Interim Budget and the Permanent Budget.
BUSINESS DAY - any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of Texas or is a day on
which banking institutions located in such state are closed.
CAPITAL EXPENDITURE LOAN - a collective reference to outstanding
loans under the capital expenditure line of credit as set forth in the
Pre-Petition Loan Documents.
CAPITAL EXPENDITURES - expenditures made for the acquisition of any
fixed assets or improvements, replacements, substitutions or additions
thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations.
CAPITALIZED LEASE OBLIGATION - any Debt represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
CASH COLLATERAL - cash or Cash Equivalents, and any interest earned
thereon, that is deposited with Agent in accordance with the Agreement for
the Pro Rata benefit of Lenders as security for the Obligations to the
extent provided in the Agreement.
CASH COLLATERAL ACCOUNT - a demand deposit, money market or other
account established by Agent at such financial institution as Agent may
select in its discretion, which account shall be in Agent's name and
subject to Agent's Liens for the Pro Rata benefit of Lenders.
CASH EQUIVALENTS - (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by
the full faith and credit of the United States government having
maturities of not more than 12 months from the date of acquisition; (ii)
domestic certificates of deposit and time deposits having maturities of
not more than 12 months from the date of acquisition, bankers' acceptances
having maturities of not more than 12 months from the date of acquisition
and overnight bank deposits, in each case issued by any commercial bank
organized under the laws of the United States, any state thereof or the
District of Columbia, which at the time of acquisition are rated A-1 (or
better) by S&P or P-1 (or better) by Moody's, and (unless issued by a
Lender) not
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subject to offset rights in favor of such bank arising from any banking
relationship with such bank; (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in
clauses (i) and (ii) entered into with any financial institution meeting
the qualifications specified in clause (ii) above; and (iv) commercial
paper having at the time of investment therein or a contractual commitment
to invest therein a rating of A-1 (or better) by S&P or P-1 (or better) by
Moody's, and having a maturity within 9 months after the date of
acquisition thereof.
CASH MANAGEMENT AGREEMENTS - any agreement entered into from time to
time between Borrower or any of its Subsidiaries, on the one hand, and
Bank or any of its Affiliates or any other banking or financial
institution, on the other hand, in connection with cash management
services for operating, collection, payroll and trust accounts of Borrower
or its Subsidiaries provided by such banking or financial institution,
including automatic clearinghouse services, controlled disbursement
services, electronic funds transfer services, information reporting
services, lockbox services, stop payment services and wire transfer
services.
CERCLA - the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C.ss. 9601 et seq. and its implementing regulations.
CHAPTER 11 CASE - as defined in the Recitals hereto.
CHATTEL PAPER - shall have the meaning ascribed to the term "chattel
paper" in the UCC.
CLAIMS - any and all claims, demands, liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, awards, remedial
response costs, expenses or disbursements of any kind or nature whatsoever
(including reasonable attorneys', accountants', consultants' or
paralegals' fees and expenses), whether arising under or in connection
with the DIP Financing Documents, any Applicable Law (including any
Environmental Laws) or otherwise, that may now or hereafter be suffered or
incurred by a Person and whether suffered or incurred in or as a result of
any investigation, litigation, arbitration or other judicial or
non-judicial proceeding or any appeals related thereto.
CLOSING DATE - the date on which all of the conditions precedent in
SECTION 10.1 of the Agreement are satisfied and the initial Revolver Loans
are made under the Agreement.
COLLATERAL - all of the Property and interests in Property of
Borrower that are described in SECTION 6 of the Agreement, and all other
Property and interests in Property that now or hereafter secure the
payment and performance of any of the Obligations, whether or not such
Property or interest in Property was in existence on or acquired by
Borrower or any other Obligor prior to or after the Petition Date.
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COMMITMENT - at any date for any Lender, the obligation of such
Lender to make Revolver Loans pursuant to the terms and conditions of the
Agreement, which shall not exceed the principal amount set forth opposite
such Lender's name under the heading "Commitment" on the signature pages
hereof or the signature page of the Assignment and Acceptance by which it
became a Lender, as modified from time to time pursuant to the terms of
the Agreement or to give effect to any applicable Assignment and
Acceptance; and "Commitments" means the aggregate principal amount of the
Commitments of all Lenders, the maximum amount of which shall be
$25,000,000.
COMMITMENT TERMINATION DATE - the date that is the soonest to occur
of: (i) the last day of the DIP Term, (ii) the effective date of any
Acceptable Plan or the date of entry of a Confirmation Order with respect
to any other Reorganization Plan, (iii) the effective date of any sale of
all or a substantial part of the Collateral, (iv) the date Agent
terminates the DIP Facility pursuant to SECTION 5.2.1 of the Agreement or
(v) the date on which Borrower elects to terminate the Agreement pursuant
to SECTION 5.2.2 of the Agreement.
COMMITTEE - a creditors' or equity security holders' committee
appointed in the Chapter 11 Case by the U. S. Trustee.
COMPLIANCE CERTIFICATE - a Compliance Certificate to be provided by
Borrower to Agent in accordance with, and in the form annexed as EXHIBIT C
to, the Agreement, and the supporting schedules to be annexed thereto.
CONFIRMATION ORDER - an order entered by the Court confirming a
Reorganization Plan.
CONTINGENT OBLIGATION - with respect to any Person, any obligation
of such Person arising from any guaranty, indemnity or other assurance of
payment or performance of any Debt, lease, dividend or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including (i) the direct or
indirect guaranty endorsement (other than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale
with recourse by such Person of the obligation of a primary obligor, (ii)
the obligation to make take-or-pay or similar payments, if required,
regardless of non-performance by any other party or parties to an
agreement, (iii) any obligation of such Person, whether or not contingent,
(A) to purchase any such primary obligation or any Property constituting
direct or indirect security therefor, (B) to advance or supply funds (1)
for the purchase or payment of any such primary obligations or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor,
(C) to purchase Property, Securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (D)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; PROVIDED, HOWEVER,
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that the term "Contingent Obligation" shall not include any product
warranties extended in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated
or determinable amount of the primary obligation with respect to which
such Contingent Obligation is made (or, if less, the maximum amount of
such primary obligation for which such Person may be liable pursuant to
the terms of the instrument evidencing such Contingent Obligation) or, if
not stated or determinable, the maximum reasonably anticipated liability
with respect thereto (assuming such Person is required to perform
thereunder), as determined by such Person in good faith.
COURT - as defined in the Recitals to the Agreement.
CRITICAL VENDOR - a Person who is a supplier of essential goods or
services to Borrower and whose continued supply of such goods and services
is reasonably determined by Borrower (with Agent's consent, not to be
unreasonably withheld) to be essential to the successful reorganization of
Borrower's business.
CURRENT ASSETS - at any date, the amount at which all of the current
assets of a Person would be properly classified as current assets shown on
a balance sheet at such date, in accordance with GAAP, except that amounts
due from Affiliates and investments in Affiliates shall be excluded
therefrom.
DEBT - as applied to a Person means, without duplication: (i) all
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such
Person on the date as of which Debt is to be determined, including
Capitalized Lease Obligations; (ii) all obligations of other Persons which
such Person has guaranteed; (iii) all reimbursement obligations in
connection with letters of credit or letter of credit guaranties issued
for the account of such Person; and (iv) in the case of Borrower (without
duplication), the Pre-Petition Debt and the Obligations.
DEFAULT - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
DEFAULT RATE - a variable rate per annum which, on any date, is
equal to the Base Rate in effect on such date PLUS 3%.
DEPOSIT ACCOUNT - a demand, time, savings, passbook, money market or
other depository account, or a certificate of deposit, maintained by
Borrower with any bank, savings and loan association, credit union or
other depository institution.
DILUTION - an amount (expressed as a percentage) equal to (i)
non-cash credits against Accounts divided by (ii) the sum of (a) cash
collections against Accounts plus (b) non-cash credits against Accounts.
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DIP FACILITY - the $25,000,000 credit facility established by Agent
and Lenders in favor of Borrower under SECTION 1 of the Agreement and
pursuant to which the Commitments are made available by Lenders.
DIP FINANCING DOCUMENTS - the Agreement and the Security Documents
and any and all other agreements, instruments and documents now or
hereafter executed by Borrower in favor of Agent and Lenders with respect
to any of the transactions contemplated by the Agreement.
DIP MOTION - the motion of Borrower for approval of the financing
under the DIP Facility pursuant to the Agreement.
DIP TERM - a period commencing on the date of entry of the Interim
Financing Order and ending on the earlier of (i) April 30, 2001 or (ii)
the Full Payment of all the Pre-Petition Debt and the Obligations from the
proceeds of a Foreign Asset Sale.
DISTRIBUTION - in respect of any entity, (i) any payment of any
dividends or other distributions on Equity Interests of the entity (except
distributions in such Equity Interests) and (ii) any purchase, redemption
or other acquisition or retirement for value of any Equity Interests of
the entity or any Affiliate of the entity unless made contemporaneously
from the Net Proceeds of the sale of Equity Interests.
DOCUMENT - shall have the meaning ascribed to the term "document" in
the UCC.
DOLLARS AND THE SIGN $ - lawful money of the United States of
America.
DOMINION ACCOUNT - a special account of Agent established by
Borrower at a bank selected by Borrower, but acceptable to Agent and
Lenders in their discretion, and over which Agent shall have sole and
exclusive access and control for withdrawal purposes.
ELIGIBLE ACCOUNT - an Account that arises in the Ordinary Course of
Business of Borrower from the sale of goods or rendition of services, is
payable in Dollars, is subject to Agent's duly perfected Lien and is
deemed by Agent, in its sole credit judgment, to be an Eligible Account.
Without limiting the generality of the foregoing, no Account shall be an
Eligible Account if: (i) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person controlled by an
Affiliate of Borrower; (ii) it is unpaid for more than 60 days after the
original due date shown on the invoice; (iii) it is due or unpaid more
than 90 days after the original invoice date; (iv) 20% or more of the
Accounts from the Account Debtor are not deemed Eligible Accounts
hereunder; (v) the total unpaid Accounts of the Account Debtor exceed 15%
of the net amount of all Eligible Accounts or exceeds a credit limit
established by Agent for such Account Debtor, in each case to the extent
of such excess; (vi) any covenant, representation or warranty contained in
the Agreement with respect to such Account has been breached;
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(vii) the Account Debtor is also Borrower's creditor or supplier, or the
Account Debtor has disputed liability with respect to such Account, or the
Account Debtor has made any claim with respect to any other Account due
from such Account Debtor to Borrower, or the Account otherwise is or may
become subject to any right of setoff, counterclaim, reserve or
chargeback, provided that the Accounts of such Account Debtor shall be
ineligible only to the extent of such offset, counterclaim, disputed
amount, reserve or chargeback; (viii) an Insolvency Proceeding has been
commenced by or against the Account Debtor or the Account Debtor has
failed, suspended business or ceased to be Solvent; (ix) it arises from a
sale to an Account Debtor with its principal office, assets or place of
business outside the United States, Canada or Puerto Rico, unless the sale
is backed by an irrevocable letter of credit that is issued or confirmed
by a bank acceptable to Agent that is in form and substance acceptable to
Agent and payable in the full amount of the Account in freely convertible
Dollars at a place of payment within the United States, and, if requested
by Agent, such letter of credit (or right to payment thereunder) is
assigned to Agent; (x) it arises from a sale to the Account Debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; (xi) the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless Borrower assigns its right to payment of
such Account to Agent, in a manner satisfactory to Agent, so as to comply
with the Assignment of Claims Act of 1940 (31 U.S.C. ss.3727 and 41 U.S.C.
ss.15), or is a state, county or municipality, or a political subdivision
or agency thereof and Applicable Law disallows or restricts an assignment
of Accounts on which it is the Account Debtor; (xii) the Account Debtor is
located in New Jersey, Minnesota or any other state imposing similar
conditions on the right of a creditor to collect accounts receivable
unless Borrower has either qualified to transact business in such state as
a foreign entity or filed a Notice of Business Activities Report or other
required report with the appropriate officials in those states for the
then current year; (xiii) the Account Debtor is located in a state in
which such Borrower is deemed to be doing business under the laws of such
state and which denies creditors access to its courts in the absence of
qualification to transact business in such state or of the filing of any
reports with such state, unless Borrower has qualified as a foreign entity
authorized to transact business in such state or has filed all required
reports; (xiv) the Account is subject to a Lien other than a Permitted
Lien; (xv) the goods giving rise to such Account have not been delivered
to and accepted by the Account Debtor or the Account otherwise does not
represent a final sale; (xvi) the Account is evidenced by Chattel Paper or
an Instrument of any kind, or has been reduced to judgment; (xvii)
Borrower has made any agreement with the Account Debtor for any deduction
therefrom, except for discounts or allowances which are made in the
Ordinary Course of Business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value of each
invoice related to such Account; (xviii) Borrower has made an agreement
with the Account Debtor to extend the time of payment thereof; (xix) the
Account represents a progress billing or a retainage; or (xx) the Account
represents, in whole or in part, a billing for interest, fees or late
charges, provided that such Account shall be ineligible only to the extent
of the amount of such billing.
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ELIGIBLE ASSIGNEE - any commercial bank, savings and loan
association, savings bank, finance company, or other financial institution
(whether a corporation, partnership, or other entity) acceptable to Agent
in Agent's sole discretion.
ELIGIBLE INVENTORY - such Inventory of Borrower (other than
packaging materials, labels and supplies) which Agent, in its sole credit
judgment, deems to be Eligible Inventory. Without limiting the generality
of the foregoing, no Inventory shall be Eligible Inventory unless: (i) it
is raw materials or finished goods, or work-in-process that is, in Agent's
opinion, readily marketable in its current form; (ii) it is owned by
Borrower and not held by it on consignment or other sale or return terms;
(iii) it is in good, new and saleable condition and is not damaged or
defective; (iv) it is not slow-moving, obsolete or unmerchantable and is
not goods returned to Borrower by or repossessed from an Account Debtor;
(v) it meets all standards imposed by any Governmental Authority; (vi) it
conforms in all respects to the warranties and representations set forth
in the Agreement; (vii) it is at all times subject to Agent's duly
perfected, first priority security interest and no other Lien except a
Permitted Lien; (viii) it is in Borrower's possession and control at a
location in compliance with the Agreement, is not in transit or outside
the continental United States and is not consigned to any Person; (ix) it
is not the subject of a negotiable warehouse receipt or other negotiable
Document; (x) it is not subject to any License Agreement or other
agreement that limits, conditions or restricts Borrower's or Agent's right
to sell or otherwise dispose of such Inventory; and (xi) it is not the
subject of an Intellectual Property Claim.
ENVIRONMENTAL LAWS - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidance documents promulgated
by regulatory agencies, orders and consent decrees relating to human
health and safety or the protection or pollution of the environment,
including CERCLA.
ENVIRONMENTAL RELEASE - a release as defined in CERCLA or under any
applicable Environmental Laws.
EQUIPMENT - shall have the meaning ascribed to the term "equipment"
in the UCC.
EQUIPMENT LEASES - the equipment leases in existence on the Petition
Date between Borrower and the Pre-Petition Lenders or their Affiliates.
EQUITY INTEREST - the interest of a shareholder in a corporation, a
partner (whether general or limited) in a partnership (whether general,
limited or limited liability), a member in a limited liability company, or
any other Person having any other form of equity security.
ERISA - the Employee Retirement Income Security Act of 1974 and all
rules and regulations from time to time promulgated thereunder.
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ESTATE - the estate created in each of the Chapter 11 Case pursuant
to 11 U.S.C. ss. 541(a).
EVENT OF DEFAULT - as defined in SECTION 11 of the Agreement.
EXTRAORDINARY EXPENSES - all costs, expenses, fees (including fees
incurred to Agent Professionals) or advances that Agent or any Lender may
suffer or incur, whether prior to or after the occurrence of an Event of
Default, and whether prior to, after or during the pendency of an
Insolvency Proceeding of an Obligor, on account of or in connection with
(i) the audit, inspection, repossession, storage, repair, appraisal,
insuring, completion of the manufacture of, preparing for sale,
advertising for sale, selling, collecting or otherwise preserving or
realizing upon any Collateral; (ii) the defense of Agent's Lien upon any
Collateral or the priority thereof or any adverse claim with respect to
the Loans, the DIP Financing Documents or the Collateral asserted by any
Obligor, any receiver or trustee for any Obligor or any creditor or
representative of creditors of any Obligor; (iii) the settlement or
satisfaction of any Liens upon any Collateral (whether or not such Liens
are Permitted Liens); (iv) the collection or enforcement of any of the
Obligations; (v) the negotiation, documentation, and closing of any
restructuring or forbearance agreement with respect to the DIP Financing
Documents or Obligations; (vi) amounts advanced by Agent pursuant to
SECTION 7.1.3 of the Agreement; (vii) the enforcement of any of the
provisions of any of the DIP Financing Documents; or (viii) any payment
under indemnity or other payment agreement provided by Agent to Bank or
any other financial institution in connection with any Dominion Account or
any lockbox arrangement. Such costs, expenses and advances may include
transfer fees, taxes, storage fees, insurance costs, permit fees, utility
reservation and standby fees, legal fees, appraisal fees, brokers' fees
and commissions, auctioneers' fees and commissions, consultants' fees,
accountants' fees, environmental study fees, wages and salaries paid to
employees of Borrower or independent contractors in liquidating any
Collateral, travel expenses, all other fees and expenses payable or
reimbursable by Borrower or any other Obligor under any of the DIP
Financing Documents, and all other fees and expenses associated with the
enforcement of rights or remedies under any of the DIP Financing
Documents, but excluding compensation paid to employees (including inside
legal counsel who are employees) of Agent.
FEDERAL FUNDS RATE - for any period, a fluctuating interest rate per
annum equal for each date during such period to the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) in Dallas, Texas by the Federal Reserve Bank of Dallas,
Texas, or if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions
received by Agent from 3 federal funds brokers of recognized standing
selected by Agent.
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FEE PROCEDURE ORDER - a procedural order entered by the Court for
payment of Professional Expenses.
FEIN - with respect to any Person, the Federal Employer
Identification Number of such Person.
FINAL FINANCING ORDER - an order which is entered by the Court
pursuant to Section 364 of the Bankruptcy Code and Bankruptcy Rule
4001(c), which is in form and substance acceptable to Agent and Lenders in
all respects, and which (i) authorizes the incurrence by Borrower of
post-petition secured and superpriority indebtedness under the DIP
Facility in accordance with the DIP Financing Documents and (ii) affords
adequate protection of the Liens in favor of Pre-Petition Agent under the
Pre-Petition Loan Documents, including, without limitation, (a) scheduled
interest payments at the contract rate under the Pre-Petition Loan
Documents, payable monthly and (b) scheduled principal payments on the
Capital Expenditure Loan and the Term Loan, commencing March 1, 2001.
FINANCING ORDERS - the Interim Financing Order and the Final
Financing Order.
FISCAL QUARTER - each consecutive period of 13 weeks beginning on
the first day of a Fiscal Year (and, in the case of any Fiscal Year of 53
weeks, the 14-week period occurring at the end thereof).
FISCAL YEAR - the fiscal year of Borrower and its Subsidiaries for
accounting and tax purposes, which ends on December 31 of each year.
FLEET - Fleet Capital Corporation, a Rhode Island corporation.
FLEET INDEMNITIES - Fleet and all of its present and future
officers, directors and agents.
FLSA - the Fair Labor Standards Act of 1938.
FOREIGN ASSET SALE - the sale after the Closing Date of the Equity
Interests in or assets of any Foreign Subsidiary.
FOREIGN SUBSIDIARY - (i) any Subsidiary which is domiciled in any
country other than the United States of America or any of its territories
or possessions and (ii) UltraCare Products International, Inc., a U.S.
Virgin Islands company.
FULL PAYMENT - with respect to any Pre-Petition Debt or Obligations,
full, final and indefeasible payment such Debt in cash or immediately
available funds and, in the case of any Debt that is, at the time in
question, contingent (including any LC Outstandings that exist by virtue
of an outstanding undrawn Letter of Credit and any Contingent
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Obligation of Borrower to reimburse Lenders for Professional Expense
Advances under SECTION 1.1.3), Agent's receipt of either cash or a direct
pay letter of credit naming Agent as beneficiary and in form and
substance, and from an issuing bank, acceptable to Agent, in each case in
an amount not less than 105% of the aggregate amount of all such
contingent Debt.
FUNDING ACCOUNT - an account established by Borrower for receipt of
proceeds of Revolver Loans or such other account as Borrower may specify
in writing.
GAAP - generally accepted accounting principles in the United States
of America in effect from time to time.
GENERAL INTANGIBLE - shall have the meaning ascribed to the term
"general intangible" in the UCC and shall include all interests in
Intellectual Property.
GOVERNMENTAL APPROVALS - all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports
to, all Governmental Authorities.
GOVERNMENTAL AUTHORITY - any federal, state, municipal, national or
other governmental department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case
whether associated with a state of the United States, the District of
Columbia or a foreign entity or government.
GUARANTORS - all of Borrower's Subsidiaries, including Foreign
Subsidiaries, and each other Person who guarantees payment or performance
of the whole or any part of the Obligations.
IN-TRANSIT INVENTORY - Inventory that does not qualify as Eligible
Inventory solely on the basis that it is in transit and which is in the
process of being shipped between any of Borrower's facilities that are
located in either the United States or Puerto Rico.
INDEMNIFIED AMOUNT - the amount of any loss, cost, expenses or
damages suffered or incurred by Indemnitees and against which Lenders
and/or Borrower have agreed to indemnify such Indemnitees pursuant to the
terms of the Agreement or any of the other DIP Financing Documents.
INDEMNITEES - the Agent Indemnitees, the Fleet Indemnitees and
the Lender Indemnitees.
INSOLVENCY PROCEEDING - any action, case or proceeding commenced by
or against a Person, or any agreement of such Person, for (a) the entry of
an order for relief under
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any chapter of the Bankruptcy Code or other insolvency or debt adjustment
law (whether state, federal or foreign), (b) the appointment of a
receiver, trustee, liquidator or other custodian for such Person or any
part of its Property, (c) an assignment or trust mortgage for the benefit
of creditors of such Person, or (d) the liquidation, dissolution or
winding up of the affairs of such Person.
INSTRUMENT - shall have the meaning ascribed to the term
"instrument" in the UCC.
INTELLECTUAL PROPERTY - Property constituting under any Applicable
Law a patent, patent application, copyright, trademark, service mark,
tradename, mask work, trade secret or license or other right to use any of
the foregoing.
INTELLECTUAL PROPERTY CLAIM - the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise)
that Borrower's ownership, use, marketing, sale or distribution of any
Inventory, Equipment, Intellectual Property or other Property is violative
of any ownership or right to use any Intellectual Property of such Person.
INTERIM BUDGET - a 30 day cash expense budget detailing Borrower's
anticipated cash receipts and expenditures, including professional fees
and expenses, through the first 30 days following the Petition Date, as
amended or supplemented from time to time from time to time with Agent's
and each Lender's prior written consent, which budget (and any amendments
thereto) shall be in form and substance acceptable to the Lenders and
shall be incorporated into the Interim Financing Order.
INTERIM FINANCING ORDER - an order that is entered by the Court
pursuant to Section 364 of the Bankruptcy Code and Bankruptcy Rule
4001(c), which is in form and substance satisfactory to Agent and Lenders,
which authorizes Borrower to incur, during the Interim Period,
post-petition secured and superpriority Debt under the DIP Facility in
accordance with the DIP Financing Documents and affords adequate
protection of the Liens in favor of Pre-Petition Agent under the
Pre-Petition Loan Documents, including (i) scheduled interest payments at
the contract rate under the Pre-Petition Loan Documents, payable monthly
and (ii) scheduled principal payments on the Capital Expenditure Loan and
the Term Loan, commencing March 1, 2001.
INTERIM PERIOD - the period commencing upon entry of the Interim
Financing Order and ending on the entry of the Final Financing Order.
INVENTORY - shall have the meaning ascribed to "inventory" in the
UCC and shall include, in the case of Borrower, all goods intended for
sale or lease by Borrower, or for display or demonstration; all work in
process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in Borrower's
business; and all Documents
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evidencing and General Intangibles relating to any of the foregoing,
whether now owned or hereafter acquired by Borrower.
INVENTORY FORMULA AMOUNT - on any date of determination thereof, an
amount equal to the lesser of (i) $10,000,000 or (ii) the sum of (a) 60%
of the Value of Eligible Inventory that is finished goods, excluding
finished goods with outdated packaging, (b) 45% of the Value of Eligible
Inventory that is finished goods with outdated packaging, (c) 35% of the
Value of Eligible Inventory that is raw goods and (d) the lesser of (1)
$1,000,000 or (2) 60% of In-Transit Inventory; PROVIDED THAT the Inventory
described in clause (b) above shall not be Eligible Inventory at any time
subsequent to 120 days after the Petition Date.
INVENTORY RESERVE - a reserve in the amount of $1,500,000 that shall
continue until Agent is satisfied in its sole discretion that accurate and
complete Inventory reporting is being provided to Agent on a current
basis.
INVESTMENT PROPERTY - shall have the meaning ascribed to "investment
property" in the UCC.
LC APPLICATION - an application previously submitted by Borrower to
Bank (on which Fleet may be a co-applicant) under the Pre-Petition Loan
Documents for the issuance of a Letter of Credit.
LC OUTSTANDINGS - on any date of determination thereof, an amount
(in Dollars) equal to the sum of (i) all amounts then due and payable by
any Obligor on such date by reason of any payment made on or before such
date by Fleet under any LC Support PLUS (ii) the aggregate undrawn amount
of all Letters of Credit then outstanding.
LC SUPPORT - a guaranty or other support agreement from Fleet in
favor of Bank pursuant to which Fleet has guaranteed or otherwise assured
the payment or performance by any party (other than Fleet, if a party) of
such party's obligations with respect to a Letter of Credit, including the
obligation of such parties to reimburse Bank for any payment made by Bank
under such Letter of Credit.
LENDER INDEMNITEE - a Lender in its capacity as a lender under the
Agreement and its present and future officers, directors and agents.
LENDERS - Fleet (whether in its capacity as a provider of Loans
under SECTION 1 of the Agreement) and any other Person who may from time
to time become a "Lender" under the Agreement, and their respective
successors and permitted assigns.
LETTER OF CREDIT - any letter of credit issued by Bank for the
account of Borrower under the Pre-Petition Loan Documents.
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LETTER OF CREDIT RESERVE - a reserve in the amount of the aggregate
undrawn amount of all outstanding Letters of Credit issued under or
procured pursuant to the Pre-Petition Loan Documents.
LICENSE AGREEMENT - any agreement between Borrower and a Licensor
pursuant to which Borrower is authorized to use any Intellectual Property
in connection with the manufacturing, marketing, sale or other
distribution of any Inventory of Borrower, including the license under the
Pre-Petition P&G Settlement.
LICENSOR - any Person from whom Borrower obtains the right to use
(whether on an exclusive or non-exclusive basis) any Intellectual Property
in connection with Borrower's manufacture, marketing, sale or other
distribution of any Inventory.
LIEN - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien"
shall also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of the
Agreement, Borrower shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes.
LOANS - the Revolver Loans and the Revolving Credit Advances,
collectively.
LOAN ACCOUNT - the loan account established by each Lender on its
books pursuant to SECTION 4.7.1 of the Agreement.
MATERIAL ADVERSE EFFECT - the effect of any event, condition, act,
omission or circumstance, which, alone or when taken together with other
events, conditions, acts, omissions or circumstances occurring or existing
concurrently therewith, (i) has a material adverse effect upon the
business, operations, Properties or condition (financial or otherwise) of
Borrower or Borrower and the Subsidiaries taken as a whole; (ii) has or
may be reasonably expected to have any material adverse effect whatsoever
upon the validity or enforceability of the Agreement or any of the other
DIP Financing Documents; (iii) has any material adverse effect upon the
value of the whole or any material part of the Collateral, the Liens of
Agent with respect to the Collateral or the priority of any such Liens;
(iv) materially impairs the ability of any Obligor to perform its
obligations under the Agreement or any of the other DIP Financing
Documents, including repayment of any of the Obligations when due; or (v)
materially impairs the ability of Agent to enforce or collect the
Obligations or realize upon any of the Collateral in accordance with the
DIP Financing Documents and Applicable Law.
MATERIAL CONTRACT - any agreement between Borrower and P&G, and any
other
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agreement to which Borrower is a party and which, if terminated or
breached, could reasonably be expected to have a Material Adverse Effect.
MAXIMUM RATE - the maximum non-usurious rate of interest permitted
by Applicable Law that at any time, or from time to time, may be
contracted for, taken, reserved, charged or received on the Debt in
question or, to the extent that at any time Applicable Law may thereafter
permit a higher maximum non-usurious rate of interest, then such higher
rate. Notwithstanding any other provision hereof, the Maximum Rate shall
be calculated on a daily basis (computed on the actual number of days
elapsed over a year of 365 or 366 days, as the case may be).
MONEY BORROWED - as applied to any Person, (i) Debt arising from the
lending of money by any other Person to such Person; (ii) Debt, whether or
not in any such case arising from the lending of money by another Person
to such Person, (A) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (B) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments,
or (C) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial payment
for Property; (iii) Debt that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Debt of such Person under any
guaranty of obligations that would constitute Debt for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by such Person.
MOODY'S - Moody's Investors Services, Inc.
MULTIEMPLOYER PLAN - has the meaning set forth in Section 4001(a)(3)
of ERISA.
NET PROCEEDS - proceeds (including cash receivable (when received)
by way of deferred payment) received by Borrower from the sale, lease,
transfer or other disposition of any Property, including insurance
proceeds and awards of compensation received with respect to the
destruction or condemnation of all or part of such Property, net of: (i)
the reasonable and customary costs of such sale, lease, transfer or other
disposition; and (ii) amounts applied to repayment of Debt (other than the
Obligations) secured by a Permitted Lien on the Property disposed of that
is senior to Lender's Liens.
NOTES - each Revolver Note and any other promissory note executed by
Borrower at Agent's request to evidence any of the Obligations.
NOTICE OF BORROWING - as defined in SECTION 3.1.1(I) of the
Agreement.
OBLIGATIONS - in each case, whether now in existence or hereafter
arising, (i) the principal of, and interest and premium, if any, on, the
Revolver Loans; (ii) all LC Outstandings and all other obligations of any
Obligor to Agent or Fleet arising in connection with the issuance of any
Letter of Credit; and (iii) all other Debts, covenants,
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duties and obligations (including Contingent Obligations) now or at any
time or times hereafter owing by any Obligor to Agent or any Lender under
or pursuant to the Agreement or any of the other DIP Financing Documents,
whether evidenced by any note or other writing, whether arising from any
extension of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise and whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, or
joint or several, including all interest, charges, expenses, fees or other
sums (including Extraordinary Expenses) chargeable to any or all Obligors
hereunder or under any of the other DIP Financing Documents.
OBLIGOR - Borrower, each Guarantor, and any other Person that is at
any time liable for the payment of the whole or any part of the
Obligations or that has granted in favor of Agent a Lien upon any of any
of such Person's assets to secure payment of any of the Obligations.
ORDINARY COURSE OF BUSINESS - with respect to any Person, the
ordinary course of such Person's business, as conducted by such Person in
accordance with past practices and undertaken by such Person in good faith
and not for the purpose of evading any covenant or restriction in any DIP
Financing Document.
ORGANIZATION DOCUMENTS - with respect to any Person, its charter,
certificate or articles of incorporation, bylaws, articles of
organization, operating agreement, members agreement, partnership
agreement, voting trust, or similar agreement or instrument governing the
formation or operation of such Person.
OSHA - the Occupational Safety and Hazard Act of 1970.
OUT-OF-FORMULA CONDITION - as defined in SECTION 1.1.2 of the
Agreement.
OUT-OF-FORMULA LOAN - a Revolver Loan made when an Out-of-Formula
Condition exists or the amount of any Revolver Loan which, when funded,
results in an Out-of-Formula Condition.
P&G - The Proctor & Gamble Company.
P&G QUARTERLY RESERVE - an amount determined as of each fiscal
quarter which shall be equal to the greater of (i) $100,000 as of the
first day of the first month during such fiscal quarter, beginning with
the fiscal quarter commencing October 1, 2000, increasing by an additional
$100,000 as of the first day of each additional month during each fiscal
quarter to a maximum of $300,000 or (ii) an amount estimated based upon
Borrower's projected monthly sales of Inventory in accordance with SECTION
9.1.23 for amounts payable to P&G for future royalty payments due and
payable to P&G.
P&G SETTLEMENT RESERVE - an amount equal to $4,500,000.
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PARTICIPANT - as defined in SECTION 13.2.1.
PAYMENT ACCOUNT - an account maintained by Agent (currently at Bank)
to which all monies from time to time deposited to a Dominion Account
shall be transferred and all other payments shall be sent in immediately
available federal funds.
PAYMENT ITEMS - all checks, drafts, or other items of payment
payable to Borrower, including proceeds of any of the Collateral.
PENDING REVOLVER LOANS - at any date, the aggregate principal amount
of all Revolver Loans which have been requested in any Notice of Borrowing
received by Agent but which have not theretofore been advanced by Agent or
Lenders.
PERMANENT BUDGET - a 90 day cash expense budget detailing Borrower's
anticipated cash receipts and expenditures, including professional fees
and expenses, as amended or supplemented from time to time with the
approval of Agent and Lenders, which budget (and any amendments thereto)
shall be in form and substance acceptable to Agent and Lenders. The
Permanent Budget shall (i) be updated by Borrower and approved by Agent
and Lenders every 30 days and (ii) incorporate cash receipts arising from
contemplated sales of Borrower's assets and the assets of the Foreign
Subsidiaries.
PERMITTED CONTINGENT OBLIGATIONS - Contingent Obligations arising
from endorsements for collection or deposit in the Ordinary Course of
Business; Contingent Obligations of Borrower and its Subsidiaries existing
as of the Closing Date, including extensions and renewals thereof that do
not increase the amount of such Contingent Obligations as of the date of
such extension or renewal; Contingent Obligations incurred in the Ordinary
Course of Business with respect to surety bonds, appeal bonds, performance
bonds and other similar obligations.
PERMITTED LIENS - any Lien of a kind specified in SECTION 9.2.3 of
the Agreement.
PERMITTED PURCHASE MONEY DEBT - Purchase Money Debt of Borrower and
its Subsidiaries which is incurred after the date of the Agreement and
which is secured by no Lien or only by a Purchase Money Lien, provided
that the aggregate amount of Purchase Money Debt incurred after the date
of the Agreement does not exceed $50,000 and the incurrence of such
Purchase Money Debt does not violate any limitation in the DIP Financing
Documents regarding Capital Expenditures. For the purposes of this
definition, the principal amount of any Purchase Money Debt consisting of
capitalized leases shall be computed as a Capitalized Lease Obligation.
PERSON - an individual, partnership, corporation, limited liability
company, limited liability partnership, joint stock company, land trust,
business trust, or unincorporated organization, or a Governmental
Authority.
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PETITION DATE - October 10, 2000.
PLAN - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
PRE-PETITION P&G SETTLEMENT - a pre-petition settlement between
Borrower and P&G approved by the Court, pursuant to which P&G shall have
granted to Borrower a current license to make, use and offer to sell the
Drypers' "Unicuff" diaper products, and shall have acknowledged Agent's
right to sell any of such products in realization of Agent's liens therein
subject to Agent's and Lenders' payment of all unpaid royalties then due
thereunder.
PRE-PETITION AGENT - Fleet in its capacity as collateral and
administrative agent under the Pre-Petition Loan Documents.
PRE-PETITION DEBT - all Debts and other obligations of Borrower or
any other Obligor to Pre-Petition Agent or any Pre-Petition Lender on the
Petition Date and that arise under any of the Pre-Petition Loan Documents,
whether direct or indirect, absolute or contingent or due or to become
due, including all interest thereon accruing after the Petition Date and
all legal fees and collection expenses heretofore or hereafter incurred in
collecting any of such indebtedness.
PRE-PETITION LENDERS - Fleet and The CIT Group/Business Credit, Inc.
PRE-PETITION LOAN AGREEMENT - the Amended and Restated Credit
Agreement dated December 13, 1999, among Pre-Petition Agent, Pre-Petition
Lenders and Borrower, as amended prior to the date hereof.
PRE-PETITION LOAN DOCUMENTS - the Pre-Petition Loan Agreement and
all instruments, agreements, pledges, assignments and other documents
executed in connection therewith or with reference thereto or to evidence
or secure payment of the whole or any part of the Pre-Petition Debt.
PRO RATA - a share of or in all Loans, liabilities, payments,
proceeds, collections, Collateral and Extraordinary Expenses, which share
for any Lender on any date shall be a percentage (expressed as a decimal,
rounded to the ninth decimal place) arrived at by dividing the amount of
the Commitment of such Lender on such date by the aggregate amount of the
Commitments of all Lenders on such date.
PROFESSIONAL EXPENSE ADVANCES - Revolver Loans made after the
Commitment Termination Date pursuant to SECTION 1.1.3 of the Agreement for
the purpose described therein.
PROFESSIONAL EXPENSE ESCROW - the escrow to be established by
Borrower pursuant
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to the Financing Orders for the deposit of Revolver Loan proceeds to be
used for the purpose of paying Professional Expenses.
PROFESSIONAL EXPENSE RESERVE - on any date of determination thereof,
an amount equal to the sum of (i) $300,000 for the first 30 days following
the Petition Date and (ii) $800,000 beginning 30 days following the
Petition Date.
PROFESSIONAL EXPENSES - the fees and reimbursable expenses of a
Professional Person.
PROFESSIONAL PERSON - a Person who is an attorney, accountant,
appraiser, auctioneer or other professional person and who is retained,
with Court approval, by (i) Borrower pursuant to Section 327 of the
Bankruptcy Code or (ii) a Committee pursuant to Section 1103(a) of the
Code.
PROPERLY CONTESTED - in the case of any Debt of an Obligor
(including any Taxes) that is not paid as and when due or payable by
reason of such Obligor's bona fide dispute concerning its liability to pay
same or concerning the amount thereof, (i) such Debt is being properly
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted; (ii) such Obligor has established appropriate
reserves as shall be required in conformity with GAAP; (iii) the
non-payment of such Debt will not have a Material Adverse Effect and will
not result in a forfeiture of any assets of such Obligor; (iv) no Lien is
imposed upon any of such Obligor's assets with respect to such Debt unless
such Lien is at all times junior and subordinate in priority to the Liens
in favor of Agent (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such Lien
is stayed during the period prior to the final resolution or disposition
of such dispute; (v) if the Debt results from, or is determined by the
entry, rendition or issuance against an Obligor or any of its assets of a
judgment, writ, order or decree, enforcement of such judgment, writ, order
or decree is stayed pending a timely appeal or other judicial review; and
(vi) if such contest is abandoned, settled or determined adversely (in
whole or in part) to such Obligor, such Obligor forthwith pays such Debt
and all penalties, interest and other amounts due in connection therewith.
PROPERTY - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
PURCHASE MONEY DEBT - means and includes (i) Debt (other than the
Obligations) for the payment of all or any part of the purchase price of
any fixed assets, (ii) any Debt (other than the Obligations) incurred at
the time of or within 10 days prior to or after the acquisition of any
fixed assets for the purpose of financing all or any part of the purchase
price thereof, and (iii) any renewals, extensions or refinancings thereof,
but not any increases in the principal amounts thereof outstanding at the
time.
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<PAGE>
PURCHASE MONEY LIEN - a Lien upon fixed assets which secures
Purchase Money Debt, but only if such Lien shall at all times be confined
solely to the fixed assets acquired through the incurrence of the Purchase
Money Debt secured by such Lien and such Lien constitutes a purchase money
security interest under the UCC.
REGULATION D - Regulation D of the Board of Governors.
REGISTER - the register maintained by Agent in accordance with
SECTION 4.7.2 of the Agreement.
REORGANIZATION PLAN - a plan of reorganization proposed by Borrower
or any other Person (including Agent or any Lender) in the Chapter 11
Case.
REPORTABLE EVENT - any of the events set forth in Section 4043(b) of
ERISA.
REQUIRED LENDERS - at any date of determination thereof, Lenders
having Commitments representing at least 66 2/3% of the aggregate
Commitments at such time; PROVIDED, HOWEVER, that if any Lender shall be
in breach of any of its obligations hereunder to Borrower or Agent,
including any breach resulting from its failure to honor its Commitment in
accordance with the terms of this Agreement, then, for so long as such
breach continues, the term "Required Lenders" shall mean Lenders
(excluding each Lender that is in breach of its obligations hereunder)
having Commitments representing at least 66 2/3% of the aggregate
Commitments at such time; PROVIDED FURTHER, HOWEVER, that if the
Commitments have been terminated, the term "Required Lenders" shall mean
Lenders (excluding each Lender that is in breach of its obligations under
the Agreement) holding Revolver Loans representing at least 66 2/3% of the
aggregate principal amount of Revolver Loans outstanding at such time.
RESTRICTED INVESTMENT - any acquisition of Property by Borrower or
any of its Subsidiaries in exchange for cash or other Property, whether in
the form of an acquisition of Equity Interests or indebtedness or
obligations, or the purchase or acquisition by Borrower or any of its
Subsidiaries of any other Property, or a loan, advance, capital
contribution or subscription, except acquisitions of the following: (a)
fixed assets to be used in the business of Borrower or any of its
Subsidiaries so long as the acquisition costs thereof constitute Capital
Expenditures permitted hereunder; (b) goods held for sale or lease or to
be used in the manufacture of goods or the provision of services by
Borrower or any of its Subsidiaries in the Ordinary Course of Business;
(c) Current Assets arising from the sale or lease of goods or the
rendition of services in the Ordinary Course of Business of Borrower or
any of its Subsidiaries; (d) investments in Subsidiaries of Borrower to
the extent existing on the Closing Date; and (e) Cash Equivalents. Any
loan, advance or transfer of any Property by Borrower to any Foreign
Subsidiary shall specifically constitute a Restricted Investment.
RESTRICTIVE AGREEMENT - an agreement (other than any of the DIP
Financing
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<PAGE>
Documents) that, if and for so long as an Obligor or any Subsidiary of
such Obligor is a party thereto, would prohibit, condition or restrict
such Obligor's or Subsidiary's right to incur or repay Debt for Money
Borrowed (including any of the Obligations); grant Liens upon any of such
Obligor's or Subsidiary's assets (including Liens granted in favor of
Agent pursuant to the DIP Financing Documents); declare or make
Distributions; amend, modify, extend or renew any agreement evidencing
Debt for Money Borrowed (including any of the DIP Financing Documents); or
repay any Debt owed to any Obligor.
REVOLVER LOAN - a Loan made by Lenders as provided in SECTION 1.1 of
the Agreement.
REVOLVER NOTE - a Revolver Note to be executed by Borrower in favor
of each Lender in the form of EXHIBIT A attached hereto, which shall be in
the face amount of such Lender's Commitment and which shall evidence all
Revolver Loans made by such Lender to Borrower pursuant to the Agreement.
REVOLVING CREDIT ADVANCES - a collective reference to any advances
under the revolving line of credit as set forth in the Pre-Petition Loan
Documents.
S&P - Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc.
SCHEDULE OF ACCOUNTS - as defined in SECTION 7.2.1 of the Agreement.
SEC - the Securities Exchange Commission.
SECURITY - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933.
SECURITY DOCUMENTS - any and all other instruments and agreements
now or at any time hereafter securing the whole or any part of the
Obligations.
SENIOR OFFICER - the chairman of the board of directors, the
president or the chief financial officer of, or in-house legal counsel to,
Borrower.
SOLVENT - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such
Person's Debts (including Contingent Obligations), (ii) is able to pay all
of its Debts as such Debts mature, (iii) has capital sufficient to carry
on its business and transactions and all business and transactions in
which it is about to engage; and (iv) is not "insolvent" within the
meaning of Section 101(32) of the Bankruptcy Code.
STATUTORY RESERVES - on any date, the percentage (expressed as a
decimal) established by the Board of Governors which is the then stated
maximum rate for all reserves (including any emergency, supplemental or
other marginal reserve requirements)
-85-
<PAGE>
applicable to any member bank of the Federal Reserve System in respect to
Eurocurrency Liabilities (or any successor category of liabilities under
Regulation D). Such reserve percentage shall include, without limitation,
those imposed pursuant to said Regulation D. The Statutory Reserve shall
be adjusted automatically on and as of the effective date of any change in
such percentage.
SUBSIDIARY - any Person a majority of the Equity Interests of which
is at the time owned, directly or indirectly, by another Person or by one
or more other Subsidiaries or by such other Person and one or more other
Subsidiaries.
TAXES - any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including income, receipts, excise, property, sales, use, transfer,
license, payroll, withholding, social security and franchise taxes now or
hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political
subdivision or taxing authority thereof or therein and all interest,
penalties, additions to tax and similar liabilities with respect thereto,
but excluding, in the case of each Lender, taxes imposed on or measured by
the net income or overall gross receipts of such Lender.
TERM LOAN - a collective reference to any advances under the
outstanding term loan as set forth in the Pre-Petition Loan Documents.
TRANSFEREE - as defined in SECTION 13.3.3 of the Agreement.
UCC - the Uniform Commercial Code (or any successor statute) as
adopted and in force in the State of Texas or, when the laws of any other
state govern the method or manner of the creation or perfection of any
security interest in any of the Collateral, the Uniform Commercial Code
(or any successor statute) of such state.
VALUE - with reference to the value of Eligible Inventory, value
determined on the basis of the lower of cost or market of such Eligible
Inventory, with the cost thereof calculated on a first-in, first-out
basis.
ACCOUNTING TERMS. Unless otherwise specified herein, all terms of an
accounting character used in the Agreement shall be interpreted, all accounting
determinations under the Agreement shall be made, and all financial statements
required to be delivered under the Agreement shall be prepared in accordance
with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statement of Borrower and its Subsidiaries heretofore
delivered to Agent and Lenders and using the same method for inventory valuation
as used in such audited financial statements, except for any change in which
Borrower's independent public accountants concur or as required by GAAP unless
(i) Borrower shall have objected to determining such compliance on such basis at
the time of delivery of such financial statements or (ii) Agent or any Lender
shall so object in writing within 30 days after the delivery of such financial
statements, in either of which events such calculations shall be made on a basis
-86-
<PAGE>
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made. In the event of any change
in GAAP that occurs after the date of the Agreement and that is material to
Borrower, Agent and Lenders shall the right to require either that conforming
adjustments be made to any financial covenants set forth in the Agreement, or
the components thereof, that are affected by such change or that Borrower
reports its financial condition based on GAAP as in effect immediately prior to
the occurrence of such change.
OTHER TERMS. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations; to any of the DIP Financing
Documents shall include any and all amendment or modifications thereto and any
and all restatements, extensions or renewals thereof; to any Person shall mean
and include the successors and permitted assigns of such Person; to "including"
and "include" shall be understood to mean "including, without limitation;" to
the time of day shall mean the time of day on the day in question in Houston,
Texas, unless otherwise expressly provided in the Agreement; and to any Property
of Borrower shall mean and include all Property of the Estate. A Default or an
Event of Default shall be deemed to exist at all times during the period
commencing on the date that such Default or Event of Default occurs to the date
on which such Default or Event of Default is waived in writing pursuant to this
Agreement or, in the case of a Default, is cured within any period of cure
expressly provided in this Agreement; and an Event of Default shall "continue"
or be "continuing" until such Event of Default has been waived in writing by
Lenders. Whenever the phrase "to the best of Borrower's knowledge" or words of
similar import relating to the knowledge or the awareness of Borrower are used
herein, such phrase shall mean and refer to (i) the actual knowledge of a Senior
Officer of Borrower or (ii) the knowledge that a Senior Officer would have
obtained if they had engaged in good faith and the diligent performance of their
duties, including the making of such reasonable specific inquiries as may be
necessary of the officers, employees or agents of Borrower and a good faith
attempt to ascertain the existence or accuracy of the matter to which such
phrase relates.
IN WITNESS WHEREOF, this Appendix has been duly executed in Dallas, Texas,
on October 11, 2000.
-87-
<PAGE>
BORROWER:
DRYPERS CORPORATION
By:____________________________________
Title:_________________________________
LENDERS:
FLEET CAPITAL CORPORATION
By:____________________________________
Title:_________________________________
THE CIT GROUP/BUSINESS
CREDIT, INC.
By:____________________________________
Title:_________________________________
AGENT:
FLEET CAPITAL CORPORATION,
as Agent
By:____________________________________
Title:_________________________________
-88-
<PAGE>
-----------------------------------------------------------------
DRYPERS CORPORATION, as Borrower
-----------------------------------------------------------------
-----------------------------------------------------------------
THE FINANCIAL INSTITUTIONS
PARTY HERETO FROM TIME TO TIME, as Lenders
and
FLEET CAPITAL CORPORATION, as Agent
--------------------------------------------------------------
=================================================================
POST-PETITION LOAN AND SECURITY AGREEMENT
Dated: October 11, 2000
$25,000,000.00
=================================================================
-89-
<PAGE>
TABLE OF CONTENTS
SECTION 1. DIP FACILITY.......................................-1-
1.1. REVOLVER FACILITY..................................-1-
SECTION 2. INTEREST, FEES AND CHARGES.........................-4-
2.1. INTEREST...........................................-4-
2.2. FEES...............................................-4-
2.3. COMPUTATION OF INTEREST AND FEES...................-5-
2.4. REIMBURSEMENT OBLIGATIONS..........................-5-
2.5. BANK CHARGES.......................................-6-
2.6. CAPITAL ADEQUACY...................................-6-
2.7. MAXIMUM INTEREST...................................-7-
SECTION 3. LOAN ADMINISTRATION................................-8-
3.1. MANNER OF BORROWING AND FUNDING REVOLVER LOANS.....-8-
3.2. DEFAULTING LENDER..................................-9-
3.3. ALL REVOLVER LOANS TO CONSTITUTE ONE OBLIGATION...-10-
SECTION 4. PAYMENTS..........................................-10-
4.1. GENERAL PAYMENT PROVISIONS........................-10-
4.2. REPAYMENT OF REVOLVER LOANS.......................-10-
4.3. PAYMENT OF OTHER OBLIGATIONS......................-11-
4.4. MARSHALING; PAYMENTS SET ASIDE....................-11-
4.5. AGENT'S ALLOCATION OF PAYMENTS AND COLLECTIONS....-11-
4.6. APPLICATION OF PAYMENTS AND COLLECTIONS...........-12-
4.7. LOAN ACCOUNTS; THE REGISTER; ACCOUNT STATED.......-12-
SECTION 5. DIP TERM AND TERMINATION OF COMMITMENTS...........-13-
5.1. TERM OF COMMITMENTS...............................-13-
5.2. TERMINATION.......................................-13-
SECTION 6. COLLATERAL SECURITY...............................-14-
6.1. GRANT OF SECURITY INTEREST IN COLLATERAL..........-14-
6.2. OTHER COLLATERAL..................................-15-
6.3. LIEN ON DEPOSIT ACCOUNTS..........................-15-
6.4. GUARANTIES BY SUBSIDIARIES........................-15-
6.5. LIEN PERFECTION; FURTHER ASSURANCES...............-16-
<PAGE>
6.6. LIENS UNDER FINANCING ORDERS......................-16-
6.7. LIEN PRIORITY.....................................-16-
SECTION 7. COLLATERAL ADMINISTRATION.........................-16-
7.1. GENERAL PROVISIONS................................-16-
7.2. ADMINISTRATION OF ACCOUNTS........................-18-
7.3. ADMINISTRATION OF INVENTORY.......................-19-
7.4. ADMINISTRATION OF EQUIPMENT.......................-20-
7.5. BORROWING BASE CERTIFICATES.......................-20-
SECTION 8. REPRESENTATIONS AND WARRANTIES....................-21-
8.1. GENERAL REPRESENTATIONS AND WARRANTIES............-21-
8.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES...-24-
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS...............-24-
9.1. AFFIRMATIVE COVENANTS.............................-24-
9.2 NEGATIVE COVENANTS................................-28-
SECTION 10. CONDITIONS PRECEDENT..............................-31-
10.1. CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSIONS.-31-
10.2. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.....-32-
10.3. LIMITED WAIVER OF CONDITIONS PRECEDENT............-33-
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.-33-
11.1. EVENTS OF DEFAULT.................................-33-
11.2 ACCELERATION OF THE OBLIGATIONS...................-36-
11.3 REMEDIES..........................................-36-
11.4. LICENSES AND SALE OF COLLATERAL...................-37-
11.5. SETOFF............................................-38-
11.6. REMEDIES CUMULATIVE; NO WAIVER....................-38-
SECTION 12. AGENT.............................................-39-
12.1. APPOINTMENT, AUTHORITY AND DUTIES OF AGENT........-39-
12.2. AGREEMENTS REGARDING COLLATERAL...................-41-
12.3. RELIANCE BY AGENT.................................-42-
12.4. ACTION UPON DEFAULT...............................-42-
12.5. RATABLE SHARING...................................-42-
12.6. INDEMNIFICATION OF AGENT..........................-43-
-ii-
<PAGE>
12.7. LIMITATION ON RESPONSIBILITIES OF AGENT...........-44-
12.8. SUCCESSOR AGENT AND CO-AGENTS.....................-44-
12.9. CONSENTS, AMENDMENTS AND WAIVERS..................-45-
12.10. DUE DILIGENCE AND NON-RELIANCE....................-47-
12.11. REPRESENTATIONS AND WARRANTIES OF LENDERS.........-47-
12.12. THE REQUIRED LENDERS..............................-47-
12.13. SEVERAL OBLIGATIONS...............................-48-
12.14. AGENT IN ITS INDIVIDUAL CAPACITY..................-48-
12.15. NO THIRD PARTY BENEFICIARIES......................-48-
12.16. NOTICE OF TRANSFER................................-48-
12.17. REPLACEMENT OF CERTAIN LENDERS....................-48-
12.18. REMITTANCE OF PAYMENTS AND COLLECTIONS............-49-
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND
PARTICIPATIONS....................................-50-
13.1. SUCCESSORS AND ASSIGNS............................-50-
13.2. PARTICIPATIONS....................................-50-
13.3. ASSIGNMENTS.......................................-51-
SECTION 14. MISCELLANEOUS.....................................-52-
14.1. POWER OF ATTORNEY.................................-52-
14.2. GENERAL INDEMNITY.................................-53-
14.3. SURVIVAL OF ALL INDEMNITIES.......................-53-
14.4. INDULGENCES NOT WAIVERS...........................-53-
14.5. MODIFICATION OF AGREEMENT.........................-54-
14.6. SEVERABILITY......................................-54-
14.7. CUMULATIVE EFFECT; CONFLICT OF TERMS..............-54-
14.8. EXECUTION IN COUNTERPARTS.........................-54-
14.9. AGENT'S OR REQUIRED LENDERS' CONSENT..............-54-
14.10. NOTICES...........................................-54-
14.11. PERFORMANCE OF BORROWER'S OBLIGATIONS.............-55-
14.12. TIME OF ESSENCE...................................-55-
14.13. ENTIRE AGREEMENT; APPENDIX A, EXHIBITS AND
SCHEDULES.........................................-55-
14.14. INTERPRETATION....................................-55-
14.15. OBLIGATIONS OF LENDERS SEVERAL....................-55-
14.16. GOVERNING LAW.....................................-56-
14.17. WAIVERS BY BORROWER...............................-56-
14.18. LIMITED FORBEARANCE...............................-56-
14.19. NON-APPLICATION OF CHAPTER 346 OF TEXAS
FINANCE CODE......................................-56-
14.20. ENTIRE AGREEMENT..................................-56-
-iii-
<PAGE>
EXHIBIT A
FORM OF REVOLVER NOTE
U.S. $_____________ October 11, 2000
Houston, Texas
FOR VALUE RECEIVED, the undersigned, DRYPERS CORPORATION, a Delaware
corporation ("Borrower"), hereby unconditionally promises to pay to the order of
____________ (herein, together with any subsequent holder hereof, called the
"Lender") the principal sum of _______________________ AND 00/100 DOLLARS
($_____________) or such lesser sum as may constitute Lender's Pro Rata share of
the outstanding principal amount of all Revolver Loans pursuant to the terms of
the Loan Agreement referred to below on the date on which such outstanding
principal amounts become due and payable pursuant to SECTION 4.2 of the Loan
Agreement (as defined below), in strict accordance with the terms thereof.
Borrower likewise unconditionally promises to pay to Lender interest from and
after the date hereof on Lender's Pro Rata share of the outstanding principal
amount of Revolver Loans at such interest rates, payable at such times, and
computed in such manner as are specified in SECTION 2.1 of the Loan Agreement,
in strict accordance with the terms thereof.
This Revolver Note ("Note") is issued pursuant to, and is one of the
"Revolver Notes" referred to in, the Post-Petition Loan and Security Agreement
dated October 11, 2000 (as the same may be amended from time to time, the "Loan
Agreement"), among Borrower, Fleet Capital Corporation, as agent (in such
capacity, the "Agent") for the financial institutions from time to time parties
thereto as lenders ("Lenders"), and such Lenders, and Lender is and shall be
entitled to all benefits thereof and of all DIP Financing Documents executed and
delivered in connection therewith. The provisions of the Loan Agreement are
incorporated herein by this reference. All capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed to such terms in the
Loan Agreement.
The repayment of the principal balance of this Note is subject to the
provisions of SECTION 4.2 of the Loan Agreement. The entire unpaid principal
balance and all accrued interest on this Note shall be due and payable
immediately upon the termination of the Commitments as set forth in SECTION 5.2
of the Loan Agreement.
All payments of principal and interest shall be made in Dollars in
immediately available funds as specified in the Loan Agreement.
Upon or after the occurrence of an Event of Default and for so long as
such Event of Default exists, the principal balance and all accrued interest of
this Note may be declared due and payable in the manner and with the effect
provided in the Loan Agreement, and the unpaid principal balance hereof shall
bear interest at the Default Rate as and when provided in SECTION 2.1.2 of the
Loan Agreement. Borrower agrees to pay, and save Lender harmless against, any
liability for the payment of, all costs and expenses, including, but not limited
to, reasonable
<PAGE>
attorneys' fees, arising in connection with the enforcement by Lender of any of
its rights under this Note, the Loan Agreement or any of the other DIP Financing
Documents.
All principal amounts of Revolver Loans made by Lender to Borrower
pursuant to the Loan Agreement, and all accrued and unpaid interest thereon,
shall be deemed outstanding under this Note and shall continue to be owing by
Borrower in accordance with the terms of this Note and the Loan Agreement.
In no contingency or event whatsoever, whether by reason of advancement of
the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to
Lender for the use, forbearance or detention of money advanced hereunder exceed
the highest lawful rate permissible under any law which a court of competent
jurisdiction may deem applicable hereto; and, in the event of any such payment
inadvertently paid by Borrower or inadvertently received by Lender, such excess
sum shall be, at Borrower's option, returned to Borrower forthwith or credited
as a payment of principal, but shall not be applied to the payment of interest.
It is the intent hereof that Borrower not pay or contract to pay, and that
Lender not receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by Borrower under
Applicable Law.
Time is of the essence of this Note. To the fullest extent permitted by
Applicable Law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waives presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible each provision of this Note shall be interpreted in such
a manner as to be effective and valid under Applicable Law, but if any provision
of this Note shall be prohibited or invalid under Applicable Law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Lender in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Lender of any right or
remedy preclude any other right or remedy. Lender, at its option, may enforce
its rights against any Collateral securing this Note without enforcing its
rights against Borrower, any guarantor of the indebtedness evidenced hereby or
any other property or indebtedness due or to become due to Borrower. Borrower
agrees that, without releasing or impairing Borrower's liability hereunder,
Lender may at any time release, surrender, substitute or exchange any Collateral
securing this Note and may at any time release any party primarily or
secondarily liable for the indebtedness evidenced by this Note.
The rights and obligations of Lender and Borrower hereunder shall be
construed in accordance with and governed by the laws (without giving effect to
the conflict of law principles thereof) of the State of Texas. This Note is
intended to take effect as an instrument under seal under Texas law.
The provisions of Chapter 346 of the Texas Finance Code are specifically
declared by the parties hereto not to be applicable to this Note or any of the
other DIP Financing Documents or to the transactions contemplated hereby.
<PAGE>
THIS NOTE, THE AGREEMENT, THE ORDERS AND THE OTHER DIP FINANCING DOCUMENTS
REFERRED TO HEREIN REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered in Houston, Texas, by its duly authorized officer on the date first
above written.
DRYPERS CORPORATION,
Borrower
By: _____________________
Name: _____________________
Title:_____________________
<PAGE>
EXHIBIT B
FORM OF NOTICE OF BORROWING
Date ______________, 2000
Fleet Capital Corporation, as Agent
5950 Sherry Lane, Suite 300
Dallas, Texas 75225
ATTENTION: Loan Administration Officer
Re: Post-Petition Loan and Security Agreement dated October 11, 2000, by
and among Drypers Corporation, Fleet Capital Corporation, as
collateral and administrative agent for certain Lenders from time to
time parties thereto, and certain Lenders (as at any time amended,
the "Loan Agreement")
Gentlemen:
This Notice of Borrowing is delivered to you pursuant to SECTION 3.1.1 of
the Loan Agreement. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings attributable thereto in the Loan Agreement.
Borrower hereby requests a Revolver Loan in the aggregate principal amount of
$______________ to be made on _____________, 20___.
Borrower hereby ratifies and reaffirms all of its liabilities and
obligations under the DIP Financing Documents and hereby certifies that no
Default or Event of Default exists on the date hereof.
Borrower has caused this Notice of Borrowing to be executed and delivered
by its duly authorized representative, this ______ day of _____________, 20___.
DRYPERS CORPORATION
By: _____________________
Name: _____________________
Title:_____________________
<PAGE>
EXHIBIT C
COMPLIANCE CERTIFICATE
[LETTERHEAD OF BORROWER]
__________________, 20__
Fleet Capital Corporation, as Agent
5950 Sherry Lane, Suite 300
Dallas, Texas 75225
ATTENTION: Loan Administration Officer
The undersigned, the chief financial officer of DRYPERS CORPORATION, a
Delaware corporation ("Borrower"), gives this certificate to FLEET CAPITAL
CORPORATION ("Agent") in accordance with the requirements of SECTION 9.1.6 of
that certain Post-Petition Loan and Security Agreement dated October 11, 2000,
among Borrower, Agent and the Lenders referenced therein ("Loan Agreement").
Capitalized terms used in this Certificate, unless otherwise defined herein,
shall have the meanings ascribed to them in the Loan Agreement.
1. Based upon my review of the balance sheets and statements of
income of Borrower and its Subsidiaries for the [FISCAL YEAR] [QUARTERLY PERIOD]
ending _____________, 20__ (the "Subject Period"), copies of which are attached
hereto, I hereby certify that, as of the date of this Certificate, (a) I am an
officer of the Borrower and that, as such, am authorized to execute this
certificate on behalf of Borrower and (b) the financial statements of Borrower
attached to this certificate were prepared in accordance with GAAP, and present
fairly the financial condition and results of operations of the Borrower as of,
and for the (month or fiscal year) ended as on, the last day of the Subject
Period.
2. A review of the activities of the Borrower during the Subject
Period has been made under my supervision with a view to determining whether,
during the Subject Period, the Borrower performed, and complied with all of its
obligations under the Loan Documents, and during the Subject Period, to my
knowledge the Borrower performed, and complied with all of its obligations under
the Loan Documents (EXCEPT for the deviations, if any, set forth on the schedule
annexed to this Certificate) in all material respects.
2. No Default exists on the date hereof (except for the Defaults, if
any, set forth on the schedule annexed to this Certificate).
3. No Event of Default exists on the date hereof (except for the
Events of Default set forth on the schedule annexed to this Certificate).
4. As of the date hereof, Borrower is current in its payment of all
accrued rent and other charges to Persons who own or lease any premises where
any of the Collateral is
<PAGE>
located, and there are no pending disputes or claims regarding Borrower's
failure to pay or delay in payment of any such rent or other charges.
5. As of the date hereof, Borrower is current in its payment of
all amounts due and payable to The Proctor & Gamble Company.
Very truly yours,
----------------------------
Chief Financial Officer
<PAGE>
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated as of ______, 20__
Reference is made to the Post-Petition Loan and Security Agreement dated
October 11, 2000 (at any time amended, the "Loan Agreement"), among DRYPERS
CORPORATION ("Borrower"), FLEET CAPITAL CORPORATION, in its capacity as agent
("Agent") for the financial institutions from time to time party to the Loan
Agreement ("Lenders"), and Lenders. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Loan
Agreement.
__________________ (the "Assignor") and
______________________________________ (the "Assignee") agree as follows:
1. Assignor hereby assigns to Assignee and Assignee hereby purchases and assumes
from Assignor (i) a principal amount of $________ of the outstanding Revolver
Loans held by Assignor (which amounts, according to the records of Agent,
represent _______% of the total principal amount of outstanding Revolver Loans)
and (ii) a principal amount of $__________ of Assignor's Commitment (which
amount includes Assignor's outstanding Revolver Loans being assigned to Assignee
pursuant to clause (i) above and which, according to the records of Agent,
represents (____%) of the total Commitments of Lenders under the Loan Agreement)
(the "Assigned Interests"), together with an interest in the DIP Financing
Documents corresponding to the Assigned Interest. This Agreement shall be
effective from the date (the "Assignment Effective Date") on which Assignor
receives both (x) the principal amount of the Assigned Interest in the Revolver
Loans on the Assignment Effective Date, if any, and (y) a copy of this Agreement
duly executed by Assignee. From and after the Assignment Effective Date,
Assignee hereby expressly assumes, and undertakes to perform, all of Assignor's
obligations in respect of Assignor's Commitments to the extent, and only to the
extent, of Assignee's Assigned Interest, and all principal, interest, fees and
other amounts which would otherwise be payable to or for Assignor's account in
respect of the Assigned Interest shall be payable to or for Assignee's account,
to the extent such amounts have accrued subsequent to the Assignment Effective
Date.
2.
3. Assignor (i) represents that as of the date hereof, the aggregate of its
Commitments under the Loan Agreement (without giving effect to assignments
thereof, which have not yet become effective) is $__________, and the
outstanding balance of its Revolver Loans (unreduced by any assignments thereof,
which have not yet become effective) is $__________; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto, other than that Assignor is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower, the performance or observance by Borrower of any of its obligations
under the Loan Agreement or any of the DIP Financing Documents; and (iv)
attaches the Notes held by it and requests that Agent exchange
<PAGE>
such Notes for new Notes payable to Assignee and the Assignor in the principal
amounts set forth on SCHEDULE A hereto.
4.
5. Assignee (i) represents and warrants that it is legally authorized to enter
into this Assignment and Acceptance; (ii) confirms that it has received a copy
of the Loan Agreement, together with copies of the most recent financial
statements delivered pursuant to SECTION 9.1.6 thereof, and copies of such other
DIP Financing Documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance;
(iii) agrees that it shall, independently and without reliance upon the Assignor
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 the Loan Agreement; (iv) confirms that it is eligible to become an
Assignee; (v) appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under the Loan Agreement as are delegated to
Agent by the terms thereof, together with such powers as are incidental thereto;
(vi) agrees that it will strictly observe and perform all the obligations that
are required to be performed by it as a "Lender" under the terms of the Loan
Agreement and the other DIP Financing Documents; and (vii) agrees that it will
keep confidential all information with respect to Borrower furnished to it by
Borrower or the Assignor to the extent provided in the Loan Agreement.
6.
7. Assignor acknowledges and agrees that it will not sell or otherwise dispose
of the Assigned Interest or any portion thereof, or grant any participation
therein, in a manner which, or take any action in connection therewith which,
would violate the terms of any of the DIP Financing Documents.
8.
9. This Agreement and all rights and obligations shall be interpreted in
accordance with and governed by the laws of the State of Texas. If any provision
hereof would be invalid under Applicable Law, then such provision shall be
deemed to be modified to the extent necessary to render it valid while most
nearly preserving its original intent; no provision hereof shall be affected by
another provision's being held invalid.
10.
11. Each notice or other communication hereunder shall be in writing, shall be
sent by messenger, by telecopy or facsimile transmission or by first-class mail,
shall be deemed given when sent and shall be sent as follows:
12.
13. If to Assignee, to the following address (or to such other address as
Assignee may designate from time to time):
14.
15. __________________________
16. __________________________
17. __________________________
18.
If to Assignor, to the following address (or to such other address as
Assignor may designate from time to time):
__________________________
__________________________
__________________________
__________________________
<PAGE>
Payments hereunder shall be made by wire transfer of immediately available
Dollars as follows:
If to Assignee, to the following account (or to such other account as
Assignee may designate from time to time):
__________________________
ABA No.___________________
__________________________
Account No._______________
Reference: ______________________
If to Assignor, to the following account (or to such other account as
Assignor may designate from time to time):
__________________________
__________________________
__________________________
ABA No.___________________
For Account of:___________
Reference: _____________________
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed and delivered by their respective duly authorized
officers, as of the date first above written.
___________________
("Assignor")
By: _____________________
Title: _____________________
___________________
("Assignee")
By: _____________________
Title: _____________________
<PAGE>
EXHIBIT E
FORM OF NOTICE
Reference is made to (i) the Post-Petition Loan and Security Agreement
dated October 11, 2000 (at any time amended, the "Loan Agreement"), among
DRYPERS CORPORATION ("Borrower"), FLEET CAPITAL CORPORATION in its capacity as
agent ("Agent") for the financial institutions from time to time party to the
Loan Agreement ("Lenders"), and Lenders, and (ii) the Assignment and Acceptance
dated as of ____________, 20__ (the "Assignment Agreement") between
__________________ (the "Assignor") and ____________________ (the "Assignee").
Except as otherwise defined herein, capitalized terms used herein which are
defined in the Loan Agreement are used herein with the respective meanings
specified therein.
Assignor hereby notifies Borrower and Agent of Assignor's intent to assign
to Assignee pursuant to the Assignment Agreement a principal amount of $________
of the outstanding Revolver Loans held by Assignor, and (ii) $___________ of
Assignor's Commitment (which amount includes Assignor's outstanding Revolver
Loans being assigned to Assignee pursuant to clause (i) above), together with an
interest in the DIP Financing Documents corresponding to the interest in the
Revolver Loans and Commitments so assigned. Pursuant to the Assignment
Agreement, Assignee has expressly assumed all of Assignor's obligations under
the Loan Agreement to the extent of the Assigned Interest (as defined in the
Assignment Agreement).
For purposes of the Loan Agreement, Agent shall deem Assignor's share of
the Commitment to be reduced by $_________ and Assignee's share of the
Commitment increased by $_________.
The address of Assignee to which notices, information and payments are to
be sent under the terms of the Loan Agreement is:
________________________
________________________
________________________
________________________
This Notice is being delivered to Borrower and Agent pursuant to SECTION
13.3 of the Loan Agreement. Please acknowledge your receipt of this Notice by
executing and returning to Assignee and Assignor a copy of this Notice.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused the execution of this
Notice, as of _________________, 20__.
___________________
("Assignor")
By: _____________________
Title: _____________________
___________________
("Assignee")
By: _____________________
Title: _____________________
ACKNOWLEDGED AND AGREED TO
AS OF THE DATE SET FORTH ABOVE:
BORROWER:
--------
DRYPERS CORPORATION
By:_____________________________
Title:__________________________
FLEET CAPITAL CORPORATION,
as Agent
By:______________________________
Title:___________________________
