EXHIBIT 10.2
TERM LOAN AGREEMENT
TERM LOAN AGREEMENT, dated as of December 13, 1999 is among DRYPERS
CORPORATION, a Delaware corporation ("Borrower"), each of the institutions which
is or may from time to time become a signatory hereto or any successor or
permitted assignee thereof (each a "Lender" and, collectively, the "Lenders"),
and DAVIDSON KEMPNER SERVICE COMPANY, LLC, individually and as agent for the
Lenders (in its capacity as agent, 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. Accounting terms not
otherwise specifically defined herein shall be construed in accordance with GAAP
consistently applied.
RECITALS:
A. Borrower has requested a term loan facility in the amount of
$27,000,000.
B. The Lenders have agreed to make such facility available to Borrower,
and Agent has agreed to act in such capacity, all on the terms and conditions of
this Term Loan Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. TERM LOAN FACILITY
1.1 TERM LOAN FACILITY. Subject to the terms and conditions of this
Agreement, upon the request of Borrower pursuant to Subsection 3.1.1, each
Lender severally agrees to make a Loan to Borrower on or before December 15,
1999 in a principal amount up to but not exceeding the amount of such Lender's
Commitment. Each Loan shall be disbursed as a single advance and evidenced by,
and repayable accordance with the terms of, the Notes, accrue interest as set
forth herein and be secured by a perfected security interest, prior to all Liens
other than the security interest of the agent for the lenders under the Working
Capital Loan Agreement, in all of the Collateral.
1.2 USE OF PROCEEDS. The Loans shall be used solely for Borrower's general
operating capital needs in a manner consistent with the provisions of this
Agreement and all applicable laws.
2. INTEREST, FEES AND CHARGES
2.1 INTEREST.
2.1.1 RATES OF INTEREST. The unpaid principal amount of the Loans
shall bear interest prior to maturity at the fixed rate of 12.5% per
annum. Accrued and unpaid interest on the Loans shall be due and payable
in arrears as specified in Subsection 3.2 hereof.
2.1.2 DEFAULT RATE OF INTEREST. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal
amount of the Loans shall bear interest at a rate per annum equal to the
lesser of (a) the rate of 17.00 % per annum during the remainder of the
calendar month in which such Event of Default shall have occurred, which
rate shall be increased by 0.50 % for the remainder of the then-current
calendar quarter and by additional increments of 0.50 % for each calendar
quarter thereafter but in no event to exceed 21.5% per annum or (b) the
Maximum Rate (the "Default Rate"). Any interest that has accrued at the
Default Rate shall be payable from time to time on demand.
2.1.3 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 or forbearance of money, 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 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.
2.2 COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed over
a year of 360 days. For the purpose of computing interest hereunder, all items
of payment received by each Lender shall be deemed applied by such Lender on
account of the Obligations (subject to final payment of
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such items) on the Business Day after such Lender receives such items in its
account specified by such Lender to Borrower.
2.3 MAINTENANCE FEES. On each anniversary of the date of this Agreement,
Borrower shall pay to each Lender a maintenance fee in the amount equal to 2%
per annum of the principal amount of the Loan of such Lender outstanding on such
anniversary.
2.4 CLOSING FEE. Borrower shall pay to each Lender, on the date of the
making of the Loans hereunder, a closing fee in the amount equal to 2% of the
amount of the Commitment of such Lender.
2.5 AUDIT AND APPRAISAL FEES. Borrower shall pay to each Lender audit and
appraisal fees in accordance with its current schedule of fees in effect from
time to time in connection with audits and appraisals of Borrower's books and
records and such other matters as such Lender shall deem appropriate, which
schedule (including the per diem rates) shall be provided to Borrower prior to
any applicable audit or appraisal, plus all out-of-pocket expenses incurred by
such Lender in connection with such audits and appraisals. Audit fees shall be
payable to each Lender on the first Business Day of the month following the date
of issuance by such Lender of a request for payment thereof to Borrower.
2.6 REIMBURSEMENT OF EXPENSES. If, at any time, regardless of whether or
not an Event of Default then exists, Agent or any Lender incurs legal or
accounting expenses or any other costs or out-of-pocket expenses in connection
with (i) the negotiation and preparation of this Agreement or any of the other
Credit Documents, any amendment or modification of this Agreement or any of the
other Credit Documents, or any sale or attempted sale of any interest herein to
any Lender or any participant; (ii) the administration of this Agreement or any
of the other Credit Documents and the transactions contemplated hereby and
thereby; (iii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person) in any
way relating to the Collateral, this Agreement or any of the other Credit
Documents or Borrower's affairs; (iv) any attempt to enforce any rights of Agent
or any Lender against Borrower or any other Person which may be obligated to
Agent or any Lender by virtue of this Agreement or any of the other Credit
Documents, including, without limitation, the Account Debtors, or (v) any
attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate
or otherwise dispose of or realize upon the Collateral, then all such legal and
accounting expenses, other costs and out-of-pocket expenses of each Lender shall
be charged to Borrower. All amounts chargeable to Borrower under this SUBSECTION
2.6 shall be Obligations secured by all of the Collateral, shall be payable on
demand to Agent or to such Lender, as the case may be, and shall bear interest
from the date such demand is made until paid in full at the Prime Rate plus 4%.
Borrower shall also reimburse Agent for expenses incurred by Agent in its
administration of the Collateral to the extent and in the manner provided in
SECTION 5 hereof.
2.7 BANK CHARGES. Borrower shall pay to Agent and each Lender, on demand,
any and all fees, costs or expenses which Agent or any Lender pays to a bank or
other similar institution (including, without limitation, any fees paid by Agent
to any Lender) 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 loans made by Agent to Borrower pursuant to this
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Agreement and (ii) the depositing for collection, by Agent or any Lender, of any
check or item of payment received or delivered to Agent or any Lender on account
of the Obligations.
3. LOAN ADMINISTRATION
3.1 MANNER OF BORROWING. The Loans shall be governed by the following
provisions:
3.1.1 LOAN REQUESTS. The Loan of each Lender shall be in a minimum
principal amount of $5,000,000.00 or such greater amount which is an
integral multiple of $1,000,000.00, but in no event in excess of the
Commitment of such Lender, as specified by the Borrower. Promptly on the
date specified for the Loans hereunder, each Lender will make its Loan
available to Borrower in immediately available funds.
3.1.2 NOTES. The Borrower agrees to record each Loan on the Register
referred to in Section 11.1.5. Each Loan recorded on the Register (a "REGISTERED
LOAN") may not be evidenced by promissory notes other than Registered Notes (as
defined below). Upon the registration of any Loan, the Borrower agrees, at the
request of any Lender, to execute and deliver to such Lender a promissory note
in conformity with the terms of this Agreement in registered form to evidence
such Registered Loan in form and substance satisfactory to such Lender and
registered as provided in Section 11.1.5 (a "REGISTERED NOTE"), dated the date
hereof, payable to the Lender and otherwise duly completed. Once recorded on the
Register, the Loan or Loans evidenced by such Registered Note may not be removed
from the Register so long as it remains outstanding, and a Registered Note may
not be exchanged for a promissory note that is not a Registered Note.
3.2 PAYMENTS. Except where evidenced by notes or other instruments issued
or made by Borrower to Agent or any Lender specifically containing payment
provisions that conflict with this SUBSECTION 3.2 (in which event the
conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:
3.2.1 PRINCIPAL PAYMENTS. The principal amount of the Loans shall be
paid in ten successive quarterly installments, on each March 31, June 30,
September 30 and December 31, beginning on June 30, 2000. Each such
installment shall be in the total amount of $250,000 and shall be paid pro
rata to each Lender, except that the last installment shall be in the
total amount equal to the unpaid principal amount of the Loans.
3.2.2 INTEREST PAYMENTS. Interest accrued on the Loans shall be
payable quarterly in arrears, on each March 31, June 30, September 30 and
December 31, beginning on December 31, 1999 and upon payment in full or
prepayment of the Loans (to the extent accrued on the portion of the Loans
so prepaid, in the case of any such prepayment).
3.2.3 COSTS, FEES AND CHARGES; PAYMENTS PRO RATA. Costs, fees and
charges payable pursuant to this Agreement shall be payable by Borrower as
and when provided in SECTION 2 hereof, to Agent or the Lender entitled
thereto, as the case may be, or to any other Person designated by Agent or
such Lender in writing. All payments and
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prepayments of principal, interest and fees payable under Subsections 2.3
and 2.4, shall be made to the Lenders pro rata.
3.3 PREPAYMENT. (a) Borrower may prepay the Loans in whole or in any
partial amount which is a multiple of $1,000,000 on any Business Day upon at
least five Business Days' notice to Agent and the Lenders and payment of (i) all
interest accrued on the amount prepaid to the date of prepayment and (ii) a
prepayment fee in the amount of 1% of the amount prepaid in the case of a
prepayment on or before the date which is one year from the date of this
Agreement, 3% of the amount prepaid in the case of a prepayment after the date
which is one year from the date of this Agreement and on or before the date
which is two years from the date of this Agreement and 5% of the amount prepaid
in the case of a prepayment thereafter. Amounts prepaid may not be reborrowed.
(b) Except as provided in Subsection 5.4.2 hereof, if Borrower sells any
of the Equipment, or if any of the Collateral is lost or destroyed or taken by
condemnation, Borrower shall pay to the Lenders, unless otherwise agreed by the
Lenders, as and when received by Borrower and as a mandatory prepayment of the
Loans, a sum equal to the net cash proceeds (including insurance payments)
received by Borrower from such sale, loss, destruction or condemnation;
provided, however, that no such prepayment shall be required to be made to the
extent that such proceeds are required to be applied to the prepayment of
amounts outstanding under the Working Capital Loan Agreement and are so applied
as a permanent reduction of the lending commitments thereunder.
3.4 OTHER OBLIGATIONS. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Agent or the Lender
entitled thereto, as and when provided in this Agreement and the other Credit
Documents, or on demand, whichever is later.
3.5 APPLICATION OF PAYMENTS AND COLLECTIONS. All items of payment received
by Agent or any Lender by 12:00 noon, New York time, on any Business Day shall
be deemed received on that Business Day. All items of payment received after
12:00 noon, New York time, on any Business Day shall be deemed received on the
following Business Day. Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Agent or any Lender from or on behalf of Borrower, and
Borrower does hereby irrevocably agree that Agent and each Lender shall have the
continuing exclusive right to apply and reapply any and all such payments and
collections received at any time or times hereafter by any of them or their
agents against the Obligations, in such manner as Agent or such Lender may deem
advisable, notwithstanding any entry by Agent or any Lender upon any of their
respective books and records.
3.6 ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall constitute one
general Obligation of Borrower, and shall be secured by Agent's Lien upon all of
the Collateral, for the benefit of the Lenders.
3.7 LOAN ACCOUNT. Agent shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrower
on any Obligations and
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may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.
4. SECURITY INTERESTS
4.1 SECURITY INTEREST IN COLLATERAL. To secure prompt and complete payment
and performance of the Obligations, Borrower shall execute and deliver or cause
to be executed and delivered the documents described below covering the Property
and collateral described in this SUBSECTION 4.1 (which, together with any other
Property and collateral which may now or hereafter secure the Obligations or any
part thereof, is sometimes herein called the "Collateral"):
4.1.1 Borrower shall grant to Agent, for the pro rata benefit of the
Lenders, a perfected security interest, prior to all Liens other than the
security interest of the agent for the lenders under the Working Capital
Loan Agreement and Permitted Liens, in all of Borrower's personal
Property, including without limitation all of its Accounts, Equipment,
Inventory and General Intangibles, whether now owned or hereafter
acquired, and all products and proceeds thereof, including all monies and
other Property of any kind now or at any times hereafter in the possession
or under the control of Agent or a bailee or Affiliate of Agent, pursuant
to the Borrower Security Agreement.
4.1.2 Borrower shall grant to Agent, for the pro rata benefit of the
Lenders, a perfected security interest, prior to all Liens other than the
security interest of the agent for the lenders under the Working Capital
Loan Agreement, in (i) all of Borrower's shares of Capital Stock of each
of its Domestic Subsidiaries, whether now owned or hereafter acquired, and
(ii) all (but in any event not to exceed 65%) of the issued and
outstanding shares of Capital Stock of each of its direct Foreign
Subsidiaries and Foreign Affiliates, pursuant to the Borrower Pledge
Agreement.
4.1.3 Borrower shall grant to Agent, for the pro rata benefit of the
Lenders, mortgages and leasehold mortgages over all of its owned and
leased real Property, as provided herein.
4.1.4 Borrower shall cause each of its present direct Foreign
Subsidiaries, and, except as otherwise consented to in writing by Agent,
shall cause each of its future direct Foreign Subsidiaries, to execute a
Negative Pledge Agreement with respect to the Capital Stock of their
Subsidiaries, whether now owned or hereafter acquired.
4.1.5 Borrower shall execute and cause to be executed, and cause
each Guarantor to execute and cause to be executed, such further documents
and instruments, including, without limitation, amendments to any of the
Security Documents, as Agent or any Lender, in its sole discretion, deems
necessary or desirable to create, evidence, preserve, and perfect its
liens and security interest in the Collateral.
4.2 LIEN PERFECTION; FURTHER ASSURANCES. Borrower shall execute such
additional UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents as are necessary to perfect Agent's Lien
upon any of the Collateral and shall xxxx
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such other action as may be required to perfect or to continue the perfection of
Agent's Lien upon the Collateral. 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. At Agent's request,
Borrower shall also promptly execute or cause to be executed and shall deliver
to Agent any and all documents, instruments and agreements deemed necessary by
Agent or any Lender to give effect to or carry out the terms or intent of the
Credit Documents.
4.3 GUARANTIES BY DOMESTIC SUBSIDIARIES. Each Person which, with Agent's
consent, hereafter becomes a Domestic Subsidiary shall execute and deliver to
Agent (a) a Guaranty in form and substance satisfactory to Agent and the Lender,
pursuant to which such Subsidiary guarantees the prompt payment and performance
in full of all of the Obligations, and (b) a Guarantor Security Agreement, and
mortgages and leasehold mortgages, in form and substance satisfactory to Agent
and each Lender, pursuant to which such Subsidiary grants to Agent, for the pro
rata benefit of the Lenders, a perfected security interest and/or mortgage,
prior to all Liens other than the security interest of the agent for the lenders
under the Working Capital Loan Agreement, in all of such Subsidiary's real and
personal Property, including without limitation the types of personal Property
described in SUBSECTION 4.1, whether now owned or hereafter acquired, and all
products and proceeds thereof. 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 and each Lender, pursuant to which Agent, for the pro rata
benefit of the Lenders, is granted a perfected security interest, prior to all
Liens other than the security interest of the agent for the lenders under the
Working Capital Loan Agreement, in all of the Capital Stock of such Subsidiary,
provided that such security interest shall be limited to 65% of the Capital
Stock of any Foreign Subsidiary and provided further that no pledge shall be
required of any Capital Stock of any Foreign Subsidiary that is not a direct,
first-tier Subsidiary of Borrower or of a Domestic Subsidiary. Borrower shall
cause to be executed and delivered to Agent and the Lenders such legal opinions,
corporate and partnership documents and certificates as Agent, the Lenders or
any of their counsel may require in connection with the documents executed and
delivered pursuant to this Subsection.
5. COLLATERAL ADMINISTRATION
5.1 General.
5.1.1 LOCATION OF COLLATERAL. All Collateral, other than Inventory
in transit and motor vehicles, will at all times be kept by Borrower and
its Domestic Subsidiaries at one or more of the business locations within
the United States, Canada and Puerto Rico set forth in EXHIBIT B hereto
and shall not, without the prior written approval of Agent and each
Lender, be moved therefrom except, prior to an Event of Default and
Agent's acceleration of the maturity of the Obligations in consequence
thereof, for (i) sales of Inventory in the ordinary course of business and
(ii) removals in connection with dispositions of Equipment that are
authorized by SUBSECTION 5.4.2 hereof.
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5.1.2 INSURANCE OF COLLATERAL. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability and such
other risks in such amounts and with such insurance companies as are
reasonably satisfactory to Agent and the Lenders. Borrower shall deliver
copies of such policies to Agent with satisfactory lender's loss payable
endorsements, naming Fleet and, to the extent reasonably practicable,
Agent for the benefit of the Lenders as loss payees, assignees or
additional insureds, 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 such Persons in the event of
cancellation of the policy for any reason whatsoever and a clause
specifying that the interest of such Persons 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 or any Lender may, at its option (but only if the agent
for the lenders under the Working Capital Loan Agreement has failed to do
so), but shall not be required to, procure the same and charge Borrower
therefor. Borrower agrees to deliver to Agent and each Lender, promptly as
rendered, true copies of all reports made in any reporting forms to
insurance companies.
5.1.3 PROTECTION OF COLLATERAL. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral,
any and all excise, property, sales, and use taxes imposed by any state,
federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to
promptly pay any portion thereof when due and the agent for the lenders
under the Working Capital Loan Agreement fails to do so, then Agent or any
Lender 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.
5.2 ADMINISTRATION OF ACCOUNTS.
5.2.1 RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS. Borrower shall
keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Agent and each Lender on such
periodic basis as Agent or any Lender shall request a sales and
collections report for the preceding period, in form satisfactory to Agent
and each Lender. On or before the fifteenth day of each month from and
after the date hereof, Borrower shall deliver to Agent and each Lender, in
form acceptable to Agent and each Lender, 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 request therefor by Agent or any Lender, copies
of proof of delivery and the original copy of all documents, including,
without limitation, repayment
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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 or any Lender shall reasonably request. If
requested by Agent or any Lender and consented to by the agent for the
lenders under the Working Capital Loan Agreement, Borrower shall execute
and deliver to Agent for the pro rata benefit of the Lenders formal written
assignments of all of its Accounts weekly or daily, which shall include all
Accounts that have been created since the date of the last assignment,
together with copies of invoices or invoice registers related thereto.
5.2.2 DISCOUNTS, ALLOWANCES, DISPUTES. 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 and each Lender as
part of the next required Schedule of Accounts. If any amounts due and
owing in excess of $500,000 are in dispute between Borrower and any
Account Debtor, Borrower shall provide Agent and each Lender with written
notice thereof at the time of submission of the next Schedule of Accounts,
explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence of an
Event of Default, Agent shall have the right (but only if the agent for
the lenders under the Working Capital Loan Agreement has failed to do so)
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 the
Accounts 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.
5.2.3 TAXES. If an Account includes a charge for any tax payable to
any governmental taxing authority, Agent and each Lender is authorized
(but only if the agent for the lenders under the Working Capital Loan
Agreement has failed to do so), 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 any
Lender shall be liable for any taxes to any governmental taxing authority
that may be due by Borrower.
5.2.4 ACCOUNT VERIFICATION. Whether or not a Default or an Event of
Default has occurred, any of Agent's or any Lender's officers, employees
or representatives shall have the right, at any time or times hereafter,
in the name of Agent or such Lender, any designee of Agent, such Lender or
Borrower, to verify the validity, amount or any other matter relating to
any Accounts by mail, telephone, telegraph or otherwise. Borrower shall
cooperate fully with Agent in an effort to facilitate and promptly
conclude any such verification process.
5.3 ADMINISTRATION OF INVENTORY.
5.3.1 RECORDS AND REPORTS OF INVENTORY. Borrower shall keep accurate
and complete records of its inventory. Borrower shall furnish to Agent and
each Lender Inventory reports in form and detail satisfactory to Agent and
each Lender at such times as Agent or any Lender may request, but at least
once each month, not later than the
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twentieth day of such month. Borrower shall conduct a physical inventory no
less frequently than annually and shall provide to Agent and each Lender a
report based on each such physical inventory promptly thereafter, together
with such supporting information as Agent or any Lender shall request.
5.3.2 RETURNS OF INVENTORY. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower the shipment of which
generated an Account on which such Account Debtor is obligated in excess
of $500,000, Borrower shall promptly notify Agent and each Lender of the
same, specifying the reason for such return and the location, condition
and intended disposition of the returned Inventory.
5.4 ADMINISTRATION OF EQUIPMENT.
5.4.1 RECORDS AND SCHEDULES OF EQUIPMENT. Borrower shall keep
accurate records itemizing and describing the kind, type, quality,
quantity and value of its Equipment and all dispositions made in
accordance with Subsection 5.4.2 hereof, and shall furnish Agent and each
Lender with a current schedule containing the foregoing information on at
least an annual basis and more often if requested by Agent or any Lender.
Immediately on request therefor by Agent or any Lender, Borrower shall
deliver to Agent and each Lender any and all evidence of ownership, if
any, of any of the Equipment.
5.4.2 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 and each Lender; provided,
however, that the foregoing restriction shall not apply, for so long as no
Default or Event of Default exists and is continuing, to (i) dispositions
of Equipment which, in the aggregate during any consecutive twelve-month
period, has a fair market value or book value, whichever is less, of
$250,000 or less, provided that all net cash proceeds thereof are remitted
to the Lenders for application to prepayment of the Loans, to the extent
required pursuant to Section 3.3 (b) 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 and each Lender at least 5 days prior
written notice of such disposition.
5.5 PAYMENT OF CHARGES. All amounts chargeable to Borrower under SECTION 5
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the Prime Rate plus 4% per annum.
6. REPRESENTATIONS AND WARRANTIES
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6.1 GENERAL REPRESENTATIONS AND WARRANTIES. To induce Agent and the
Lenders to enter into this Agreement and to make Loans hereunder, Borrower
warrants, represents and covenants to Agent and the Lenders that:
6.1.1 ORGANIZATION AND QUALIFICATION. Each of Borrower and its
Domestic Subsidiaries is a corporation or entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation. Each of Borrower and its Domestic Subsidiaries
is duly qualified and is authorized to do business and is in good standing
as a foreign corporation in each state or jurisdiction listed on EXHIBIT C
hereto and in all other states and jurisdictions in which the failure of
Borrower or any of its Subsidiaries to be so qualified would have a
Material Adverse Effect.
6.1.2 CORPORATE POWER AND AUTHORITY. Each of Borrower and its
Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Credit Documents
to which it is a party. The execution, delivery and performance of this
Agreement and each of the other Credit Documents have been duly authorized
by all necessary corporate action and do not and will not (i) require any
consent or approval of the shareholders of Borrower or any of its
Subsidiaries; (ii) contravene Borrower's or any of its Subsidiaries'
charter, articles or certificate of incorporation or by-laws; (iii)
violate, or cause Borrower or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability
to Borrower or any of its Subsidiaries; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or
any other agreement, lease or instrument to which Borrower or any of its
Subsidiaries is a party or by which it or its Properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any
Lien (other than Permitted Liens) upon or with respect to any of the
Properties now owned or hereafter acquired by Borrower or any of its
Subsidiaries.
6.1.3 LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each of
the other Credit Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Borrower and its
Subsidiaries that are parties to such Credit Documents, enforceable
against it in accordance with its respective terms.
6.1.4 CAPITAL STRUCTURE. EXHIBIT D hereto states (i) the correct
name of each of the Subsidiaries of Borrower, its jurisdiction of
incorporation and the percentage and holder of its Voting Stock owned by
Borrower, any Subsidiary and any other Person and (ii) the name of each of
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation. Borrower has good title to all of the Capital Stock it
purports to own of each of its Subsidiaries, free and clear in each case
of any Lien other than Permitted Liens. All such shares have been duly
issued and are fully paid and non-assessable. There are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any shares of Capital Stock
or obligations convertible into, or any powers of attorney relating to,
shares of the Capital Stock of any of Borrower's Subsidiaries.
11
6.1.5 CORPORATE NAMES. Neither Borrower nor any of its Subsidiaries
has been known as or used any corporate, fictitious or trade names in the
last five years, except those listed on EXHIBIT E hereto.
6.1.6 BUSINESS LOCATIONS; AGENT FOR PROCESS. Each of Borrower's and
its Subsidiaries' chief executive office and other places of business are
as listed on EXHIBIT B hereto. During the preceding one-year period,
neither Borrower nor any of its Subsidiaries has had an office, place of
business or agent for service of process other than as listed on EXHIBIT
B. Except as shown on EXHIBIT B, no Inventory owned by Borrower is stored
with a bailee, warehouseman or similar party, and no Inventory owned by
Borrower is consigned to any Person.
6.1.7 TITLE TO PROPERTIES; PRIORITY OF LIENS. Each of Borrower and
its Subsidiaries has good and indefeasible title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its
real Property, and good title to all of the Collateral and all of its
other Property, in each case, free and clear of all Liens except Permitted
Liens. Borrower and its Domestic Subsidiaries own no real Property located
in the United States and no motor vehicles located in the United States.
Borrower has paid or discharged all lawful claims which, if unpaid, might
become a Lien against any of Borrower's Properties that is not a Permitted
Lien. The Liens granted to Agent under the Security Documents hereof are
perfected Liens, subject only to Permitted Liens.
6.1.8 ACCOUNTS. Unless otherwise indicated in writing to Agent and
each Lender, with respect to each Account:
(a) It is genuine and in all respects what it purports to be, and it is
not evidenced by a judgment;
(b) It arises out of a completed, bona fide sale and delivery of goods or
rendition of services by Borrower in the ordinary course of its
business and 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;
(c) It is for a liquidated amount maturing as stated in the duplicate
invoice covering such sale or rendition of services, a copy of which
has been furnished or is available to Agent and each Lender;
(d) Such Account, and Agent's security interest therein, is not, and will
not (by voluntary act or omission of Borrower) be in the future,
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 and
each Lender to be immaterial, and each such Account is absolutely
owing to Borrower and is not contingent in any respect or for any
reason;
12
(e) Borrower has made no agreement with any Account Debtor thereunder for
any extension, compromise, settlement or modification of any such
Account or any deduction therefrom, except discounts or allowances
which are granted by Borrower in the ordinary course of its business
for prompt payment and which are reflected in the calculation of the
net amount of each respective invoice related thereto and are
reflected in the Schedules of Accounts submitted to Agent and each
Lender pursuant to Subsection 5.2.1 hereof;
(f) There are no facts, events or occurrences which in any way impair the
validity or enforceability of any Accounts or tend to reduce the
amount payable thereunder from the face amount of the invoice and
statements delivered to Agent and each Lender with respect thereto;
(g) To Borrower's knowledge, the Account Debtor thereunder (a) had the
capacity to contract at the time any contract or other document giving
rise to the Account was executed and (b) such Account Debtor is
Solvent; and
(h) To Borrower's knowledge, there are no proceedings or actions which are
threatened or pending against any Account Debtor thereunder which
might result in any material adverse change in such Account Debtor's
financial condition or the collectibility of such Account.
6.1.9 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 each Lender, and Borrower
will not permit any of the Equipment to become an accession to any
personal Property other than Equipment that is subject to perfected Liens
(subject only to Permitted Liens) in favor of Agent for the pro rata
benefit of the Lenders.
6.1.10 FINANCIAL STATEMENTS; FISCAL YEAR. The (a) audited
Consolidated and consolidating balance sheets of Borrower and such other
Persons described therein (including the accounts of all Subsidiaries of
Borrower for the respective periods during which such entities were
Subsidiaries) as of December 31, 1998, and the related statements of
income, changes in stockholder's equity, and changes in financial position
for the periods ended on such date and (b) Consolidated and consolidating
balance sheets of Borrower and such other Persons described therein
(including the accounts of all Subsidiaries of Borrower for the respective
periods during which such entities were Subsidiaries) as of September 30,
1999, and the related statements of income, changes in stockholder's
equity, and changes in financial position for the periods ended on such
date, have been prepared in accordance with GAAP, and present fairly the
financial positions of Borrower and such Persons at such date and the
results of Borrower's operations for
13
such periods. Since December 31, 1998, there has been no material change
in the business, condition (financial or otherwise), operations, prospects
or properties of Borrower and such other Persons as shown on the
Consolidated balance sheet as of such date and no change in the aggregate
value of Equipment and real Property owned by Borrower or such other
Persons, except changes in the ordinary course of business, none of which
individually or in the aggregate has had a Material Adverse Effect. The
fiscal year of Borrower and each of its Subsidiaries ends on December 31
of each year.
6.1.11 FULL DISCLOSURE. The financial statements referred to in
SUBSECTION 6.1.10 hereof do not, nor does this Agreement or any other
written statement of Borrower to Agent or the Lenders, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact
which Borrower has failed to disclose to Agent and each Lender in writing
which has had or, so far as Borrower can now foresee, will have a Material
Adverse Effect.
6.1.12 SOLVENT FINANCIAL CONDITION. Each of Borrower and its
Subsidiaries is now and, after giving effect to the Loans to be made
hereunder, at all times will be, Solvent.
6.1.13 SURETY OBLIGATIONS. Except as set forth on Exhibit S, neither
Borrower nor any of its Subsidiaries is obligated as surety or indemnitor
under any surety or similar bond or other contract issued or entered into
any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person other than Borrower or any
Subsidiary.
6.1.14 TAXES. Borrower's federal tax identification number is
00-0000000. The federal tax identification number of each of Borrower's
Domestic Subsidiaries is shown on EXHIBIT F hereto. Each of Borrower and
its Subsidiaries has filed all federal, state and local tax returns and
other reports it is required by law to file and has paid, or made
provision for the payment of, all taxes, assessments, fees, levies and
other governmental charges upon it, its income and Properties as and when
such taxes, assessments, fees, levies and charges are due and payable, (i)
unless and to the extent any thereof are being actively contested in good
faith and by appropriate proceedings and Borrower maintains reasonable
reserves on its books therefor or (ii) unless the failure to file, pay or
make provision for the payment of any such taxes or other charges either
(a) involves a Governmental Authority outside of the United States and its
territories and would not have a Material Adverse Effect or (b) involves a
Governmental Authority located within the United States and its
territories and the amount thereof does not exceed $50,000. The provision
for taxes on the books of Borrower and its Subsidiaries are adequate for
all years not closed by applicable statutes, and for its current fiscal
year.
6.1.15 BROKERS. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement (except for those claims that
arise by virtue of the activities, promises, representations or other
conduct of Agent or any of the Lenders).
14
6.1.16 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Each of
Borrower and its Subsidiaries owns or possesses all the patents,
trademarks, service marks, trade names, copyrights and licenses necessary
for the present and planned future conduct of its business without any
known conflict with the rights of others. Except for immaterial copyrights
and licenses, all such patents, trademarks, service marks, trade names,
copyrights, licenses and other similar rights are listed on EXHIBIT G
hereto. Borrower shall, from time to time as necessary (but no more
frequently than quarterly) due to any new patents, trademarks or
copyrights obtained by Borrower after the date hereof, deliver to Agent
and each Lender an updated EXHIBIT G to this Agreement, together with a
certificate of an authorized officer of Borrower certifying that the
information set forth on such schedule is true, correct and complete as of
such date, which schedule may be used to prepare additional assignments,
if necessary.
6.1.17 GOVERNMENTAL CONSENTS. Each of Borrower and its Subsidiaries
has, and is in good standing with respect to, all material governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business
as heretofore or proposed to be conducted by it and to own or lease and
operate its Properties as now owned or leased by it.
6.1.18 COMPLIANCE WITH LAWS. Each of Borrower and its Subsidiaries
has duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions
of all federal, state and local laws, rules and regulations applicable to
Borrower or such Subsidiary, as applicable, its Properties or the conduct
of its business, including, without limitation, Environmental Laws, and
there have been no material citations, notices or orders of noncompliance
issued to Borrower or any of its Subsidiaries under any such law, rule or
regulation, including without limitation Environmental Laws. Each of
Borrower and its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in material compliance with
all federal, state and local laws, rules and regulations applicable to it.
No Inventory manufactured in the United States has been produced in
violation of the Fair Labor Standards Act (29 U.S.C. ss. 201 eT Seq.), as
amended.
6.1.19 RESTRICTIONS. Neither Borrower nor any of its Subsidiaries is
a party or subject to any contract, agreement, or charter or other
corporate restriction, which materially and adversely affects its business
or the use or ownership of any of its Properties. Other than the Working
Capital Loan Agreement, neither Borrower nor any of its Subsidiaries is a
party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness, other than as set forth on EXHIBIT H
hereto, none of which prohibit the execution of or compliance with this
Agreement or the other Credit Documents by Borrower or any of its
Subsidiaries, as applicable.
6.1.20 LITIGATION. Except as set forth on EXHIBIT I hereto, there
are no actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or affecting Borrower or any of
its Subsidiaries, or the business, operations, Properties, prospects,
profits or condition of Borrower or any of its Subsidiaries. Neither
15
Borrower nor any of its Subsidiaries is in default with respect to any
order, writ, injunction, judgment, decree or rule of any court,
Governmental Authority or arbitration board or tribunal.
6.1.21 NO DEFAULTS. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of
Default. Neither Borrower nor any of its Subsidiaries is in default, and
no event has occurred and no condition exists which constitutes, or which
with the passage of time or the giving of notice or both would constitute,
a default in the payment of any Indebtedness to any Person for Money
Borrowed.
6.1.22 LEASES. EXHIBIT J hereto is a complete listing of all
Capitalized Lease Obligations of Borrower and its Subsidiaries and EXHIBIT
K hereto is a complete listing of all operating leases of Borrower and its
Subsidiaries. Each of Borrower and its Subsidiaries is in material
compliance with all of the terms of each of its respective Capitalized
Lease Obligations and operating leases.
6.1.23 PENSION PLANS. Except as disclosed on EXHIBIT L hereto,
neither Borrower nor any of its Subsidiaries has any Plan. Borrower and
each of its Subsidiaries is in compliance in all material respects with
the requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan. No fact or situation that could reasonably be
expected to result in a Material Adverse Effect exists in connection with
any Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal
liability in connection with a Multiemployer Plan.
6.1.24 TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change
in, the business relationship between Borrower or any of its Subsidiaries
and any customer or any group of customers whose purchases individually or
in the aggregate are material to the business of Borrower or any of its
Subsidiaries, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially affect
adversely Borrower or any of its Subsidiaries or prevent Borrower or any
of its Subsidiaries from conducting such business after the consummation
of the transaction contemplated by this Agreement in substantially the
same manner in which it has heretofore been conducted.
6.1.25 LABOR RELATIONS. Except as described on EXHIBIT M hereto,
neither Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Borrower's or
any of its Subsidiaries' employees, or, to Borrower's knowledge, threats
of strikes or work stoppages or any asserted pending demands for
collective bargaining by any union or organization.
6.1.26 COMPLIANCE WITH INDENTURE. All of the Obligations constitute
"Permitted Debt" under the terms of the Indenture. Borrower and each
Subsidiary which is a party to
16
the Indenture are in full compliance with all covenants, agreements, and
terms of the Indenture.
6.2 CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Credit
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or its Subsidiaries' business or operations
that would render the information in any exhibit attached hereto either
inaccurate, incomplete or misleading, so long as the Required Lenders have
consented to such changes or such changes are expressly permitted by this
Agreement.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Borrower contained in this Agreement or any of the other Credit
Documents shall survive the execution, delivery and acceptance thereof by Agent,
the Lenders and the parties thereto and the closing of the transactions
described therein or related thereto; provided that Borrower shall be permitted
to deliver to Agent from time to time as necessary, but at least quarterly,
updated Exhibits B, C, D, F, H (with respect to Subsidiaries only) I, J, K, L
and M to this Agreement, together with a certificate of an authorized officer of
Borrower certifying that the information set forth in such exhibit(s) is true,
correct and complete as of such date.
7. COVENANTS AND CONTINUING AGREEMENTS
7.1 AFFIRMATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless otherwise consented to by the Required Lenders
in writing, it shall:
7.1.1 VISITS AND INSPECTIONS. Permit representatives of Agent and
any Lender, 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 and each of its Subsidiaries, inspect, audit and make extracts
from its books and records, and discuss with its officers, its employees
and its independent accountants, the business, assets, liabilities,
financial condition, business prospects and results of operations of
Borrower and each of its Subsidiaries.
7.1.2 NOTICES. Promptly notify Agent and each Lender in writing of
the occurrence of any event or the existence of any fact which renders any
representation or warranty in this Agreement or any of the other Credit
Documents inaccurate, incomplete or misleading.
7.1.3 FINANCIAL STATEMENTS. Keep, and cause each Subsidiary to 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 its financial transactions (except for Foreign Subsidiaries
and Foreign Affiliates that may keep day to day records and books of
account in accordance with local statutory practices rather than GAAP);
and cause to be prepared and furnished to Agent and each Lender the
following (all to be prepared in accordance with GAAP applied on a
consistent basis, unless Borrower's certified public
17
accountants concur in any change therein and such change is disclosed to
Agent and each Lender and is consistent with GAAP):
(a) not later than 90 days after the close of each fiscal year of
Borrower, unqualified audited financial statements of Borrower and
its Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, which Consolidated financial statements shall
be certified by a firm of independent certified public accountants
of recognized standing selected by Borrower but acceptable to Agent
and each Lender (except for a qualification for a change in
accounting principles with which the accountant concurs);
(b) not later than 60 days after the close of each fiscal quarter of
Borrower, excluding the last quarter of Borrower's fiscal year,
unaudited financial statements of Borrower and its Subsidiaries as
of the end of such quarter and of the portion of Borrower's
financial year then elapsed, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and fairly
presenting the Consolidated financial position and results of
operations of Borrower and its Subsidiaries for such quarter and
period subject only to changes from audit and year-end adjustments
and except that such statements need not contain notes;
(c) not later than 30 days after the end of each month hereafter,
including the last month of Borrower's fiscal year, unaudited
interim financial statements of Borrower and its Subsidiaries as of
the end of such month and of the portion of Borrower's financial
year then elapsed, on a Consolidated and consolidating basis,
certified by the principal financial officer of Borrower as prepared
in accordance with GAAP and fairly presenting the Consolidated
financial position and results of operations of Borrower and its
Subsidiaries for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need
not contain notes; provided, however, that Borrower will deliver a
preliminary unaudited financial report as of and for each year
ending December 31 within thirty (30) days after the end of such
year, and provided, further, that the unaudited financial report as
of and for each month ending January 31 will not be due until sixty
(60) days after the end of such month;
(d) promptly after the sending or filing thereof, as the case may be,
copies of any proxy statements, financial statements or reports
which Borrower has made available to its shareholders and copies of
any regular, periodic and special reports or registration statements
(other than on Form S-8) which Borrower files with the Securities
and Exchange Commission or any Governmental Authority which may be
substituted therefor, or any national securities exchange;
(e) promptly after the filing thereof, copies of any annual report to be
filed with ERISA in connection with each Plan; and
(f) such other data and information (financial and otherwise) as Agent
or any Lender, from time to time, may reasonably request, bearing
upon or related to the
18
Collateral or Borrower's and each of its Subsidiaries' financial
condition or results of operations.
Concurrently with the delivery of the financial statements described
in clause (a) of this SUBSECTION 7.1.3, Borrower shall forward to Agent
and each Lender a copy of the accountants' letter to Borrower's management
that is prepared in connection with such financial statements and also
shall cause to be prepared and shall furnish to Agent and each Lender a
certificate of the aforesaid certified public accountants certifying to
Agent and each Lender that, based upon their examination of the financial
statements of Borrower and its Subsidiaries performed in connection with
their examination of said financial statements, they are not aware of any
Default or Event of Default insofar as it may relate to accounting matters
or, if they are aware of such Default or Event of Default, specifying the
nature thereof. Concurrently with the delivery of the financial statements
described in clauses (a) and (c) of this SUBSECTION 7.1.3, or more
frequently if requested by Agent or any Lender, Borrower shall cause to be
prepared and furnished to Agent and each Lender a Compliance Certificate
in the form of EXHIBIT N hereto executed by the Chief Financial Officer of
Borrower. All financial statements and reports, including Borrowing Base
Reports, required to be delivered under this Section shall be due on the
Business Day immediately following the specified due date if the specified
due date is not a Business Day.
7.1.4 LANDLORD AND STORAGE AGREEMENTS; LANDLORD SUBORDINATION
AGREEMENT. Provide Agent and each Lender with copies of all lease or
warehouse storage agreements between Borrower or any of its Subsidiaries
and any landlord or warehouseman which owns any premises at which any
Inventory may, from time to time, be kept and obtain from each such
landlord and warehouseman a subordination or waiver agreement in form and
substance satisfactory to the Agent and each Lender within 45 days after
the date hereof in the case of all such leases or warehouse storage
arrangements in existence on the date hereof and within five days after
entering into any such arrangement after the date hereof; provided,
however, that if Borrower is unable to obtain the consent of any landlord
or warehouseman with respect to any such arrangement entered into after
the date hereof after exerting its best efforts, Borrower shall not be
required to obtain such subordination or waiver agreement. In any case in
which Borrower is unable to obtain a subordination or waiver agreement,
Borrower shall be required to demonstrate its best efforts by providing
Agent and the Lenders with copies of correspondence and/or other evidence
of seeking the consent of the relevant landlord or warehouseman by
reasonable means, including an offer to make a payment of at least $10,000
in exchange for such consent.
7.1.5 REAL PROPERTY.Upon acquisition of any real Property by the
Borrower or any Domestic Subsidiary, provide to the Agent for the benefit
of the Lenders mortgages on such real Property, satisfactory in form and
substance to the Agent and the Lenders and subject only to the prior Lien
of the agent for the lenders under the Working Capital Loan Agreement,
together with evidence of the recordation thereof and such title
19
insurance policies, surveys, other certificates, instruments and legal
opinions reasonably requested by the Agent or any Lender in connection
therewith.
7.1.6 PROJECTIONS. No later than 30 days prior to the end of each
fiscal year of Borrower, deliver to Agent and each Lender Projections of
Borrower for the forthcoming fiscal year, quarter by quarter.
7.1.7 ERISA. Comply, and will cause each Subsidiary to comply, with
all minimum funding requirements, and all other material requirements, of
ERISA, if applicable, so as not to give rise to any liability for failure
to comply with the requirements of ERISA.
7.1.8 LEASEHOLD MORTGAGES. Within 45 days after the date hereof,
provide leasehold mortgages, satisfactory in form and substance to the
Agent and each Lender, with respect to all real Property leased by the
Borrower and its Domestic Subsidiaries, together with evidence of the
recordation thereof and such other certificates, instruments and legal
opinions reasonably requested by the Agent or any Lender in connection
therewith, all satisfactory in form and substance to the Agent and each of
the Lenders and within five days after entering into any lease of real
Property by the Borrower or its Domestic Subsidiaries after the date
hereof provide leasehold mortgages, satisfactory in form and substance to
the Agent and each Lender, with respect to such real Property, together
with evidence of the recordation thereof and such other certificates,
instruments and legal opinions reasonably requested by the Agent or any
Lender in connection therewith, all satisfactory in form and substance to
the Agent and each of the Lenders; provided, however, that if Borrower is
unable to obtain the consent of any lessor with respect to any such real
Property after exerting its best efforts, Borrower shall not be required
to provide such leasehold mortgage. In any case in which Borrower is
unable to obtain a leasehold mortgage, Borrower shall be required to
demonstrate its best efforts by providing Agent and the Lenders with
copies of correspondence and/or other evidence of seeking the consent of
the relevant lessor by reasonable means including an offer to make a
payment of at least $10,000 in exchange for such consent.
7.1.9 LEGAL OPINIONS. Within 45 days after the date hereof, opinions
of counsel to the Borrower in the States of Washington, Ohio, Minnesota,
New Jersey, California and Canada, to the extent Inventory and/or
Equipment are located in Canada, satisfactory in form and substance to the
Agent and each of the Lenders.
7.1.10 CASH MANAGEMENT. Maintain at all times the banking and cash
management arrangements provided for in the Working Capital Loan Agreement
or such other banking and cash management arrangements as may be approved
by the Agent and each Lender.
7.2 NEGATIVE COVENANTS. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Agent or any Lender, Borrower
covenants that, unless the Required Lenders have first consented thereto in
writing, it will not:
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7.2.1 MERGERS; CONSOLIDATIONS; ACQUISITIONS. Merge or consolidate,
or permit any Subsidiary of Borrower to merge or consolidate, with any
Person; nor acquire, nor permit any of its Subsidiaries to acquire, all or
substantially all of the Properties of any Person, except that any
Subsidiary may be dissolved, liquidated or merged into Borrower and any
Foreign Subsidiary may be dissolved, liquidated or merged into another
Foreign Subsidiary, so long as such dissolution, liquidation or merger
results in all assets of such Subsidiary being owned by Borrower or, in
the case of a Foreign Subsidiary, by another Foreign Subsidiary.
7.2.2 LOANS. Make, or permit any Subsidiary of Borrower to 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 which are otherwise permitted hereunder) to any Person,
except as permitted by Subsection 7.2.12.
7.2.3 TOTAL INDEBTEDNESS. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur or suffer to exist,
any Indebtedness, except:
(a) Obligations owing to Agent and the Lenders;
(b) Indebtedness of any Foreign Subsidiary owed to Borrower, provided
that any such Indebtedness and shall not exceed $110,000,000 as of
November 30, 1999, and any other such Indebtedness owing to Borrower
(a) must be evidenced by intercompany notes that are pledged to
Agent, for the benefit of the Lenders, and (b) shall not exceed the
sum of (1) the actual amount of Indebtedness of Foreign Subsidiaries
owed to Borrower outstanding as of November 30, 1999 (not to exceed
$110,000,000 plus an additional $3,000,000 plus (2) for periods
subsequent to July 1, 2000, the then applicable Average Gross
Availability Amount, as defined in, and determined under, the
Working Capital Loan Agreement. Borrower shall provide Agent with a
schedule setting forth the proposed Average Gross Availability
Amount within five (5) Business Days after the end of each month and
at least five (5) Business Days prior to making any loan or advance
that would constitute Indebtedness under clause (b)(2) hereof in
order to obtain Agent's and each Lender's consent to any such loan
or advance, which consent shall be granted in Agent's and each
Lender's sole discretion. In the event that, as a result of a
decrease in such Average Gross Availability Amount, the outstanding
Indebtedness addressed by this clause (b) exceeds the amount
permitted by this clause (b), it shall not constitute a Default
hereunder so long as Borrower is in compliance with this clause (b)
within 60 days thereafter;
(c) Indebtedness of Borrower owed to any Subsidiary or of any Subsidiary
owed to another Subsidiary or to a Foreign Affiliate, including any
renewal, extension or refinancing thereof;
(d) Obligations to pay Rentals permitted by Subsection 7.2.13;
(e) Permitted Purchase Money Indebtedness;
21
(f) contingent liabilities arising out of endorsements of checks and
other negotiable instruments for deposit or collection in the
ordinary course of business;
(g) Indebtedness arising under the Indenture or the Working Capital Loan
Agreement; and
(h) Indebtedness of Foreign Subsidiaries (other than Indebtedness
described in Subsection 7.2.3(b) or (c) above) incurred, renewed,
extended or refinanced when no Default exists or would result
therefrom, provided that the aggregate amount of all such
Indebtedness outstanding at any time shall not exceed the greater of
(a) fifty percent (50%) of the aggregate book value of the accounts
receivable (net of bad debt reserves) of such Foreign Subsidiaries
or (b) $10,000,000;
(i) Indebtedness of Foreign Subsidiaries to Fleet or an Affiliate
thereof which has been Guaranteed by Borrower, including any
renewal, extension or refinancing thereof;
(j) Indebtedness existing on the date hereof and described on Exhibit T
hereto;
(k) Indebtedness not to exceed $4,000,000 owing to Xxxxxxx & Xxxxxx
Company arising from the licensing to Borrower of certain patents
owned by Xxxxxxx & Xxxxxx Company;
(l) Capitalized Lease Obligations so long as such leases do not cover
any Property other than the Property acquired in connection
therewith, provided that the aggregate amount of all such
Indebtedness outstanding at any time shall not exceed $1,500,000;
(m) Hedging Obligations entered into in the ordinary course of business
in order to hedge currency, commodity or interest rate risks, and
not for purposes of speculation;
(n) Permitted Borrower Refinancing Debt;
(o) Guarantees of Indebtedness by Borrower or any Subsidiary, provided
that the Indebtedness subject to such Guarantee, if incurred
directly rather than by a Guarantee by Borrower or such Subsidiary,
would otherwise be permitted under this Subsection 7.2.3; and
(p) Indebtedness not included in paragraphs (a) through (o) above which
does not exceed at any time, in the aggregate, the sum of
$1,000,000.00.
7.2.4 AFFILIATE TRANSACTIONS. Enter into, or be a party to, or permit any
Subsidiary of Borrower to enter into or be a party to, any transaction with any
Affiliate of Borrower or stockholder, except in the ordinary course of and
pursuant to the reasonable
22
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms which are fully disclosed to Agent and each Lender and are no
less favorable to Borrower than would obtain in a comparable arm's length
transaction with a Person not an Affiliate or stockholder of Borrower or such
Subsidiary, except for the following:
(a) sales, assignments, transfers or other dispositions of assets and licenses
of intellectual Property rights permitted under Subsection 7.2.9 hereof
(including without limitation sales of inventory to Borrower or any
Subsidiary);
(b) payment of reasonable and customary regular fees to directors of Borrower
who are not employees of Borrower;
(c) loans and advances to officers, directors and employees of Borrower or its
Subsidiaries for travel, entertainment and moving and other relocation
expenses made in direct furtherance and in the ordinary course of business
of Borrower and its Subsidiaries (provided that the same shall not exceed
the aggregate amount of $400,000 during any fiscal year of Borrower);
(d) any other transaction with any employee, officer or director of Borrower
or any of its Subsidiaries pursuant to employee benefit or compensation
arrangements entered into in the ordinary course of business and approved
by the Board of Directors of Borrower or such Subsidiary; and
(e) allocations of corporate overhead and expenses among Borrower and its
Subsidiaries; and
(f) loans permitted under Subsection 7.2.3 and investments permitted by
Subsection 7.2.12.
7.2.5 LIMITATION ON LIENS. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(a) Liens at any time granted in favor of the agent for the lenders under the
Working Capital Loan Agreement and Agent for the benefit of the Lenders;
(b) Liens for taxes (excluding any Lien imposed pursuant to any of the
provisions of ERISA) not yet due, or being contested in the manner
described in Subsection 6.1.14 hereto, but only if in the judgment of the
Agent and each Lender such Lien does not adversely affect the Lender's
rights or the priority of Agent's Lien in the Collateral for the benefit
of the Lenders;
(c) Purchase Money Liens securing Permitted Purchase Money Indebtedness;
(d) Liens disclosed on Exhibit O hereto;
23
(e) Liens of mechanics, materialmen, warehousemen, landlords, carriers,
repairmen, or other similar statutory Liens securing obligations that (a)
are not yet due and are incurred in the ordinary course of business or (b)
are being contested in good faith by appropriate proceedings diligently
pursued, and for which adequate reserves have been established;
(f) Liens resulting from good faith deposits to secure payments of workers'
compensation, unemployment insurance or other social security programs or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, or contracts (other than for payment of Indebtedness),
or leases made in the ordinary course of business;
(g) Liens securing permitted Indebtedness of the Foreign Subsidiaries pursuant
to Subsection 7.2.3, provided that no such Lien shall be granted in any
Capital Stock owned by a Foreign Subsidiary;
(h) any interest or title of a lessor in Property subject to any Capitalized
Lease Obligation or operating lease which, in each case, is permitted
under this Agreement;
(i) any renewal of, replacement for or substitution for any Lien permitted by
any of the clauses of this Subsection 7.2.5; provided that the
Indebtedness secured is not increased nor the Lien extended to any
additional assets;
(j) Liens securing Permitted Borrower Refinancing Debt so long as such
Permitted Borrower Refinancing Debt is secured only by Liens on those
assets that secured such Indebtedness prior to the renewal, extension,
refinancing, refund or repurchase;
(k) Liens arising by reason of any judgment, decree or order of any court so
long as such Lien is fully bonded and any appropriate legal proceedings
that may have been duly instituted for the review or appeal of such
judgment, decree or order have not been finally terminated or the period
within which such proceedings may be instituted has not expired;
(l) Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation
of goods;
(m) such other Liens as the Required Lenders may hereafter approve in writing;
and
(n) Liens not permitted by any other clause of this Subsection 7.2.5 securing
Indebtedness or other Obligations in an aggregate amount not to exceed
$250,000 at any one time outstanding, provided that (a) any such Liens on
assets of Borrower or any Guarantor are subordinate to Agent's Liens
thereon, (b) any such Liens do not extend to any Capital Stock, and (c)
any such Liens do not extend to Accounts, Inventory or Equipment or
General Intangibles.
24
7.2.6 SUBORDINATED DEBT. Make, or permit any Subsidiary of Borrower to
make, any, payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except in accordance with a subordination agreement approved by Agent and each
Lender, provided that Borrower may prepay or redeem Subordinated Debt using
Qualified Stock of Borrower.
7.2.7 DISTRIBUTIONS; CERTAIN PREPAYMENTS. (a) Declare or make any
Distributions, except that the foregoing shall not prohibit or limit (i) the
purchase, redemption, acquisition or retirement of any shares of Capital Stock
of Borrower in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary) of, other shares of
Qualified Stock of Borrower or (ii) the redemption or acquisition of any of the
notes issued under the Indenture to the extent required by the terms thereof (as
in effect on the date hereof) or (b) make any voluntary prepayment, redemption
or defeasance of any of the notes issued under the Indenture.
7.2.8 CAPITAL EXPENDITURES. Make Capital Expenditures (excluding Capital
Expenditures which are financed under the Working Capital Loan Agreement or
borrowings under any financing arrangement otherwise permitted hereunder),
which, in the aggregate, as to Borrower and its Subsidiaries, exceed (i)
$10,000,000 during Borrower's fiscal year 2000, (ii) $15,000,000 during its
fiscal year 2001 and (iii) $20,000,000 during its fiscal year 2002.
7.2.9 DISPOSITION OF ASSETS. Sell, lease or otherwise dispose of any of,
or permit any Subsidiary of Borrower to sell, lease or otherwise dispose any of,
its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person except:
(a) sales of Inventory in the ordinary course of business for so long as no
Event of Default exists hereunder,
(b) a transfer of Property to Borrower by a Subsidiary of Borrower;
(c) dispositions expressly authorized by SUBSECTION 5.4.2 of this Agreement;
(d) factoring of accounts receivable of any of the Foreign Subsidiaries (other
than accounts receivable included in the Borrowing Base) pursuant to
factoring arrangements entered into in the ordinary course of their
respective businesses;
(e) sales, assignments, transfers, or other dispositions of assets of Borrower
and the Subsidiaries, the gross proceeds of which (inclusive of
dispositions of Equipment permitted under SUBSECTION 5.4.2) do not exceed
$500,000.00 in the aggregate for any fiscal year;
(f) non-exclusive licenses of technology and other intellectual Property
rights by and among Borrower and the Subsidiaries.
25
Agent is hereby authorized, on behalf of all Lenders, to release the Liens
held by Agent on Collateral that Borrower or any Subsidiary is permitted
pursuant to this SUBSECTION 7.2.9 to sell or otherwise dispose of in the event
such Person does in fact sell or otherwise dispose of such Collateral.
7.2.10 STOCK OF SUBSIDIARIES. Form or permit any Subsidiary to form
any new Subsidiary, or permit any of its Subsidiaries to issue any
additional shares of its Capital Stock except director's qualifying
shares.
7.2.11 XXXX-AND-HOLD SALES, ETC. Make a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval or
consignment basis, or any sale on a repurchase or return basis, except for
certain xxxx-and-hold sales of which Borrower will give prompt written
notice to Agent and each Lender.
7.2.12 RESTRICTED INVESTMENT. Make or have, or permit any Subsidiary
of Borrower to make or have, any Restricted Investment.
7.2.13 LEASES. Become, or permit any of its Subsidiaries to become,
a lessee under any operating lease (other than a lease under which
Borrower or any of its Subsidiaries is lessor) of Property if the
aggregate Rentals payable under the lease in question and all other leases
under which Borrower or any of its Subsidiaries is then lessee would
exceed $8,500,000 during Borrower's 1999 fiscal year. The amount of such
aggregate annual Rentals may increase by a total of $1,000,000 for each
subsequent fiscal year of Borrower. The term "Rentals" means, as of the
date of determination, all payments which the lessee is required to make
by the terms of any lease during the applicable annual period.
7.2.14 TAX CONSOLIDATION. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of
Borrower.
7.2.15 MODIFICATIONS TO OTHER SENIOR FUNDED DEBT. Amend, modify or
supplement any payment or other material terms of the Indenture, the
Working Capital Loan Agreement or the Loan Documents (as defined in the
Working Capital Loan Agreement).
7.2.16 NEGATIVE PLEDGE. (i) Pledge, assign or grant, or permit any
Subsidiary to pledge assign or grant, a security interest in any Capital
Stock owned by Borrower or such Subsidiary or (ii) grant, or permit any
Subsidiary to grant, a negative pledge to any Person with respect to the
Capital Stock or other assets owned by Borrower or such Subsidiary, in
either case, other than pursuant to the Credit Documents.
7.3 SPECIFIC FINANCIAL COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless otherwise consented to by the Required Lenders
in writing, it shall:
26
7.3.1 INTEREST COVERAGE RATIO. Achieve, at the end of each fiscal
quarter, an Interest Coverage Ratio, for the quarterly period then ended,
equal to or greater than the ratio shown below for the quarter
corresponding thereto:
FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 0.95 to 1
March 31, 2000 1.35 to 1
June 30, 2000 1.50 to 1
September 30, 2000 1.60 to 1
December 31, 2000 1.80 to 1
March 31, 2001 and thereafter 2.00 to 1
7.3.2 ADJUSTED EBITDA TO FIXED CHARGES RATIO. Achieve, at the end of
each fiscal quarter, a ratio of Adjusted EBITDA to Fixed Charges equal to
or greater than the ratio shown below for the quarter corresponding
thereto:
FISCAL QUARTER ENDING RATIO
--------------------- -----
September 30, 2000 1.20 to 1
December 31, 2000 1.00 to 1
March 31, 2001 and thereafter 1.35 to 1
For purposes of calculating the ratio of Adjusted EBITDA to Fixed Charges as of
September 30, 2000, the respective amounts of Adjusted EBITDA and Interest
Expense for the three quarters then ended shall be annualized by being
multiplied by 1.33. Commencing as of December 31, 2000 and as of the end of each
fiscal quarter thereafter, the respective amounts of Adjusted EBITDA and
Interest Expense shall be determined on the basis of the twelve months then
ended.
7.3.3 MINIMUM EBITDA. Achieve (i) for the fiscal year ending December 31,
2000, EBITDA of at least $36,500,000, (ii) for the fiscal year ending December
31, 2001, EBITDA of at least $40,000,000 and (iii) for the nine-month period
ending September 30, 2002, EBITDA of at least $30,000,000.
8. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the other
Credit Documents, and without affecting in any manner the rights of Agent and
the Lenders under the other sections of this Agreement, the Lenders shall not be
required make any Loan under this
27
Agreement unless and until each of the following conditions has been and
continues to be satisfied:
8.1 DOCUMENTATION. Agent and each Lender shall have received, in form and
substance satisfactory to it and its counsel, a duly executed copy of this
Agreement and the other Credit Documents, together with such additional
documents, instruments, legal opinions and certificates as Agent, any Lender and
any of their counsel shall require.
8.2 PERFECTION. Agent and each Lender shall have received, in form and
substance satisfactory to it and its counsel, executed UCC-1 financing
statements for all Collateral and such additional documents, instruments, legal
opinions and certificates as Agent and its counsel shall require, together with
evidence of the delivery of all certificated securities and instruments to the
agent for the lenders under the Working Capital Loan Agreement, in connection
with the creation, validity and perfection of the Liens in favor of the Agent
for the benefit of the Lenders.
8.3 NO DEFAULT. No Default or Event of Default shall exist.
8.4 OTHER CREDIT DOCUMENTS. Each of the conditions precedent set forth in
the other Credit Documents shall have been satisfied.
8.5 WORKING CAPITAL LOAN AGREEMENT. Agent and each Lender shall have
received evidence satisfactory to it that the Working Capital Loan Agreement and
all Loan Documents (as defined therein) are in full force and effect, and that,
after giving effect to all extensions of credit thereunder, Availability (as
defined therein) thereunder shall be not less than $8,000,000.
8.6 NO LITIGATION. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
9.1 EVENTS OF DEFAULT. The occurrence of one or more of the following
events shall constitute an "Event of Default":
9.1.1 PAYMENT OF NOTES. Borrower fails to pay when due any
installment of principal, interest or premium, if any, owing on any of the
Notes.
9.1.2 PAYMENT OF OTHER OBLIGATIONS. Borrower fails to pay any of the
Obligations that are not evidenced by the Notes on the due date thereof
(whether due at stated maturity, on demand, upon acceleration or
otherwise).
9.1.3 MISREPRESENTATIONS. Any representation, warranty or other
statement made or furnished to Agent or any Lender by or on behalf of
Borrower, any Subsidiary of Borrower or any Guarantor in this Agreement,
any of the other Credit Documents or any instrument, certificate or
financial statement furnished in compliance with or in reference
28
thereto proves to have been false or misleading in any material respect
when made or furnished or when reaffirmed pursuant to SUBSECTION 6.2
hereof.
9.1.4 BREACH OF SPECIFIC COVENANTS. Borrower fails or neglects to
perform, keep or observe any covenant contained in (a) SUBSECTIONS 4.2,
5.1.1, 5.2, 7.1.1, 7.1.3, 7.1.8, 7.1.9, 7.2 or 7.3 hereof, (b) the Warrant
Agreement referred to in the definition of Common Stock Agreements or (c)
the Registration Rights Agreement referred to in such definition, in each
case on the date that Borrower is required to perform, keep or observe
such covenant.
9.1.5 BREACH OF OTHER COVENANTS. Borrower fails or neglects to
perform, keep or observe any covenant contained in this Agreement or any
other Credit Document (other than a covenant which is dealt with
specifically elsewhere in SUBSECTION 9.1 hereof) and the breach of such
other covenant is not cured to the satisfaction of Agent and each Lender
within 15 days after the sooner to occur of Borrower'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 executive officer of Borrower.
9.1.6 DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS. 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 Security Documents, the Indenture, the Working Capital Loan
Agreement or any Loan Document (as defined in the Working Capital Loan
Agreement), and such event of default shall continue beyond any applicable
grace period.
9.1.7 OTHER DEFAULTS. There shall occur any default or event of
default on the part of Borrower under any agreement, document or
instrument to which Borrower is a party or by which Borrower or any of its
Property is bound, creating or relating to any Indebtedness (other than
the Obligations or under the Indenture or the Working Capital Loan
Agreement) in excess of $100,000.00 if the payment or maturity of such
Indebtedness is, or, at the option of the holders of any such Indebtedness
or a trustee on their behalf, may be accelerated in consequence of such
event of default or demand for payment of such Indebtedness is made.
9.1.8 UNINSURED LOSSES. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Agent and each Lender shall have permitted) by insurance.
9.1.9 INSOLVENCY AND RELATED PROCEEDINGS. Borrower or any Guarantor
shall cease to be Solvent or shall suffer the appointment of a receiver,
trustee, custodian or similar fiduciary, or shall make an assignment for
the benefit of creditors, or any petition for an order for relief shall be
filed by or against Borrower or any Guarantor under the Bankruptcy Code
(and if against Borrower or any Guarantor, the continuation of such
proceedings for more than 30 days), or Borrower or any Guarantor shall
make any offer of settlement, extension or composition to their respective
unsecured creditors generally.
29
9.1.10 BUSINESS DISRUPTION; CONDEMNATION. There shall occur a
cessation of a material part of the business of Borrower, any Subsidiary
of Borrower or any Guarantor for a period which significantly affects
Borrower's or such Guarantor's capacity to continue its business, on a
profitable basis; or Borrower, any Subsidiary of Borrower or any Guarantor
shall suffer the loss or revocation of any license or permit now held or
hereafter acquired by Borrower or such Guarantor which is necessary to the
continued or lawful operation of its business; or Borrower or any
Guarantor shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material
part of its business affairs; or any material lease or agreement pursuant
to which Borrower or any Guarantor leases, uses or occupies any Property
shall be canceled or terminated by the other party prior to the expiration
of its stated term; or any part of the Collateral shall be taken through
condemnation or the value of such Property shall be impaired through
condemnation.
9.1.11 CHANGE OF OWNERSHIP. A Change in Control shall occur or
Borrower shall cease to own and control, beneficially and of record, at
least 100% of the issued and outstanding Capital Stock of any Guarantor.
9.1.12 ERISA. A Reportable Event shall occur which Agent and each
Lender, in its sole discretion, shall determine in good faith constitutes
grounds for the termination by the Pension Benefit Guaranty Corporation of
any Plan or for the appointment by the appropriate United States district
court of a trustee for any Plan, or if any Plan shall be terminated or any
such trustee shall be requested or appointed, or if Borrower, any
Subsidiary of Borrower or any Guarantor is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer
Plan resulting from Borrower's, such Subsidiary's or such Guarantor's
complete or partial withdrawal from such Plan.
9.1.13 CHALLENGE TO AGREEMENT. Borrower, any Subsidiary of Borrower
or any Guarantor, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability
of this Agreement, or any of the other Credit Documents, the legality or
enforceability of any of the Obligations or the perfection or priority of
any Lien granted to Agent for the benefit of the Lenders.
9.1.14 REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed
by such Guarantor, or shall repudiate such Guarantor's liability
thereunder or shall be in default under the terms thereof.
9.1.15 CRIMINAL FORFEITURE. Borrower, any Subsidiary of Borrower or
any Guarantor shall be criminally indicted or convicted under any law that
could lead to a forfeiture of any material portion of the Property of
Borrower, any Subsidiary of Borrower or any Guarantor.
9.1.16 JUDGMENTS. Any material money judgment, writ of attachment or
similar process is filed against Borrower, any Subsidiary of Borrower or
any Guarantor, or any of their respective Property.
30
9.1.17 REPUDIATION OF OR DEFAULT UNDER INTERCREDITOR AGREEMENT. The
agent or the Lenders under the Working Capital Loan Agreement shall revoke
or attempt to revoke the Intercreditor Agreement, or shall repudiate any
of their obligations thereunder or shall be in default under the terms
thereof.
9.2 ACCELERATION OF THE OBLIGATIONS. Without in any way limiting the right
of Agent and the Lenders to demand payment of any portion of the Obligations
payable on demand in accordance with SUBSECTION 3.2 hereof, upon or at any time
after the occurrence of an Event of Default, all or any portion of the
Obligations shall, at the option of Agent (with the consent of the Required
Lenders or at the direction of the Required Lenders), and without presentment,
demand, protest or further notice by Agent or any Lender, become at once due and
payable and Borrower shall forthwith pay to Agent and each Lender the full
amount of such Obligations owing to Agent or such Lender, as the case may be,
provided, that upon the occurrence of an Event of Default specified in
SUBSECTION 9.1.9 hereof, all of the Obligations shall become automatically due
and payable without declaration, notice or demand by Agent or any Lender.
9.3 OTHER REMEDIES. Upon and after the occurrence of an Event of Default,
Agent and the Lenders shall have and may exercise from time to time, subject to,
and in accordance with the terms of the Intercreditor Agreement, the following
rights and remedies:
9.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable
rights to which Agent and the Lenders may be entitled, all of which rights
and remedies shall be cumulative and shall be in addition to any other
rights or remedies contained in this Agreement or any of the other Credit
Documents, and none of which shall be exclusive.
9.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Agent at a place designated by Agent which is
reasonably convenient to both parties, and (ii) enter any premises where
any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the
Property of Borrower, Borrower agrees not to charge Agent for storage
thereof).
9.3.3 The right to sell or otherwise dispose of all or any
Collateral in its condition at that time, 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 Agent, in its sole discretion, may deem advisable.
The proceeds realized from the sale of any Collateral may be applied,
after allowing two (2) Business Days for collection, first to the costs,
expenses and attorneys' fees incurred by Agent in collecting the
Obligations, in enforcing the rights of Agent under the Credit Documents
and in collecting, retaking, completing, protecting, removing, storing,
advertising for sale, selling and delivering any Collateral, second to the
interest due upon any of the Obligations, and third, to the principal of
the Obligations. If any deficiency shall arise, Borrower and each
Guarantor shall remain jointly and severally liable to Agent and the
Lenders therefor.
31
9.3.4 Agent is hereby granted, for the benefit of the Lenders a
license or other right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names,
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 benefit, for the benefit of the Lenders.
9.4 REMEDIES CUMULATIVE; NO WAIVER. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement and the other Credit Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any Guaranty Agreement 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 (except for amendments and waivers
effected pursuant to SUBSECTION 11.3). The failure or delay of Agent or any
Lender to require strict performance by Borrower of any provision of this
Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or 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 the
Lenders shall have been fully satisfied (except for waivers effected pursuant to
SUBSECTION 11.3). None of the undertakings, agreements, warranties, covenants
and representations of Borrower contained in this Agreement or any of the other
Credit Documents and no Event of Default by Borrower under this Agreement or any
other Credit Documents shall be deemed to have been suspended or waived, 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
and Required Lenders and directed to Borrower.
10. AGENT
10.1 APPOINTMENT, POWERS AND IMMUNITIES. In order to expedite the various
transactions contemplated by this Agreement, the Lenders hereby irrevocably
appoint and authorize Davidson Kempner Service Company, LLC to act as their
agent hereunder and under each of the other Credit Documents. Davidson Kempner
Service Company, LLC consents to such appointment and agrees to perform the
duties of Agent as specified herein. The Lenders authorize and direct Agent to
take such action in their name and on their behalf under the terms and
provisions of the Credit Documents and to exercise such rights and powers
thereunder as are specifically delegated to or required of Agent for the
Lenders, together with such rights and powers as are reasonably incidental
thereto. Agent is hereby expressly authorized:
(a) To receive on behalf of each of the Lenders any amounts realized on
the Collateral and to distribute to each Lender its pro rata share
of such amount as provided in this Agreement;
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(b) To receive all documents and items to be furnished under the Credit
Documents;
(c) To act as nominee for and on behalf of the Lenders in and under the
Credit Documents to the extent permitted by the Credit Documents;
(d) To arrange for the means whereby the funds of the Lenders are to be
made available to Borrower;
(e) To distribute to the Lenders information, requests, notices,
payments, prepayments, documents and other items received from
Borrower, the Guarantors, and other Persons;
(f) To execute and deliver to Borrower, the Guarantors, and other
Persons, all requests, demands, approvals, notices, and consents
received from the Lenders;
(g) To the extent permitted by the Credit Documents, to exercise on
behalf of each Lender all rights and remedies of Lenders upon the
occurrence of any Event of Default;
(h) To accept, execute, and deliver any Security Documents as the
secured party for the benefit of the Lenders to the extent permitted
by the Credit Documents;
(i) To take such other actions as may be requested by Required Lenders;
and
(j) To release Liens held by Agent on Collateral to the extent permitted
by the Credit Documents.
Neither Agent nor any of its Affiliates, officers, directors, employees,
attorneys, or agents shall be liable for any action taken or omitted to be taken
by any of them hereunder or otherwise in connection with this Agreement or any
of the other Credit Documents except for its or their own gross negligence or
willful misconduct. Without limiting the generality of the preceding sentence,
Agent (i) may treat the payee of any Note as the holder thereof until Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Agent; (ii) shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Credit Documents, and shall not by reason of this Agreement or any other
Credit Document be a trustee or fiduciary for any Lender; (iii) shall not be
required to initiate any litigation or collection proceedings hereunder or under
any other Credit Document except to the extent requested by Required Lenders;
(iv) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or any other Credit
Document, or any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other Credit Document,
or for the value, validity, effectiveness, enforceability, or sufficiency of
this Agreement or any other Credit Document or any other document referred to or
provided for herein or therein or for any failure by any Person to perform any
of its obligations hereunder or thereunder; (v) may consult with legal counsel
(including counsel for Borrower), independent public accountants, and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good
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faith by it in accordance with the advice of such counsel, accountants, or
experts; and (vi) shall incur no liability under or in respect of any Credit
Document by acting upon any notice, consent, certificate, or other instrument or
writing believed by it to be genuine and signed or sent by the proper party or
parties. As to any matters not expressly provided for by this Agreement, Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by Required Lenders, and such
instructions of Required Lenders and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders; provided, however, that Agent
shall not be required to take any action which exposes Agent to personal
liability or which is contrary to this Agreement or any other Credit Document or
applicable law.
10.2 RIGHTS OF AGENT AS A LENDER. With respect to its Commitment, the
Loans made by it and the Notes issued to it, Davidson Kempner Service Company,
LLC, or any Affiliate thereof, in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not acting as Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to, act as trustee under indentures
of, provide merchant banking services to, and generally engage in any kind of
business with Borrower, any of its Subsidiaries, any Guarantor, and any other
Person who may do business with or own securities of Borrower, any Subsidiary,
or any Guarantor, all as if it were not acting as Agent and without any duty to
account therefor to the Lenders.
10.3 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment of
any principal of or interest on any Advance made by it under this Agreement or
payment of any other obligation under the Credit Documents then owed by Borrower
or any Guarantor to such Lender, whether voluntary, involuntary, through the
exercise of any right of setoff, banker's lien, counterclaim or similar right,
or otherwise, in excess of its pro rata share, such Lender shall promptly
purchase from the other Lenders participations in the Loans held by them
hereunder in such amounts, and make such other adjustments from time to time as
shall be necessary to cause such purchasing Lender to share the excess payment
ratably with each of the other Lenders in accordance with its pro rata portion
thereof. To such end, all of the Lenders shall make appropriate adjustments
among themselves (by the resale of participations sold or otherwise) if all or
any portion of such excess payment is thereafter rescinded or must otherwise be
restored. Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any Lender so purchasing a participation in the Loans made
by the other Lenders may exercise all rights of setoff, banker's lien,
counterclaim, or similar rights with respect to such participation as fully as
if such Lender were a direct holder of Loans to Borrower in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower.
10.4 INDEMNIFICATION. THE LENDERS HEREBY AGREE TO INDEMNIFY AGENT FROM AND
HOLD AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER SUBSECTION 11.2,
BUT WITHOUT LIMITING THE OBLIGATIONS OF BORROWER UNDER SUBSECTION 11.2), RATABLY
IN
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ACCORDANCE WITH THEIR RESPECTIVE COMMITMENTS, ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES,
SUITS, COSTS, EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), AND DISBURSEMENTS
OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE
CREDIT DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY AGENT UNDER OR IN
RESPECT OF ANY OF THE CREDIT DOCUMENTS; PROVIDED, FURTHER, THAT NO LENDER SHALL
BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE
EXPRESS INTENTION OF THE LENDERS THAT AGENT SHALL BE INDEMNIFIED HEREUNDER FROM
AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH LENDER
AGREES TO REIMBURSE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE
(CALCULATED ON THE BASIS OF THE COMMITMENTS) OF ANY AND ALL REASONABLE
OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) INCURRED BY AGENT
IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE CREDIT DOCUMENTS, TO THE EXTENT THAT AGENT IS NOT
REIMBURSED FOR SUCH EXPENSES BY BORROWER OR ANY GUARANTOR.
10.5 INDEPENDENT CREDIT DECISIONS. Each Lender agrees that it has
independently and without reliance on Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of Borrower and the Guarantors, and its decision to enter into this
Agreement has been independently made and without reliance upon Agent or any
other Lender, and based upon such documents and information as it shall deem
appropriate at the time, and each Lender agrees that it will continue to make
its own analysis and decisions in taking or not taking action under this
Agreement or any of the other Credit Documents. Agent shall not be required to
keep itself informed as to the performance or observance by Borrower or any
Guarantor of this Agreement or any other Credit Document or to inspect the
properties or books of Borrower or any Guarantor. Except for notices, reports
and other documents and information expressly required to be furnished to the
Lenders by Agent hereunder or under the other Credit Documents, Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
financial information concerning the affairs, financial condition or business of
Borrower or any Guarantor (or any of their Affiliates) which may come into the
possession of Agent or any of its Affiliates.
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10.6 SEVERAL COMMITMENTS. The Commitments and other obligations of the
Lenders under this Agreement are several. The default by any Lender in making a
Loan in accordance with its Commitment shall not relieve the other Lenders of
their obligations under this Agreement. In the event of any default by any
Lender in making any Loan, each nondefaulting Lender shall be obligated to make
its Loan but shall not be obligated to advance the amount which the defaulting
Lender was required to advance hereunder. In no event shall any Lender be
required to advance an amount or amounts which shall in the aggregate exceed
such Lender's Commitment. No Lender shall be responsible for any act or omission
of any other Lender.
10.7 SUCCESSOR AGENT. Subject to the appointment and acceptance of a
successor Agent as provided below, Agent may resign at any time, and shall
resign in the event that Davidson Kempner Service Company, LLC or any Affiliate
thereof ceases to be the holder of at least 50% of the aggregate principal
amount of the Loans, by giving notice thereof to the Lenders and Borrower. Agent
may be removed at any time with or without cause by Required Lenders. Upon any
such resignation or removal, Required Lenders will have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be another Lender or a
commercial bank or other financial institution or institutional investor
organized under the laws of the United States of America or any State thereof.
Upon the acceptance of its appointment as successor Agent, such successor Agent
shall thereupon succeed to and become vested with all rights, powers,
privileges, immunities, and duties of the resigning or removed Agent, and the
resigning or removed Agent shall be discharged from its duties and obligations
under this Agreement and the other Credit Documents. After any Agent's
resignation or removal as Agent, the provisions of this SECTION 10 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was Agent.
11. MISCELLANEOUS
11.1 SUCCESSORS AND ASSIGNS.
11.1.1 This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
Borrower may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of Agent and all of the
Lenders.
11.1.2 Any Lender may, with the written consent of Agent, sell
participations to one or more banks or other financial institutions in or
to all a portion of its rights and obligations under this Agreement and
the other Credit Documents (including, without limitation, all or a
portion of its Commitments, the Loans owing to it; provided, however, that
(i) such Lender's obligations under this Agreement and the other Credit
Documents (including, without limitation, its Commitments) shall remain
unchanged, (ii) such Lender shall remain solely responsible to Borrower
for the performance of such obligations, (iii) such Lender shall remain
the holder of its Notes for all purposes of this Agreement, (iv) Borrower
shall continue to deal solely and directly with such Lender in
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connection with such Lender's rights and obligations under this Agreement
and the other Credit Documents, and (v) such Lender shall not sell a
participation that conveys to the participant the right to vote or give or
withhold consents under this Agreement or any other Credit Document, other
than the right to vote upon or consent to (A) any increase of such
Lender's Commitments, (B) any reduction of the principal amount of, or
interest to be paid on, the Loans of such Lender, (C) any reduction of any
commitment fee or other amount payable to such Lender under any Credit
Document, or (D) any postponement of any date for the payment of any
amount payable in respect of the Loans of such Lender. Such participants
shall have no rights under the Credit Documents, other than certain voting
rights as provided above. Except in the case of the sale of a
participating interest to another Lender, the relevant participation
agreement shall prohibit the participant from transferring, pledging,
assigning, selling participations in, or otherwise encumbering its portion
of the Obligations. In the event that any Lender sells participations in
its Registered Loan, such Lender shall maintain a register on which it
enters the name of all participants in the Registered Loans held by it
(the "PARTICIPANT REGISTER"). A Registered Loan (and the Registered Note,
if any, evidencing the same) may be participated in whole or in part only
by registration of such participation on the Participant Register (and
each Registered Note shall expressly so provide). Any participation of
such Registered Loan (and the Registered Note, if any, evidencing the
same) may be effected only by the registration of such participation on
the Participant Register.
11.1.3 Borrower and each of the Lenders agree that any Lender may,
with the written consent of Agent, at any time assign to one or more
Eligible Assignees all, or a proportionate part of all, of its rights and
obligations under this Agreement and the other Credit Documents
(including, without limitation, its Commitment and Loans); provided,
however, that (i) except in the case of an assignment of all of a Lender's
rights and obligations under this Agreement and the other Credit
Documents, the amount of the Commitment and Loan of the assigning Lender
being assigned pursuant to each assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no
event be less than five million Dollars ($5,000,000) or if less, the
outstanding amount of the Loan of the assigning Lender, and (ii) the
parties to each such assignment shall execute and deliver to Agent for its
acceptance and recording in the Register (as defined below), an Assignment
and Acceptance, together with the Note or Notes subject to such
assignment, and a processing and recordation fee of $2,500. Upon such
execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the
execution thereof, or, if so specified in such Assignment and Acceptance,
the date of acceptance thereof by Agent, (x) the assignee thereunder shall
be a party hereto as a "Lender" and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender hereunder and
under the Credit Documents and (y) the Lender that is an assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement and
the other Credit Documents (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of a Lender's rights and
obligations under the Credit Documents,
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such Lender shall cease to be a party thereto). Anything contained herein
to the contrary notwithstanding, the consent of the Agent or the Borrower
shall not be required (and the payment of fees or minimum assignment
amount shall not be required) if such assignment is in connection with the
merger, consolidation, sale, transfer, or other disposition of all or any
substantial portion of the business or loan portfolio of such Lender or
the assignee is an Affiliate of, or a fund, money market account,
investment account or other account managed by, a Lender, or a fund that
invests in commercial loans and is managed by the same investment advisor
as such Lender or an affiliate of such investment advisor.
11.1.4 By executing and delivering an Assignment and Acceptance, the
Lender that is an assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i)
other than as provided in such Assignment and Acceptance, such assigning
Lender makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties, or representations made in or
in connection with the Credit Documents or the execution, legality,
validity, and enforceability, genuineness, sufficiency, or value of the
Credit Documents or any other instrument or document furnished pursuant
thereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or any Guarantor or the performance or observance by Borrower or
any Guarantor of its obligations under the Credit Documents; (iii) such
assignee confirms that it has received a copy of the other Credit
Documents, together with copies of the financial statements referred to in
SUBSECTION 7.1.3 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon Agent or such 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 this
Agreement and the other Credit Documents; (v) such assignee confirms that
it is an Eligible Assignee; (vi) such assignee appoints and authorizes
Agent to take such action as agent on its behalf and exercise such powers
under the Credit Documents as are delegated to Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Credit Documents are
required to be performed by it as a Lender.
11.1.5(a) Agent may maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Commitments
of, and principal amount of the Loans owing to, each Lender from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrower, Agent, and
the Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes under the Credit Documents. The
Register shall be available for inspection by Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
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(b) Borrower shall maintain, or cause to be maintained, a register
(the "REGISTER") on which it enters the names of each Lender as the
registered owner of the Loan held by such Lender. A Registered Loan (and
the Registered Note, if any, evidencing the same) may be assigned or sold
in whole or in part only by registration of such assignment or sale on the
Register (and each Registered Note shall expressly so provide). Any
assignment or sale of all or part of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by
registration of such assignment or sale on the Register, together with the
surrender of the Registered Note, if any, evidencing the same duly
endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the
request of the designated assignee(s) or transferee(s), one or more new
Registered Notes in the same aggregate principal amount shall be issued to
the designated assignee(s) or transferee(s). Prior to the registration of
assignment or sale of any Registered Loan (and the Registered Note, if any
evidencing the same), the Borrower shall treat the Person in whose name
such Loan (and the Registered Note, if any, evidencing the same) is
registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding notice to the
contrary.
11.1.6 Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and assignee representing that it is an Eligible
Assignee, together with any Note or Notes subject to such assignment,
Agent shall, if such Assignment and Acceptance has been completed and is
in substantially the form of EXHIBIT P hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the
Register, and (iii) give prompt written notice thereof to Borrower. Within
five (5) Business Days after its receipt of such notice, Borrower, at its
expense, shall execute and deliver to Agent in exchange for the
surrendered Note or Notes a new Note or Notes to the order of such
Eligible Assignee in amounts equal to the Commitment assumed by it and the
Note assigned to it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment, a new Note or Notes to the
order of the assigning Lender in amounts equal to the Commitment or Note
retained by it hereunder (each such promissory note shall constitute a
"Note" for purposes of the Credit Documents). Such new Notes shall be in
an aggregate principal amount of the surrendered Note or Notes, shall be
dated the effective date of such Assignment and Acceptance, and shall
otherwise be in substantially the form of EXHIBIT A hereto.
11.1.7 Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant, any information relating to Borrower or its Subsidiaries
furnished to such Lender by or on behalf of Borrower or its Subsidiaries.
11.2 SECURITIZATION. The Borrower hereby acknowledges that the Lenders and
any of their Affiliates may sell or securitize the Loans (a "SECURITIZATION")
through the pledge of the Loans as collateral security for loans to such Lenders
or their Affiliates or through the sale of the Loans or the issuance of direct
or indirect interests in the Loans, which loans to the Lenders or their
Affiliates or direct or indirect interests will be rated by Xxxxx'x, Standard &
Poor's or one
39
or more other rating agencies. The Borrower shall cooperate with such Lenders
and their Affiliates to effect the Securitization.
11.3 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 the agent-in-fact) and Agent, or
Agent's agent, may, without notice to Borrower and in either Borrower's or
Agent's name, but at the cost and expense of Borrower, for the benefit of the
Lenders, and provided that all obligations under the Working Capital Loan
Agreement have been paid in full:
11.3.1 At such time or times upon or after the occurrence of a
Default or an Event of Default as Agent or said agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of Agent or
under Agent's control.
11.3.2 At such time or times upon or after the occurrence of an
Event of Default as Agent or its agent in its sole discretion may
determine: (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 xxxx, xxxx of lading or similar document or
agreement relating to the Accounts, Inventory 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, Equipment 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.
11.4 INDEMNITY. BORROWER HEREBY AGREES TO INDEMNIFY AGENT AND THE LENDERS
AND HOLD AGENT AND THE LENDERS HARMLESS FROM AND AGAINST ANY LIABILITY, LOSS,
DAMAGE, SUIT, ACTION OR PROCEEDING EVER SUFFERED OR INCURRED BY AGENT OR ANY
LENDER (INCLUDING REASONABLE
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ATTORNEYS FEES AND LEGAL EXPENSES) AS THE RESULT OF BORROWER'S FAILURE TO
OBSERVE, PERFORM OR DISCHARGE BORROWER'S DUTIES HEREUNDER. IN ADDITION, BORROWER
SHALL DEFEND AGENT AND THE LENDERS AGAINST AND SAVE THEM HARMLESS FROM ALL
CLAIMS OF ANY PERSON WITH RESPECT TO THE COLLATERAL. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THESE INDEMNITIES SHALL EXTEND TO ANY CLAIMS
ASSERTED AGAINST AGENT OR ANY LENDER 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. NOTWITHSTANDING ANY CONTRARY PROVISION IN THIS AGREEMENT, THE
OBLIGATION OF BORROWER UNDER THIS SUBSECTION 11.2 SHALL SURVIVE THE PAYMENT IN
FULL OF THE OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
11.5 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement, the Notes, or any other Credit Document to which Borrower is a party,
nor any consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be agreed or consented to by Agent, the Required
Lenders and Borrower, and each such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
that no amendment, waiver, or consent or forbearance to act with respect thereto
shall, unless in writing and signed by Agent, all of the Lenders and Borrower,
do any of the following: (a) increase Commitments of the Lenders or subject the
Lenders or Agent to any additional obligations; (b) reduce the principal of, or
interest on, the Notes or any fees or other amounts payable hereunder; (c)
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder; (d) change the percentage
of the aggregate unpaid principal amount of the Notes or the number of Lenders
which shall be required for the Lenders or any of them to take any action under
this Agreement; or (e) change any provision contained in, or any definition used
in connection with, this SUBSECTION 11.3. Notwithstanding anything to the
contrary contained in this Section, no amendment, waiver, or consent shall be
made with respect to SECTION 10 hereof without the prior written consent of
Agent.
11.6 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.
11.7 SUCCESSORS AND ASSIGNS. This Agreement and the other Credit Documents
shall be binding upon and inure to the benefit of the respective successors and
assigns of Borrower, Agent and any Lender permitted under SECTIONS 10 and 11
hereof.
11.8 CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the other
Credit Documents are hereby made cumulative with the provisions of this
Agreement. Except as otherwise provided in SUBSECTION 3.2 hereof and except as
otherwise provided in any of the other Credit Documents by specific reference to
the applicable provision of this Agreement, if any
41
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Credit Documents, the
provision contained in this Agreement shall govern and control.
11.9 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
11.10 NOTICE. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
If to Agent: Davidson Kempner Service Company, LLC
Attention: Xxxxxx Xxxxx and Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to any Lender: The address for such Lender shown with its
signature below.
If to Borrower: Drypers Corporation
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Chief Financial Officer
Facsimile No.: (000) 000-0000
With a copy to: Fulbright & Xxxxxxxx, L.L.P.
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this SUBSECTION 11.8; PROVIDED, HOWEVER, that any notice,
request or demand to or upon Agent or any Lender pursuant to SUBSECTION 3.1.1
hereof shall not be effective until received by Agent or such Lender.
42
11.11 AGENT'S OR LENDER'S CONSENT. Whenever Agent's or any Lender's
consent is required to be obtained under this Agreement, any of the other Credit
Documents as a condition to any action, inaction, condition or event, Agent or
such Lender shall be authorized to give or withhold such 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.
11.12 CREDIT INQUIRIES. Borrower hereby authorizes and permits Agent and
the Lenders to respond to usual and customary credit inquiries from third
parties concerning Borrower or any of its Subsidiaries.
11.13 TIME OF ESSENCE. Time is of the essence of this Agreement and the
other Credit Documents.
11.14 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE OTHER CREDIT
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.
11.15 INTERPRETATION. No provision of this Agreement or any of the other
Credit 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 or dictated such
provision.
11.16 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW
YORK. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF
AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S OTHER REMEDIES
IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION
ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS PART OF THE
CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE
DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF THE BORROWER OR AGENT, BORROWER
HEREBY CONSENTS AND AGREES THAT THE SUPREME COURT OF NEW YORK COUNTY, NEW YORK,
OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND AGENT OR ANY LENDER PERTAINING TO
THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR
43
RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY
LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
11.17 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH AGENT AND THE LENDERS HEREBY ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE CREDIT
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 OR ANY
LENDER TO EXERCISE ANY OF THEIR 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
EACH LENDER'S ENTERING INTO THIS AGREEMENT AND THAT AGENT AND EACH LENDER 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.
44
11.18 INTERCREDITOR AGREEMENT Agent and the Lenders acknowledge that
receipt of certain payments and exercise of certain rights and remedies
hereunder may be affected by the provisions of the Intercreditor Agreement.
Notwithstanding the foregoing, neither Borrower nor any Person not party to the
Intercreditor Agreement shall be deemed to be a third party beneficiary thereof
for any purpose, nor shall Borrower interpose any defense based on the
Intercreditor Agreement to the exercise by Agent or the Lenders of any rights
and remedies hereunder or under the other Credit Documents or the receipt of
payments hereunder or thereunder; provided, however, that Borrower and each
Subsidiary party to a Credit Document shall not be deemed in default of any
obligation hereunder or under any of the other Credit Documents to deliver to
the Agent any item of Collateral or the proceeds thereof to the extent that (a)
Borrower or such Subsidiary shall be subject to the same obligation to the agent
for the lenders under the Working Capital Loan Agreement, (b) the delivery of
such item or proceeds to such agent is contemplated by the Intercreditor
Agreement (as amended, supplemented, modified or waived from time to time) and
(c) the Borrower or such Subsidiary shall have so delivered such item or
proceeds to such agent. The parties to the Intercreditor Agreement may amend,
supplement, modify or waive the provisions thereof, without notice to, or
consent of, Borrower.
[REMAINDER OF PAGE INTENTIONAL LEFT BLANK]
45
IN WITNESS WHEREOF, this Agreement has been duly executed in on the day
and year specified at the beginning of this Agreement.
BORROWER:
DRYPERS CORPORATION
By:
Xxxxxxxx X. Xxxxxx
Executive Vice President
AGENT:
DAVIDSON KEMPNER SERVICES COMPANY, LLC
By:
Name:
Title:
LENDERS:
DK ACQUISITION PARTNERS, L.P.
By:
Name:
Title:
COMMITMENT: $15,000,000.00 Address:
ABLECO FINANCE LLC
By:
Name:
Title:
COMMITMENT: $12,000,000 Address:
46
APPENDIX A
GENERAL DEFINITIONS
When used in the Term Loan Agreement dated as of December ___, 1999, by
and among X. X. Xxxxxxxx & Co., L.L.C., as Agent, the Lenders, and Drypers
Corporation, 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):
ACCOUNT DEBTOR - any Person who is or may become obligated under or
on any Account.
ACCOUNTS - as defined in the Code, including, without limitation,
all accounts, contract rights, chattel paper, instruments and documents,
whether now owned or hereafter created or acquired by Borrower or in which
Borrower now has or hereafter acquired any interest.
ADJUSTED EBITDA - with respect to any fiscal period, the sum of
EBITDA for such period minus cash payments of federal and state income and
franchise taxes for such period.
ADJUSTED NET EARNINGS FROM OPERATIONS - with respect to any fiscal
period, means the Consolidated net earnings (or loss) after provision for
income taxes for such fiscal period of Borrower and its Subsidiaries, as
reflected on the Consolidated financial statement of Borrower and its
Subsidiaries supplied to Lender pursuant to SUBSECTION 7.1.3 of the
Agreement, but excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of Borrower accrued prior to the
date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the assets of
which have been acquired in any manner by Borrower, realized
by such corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a Subsidiary
of Borrower) in which Borrower has an ownership interest
unless such net earnings shall have actually been received by
Borrower in the form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of Borrower
which for any reason is unavailable for payment of dividends
to Borrower;
1
(vii) the earnings of any Person to which any assets of Borrower
shall have been sold, transferred of disposed of, or into
which Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the
date of such transaction;
(viii) any gain arising from the acquisition of any Securities of
Borrower;
(ix) any gain arising from extraordinary or non-recurring items;
(x) any loss attributable to any write-off through the second
fiscal quarter of 2000 of any insurance gain reflected on the
Borrower's records as of September 30, 1999; and
(xi) any loss arising from capitalized financing costs associated
with a revolving line of credit to Borrower extended by
BankBoston, N.A. as agent and sole lender.
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, a Person; (ii) which
beneficially owns or holds 10% or more of any class of the Voting Stock of
a Person; or (iii) 10% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 10% or more of the equity interest) of
which is beneficially owned or held by a Person or a Subsidiary of a
Person.
AGENT - as defined in the introductory paragraph of this Agreement.
AGREEMENT - the Term Loan Agreement referred to in the first
sentence of this APPENDIX A, all Exhibits thereto and this APPENDIX A.
ASSIGNMENT AND ACCEPTANCE - an assignment and acceptance entered
into by a Lender and its assignee and accepted by Agent pursuant to
SUBSECTION 10.8, in substantially the form of EXHIBIT P hereto.
BORROWER - Drypers Corporation, a Delaware corporation.
BORROWER PLEDGE AGREEMENT - the Pledge Agreement dated as of
December 13, 1999 made by Borrower in favor of Agent, for the benefit of
the Lenders, as the same may be amended, supplemented, or modified from
time to time.
BORROWER SECURITY AGREEMENT - the Security Agreement dated as of
December 13, 1999 made by Borrower in favor of Agent, for the benefit of
the Lenders, as the same may be amended, supplemented, or modified from
time to time.
BUSINESS DAY - any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in the State of New York are closed.
2
CAPITAL EXPENDITURES - expenditures which are so classified on the
Consolidated statement of cash flows of Borrower in accordance with GAAP,
including all such expenditures so classified as "purchase of property and
equipment, net" and the total principal portion of Capitalized Lease
Obligations.
CAPITAL STOCK - as to any Person, any and all shares, interests,
partnership interests, participations, rights in or other equivalents
(however designated) of such Person's equity interest (however
designated).
CAPITALIZED LEASE OBLIGATIONS - any Indebtedness represented by
obligations under a lease that is required to be capitalized and accounted
for as a capital lease under GAAP.
CHANGE IN CONTROL - the occurrence of any of the following events:
(i) Any Person or "group" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person will be deemed to have "beneficial
ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of a
majority of the voting power of all classes of Voting Stock of
Borrower.
(ii) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of
Borrower (together with any new directors whose election to
such Board of Directors, or whose nomination for election by
the stockholders of Borrower, was approved by a vote of
66-2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors
of Borrower then in office.
CODE - the Uniform Commercial Code as adopted and in force in the
State of New York, as from time to time in effect.
COLLATERAL - all of the Property and interests in Property described
in SUBSECTION 4.L 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.
COMMITMENT - for each Lender, its Commitment shown with its
signature hereto.
COMMON STOCK AGREEMENTS - the Warrant Agreement to be entered into
between Borrower, X.X. Xxxxxxxx & Co., L.L.C. and Ableco Holding, LLC and
the warrants issued thereunder and the Registration Rights Agreement to be
entered into among Borrower and the parties named therein as Holders.
3
CONSOLIDATED - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
CREDIT DOCUMENTS - the Agreement, the Notes, the Security Documents,
the Common Stock Agreements and the Intercreditor Agreement.
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 - as defined in SUBSECTION 2.1.2 of the Agreement.
DISQUALIFIED STOCK - any class or series of Capital Stock other than
common stock.
DISTRIBUTION - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on Capital Stock of
the corporation (except distributions in such stock) and (ii) the
redemption or acquisition of Securities unless made contemporaneously from
the net proceeds of the sale of Securities.
DOLLARS and $ - lawful money of the United States of America.
DOMESTIC SUBSIDIARY - any Subsidiary (excluding UltraCare Products
International, Inc.) which is domiciled or is principally doing business
in the United States of America or any of its territories or possessions.
DOMINION ACCOUNT - a special account of Agent established by
Borrower pursuant to the Agreement at a bank selected by Borrower, but
acceptable to Agent in its reasonable discretion, and over which Agent
shall have sole and exclusive access and control for withdrawal purposes.
EBITDA - with respect to any fiscal period, the sum of Borrower's
Adjusted Net Earnings From Operations plus Interest Expense and taxes for
said period as determined in accordance with GAAP, plus depreciation and
amortization expenses for such period.
ELIGIBLE ASSIGNEE - any Person acceptable to the Agent in the
Agent's sole discretion.
ENVIRONMENTAL LAWS - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
EQUIPMENT -as defined in the Code, including, without limitation,
all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal Property (other than Inventory) of
every kind and description used in Borrower's operations or owned by
Borrower or in which Borrower has an interest, whether now owned or
hereafter acquired by Borrower and wherever located, and all parts,
accessories
4
and special tools and all increases and accessions thereto and
substitutions and replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
EVENT OF DEFAULT - as defined in SUBSECTION 9.1 of the Agreement.
FLEET - Fleet Capital Corporation, a Rhode Island corporation.
FIXED CHARGES - as of the end of any fiscal quarter, the sum of: (i)
scheduled principal payments required to be made during the next twelve
months in respect of Indebtedness, plus (ii) Interest Expense for the
preceding twelve months (unless otherwise specified herein), plus (iii)
commencing December 31, 2000 and thereafter, Capital Expenditures not
financed under the Working Capital Loan Agreement or borrowings under any
other financing arrangement otherwise permitted hereunder during the
preceding twelve month period, all determined in accordance with GAAP.
FOREIGN AFFILIATE - any Person in which Borrower or any Subsidiary
has an equity or ownership interest equal to or less than fifty percent
(50%) and which is domiciled in any country other than the United States
of America or any of its territories or possessions or conducts business
or generates accounts receivable in any country other than the United
States of America or any of its territories or possessions.
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.
GAAP - generally accepted accounting principles in the United States
of America in effect from time to time.
GENERAL INTANGIBLES - as defined in the Code, including, without
limitation, all personal Property of Borrower (including things in action)
other than goods, Accounts, chattel paper, documents, instruments and
money, whether now owned or hereafter created or acquired by Borrower.
GOVERNMENTAL AUTHORITY - any nation or government, any state or
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government.
GUARANTEE - by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation
5
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise)
or (ii) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect the obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
GUARANTY AGREEMENT - means the guaranty of any of Borrower's active
Domestic Subsidiaries in favor of Agent and the Lenders, each in
substantially the form of EXHIBIT R hereto, duly executed (whether before,
on or after the date of this Agreement) by one or more of the Guarantors,
as the same may be amended, supplemented or modified from time to time.
GUARANTOR SECURITY AGREEMENTS - the security agreements of the
Guarantors in favor of Agent, for the benefit of the Lenders, each in form
and substance satisfactory to Agent, duly executed (whether before, on or
after the date of this Agreement) by one or more of the Guarantors, as the
same may be amended, supplemented or modified from time to time.
GUARANTOR - each Domestic Subsidiary that at any time executes a
Guaranty Agreement in favor of Agent and the Lenders, and any other Person
who may hereafter guarantee payment or performance of the whole or any
part of the Obligations.
HEDGING OBLIGATIONS - the obligations of any Person under (i)
interest rate cap agreements, interest rate swap agreements and interest
rate collar agreements and (ii) other agreements or arrangements designed
to protect such Person against fluctuations in interest rates, the price
of commodities used by any such Person in the ordinary course of business,
or the value of foreign currencies.
INDEBTEDNESS - as to any Person at any time (without duplication):
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, notes, debentures, or other
similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of Property or services, including without
limitation, all obligations to make payments (other than royalty or
licensing payments to be made by such Person based upon a percentage of
sales) under non-compete agreements and any licensing or dispute
settlement agreements, but excluding all trade accounts payable and
accrued liabilities of such Person arising in the ordinary course of
business, (iv) all Capitalized Lease Obligations of such Person (other
than the interest component of such obligations), (v) all Indebtedness or
other obligations of others Guaranteed by such Person, other than the
Guarantee by Borrower of the accounts payable arising in the ordinary
course of business of any Foreign Subsidiary, (vi) all obligations secured
by a Lien existing on Property owned by such Person, whether or not the
obligations secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person, (vii) all reimbursement
obligations of such Person (whether contingent or
6
otherwise) in respect of letters of credit, bankers' acceptances, surety
or other bonds and similar instruments, (viii) all liabilities of such
Person in respect of unfunded vested benefits under any Plan, (ix) all
Disqualified Stock of such Person, and (x) all net obligations of such
Person under or in respect of Hedging Obligations.
INDENTURE - that certain Indenture dated as of June 15, 1997,
between Borrower and Bankers Trust Company, as trustee, as amended,
supplemented or otherwise modified from time to time.
INTERCREDITOR AGREEMENT - that certain Intercreditor Agreement dated
as of even date herewith among Agent, the Lenders, Fleet as Agent for the
lenders under the Working Capital Loan Agreement and Borrower, as amended,
supplemented or otherwise modified from time to time.
INTEREST COVERAGE RATIO - with respect to any period of
determination, the ratio of Consolidated (i) EBITDA for such period to
(ii) Interest Expense for such period, all as determined in accordance
with GAAP.
INTEREST EXPENSE - with respect to any fiscal period, the interest
expense incurred for such period as determined in accordance with GAAP
plus the letter of credit and guaranty fees owing for such period under
the Working Capital Loan Agreement.
INVENTORY - as defined in the Code, including, without limitation,
all of Borrower's inventory, whether now owned or hereafter acquired
including, but not limited to, 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 evidencing and General Intangibles relating to any of the
foregoing, whether now owned or hereafter acquired by Borrower.
LENDER - any Person which is or may become a signatory to the
Agreement or any successor or permitted assignee thereof.
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.
LOAN ACCOUNT - the loan account established on the books of Agent
pursuant to SUBSECTION 3.7 of the Agreement.
7
LOANS - all loans made by the Lenders pursuant to the Agreement.
MATERIAL ADVERSE EFFECT - (i) a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of Borrower and its Subsidiaries taken as a whole, or (ii) a
material adverse effect on the ability of Borrower and its Subsidiaries,
taken as a whole, to perform the Obligations in accordance with their
terms. In determining whether any individual event could reasonably be
expected to result in a Material Adverse Effect, notwithstanding that such
event does not itself have such effect, a Material Adverse Effect shall be
deemed to have occurred if the cumulative effect of such event and all
other then-existing events would reasonably be expected to result in a
Material Adverse Effect.
MAXIMUM RATE - at any time, the maximum rate of interest under
applicable law that any Lender may charge Borrower. The Maximum Rate shall
be calculated in a manner that takes into account any and all fees,
payments, and other charges in respect of the Credit Documents that
constitute interest under applicable law. Each change in any interest rate
provided for herein based upon the Maximum Rate resulting from a change in
the Maximum Rate shall take effect without notice to Borrower at the time
of such change in the Maximum Rate.
MONEY BORROWED - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to Borrower, (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)
Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of Borrower under any guaranty
of obligations that would constitute Indebtedness for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by Borrower.
MULTIEMPLOYER PLAN - has the meaning set forth in Section 4001(a)(3)
of ERISA.
NEGATIVE PLEDGE AGREEMENT - a negative pledge agreement of each of
the direct, first-tier Foreign Subsidiaries of Borrower or of a Domestic
Subsidiary in favor of Agent for the benefit of the Lenders, each in form
and substance satisfactory to Agent and each Lender.
NOTES - collectively, the promissory notes made be the Borrower in
favor of each Lender in substantially the form of Exhibit A hereto.
OBLIGATIONS - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and
other charges thereon, owing, arising, due or payable from Borrower to
Agent, any Affiliate of Agent, or any Lender of
8
any kind or nature, present or future, whether or not evidenced by any
note, guaranty or other instrument, whether arising under the Agreement or
any of the other Credit Documents or otherwise whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary
or secondary, due or to become due, now existing or hereafter arising and
however acquired.
PAYOR - as defined in SUBSECTION 3.9 of the Agreement.
PERMITTED BORROWER REFINANCING DEBT -
(i) Indebtedness of Borrower existing on the date hereof and
disclosed to the Agent and the Lenders pursuant to this
Agreement, the terms of which have been amended, modified or
supplemented in a manner that does not (a) adversely affect
the priority of such Indebtedness in right of payment in
relation to the Obligations, (b) impose more restrictive
financial or other covenants with respect thereto; (c) change
any of the terms of repayment (such as interest rate, fees or
amortization schedule of such Indebtedness), or (d) accelerate
the maturity of such Indebtedness; and
(ii) Indebtedness of Borrower, the net proceeds of which are used
to renew, extend, refinance, refund or repurchase outstanding
Indebtedness of Borrower; provided that (a) if the
Indebtedness being renewed, extended, refinanced, refunded or
repurchased is PARI PASSU with or subordinated in right of
payment to the Obligations, then such Indebtedness is PARI
PASSU with or subordinated in right of payment to the
Obligations at least to the same extent as the Indebtedness
being renewed, extended, refinanced, refunded or repurchased,
(b) the terms of repayment of such Indebtedness is scheduled
to mature no earlier than the Indebtedness being renewed,
extended, refinanced, refunded or repurchased and (c) the
terms of repayment of such Indebtedness and the financial and
other covenants relating thereto have been approved by Agent
in its sole discretion; provided, further, that such
Indebtedness is in an aggregate principal amount (or, if such
Indebtedness is issued at a price less than the principal
amount thereof, the aggregate amount of gross proceeds
therefrom is) substantially equivalent to the sum of (1) the
aggregate principal amount then outstanding of the
Indebtedness being renewed, extended, refinanced, refunded or
repurchased (or if the Indebtedness being renewed, extended,
refinanced, refunded or repurchased was issued at a price less
than the principal amount thereof, then not in excess of the
amount of liability in respect thereof determined in
accordance with GAAP) and (2) the amount of accrued and unpaid
interest, if any, on the Indebtedness being renewed, extended,
refinanced, refunded or repurchased.
PERMITTED LIENS - any Lien of a kind specified in SUBSECTION 7.2.5
of the Agreement.
9
PERMITTED PURCHASE MONEY INDEBTEDNESS - Purchase Money Indebtedness
of Borrower incurred after the date hereof which is secured by a Purchase
Money Lien and which, when aggregated with the principal amount of all
other such Indebtedness and Capitalized Lease Obligations of Borrower at
the time outstanding, does not exceed $500,000 For the purposes of this
definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized Lease
Obligation.
PERSON - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
PLAN - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
PRIME RATE - the base rate per annum for corporate loans posted by
75% of the nation's 30 largest bank, for each day published in the Wall
Street Journal as the "Prime Rate" on the succeeding Business Day.
PROJECTIONS - Borrower's forecasted Consolidated and consolidating
(i) balance sheets, (ii) profit and loss statements, and (iii) cash flow
statements, and all prepared on a consistent basis with Borrower's
historical financial statements, together with appropriate supporting
details and a statement of underlying assumptions.
PROPERTY - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
PURCHASE MONEY INDEBTEDNESS - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (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.
PURCHASE MONEY LIEN - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness secured
by such Lien.
QUALIFIED STOCK - any and all Capital Stock of a Person, other than
Disqualified Stock.
REGISTER - as defined in SUBSECTION 11.1.5 of the Agreement.
RENTALS - as defined in SUBSECTION 7.2.12 of the Agreement.
10
REPORTABLE EVENT - any of the events set forth in Section 4043(b) of
ERISA.
REQUIRED LENDERS - at any time while no Loans are outstanding,
Lenders having at least 66-2/3% of the aggregate amount of the Commitments
and, at any time while Loans are outstanding, Lenders holding at least
66-2/3% of the outstanding aggregate principal amount of the Loans.
REQUIRED PAYMENT - as defined in SUBSECTION 3.9 of the Agreement.
RESTRICTED INVESTMENT - any investment made in cash or by delivery
of Property to any Person, whether by acquisition of stock, Indebtedness
or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following:
(i) Property to be used in the ordinary course of business;
(ii) current assets arising from the sale of goods and services in
the ordinary course of business of Borrower and its
Subsidiaries;
(iii) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by
the United States of America, provided that such obligations
mature within one year from the date of acquisition thereof;
(iv) investments in certificates of deposit or similar instruments
maturing within one year from the date of acquisition issued
by a bank or trust company organized under either (i) the laws
of the United States or any state thereof or (ii) a
jurisdiction outside of the United States, having capital
surplus and undivided profits aggregating at least
$50,000,000.00; and
(v) investments in commercial paper given one of the two highest
ratings by a national credit rating agency and maturing not
more than 270 days from the date of creation thereof.
(vi) repurchase agreements with any financial institution having
combined capital, surplus, and undivided profits of not less
than $100,000,000 for U.S. Government obligations maturing in
less than 10 days;
(vii) investments in daily money market mutual funds having assets
greater than Two Billion Dollars ($2,000,000,000) and limited
in holdings to assets of the types described in subsections
(iii) (iv) or (v) of this definition;
(viii)investments by any Subsidiary in or to Borrower or another
Subsidiary;
11
(ix) demand deposits at banks (a) whose deposits are insured by the
Federal Deposit Insurance Corporation, maintained by Borrower
or any Subsidiary in the ordinary course of business for the
purpose of paying operating expenses or (b) outside of the
United States, in currencies other than U.S. dollars, which
banks provide working capital, operating accounts or similar
services to one or more Subsidiaries at such foreign banks,
provided that such foreign banks must have capital and surplus
in excess of $50,000,000.00;
(x) investments existing on the date hereof and described on
EXHIBIT U hereto, including intercompany receivables and
Investments in Subsidiaries, partnerships and other Persons
owned on the date hereof;
(xi) the acquisition or ownership of Capital Stock or obligations
or securities received in settlement of debts (created in the
ordinary course of business) owing to Borrower or any
Subsidiary; and
(xii) investments approved by Agent and each Lender, in their sole
discretion.
SCHEDULE OF ACCOUNTS - as defined in SUBSECTION 5.2.1 of the
Agreement.
SECURITY - shall have the same meaning as in Section 2 (a) (l) of
the Securities Act of 1933, as amended.
SECURITY DOCUMENTS - the Borrower Pledge Agreement, Borrower
Security Agreement, Guaranty Agreements, the mortgages and leasehold
mortgages referred to in Section 4.1.3 hereof and all other instruments
and agreements now or at any time hereafter securing the whole or any part
of the Obligations.
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 Indebtedness (including contingent debts), (ii) is able to pay
all of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
SUBORDINATED DEBT - Indebtedness of Borrower that is subordinated to
the Obligations in a manner satisfactory to Agent.
SUBSIDIARY - any corporation or other entity of which a Person owns,
directly or indirectly through one or more intermediaries, more than 50%
of the Voting Stock at the time of determination.
Total Indebtedness - at any time, the aggregate amount of
Indebtedness of the Borrower and its Subsidiaries at such time, determined
on a Consolidated basis.
12
VOTING STOCK - Securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
WORKING CAPITAL LOAN AGREEMENT - the Amended and Restated Credit
Agreement dated as of the date hereof by and among Borrower, the lenders
named therein and Fleet as Agent.
OTHER TERMS. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code 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. 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. All references to any of the Credit Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
13
$27,000,000
TERM LOAN AGREEMENT
Dated: December 13, 1999
BY AND AMONG
DRYPERS CORPORATION
AND
THE LENDERS WHICH ARE PARTIES HERETO
AND
DAVIDSON KEMPNER SERVICE COMPANY, LLC., AS AGENT
TABLE OF CONTENTS
PAGE
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1. TERM LOAN FACILITY........................................................1
1.1 TERM LOAN FACILITY...................................................1
1.2 USE OF PROCEEDS......................................................1
2. INTEREST, FEES AND CHARGES................................................1
2.1 INTEREST.............................................................1
2.1.1 RATES OF INTEREST..............................................2
2.1.2 DEFAULT RATE OF INTEREST.......................................2
2.1.3 MAXIMUM INTEREST...............................................2
2.2 COMPUTATION OF INTEREST AND FEES.....................................2
2.3 MAINTENANCE AND DEFAULT FEES. (A)...................................3
2.4 CLOSING FEE..........................................................3
2.5 AUDIT AND APPRAISAL FEES.............................................3
2.6 REIMBURSEMENT OF EXPENSES............................................3
2.7 BANK CHARGES.........................................................3
3. LOAN ADMINISTRATION.......................................................4
3.1 MANNER OF BORROWING..................................................4
3.1.1 LOAN REQUESTS..................................................4
3.1.2 NOTES..........................................................4
3.2 PAYMENTS.............................................................4
3.2.1 PRINCIPAL PAYMENTS.............................................4
3.2.2 INTEREST PAYMENTS..............................................4
3.2.3 COSTS, FEES AND CHARGES; PAYMENTS PRO RATA.....................4
3.3 PREPAYMENT. (A).....................................................5
3.4 OTHER OBLIGATIONS....................................................5
3.5 APPLICATION OF PAYMENTS AND COLLECTIONS..............................5
3.6 ALL LOANS TO CONSTITUTE ONE OBLIGATION...............................5
3.7 LOAN ACCOUNT.........................................................5
4. SECURITY INTERESTS........................................................6
4.1 SECURITY INTEREST IN COLLATERAL......................................6
4.2 LIEN PERFECTION; FURTHER ASSURANCES..................................6
4.3 GUARANTIES BY DOMESTIC SUBSIDIARIES..................................7
5. COLLATERAL ADMINISTRATION.................................................7
5.1 GENERAL..............................................................7
5.1.1 LOCATION OF COLLATERAL.........................................7
5.1.2 INSURANCE OF COLLATERAL........................................8
5.1.3 PROTECTION OF COLLATERAL.......................................8
5.2 ADMINISTRATION OF ACCOUNTS...........................................8
5.2.1 RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS.................8
5.2.2 DISCOUNTS, ALLOWANCES, DISPUTES................................9
5.2.3 TAXES..........................................................9
5.2.4 ACCOUNT VERIFICATION...........................................9
5.3 ADMINISTRATION OF INVENTORY..........................................9
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5.3.1 RECORDS AND REPORTS OF INVENTORY...............................9
5.3.2 RETURNS OF INVENTORY..........................................10
5.4 ADMINISTRATION OF EQUIPMENT.........................................10
5.4.1 RECORDS AND SCHEDULES OF EQUIPMENT............................10
5.4.2 DISPOSITIONS OF EQUIPMENT.....................................10
5.5 PAYMENT OF CHARGES..................................................10
6. REPRESENTATIONS AND WARRANTIES...........................................10
6.1 GENERAL REPRESENTATIONS AND WARRANTIES..............................11
6.1.1 ORGANIZATION AND QUALIFICATION................................11
6.1.2 CORPORATE POWER AND AUTHORITY.................................11
6.1.3 LEGALLY ENFORCEABLE AGREEMENT.................................11
6.1.4 CAPITAL STRUCTURE.............................................11
6.1.5 CORPORATE NAMES...............................................12
6.1.6 BUSINESS LOCATIONS; AGENT FOR PROCESS.........................12
6.1.7 TITLE TO PROPERTIES; PRIORITY OF LIENS........................12
6.1.8 ACCOUNTS......................................................12
6.1.9 EQUIPMENT.....................................................13
6.1.10 FINANCIAL STATEMENTS; FISCAL YEAR............................13
6.1.11 FULL DISCLOSURE..............................................14
6.1.12 SOLVENT FINANCIAL CONDITION..................................14
6.1.13 SURETY OBLIGATIONS...........................................14
6.1.14 TAXES........................................................14
6.1.15 BROKERS......................................................14
6.1.16 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES.................15
6.1.17 GOVERNMENTAL CONSENTS........................................15
6.1.18 COMPLIANCE WITH LAWS.........................................15
6.1.19 RESTRICTIONS.................................................15
6.1.20 LITIGATION...................................................15
6.1.21 NO DEFAULTS..................................................16
6.1.22 LEASES.......................................................16
6.1.23 PENSION PLANS................................................16
6.1.24 TRADE RELATIONS..............................................16
6.1.25 LABOR RELATIONS..............................................16
6.1.26 COMPLIANCE WITH INDENTURE....................................16
6.2 CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES.................17
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................17
7. COVENANTS AND CONTINUING AGREEMENTS......................................17
7.1 AFFIRMATIVE COVENANTS...............................................17
7.1.1 VISITS AND INSPECTIONS........................................17
7.1.2 NOTICES.......................................................17
7.1.3 FINANCIAL STATEMENTS..........................................17
7.1.4 LANDLORD AND STORAGE AGREEMENTS; LANDLORD SUBORDINATION
AGREEMENT.....................................................19
7.1.5 REAL PROPERTY.................................................19
7.1.6 PROJECTIONS...................................................20
7.1.7 ERISA.........................................................20
7.1.8 LEASEHOLD MORTGAGES...........................................20
7.1.9 LEGAL OPINIONS................................................20
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7.1.10 CASH MANAGEMENT..............................................20
7.2 NEGATIVE COVENANTS..................................................20
7.2.1 MERGERS; CONSOLIDATIONS; ACQUISITIONS.........................21
7.2.2 LOANS.........................................................21
7.2.3 TOTAL INDEBTEDNESS............................................21
7.2.4 AFFILIATE TRANSACTIONS........................................22
7.2.5 LIMITATION ON LIENS...........................................23
7.2.6 SUBORDINATED DEBT.............................................25
7.2.7 DISTRIBUTIONS.................................................25
7.2.8 CAPITAL EXPENDITURES..........................................25
7.2.9 DISPOSITION OF ASSETS.........................................25
7.2.10 STOCK OF SUBSIDIARIES........................................26
7.2.11 XXXX-AND-HOLD SALES, ETC.....................................26
7.2.12 RESTRICTED INVESTMENT........................................26
7.2.13 LEASES.......................................................26
7.2.14 TAX CONSOLIDATION............................................26
7.2.15 MODIFICATIONS TO OTHER SENIOR FUNDED DEBT....................26
7.2.16 NEGATIVE PLEDGE..............................................26
7.3 SPECIFIC FINANCIAL COVENANTS........................................26
7.3.1 INTEREST COVERAGE RATIO.......................................27
7.3.2 ADJUSTED EBITDA TO FIXED CHARGES RATIO........................27
7.3.3 MINIMUM ADJUSTED EBITDA.......................................27
8. CONDITIONS PRECEDENT.....................................................27
8.1 DOCUMENTATION.......................................................28
8.2 PERFECTION..........................................................28
8.3 NO DEFAULT..........................................................28
8.4 OTHER CREDIT DOCUMENTS..............................................28
8.5 WORKING CAPITAL LOAN AGREEMENT......................................28
8.6 NO LITIGATION.......................................................28
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT........................28
9.1 EVENTS OF DEFAULT...................................................28
9.1.1 PAYMENT OF NOTES..............................................28
9.1.2 PAYMENT OF OTHER OBLIGATIONS..................................28
9.1.3 MISREPRESENTATIONS............................................28
9.1.4 BREACH OF SPECIFIC COVENANTS..................................29
9.1.5 BREACH OF OTHER COVENANTS.....................................29
9.1.6 DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS.............29
9.1.7 OTHER DEFAULTS................................................29
9.1.8 UNINSURED LOSSES..............................................29
9.1.9 INSOLVENCY AND RELATED PROCEEDINGS............................29
9.1.10 BUSINESS DISRUPTION; CONDEMNATION............................30
9.1.11 CHANGE OF OWNERSHIP..........................................30
9.1.12 ERISA........................................................30
9.1.13 CHALLENGE TO AGREEMENT.......................................30
9.1.14 REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT...........30
9.1.15 CRIMINAL FORFEITURE..........................................30
9.1.16 JUDGMENTS....................................................30
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9.1.17 REPUDIATION OF OR DEFAULT UNDER INTERCREDITOR AGREEMENT......31
9.2 ACCELERATION OF THE OBLIGATIONS.....................................31
9.3 OTHER REMEDIES......................................................31
9.4 REMEDIES CUMULATIVE; NO WAIVER......................................32
10. AGENT...............................................................32
10.1 APPOINTMENT, POWERS AND IMMUNITIES..................................32
10.2 RIGHTS OF AGENT AS A LENDER.........................................34
10.3 SHARING OF PAYMENTS, ETC............................................34
10.4 INDEMNIFICATION.....................................................34
10.5 INDEPENDENT CREDIT DECISIONS........................................35
10.6 SEVERAL COMMITMENTS.................................................36
10.7 SUCCESSOR AGENT.....................................................36
11. MISCELLANEOUS.......................................................36
11.1 SUCCESSORS AND ASSIGNS..............................................36
11.2 SECURITIZATION......................................................39
11.3 POWER OF ATTORNEY...................................................40
11.4 INDEMNITY...........................................................40
11.5 AMENDMENTS, ETC.....................................................41
11.6 SEVERABILITY........................................................41
11.7 SUCCESSORS AND ASSIGNS..............................................41
11.8 CUMULATIVE EFFECT; CONFLICT OF TERMS................................41
11.9 EXECUTION IN COUNTERPARTS...........................................42
11.10 NOTICE...........................................................42
11.11 AGENT'S OR LENDER'S CONSENT......................................43
11.12 CREDIT INQUIRIES.................................................43
11.13 TIME OF ESSENCE..................................................43
11.14 ENTIRE AGREEMENT.................................................43
11.15 INTERPRETATION...................................................43
11.16 GOVERNING LAW; CONSENT TO FORUM..................................43
11.17 WAIVERS BY BORROWER..............................................44
11.18 INTERCREDITOR AGREEMENT..........................................45
APPENDIX A GENERAL DEFINITIONS
EXHIBIT A NOTE
EXHIBIT B BORROWER'S AND EACH SUBSIDIARY'S BUSINESS LOCATIONS
EXHIBIT C JURISDICTIONS IN WHICH BORROWER AND EACH SUBSIDIARY IS AUTHORIZED
TO DO BUSINESS
EXHIBIT D CAPITAL STRUCTURE OF BORROWER
EXHIBIT E CORPORATE NAMES
EXHIBIT F TAX IDENTIFICATION NUMBERS OF SUBSIDIARIES
EXHIBIT G PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
EXHIBIT H CONTRACTS RESTRICTING BORROWER'S RIGHT TO INCUR DEBTS
EXHIBIT I LITIGATION
EXHIBIT J CAPITALIZED LEASES
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EXHIBIT K OPERATING LEASES
EXHIBIT L PENSION PLANS
EXHIBIT M LABOR CONTRACTS
EXHIBIT N COMPLIANCE CERTIFICATE
EXHIBIT O PERMITTED LIENS
EXHIBIT P ASSIGNMENT AND ACCEPTANCE
EXHIBIT Q FORM OF GUARANTY
EXHIBIT R FORM OF GUARANTOR SECURITY AGREEMENT
EXHIBIT S SURETY OBLIGATIONS
EXHIBIT T PERMITTED INDEBTEDNESS
EXHIBIT U EXISTING INVESTMENTS
v
