EXHIBIT 10.C.2
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$35,000,000
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and among
ASSOCIATED HYGIENIC PRODUCTS LLC
as Borrower,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as the Arranger and Administrative Agent
Dated as of March 14, 2001
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TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION...............................................2
1.1 Definitions..........................................................2
1.2 Accounting Terms....................................................29
1.3 Code................................................................29
1.4 Construction........................................................29
1.5 Schedules and Exhibits..............................................29
2. LOAN AND TERMS OF PAYMENT.................................................29
2.1 Revolver Advances...................................................30
2.3 Borrowing Procedures and Settlements................................33
2.4 Payments............................................................40
2.5 Overadvances........................................................43
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations........................................................43
2.7 Cash Management.....................................................45
2.8 Crediting Payments; Float Charge....................................47
2.9 Designated Account..................................................47
2.10 Maintenance of Loan Account; Statements of Obligations..............47
2.11 Fees................................................................48
2.12 Letters of Credit...................................................48
2.13 LIBOR Option........................................................52
2.14 Capital Requirements................................................55
3. CONDITIONS; TERM OF AGREEMENT.............................................56
3.1 Conditions Precedent to the Initial Extension of Credit.............56
3.2 Conditions Subsequent to the Initial Extension of Credit............60
3.3 Conditions Precedent to all Extensions of Credit....................61
3.4 Term................................................................61
3.5 Effect of Termination...............................................61
3.6 Early Termination by Borrower.......................................62
4. CREATION OF SECURITY INTEREST.............................................62
4.1 Grant of Security Interest..........................................62
4.2 Negotiable Collateral...............................................63
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4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........ 63
4.4 Delivery of Additional Documentation Required................................. 63
4.5 Power of Attorney............................................................. 64
4.6 Right to Inspect.............................................................. 64
4.7 Control Agreements............................................................ 65
4.8 Revised Article 9............................................................. 65
5. REPRESENTATIONS AND WARRANTIES...................................................... 66
5.1 No Encumbrances............................................................... 66
5.2 Eligible Accounts............................................................. 66
5.3 Eligible Inventory............................................................ 67
5.4 Equipment..................................................................... 68
5.5 Location of Inventory and Equipment........................................... 68
5.6 Inventory Records............................................................. 68
5.7 Location of Chief Executive Office, FEIN, Fiscal Year......................... 68
5.8 Due Organization and Qualification; Subsidiaries.............................. 68
5.9 Due Authorization; No Conflict................................................ 69
5.10 Litigation.................................................................... 70
5.11 No Material Adverse Change.................................................... 70
5.12 Fraudulent Transfer........................................................... 70
5.13 Employee Benefits............................................................. 70
5.14 Environmental Condition....................................................... 71
5.15 Brokerage Fees................................................................ 71
5.16 Intellectual Property......................................................... 71
5.17 Leases........................................................................ 71
5.18 DDAs.......................................................................... 71
5.19 Complete Disclosure........................................................... 71
5.20 Indebtedness.................................................................. 72
6. AFFIRMATIVE COVENANTS............................................................... 72
6.1 Accounting System............................................................. 72
6.2 Collateral Reporting.......................................................... 72
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6.3 Financial Statements, Reports, Certificates............................... 73
6.4 Guarantor Reports......................................................... 75
6.5 Return.................................................................... 75
6.6 Maintenance of Properties and Equipment................................... 76
6.7 Taxes..................................................................... 76
6.8 Insurance................................................................. 76
6.9 Location of Inventory and Equipment....................................... 77
6.10 Compliance with Laws...................................................... 77
6.11 Leases.................................................................... 77
6.12 Brokerage Commissions..................................................... 77
6.13 Existence................................................................. 78
6.14 Environmental............................................................. 78
6.15 Disclosure Updates........................................................ 78
6.16 License Default Notices................................................... 78
6.17 Engage Consultant......................................................... 79
7. NEGATIVE COVENANTS.............................................................. 79
7.1 Indebtedness.............................................................. 79
7.2 Liens..................................................................... 79
7.3 Restrictions of Fundamental Changes....................................... 80
7.4 Disposal of Assets........................................................ 80
7.5 Change Name............................................................... 80
7.6 Guarantee................................................................. 80
7.7 Nature of Business........................................................ 80
7.8 Payments, Prepayments and Amendments...................................... 80
7.9 Change of Control......................................................... 81
7.10 Consignments.............................................................. 81
7.11 Distributions............................................................. 81
7.12 Accounting Methods........................................................ 82
7.13 Investments............................................................... 82
7.14 Transactions with Affiliates.............................................. 82
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7.15 Suspension........................................................ 82
7.16 Compensation...................................................... 82
7.17 Use of Proceeds................................................... 82
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees............................................ 82
7.19 Securities Accounts............................................... 83
7.20 Financial Covenants............................................... 83
7.21 Officers.......................................................... 84
8. EVENTS OF DEFAULT....................................................... 84
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................. 86
9.1 Rights and Remedies............................................... 86
9.2 Remedies Cumulative............................................... 89
10. TAXES AND EXPENSES...................................................... 89
11. WAIVERS; INDEMNIFICATION................................................ 89
11.1 Demand; Protest; etc.............................................. 89
11.2 The Lender Group's Liability for Collateral....................... 90
11.3 Indemnification................................................... 90
12. NOTICES................................................................. 90
13. CHOICE OF LAW AND VENUE; JURY TRAIL WAIVER.............................. 92
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................. 93
14.1 Assignments and Participations.................................... 93
14.2 Successors........................................................ 96
15. AMENDMENTS; WAIVERS..................................................... 96
15.1 Amendments and Waivers............................................ 96
15.2 Replacement of Holdout Lender..................................... 97
15.3 No Waivers; Cumulative Remedies................................... 98
16. AGENT; THE LENDER GROUP................................................. 98
16.1 Appointment and Authorization of Agent............................ 98
16.2 Delegation of Duties.............................................. 99
16.3 Liability of Agent................................................ 99
16.4 Reliance by Agent................................................. 99
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16.5 Notice of Default or Event of Default..................................... 100
16.6 Credit Decision........................................................... 100
16.7 Costs and Expenses; Indemnification....................................... 101
16.8 Agent in Individual Capacity.............................................. 101
16.9 Successor Agent........................................................... 102
16.10 Lender in Individual Capacity............................................. 102
16.11 Withholding Taxes......................................................... 103
16.12 Collateral Matters........................................................ 105
16.13 Restrictions on Actions by Lender; Sharing of Payments.................... 106
16.14 Agency for Perfection..................................................... 106
16.15 Payments by Agent to the Lenders.......................................... 107
16.16 Concerning the Collateral and Related Loan Documents...................... 107
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.................................... 107
16.18 Several Obligations; No Liability......................................... 108
16.19 Legal Representations of Agent............................................ 109
17. GENERAL PROVISIONS.............................................................. 109
17.1 Effectiveness............................................................. 109
17.2 Section Headings.......................................................... 109
17.3 Interpretation............................................................ 109
17.4 Severability of Provisions................................................ 109
17.5 Amendments in Writing..................................................... 109
17.6 Counterparts; Telefacsimile Execution..................................... 110
17.7 Revival and Reinstatement of Obligations.................................. 110
17.8 Integration............................................................... 110
17.9 Conflicts................................................................. 110
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule C-1 Commitments
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 5.4 Drypers Equipment Leases Assumed or
Otherwise Transferred to Borrower
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.8(d) Subscriptions, Options, Warrants and Calls
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement"), is entered into as of March 14, 2001, between and among, on the
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one hand, the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and assigns, are referred to
hereinafter each individually as a "Lender" and collectively as the "Lenders"),
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FOOTHILL CAPITAL CORPORATION, a California corporation, as the arranger and
administrative agent for the Lenders ("Agent"), and, on the other hand,
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ASSOCIATED HYGIENIC PRODUCTS LLC, a Delaware limited liability company
("Borrower").
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WITNESSETH:
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WHEREAS, Borrower and Foothill (as defined herein) are parties to that
certain Loan and Security Agreement dated as of January 21, 2000 (as amended
prior to the date hereof, the "Prior Loan Agreement"); and
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WHEREAS, Borrower has requested that Foothill amend and restate the
Prior Loan Agreement in its entirety to, among other things, fund the
acquisition of substantially all of the assets of Drypers (as defined herein)
located in the United States of America; and
WHEREAS, Foothill has agreed to such amendment and restatement of the
Prior Loan Agreement in the manner set forth herein and in the amounts set forth
herein; and
WHEREAS, Borrower acknowledges and agrees that the security interests
granted to Foothill pursuant to the Prior Loan Agreement and the other Loan
Documents (as defined in the Prior Loan Agreement) shall remain outstanding and
in full force and effect in accordance with the Prior Loan Agreement and such
other Loan Documents and shall continue to secure the Obligations (as defined
herein); and
WHEREAS, each of Borrower, Foothill, and the Lenders (as defined
herein) acknowledges and agrees that (i) the Obligations (as defined herein)
represent, among other things, the amendment, restatement, renewal, extension,
consolidation and modification of the Obligations (as defined in the Prior Loan
Agreement) arising in connection with the Prior Loan Agreement and the other
Loan Documents (as defined in the Prior Loan Agreement) executed in connection
therewith; (ii) Borrower, Foothill and the Lenders intend that the Prior Loan
Agreement and the other Loan Documents (as defined in the Prior Loan Agreement)
executed in connection therewith and the collateral pledged thereunder shall
secure, without interruption or impairment of any kind, all existing Obligations
(as defined in the Prior Loan Agreement) under the Prior Loan Agreement and the
other Loan Documents (as defined in the Prior Loan Agreement) executed in
connection therewith as amended, restated, renewed, extended, consolidated and
modified hereunder, together with all other Obligations (as defined herein)
hereunder; (iii) all Liens (as defined in the Prior Loan Agreement) evidenced by
the Prior Loan Agreement and the other Loan Documents (as
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defined in the Prior Loan Agreement) executed in connection therewith are hereby
ratified, confirmed and continued; (iv) this Agreement is intended to restate,
renew, extend, consolidate, amend and modify the Prior Loan Agreement; and (v)
the Loan Documents (as defined in the Prior Loan Agreement) (other than the
Prior Loan Agreement which shall be restated, renewed, extended, consolidated,
amended and modified as set forth herein) shall remain extant and in full force
and effect (except to the extent amended and modified as of the date hereof);
and
WHEREAS, each of Borrower, Foothill and the Lenders intend that (i) the
provisions of the Prior Loan Agreement be hereby superseded and replaced by the
provisions hereof; and (ii) by entering into and performing their respective
obligations hereunder, this transaction shall not constitute a novation.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein set forth and other good and valuable consideration, the
receipt and adequacy of all of the foregoing as legally sufficient consideration
being hereby acknowledged, Borrower, Foothill and the Lenders do hereby agree
that the Prior Loan Agreement is amended and restated in its entirety as
follows:
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have
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the following definitions:
"Account Debtor" means any Person who is or who may become obligated
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under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"Accounts" means all of Borrower's now owned or hereafter acquired
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right, title, and interest with respect to "accounts" (as that term is defined
in the Code), and any and all supporting obligations in respect thereof.
"Acknowledgment of Licenses" means, collectively, that certain letter
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agreement by Procter & Xxxxxx in favor of Agent dated as of March 14, 2001,
acknowledging Agent's security interest in the Collateral, and that certain
letter agreement by Disposable Soft Foods (UK) PLC in favor of Agent dated as of
March 14, 2001, acknowledging Agent's security interest in the Collateral.
"Acquired Assets" means the assets acquired by Borrower pursuant to the
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Asset Purchase Agreement.
"Additional Documents" has the meaning set forth in Section 4.4.
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"Adjustment Date" means, with respect to any fiscal quarter end of
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Borrower, the later of (a) 90 days after such fiscal quarter end, or (b) the
sixth (6th) day following the delivery to Agent of the financial statements for
the last fiscal month period in such fiscal quarter.
"Advances" has the meaning set forth in Section 2.1.
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"Affiliate" means, as applied to any Person, any other Person who,
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directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, in any event: (a) any Person which owns
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directly or indirectly 5% or more of the securities having ordinary voting power
for the election of directors or other members of the governing body of a Person
or 5% or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed to control such
Person; (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person; and (c) each partnership or joint venture in
which a Person is a partner or joint venturer shall be deemed to be an Affiliate
of such Person.
"Affiliate Subordination Agreement" means that certain amended and
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restated subordination and non-setoff agreement relating to subordinated
intercompany debt of the Borrower to its Affiliates, dated of even date
herewith, among Borrower, certain of its Affiliates and Agent, in form and
substance satisfactory to Agent.
"Agent" means Foothill, solely in its capacity as agent for the Lenders
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hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by Agent from
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time to time as the account into which Borrower shall make all payments to Agent
for the benefit of the Lender Group and into which the Lender Group shall make
all payments to Agent under this Agreement and the other Loan Documents; unless
and until Agent notifies Borrower and the Lender Group to the contrary, Agent's
Account shall be that certain deposit account bearing account number 323-266193
and maintained by Agent with The Chase Manhattan Bank, 4 New York Plaza, 15th
Floor, New York, New York 10004, ABA #000000000.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
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"Agent's Liens" means the Liens granted by Borrower to Agent for the
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benefit of the Lender Group under this Agreement or the other Loan Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
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officers, directors, employees, and agents.
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"Agreement" has the meaning set forth in the preamble hereto.
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"Applicable Prepayment Premium" means, as of any date of determination,
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an amount equal to (a) the Maximum Amount, multiplied by (b)(i) during the
period of time from and after the date of the execution and delivery of this
Agreement up to the date that is the first anniversary of the Closing Date, 5%,
(ii) during the period of time from and including the date that is the first
anniversary of the Closing Date up to the date that is the second anniversary of
the Closing Date, 4%, (iii) during the period of time from and including the
date that is the second anniversary of the Closing Date up to the date that is
the third anniversary of the Closing Date, 3%, (iv) during the period of time
from and including the date that is the third anniversary of the Closing Date up
to the date that is the fourth anniversary of the Closing Date, 2%, and (v)
during the period of time from and including the date that is the fourth
anniversary of the Closing Date up to the Maturity Date, 1%, provided, however,
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if the Applicable Prepayment Premium, as calculated hereunder, when added to all
interest and other charges for the use of money as contemplated by the Official
Code of Georgia Annotated, Section 7-4-18 (the "Interest Charges") exceeds five
percent (5%) per month (the "Legal Limit"), the amount of such Applicable
Prepayment Premium shall be reduced to an amount which when added to the
Interest Charges would equal the Legal Limit less $1.00.
"Amended and Restated Wang Note" means that certain $4,085,000 amended
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and restated term note given by Xxxxxxx XX Xxxx in favor of Borrower dated of
even date herewith, in form and substance satisfactory to Agent, together with
endorsement in blank.
"Asset Purchase Agreement" means that certain asset purchase agreement,
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together with all related exhibits, schedules, annexes and all other documents
related thereto, dated as of February 20, 2001 by and among Drypers, Borrower
and DSG with respect to the Drypers Acquisition, in form and substance
satisfactory to Agent, and on terms and conditions approved by the Court.
"Assignee" has the meaning set forth in Section 14.1.
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"Assignment and Acceptance" means an Assignment and Acceptance in the
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form of Exhibit A-1.
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"Assignment of Note" means that certain assignment of note dated as of
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even date herewith executed and delivered by Borrower in favor of Agent with
respect to the Amended and Restated Wang Note and related collateral documents,
in form and substance satisfactory to Agent.
"Authorized Person" means any officer or other employee of Borrower.
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"Availability" means, as of any date of determination, if such date is
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a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrower
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is entitled to borrow as Advances under Section 2.1 (after giving effect to all
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then outstanding Obligations and all sublimits and reserves applicable
hereunder).
"Bankruptcy Code" means the United States Bankruptcy Code, as in effect
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from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
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accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/16%), on the basis of the rates at which Dollar deposits are offered
to major banks in the London interbank market on or about 2:00 p.m. (Georgia
time) 2 Business Days prior to the commencement of the applicable Interest
Period, for a term and in amounts comparable to the Interest Period and amount
of the LIBOR Rate Loan requested by Borrower in accordance with this Agreement,
which determination shall be conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced within Xxxxx Fargo at
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its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Base Rate Loan" means each Borrowing of an Advance or Capital
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Expenditure Loan or portion of the Term Loan that bears interest at a rate
determined by reference to the Base Rate.
"Base Rate Margin" has the meaning set forth in Section 2.6.
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"Benefit Plan" means a "defined benefit plan" (as defined in
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Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA
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Affiliate of Borrower has been an "employer" (as defined in Section 3(5) of
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ERISA) within the past six years.
"BNP Guarantees" means, collectively, that certain Limited Recourse
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Guaranty dated January 28, 2000 by BNP Private Bank & Trust Cayman Limited in
favor of Borrower, and that certain Guaranty dated January 21, 2000 by BNP
Jersey Trust Corporation Limited in favor of Borrower.
"Board of Directors" means the board of directors (or comparable
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managers) of Borrower or any committee thereof duly authorized to act on behalf
of the board.
"Books" means Borrower's now owned or hereafter acquired books and
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records (including all of its Records indicating, summarizing, or evidencing its
assets (including the Collateral) or liabilities, all of its Records relating to
its business operations or financial condition, and all of its goods or General
Intangibles related to such information).
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"Borrower" has the meaning set forth in the preamble to this
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Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances or
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Capital Expenditure Loans or the Term Loan, made on the same day by the Lenders
(or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or
by Agent in the case of an Agent Advance.
"Borrowing Base" has the meaning set forth in Section 2.1.
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"Borrowing Base Certificate" means a certificate in the form of Exhibit
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B-1.
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"Business Day" means any day that is not a Saturday, Sunday, or other
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day on which national banks are authorized or required to close, except that, if
a determination of a Business Day shall relate to a LIBOR Rate Loan, the term
"Business Day" also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.
"Capital Expenditure Loan" has the meaning set forth in Section 2.2.
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"Capital Expenditure Loan Amount" means $5,000,000.
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"Capital Lease" means a lease that is required to be capitalized for
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financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
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obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued or
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unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 1 year from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Xxxxx'x, (d) certificates of deposit or bankers' acceptances
maturing within 1 year from the date of acquisition thereof either (i) issued by
any bank organized under the laws of the United States or any state thereof
which bank has a rating of A or A2, or better, from S&P or Xxxxx'x, or (ii)
certificates of deposit less than or equal to $100,000 in the aggregate issued
by any other bank insured by the Federal Deposit Insurance Corporation, and (e)
investments in money market mutual funds having assets in excess of
$2,500,000,000, substantially all of whose assets are comprised of the items
described in clauses (a) through (d) above.
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"Cash Management Bank" has the meaning set forth in Section 2.7(a).
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"Cash Management Account" has the meaning set forth in Section 2.7(a).
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"Cash Management Agreements" means those certain cash management
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service agreements, in form and substance satisfactory to Agent, each of which
is among Borrower, Agent, and one of the Cash Management Banks.
"Change of Control" means (a) any "person" or "group" (within the
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meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, that become the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 20% or more, of the Stock of Borrower
having the right to vote for the election of members of the Board of Directors,
or (b) a majority of the members of the Board of Directors do not constitute
Continuing Directors, (c) Borrower ceases to directly own and control 100% of
the outstanding Stock of each of its Subsidiaries extant as of the Closing Date,
or (d) DSG shall cease to own and control eighty percent (80%) of the total
voting power of all classes of stock then outstanding of Holdco entitled to vote
in the election of directors.
"Chapter 11 Case" means Drypers' Chapter 11 Case No. 00-39360-H4-11
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pending before the Court.
"Closing Date" means the date of the making of the initial Advance (or
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other extension of credit) hereunder or the date on which Agent sends Borrower a
written notice that each of the conditions precedent set forth in Section 3.1
either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of Borrower
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for the 1 year period following the Closing Date, on a month by month basis, in
form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Code" means the Georgia Uniform Commercial Code, as in effect from
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time to time.
"Collateral" means all of Borrower's now owned or hereafter acquired
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right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
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(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of Borrower that now or hereafter come into
the possession, custody, or control of any member of the Lender Group, and
(j) the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"Collateral Assignments" means, collectively, that certain Collateral
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Assignment of Rights Under Limited Recourse Guaranty and Stock Pledge Agreement
dated as of January 21, 2000 executed and delivered by Borrower in favor of
Foothill, and that certain Collateral Assignment of Rights Under Guaranty dated
as of January 21, 2000 executed and delivered by Borrower to Foothill.
"Collateral Access Agreement" means a landlord waiver, bailee letter,
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acknowledgement agreement, or attornment and subordination agreement of any
lessor, warehouseman, processor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Equipment or Inventory,
in each case, in form and substance reasonably satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other
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items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrower.
"Commitment" means, with respect to each Lender, its Revolver
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Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-I or on the signature page of the
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Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 141.
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"Compliance Certificate" means a certificate substantially in the form
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of Exhibit C-1 delivered by the chief financial officer of Borrower to Agent.
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"Consultant" shall mean Xxxxxxxx & Associates, Inc., or any subsequent
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replacement consultant satisfactory to Agent.
"Continuing Director" means (a) any member of the Board of Directors
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who was a director (or comparable manager) of Borrower on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Borrower (as such terms are used in Rule 14a-11 under the Exchange Act) and
whose initial assumption of office resulted from such contest or the settlement
thereof.
"Control Agreement" means a Control agreement, in form and substance
-----------------
satisfactory to Agent, executed and delivered by Borrower, Agent, and the
applicable securities intermediary with respect to a Securities Account or a
bank with respect to a deposit account.
"Court" means the United States Bankruptcy Court for the Southern
-----
District of Texas, Houston Division.
"Daily Balance" means, with respect to each day during the term of this
-------------
Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account maintained by
---
Borrower.
"Default" means an event, condition, or default that, with the giving
-------
of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance (or
-----------------
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3 days
---------------------
from and after the date the relevant payment is due, and (b) thereafter, at the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).
"Designated Account" means account number 00-000-000 of Borrower
------------------
maintained with the Borrower's Designated Account Bank, or such other deposit
account of Borrower (located within the United States) that has been designated
as such, in writing, by Borrower to Agent.
9
"Designated Account Bank" means SouthTrust Bank of Georgia, N.A., whose
-----------------------
office is located at 1 Georgia Center, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx 00000, and whose ABA number is 000000000.
"Dilution" means, as of any date of determination, a percentage, based
--------
upon the experience of the immediately prior 90 days, that is the result of
dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to the Accounts during
such period, by (b) Borrower's Collections with respect to Accounts during such
period (excluding extraordinary items) plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount
----------------
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and
-------------------
delivered by Borrower to Agent regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is satisfactory to Agent.
"Dollars" or "$" means United States dollars.
------- -
"Drypers" means Drypers Corporation, a Delaware corporation, as debtor
-------
or debtor-in-possession, as the case may be.
"Drypers Acquisition" means the acquisition of Drypers' assets located
-------------------
in the United States, including intellectual property and the "Drypers" trade
name worldwide, and the assignment and assumption of certain executory contracts
and leases of Drypers, all pursuant to the Asset Purchase Agreement, in each
case, free and clear of all liens and encumbrances, as approved by the Court and
on terms satisfactory to Agent in its sole discretion.
"DSG" means DSG International Limited, a company formed under the laws
---
of the British Virgin Islands.
"DSG Holdings (UK)" means DSG Holdings (UK) Limited, a company formed
-----------------
under the laws of England.
"EBITDA" means, with respect to any fiscal period, Borrower's and its
------
Subsidiaries consolidated net earnings (or loss), minus extraordinary gains,
plus interest expense (excluding interest received on the Amended and Restated
Wang Note), income taxes, and depreciation and amortization for such period, as
determined in accordance with GAAP.
10
"Eligible Accounts" means those Accounts created by the Borrower in the
-----------------
ordinary course of its business, that arise out of Borrower's sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrower in the Loan Documents,
and that are not excluded as ineligible by virtue of one or more of the criteria
set forth below; provided, however, that such criteria may be fixed and revised
--------- -------
from time to time by Agent in Agent's Permitted Discretion to address the
results of any audit performed by Agent from time to time after the Closing
Date. In determining the amount to be included, Eligible Accounts shall be
calculated net of customer deposits and unapplied cash remitted to Borrower.
Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 120 days
of original invoice date or that are more than 60 days past due,
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States or Canada, or (ii)
is not organized under the laws of the United States, Canada, or any state or
province thereof, or (iii) is the government of any foreign country or sovereign
state, or of any state, province, municipality, or other political subdivision
thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (y) the Account is supported by an irrevocable
letter of credit reasonably satisfactory to Agent (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Agent and is
directly drawable by Agent, or (z) the Account is covered by credit insurance in
form, substance, and amount, and by an insurer, reasonably satisfactory to
Agent; provided, in connection with any Canadian account debtor, such account
-------
debtor shall have been directed to remit the proceeds of such Account to a Cash
Management Bank,
(g) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which Borrower has
complied, to the reasonable
11
satisfaction of Agent, with the Assignment of Claims Act, 31 USC (S) 3727), or
(ii) any state of the United States (exclusive, however, of (y) Accounts owed by
any state that does not have a statutory counterpart to the Assignment of Claims
Act, or (z) Accounts owed by any state that does have a statutory counterpart to
the Assignment of Claims Act as to which Borrower has complied to Agent's
satisfaction),
(h) Accounts with respect to which the Account Debtor is a creditor of
Borrower, has or has asserted a right of setoff, has disputed its liability, or
has made any claim with respect to its obligation to pay the Account, to the
extent of such claim, right of setoff, or dispute,
(i) Accounts, to the extent such Accounts, together with all other
Accounts owing by such Account Debtor to Borrower or any Subsidiary of Borrower
exceed in the aggregate (a) thirty percent (30%) of all Eligible Accounts in the
case of Walgreen Company, (b) twenty percent (20%) of all Eligible Accounts in
the case of Medline Industries, Inc., (c) twenty-five percent (25%) of all
Eligible Accounts in the case of Walmart, and (d) ten percent (10%) of all
Eligible Accounts in all other cases,
(j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
Borrower has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, or West Virginia (or any other state that
requires a creditor to file a business activity report or similar document in
order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such state), unless
Borrower has qualified to do business in New Jersey, Minnesota, West Virginia,
or such other states, or has filed a business activities report with the
applicable division of taxation, the department of revenue, or with such other
state offices, as appropriate, for the then-current year, or is exempt from such
filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or
12
(o) Accounts that represent the right to receive progress payments or
other advance xxxxxxxx that are due prior to the completion of performance by
Borrower of the subject contract for goods or services.
"Eligible Inventory" means Inventory consisting of raw materials or
------------------
first quality finished goods held for sale in the ordinary course of Borrower's
business located at one of Borrower's business locations set forth on Schedule
--------
E-1 (or in-transit between any such locations), that complies with each of the
---
representations and warranties respecting Eligible Inventory made by Borrower in
the Loan Documents, and that is not excluded as ineligible by virtue of the one
or more of the criteria set forth below; provided, however, that such criteria
--------- -------
may be fixed and revised from time to time by Agent in Agent's Permitted
Discretion to address the results of any audit or appraisal performed by Agent
from time to time after the Closing Date. In determining the amount to be so
included, Inventory shall be valued at the lower of cost or market on a basis
consistent with Borrower's historical accounting practices. An item of inventory
shall not be included in Eligible Inventory if:
(a) Borrower does not have good, valid, and marketable title thereto,
(b) it is not located at one of the locations in the United States set
forth on Schedule E-1 or in transit from one such location to another such
------------
location,
(c) it is located on real property leased by Borrower or in a contract
warehouse or in possession of a processor, in each case, unless it is subject to
a Collateral Access Agreement executed by the lessor, warehouseman, processor or
other third party, as the case may be, and unless it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first priority Agent's
Lien,
(e) it consists of goods returned or rejected by Borrower's customers,
(f) it consists of goods that are obsolete or slow moving, restrictive
or custom items, work-in-process, or goods that constitute spare parts,
packaging (including "inners" and "outers") and shipping materials, supplies
used or consumed in Borrower's business, xxxx and hold goods, defective goods,
"seconds," or Inventory acquired on consignment, or
(g) it is not subject to a license or other agreement or carries
branded logos and trade names that limit or restrict Borrower's right to sell
or display such Inventory, unless such Inventory is otherwise approved by Agent
in its sole discretion.
"Eligible Transferee" means (a) a commercial bank organized under the
-------------------
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of
13
the Organization for Economic Cooperation and Development or a political
subdivision of any such country and which has total assets in excess of
$250,000,000, provided that such bank is acting through a branch or agency
located in the United States, (c) a finance company, insurance company, or other
financial institution or fund that is engaged in making, purchasing, or
otherwise investing in commercial loans in the ordinary course of its business
and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and Borrower, and
(f) during the continuation of an Event of Default, any other Person approved by
Agent.
"Elmbay" means Elmbay Limited a corporation formed under the laws of
------
England, and the general partner of Holdco.
"Elmbay Pledge Agreement" means that certain pledge agreement dated as
-----------------------
of even date herewith, executed and delivered by Elmbay in favor of Agent,
pledging all of its equity interest in Borrower to Agent, in form and substance
satisfactory to Agent.
"Environmental Actions" means any complaint, summons, citation, notice,
---------------------
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of Borrower or any predecessor in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
-----------------
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrower, relating
to the environment, employee health and safety, or Hazardous Materials,
including the Comprehensive Environmental Response, Cooperation and Liability
Act, 42 U.S.C. 9601 et seq. ("CERCLA"); the Resource Conservation and Recovery
------
Act, 42 U.S.C. 6901 et seq. ("RCRA"); the Federal Water Pollution Control Act,
------
33 USC (S) 1251 et seq; the Toxic Substances Control Act, 15 USC, (S) 2601 et
------ --
seq; the Clean Air Act, 42 USC (S) 7401 et seq.; the Safe Drinking Water Act, 42
--- ------
USC. (S) 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. (S) 2701 et seq.;
------ ------
the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC. (S)
11001 et seq.; the Hazardous Material Transportation Act, 49 USC (S) 1801 et
------ --
seq.; and the Occupational Safety and Health Act, 29 USC. (S)651 et seq. (to the
--- ------
extent it regulates occupational exposure to Hazardous Materials); any state and
local or foreign counterparts or equivalents, in each case as amended from time
to time.
14
"Environmental Liabilities and Costs" means all liabilities, monetary
-----------------------------------
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party which relates to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
------------------
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrower's now owned or hereafter acquired
---------
right, title, and interest with respect to equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, vehicles (including motor vehicles),
tools, parts, goods (other than consumer goods, farm products, or inventory),
wherever located, including all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing, specifically including any assets acquired by Borrower with the
proceeds of a Term Loan or Capital Expenditure Loan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any person subject to ERISA whose employees
---------------
are treated as employed by the same employer is the employees of Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of Borrower under
IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which Borrower is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower and
whose employees are aggregated with the employees of Borrower under IRC Section
414(o).
"Event of Default" has the meaning set forth in Section 8.
---------------- ---------
"Excess Availability" means the amount, as of the date any
-------------------
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables and royalty payments of Borrower aged in
excess of historical levels with respect thereto and all book overdrafts in
excess of historical practices with respect thereto, in each case as determined
by Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect
------------
from time to time.
15
"Fee Letter" means that certain fee letter, dated as of even date
----------
herewith, between Borrower and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
----
"First Adjustment Date" has the meaning set forth in Section 2.6(a).
--------------------- --------------
"Foothill" means Foothill Capital Corporation, a California
--------
corporation.
"Funding Date" means the date on which a Borrowing occurs.
------------
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
------- ------ -------------------
"GAAP" means generally accepted accounting principles as in effect from
----
time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's now owned or hereafter
-------------------
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, domain names,
literature, reports, catalogs, money, deposit accounts, insurance premium
rebates, tax refunds, and tax refund claims), and any and all supporting
obligations in respect thereof, and any other personal property other than
goods, Accounts, Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
-------------------
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
----------------------
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or listed
-------------------
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of properties harmful to human health or the environment
such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal
16
resources, (c) any flammable substances or explosives or any radioactive
materials, and (d) friable asbestos or electrical equipment that contains any
oil or dielectric fluid containing levels of polychlorinated biphenyls in excess
of 50 parts per million.
"Holdco" means AHP Holdings L.P., a Georgia limited partnership.
------
"Indebtedness" means (a) all obligations of Borrower for borrowed
------------
money, (b) all obligations of Borrower evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of Borrower
in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all obligations of Borrower under Capital Leases,
(d) all obligations or liabilities of others secured by a Lien on any asset of
Borrower, irrespective of whether such obligation or liability is assumed, (e)
all obligations of Borrower for the deferred purchase price of assets (other
than trade debt incurred in the ordinary course of Borrower's business and
repayable in accordance with customary trade practices), and (f) any obligation
of Borrower guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse to
Borrower) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
----------------------- ------------
"Indemnified Person" has the meaning set forth in Section 11.3.
------------------ ------------
"Insolvency Proceeding" means any proceeding commenced by or against
---------------------
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that portion of
-----------------
the book value of all of such Person's assets that would be treated as
intangibles under GAAP, excluding "goodwill" to the extent such goodwill is
negative.
"Intellectual Property Security Agreement" means that certain amended
----------------------------------------
and restated intellectual property security agreement dated of even date
herewith, executed and delivered by Borrower in favor of Agent, in form and
substance satisfactory to Agent.
"Interest Period" means, with respect to each LIBOR Rate Loan, a period
---------------
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2, or
3 months thereafter; provided, however, that (a) if any Interest Period would
--------- -------
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires, (c) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
17
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (d) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is 1 , 2, or 3 months after the
date on which the Interest Period began, as applicable, and (e) Borrower may not
elect an Interest Period which will end after the Maturity Date.
"Inventory" means all Borrower's now owned or hereafter acquired right,
---------
title, and interest with respect to inventory, including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by
Borrower as lessor, goods that are furnished by Borrower under a contract of
service, and raw materials, work in process, or materials used or consumed in
Borrower's business.
"Investment" means, with respect to any Person, any investment by such
----------
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Investment Property" means all of Borrower's now owned or hereafter
-------------------
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time
---
to time.
"Issuing Lender" means Foothill or any other Lender that, at the
--------------
request of Borrower and with the consent of Agent agrees, in such Lender's sole
discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C
Undertakings pursuant to Section 2.12.
------------
"L/C" has the meaning set forth in Section 2.12(a).
--- ---------------
"L/C Disbursement" means a payment made by the Issuing Lender pursuant
----------------
to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
---------------
18
"Lender" and "Lenders" have the respective meanings set forth in the
------ -------
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
------------
"Lender Group" means, individually and collectively, each of the
------------
Lenders (including the Issuing Lender) and Agent.
""Lender Group Expenses" means all (a) costs or expenses (including
---------------------
taxes, and insurance premiums) required to be paid by Borrower under any of the
Loan Documents that are paid or incurred by the Lender Group, (b) fees or
charges paid or incurred by Agent in connection with the Lender Group's
transactions with Borrower, including, fees or charges for Photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with
the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Agent in the
disbursement of funds to Borrower (by wire transfer or otherwise), (d) charges
paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable
costs and expenses paid or incurred by the Lender Group to correct any default
or enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with Borrower or any guarantor of the Obligations,
(h) Agent's reasonable fees and expenses (including attorneys fees) incurred in
advising, structuring, drafting, reviewing, administering, or amending the Loan
Documents, and (i) Agent's and each Lender's reasonable fees and expenses
(including attorneys fees) incurred in terminating, enforcing (including
attorneys fees and expenses incurred in connection with a "workout," a
restructuring," or an Insolvency Proceeding concerning Borrower or in exercising
rights or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
---------------------
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
19
"Letter of Credit" means an L/C or an L/C undertaking, as the context
----------------
requires.
"Letter of Credit Usage" means, as of any date of determination, the
-----------------------
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of
the amount of outstanding time drafts accepted by an Underlying Issuer as a
result of drawings under Underlying Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
-------------- ------------------
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
------------ -----------
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan,
----------
the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest
Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be
adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR Rate Loan" means each Borrowing of an Advance or portion of the
---------------
Term Loan or the Capital Expenditure Loan, as the case may be, that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" has the meaning set forth in Section 2.6.
----------------- -----------
"Lien" means any interest in an asset securing an obligation owed to,
----
or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest
shall be contingent upon the occurrence of some future event or events or
the existence of some future circumstance or circumstances, including the
lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement,
security agreement, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases, and other title exceptions
and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
------------ ------------
"Loan Documents" means this Agreement, the Assignment of Note, the
--------------
Cash Management Agreements, the BNP Guarantees, the Collateral Assignments,
the Control Agreements, the Disbursement Letter, the Fee Letter, the
Intellectual Property Security Agreement, the Letters of Credit, the
Mortgages, the Officers' Certificate, the Parent Guaranty, the Parent
Pledge Agreement, the Elmbay Pledge Agreement, the Parent Security
Agreement, the Affiliate Subordination Agreement, the Wang Pledge
Agreement, the Subordination Agreements, the Acknowledgement of Licenses,
and any other note or notes
20
executed by Borrower in connection with this Agreement and payable to a member
of the Lender Group, and any other agreement entered into, now or in the future,
by Borrower and Agent or the Lender Group in connection with this Agreement,
specifically including any reaffirmation agreement executed in connection with
the foregoing.
"Material Adverse Change" means (a) a material adverse change in the
-----------------------
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower, (b) a material impairment of
Borrower's ability to perform its obligations under the Loan Documents to which
it is a party or of the Lender Group's ability to enforce the Obligations or
realize upon the Collateral, or (c) a material impairment of the enforceability
or priority of the Agent's Liens with respect to the Collateral as a result of
an action or failure to act on the part of Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
------------- -----------
"Maximum Amount" means $35,000,000.
--------------
"Maximum Revolver Amount" means, at any date of determination, the
-----------------------
Maximum Amount less the then outstanding principal balance of the Term Loan.
"Mortgages" means, individually and collectively, one or more
---------
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Agent, for the benefit of the Lender Group, in form and
substance satisfactory to Agent, that encumber the Real Property Collateral and
the related improvements thereto.
"Negotiable Collateral" means all of Borrower's now owned and
---------------------
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Net Liquidation Percentage" means the percentage of the book value of
--------------------------
Borrower's Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, net of liquidation expenses, such percentage to
be as determined from time to time by a qualified appraisal company selected by
Agent.
"Obligations" means all loans (including the Term Loan and the Capital
-----------
Expenditure Loans), Advances, debts, principal, interest (including any interest
that, but for the provisions of the Bankruptcy Code, would have accrued),
contingent reimbursement obligations with respect to outstanding Letters of
Credit, premiums, liabilities (including all amounts charged to Borrower's Loan
Account pursuant hereto), obligations, fees (including the fees provided for in
the Fee Letter), charges, costs, Lender Group Expenses (including any fees or
expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description
21
owing by Borrower to the Lender Group pursuant to or evidenced by the Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all Lender
Group Expenses that Borrower are required to pay or reimburse by the Loan
Documents, by law, or otherwise. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Officers' Certificate" means the representations and warranties of
---------------------
officers form submitted by Agent to Borrower, together with Borrower's completed
responses to the inquiries set forth therein, the form and substance of such
responses to be satisfactory to Agent.
"Order of the Court" means, with respect to the Chapter 11 Case, that
------------------
certain order of the Court authorizing (i) the Drypers Acquisition by Borrower
and DSG pursuant to Sections 105 and 363 of the Bankruptcy Code and (ii) the
assumption and assignment of certain executory contracts and unexpired leases
pursuant to Section 365 of the Bankruptcy Code.
"Originating Lender" has the meaning set forth in Section 14.1(e).
------------------ ---------------
"Overadvance" has the meaning set forth in Section 2.5.
----------- -----------
"Parent Guaranty" means that certain amended and restated guaranty
---------------
dated of even date herewith, executed and delivered by Holdco in favor of Agent,
in form and substance satisfactory to Agent.
"Parent Pledge Agreement" means that certain amended and restated
-----------------------
pledge agreement dated of even date herewith, executed and delivered by Holdco
in favor of Agent, pledging all of its equity interests in Borrower to Agent, in
form and substance satisfactory to Agent.
"Parent Security Agreement" means that certain amended and restated
-------------------------
security agreement of even date herewith, executed and delivered by Holdco in
favor of Agent, in form and substance satisfactory to agent.
"Participant" has meaning set forth in Section 14.1(e).
----------- ---------------
"Pass-Through Entity" means a Person which is an "S corporation"
--------------------
within the meaning of Section 1361 of the IRC, a "qualified subchapter S
subsidiary" within the meaning of Section 1361 (b)(3)(B) of the IRC, a
partnership (including a limited liability company) within the meaning of
Section 7701(a)(2) of the IRC (other than one electing to be
22
taxed as a corporation), or an entity with a single owner that is disregarded
pursuant to Treasury Reg. (S)301.7701-3.
"Permitted Discretion" means a determination made in good faith and in
--------------------
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
----------------------
Borrower of Equipment that is substantially worn, damaged, or obsolete in the
ordinary course of Borrower's business with an aggregate fair market value not
to exceed $200,000 in any fiscal year, (b) sales by Borrower of Inventory to
buyers in the ordinary course of business, (c) the use or transfer of money or
Cash Equivalents by Borrower in a manner that is not prohibited by the terms of
this Agreement or the other Loan Documents, (d) the licensing by Borrower, on a
non-exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of Borrower's business, (e) sales or
dispositions of Equipment not included in the Xxxxx-Xxxxxx appraisal dated
November 16, 2000, or the Xxxx Machinery International, Inc. appraisal dated
January 26, 2001, or any subsequent updated appraisal (the "Appraisal") in an
---------
amount not to exceed $250,000 in the aggregate in any fiscal year, and (f) other
sales of Equipment provided that the proceeds of each such sale equal or exceed
120% of the orderly liquidation value of such Equipment as set forth in the
Appraisal. In the event of any sale of Equipment where the Equipment to be sold
is not valued on an individual basis by the Appraisal, Agent shall determine in
its reasonable judgment the orderly liquidation value of such Equipment.
"Permitted Holders" means any direct or indirect wholly-owned
-----------------
subsidiary of DSG.
"Permitted Investments" means (a) investments in Cash Equivalents, (b)
---------------------
investments in negotiable instruments for collection, and (c) advances made in
connection with purchases of goods or services in the ordinary course of
business.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
---------------
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
------------
interests of lessors under operating leases, (e) purchase money Liens or the
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
business of Borrower and not in connection with the borrowing of money, and
which Liens either (i) are for sums not yet delinquent, or (ii) are the subject
of Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, (h) Liens or
deposits to secure performance of bids, tenders, or leases incurred in the
ordinary
23
course of business of Borrower and not in connection with the borrowing of
money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of business of Borrower, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) Liens with respect to the Real Property Collateral that are
exceptions to the commitments for title insurance issued in connection with the
Mortgages, as accepted by Agent, and (l) with respect to any Real Property that
is not part of the Real Property Collateral, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof by Borrower.
"Permitted Protest" means the right of Borrower to protest any Lien
-----------------
(other than any such Lien that secures the Obligations), taxes (other than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the Books in such amount as is required under GAAP,
(b) any such protest is instituted promptly and prosecuted diligently by
Borrower in good faith, and (c) Agent is satisfied that, while any such protest
is pending, there will be no impairment of the enforceability, validity, or
priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
-------------------------------------
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of
$250,000.
"Person" means natural persons, corporations, limited liability
------
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means Collateral other than Real
----------------------------
Property.
"Projections" means Borrower's forecasted (a) balance sheets, (b)
-----------
profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
--------------
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, the percentage obtained by dividing (i) such Lender's Commitment, by
(ii) the aggregate Revolver Commitments of all Lenders,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse the Issuing Lender, and to receive payments of fees
with respect thereto, the
24
percentage obtained by dividing (i) such Lender's Revolver Commitment, by (ii)
the aggregate Revolver Commitments of all Lenders,
(c) with respect to a Lender's obligation to make Capital
Expenditure Loans and receive payments of interest, fees, and principal with
respect thereto, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate amount of all Lenders' Revolver Commitments,
(d) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
(e) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount of
Total Commitments of all Lenders; provided, however, that, in each case, in the
-------- -------
event all Commitments have been terminated, Pro Rata Share shall be determined
according to the Commitments in effect immediately prior to such termination.
"Purchase Money Indebtedness" means Indebtedness (other than the
---------------------------
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any estate or interests in real property
-------------
now owned or hereafter acquired by Borrower and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
------------------------
Property identified on Schedule R-1 (which shall include any parcel or parcels
------------
that are part of the Acquired Assets) and any Real Property hereafter acquired
by Borrower.
"Record" means information that is inscribed on a tangible medium
------
or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
---------------
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC (S) 9601.
"Report" has the meaning set forth in Section 16.17.
------ -------------
25
"Required Availability" means Excess Availability and unrestricted
---------------------
cash and Cash Equivalents in an amount of not less than $5,000,000.
"Required Lenders" means, at any time, (a) Agent, and (b) Lenders
----------------
whose Pro Rata Shares aggregate 66 2/3% or more of the Total Commitments, or if
the Commitments have been terminated irrevocably, 66 2/3% or more of the
Obligations then outstanding.
"Reserve Percentage" means, on any day, for any Lender, the maximum
------------------
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic supplemental, marginal, or emergency reserve)
that are in effect on such date with respect to eurocurrency fundings
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its
--------------------
Revolver commitment, and, with respect to all Lenders, their Revolver
Commitments, in each as such Dollar amounts are set forth beside such Lender's
name under the applicable heading on Schedule C-1 or on the signature page of
------------
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1
------------
"Revolver Usage" means, as of any date of determination, the sum of
--------------
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage, plus (c) the then extant amount of
outstanding Capital Expenditure Loans.
"Risk Participation Liability" means, as to each Letter of Credit, all
----------------------------
reimbursement obligations of Borrower to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrower,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"Royalty Reserves" means reserves determined from time to time by
----------------
Agent in its reasonable judgment, for the estimated costs relating to the
royalties payable to any licensors, including without limitation, Xxxxxxxx Xxxxx
and Xxxxxxx & Xxxxxx.
"SEC" means the United States Securities and Exchange Commission and
---
any successor thereto.
"Securities Account" means a "securities account" as that term defined
------------------
in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
---------- -----------------
26
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
--------------- -----------------
"Solvent" means, with respect to any Person on a particular date, that
-------
such Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"Stock" means all shares, options, warrants, interests,
-----
participations, equity interests or other equivalents (regardless of how
designated) of or in a Person, whether voting or nonvoting, including common
stock, preferred stock, limited liability company interests, partnership
interests, partnership interests, or any other "equity security" (as such term
is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by
the SEC under the Exchange Act).
"Subordinated Note A" means the indebtedness of Borrower to DSG
-------------------
evidenced by that certain subordinated discount promissory note executed by
Borrower and payable to the order of DSG dated as of March __, 2001, in the
original principal amount of $15,906,250, as amended, restated or replaced from
time to time with Agent's consent, all in form and substance satisfactory to
Agent.
"Subordinated Note B" means the indebtedness of Borrower to DSG
-------------------
Holdings (UK), evidenced by that certain promissory note executed by Borrower
and payable to the order of DSG Holdings (UK) dated as of March __, 2001, in the
original principal amount of $5,000,000 in form and substance satisfactory to
Agent.
"Subordination Agreement" means, individually and collectively, (a)
-----------------------
that certain Subordination Agreement dated of even date herewith, among DSG,
Borrower and Agent relating to the Subordinated Note A, (b) that certain
Subordination Agreement dated of even date herewith, among DSG Holdings (UK),
Borrower and Agent relating to the Subordinated Note B, and (c) any other
subordination agreement entered into in connection with Subordinated Note A or
Subordinated Note B from time to time, all in form and substance satisfactory to
Agent.
"Subsidiary" of a Person means a corporation, partnership, limited
----------
liability company, or other entity in which that Person directly or indirectly
xxxxx or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Swing Lender" means Foothill or any other Lender that, at the request
------------
of Borrower and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
---------- -----------------
27
"Tangible Net Worth" means, as of any date of determination, the
------------------
result of (a) Borrower's total stockholder's equity, minus (b) the sum of (i)
all Intangible Assets of Borrower, (ii) all of Borrower's prepaid expenses and
(iii) all amounts due to Borrower from Affiliates.
"Tax Distribution Amount" means, for any period when Borrower is a
-----------------------
Pass-Through Entity, an amount sufficient to cover payment of the expected
federal and state income taxes attributable to the ownership of Borrower's
common equity, based on the highest federal and state income tax rates that
could be applicable to any holder of Borrower's common equity (as the case may
be), as determined through the end of the period in question; provided, however,
that in no event shall the Tax Distribution Amount for any year exceed the
actual amount of federal and state income taxes attributable to the ownership of
Borrower's common equity.
"Taxes" has the meaning set forth in Section 16.11.
----- -------------
"Term Loan" has the meaning set forth in Section 2.2.
--------- -----------
"Term Loan Amount" means $11,000,000.
----------------
"Term Loan Commitment" means, with respect to each Lender, its Term
--------------------
Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 or on the signature page of the
------------
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
------------
"Total Commitment" means, with respect to each Lender, its Total
----------------
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
------------
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
------------
"Total Debt to EBITDA Ratio" means, at any date of determination, the
--------------------------
ratio of (a) all Indebtedness of Borrower (excluding Indebtedness of Borrower
pursuant to Subordinated Note B) as of such to (b) EBITDA for the four fiscal
quarter period then ending.
"Underlying Issuer" means a third Person which is the beneficiary of
-----------------
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrower.
28
"Underlying Letter of Credit" means a letter of credit that has been
---------------------------
issued by an Underlying Issuer.
"United States Person" has the meaning set forth in Section 16.11.
--------------------
"Voidable Transfer" has the meaning set forth in Section 17.7.
----------------- ------------
"Wang Pledge Agreement" means that certain stock pledge agreement
---------------------
dated as of January 21, 2000 between BNP Private Bank & Trust Cayman ("BNP
Cayman"), as trustee, Piccadilly Cayman Limited and Borrower pledging certain
shares of DSG to Agent.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a national
-----------
banking association.
1.2 Accounting Terms. All accounting terms not specifically defined herein
----------------
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. When the
term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
----
shall be construed an defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement of any other Loan
------------
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
29
1.5 Schedule and Exhibits. All of the schedules and exhibits attached to
---------------------
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
-----------------
(a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
--------
to Borrower in an amount at any one time outstanding not to exceed such Lender's
Pro Rata Share of an amount equal to the lesser of (i) the Maximum Revolver
Amount less the Letter of Credit Usage less the outstanding principal amount of
Capital Expenditure Loans, or (ii) the Borrowing Base less the Letter of Credit
Usage. For purposes of this Agreement, "Borrowing Base" as of any date of
--------------
determination, shall mean the result of:
(X) the lesser of
(i) 85% of the amount of Eligible Accounts, less
the amount, if any, of the Dilution Reserve, and
(ii) an amount equal to 45 days of Borrower's
Collections with respect to Accounts for the
immediately preceding 60 day period, plus
(y) the lowest of
(i) $15,000,000,
(ii) the sum of (A) the lowest of (I) 80% times
the then extant Net Liquidation Percentage times the
next book value of Borrower's Eligible Inventory
consisting of raw materials, (II) $5,000,000, or (III)
50% of the amount of credit availability created by
clause (B) below of Borrower's Eligible Inventory, plus
(B) 80% times the then extant Next Liquidation
Percentage times the net book value of Borrower's
Eligible Inventory consisting of first quality finished
goods, and
(iii) 75% of the amount of credit availability
created by clause (x) above, minus
----------
(z) the Royalty Reserves and the aggregate amount of other
reserves, if any, established by Agent under Section 2.1(b).
--------------
30
(b) Anything to the contrary in this Section 2.1 notwithstanding,
-----------
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrower is required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, and (ii) amounts owing by Borrower
to any Person to the extent secured by a Lien on, or trust over, any of the
Collateral (other than any existing Permitted Lien set forth on Schedule P-1
------------
which is specifically identified thereon as entitled to have priority over the
Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent likely
would have a priority superior to the Agent's Liens (such as Liens or trusts in
favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral. Agent shall also have the right to establish reserves for any amount
by which, at any date of determination, in Agent's Permitted Discretion, the
outstanding principal amount of the Term Loan exceeds 80% of the net orderly
liquidation value of the Equipment and 70% of the quick sale value of the Real
Property subject to Agent's first priority perfected lien. In addition to the
foregoing, Agent shall have the right to have the Inventory reappraised by a
qualified appraisal company selected by Agent from time to time after the
Closing Date for the purpose of redetermining the Net Liquidation Percentage of
the Eligible Inventory portion of the Collateral and, as a result, redetermining
the Borrowing Base.
(c) The Lenders with Revolver Commitments shall have no obligation
to make additional Advances hereunder to the extent such additional Advances
would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 Term Loan; Capital Expenditure Loans.
------------------------------------
(a) Term Loan. Subject to the terms and conditions of this Agreement,
on the Closing Date each Lender with a Term Loan Commitment agrees (severally,
not jointly or jointly and severally) to make a term loan to Borrower in an
amount equal to each such Lender's Pro Rata Share of the Term Loan Amount (the
"Term Loan"). The Term Loan shall be repaid in sixty (60) equal monthly
installments of principal (together with accrued interest), such installments to
be payable on the first day of each month commencing with the first day of the
first month following the date on which such Term Loan is made and continuing on
the first day of each succeeding month. Additionally, the unpaid principal
balance of the Term Loan shall be repaid with the proceeds of any Permitted
Disposition to
31
the extent such repayment is required by Section 7.4 hereof, with such proceeds
-----------
being applied to the installments due on the Term Loan in the inverse order of
their maturity. The outstanding unpaid principal balance of the Term Loan,
together with all accrued and unpaid interest and fees thereon, shall be due and
payable on the earlier of the Maturity Date or the date of termination of this
Agreement, whether by its terms, by prepayment, by acceleration, or otherwise.
The unpaid principal balance of the Term Loan may be prepaid in whole or in part
without penalty or premium (except as provided in Section 3.6) at any time
-----------
during the term of this Agreement upon ninety (90) days' written notice by
Borrower to Agent, all such prepaid amounts to be applied to the installments
due on the Term Loan in the inverse order of their maturity. All amounts
outstanding under the Term Loan shall constitute Obligations.
(b) Capital Expenditure Loans. Subject to the terms and conditions
of this Agreement, each Lender with a Revolver Commitment (severally, not
jointly or jointly and severally) agrees to make a series of loans (each, a
"Capital Expenditure Loan" and collectively the "Capital Expenditure Loans") to
or for the benefit of Borrower, in an aggregate amount at any one time
outstanding for such Lender not to exceed such Lender's Pro Rata Share of the
Capital Expenditure Loan Amount. Each borrowing consisting of Capital
Expenditure Loans shall be advanced directly to the applicable vendor or
Borrower, as Borrower may request. Any new or used Equipment that is to be
acquired or that has been purchased by Borrower using a Capital Expenditure Loan
must be acceptable to Agent, in its sole discretion in all respects, must not
be a fixture, and must not be intended to be affixed to real property or to
become installed in or affixed to other goods. All amounts outstanding under the
Capital Expenditure Loans shall constitute Obligations. Anything herein to the
contrary notwithstanding, (a) each borrowing consisting of Capital Expenditure
Loans shall be in a principal amount of not less than (i) $500,000, or (ii) such
lesser amount as is the then unfunded balance of the Capital Expenditure Loan
Amount; (b) each borrowing consisting of Capital Expenditure Loans shall be in
an amount, as determined by Agent, not to exceed 80% of Borrower's invoice cost
(net of shipping, freight, installation, and other so-called `soft costs') of
(i) new or used Equipment that is to be purchased by Borrower with the proceeds
of such Borrowing, or (ii) new or used Equipment that has been purchased by
Borrower within 90 days prior to the date of such borrowing; (c) the Lender
Group shall have no obligation to fund any Capital Expenditure Loan hereunder to
the extent that the making thereof would cause the then outstanding amount of
all Capital Expenditure Loans to exceed (i) the Capital Expenditure Loan Amount,
or (ii) the Maximum Revolver Amount less the outstanding Advances less the
Letter of Credit Usage; and (d) the aggregate amount of all Capital Expenditure
Loans outstanding at any time (including giving effect to any requested Capital
Expenditure Loans outstanding at any time (including giving effect to any
requested Capital Expenditure Loan) shall not exceed the lesser of cost or fair
market value of all of the Equipment acquired or financed with the proceeds of
such Capital Expenditure Loans. Each Capital Expenditure Loan shall be repaid in
sixty (60) equal monthly installments of principal (together with accrued
interest), such installments to be payable on the first day of each month
commencing with the first day of the first day of the first month following the
date on which such Capital Expenditure Loan is made and continuing on the first
day of each succeeding month. The outstanding principal balance of the Capital
Expenditure Loans, together with
32
all accrued and unpaid interest and fees thereon, shall be due and payable on
the earlier of the Maturity Date or the date of termination of this Agreement,
whether by its terms, by prepayment, by acceleration, or otherwise. Capital
Expenditure Loans may be prepaid in whole or in part without penalty or premium
(except as provided in Section 3.6) at any time during the term of this
-----------
Agreement upon ninety (90) days' written notice by Borrower to Agent, all such
prepaid amounts to be applied to the installments due on all of the Capital
Expenditure Loans of all Lenders in the inverse order of their maturity.
2.3 Borrowing Procedures and Settlements.
------------------------------------
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 1:00 p.m. (Georgia time) on the
Business Day prior to the date that is the requested Funding Date in the case of
a request for an Advance or the Term Loan specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day;
provided, however, that in the case of a request for Swing Loan in an amount of
-------- -------
$1,000,000, or less, such notice will be timely received if it is received by
Agent no later than 1:00 p.m. (Georgia time) on the Business Day that is the
requested Funding Date) specifying (i) the amount of such Borrowing, and (ii)
the requested Funding Date, which shall be a Business Day. At Agent's election,
in lieu of delivering the above-described written request, any Authorized Person
may give Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
--------------
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
--------------
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
--------------
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
--------------
have the terms of Section 2.3(c) apply to such requested Borrowing.
--------------
(c) Making of Advances.
(i) In the event that Agent shall elect to have the terms of
this Section 2.3(c) apply to a requested Borrowing as described in
--------------
Section 2.3(b), then promptly after receipt of a request for a
--------------
Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders,
--------------
not later than 4:00 p.m. (Georgia time) on the Business Day
immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such
Lender's Pro Rata Share of the requested Borrowing available to Agent
in immediately available funds, to Agent's Account, not later than
1:00 p.m. (Georgia time) on the Funding Date applicable thereto.
After Agent's receipt of the proceeds of
33
such Advances (or borrowing under the Term Loan or Capital
Expenditure Loan, as applicable), upon satisfaction of the applicable
conditions precedent set forth in Section 3 hereof, Agent shall make
the proceeds thereof available to Borrower on the applicable Funding
Date by transferring immediately available funds equal to such
proceeds received by Agent to Borrower's Designated Account;
provided, however, that, subject to the provisions of Section 2.3(i),
-------- ------- --------------
Agent shall not request any Lender to make, and no Lender shall have
the obligation to make, any Advance (or its portion of the Term Loan)
if Agent shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in Section 3 will not be
---------
satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least 1 Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrower the amount of
that Lender's Pro Rata Share of the Borrowing, Agent may assume that
each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrower on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available
to Agent in immediately available funds and Agent in such
circumstances has made available to Borrower such amount, that Lender
shall on the Business Day following such Funding Date make such
amount available to Agent, together with interest at the Defaulting
Lender Rate for each day during such period. A notice submitted by
Agent to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount
is so made available, such payment to Agent shall constitute such
Lender's Advance on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to Agent on the
Business Day following the Funding Date, Agent will notify Borrower
of such failure to fund and, upon demand by Agent, Borrower shall pay
such amount to Agent for Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to
the Advances composing such Borrowing. The failure of any Lender to
make any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such Funding
Date, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on any
Funding Date.
34
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to
the Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Borrower and if no Default or
Event of Default had occurred and is continuing (and to the extent
such Defaulting Lender's Advance was not funded by the Lender Group),
retain same to be re-advanced to Borrower as if such Defaulting Lender
has made Advances to Borrower. Subject to the foregoing, Agent may
hold and, in its Permitted Discretion, re-lend to Borrower for the
account of such Defaulting Lender the amount of all such payments
received and retained by it for the account of such Defaulting Lender.
Solely for the purposes of voting or consenting to matters with
respect to the Loan Documents, such Defaulting Lender shall be deemed
not to be a "Lender" and such Lender's Commitment shall be deemed to
be zero. This Section shall remain effective with respect to such
Lender until (x) the Obligations under this Agreement shall have been
declared or shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, and Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting Lender
makes its Pro Rata Share of the applicable Advance and pays to Agent
all amounts owing by Defaulting Lender in respect thereof. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse
the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the
performance by Borrower of its duties and obligations hereunder to
Agent or to the Lenders other than such Defaulting Lender. Any such
failure to fund by any Defaulting Lender shall constitute a material
breach by such Defaulting Lender of this Agreement and shall entitle
Borrower at its option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Commitment of such Defaulting Lender,
such substitute Lender to be acceptable to Agent. In connection with
the arrangement of such a substitute Lender, the Defaulting Lender
shall have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance
Agreement in favor of the substitute Lender (and agrees that it shall
be deemed to have executed and delivered such document if it fails to
do so) subject only to being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind
whatsoever; provided further, however, that any such assumption of the
-------- ------- -------
Commitment of such Defaulting Lender shall not be deemed to constitute
a waiver of any of the Lender Groups' or
35
Borrower's rights or remedies against any such Defaulting Lender arising
out of or in relation to such failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of Swing Lender,
as a Lender, to have the terms of this Section 2.3(d) apply to a requested
--------------
Borrowing as described in Section 2.3(b), Swing Lender as a Lender shall
--------------
make such Advance in the amount of such Borrowing (any such Advance made
solely by Swing Lender as a Lender pursuant to this Section 2.3(d) being
--------------
referred to as a "Swing Loan" and such Advances being referred to
----------
collectively as "Swing Loans") available to Borrower on the Funding Date
-----------
applicable thereto by transferring immediately available funds to
Borrower's Designated Account. Each Swing Loan is an Advance hereunder and
shall be subject to all the terms and conditions applicable to other
Advances, except that no such Swing Loan shall be eligible for the LIBOR
Option and all payments on any Swing Loan shall be payable to Swing Lender
as a Lender solely for its own account (and for the account of the holder
of any participation interest with respect to such Swing Loan). Subject to
the provisions of Section 2.3(i), Agent shall not request Swing Lender as a
--------------
Lender to make, and Swing Lender as a Lender shall not make, any Swing Loan
if Agent has actual knowledge that (i) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
---------
requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender as a Lender shall not
otherwise be required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the Funding Date
---------
applicable thereto prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens, shall
constitute Advances and Obligations hereunder, and shall bear interest at
the rate applicable from time to time to Advances that are Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrower and the Lenders, from time
to time in Agent's sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any time that
any of the other applicable conditions precedent set forth in Section 3
---------
have not been satisfied, to make Advances to Borrower on behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the Obligations, or
(C) to pay any other amount chargeable to
36
Borrower pursuant to the terms of this Agreement, including Lender
Group Expenses and the costs, fees, and expenses described in Section
-------
10 (any of the Advances described in this Section 2.3(e) shall be
-- --------------
referred to as "Agent Advances"). Each Agent Advance is an Advance
--------------
hereunder and shall be subject to all terms and conditions applicable
to other Advances, except that no such Agent Advance shall be eligible
for the LIBOR Option and all payments thereon shall be payable to
Agent solely for its own account (and for the account of the holder of
any participation interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand and secured
by the Agent's Liens granted to Agent under the Loan Documents, shall
constitute Advances and Obligations hereunder, and shall bear interest
at the rate applicable from time to time to Advances that are Base
Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
----------
Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Collections received, as to
each by notifying the Lenders by telecopy, telephone, or other similar
form of transmission, of such requested Settlement, no later than 5:00
p.m. (Georgia time) on the Business Day immediately prior to the date
of such requested Settlement (the date of such requested Settlement
being the "Settlement Date"). Such notice of a Settlement Date shall
---------------
include a summary statement of the amount of outstanding Advances,
Swing Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained herein
(including Section 2.3(c)(iii): (y) if a Lender's balance of the
-------------------
Advances, Swing Loans, and Agent Advances exceeds such Lender's Pro
Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, then Agent shall, by no later than 3:00 p.m. (Georgia
time) on the Settlement Date, transfer in immediately available funds
to the account of such Lender as such Lender may designate, an amount
such that each such Lender shall, upon receipt of such amount, have as
of the Settlement Date, its Pro Rata Share of the Advances, Swing
Loans, and Agent Advances, and (ii) if a Lender's balance of the
Advances,
37
Swing Loans, and Agent Advances is less than such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, such Lender shall no later
than 3:00 p.m. (Georgia time) on the Settlement Date
transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon
transfer of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances, Swing Loans, and Agent
Advances. Such amounts made available to Agent under clause
(z) of the immediately preceding sentence shall be applied
against the amounts of the applicable Swing Loan or Agent
Advance and, together with the portion of such Swing Loan or
Agent Advance representing Swing Lender's Pro Rata Share
thereof, shall constitute Advances of such Lenders. If any
such amount is not made available to Agent by any Lender on
the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand form such
Lender together with interest thereon at the Defaulting
Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than,
equal to, or greater than such Lender's Pro Rata Share of
the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrower and allocable
to the Lenders hereunder, and proceeds of Collateral. To the
extent that a net amount is owed to any such Lender after
such application, such net amount shall be distributed by
Agent to that Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent
no Agent Advances or Swing Loans are outstanding, may pay
over to Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing
Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing
Lender shall pay to Agent for the accounts of the Lenders,
and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that
each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Advances.
During the period between Settlement Dates, Swing Lender
with respect to Swing Loans, Agent with respect to Agent
Advances, and each Lender (subject to the effect of letter
agreements between Agent and individual Lenders) with
respect to the Advances other than Swing Loans and Agent
Advances, shall be entitled to
38
interest at the applicable rate or rates payable under this Agreement
on the daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal amount of
the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interest therein of each
Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than Swing Loans
and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrower notwithstanding that an Overadvances exists or thereby would
be created, so long as (i) after giving effect to such Advances (including a
Swing Loan) the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount, and (ii) at the time of the making of
any such Advance (including any Swing Loan), Agent does not believe, in good
faith, that the Overadvance created by such Advance will be outstanding for more
than 90 days. The foregoing provisions are for the exclusive benefit of Agent,
Swing Lender, and the Lenders and are not intended to benefit Borrower in any
way. The Advances and Swing Loans, as applicable, that are made pursuant to this
Section 2.3(i) shall be subject to the same terms and conditions as any other
--------------
Advance or Swing Loan, as applicable, except that they shall not be eligible for
the LIBOR Option and the rate of interest applicable thereto shall be the rate
applicable to Advances that are Base Rate Loans under Section 2.6(c) hereof
--------------
without regard to the presence or absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify Lenders as soon as practicable (and prior to making
any (or any additional) intentional
39
Overadvances (except for and excluding amounts charged to the Loan Account
for interest, fees, or Lender Group Expenses) unless Agent determines that
prior notice would result in imminent harm to the Collateral or its value),
and the Lenders with Revolver Commitments thereupon shall, together with
Agent, jointly determine the terms of arrangements that shall be
implemented with Borrower intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrower to an amount
permitted by the preceding paragraph. In the event Agent or any Lender
disagrees over the terms of reduction or repayment of any Overadvance, the
terms of reduction or repayment thereof shall be implemented according to
the determination of the Required Lenders.
(ii) Each Lender with a Revolver Commitment shall be obligated to
settle with Agent as provided in Section 2.3(f) for the amount of such
--------------
Lender's Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
Section 2.3(i), and any Overadvances resulting from the charging to the
--------------
Loan Account of interest, fees, or Lender Group Expenses.
2.4 Payments.
--------
(a) Payments by Borrower.
(i) Except as otherwise expressly provided herein, all payments by
Borrower shall be made to Agent's Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 2:00
p.m. (Georgia time) on the date specified herein. Any payment received by
Agent later than 2:00 p.m. (Georgia time), shall be deemed to have been
received on the following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the date on
which any payment is due to the Lenders that Borrower will not make such
payment in full as and when required, Agent may assume that Borrower has
made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due
date an amount equal to the amount then due such Lender. If and to the
extent Borrower does not make such payment in full to Agent on the date
when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
40
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to Defaulting Lenders
and except as otherwise provided in the Loan Documents (including letter
agreements between Agent and individual Lenders), aggregate principal and
interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Obligations to which such payments
relate held by each Lender) and payments of fees and expenses (other than
fees or expenses that are for Agent's separate account, after giving effect
to any letter agreements between Agent and individual Lenders) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the type
of Commitment or Obligation to which a particular fee relates. All payments
shall be remitted to Agent and all such payments (other than payments
received while no Default or Event of Default has occurred and is
continuing and which relate to the payment of principal or interest of
specific Obligations or which relate to the payment of specific fees) and
all proceeds of Accounts or other Collateral received by Agent shall be
applied as follows:
A. first, to pay any Lender Group Expenses then due to Agent
-----
under the Loan Documents, until paid in full,
B. second, to pay any Lender Group Expenses then due to the
------
Lenders under the Loan Documents, on a ratable basis, until paid in
full,
C. third, to pay any fees then due to Agent (for its separate
-----
account, after giving effect to any letter agreements between Agent
and the individual Lenders) under the Loan Documents until paid in
full,
D. fourth, to pay any fees then due to any or all of the
------
Lenders (after giving effect to any letter agreements between Agent
and individual Lenders) under the Loan Documents, on a ratable basis,
until paid in full,
E. fifth, to pay interest due in respect of all Agent Advances,
-----
until paid in full,
F. sixth, ratably to pay interest due in respect of the
-----
Advances (other than Agent Advances), the Swing Loans, the Capital
Expenditure Loan and the Term Loan until paid in full,
G. seventh, to pay the principal of all Agent Advances until
-------
paid in full,
41
H. eighth, ratably to pay all principal amounts then due and
------
payable (other than as a result of an acceleration thereof) with
respect to the Term Loan and the Capital Expenditure Loans, until
paid in full,
I. ninth, to pay the principal of all Swing Loans until paid
-----
in full,
J. tenth, to pay the principal of all Advances until paid in
-----
full,
K. eleventh, if an Event of Default has occurred and is
--------
continuing, to pay, on a pro-rata basis, the outstanding principal
balance of the Term Loan and the Capital Expenditure Loan (in the
inverse order of the maturity of the installments due thereunder)
until the Term Loan and the Capital Expenditure Loan, are each,
respectively, paid in full,
L. twelfth, if an Event of Default has occurred and is
-------
continuing, to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter of Credit
Usage until paid in full,
M. thirteenth, if an Event of Default has occurred and is
----------
continuing, to pay any other Obligations until paid in full, and
N. fourteenth, to Borrower (to be wired to the Designated
----------
Account) or such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(h).
--------------
(iii) In each instance, so long as no Default or Event of Default has
occurred and is continuing, Section 2.4(b) shall not be deemed to apply to
--------------
any payment by Borrower specified by Borrower to be for the payment of
specific Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment of
all amounts owing under the Loan Documents according to the terms thereof,
including loan fees, service fees, professional fees, interest (and
specifically including interest accrued after the commencement of any
Insolvency
42
Proceeding), default interest, interest on interest, and expense
reimbursements, whether or not the same would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
-----------
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this Section 2.4
-----------
shall control and govern.
2.5 Overadvances. If, at any time or for any reason, the amount of
------------
Obligations owed by Borrower to the Lender Group pursuant to Sections 2.1 and
----------------
2.12 is greater than either the Dollar or percentage limitations set forth in
----
Sections 2.1 or 2.12, (an "Overadvance"), Borrower immediately shall pay to
-------------------- -----------
Agent, in cash, the amount of such excess, which amount shall be used by Agent
to reduce the Obligations in accordance with the priorities set forth in Section
-------
2.4(b). In addition, Borrower hereby promises to pay the Obligations (including
------
principal, interest, fees, costs, and expenses) in Dollars in full to the Lender
Group as and when due and payable under, the terms of this Agreement and the
other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
--------------------------------------------------------------
Calculations.
------------
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof as follows: (i) if the relevant Obligation is an Advance made as
a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the margin
(as determined below) in effect from time to time in connection with LIBOR Rate
Loans (the "LIBOR Rate Margin") with respect to Advances, (ii) if the relevant
Obligation is a portion of a Capital Expenditure Loan or Term Loan made as a
LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate
Margin with respect to Capital Expenditure Loans and the Term Loan, (iii) if the
relevant Obligation is a portion of a Capital Expenditure Loan or Term Loan
made as a Base Rate Loan, at a per annum rate equal to the Base Rate plus the
margin (as determined below) in effect from time to time in connection with Base
Rate Loans (the "Base Rate Margin") with respect to Capital Expenditure Loans
and the Term Loan, and (iv) all other Obligations (except for undrawn Letters
of Credit), at a per annum rate equal to the Base Rate plus the Base Rate Margin
in effect for Advances made as Base Rate Loans. From the Closing Date to the
First Adjustment Date, the Base Rate Margin in connection with Advances shall be
2.25%, the Base Rate Margin in connection with Capital Expenditure Loans and the
Term Loan shall be 2.75%, the LIBOR Rate Margin in connection with Advances
shall be 3.75%,
43
and the LIBOR Rate Margin in connection with Capital Expenditure Loans and the
Term Loan shall be 4.25%. Commencing on the later of March 31, 2002 or the
sixth (6th) day following the delivery of Borrower's financial statements to
Agent for the fiscal year ending December 31, 2001 (the "First Adjustment
Date') and on each Adjustment Date thereafter, the Base Rate Margin and the
LIBOR Rate Margin shall each be adjusted to be the interest rate margin based
upon the Total Debt to EBITDA Ratio for the 12 fiscal months then ended as set
forth in such financial statements delivered to Agent pursuant to Section 6.3(a)
--------------
as of the fiscal quarter end preceding such Adjustment Date, and expressed as a
per annum rate of interest as set forth in the table below.
--------------------------------------------------------------------------------
Then the Then the
If the Total Debt Type of Loan LIBOR Rate Base Rate
to EBITDA Ratio Outstanding: Margin shall Margin shall
is: be: be:
--------------------------------------------------------------------------------
Less than or Advances 3.25% 1.75%
equal to 2.5 to 1.0 --------------------------------------------------------
Term Loan, 3.75% 2.25%
Capital Expenditure Loan
--------------------------------------------------------------------------------
Greater than 2.5 Advances 3.50% 2.00%
to 1.0 but less -------------------------------------------------------
than 3.0 to 1.0 Term Loan, 4.00% 2.50%
Capital Expenditure Loan
--------------------------------------------------------------------------------
Greater than 3.0 Advances 3.75% 2.25%
to 1.0 but less -------------------------------------------------------
than 3.5 to 1.0 Term Loan, 4.25% 2.75%
Capital Expenditure Loan
--------------------------------------------------------------------------------
Greater than 3.5 Advances 4.00% 2.50%
to 1.0 but less -------------------------------------------------------
than 4.0 to 1.0 Term Loan, 4.50% 3.00%
Capital Expenditure Loan
--------------------------------------------------------------------------------
Equal to or Advances 4.25% 2.75%
greater than 4.0 -------------------------------------------------------
to 1.0 Term Loan, 4.75% 3.25%
Capital Expenditure Loan
--------------------------------------------------------------------------------
(b) Letter of Credit Fee. Burrower shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
-------
2.12(e)) which shall accrue at a rate equal to 2.50% per annum times the Daily
--------
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the continuation of an
Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit ) that
have been charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate equal to 3
percentage points above the per annum rate otherwise applicable hereunder,
and
(ii) the Letter of Credit fee provided for above shall be increased to
3 percentage points above the per annum rate otherwise applicable
hereunder.
44
(d) Payment. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, or the first day of each
month at any time that Obligations or Commitments are outstanding. Borrower
hereby authorizes Agent, from time to time, without prior notice to Borrower, to
charge such interest and fees, all Lender Group Expenses (as and when
incurred), the charges, commissions, fees, and costs provided for in Section
-------
2.12(e) (as and when accrued or incurred), the fees and costs provided for in
-------
Section 2.11 (as and when accrued or incurred), and all other payments as and
------------
when due and payable under any Loan Document (including the installments due and
payable with respect to the Term Loan and Capital Expenditure Loans) to
Borrower's Loan Account, which amounts thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances hereunder. Any
interest not paid when due shall be compounded by being charged to Borrower's
Loan Account and shall thereafter constitute Advances hereunder and shall
accrue interest at the rate then applicable to Advances that are Base Rate Loans
hereunder.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
-------- -------
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrower are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrower in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
---------------
(a) Borrower shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and shall
--------------- --------------------
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors (including, without limitation, "JSL Partners," the
Department of Defense and the "Kid's Diapers Account") forward payment of the
amounts owed by them directly to such Cash Management Bank; provided however,
----------------
that Borrower may continue to maintain the Hong Kong Bank of Canada bank
45
account (A) but unless and until a Cash Management Agreement for such account is
delivered to Agent, Borrower (1) shall direct Wal-Mart Canada to re-direct its
payments to a Cash Management Bank and (2) not less than once per week, Borrower
shall initiate a wire transfer of such funds on deposit in such account to a
Cash Management Bank, and (B) if such Cash Management Agreement is not received
within 30 days of the Closing Date, Borrower shall close such account, (ii)
deposit all Collections and other amounts received by Borrower directly from any
Account Debtor or any other source, including, without limitation, all cash
received from Affiliates, immediately upon receipt, into such Cash Management
Bank, and (iii) deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all
Collections (including those sent directly by Account Debtors to a Cash
Management Bank) into a bank account in Agent's name (a "Cash Management
---------------
Account") at one of the Cash Management Banks.
-------
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrower, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank as agent or bailee-in-
possession for Agent, (ii) the Cash Management Bank has no rights of setoff or
recoupment or any other claim against the applicable Cash Management Account,
other than for payment of its service fees and other charges directly related to
the administration of such Cash Management Account and for returned checks or
other items of payment, and (iii) it immediately will forward by daily sweep all
amounts in the applicable Cash Management Account to the Agent's Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 2.7(a) to add or replace a Cash
---------------
Management Account Bank or Cash Management; provided, however, that (i) such
-------- -------
prospective Cash Management Bank shall be satisfactory to Agent and Agent shall
have consented in writing in advance to the opening of such Cash Management
Account with the prospective Cash Management Bank, and (ii) prior to the time of
the opening of such Cash Management Account, Borrower and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Borrower shall close any of its Cash Management Accounts (and
establish replacement cash management accounts in accordance with the foregoing
sentence) promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent's
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts or Agent's liability under any Cash Management
Agreement with such Cash Management Bank is no longer acceptable in Agent's
reasonable judgment, provided further, that with respect to the account with
-------- -------
account number 1lF-07183 WCMA maintained at Xxxxxxx Xxxxx International,
Borrower shall not keep in excess of $50,000 in such account at any time.
46
Additionally, at the request of Agent, Borrower shall deliver to Agent an
agreement to obtain a first priority perfected interest in such account.
(d) The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which Borrower is hereby deemed to have
granted a Lien to Agent.
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
--------------------------------
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is, received into the Agent's Account on a Business Day on or
before 2:00 p.m. (Georgia time). If any payment item is received into the
Agent's Account on a non-Business Day or after 2:00 p.m. (Georgia time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. From and after
the Closing Date, Agent shall be entitled to charge Borrower for 1 Business Day
of `clearance' or `float' at the rate applicable to Base Rate Loans under
Section 2.6 on all Collections that are received by Borrower (regardless of
-----------
whether forwarded by the Cash Management Banks to Agent). This across-the-board
1 Business Day clearance or float charge on all Collections is acknowledged by
the parties to constitute an integral aspect of the pricing of the financing of
Borrower and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance or float charge
being the equivalent of charging 1 Business Day of interest on such Collections.
The parties acknowledge and agree that the economic benefit of the foregoing
provisions of this Section 2.8 shall be for the exclusive benefit of Agent.
-----------
2.9 Designated Account. Agent is authorized to make the Advances and
------------------
Capital Expenditure Loans and borrowings under the Term Loan, and Issuing Lender
is authorized to issue the Letters of Credit, under this Agreement based upon
telephonic or other instructions received from anyone purporting to be an
Authorized Person, or without instructions if pursuant to Section 2.6(d).
--------------
Borrower agrees to establish and maintain the Designated Account with the
Designated Account Bank for the purpose of receiving the proceeds of the
Advances requested by Borrower and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Borrower in writing, the proceeds of the
Term Loan and any Advance, Capital Expenditure Loan, Agent Advance, or Swing
Loan requested by Borrower and made by Agent or the Lenders hereunder shall be
made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
------------------------------------------------------
maintain an account on its books in the name of Borrower (the "Loan Account") on
------------
which
47
Borrower will be charged with the Term Loan, all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrower or for Borrower's account, the Letters of Credit issued by Issuing
Lender for Borrower's account, and with all other payment Obligations hereunder
or under the other Loan Documents, including, accrued interest, fees and
expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan
-----------
Account will be credited with all payments received by Agent from Borrower or
for Borrower's account, including all amounts received in the Agent's Account
from any Cash Management Bank. Agent shall render statements regarding the Loan
Account to Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrower and the Lender Group
unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver
to Agent written objection thereto describing the error or errors contained in
any such statements.
2.11 Fees. Borrower shall pay to Agent the following fees and charges,
----
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) Unused Line Fee. On the first day of each month during the term
of this Agreement, payable in arrears, an unused line fee in an amount equal to
0.375% per annum times the result of (a) the average Maximum Revolver Amount
during the immediately preceding month, less (b) the sum of (i) the average
Daily Balance of Advances that were outstanding during the immediately preceding
month, plus (ii) the average Daily Balance of the Letter of Credit Usage during
the immediately preceding month, plus (iii) the average Daily Balance of Capital
Expenditure Loans that were outstanding during the immediately preceding month.
(b) Fee Letter Fees. As and when due and payable under the terms of
the Fee Letter, Borrower shall pay to Agent the fees set forth in the Fee
Letter, and
(c) Audit, Appraisal, and Valuation Charges. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows,
(i) a fee of $750 per day, per auditor, plus out-of-pocket expenses for each
financial audit of Borrower performed by personnel employed by Agent, (ii) if
implemented, a one time charge of $3,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems;
provided, however, that if Borrower implements such electronic collateral
-------- -------
reporting system within 180 days of the date hereof, Agent shall discount such
fee by an amount set by Agent in its determination, (iii) a fee of $1,500 per
day per appraiser, plus out-of-pocket expenses, for each appraisal of the
Collateral performed by personnel employed by Agent, and (iv) the actual
charges paid or incurred by Agent if it elects to employ the services of one
48
or more third Persons to perform financial audits of Borrower, to appraise the
Collateral, or any portion thereof, or to assess Borrower's business valuation.
2.12 Letters of Credit
-----------------
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to purchase participations or execute indemnities or
---
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
---------------
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account
of Borrower. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension) a notice requesting the
issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
to be amended, renewed, or extended, the date of issuance, amendment, renewal,
or extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or the beneficiary of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender, Borrower
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing
Lender shall have no obligation to issue a Letter of Credit if any of the
following would result after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed $2,000,000, or
(ii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less than the extended outstanding amount of Advances,
and Capital Expenditure Loan.
Borrower and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no 1ater
than 30 days prior to the Maturity Date and all such Letters of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable
in Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 2:00 p.m., Georgia time, on the date that such L/C Disbursement is made, if
Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 1:00 p.m., Georgia time, on such date,
49
or, if such notice has not been received by Borrower prior to such time on such
date, then not later than 2:00 p.m., Georgia time, on (i) the Business Day that
Borrower receives such notice, if such notice is received prior to 1:00 p.m.,
Georgia time, on the date of receipt, and, in the absence of such reimbursement,
the L/C Disbursement immediately and automatically shall be deemed to be an
Advance hereunder and, thereafter, shall bear interest at the rate then
applicable to Advances that are Base Rate Loans under Section 2.6. To the extent
-----------
an L/C Disbursement is deemed to be an Advance hereunder, Borrower's obligation
to reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrower pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
--------------
Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
---------------
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrower had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share pursuant to this Section 2.12(b)
---------------
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
---------
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by the Issuing Lender in respect of such Letter
of Credit as provided in this Section, Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
50
(c) Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; provided, however, that Borrower shall not be obligated
-------- -------
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group. Borrower agrees to be bound by the Underlying
Issuer's regulations and interpretations of any Underlying Letter of Credit or
by Issuing Lender's interpretations of any L/C issued by Issuing Lender to or
for Borrower's account, even though this interpretation may be different from
Borrower's own, and Borrower understands and agrees that the Lender Group shall
not be liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrower's instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto.
Borrower understands that the L/C Undertakings may require Issuing Lender to
indemnify the Underlying Issuer for certain costs or liabilities arising out of
claims by Borrower against such Underlying Issuer. Borrower hereby agrees to
indemnify, save, defend, and hold the Lender Group harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability incurred
by the Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that Borrower shall
-------- -------
not be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(d) Borrower hereby authorizes and directs any Underlying Issuer to deliver
to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender's instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of (Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrower to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by Borrower that, as of the Closing Date, the issuance charge imposed
by the prospective Underlying Issuer is .825% per annum times the face amount of
each Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of charges
for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or the
Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
51
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.13 LIBOR Option.
------------
(a) Interest and Interest Payment Dates. In lieu of having interest
charged at the rate based upon the Base Rate, Borrower shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Advances, Term
------------
Loan or Capital Expenditure Loans be charged at the LIBOR Rate. Interest on
LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the
Interest Period applicable thereto, (ii) the occurrence of an Event of Default
in consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of the Obligations, (iii) termination of this Agreement
pursuant to the terms hereof, or (iv) the first day of each month that such
LIBOR Rate Loan is outstanding. On the last day of each applicable Interest
Period, unless Borrower properly has exercised the LIBOR Option with respect
thereto, the interest rate applicable to such LIBOR Rate Loan automatically
shall convert to the rate of interest then applicable to Base Rate Loans of the
same type hereunder. At any time that an Event of Default has occurred and is
continuing, Borrower no longer shall have the option to request that Advances or
Capital Expenditure Loans or portions of the Term Loan bear interest at the
LIBOR Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR Election.
(i) Borrower may, at any time and from time to time, so long as
no Event of Default has occurred and is continuing, elect to exercise
the LIBOR Option by notifying Agent prior to 2:00 p.m. (Georgia time)
at least two (2)
52
Business Days prior to the commencement of the proposed Interest
Period (the "LIBOR Deadline"). Notice of Borrower's election of the
--------------
LIBOR Option for a permitted portion of the Advances or the Term Loan
and an Interest Period pursuant to this Section shall be made by
delivery to Agent of a LIBOR Notice received by Agent before the LIBOR
Deadline, or by telephonic notice received by Agent before the LIBOR
Deadline (to be confirmed by delivery to Agent of a LIBOR Notice
received by Agent prior to 5:00 p.m. (Georgia time) on the same day.
Promptly upon its receipt of each such LIBOR Notice, Agent shall
provide a copy thereof to each of the Lenders having a Revolver
Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrower. In connection with each LIBOR Rate Loan, Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any
loss, cost, or expense incurred by Agent or any Lender as a result of
(a) the payment of any principal of any LIBOR Rate Loan other than on
the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any LIBOR Rate
Loan other than on the last day of the Interest Period applicable
thereto, or (c) the failure to borrow, convert, continue or prepay any
LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively,
"Funding Losses"). Funding Losses shall, with respect to Agent or any
--------------
Lender, be deemed to equal the amount determined by Agent or such
Lender to be the excess, if any, of (i) the amount of interest that
would have accrued on the principal amount of such LIBOR Rate Loan had
such event not occurred, at the LIBOR Rate that would have been
applicable thereto, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case
of a failure to borrow, convert or continue, for the period that
would have been the Interest Period therefor), minus (ii) the amount
of interest that would accrue on such principal amount for such period
at the interest rate which Agent or such Lender would be offered were
it to be offered, at the commencement of such period, Dollar deposits
of a comparable amount and period in the London interbank market. A
certificate of Agent or a Lender delivered to Borrower setting forth
any amount or amounts that Agent or such Lender is entitled to receive
pursuant to this Section shall be conclusive absent manifest error.
(iii) Borrower shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrower only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000 and integral multiples of
$500,000 in excess thereof.
53
(c) Prepayments. Borrower may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
-------- -------
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
-------
2.4(b) or for any other reason, including early termination of the term of this
------
Agreement or acceleration of the Obligations pursuant to the terms hereof,
Borrower shall indemnify, defend, and hold Agent and the Lenders and their
Participants harmless against any and all Funding Losses in accordance with
clause (b)(ii) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to
changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including
changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase
the cost of funding loans bearing interest at the LIBOR Rate. In
any such event, the affected Lender shall give Borrower and
Agent notice of such a determination and adjustment and Agent
promptly shall transmit the notice to each other Lender and, upon
its receipt of the notice from the affected Lender, Borrower may,
by notice to such affected Lender (y) require such Lender to
furnish to Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the
amount of such adjustment, or (z) repay the LIBOR Rate Loans with
respect to which such adjustment is made (together with any
Funding Losses due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or
any law, regulation, treaty, or directive, or any change therein
or in the interpretation of application thereof, shall at any
time after the date hereof, in the reasonable opinion of any
Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Advances or to continue such funding or
maintaining, or to determine or charge interest rates at the
LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Borrower and Agent promptly shall
transmit the notice to each other Lender and (y) in the case of
any LIBOR Rate Loans of such Lender that are outstanding, the
date specified in such Lender's notice shall be deemed to be the
last day of the Interest Period of such LIBOR Rate Loans, and
interest upon the LIBOR Rate Loans of such Lender thereafter
shall accrue interest at the rate then applicable to Base Rate
Loans, and (z) Borrower shall not be
54
entitled to elect the LIBOR Option until such Lender determines
that it would no longer be unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the
LIBOR Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender
--------------------
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attributior methods. If Borrower becomes obligated
to pay additional amounts to any Lender pursuant to this section as a result of
any condition described in this section which is not generally applicable to all
Lenders, then, unless the Lender to which such conditions apply has theretofore
taken steps to remove or cure, and has removed or cured, within a reasonable
time period the conditions creating the cause for such obligation to pay such
additional amounts, Borrower may, within four months of being notified of such
condition, designate an Eligible Transferee which is willing to purchase all
rights and obligations of such Lender and which is acceptable to Agent (such
Eligible Transferee being herein called a "Replacement Lender") to purchase for
cash all of the rights and obligations of such Lender under this Agreement,
without recourse to or warranty (other than title) by, or expense to, such
Lender for a purchase price equal to the outstanding principal amount of the
Advances, Capital Expenditure Loans and Term Loan payable to such Lender plus
any accrued but unpaid interest and fees on such Advances, Capital Expenditure
Loans and Term Loan, expense reimbursements and indemnities in respect of
55
that Lender's Commitment under the Loan Documents, whereupon the Commitment of
such Lender shall be irrevocably terminated in whole (which shall include the
termination in whole of the obligation of such Lender to make Advances and
Capital Expenditure Loans to Borrower). Such Lender shall consummate such sale
with such terms within a reasonable time not exceeding ten Business Days from
the date Borrower shall have designated a Replacement Lender acceptable to
Agent, and whereupon such Lender shall no longer be a party hereto or have any
obligations or rights hereunder (except rights which, pursuant to the provisions
of this Agreement, survive the termination of this Agreement and the repayment
of the Obligations), and the Replacement Lender shall succeed to such
obligations and rights.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
-------------------------------------------------------
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder including,
without limitation, the Term Loan and any Capital Expenditure Loan), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before March 31, 2001;
(b) Agent shall have received all financing statements required by
Agent, duly executed by Borrower, and Agent shall have received searches
reflecting the filing of all such financing statements;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such document
shall be in full force and effect:
(i) the Control Agreements,
(ii) the Disbursement Letter,
(iii) the Fee Letter,
(iv) the Cash Management Agreements,
(v) the Mortgages,
(vi) the Intellectual Property Security Agreement,
(vii) the Parent Pledge Agreement,
(viii) the Elmbay Pledge Agreement,
(ix) the Parent Security Agreement,
56
(x) the Parent Guaranty,
(xi) the Assignment of Note, together with the original
Amended and Restated Wang Note,
(xii) the Acknowledgement of Licenses,
(xiii) the Affiliate Subordination Agreement,
(xiv) the Subordination Agreements, and
(xv) the Officers' Certificate;
(d) Agent shall have received a certificate from the Secretary of
Borrower attesting to the resolutions of Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which Borrower is a party and authorizing specific
officers of such Borrower to execute the same;
(e) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;
(f) Agent shall have received a certificate of status with respect
to Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Agent shall have received certificates of status with respect to
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate from the Secretary of
Holdco attesting to the resolutions of Holdco's Board of Directors authorizing
its execution, delivery, and performance of the Loan Documents to which Holdco
is a party and authorizing specific officers of Holdco to execute the same;
(i) Agent shall have received copies of Holdco's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Holdco;
(j) Agent shall have received a certificate of status with respect
to Holdco, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate
57
officer of the jurisdiction of organization of Holdco, which certificate shall
indicate that Holdco is in good standing in such jurisdiction;
(k) Agent shall have received certificates of status with respect to
Holdco, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Holdco) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Holdco is in good standing in such
jurisdictions;
(l) Agent shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
-----------
which shall be satisfactory to Agent;
(m) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Borrower) that all tax returns
required to be filed by Borrower have been timely filed and all taxes upon
Borrower or its properties, assets, income, and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest;
(n) Agent shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of Borrower's books and
records (including the books and records relating to the Acquired Assets) and
verification of Borrower's representations and warranties to the Lender Group,
the results of which shall be satisfactory to Agent, (ii) an inspection of each
of the locations where Inventory or Acquired Assets are located, the results of
which shall be satisfactory to Agent, and (iii) confirmation that all Equipment
is not subject to any encumbrance;
(o) Agent shall have received an appraisal of the Net Liquidation
Percentage applicable to Borrower's Inventory and an appraisal of Borrower's
Equipment and the Acquired Assets, the results of which shall be satisfactory to
Agent;
(p) Agent shall have received Borrower's Closing Date Business Plan;
(q) Borrower shall pay all Lender Group Expenses incurred in connection
with the transactions evidenced by this Agreement;
(r) Agent shall have received (i) appraisals of the Real Property
Collateral satisfactory to Agent, and (ii) mortgagee title insurance policies
(or marked commitments to issue the same) for the Real Property Collateral
issued by a title insurance company satisfactory to Agent (each a "Mortgage
Policy" and, collectively, the "Mortgage Policies") in amounts satisfactory to
Agent assuring Agent that the Mortgages on such Real Property Collateral are
valid and enforceable first priority mortgage Liens on such Real Property
58
Collateral free and clear of all defects and encumbrances except Permitted
Liens, and the Mortgage Policies otherwise shall be in form and substance
satisfactory to Agent;
(s) Agent shall have received a phase-I environmental report,
environmental indemnity, and a real estate survey with respect to each parcel
composing the Real Property Collateral; the environmental consultants and
surveyors retained for such reports or surveys, the scope of the reports or
surveys, and the results thereof shall be acceptable to Agent;
(t) Agent shall have received all Collateral Access Agreements with
respect to the following locations: 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxx; 000 Xxxxxx
Xxxxxx, Xxxxxx, Xxxx; "Building 59", Vancouver, Washington; "Building 00",
Xxxxxxxxx, Xxxxxxxxxx; Xxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxx; and Oconto Falls,
Wisconsin.
(u) Agent shall have received copies of lease assignment and assumption
agreements with respect to the following locations: 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxx; "Building 00", Xxxxxxxxx, Xxxxxxxxxx; "Xxxxxxxx 00", Xxxxxxxxx,
Xxxxxxxxxx; and Memorial Highway, Houston, Texas.
(v) Agent shall have received opinions of Counsel for Borrower (including
Borrower's local counsel in the State of Georgia) and Holdco, each in form and
substance satisfactory to Agent;
(w) Borrower shall have received the proceeds of the Subordinated Note A
and Subordinated Note B (in a minimum amount of $20,000,000) and in such greater
amount as may be necessary to consummate the contemplated acquisition, on terms
and conditions satisfactory to Agent;
(x) Borrower shall have the Required Availability after giving effect to
the initial extensions of credit hereunder;
(Y) Borrower shall pay all Lender Group Expenses incurred in connection
with the transactions evidenced by this Agreement;
(z) Borrower shall have engaged the Consultant for a minimum of 180 days
following the Closing Date, all on terms satisfactory to Agent;
(aa) Agent shall have received duly executed, or entered, as the case may
be, copies of the Asset Purchase Agreement accompanied by true and correct
certified copies of all bid procedures orders and the Order of the Court
approving the Drypers Acquisition contemplated therein, both in form and
substance acceptable to Agent, but which Order shall provide for the sale of the
Acquired Assets free and clear of all liens, security interests, claims and
encumbrances (including, without limitation, ad valorem tax liens), other than
those permitted by Agent, pursuant to Section 363(f) of the Bankruptcy Code, and
contain
59
findings pursuant to Section 363(m) of the Bankruptcy Code and such Asset
Purchase Agreement shall have been authorized by all necessary corporate action
on the part of Borrower and Borrower shall have received all necessary
governmental and other approvals (if any shall be required) relating to same,
and such acquisition, assignment and assumption shall have been authorized by a
final order of the Court, which shall not (i) have been stayed or reversed, or
ordered to be reconsidered, or (ii) contravene or conflict with the
organizational documents of Borrower or any provision of law, any presently
existing requirement or restriction imposed by any judicial, arbitral,
regulatory or governmental instrumentality or constitute a default under, or
result in the creation or imposition of any lien other than liens permitted by
Agent upon any property or assets of Borrower under any agreement, instrument or
indenture by Borrower is bound;
(bb) To the extent any "escrow agreement" or "escrow account" is
entered into by Borrower and Drypers pursuant to the Asset Purchase Agreement to
accommodate a "Working Capital Adjustment" (as defined in the Asset Purchase
Agreement) Borrower shall deliver to Agent copies of such escrow documents and
agreements, together with an acknowledgement of Agent's security interest in
such "escrow account".
(cc) Agent shall have received (i) copies of Borrower's royalty and
private label manufacturer agreements and license agreements with Xxxxxxxx-
Xxxxx, Procter & Xxxxxx, the Collegiate Licensing Products Company and
Disposable Soft Goods (UK) plc, each in form and substance satisfactory to
Agent, and (ii) consents, in form and substance reasonably satisfactory to
Agent, from Xxxxxxx & Xxxxxx and Disposable Soft Goods (UK) plc, acknowledging
and consenting to Borrower's collateral assignment to Agent of Borrower's rights
under the license agreements between Borrower and such licensors;
(dd) Borrower shall have received all licenses, approvals or evidence
of other actions required by any Governmental Authority in connection with the
execution and delivery by Borrower of this Agreement or any other Loan Document
or with the consummation of the transactions contemplated hereby and thereby;
(ee) Agent shall have received a letter from Associated Hygienic
Products, Inc. confirming it does not own any assets located in or about the
State of Georgia other than books and records, and that such books and records
are segregated from Borrower's books and records and clearly identified as such;
and
(ff) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
--------------------------------------------------------
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder including, without limitation,
any Capital Expenditure Loan) is subject to the fulfillment, on or before the
date applicable thereto, of each of the conditions
60
subsequent set forth below (the failure by Borrower to so perform or cause to be
performed constituting an Event of Default):
(a) within 30 days of the Closing Date, Borrower shall deliver to
Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
-----------
which shall be satisfactory to Agent and its counsel; and
(b) Within 90 days of the Closing Date, Borrower will provide a
satisfactory opening consolidated balance sheet audited by an accounting firm
satisfactory to Agent.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of
------------------------------------------------
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder, including all extensions of credit on the Closing Date)
shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against
Borrower, Agent, any Lender, or any of their Affiliates, and
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall become effective upon the execution and
----
delivery hereof by Borrower, Agent, and the Lenders and shall continue in full
force and effect for a term ending on March 14, 2006 (the "Maturity Date"). The
-------------
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
---------------------
all Obligations (including contingent reimbursement obligations of Borrower with
respect to any outstanding Letters of Credit) immediately shall become due and
payable without notice or demand. No termination of this Agreement, however,
shall relieve or discharge Borrower of its duties, Obligations, or covenants
hereunder and the Agent's Liens in the Collateral shall
61
remain in effect until all Obligations (other than Obligations that by their
terms survive termination hereof) have been fully and finally discharged and the
Lender Group's obligations to provide additional credit hereunder have been
terminated. When this Agreement has been terminated and all of the Obligations
have been fully and finally discharged and the Lender Group's obligations to
provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrower's sole expense, execute and deliver any
UCC termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.
3.6 Early Termination by Borrower. Borrower have the option, at any time
-----------------------------
upon 90 days prior written notice to Agent, to terminate this Agreement by
paying to Agent, for the benefit of the Lender Group, in cash, the Obligations
(including either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender), in full, together with the
Applicable Prepayment Premium (to be allocated based upon letter agreements
between Agent and individual Lenders). If Borrower has sent a notice of
termination pursuant to the provisions of this Section, then the Commitments
shall terminate and Borrower shall be obligated to repay the Obligations
(including either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender), in full, together with the
Applicable Prepayment Premium, on the date set forth as the date of termination
of this Agreement in such notice. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of the
Required Lenders to terminate after the occurrence of an Event of Default, (b)
foreclosure and sale of Collateral, (c) sale of the Collateral in any Insolvency
Proceeding, or (iv) restructure, reorganization or compromise of the Obligations
by the confirmation of a plan of reorganization, or any other plan of
compromise, restructure, or arrangement in any Insolvency Proceeding, then, in
view of the impracticability and extreme difficulty of ascertaining the actual
amount of damages to the Lender Group or profits lost by the Lender Group as a
result of such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrower shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
62
4.1 Grant of Security Interest. Borrower hereby grants to Agent, for the
--------------------------
benefit of the Lender Group, a continuing security interest in all of its right,
title, and interest in all currently existing and hereafter acquired or arising
Personal Property Collateral in order to secure prompt repayment of any and all
of the Obligations in accordance with the terms and conditions of the Loan
Documents and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. The Agent's Liens in and to the
Personal Property Collateral shall attach to all Personal Property Collateral
without further act on the part of Agent or Borrower. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, Borrower has no authority, express or implied, to
dispose of any item or portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including
---------------------
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, Borrower, immediately upon the request of Agent,
shall endorse and deliver physical possession of such Negotiable Collateral to
Agent, provided, however that until an Event of Default has occurred and is
-------- -------
continuing, Borrower shall be entitled to collect solely the interest paid with
respect to the Amended and Restated Wang Note and deposit the same in the Cash
Management Account. If an Event of Default shall have occurred and is
continuing, any and all interest paid or payable in the form of cash,
instruments or other property in respect of the Amended and Restated Wang Note
shall be forthwith delivered to Agent to be applied in accordance with Section
-------
2.4(b)(i) and shall if received by Borrower, be received by Borrower in trust
---------
for the benefit of Agent, be segregated from the other property or funds of
Borrower and be forthwith delivered to Agent by Borrower as Collateral under the
terms of this Agreement in the same form as so received (with any necessary
endorsements).
4.3 Collection of Accounts, General Intangibles, and Negotiable
-----------------------------------------------------------
Collateral. At any time after the occurrence and during the continuation of an
----------
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrower that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Borrower agrees that it will
hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by Borrower.
4.4 Delivery of Additional Documentation Required. At any time upon the
---------------------------------------------
request of Agent, Borrower, or Holdco, as the case may be, shall execute and
deliver to Agent, any and all financing statements, original financing
statements in lieu of continuation statements, fixture filings, security
agreements, pledges, assignments (including, without limitation, assignments in
connection with the Prior Loan Agreement and Prior Loan Documents), endorsements
of certificates of title and all other documents (the "Additional
63
Documents") that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to perfect and continue perfected the Agent's
Liens in the Collateral (whether now owned or hereafter arising or acquired), to
create and perfect Liens in favor of Agent in any Real Property acquired after
the Closing Date, and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents. To the maximum extent
permitted by applicable law, Borrower authorizes Agent to execute any such
Additional Documents in Borrower's name and authorizes Agent to file such
executed Additional Documents in any appropriate filing office. In addition, on
such periodic basis as Agent shall reasonably require, Borrower shall (a)
provide Agent with a report of all new patentable, copyrightable, or
trademarkable materials acquired or generated by Borrower during the prior
period, (b) cause all patents, copyrights, and trademarks acquired or generated
by Borrower that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Borrower's ownership thereof, and (c) cause to be
prepared, executed, and delivered to Agent supplemental schedules to the
applicable Loan Documents to identify such patents, copyrights, and trademarks
as being subject to the security interests created thereunder.
4.5 Power of Attorney. Borrower hereby irrevocably makes, constitutes,
-----------------
and appoints Agent (and any of Agent's officers, employees, or agents designated
by Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
-----------
described in Section 4.4, (b) at any time that an Event of Default has occurred
-----------
and is continuing, sign Borrower's name on any invoice or xxxx of lading
relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
Borrower's name on any Collection item that may come into the Lender Group's
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as Borrower's attorney, and
each and every one of its rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and the Lender Group's obligations to extend credit hereunder are
terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their
---------------
respective officers, employees, or agents) shall have the right from time to
time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the
64
Collateral; provided, that if no Event of Default has occurred and is
--------
continuing, Agent shall only conduct any such inspection or review of Borrower's
Books and/or the Collateral during normal business hours, and provided further
-------- -------
that Borrower shall cause to be performed by an appraiser satisfactory to Agent
(a) on a semi-annual basis, updated appraisals of Borrower's Equipment, (b) on a
quarterly basis, updated appraisals of Borrower's Inventory, and (c) on an
annual basis, updated appraisals of Borrower's Real Property Collateral, in each
case at Borrower's expense.
4.7 Control Agreements. Borrower agrees that it will not transfer assets
------------------
out of any Securities Accounts other than as permitted under Section 7.19 and,
------------
if to another securities intermediary, unless each of Borrower, Agent, and the
substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property shall be modified by Borrower
without the prior written consent of Agent. Upon the occurrence and during the
continuance of a Default or Event of Default, Agent may notify any securities
intermediary to liquidate the applicable Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account.
4.8 Revised Article 9. Borrower acknowledges and agrees that, in
-----------------
anticipation of the application to the transactions contemplated hereby, in one
or more jurisdictions, of revised Article 9 of the Uniform Commercial Code
("Revised Article 9"):
(a) Attachment. In applying the law of any jurisdiction in which
Revised Article 9 is in effect, the Collateral includes all presently existing
and hereafter acquired assets of Borrower, whether or not the type of Collateral
is within the scope of Revised Article 9. The Collateral shall, without
limitation, specifically include the following categories of assets as defined
in Revised Article 9: goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents, accounts, chattel
paper (whether tangible or electronic) deposit accounts, letter-of-credit rights
(whether or not the letter of credit is evidenced by a writing), commercial tort
claims, securities and all other investment property, general intangibles
(including payment intangibles and software), supporting obligations and any and
all proceeds of any thereof, wherever located, whether now owned and hereafter
acquired. If Borrower shall, at any time, whether or not Revised Article 9 is in
effect in any particular jurisdiction, acquire a commercial tort claim, as
defined in Revised Article 9, seeking recovery in an amount in excess of
$100,000, individually or in the aggregate, Borrower shall immediately notify
Agent in a writing signed by Borrower and accompanied by a brief description of
the commercial tort claim, granting to Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance satisfactory to Agent.
65
(b) Perfection by Filing. Agent may at any time and from time to time,
pursuant to the provisions of Section 4.1 and this Section 4.8, file financing
----------- -----------
statements, continuation statements and amendments thereto that describe the
Collateral to include all presently existing and hereafter acquired assets of
Borrower, or words of similar effect and which contain any other information
required by Part 5 of Revised Article 9 for the sufficiency or filing office
acceptance of any financing statement, continuation statement or amendment,
including the type of Borrower's organization and any organization
identification number issued to Borrower. Borrower agrees to furnish any such
information to Agent immediately upon request. Any such financing statements,
continuation statements or amendments may be signed by Agent on behalf of
Borrower, and may be filed at any time in any jurisdiction whether or not
Revised Article 9 is then in effect in that jurisdiction.
(c) Other Perfection. Borrower shall at all times, and from time to time,
whether or not Revised Article 9 is in effect in any particular jurisdiction,
take such steps as Agent may reasonably request for Agent (a) to obtain an
acknowledgment, in form and substance satisfactory to Agent, of any bailee
having possession of any of the Collateral that the bailee holds such Collateral
for Agent, (b) to obtain "control" of any investment property, deposit
accounts, letter-of-credit rights or electronic chattel paper (as such terms are
defined in Revised Article 9 with corresponding provisions in Rev. (S)(S) 9-104,
9-105, 9-106 and 9-107 relating to what constitutes "control" for such items of
Collateral), with any agreements establishing control, to be in form and
substance satisfactory to Agent, and (c) otherwise to insure the continued
perfection and priority of Agent's security interest in any of the Collateral
and of the preservation of its rights therein, whether in anticipation and
following the effectiveness or Revised Article 9 in any jurisdiction.
(d) Savings Clause. Nothing contained in this Section 4.8 shall be
-----------
construed to narrow the scope of Agent's security interest in any of the
Collateral or the perfection or priority thereof or to impair or otherwise limit
any of the rights, powers, privileges or remedies of Agent or any Lender
hereunder except (and then only to the extent) mandated by Revised Article 9 to
the extent then applicable.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, Borrower
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Advance
(or other extension of credit including, without limitation, any Capital
Expenditure Loan) made thereafter, as though made on and as of the date of such
Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
66
5.1 No Encumbrances. Borrower has good and indefeasible title to the
---------------
Collateral and the Real Property, free and clear of Liens except for Permitted
Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide existing
-----------------
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrower's business, owed to Borrower without defenses, disputes,
offsets counterclaims, or rights of return or cancellation. As to each Eligible
Account, such Account is not:
(a) owed by an employee, Affiliate, or agent of Borrower,
(b) on account of a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or on any other terms by reason of which the
payment by the Account Debtor may be conditional,
(c) payable in a currency other than Dollars,
(d) owed by an Account Debtor that has or has asserted a right of
setoff, has disputed its liability, or has made any claim with respect to its
obligation to pay the Account,
(e) owed by an Account Debtor that is subject to any Insolvency
Proceeding or is not Solvent or as to which Borrower has received notice of an
imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
(f) on account of a transaction as to which the goods giving rise to
such Account have not been shipped and billed to the Account Debtor or the
services giving rise to such Account have not been performed and accepted by the
Account Debtor,
(k) a right to receive progress payments or other advance xxxxxxxx
that are due prior to the completion of performance by Borrower of the subject
contract for goods or services, and
(h) an Account that has not been billed to the customer.
5.3 Eligible Inventory. All Eligible Inventory is of good and
------------------
merchantable quality, free from defects. As to each item of Eligible Inventory,
such Inventory is
(a) owned by Borrower free and clear of all Liens other than Liens in
favor of Lender,
(b) either located at one of the locations set forth on Schedule E-l
-------- ---
or in transit from one such location to another such location,
67
(c) not located on real property leased by Borrower or in a contract
warehouse, in each case, unless subject to a Collateral Access Agreement
executed by the lessor, the warehouseman, or other third party, as the case may
be, and unless segregated or otherwise separately identifiable from goods of
others, if any, stored on the premises,
(d) not goods that have been returned or rejected by Borrower's
customers, and
(e) not goods that are obsolete or slow moving, restrictive or custom
items, work-in-process, or that constitute spare parts, packaging and shipping
materials, supplies used or consumed in Borrower's business, xxxx and hold
goods, defective goods, "seconds," or Inventory acquired on consignment.
5.4 Equipment. All of the Equipment is used or held for use in Borrower's
---------
business and is fit for such purposes. Set forth on Schedule 5.4 is a
------------
description of all equipment and the applicable lessor for the leased equipment
formerly leased to Drypers and now located at one of Borrower's locations set
forth on Schedule 5.5, involving equipment with a fair market value in excess of
------------
$50,000 per lease, where such equipment has been or will be retained by
Borrower, whether by way of assumption of the Drypers' lease agreement with the
applicable lessor of such equipment, or by way of rejection, cancellation or
renegotiation of any such lease agreement with respect to such equipment.
5.5 Location of Inventory and Equipment. The Inventory and Equipment are
-----------------------------------
not stored with a bailee, warehouseman, or similar party (without Agent's prior
written consent) and are located only at the locations identified on Schedule
--------
5.5; provided, however, that Borrower shall not maintain, locate or re-locate,
--- -------- -------
any of its Equipment (other than leased equipment) at or to, as the case may be,
its locations at 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxx, Buildings 55 and 59 in
Vancouver, Washington, or Memorial Highway in Houston, Texas, unless (a) Agent
consents in writing at least 30 days prior to the location or re-location of
such Equipment, and (b) Borrower obtains a Collateral Access Agreement with the
landlord at such location, entitling Agent to a 120-day period following
termination, surrender or abandonment by Borrower of such location to remove its
Collateral.
5.6 Inventory Records. The Borrower keeps correct and accurate records
-----------------
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 Location of Chief Executive Office; FEIN; Fiscal Year. The chief
-----------------------------------------------------
executive office of the Borrower is located at the address indicated in
Schedule 5.7 and each Borrower's FEIN is identified in Schedule 5.7. Borrower
has a fiscal year ending December 31.
5.8 Due Organization and Oualification: Subsidiaries
------------------------------------------------
68
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
---------------
description of the authorized Stock of Borrower, by class, and, as of the
Closing Date, a description of the number of shares of each such class that are
issued and outstanding, and the name and amount of such Stock owned by each
member. Other than as described on Schedule 5.8(b), there are no subscriptions,
---------------
options, warrants, or calls relating to any shares of Borrower's Stock,
including any right of conversion or exchange under any outstanding security or
other instrument. Borrower is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its Stock
or any security convertible into or exchangeable for any of its Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
---------------
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding Stock of each such Subsidiary
has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8(d), there are no
---------------
subscriptions, options, warrants, or calls relating to any shares of Borrower's
Subsidiaries' Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower's Subsidiaries'
Stock or any security convertible into or exchangeable for any such Stock.
5.9 Due Authorization: No Conflict.
------------------------------
(a) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to Borrower, the Governing Documents of Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on Borrower, (i)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any material contractual obligation of Borrower,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Borrower, other than Permitted
Liens, or
69
(iv) require any approval of Borrower's members or any approval or consent of
any Person under any material contractual obligation of Borrower.
(c) Other than the filing of financing statements, fixture filings,
and Mortgages, the execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which Borrower is a party do not and will
not require any registration with, consent, or approval of, or notice to, or
other action with or by, any Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents to which Borrower is
a party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
---------- -------------
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, or any of its Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), (b) matters arising after the Closing Date that, if
decided adversely to Borrower, or any of its Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change, and
(c) ongoing Collections matters in which the Borrower is a plaintiff.
5.11 No Material Adverse Change. All financial statements relating to
--------------------------
Borrower or Holdco that have been delivered by Borrower or Holdco to the Lender
Group have been prepared in accordance with GA4P (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrower's (or Holdco's, as applicable) financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Borrower (or Holdco, as applicable)
since the date of the latest financial statements submitted to the Lender Group
on or before the Closing Date.
5.12 Fraudulent Transfer.
-------------------
(a) Borrower is Solvent.
(b) No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrower.
70
5.13 Employee Benefits. None of Borrower, any of its Subsidiaries, or any
-----------------
of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a)
----------------------- -------------
none of Borrower's properties or assets has ever been used by Borrower or, to
the best of Borrower's knowledge, by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, except in material compliance with applicable Environmental
Laws, (b) to Borrower's knowledge, none of Borrower's properties or assets has
ever been designated or identified in any manner as a Hazardous Materials
disposal site, or a candidate for closure, pursuant to any Environmental Law,
(c) to Borrower's knowledge, no Environmental Lien arising under any
Environmental Law has attached to any revenues or to any real or personal
property owned or operated by Borrower, and (d) Borrower has not received a
summons, citation, notice, or directive from the Environmental Protection Agency
or any other federal or state governmental agency concerning any action or
omission by Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
5.15 Brokerage Fees. Borrower has not utilized the services of any broker
--------------
or finder in connection with Borrower's obtaining financing from the Lender
Group under this Agreement and no brokerage commission or finders fee is payable
by Borrower in connection herewith.
5.16 Intellectual Property. Borrower owns, or holds licenses in, all
---------------------
trademarks, trade names, copyrights, patents, patent rights and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as Schedule 5.16 is a true, correct, and complete listing of all material
-------------
patents, patent applications, trademarks, trademark applications, copyrights,
and copyright registrations as to which Borrower is the owner or is an exclusive
licensee in a geographic area.
5.17 Leases. Borrower enjoys peaceful and undisturbed possession under all
------
leases material to the business of Borrower and to which it is a party or under
which it is operating. All of such leases are valid and subsisting and no
material default by Borrower exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the Borrower's DDAs,
---- -------------
including, with respect to each depository (i) the name and address of such
depository, and (ii) the account numbers of the accounts maintained with such
depository.
5.19 Complete Disclosure. All factual information (taken as a whole)
-------------------
furnished by or on behalf of Borrower in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower in writing to Agent or any Lender will be, true and
71
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrower's good faith best estimate of its future
performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
------------ -------------
of all Indebtedness of Borrower outstanding immediately prior to the Closing
Date that is to remain outstanding after the Closing Date and such Schedule
accurately reflects the aggregate principal amount of such Indebtedness and the
principal terms thereof.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
shall and shall cause each of its Subsidiaries to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables
-----------------
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrower also shall keep an inventory
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent with the following documents at
--------------------
the following times in form satisfactory to Agent:
--------------------------------------------------------------------------------
Daily (a) a sales journal, collection journal, and credit register
since the last such schedule and a calculation of the Borrowing
Base as of such date, and
(b) notice of all returns, disputes, or claims.
--------------------------------------------------------------------------------
Weekly (c) Inventory reports specifying each Borrower's cost and the
wholesale market value of its Inventory, by category, with
additional detail showing additions to and deletions from the
Inventory.
--------------------------------------------------------------------------------
Monthly (d) a detailed calculation of the Borrowing Base (including
(not later detail regarding those Accounts that are not Eligible
than the Accounts),
10th day of
each (e) a detailed and a summary aging, by total, of the Accounts,
month) together with a reconciliation to the detailed calculation of
the Borrowing Base previously provided to Agent
--------------------------------------------------------------------------------
72
--------------------------------------------------------------------------------
(f) a summary aging, by vendor, of Borrower's accounts payable and
any book overdraft, and
(g) a calculation of Dilution for the prior month.
--------------------------------------------------------------------------------
Quarterly (h) a detailed list of Borrower's customers,
(i) a report regarding Borrower's accrued, but unpaid, ad valorem
taxes,
--------------------------------------------------------------------------------
Upon (j) copies of invoices in connection with the Accounts, credit memos,
request remittance advices, deposit slips, shipping and delivery documents in
by Agent connection with the Accounts and, for Inventory and Equipment
acquired by Borrower, purchase orders and invoices, and
--------------------------------------------------------------------------------
(k) such other reports as to the Collateral, or the financial
condition of Borrower as Agent may reasonably request.
--------------------------------------------------------------------------------
In addition, Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
-------------------------------------------
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45 days
in the case of a month that is the end of the first 3 fiscal quarters in a
fiscal year) after the end of each month during each of Borrower's fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Borrower's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Borrower to the effect that;
A. the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in all material respects the financial
condition of Borrower and its Subsidiaries,
B. the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents are
true and correct in
73
all material respects on and as of the date of such
certificate, as though made on and as of such date (except to
the extent that such representations and warranties relate
solely to an earlier date), and
C. there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of
any non-compliance, describing such non-compliance as to which
he or she may have knowledge and what action Borrower has
taken, is taking, or proposes to take with respect thereto),
and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
------------
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
-------
7.20, and
----
(b) as soon as available, but in any event within 90 days after the
end of each of Borrower's fiscal years,
(i) financial statements of Borrower and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent and
the Lenders stating that such accountants do not have knowledge of
the existence of any Default or Event Default under Section 7.20.
------------
(c) as soon as available, but in any event within 30 days prior to
the start of each Borrower's fiscal years, copies of Borrower's Projections and
a business plan, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in all respects, in its sole discretion, for
the forthcoming 3 years, year by year, and for the forthcoming fiscal year,
month by month, certified by the chief financial officer of Borrower as being
such officer's good faith best estimate of the financial performance of Borrower
during the period covered thereby,
(d) if and when filed by Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
74
(iii) copies of Borrower's federal income tax returns, and any
amendments thereto, filed with the internal Revenue Service, and
(iv) any other information that is provided by Borrower to its
shareholders generally,
(e) if and when filed by Borrower and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in jurisdictions in
which (i) Borrower conducts business or is required to pay any such excise tax,
(ii) where Borrower's failure to pay any such applicable excise tax would result
in a Lien on the properties or assets of Borrower, or (iii) where Borrower's
failure to pay any such applicable excise tax reasonably could be expected to
result in a Material Adverse Change,
(f) as soon as Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrower proposes to take with respect
thereto, and
(g) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrower.
In addition to the financial statements referred to above, Borrower
agrees to deliver financial statements prepared on both a consolidated and
consolidating basis and agrees that no Subsidiary of Borrower will have a fiscal
year different from that of Borrower. Borrower agrees that its independent
certified public accountants are authorized to communicate with Agent and to
release to Agent whatever financial information concerning Borrower Agent
reasonably may request. Borrower waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Agent pursuant to or in accordance
with this Agreement, and agrees that Agent may contact directly any such
accounting firm or service bureau in order to obtain such information.
6.4 Guarantor Reports. Cause Holdco to deliver its annual financial
-----------------
statements at the time when Borrower provides its audited financial statements
to Agent and copies of all federal income tax returns as soon as the same are
available and in any event no later than 30 days after the same are required to
be filed by law.
6.5 Return. Cause returns and allowances as between Borrower and its
------
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of Borrower, as they exist at the time of the execution and
delivery of this Agreement. If, at a time when no Event of Default has occurred
and is continuing, any Account Debtor returns any Inventory to Borrower,
Borrower promptly shall determine the reason for such return and, if Borrower
accepts such return, issue a credit memorandum (with a copy to be sent to Agent)
in the appropriate amount to such Account Debtor. If, at a time when an Event of
Default has occurred and is continuing, any Account Debtor returns any Inventory
to
75
Borrower, the applicable Borrower promptly shall determine the reason for such
return and, if Agent consents (which consent shall not be unreasonably
withheld), issue a credit memorandum (with a copy to be sent to Agent) in the
appropriate amount to such Account Debtor.
6.6 Maintenance of Properties and Equipment. Maintain and preserve all of
---------------------------------------
its properties and Equipment which are necessary or useful in the proper conduct
to its business in good working order and condition, ordinary wear and tear
excepted, and comply at all times with the provisions of all leases to which it
is a part as lessee, so as to prevent any loss of forfeiture thereof or
thereunder.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
-----
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrower
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating
that Borrower has made such payments or deposits. Borrower shall deliver
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which Borrower is required to pay any such excise tax.
6.8 Insurance.
---------
(a) At Borrower's expense, maintain insurance, respecting its
assets, including, without limitation, Real Property together with any and all
improvements located thereon, wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Borrower also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonable satisfactory to
Agent. Borrower shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
or additional insured as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss covered by
such insurance. Agent shall have the exclusive right to adjust any losses
payable under any such insurance policies in excess of $50,000, without any
liability to Borrower whatsoever in respect of such adjustments. Any monies
received as payment for any loss under any insurance policy mentioned above
(other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of
76
the Obligations or shall be disbursed to Borrower under staged payment terms
reasonably satisfactory to the Required Lenders for application to the cost of
repairs, replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items of property destroyed prior to
such damage or destruction.
(c) Borrower will not take out separate insurance concurrent in form
or contributing in the event of loss with that required to maintained under this
Section 6.8, unless Agent is included thereon as named insured with the loss
payable to Agent under a lender's loss payable endorsement or its equivalent.
Borrower immediately shall notify Agent whenever such separate insurance is
taken out, specifying the insurer thereunder and full particulars as to the
policies evidencing the same, and copies of such policies promptly shall be
provided to Agent.
6.9 Location of Inventory and Equipment. Keep the Inventory and Equipment
-----------------------------------
only at the locations identified on Schedule 5.5 and permitted by Section 5.5;
------------ -----------
provided, however, that Borrower may amend Schedule 5.5 so long as such
-------- ------- ------------
amendment occurs by written notice to Agent not less than 30 days prior to the
date on which Inventory or Equipment is moved to such new location, so long as
such new location is within the continental United States, and so long as, at
the time of such written notification, Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Agent's Liens on such assets and also provides to Agent a Collateral Access
Agreement.
6.10 Compliance with Laws. Comply with the requirements of all applicable
--------------------
laws, rules, regulations and orders of any Governmental Authority, including the
Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any
------
leases to which Borrower is a party or by which Borrower's properties and assets
are bound, unless such payments are the subject of a Permitted Protest.
6.12 Brokerage Commissions. Pay any and all brokerage commission or
---------------------
finders fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
77
6.13 Existence. At all times preserve and keep in full force and effect
---------
Borrower's valid existence and good standing and any rights and franchises
material to Borrower's business.
6.14 Environmental.
-------------
(a) Keep any property either owned or operated by Borrower free of
any Environmental Liens or post bonds or other financial assurances sufficient
to satisfy the obligations or liability evidenced by such Environmental Liens
(b) comply, in all material respects, with Environmental Laws and provide to
Agent documentation of such compliance which Agent reasonably requests, (c)
promptly notify Agent of any release of a Hazardous Material in any reportable
quantity from or onto property owned or operated by Borrower and take any
Remedial Actions required by any Governmental Authority with jurisdiction to
xxxxx said release or otherwise to come into compliance with applicable
Environmental Law, and (d) promptly provide Agent with written notice within 10
days of the receipt of any of the following: (i) notice that an Environmental
Lien has been filed against any of the real or personal property of Borrower,
(ii) commencement of any Environmental Action against Borrower or notice that an
Environmental Action will be filed against Borrower, and (iii) notice of a
violation, citation, or other administrative order related to Environmental Laws
which reasonably could be expected to result in a Material Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than 5 Business
------------------
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 License Default Notices. Deliver to Agent copies of any and all
-----------------------
default and/or termination notices received with respect to any of Borrower's
existing or future license agreements including without limitation, the license
agreements with Xxxxxxxx Xxxxx, Xxxxxxx & Xxxxxx, Collegiate Licensing Products
Company and Disposable Soft Goods (UK) Plc.
6.17 Engage Consultant. Continue to engage Consultant for a period of 180
-----------------
days following the Closing Date on the terms set forth in any "engagement
letter" or similar agreement describing the terms and conditions of Consultant's
engagement between Borrower and Consultant, and acceptable to Agent, or during
any other period of time required by Agent in its reasonable discretion
thereafter, and authorize and instruct Consultant to engage discussions with
Agent regarding Borrower's financial condition and the operation of Borrower's
business at any time upon request of Agent, and to deliver to Agent such
documents and reports in connection therewith as Agent may request.
78
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not and will not permit any of its Subsidiaries to do
many of the following:
7.1 Indebtedness. Create, incur, assure, permit, guarantee, or
------------
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
--------------
(c) Permitted Purchase Money Indebtedness,
(d) Indebtedness evidenced by the Subordinated Note A and
Subordinated Note B, and
(e) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
-----------
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Agent's
judgement, materially impair the prospects of repayment of the Obligations by
Borrower, (ii) such refinancings, renewals, or extensions do not result in an
increase in the aggregate principal amount of, or interest rate with respect to,
the Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions, that, taken as a whole, are materially more burdensome
or restrictive to Borrower, and (iv) if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to the Obligations,
then the terms and conditions of the refinancing, renewal, or extension
Indebtedness must include subordination terms and conditions that are at least
as favorable to the Lender group as those that were applicable to the
refinanced, renewed, or extended Indebtedness, as determined by Agent.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
------
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(e) and so long as the replacement Liens only encumber
--------------
those assets that secured the refinancing, renewed, or extended Indebtedness).
79
7.3 Restrictions on Fundamental Changes.
-----------------------------------
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
7.4 Disposal of Assets. Convey, sell, lease, license, assign,
------------------
transfer, or otherwise dispose of any of Borrower's assets; provided, however,
-------- -------
that the Borrower may dispose of assets in a Permitted Disposition so long as
(a) if the asset was required with the proceeds of a Capital Expenditure Loan,
the proceeds are used to repay the applicable Capital Expenditure Loan on the
date of receipt thereof by Borrower, (b) if the asset is Equipment that was
included by Agent in the calculation of the Term Loan Amount and to the extent
such proceeds from the sale of such Equipment are not used to purchase
replacement Equipment of equal or greater value within five Business Days, the
proceeds are used to repay the installments due on the Term Loan in the inverse
order of maturity, and (c) in all other cases, the proceeds are directed to the
Cash Management Account, or immediately deposited by Borrower in the Cash
Management Account.
7.5 Change Name. Change Borrower's name, FEIN, corporate structure
-----------
or identity, or add any new fictitious name; provided, however, that Borrower
-------- -------
may change its name upon at least 30 days' prior written notice to Agent of such
change and so long as, prior to such change of name, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
---------
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Agent.
7.7 Nature of Business. Make any change in the principal nature of
------------------
its business.
7.8 Payments, Prepayments and Amendments.
------------------------------------
(a) Make any payments of principal of, or interest or fees on,
Subordinated Note A or Subordinated Note B; provided, however, that Borrower may
-------- -------
make regularly scheduled interest payments on Subordinated Note A after June 30,
2001 if (i) no Event of Default has occurred and is continuing, and (ii)
Borrower has demonstrated to the satisfaction of Agent that, after giving
effect to such payment, Excess Availability is $10,000,000 or more; and
provided, further, that Borrower may refinance and pay in full the
-------- -------
80
Subordinated Note A with the proceeds of new subordinated debt provided by an
Affiliate of Borrower on terms and conditions, and subject to a Subordination
Agreement and other documents, in form and substance satisfactory to Agent.
(b) Except in connection with a refinancing permitted by Section
-------
7.1(e), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
------
of Borrower, other than the Obligations in accordance with this Agreement, and
(c) Except in connection with a refinancing permitted by Section
-------
7.1(e), directly or indirectly, amend, modify, alter, increase, or change any of
------
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
--------
7.1(b), (c) or (d).
------ --- ---
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
-----------------
any Change of Control.
7.10 Consignments. Consign any Inventory or sell any Inventory on xxxx and
------------
hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 Distributions. Make any distribution or declare or pay any dividends
-------------
(in cash or other property, other than Stock) on, or purchase, acquire, redeem,
or retire any of Borrower's Stock, of any class, whether now or hereafter
outstanding, or pay any management fees; except (a) so long as no Default or
Event of Default exists on the date of such payment or immediately after giving
effect thereto, from time to time during or following the end of any fiscal
quarter during which Borrower was a Pass-Through Entity, Borrower may distribute
to its respective equity holders in cash an amount not in excess of the tax
distribution amount for the portion of the fiscal year during the end of such
fiscal quarter, minus the aggregate amount of any such distributions therefor
made in respect of such fiscal year; provided, however, that in no event shall
the amount so distributed in respect of any fiscal year exceed the actual amount
of federal and state income taxes for such year attributable to the ownership of
Borrower's equity interest, and (b) the payment of management fees for payroll,
director and related expenses, provided that no Event of Default has occurred
and is continuing, to Holdco and Disposable Soft Goods International Limited,
directly or indirectly, in an amount not to exceed $1,200,000 in the aggregate
on a per annum basis; provided, however, that if no Event of Default has
-------- -------
occurred hereunder and satisfactory projections have been delivered to Agent,
Borrower may request on or after April 1, 2002 that Agent consider allowing an
increase in such management fees, payroll fees, director and related expenses,
but any such increase shall be in the sole discretion of Agent. The amount of
any distribution of the Tax Distribution Amount under clause (a) of this Section
shall be verified by the chief financial officer of Borrower in the certificate
required under Section 6.3 and in the written statement required of Borrower's
-----------
accountants under Section 6.3.
-----------
81
7.12 Accounting Methods. Modify or change its method of accounting (other
------------------
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with
any third party accounting firm or service bureau for the preparation or storage
of Borrower's accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or Borrower's
financial condition.
7.13 Investments. Except for Permitted Investments, directly or
-----------
indirectly, make or acquire any Investment, or incur any liabilities including
contingent obligations) for or in connection with any Investment; provided,
--------
however, that Borrower shall not have Permitted Investments (other than in the
-------
Cash Management Accounts) in excess of $500,000 outstanding at any one time
unless, if such Permitted Investments are held with a bank or securities
intermediary, Borrower and the applicable securities intermediary or bank have
entered into Control Agreements governing such Permitted Investments, as Agent
shall determine in its Permitted Discretion, to perfect (and further establish)
the Agent's Liens in such Permitted Investments.
7.14 Transactions with Affiliates. Directly or indirectly enter into or
----------------------------
permit to exist any transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Agent, including, without
limitation, any disclosure set forth on Annex A to the Affiliate Subordination
-------
Agreement, and that are no less favorable to Borrower than would be obtained in
an arm's length transaction with a non-Affiliate, and are subject to the
Affiliate Subordination Agreement.
7.15 Suspension. Suspend or go out of a substantial portion of its
----------
business.
7.16 Compensation. Increase the annual fee or per-meeting fees paid to the
------------
members of its Board of Directors during any year by more than 15% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of
115% of that paid or accrued in the prior year.
7.17 Use of Proceeds. Use the proceeds of (a) the Advances and the Term
---------------
Loan for any purpose other than (i) on the Closing Date, (x) to facilitate the
Drypers Acquisition, (y) to restate and restructure amounts owing under the
Prior Loan Agreement, and (z) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (ii) thereafter, consistent
with the terms and conditions hereof, for its lawful and permitted corporate
purposes, and (b) the Capital Expenditure Loan for any purpose than to purchase
Equipment.
7.18 Change in Location of Chief Executive Office: Inventory and Equipment
---------------------------------------------------------------------
with Bailees. Relocate its chief executive office to a new location without
------------
Borrower providing 30 days prior written notification thereof to Agent and so
long as, at the time of
82
such written notification, Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected the Agent's Liens
and also provides to Agent a Collateral Access Agreement with respect to such
new location. The Inventory and Equipment shall not at any time now or hereafter
be stored with a bailee, warehouseman, or similar party without Agent's prior
written consent.
7.19 Securities Accounts. Establish or maintain any Securities Account
-------------------
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrower shall not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
-------- -------
and is continuing or would result therefrom, Borrower may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 Financial Covenants.
-------------------
(a) Fail to maintain:
(i) Minimum EBITDA. EBITDA, measured on a fiscal
quarter-end basis, of not less than the required amount set forth
in the following table for the applicable period set forth
opposite thereto;
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$320,000 For the 3 month period ending June 30, 2001
--------------------------------------------------------------------------------
$2,110,000 For the 6 month period ending September 30, 2001
--------------------------------------------------------------------------------
$4,890,000 For the 9 month period ending December 31, 2001
--------------------------------------------------------------------------------
$7,990,000 For the 12 month period ending March 31, 2002
--------------------------------------------------------------------------------
$7,990,000 For the 12 month period ending fiscal quarter
thereafter
--------------------------------------------------------------------------------
(ii) Tangible Net Worth. Tangible Net Worth of at least
the required amount set forth in the following table as of the applicable date
set forth opposite thereto:
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$12,975,000 as of June 30, 2001
--------------------------------------------------------------------------------
$13,325,000 as of September 30, 2001
--------------------------------------------------------------------------------
83
---------------------------------------------------------------------------
$14,140,000 as of December 31, 2001
---------------------------------------------------------------------------
$15,250,000 as of March 31, 2002
---------------------------------------------------------------------------
$14,140,000, plus as measured at the end of each fiscal quarter
Borrower's cumulative thereafter
net income since
January 1, 2002
---------------------------------------------------------------------------
(b) Capital Expenditures. Make Capital Expenditures in any twelve
month period in excess of $6,975,000.
7.21 Officers. Engage or hire any chief operating officer or chief
--------
financial officer (or similar position) immediately prior to, on or after the
Closing Date unless Agent shall have received and reviewed reference checks for
any such individual, the results of which are satisfactory to Agent.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
----------------
8.1 If Borrower fails to pay when due and payable or when declared due and
payable, all or any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 (a) If Borrower fails to perform keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.2
------------
(Collateral Reporting), 6.3 (Financial Statements, Reports, Certificates),
---
6.7 (Taxes), 6.9 (Location of Inventory and Equipment), 6.10 (Compliance with
--- --- ----
Laws), or 6.11 (Leases) of this Agreement, and such failure continues for a
----
period of five (5) Business Days; (b) if Borrower falls to perform, keep, or
observe any term, provision, condition, covenant, or agreement contained in
Sections 6.1 (Accounting System), 6.4 (Guarantor Reports), 6.5 (Returns), or
------------ --- ---
6.6 (Maintenance of Properties and Equipment) of this Agreement, and such
---
failure continues for a period of fifteen (15) Business Days; or (c) if Borrower
or any guarantor of the Obligations fails to perform, keep, or observe any other
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between Borrower and Agent or any Lender; in each case, other than any such
term, provision, condition, covenant, or agreement that is the subject of
another provision of this Section 8, in which event such other provision of this
Section 8 shall govern; provided, that during any period of time that any such
failure or non-
performance of Borrower or such guarantor of the Obligations referred to in this
paragraph exists, even if such failure or non-performance is not yet an Event of
Default by virtue of the existence of a grace or cure period or the
pre-condition of the giving of a notice, at the option of the Required Lenders,
Lenders shall not be required during such period to make Advances or Capital
Expenditure Loans to Borrower;
8.3 If any material portion of Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Borrower, or any of
its Subsidiaries, and any of the following events occur: (a) Borrower or the
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Agent (including any
successor agent) and each other member of the Lender Group shall be relieved of
their obligations to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
Borrower of any of its Subsidiaries, or (e) an order for relief shall have been
entered therein;
8.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if any taxes or debts owing at any
time hereafter to any one or more of such entities becomes a Lien, whether
xxxxxx or otherwise, upon any of Borrower's or any of its Subsidiaries' assets
and the same is not paid before such payment is delinquent;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of Borrower's or any of its Subsidiaries' assets;
8.9 If there is (a) a default in any material agreement to which Borrower
or any of its Subsidiaries is a party and such default (i) occurs at the final
maturity of the obligations thereunder, or (ii) results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
Borrower's or its Subsidiaries' obligations thereunder, to terminate such
agreement, or to refuse to renew such agreement pursuant to an
85
automatic renewal right therein, or (b) a default under any of Borrower's
existing or future license agreements, including, without limitation, the
license agreements with Xxxxxxxx-Xxxxx, Xxxxxxx & Xxxxxx, collegiate Licensing
Products Company and Disposable Soft Goods (UK) Plc;
8.10 If Borrower or any of its Subsidiaries makes any payment on account
of Indebtedness that has been contractually subordinated in right of payment to
the payment of the Obligations, except to the extent such payment is permitted
by the terms of the subordination provisions applicable to such Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by Borrower, its Subsidiaries, or any officer, employee, agent, or
director of Borrower or any of its Subsidiaries;
8.12 If the obligation of Holdco under the Parent Guaranty is limited or
terminated by operation of law or by Holdco thereunder; or
8.13 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected and
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby; or
8.14 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by Borrower, or a proceeding shall be commenced by Borrower, or by
any Governmental Authority having jurisdiction over Borrower, seeking to
establish the invalidity or unenforceability thereof, or Borrower shall deny
that Borrower has any liability or obligation purported to be created under any
Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
-------------------
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable;
86
(b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting any of the Agent's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit the Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in trust for the
Lender Group, segregate all returned Inventory from all other assets of Borrower
or in Borrower's possession and conspicuously label said returned Inventory as
the property of the Lender Group;
(f) Without notice to or demand upon Borrower or Holdco, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interests in the Collateral. Borrower agrees to assemble the
Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate which
is reasonably convenient to both parties. Borrower authorizes Agent to enter the
premises where the Personal Property Collateral is located, to take and maintain
possession of the Personal Property Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien that in Agent's determination appears
to conflict with the Agent's Liens and to pay all expenses incurred in
connection therewith and to charge Borrower's Loan Account therefor. With
respect to any of Borrower's owned or leased premises, Borrower hereby grants
Agent license to enter into possession of such premises and to occupy the same,
without charge, in order to exercise any of the Lender Group's rights or
remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by the Lender
Group (including any amounts received in the Cash Management Accounts), or (ii)
Indebtedness at any time owing to or for the credit or the account of Borrower
held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of
Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
0bligations;
87
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Borrower hereby grants to Agent a
license or other right to use, without charge, Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including Borrower's premises)
as Agent determines is commercially reasonable. It is not necessary that the
Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give Borrower a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Personal Property Collateral, the time on or after which the private
sale or other disposition is to be made;
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in Section 12, at least 10
----------
days before the earliest time of disposition set forth in the notice;
no notice needs to be given prior to the disposition of any portion
of the Personal Property Collateral that is perishable or threatens
to decline speedily in value or that is of a type customarily sold
on a recognized market; and
(iii) If the sale is to be a public sale, Agent shall also give
notice of the time and place by publishing a notice one time at least
10 days before the date of the sale in a newspaper of general
circulation in the county in which such sale is to be held.
(1) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(m) Borrower acknowledges that the Obligations arose out of a
commercial transaction, and agrees that if an Event of Default shall occur,
Agent shall have the right to seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, Agent shall have the right to an
immediate writ of possession without notice of a hearing. Borrower hereby
consents to such right and such appointment and hereby waives any objection
Borrower may
88
have thereto or the right to have a bond or other security posted by Agent in
connection therewith;
(n) The Lender Group shall have all other rights and remedies
available to it at law or in equity or pursuant to any other Loan Document; and
(o) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrower. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Borrower.
9.2 Remedies Cumulative. The rights and remedies of the Lender Group
-------------------
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent Agent reasonably
determines that such failure by Borrower could result in a Material Adverse
Change, in its discretion and without prior notice to Borrower, may do any or
all of the following: (a) make payment of the same or any part thereof, (b) set
up such reserves in Borrower's Loan Account as Agent deems necessary to protect
the Lender Group from the exposure created by such failure, or (c) in the case
of the failure to comply with Section 6.8 hereof, obtain and maintain insurance
-----------
policies of the type described in Section 6.8 and take any action with respect
-----------
to such policies as Agent deems prudent. Any such amounts paid by Agent shall
constitute Lender Group Expenses and any such payments shall not constitute an
agreement by the Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing. The provisions of
this Section 10 shall not apply to any assessments or taxes that are the subject
----------
of a Permitted Protest.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
--------------------
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement. extension, or renewal
of documents, instruments,
89
chattel paper, and guarantees at any time held by the Lender Group on which
Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Borrower hereby agrees
-------------------------------------------
that: (a) so long as Agent complies with its obligations, if any, under the
Code, the Lender Group shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.
11.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the
---------------
Agent-Related Persons, the Lender-Related Persons with respect to each Lender,
each Participant, and each of their respective officers, directors, employees,
agents, and attorneys-in-fact (each, an "Indemnified Person") harmless (to the
------------------
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements its and other costs and expenses actually
incurred in connection therewith (as and when they are incurred and irrespective
of whether Suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration of this
Agreement, any of the other Loan Documents, or the transactions contemplated
hereby or thereby, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event or
circumstance in any manner related thereto (all the foregoing, collectively, the
"Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
-----------------------
Borrower shall have no obligation to any Indemnified Person under this Section
-------
11.3 with respect to any Indemnified Liability that a court of competent
----
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrower
with respect thereto. WITHOUT LIMiTATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LL4BILITLE5 WHICH IN WHOLE
OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
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Unless otherwise provided in this Agreement, all notices or demands by
Borrower or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Agent, as applicable, may designate to each other
in accordance herewith), or telefacsimile to Borrower or Agent, as the case may
be, at its address set forth below:
If to Borrower: ASSOCIATED HYGIENIC PRODUCTS LLC
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxx
Fax No. 000.000.0000
with copies to: PILLSBURY WINTHROP LLP
00 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax No. 4l5.983.1200
If to Foothill: FOOTHILL CAPITAL CORPORATION
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxx Xxxxxx,Xxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
with copies to: FOOTHILL CAPITAL CORPORATION
400 Northpark Town Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx, III, Esq.
Fax No. 000.000.0000
91
Agent and Borrower may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
----------
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF GEORGIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF XXXXXX,
STATE OF GEORGIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST
-------- -------
ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
----- --- ----------
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
-------------
BORROWER AND THE LENDER GROUP HEREBY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR C&USE OF
ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
92
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER
AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
------------------------------
(a) Any Lender may, with the written consent of Agent, assign and
delegate to one or more assignees (each an "Assignee") all, or any ratable part
--------
of all, of the Obligations, the Commitments and the other right; and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $5,000,000; provided, however, that Borrower and Agent may continue to deal
-------- -------
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Borrower and Agent by such Lender and the Assignee,
(ii) such Lender and its Assignee have delivered to Borrower and Agent an
Assignment and Acceptance in form and substance satisfactory to Agent, and (iii)
the assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merge, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor Lender
(with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations herein under have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights except with
respect to Section 11.3 hereof) and be released from its obligations under this
------------
Agreement (and in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto), and such assignment shall affect a novation between
Borrower and the Assignee.
93
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto, (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (4) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement, (5)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance and receipt and acknowledgment by Agent of
such fully executed Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent,
sell to one or more commercial banks, financial institutions, or other Persons
not Affiliates of such Lender (a "Participant") participating interests in its
-----------
Obligations, the Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents
------------------
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
-------- -------
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Or Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrower, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the
94
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral or guaranties (except to the extent expressly
provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating, (D) postpone the payment
of, or reduce the amount of, the interest or fees payable to such Participant
through such Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable by
Borrower hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrower, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrower or
Borrower's business, so long as such potential assignee or participant has
previously agreed in writing to keep such documents and information confidential
pursuant to Section 16.17 as if it were a Lender hereunder.
-------------
(g) Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 Successors. This Agreement shall bind and inure to the benefit of the
----------
respective successors and assigns of each of the parties; provided, however,
-------- -------
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent
95
to assignment by the Lenders shall release Borrower from its Obligations. A
Lender may assign this Agreement and the other Loan Documents and its rights and
duties hereunder and thereunder pursuant to Section 14.1 hereof and, except as
------------
expressly required pursuant to Section 14.1 hereof, no consent or approval by
------------
Borrower is required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
-------- -------
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrower and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to take
any action hereunder,
(e) amend this Section or any provision of the Agreement providing
for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
-------------
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release Borrower or Holdco from any obligation for the payment of
money, or
(j) change the definition of Borrowing Base or the definitions of
Eligible Accounts, Eligible Inventory, Maximum Revolves Amount, Term Loan
Amount, or change Section 2.1(b), or
--------------
96
(k) amend any of the provisions of Section 16.
----------
and, provided further, however, that no amendment, waiver or consent shall,
-------- ------- -------
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrower, shall not require consent by or the agreement of Borrower.
15.2 Replacement of Holdout Lender.
-----------------------------
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
------------
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
-------------------------------
exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the
97
extent specifically stated. No waiver by Agent or any Lender on any occasion
shall affect or diminish Agent's and each Lender's rights thereafter to require
strict performance by Borrower of any provision of this Agreement. Agent's and
each Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby designates
--------------------------------------
and appoints Foothill as its representative under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
----------
provisions of this Section 16 (except Section 16.11 and Section 16.17(d)) are
---------- ------------- ----------------
solely for the benefit of Agent, and the Lenders, and Borrower shall have no
rights as a third party beneficiary of any of the provisions contained herein.
Any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent; it being expressly understood and agreed that the
use of the word "Agent" is for convenience only, that Foothill is merely the
representative of the Lenders, and only has the contractual duties set forth
herein. Except as expressly otherwise provided in this Agreement, Agent shall
have and may use its sole discretion with respect to exercising or refraining
from exercising any discretionary rights or taking or refraining from taking any
actions that Agent expressly is entitled to take or assert under or pursuant to
this Agreement and the other Loan Documents. Without limiting the generality of
the foregoing, or of any other provision of the Loan Documents that provides
rights or powers to Agent, Lenders agree that Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect: (a)
maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Obligations, the Collateral, the
Collections, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (C) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrower, the
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Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under this
--------------------
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrower or the books or
records or properties of any of Borrower's Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
-----------------
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the
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Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed to
-------------------------------------
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
------------
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
--------- -------- -------
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the Agent-
---------------
Related Persons has made any representation or warranty to it, and that no act
by Agent hereinafter taken, including any review of the affairs of Borrower and
its Subsidiaries or Affiliates, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrower and any other Person (other than the Lender Group) party to a Loan
Document, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrower. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information is it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
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16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
-----------------------------------
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrower is obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrower and without limiting the obligation of Borrower to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
-------- -------
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make
----------------------------
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrower or its Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall
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not be under any obligation to provide such information to them. The terms
"Lender" and "Lenders" include Foothill in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
---------------
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
----------
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above. The successor Agent shall be an Eligible
Transferee.
16.10 Lender in Individual Capacity. Any Lender and its respective
-----------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of Agent.
16.11 Withholding Taxes.
-----------------
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(a) If any Lender is not a United States Person within the meaning of
Section 7701(a)(30) of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrower, to deliver to Agent and
Borrower:
(i) if such Lender claims an exemption from withholding tax pursuant
to the portfolio debt exception set forth in Section 871(h) and 881(c) of
the IRC, (a) a statement of the Lender, signed under penalty of perjury,
that it is not (I) a "bank" as described in Section 881(c)(3)(A) of the
IRC, (II) a 10% shareholder of the Borrower (within the meaning of Section
881(c)(3)(B) of the IRC), or (III) a controlled foreign corporation
described in Section 881(c)(3)(C) of the IRC, and (B) a properly completed
IRS Form W-8BEN (or, if appropriate, an IRS Form W-8 IMY, together with all
appropriate associated withholding certificates, documentary evidence and
withholding statements), before the first payment of any interest under
this Agreement and at any other time reasonably requested by Agent or
Borrower;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Form W-8BEN (or if appropriate, an IRS Form W-8 IMY, together with all
appropriate associated withholding certificates, documentary evidence and
withholding statements), before the first payment of any interest under
this Agreement and at any other time reasonably requested by Agent or
Borrower;
(iii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, a properly
completed and executed copy of IRS Form W-8ECI before the first payment of
any interest is due under this Agreement and at any other time reasonably
requested by Agent or Borrower;
(iv) such other form or forms as may be required under the IRC or
other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form W-8BEN and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of Borrower to such Lender, such Lender agrees to notify Agent
of the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrower to such Lender. To the
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extent of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN
as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable withholding
tax, Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (a) of
this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to
notify Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(e) All payments made by Borrower hereunder or under any note will be made
without setoff, counterclaim, or other defense except as required by applicable
law other than for Taxes (as defined below). All such payments will be made free
and clear of, and without deduction or withholding for, any present or future
taxes, levies, imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction (other than the United
States) or by any political subdivision or taxing authority thereof or therein
(other than of the United States) with respect to such payments (but excluding,
any tax imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein (i) measured by or based on the net income or net
profits of a Lender, or (ii) to the extent that such tax results from a change
in the circumstances of the Lender, including a change in the residence, place
of organization, or principal place of business of the Lender, or a change in
the branch or lending office of the Lender participating in the transactions set
forth herein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes"). If any
Taxes are so levied or imposed, Borrower agrees to pay the full amount of such
Taxes (less, to the extent readily ascertainable by such Lender, the full amount
of any benefit such Lender realizes as a result of the levy of such Taxes,
including any tax credit with respect to such Taxes) and such additional amounts
as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including ny amount paid pursuant to this Section
-------
16.11(e) after withholding or deduction for or on account of any Taxes, will
--------
not be less than
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the amount provided for herein; provided, however, that Borrower shall not be
-------- -------
required to increase any such amounts payable to Agent or any Lender (i) that is
not organized under the laws of the United States, if such Person fails to
comply with the other requirements of this Section 16.11, or (ii) if the
-------------
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence. Borrower will furnish to Agent as
promptly as possible after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Borrower.
16.12 Collateral Matters.
------------------
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrower of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
-----------
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which Borrower owned no interest at the time the security interest was
granted or at any time thereafter, or (iv) constituting property leased to
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not
execute and deliver a release of any Lien on any Collateral without the prior
written authorization of (y) if the release is of all or substantially all of
the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Borrower at any time, the Lenders will confirm in writing
Agent's authority to release any such Liens on particular types or items of
Collateral pursuant to this Section 16.12; provided, however, that (1) Agent
------------- -------- -------
shall not be required to execute any document necessary to evidence such release
on terms that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrower or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the
105
Lenders and that Agent shall have no other duty or liability whatsoever to any
Lender as to any of the foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
-------------------------------------------------------
(a) Each of the Lenders agrees that it shall not, without the express
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the request of Agent, set off against the Obligations, any amounts
owing by such Lender to Borrower or any deposit accounts of Borrower now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take or
cause to be taken any action, including, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral the purpose of which is, or could
be, to give such Lender any preference or priority against the other Lenders
with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender's ratable portion of all such distributions
by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as its
---------------------
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and, promptly
upon Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by Agent to
--------------------------------
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by
106
written notice to Agent. Concurrently with each such payment, Agent shall
identify whether such payment (or any portion thereof) represents principal,
premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member
----------------------------------------------------
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
---------------------------------------------------------------------
Lenders; Other Reports and Information. By becoming a party to this Agreement,
--------------------------------------
each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
------ -------
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon the Books, as well as on representations of
Borrower's personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrower that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
--------
however, that, unless prohibited by applicable law, statute, regulation, or
-------
court order, such Lender shall notify Borrower of any request by any court,
governmental or administrative agency, or pursuant to any subpoena or other
legal process for disclosure of
107
any such non-public material information concurrent with, or where practicable,
prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrower, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrower; and (ii) to pay and protect, and indemnify, defend and hold Agent, and
any such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other amounts (including,
attorneys fees and costs) incurred by Agent and any such other Lender preparing
a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 Several Obligations: No Liability. Notwithstanding that certain of
---------------------------------
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
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have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to Borrower or
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any other Person for any failure by any other Lender to fulfill its obligations
to make credit available hereunder, nor to advance for it or on its behalf in
connection with its Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.
16.19 Legal Representation of Agent. In connection with the negotiation,
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drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Paul, Hastings,
Xxxxxxxx & Xxxxxx LLP ("Xxxx Xxxxxxxx") only has represented and only shall
represent Foothill in its capacity as Agent and as a Lender. Each other Lender
hereby acknowledges that Xxxx Xxxxxxxx does not represent it in connection with
any such matters.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed effective
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when executed by Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein for
----------------
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall be
--------------------------
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a writing
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signed by Agent (on behalf of the requisite Lenders) and Borrower.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed
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in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
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counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or payment
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of the Obligations by Borrower or Holdco or the transfer to the Lender Group of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other Voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
-----------------
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrower
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8 Integration. This Agreement, together with the other Loan Documents,
-----------
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 Conflicts. Except as otherwise provided in this Agreement or any of
---------
the other Loan Documents by specific reference to the applicable provisions of
this Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
ASSOCIATED HYGIENIC PRODUCTS
LLC, a Delaware limited liability company
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
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Title: President
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FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as
a Lender
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
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Title: Vice President
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
SIGNATURE PAGE
