|
SENIOR
SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION
CREDIT
AND GUARANTY AGREEMENT
DATED
AS OF JUNE 6, 2008
BETWEEN
TORRENT
ENERGY CORPORATION
AS
BORROWER,
THE
GUARANTORS PARTY HERETO
AND
YA
GLOBAL INVESTMENTS, L.P.
AS
LENDER
|
|
AMOUNT
AND TERMS OF CREDIT
|
1
|
|
|
1.2
|
Repayment
of Term Loan
|
2
|
|
|
1.4
|
Interest
on Term Loan
|
3
|
|
|
1.6
|
Receipt
of Payments
|
4
|
|
|
1.7
|
Application
and Allocation of Payments
|
4
|
| |
1.11
|
Chief
Restructuring Officer |
6
|
|
|
1.12
|
Taxes
|
6
|
|
|
1.13
|
Super-Priority
Nature of Obligations and Lender’s Liens
|
6
|
|
|
1.14
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Payment
of Obligations
|
7
|
|
|
1.15
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No
Discharge; Survival of Claims
|
7
|
|
|
1.16
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Waiver
of Any Priming Rights
|
8
|
|
2.
|
CONDITIONS
PRECEDENT
|
8
|
|
|
2.1
|
Conditions
to the Term Loan
|
8
|
|
3.
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REPRESENTATIONS
AND WARRANTIES
|
9
|
|
|
3.1
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Corporate
Existence; Compliance with Law
|
9
|
|
|
3.2
|
Executive
Offices; Corporate or Other Names; FEIN
|
9
|
| |
3.3
|
Corporate
Power; Authorization; Enforceable Obligations
|
10
|
|
|
3.4
|
Financial
Statements
|
10
|
|
|
3.5
|
Material
Adverse Effect
|
10
|
|
|
3.6
|
Ownership
of Property; Liens
|
11
|
|
|
3.7
|
Restrictions;
No Default
|
11
|
|
|
3.8
|
Ventures,
Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness
|
11
|
|
|
3.9
|
Government
Regulation
|
11
|
|
|
3.15
|
Environmental
Matters
|
14
|
|
|
3.16
|
Insurance
Policies
|
14
|
|
|
3.17
|
Deposit
and Disbursement Accounts
|
14
|
|
|
3.18
|
Government
Contracts
|
14
|
|
|
3.19
|
Customer
and Trade Relations
|
14
|
|
|
3.20
|
Agreements
and Other Documents
|
15
|
|
|
3.21
|
Bankruptcy
Matters
|
15
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|
4.
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FINANCIAL
STATEMENTS AND INFORMATION
|
15
|
|
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4.1
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Reports
and Notices
|
16
|
|
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4.2
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Communication
with Accountants
|
16
|
|
|
4.3
|
Documents
Filed with the Bankruptcy Court or Delivered to the
U.S. Trustee or Committee
|
16
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|
5.
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AFFIRMATIVE
COVENANTS
|
16
|
|
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5.1
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Maintenance
of Existence and Conduct of Business
|
16
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|
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5.2
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Payment
of Charges and Claims
|
17
|
|
|
5.6
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Compliance
with Laws
|
18
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|
|
5.7
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Agreements;
Leases
|
18
|
|
|
5.8
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Intentionally
Omitted
|
18
|
|
|
5.9
|
Environmental
Matters
|
18
|
|
|
5.10
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Application
of Proceeds
|
19
|
|
|
5.13
|
Further
Assurances
|
19
|
|
|
5.15
|
Intellectual
Property
|
19
|
|
|
5.16
|
Schedule
of Financial Affairs
|
19
|
|
|
6.1
|
Mergers,
Subsidiaries, Etc
|
19
|
|
|
6.3
|
Affiliate
and Employee Transactions
|
20
|
|
|
6.4
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Capital
Structure and Business
|
20
|
|
|
6.5
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Guaranteed
Indebtedness
|
20
|
|
|
6.9
|
[Intentionally
Omitted]
|
21
|
|
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6.10
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Restricted
Payments; Use of Proceeds
|
21
|
|
|
6.11
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Hazardous
Materials
|
21
|
|
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6.13
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Cancellation
of Indebtedness
|
22
|
|
|
6.15
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Margin
Regulations
|
22
|
|
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6.16
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Limitation
on Negative Pledge Clauses
|
22
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|
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6.17
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Material
Contracts
|
22
|
|
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6.20
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Repayment
of Indebtedness
|
22
|
|
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6.21
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Chapter
11 Claims
|
22
|
|
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7.2
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Survival
of Obligations
|
23
|
|
8.
|
EVENTS
OF DEFAULT; RIGHTS AND REMEDIES
|
23
|
|
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8.3
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Waivers
by Borrower
|
27
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|
9.
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SUCCESSORS
AND ASSIGNS
|
28
|
|
|
9.1
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Successors
and Assigns
|
28
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|
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9.2
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Participations;
Assignments
|
28
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|
|
10.1
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Complete
Agreement; Modification of Agreement
|
29
|
|
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10.2
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Fees
and Expenses
|
29
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|
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10.6
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Conflict
of Terms
|
31
|
|
|
10.8
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Authorized
Signature
|
31
|
|
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10.9
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Notices
|
31
|
| |
10.10
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Section
Titles
|
32
|
| |
10.11
|
Counterparts |
32
|
| |
10.12
|
Time
of the Essence |
33
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| |
10.13
|
GOVERNING
LAW |
33
|
| |
10.14
|
WAIVER
OF JURY TRIAL |
33
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| |
10.15
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Publicity |
34
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| |
10.16
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Dating |
34
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| |
10.17
|
Parties
Including Trustees; Bankruptcy Court Proceedings |
34
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| |
10.18
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Right
of First Refusal |
34
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|
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11.1
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Guaranty
of the Obligations
|
35
|
|
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11.2
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Payment
by Guarantors
|
35
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|
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11.3
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Liability
of Guarantors Absolute
|
35
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|
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11.4
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Waivers
by Guarantors
|
37
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|
|
11.5
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Guarantors’
Rights of Subrogation, Contribution, etc
|
37
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|
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11.6
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Subordination
of Other Obligations
|
38
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|
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11.7
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Continuing
Guaranty
|
38
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|
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11.8
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Authority
of Guarantors or Borrower
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38
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|
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11.9
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Financial
Condition of Borrower
|
38
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INDEX OF
ANNEXES, SCHEDULES AND EXHIBITS
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Annex
A
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-
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Definitions;
Rules of Construction
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|
Annex
B
|
-
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Financial
Statements and Notices
|
| |
|
|
| |
|
|
|
Schedule
1.3
|
-
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Use
of Proceeds
|
|
Schedule
2.1(a)
|
-
|
Closing
Agenda
|
|
Schedule
3.2
|
-
|
Executive
Offices; Principal Places of Business; Locations of
Collateral; Trade Names
|
|
Schedule
3.5
|
-
|
Liabilities
|
|
Schedule
3.6
|
-
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Real
Estate and Leases
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|
Schedule
3.8
|
-
|
Ventures,
Subsidiaries and Affiliates; Outstanding Stock
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|
Schedule
3.10
|
-
|
Tax
Matters
|
|
Schedule
3.11
|
-
|
ERISA
Plans, etc.
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|
Schedule
3.12
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-
|
Litigation
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|
Schedule
3.13
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|
Brokers
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|
Schedule
3.15
|
-
|
Environmental
Matters
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|
Schedule
3.17
|
-
|
Disbursement
and Deposit Accounts
|
|
Schedule
3.18
|
-
|
Government
Contracts
|
|
Schedule
3.19
|
-
|
Customer
& Trade Relations
|
|
Schedule
3.20
|
-
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Certain
Contracts
|
|
Schedule
6.2
|
-
|
Indebtedness
|
|
Schedule
6.3
|
-
|
Loans
to and Transactions with Employees
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|
Schedule
6.6
|
-
|
Liens
|
|
Schedule
6.11
|
-
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Hazardous
Materials
|
|
Schedule
6.19
|
|
Leases
|
|
Schedule
10.8
|
-
|
Authorized
Signatures
|
|
Exhibit
A
|
-
|
Form
of Term Loan Note
|
SENIOR
SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AND
GUARANTY AGREEMENT, dated as of June 6, 2008 (this “
Agreement
”), between TORRENT ENERGY CORPORATION, a Colorado
corporation (“ Borrower
”), as borrower, the subsidiaries of the Borrower party
hereto, as guarantors (each, a “ Guarantor
” and collectively, the “ Guarantors
”) and YA GLOBAL INVESTMENTS, L.P., a Cayman Islands
exempt limited partnership (together with its successors,
assigns and transferees, the “ Lender
”), as lender. Capitalized terms used herein
are defined in Annex A or in the text hereof.
R E C I T A L S
A. On
June 2, 2008 (the “ Petition
Date ”), Borrower commenced Chapter 11 Case No.
08-32638 (the “ Borrower’s
Case ”) by filing a voluntary petition for
reorganization under Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. 101 et seq . (the
“ Bankruptcy
Code ”), with the United States Bankruptcy Court
for the District of Oregon (the “ Bankruptcy
Court ”). Each Guarantor also
commenced a case under Chapter 11 of the Bankruptcy Code (such
cases, together with the Borrower’s Case, the “
Chapter 11
Cases ”) in the Bankruptcy Court on the Petition
Date. The Borrower and the Guarantors continue to
operate their businesses and manage their properties as
debtors and a debtors-in-possession pursuant to Sections
1107(a) and 1108 of the Bankruptcy Code;
B. Borrower
has requested that Lender provide a credit facility that is
senior secured, super-priority as to Borrower of Four Million
Five Hundred Thousand Dollars ($4,500,000.00) to fund certain
of the working capital requirements of Borrower;
C. Lender
is willing to provide a credit facility to Borrower of such
amount upon the terms and conditions set forth
herein;
D. Borrower
and the Guarantors have agreed to secure all of their
obligations under the Loan Documents by, among other things,
granting Lender a first-lien security interest in and lien
upon substantially all of their existing and after-acquired
personal and real property; and
E. Unless
otherwise indicated, all references in this Agreement to
sections, subsections, schedules, exhibits, and attachments
shall refer to the corresponding sections, subsections,
schedules, exhibits, and attachments of or to this
Agreement. All schedules, annexes, exhibits and
attachments hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together,
shall constitute but a single agreement. Unless
otherwise expressly set forth herein, or in a written
amendment referring to such schedules and annexes, all
schedules and annexes referred to herein shall mean the
schedules and annexes as in effect as of the Closing
Date. These Recitals shall be construed as part of
this Agreement.
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as
follows:
1.
AMOUNT AND TERMS OF CREDIT
1.1
Term
Loan.
(a)
Upon
and subject to the terms and conditions hereof, the Lender agrees
to make Advances to the Borrower under a loan (the “
Term
Loan ”) in an aggregate principal amount of Four
Million Five Hundred Thousand Dollars
($4,500,000). Advances shall be made at the discretion
of Lender, pursuant to drawdown requests in accordance with the
Budget, as agreed to between the Borrower and Lender, from the
Closing Date until the Termination Date, for the use of Borrower
according to and pursuant to the terms of this
Agreement. Until Lender declares an Event of Default,
Lender agrees to fund any expense of the Borrower which has been
both approved in the Budget and actually incurred by the
Borrower.
(b)
Each
Advance under the Term Loan may be, upon request of Lender,
evidenced by a promissory note issued by Borrower in favor of
Lender substantially in the form of Exhibit A ,
dated the Closing Date or the date of the relevant Advance, as
applicable, payable to Lender in the principal amount equal to the
amount of such Advance and otherwise duly completed.
1.2
Repayment of Term Loan .
(a)
Borrower
hereby promises to pay to Lender the entire outstanding principal
amount of the Term Loan and all other outstanding Obligations, and
the Term Loan and all other outstanding Obligations shall mature,
on the Maturity Date.
(b)
Subject
to Section 1.5(c)
, Borrower shall have the right at any time upon ten (10)
days’ prior written notice by Borrower to Lender to
voluntarily prepay the Term Loan, including all accrued and unpaid
interest (in whole but not in part). Upon the effective
date of such termination, notwithstanding anything to the contrary
contained herein or in any Loan Document, the entire outstanding
balance of the Term Loan and all other Obligations shall be
immediately due and payable. On the date of such
termination, Borrower shall pay to Lender in immediately available
funds all of the Obligations, including any accrued and unpaid
interest thereon.
(c)
Subject
to Section 1.5(c)
, the Borrower shall prepay the Term Loan in an amount equal to
100% of the net proceeds from any sale of assets outside the
ordinary course of business and 100% of any tax refunds or of any
insurance proceeds, provided that the Borrower may retain insurance
proceeds in an amount not to exceed $250,000 to repair or replace
damaged assets.
1.3
Use of Proceeds . Borrower shall utilize the
Collateral and the proceeds of the Term Loan which are incurred on
the Closing Date (net of any amounts used on the Closing Date to
pay Fees) as follows: (i) for working capital and
general corporate purposes including certain fees and expenses of
professionals retained by Borrower, subject to the Final Order, but
excluding in any event the making of any Restricted Payment not
specifically permitted by Section 6.11
and solely for the purposes specified in the Budget, (ii) repayment
of the May 15, 2008 Note issued by Borrower to Lender, (iii) an
amount not to exceed $600,000 to pay certain amounts owed to third
parties by Methane Energy Corp., an amount not to exceed $200,000
for unpaid wages and salaries and (iv) certain other purposes
approved by Lender. Other than as may be expressly
permitted in the Final Order, Borrower shall not be permitted to
use the proceeds of the Term Loan or the Collateral: (A) to finance
in any way any action, suit,
arbitration,
proceeding, application, motion or other litigation of any type
adverse to the interests of Lender or its rights and remedies under
this Agreement, the other Loan Documents or the Final Order; or (B)
to make any payment in settlement of any claim, action or
proceeding before any court, arbitrator or other governmental body
without the prior written consent of Lender.
Schedule
1.3 contains a description of Borrower’s sources and
uses of funds as of the Closing Date, including the Term Loan, and
a funds flow memorandum detailing how funds from each source are to
be transferred particular uses.
1.4
Interest on Term Loan .
(a)
Interest
shall accrue on the outstanding principal balance of the Term Loan
in arrears for the preceding calendar month as of the Closing Date
and the first accrual determination date shall be July 1, 2008, and
interest shall be payable (i) on the Maturity Date, and (ii) if any
interest accrues or remains payable after the Maturity Date, upon
demand. If any interest or other payment under this
Agreement becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such
extension.
(b)
Borrower
shall be obligated to pay interest to Lender on the outstanding
balance of the Term Loan at a rate equal to twelve percent (12.0%)
per annum. All computations of interest shall be made on
the basis of a three hundred and sixty (360) day year, in each case
for the actual number of days occurring in the period for which
such interest is payable.
(c)
Upon
the occurrence and during the continuance of any Event of Default,
the interest rate applicable to all of the Obligations
automatically shall be the Default Rate.
(d)
Notwithstanding
anything to the contrary set forth in this Section 1.4 ,
if, at any time prior to the Termination Date, the rate of interest
payable to Lender hereunder exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the
“ Maximum Lawful
Rate ”), then in such event and so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable
hereunder to Lender shall be equal to the Maximum Lawful Rate;
provided ,
however , that
if at any time thereafter the rate of interest payable hereunder is
less than the Maximum Lawful Rate, Borrower shall continue to pay
interest hereunder to Lender at the Maximum Lawful Rate until such
time as the total interest received by Lender from the making of
the Term Loan hereunder is equal to the total interest which Lender
would have received had the interest rate payable hereunder been
(but for the operation of this paragraph) the interest rate payable
since the Closing Date as otherwise provided in this
Agreement. Thereafter, the interest rate payable to
Lender hereunder shall be the rate of interest provided in
Sections
1.4 (b) or (c) ,
as applicable, of this Agreement, unless and until the rate of
interest again exceeds the Maximum Lawful Rate, in which event this
paragraph shall again apply. In no event shall the total
interest received by Lender pursuant to the terms hereof exceed the
amount which Lender could lawfully have received had the interest
due hereunder been calculated for the full term hereof at the
Maximum Lawful Rate. In the event the Maximum Lawful
Rate is calculated pursuant to this paragraph, such interest shall
be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation
is made. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 1.4(d)
, shall make a final determination that Lender has received
interest hereunder or under any of the Loan Documents in excess of
the Maximum Lawful Rate, Lender shall, to the extent permitted by
Applicable Law, promptly apply such excess first to any lawful
interest due and not yet paid hereunder, then to the outstanding
principal of the Obligations, then to Fees and any other unpaid
Obligations and thereafter shall promptly refund any excess to
Borrower or as a court of competent jurisdiction may otherwise
order.
1.5
Fees .
(a)
Monitoring Fee . Borrower agrees to pay to Lender
a monitoring fee (the “ Monitoring Fee
”) equal to $22,500 per annum, payable monthly in equal
installments of $1,875 per month.
(b)
Commitment Fee . On the Closing Date, Borrower
agrees to pay to Lender a one-time commitment fee equal to two
percent (2.0%) of the Term Loan.
(c)
Prepayment
Fee . Upon any prepayment of the Term Loan prior to
the one year anniversary of this Agreement, the Borrower
shall pay to the Lender together with such prepayment an
amount equal to one percent (1%) of such
prepayment.
1.6
Receipt of Payments . Borrower shall make each
payment under this Agreement not later than 2:00 p.m. (Eastern
time) on the day when due in Dollars in immediately available funds
to Lender’s account.
1.7
Application and Allocation of Payments . Borrower
irrevocably waives the right to direct the application of any and
all payments at any time or times hereafter received from or on
behalf of Borrower. Notwithstanding the foregoing, in
the absence of a specific determination by Lender with respect
thereto, or if an Event of Default shall have occurred and be
continuing, such payments shall be applied in the following
order: (a) then due and payable Fees and expenses of
Lender; (b) then due and payable interest payments on the Term
Loan; (c) Obligations to Lender other than Fees, expenses and
interest and principal payments; (d) principal of the Term Loan;
and (e) to the extent there are no other Obligations then due and
payable, to Borrower or its successors or assigns or as a court of
competent jurisdiction may direct.
1.8
Accounting . Lender shall maintain a loan account
(the “ Loan Account
”) on its books to record: all payments made by
Borrower, and all other debits and credits as provided in this
Agreement with respect to the Term Loan or any other
Obligations. All entries in the Loan Account shall be
made in accordance with Lender’s customary accounting
practices as in effect from time to time. The balance in
the Loan Account, as recorded on Lender’s most recent
printout or other written statement and provided to Borrower,
shall, absent manifest error and following a thirty (30) day period
during which the Borrower may object in writing to such statement,
be presumptive evidence of the amounts due and owing to Lender by
Borrower; provided ,
that any failure to so record or any error in so recording shall
not limit or otherwise affect Borrower’s duty to pay the
Obligations.
1.9
Indemnity .
(a)
Borrower
and each Guarantor shall indemnify and hold harmless Lender and its
Affiliates, and its officers, directors, employees, attorneys and
representatives (each, an “ Indemnified
Person ”), from and against any and all suits,
actions, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys’ fees and
disbursements and other costs of investigations or defense,
including those incurred upon any appeal) (each, a “
Claim ”)
which may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and any other Loan
Document and the administration of such credit, and in connection
with or arising out of the transactions contemplated hereunder and
thereunder, and any actions or failures to act in connection
therewith, including any and all Environmental Liabilities and
legal costs and expenses arising out of or incurred in connection
with disputes between or among any parties to any of the Loan
Documents (collectively, “ Indemnified
Liabilities ”); provided ,
however , that
Borrower and Each Guarantor shall not be liable for any
indemnification to an Indemnified Person to the extent that any
such suit, action, proceeding, claim, damage, loss, liability or
expense results solely from that Indemnified Person’s gross
negligence or willful misconduct as finally determined by a court
of competent jurisdiction. NO INDEMNIFIED PERSON SHALL
BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT,
ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON
OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED,
SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF
ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
(b)
Borrower
hereby acknowledges and agrees that Lender (as of the date hereof)
is not now nor has ever been in control of any of the Subject
Property or the affairs or operations of Borrower.
1.10
Access .
(a)
Borrower
and each Guarantor shall: (i) provide access during
normal business hours to Lender and any of its officers, employees
and agents as frequently as Lender determines to be appropriate
upon reasonable advance notice to Borrower (unless a Default shall
have occurred and be continuing, in which event no such notice
shall be required and such access shall be at any and all times) to
the properties and facilities of Borrower and Guarantors; (ii)
permit Lender and any of its officers, employees and agents, as
frequently as Lender determines to be appropriate, to inspect,
audit and make extracts from all of Borrower and Guarantor’s
records, files and books of account upon reasonable advance notice
to Borrower (unless a Default shall have occurred and be
continuing, in which event no such notice shall be required and
such access shall be at any and all times); and (iii) permit Lender
and any of its officers, employees and agents, as frequently as
Lender determines to be appropriate, upon reasonable advance notice
to Borrower (unless a Default shall have occurred and be
continuing, in which event no such notice shall be required and
such access shall be at any and all times) to conduct audits and to
inspect, review and evaluate the Collateral, in each case subject
to any confidentiality agreements binding Borrower, and Borrower
agrees to render to Lender at Borrower’s cost and expense
such clerical and other assistance as may be reasonably requested
with regard thereto.
(b)
Borrower
shall make available to Lender and its counsel, as quickly as
practicable under the circumstances, originals or copies of all
books, records, board minutes, contracts, insurance policies,
environmental audits, business plans, files, financial statements
(actual and pro forma), filings with federal, state and local
regulatory agencies, other instruments and documents in the custody
or control or otherwise belonging to or property of Borrower and
key personnel for interviews which Lender may reasonably
request. Borrower shall deliver any document or
instrument reasonably necessary for Lender, as it may from time to
time request, to obtain records from any service bureau or other
Person which maintains records for Borrower, and shall maintain
duplicate records or supporting documentation on media, including
computer tapes and discs owned by Borrower. Borrower
shall make available to Lender, upon its reasonable request,
information and records prepared by its certified public
accountants and its banking and other financial
institutions.
1.11
Chief Restructuring Officer . The Borrower shall
hire C. Scott Wilson or another employee of the Borrower,
satisfactory to Lender, at a salary of Five Thousand Dollars
($5000) per month, as chief restructuring officer (“
Chief
Restructuring Officer ”) to, among other things,
assure to Lender’s satisfaction that the Borrower has
complied with all budgets and payments to be made hereunder and
administer their estates so as to maintain such
compliance. Any cost for such Chief Restructuring
Officer shall be borne by the Borrower but included in
Fees. In the event that such individual is not an
employee of the Borrower, such individual shall become an employee
of the Borrower prior to serving as Chief Restructuring Officer.
Each individual serving as Chief Restructuring Officer shall be
satisfactory to Lender at all times, in Lender’s sole
discretion.
1.12
Taxes .
(a)
Any
and all payments by or on behalf of Borrower hereunder or under the
Term Loan Note or other Loan Document shall be made, in accordance
with this Section 1.11 ,
free and clear of and without deduction for any and all present or
future Taxes. If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or
under the Term Loan Note or other Loan Document, (i) the sum
payable shall be increased as shall be necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 1.11
), Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance
with Applicable Law.
(b)
In
addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with
respect to, this Agreement (hereinafter referred to as “
Other
Taxes ”).
(c)
Borrower
shall indemnify and, within ten (10) days of demand therefor, pay
Lender for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 1.11 )
paid by Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally
asserted.
(d)
Within
thirty (30) days after the date of any such payment of Taxes or
Other Taxes described in Sections 1.11(a), (b)
or (c) , Borrower shall furnish to Lender the original or a
certified copy of a receipt evidencing payment thereof or other
evidence of payment satisfactory to Lender.
1.13
Super-Priority Nature of Obligations and Lender’s
Liens .
(a)
The
priority of Lender’s Liens on the Collateral shall be as set
forth in the Final Order. Subject to Final Order, no
filings, recordings or other actions shall be necessary to perfect
and maintain the perfection and status of such Liens.
(b)
All
Obligations of Borrower and the Guarantors shall constitute
administrative expenses of such party in the Chapter 11 Cases, with
administrative priority and senior-secured status under Sections
364(c) and 364(d) of the Bankruptcy Code. Subject only
to the Carve-Out Amount, such administrative claim shall have
priority over all other costs and expenses of the kinds specified
in, or ordered pursuant to, Sections 105, 326, 330, 331, 503(b),
506(c), 507(a), 507(b), 726 or any other provision of the
Bankruptcy Code and shall at all times be senior to the rights of
Borrower and the Guarantors, Borrower’ and Guarantors
estates, and any successor trustee or estate representative in the
Chapter 11 Cases or any subsequent proceeding or case under the
Bankruptcy Code. The liens and security interests
granted to Lender in and against the Collateral, and the priorities
accorded to the Obligations, shall have the priority and
senior-secured status afforded by Sections 364(c) and 364(d)(1) of
the Bankruptcy Code (all as more fully set forth in Final Order)
senior to all claims and interests other than the Carve-Out
Expenses up to the Carve-Out Amount.
(c)
Lender’s
Liens and its administrative claim under Sections 364(c)(1) and
364(d) of the Bankruptcy Code afforded the Obligations shall also
have priority over any claims arising under Section 506(c) of the
Bankruptcy Code, subject and subordinate only to
the Carve-Out Expenses subject to the Carve-Out Amount,
subject to the right of the Lender and any other party-in-interest
to object to the award of such fees and expenses in accordance with
any applicable Bankruptcy Rule or, if applicable, order of the
Bankruptcy Court relating to the approval of fees and expenses and
objections thereto; provided ,
however , that
Carve-Out Expenses shall not include, and the Carve-Out Amount
shall not be available to pay, any fees or disbursements (A)
arising after the conversion of a Chapter 11 Case to a case under
Chapter 7 of the Bankruptcy Code or (B) related to the commencement
or prosecution of any claims or proceedings against Lender or its
claims or security interests in, or Liens upon, the Collateral
whether under this Agreement or any other Loan
Document. In the event of any inconsistency in the
definition of “ Carve-Out
Amount ” between the provisions of this Agreement and
the Final Order, the provisions of the Final Order shall
govern.
(d)
Except
as set forth herein or in the Final Order, no other claim having a
priority superior or pari passu to that granted to Lender by the
Final Order shall be granted or approved while any Obligations
under this Agreement remain outstanding.
1.14
Payment of Obligations . Upon the maturity
(whether by acceleration or otherwise) of any of the Obligations
under this Agreement or any of the other Loan Documents, Lender
shall be entitled to immediate payment of such Obligations without
further application to, or order of, the Bankruptcy
Court.
1.15
No Discharge; Survival of Claims . Borrower and
the Guarantors agree, to the extent applicable, that (a) the
Obligations hereunder shall not be discharged by the entry of an
order confirming a plan of reorganization in the Chapter 11 Cases
(and Borrower and the Guarantors, pursuant to Section 1141(d)(4) of
the Bankruptcy Code, hereby waive any such discharge) and (b) any
super-priority administrative claim granted to Lender pursuant to
any order described in Section 1.12
and the Liens granted to Lender pursuant to any order described in
Section
1.12 shall not be affected in any manner by the entry of an
order confirming a plan of reorganization in the Chapter 11
Cases.
1.16
Waiver of Any Priming Rights . Upon the Closing
Date, and on behalf of itself and its estate, and for so long as
any Obligation shall be outstanding, Borrower and each Guarantors
hereby irrevocably waives any right, pursuant to Sections 364(c) or
364(d) of the Bankruptcy Code or otherwise, to grant any Lien of
equal or greater priority than the Lien securing the Obligations,
or to approve a claim of equal or greater priority than the
Obligations.
2.
CONDITIONS PRECEDENT
2.1
Conditions to the Term Loan . Notwithstanding any
other provision of this Agreement and without affecting in any
manner the rights of Lender hereunder, Borrower shall have no
rights under this Agreement (but shall have all applicable
obligations hereunder), and Lender shall not be obligated to make
any Advances, or to take, fulfill, or perform any other action
hereunder, until the following conditions have been fulfilled to
the satisfaction of Lender:
(a)
Lender
shall have received duly executed counterparts of the Agreement and
the other Loan Documents from the Borrower and the Guarantors, and
such documents, instruments, certificates, and agreements as Lender
shall reasonably request in connection with the transactions
contemplated by this Agreement, including all documents,
instruments, agreements and other materials listed in Schedule
2.1(a) , each in form and substance satisfactory to
Lender;
(b)
Lender
shall have received evidence satisfactory to it that Borrower and
the Guarantors have obtained consents and acknowledgments of all
Persons whose consents and acknowledgments may be required,
including, but not limited to, all requisite Governmental
Authorities, to the terms and to the execution and delivery, of
this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby. Lender
shall have received resolutions of the Board of Directors or other
governing body of Borrower and each Guarantor approving and
authorizing, among other things, the execution, delivery and
performance of this Agreement and the other Loan Documents to which
it is a party or by which it or its assets may be bound as of the
Closing Date, certified as of the Closing Date by the Borrower as
being in full force and effect without modification or
amendment. Lender shall have received signature and
incumbency certificates of the officers of such Person executing
the Loan Documents;
(c)
On
the date of any Advance, Lender shall be satisfied in its sole
discretion that Lender has a valid and continuing first priority
perfected security interest in all assets of the Borrower and the
Guarantors, including all of Borrower’s and its
Subsidiaries’ rights under and to the Subject
Property;
(d)
Lender
shall have received certificates of property and liability
insurance of Borrower and the Guarantors showing loss payable or
additional insured clauses or endorsements, or both, as
appropriate, in favor of Lender, in form and substance satisfactory
to Lender;
(e)
No
action, proceeding, investigation, regulation or legislation shall
have been instituted or threatened before any Governmental
Authority as of the date of any Advance to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related
to or arises out of this Agreement or any of the other Loan
Documents or the consummation of the transactions contemplated
hereby and thereby and which, in Lender’s sole judgment,
would make it inadvisable to consummate the transactions
contemplated by this Agreement or any of the other Loan
Documents;
(f)
Other
than the Chapter 11 Cases and as is disclosed in Schedule
2.1(e) , none of the following shall have occurred and be
continuing as of the date of any Advance: (i) a Material
Adverse Effect; (ii) a material increase in liabilities, liquidated
or contingent (net of any offsetting increase in assets), or a
material decrease in assets of Borrower and the Guarantors; or
(iii) any litigation or other proceeding which could reasonably be
expected to be successful is pending or threatened which, if
successful, could, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse
Effect;
(g)
Lender
shall have received all requested financial information and
financial statements requested of Borrower, certified by the
Borrower, and in form and substance satisfactory to Lender;
and
(h)
Lender
shall have received the Budget.
3.
REPRESENTATIONS AND WARRANTIES
To
induce Lender to enter into this Agreement and make the Term
Loan, Borrower and each Guarantor makes the following
representations and warranties to Lender on the date of each
Advance (and each such representation and warranty shall
survive the execution and delivery of this Agreement)
that:
3.1
Corporate Existence; Compliance with Law . Each
of the Borrower and each Guarantor: (a) is an entity
duly organized or formed, validly existing and in good standing
under the laws of the jurisdiction of its formation and is duly
qualified to do business and is validly existing or in good
standing, as the case may be, in each other jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualification; (b) subject to the entry of the Final
Order by the Bankruptcy Court, has the requisite power and
authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it
operates under lease, and to conduct its business as now,
heretofore and proposed to be conducted; (c) has all material
licenses, permits, consents or approvals from or by, and has made
all filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (d) is in
compliance with its certificate or articles of formation and
operating agreement; and (e) is in compliance in all material
respects with all Applicable Law except to the extent that (i) such
compliance is excused by the U.S. Bankruptcy Code or by
an applicable order of the Bankruptcy Court and (ii) such
non-compliance would neither have nor could reasonably be expected
to have a Material Adverse Effect.
3.2
Executive Offices; Corporate or Other Names; FEIN
. The current locations of Borrower’s and
Guarantors’ executive offices, principal place of business,
corporate offices, all warehouses and premises within which any
Collateral is stored or located, and the locations of
Borrower’s and Guarantors’ records concerning the
Collateral are set forth in Schedule 3.2
and, except as set forth in Schedule 3.2 ,
such locations have not changed during the preceding 12
months. In addition, the federal employer identification
number of Borrower is shown on Schedule 3.2
. During the prior five (5) years, except as set forth
in Schedule 3.2 ,
neither Borrower nor any Guarantor has been known as or used any
corporate, fictitious or trade name.
3.3
Corporate Power; Authorization; Enforceable Obligations
. Upon the entry of the Final Order by the Bankruptcy
Court, the execution, delivery and performance by each of the
Borrower and each Guarantor of the Loan Documents to which it is a
party and all other instruments and documents to be delivered by it
hereunder and thereunder to the extent it is a party thereto and
the creation of all Liens provided for herein and
therein: (a) are within its organizational power; (b)
have been duly authorized by all necessary action; (c) are not in
contravention of any provision of its certificate or articles of
organization or by-laws or other organizational documents; (d) will
not violate any law or regulation, or any order or decree of any
court or governmental instrumentality; (e) will not conflict with
or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any material
indenture, mortgage, deed of trust, lease, agreement or other
instrument to which it is a party or by which it or any of its
material property is bound; (f) will not result in the creation or
imposition of any Lien upon any of the property of Borrower or any
Guarantor other than those in favor of Lender, all pursuant to the
Loan Documents; and (g) do not require the consent or approval of
any Governmental Authority or any other Person, all of which will
have been duly obtained, made or complied with prior to the Closing
Date and which are in full force and effect. At or prior
to the Closing Date, each of the Loan Documents to which each of
the Borrower and each Guarantor is a party shall have been duly
executed and delivered by it and shall then, assuming due execution
and delivery by the other parties thereto, subject to the entry of
the Final Order by the Bankruptcy Court, constitute a legal, valid
and binding obligation of it to the extent it is a party thereto,
enforceable against it in accordance with its terms.
3.4
Financial Statements . Borrower has delivered to
Lender audited financial statements of Borrower for the fiscal year
ended March 31, 2007 and unaudited financial statements for each
fiscal quarter thereafter (together, the “ Financial
Statements ”). The Financial Statements,
taken as whole, fairly present in all material respects, in
accordance with GAAP, (i) the financial condition of Borrower and
Guarantors as of the date thereof, and (ii) the results of
operations and cash flow of Borrower for the fiscal year ended
March 31, 2007 and the most recently available fiscal quarter, as
applicable.
3.5
Material Adverse Effect . Except as set forth in
Schedule
3.5 , Borrower and Guarantors have no material obligations,
contingent liabilities, or liabilities for Charges, long-term
leases or unusual forward or long-term commitments which are not
reflected in the Financial Statements. Except as
otherwise permitted hereunder or as set forth in Schedule 3.5 ,
no Restricted Payment has been made since December 31, 2007, and no
shares of Stock of Borrower have been, or are now required to be,
redeemed, retired, purchased or otherwise acquired for value by
Borrower. Other than as disclosed in the audited
financial statements of Borrower for the fiscal year ended March
31, 2007, since such date no event or events have occurred or are
continuing which, individually or in the aggregate, could
reasonably be expected to have or result in a Material Adverse
Effect, other than the commencement of the Chapter 11 Cases and any
such event or events which have been disclosed in writing to the
Lender.
3.6
Ownership of Property; Liens . Except as
described in Schedule 3.6 ,
the real estate listed in Schedule 3.6
constitutes all of the real property owned, leased or used in
Borrower’s and Guarantors’ businesses. Each
of Borrower and Guarantors has either good and marketable title or
valid leasehold interests in the properties listed on such
Schedule. Borrower and Guarantors do not own any real
property or have any real property interests other than as set
forth on Schedule 3.6
. None of the properties and assets of Borrower or a
Guarantor are subject to any Liens, except (x) Permitted
Encumbrances, (y) the Pre-Petition Liens and (z) from and after the
Closing Date, the Lien in favor of Lender pursuant to the
Collateral Documents. Except as described in
Schedule
3.6 , Borrower has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar material
agreements, bills of sale and other documents, and duly effected
all recordings, filings and other material actions necessary to
establish, protect and perfect Borrower’s and
Guarantors’ right, title and interest in and to all such real
estate and other assets or property. Except as described
in Schedule 3.6 :
(i) Neither Borrower nor any Guarantor owns, holds or is obligated
under or a party to, any option, right of first refusal or any
other contractual right to purchase, acquire, sell, assign or
dispose of any real property owned by Borrower it as set forth in
Schedule
3.6 , and (ii) no material portion of any real property
owned by it has suffered any material damage by fire or other
casualty loss which has not heretofore been completely repaired and
restored to its condition before the casualty. All
permits required to have been issued or appropriate to enable the
real property owned by Borrower or a Guarantor to be lawfully
occupied and used for all of the purposes for which they are
currently occupied and used have been lawfully issued and are, as
of the date hereof, in full force and effect.
3.7
Restrictions; No Default . No Contract, lease,
agreement, instrument or other document to which Borrower is a
party or by which it or any of its properties or assets is bound or
affected and no provision of any charter, corporate restriction,
Applicable Law or governmental regulation, individually or in the
aggregate, has had a Material Adverse Effect since December 31,
2007. Borrower and Guarantors are not in default, and to
the knowledge of Borrower and Guarantors, no third party is in
default, under or with respect to any Contract, lease, agreement,
instrument or other documents to which Borrower or a Guarantor is a
party, which default or defaults, individually or in the aggregate,
could reasonably be expected to have or result in a Material
Adverse Effect. No Default has occurred and is
continuing.
3.8
Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness . Borrower has no Subsidiaries other
than the Guarantors. Borrower and the Guarantors are not
engaged in any joint venture or partnership with another Person,
except as set forth in Schedule 3.8
. Except as set forth in Schedule 3.8 ,
there are no outstanding rights to purchase options, warrants or
similar rights or agreements pursuant to which Borrower may be
required to issue, sell or purchase any Stock or other equity
security. Schedule 3.8
lists all outstanding Stock of Borrower and the Guarantors and the
percentage of ownership and voting interests of the owners thereof
as of the Closing Date.
3.9
Government Regulation . Borrower and the
Guarantors are not (a) an “investment company” or an
“affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment
company,” as such terms are defined in the Investment Company
Act of 1940 as amended; or (b) subject to regulation under the
Federal Power Act, the Interstate Commerce Act or any other federal
or state statute that restricts or limits Borrower’s and
Guarantors’ ability to incur Indebtedness, pledge their
assets, or to perform their obligations hereunder, or under any
other Loan Document, and the making of the Term Loan by Lender, the
application of the proceeds and repayment thereof by Borrower and
the Guarantors and the consummation of the transactions
contemplated by this Agreement and the other Loan Documents, will
not violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange
Commission.
3.10
Taxes . Except as set forth in Schedule 3.10
, all federal, state, local and foreign tax returns, reports and
statements, including information returns required to be filed with
respect to Borrower and the Guarantors have been timely filed, all
such tax returns, reports and statements are correct and complete
in all material respects, and except as otherwise prohibited by the
Chapter 11 Cases, all Charges and other impositions due and payable
with respect to Borrower and the Guarantors (whether or not shown
on any such tax returns, reports and statements) have been paid
prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment
thereof. Borrower and the Guarantors have adequately
provided for in their books and records all unpaid Charges and
other impositions, being those not yet due and
payable. Proper and accurate amounts have been withheld
by Borrower and the Guarantors from their employees and other third
parties for all periods and such withholdings have been timely paid
to the respective Governmental Authorities.
Schedule
3.10 sets forth those taxable years for which any of the tax
returns of Borrower and the Guarantors are currently being audited
by the IRS or any other applicable Governmental Authority, and any
currently, pending or threatened assessments, actions, disputes or
claims with respect to taxes are listed thereon. There
are no liens on any of the assets of Borrower and the Guarantors
with respect to Taxes except for Permitted
Encumbrances. Except as described in Schedule 3.10
, Borrower and the Guarantors have not executed or filed with the
IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period
for assessment or collection of any Charges or the filing of any
tax return. None of the property owned by Borrower and
the Guarantors is property which it is required to treat as being
owned by any other Person pursuant to the provisions of IRC Section
168(f)(8) of the Internal Revenue Code of 1954, as amended, and in
effect immediately prior to the enactment of the Tax Reform Act of
1986 or is “tax-exempt use property” within the meaning
of IRC Section 168(h). Borrower and the Guarantors have
not agreed or been requested to make any adjustment under IRC
Section 481(a) by reason of a change in accounting method or
otherwise. Borrower and the Guarantors have no
obligation under any tax-sharing agreement or arrangement, or
liability for Charges or impositions for any other Person under
applicable law, as transferee or successor, or by contract, except
as described in Schedule 3.10
.
3.11
ERISA . Schedule 3.11
lists all Plans maintained or contributed to by Borrower and the
Guarantors and all Qualified Plans, Pension Plans, Retiree Welfare
Plans or Welfare Plans maintained or contributed to by any ERISA
Affiliate. Except as set forth on Schedule 3.11
, none of the Borrower, any Guarantors or any current or former
ERISA Affiliate sponsors (or has sponsored), contributes to (or has
contributed to), or is (or was) required to contribute to or has
any liability with respect to any Title IV Plan, any Plan subject
to IRC Section 412 or ERISA Section 302, or any Retiree Welfare
Plan. Except as set forth on Schedule 3.11
, none of Borrower, any Guarantor or any current or former ERISA
Affiliate contributes to (or has contributed to) or is (or was)
required to contribute to any Multiemployer Plan. IRS
determination letters regarding the qualified status under IRC
Section 401 of each Qualified Plan have been received as of the
dates listed in Schedule 3.11
. Each of the Qualified Plans has been amended to comply
with the Tax Reform Act of 1986 and to make other changes required
under the IRC or ERISA, and if such required amendments are not
subject to the determination letters described in the previous
sentence, each Qualified Plan so amended will be submitted to the
IRS for a determination letter as to the ongoing qualified status
of the Plan under the IRC within the applicable IRC Section 401(b)
remedial amendment period; and each such Plan shall be amended,
including retroactive amendments, as required during such
determination letter process to maintain the qualified status of
such Plans. To the knowledge of Borrower and the
Guarantors, the Qualified Plans as amended continue to qualify
under Section 401 of the IRC, the trusts created thereunder
continue to be exempt from tax under the provisions of IRC Section
501(a), and nothing has occurred which would cause the loss of such
qualification or tax-exempt status. Except as set forth
on Schedule 3.11
, each Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the filing of
all reports required under the IRC or ERISA which are true and
correct as of the date filed, and all required contributions and
benefits have been paid in accordance with the provisions of each
such Plan. Borrower and the Guarantors have not engaged
in a prohibited transaction, as defined in IRC Section 4975 or
Section 406 of ERISA, in connection with any Plan which would
subject any such Person (after giving effect to any exemption) to a
material tax on prohibited transactions imposed by IRC Section 4975
or any other material liability. Except as set forth in
Schedule
3.11 : (i) there are no pending, or to the
knowledge of Borrower and the Guarantors, threatened claims,
actions or lawsuits (other than claims for benefits in the normal
course), asserted or instituted against (x) any Plan or its assets,
(y) any fiduciary with respect to any Plan or (z) Borrower or the
Guarantors or any ERISA Affiliate with respect to any Plan; (ii)
Borrower and the Guarantors and each ERISA Affiliate have complied
with the notice and continuation coverage requirements of IRC
Section 4980B and the proposed or final regulations thereunder; and
(iii) no liability under any Plan has been funded, nor has such
obligation been satisfied with, the purchase of a contract from an
insurance company that is not A rated by A.M. Best and
the equivalent by each other nationally recognized rating
agency.
3.12
No Litigation . Other than the Chapter 11 Cases
and except as set forth in Schedule 3.12
as of the Closing Date, no litigation, action, suit, arbitration,
investigation or other proceeding is now pending or, to the
knowledge of Borrower and the Guarantors, threatened against it, at
law, in equity or otherwise; and no such matter (whether shown on
Schedule
3.12 as of the Closing Date or subsequently arising) (a)
challenges any such Person’s right, power, or competence to
enter into or perform any of its obligations under the Loan
Documents, or the validity or enforceability of any Loan Document
or any action taken thereunder or any Liens granted to Lender, or
(b) if determined adversely and if it could be reasonably expected
to be determined adversely, individually or in the aggregate, could
reasonably be expected to have or result in a Material Adverse
Effect. To the knowledge of Borrower and the Guarantors
other than the Chapter 11 Cases and except as set forth in
Schedule
3.12 as of the Closing Date, there does not exist a state of
facts which could reasonably be expected to give rise to any such
litigation, action, suit, claim, arbitration, investigation or
other proceeding.
3.13
Brokers . Except as set forth in Schedule 3.13
, no broker or finder, investment banker or other intermediary of
any kind acting on behalf of Borrower and the Guarantors brought
about the obtaining, making or closing of the credit extended
pursuant to this Agreement or the transactions contemplated by the
Loan Documents, and Borrower and the Guarantors have no obligation
to any Person in respect of any finder’s, brokerage
investment banking, placement or other fees or amounts (including
expenses) due in connection therewith.
3.14
Full Disclosure . No information contained in
this Agreement, the other Loan Documents, the Financial Statements
or any written statement furnished by or on behalf of Borrower and
the Guarantors pursuant to the terms of this Agreement or any other
Loan Document, which has previously been delivered to Lender,
contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained herein
or therein not misleading in light of the circumstances under which
they were made.
3.15
Environmental Matters . Except as set forth on
Schedule
3.15 and for routine operations in the ordinary course of
business in compliance with applicable permits issued by or law of
a Governmental Authority, the Subject Property is free of any
Hazardous Material and Borrower and the Guarantors have not caused
or suffered to occur any Release at, under, above or within any
Subject Property, which violated any Environmental
Law. Except as set forth on Schedule 3.15
, there are no existing or potential Environmental Liabilities for
Borrower and the Guarantors of which they have
knowledge. Borrower and the Guarantors are not involved
in operations which are reasonably likely to result in material
Environmental Liabilities on it, or any owner of any premises which
it occupies, or any Lien securing the same under any Environmental
Law. Borrower and the Guarantors have provided to Lender
copies of all existing environmental reports, reviews and audits
and all written information pertaining to actual or potential
Environmental Liabilities relating to or affecting the Subject
Property. Borrower and the
Guarantors hereby acknowledge and agree that Lender is not now, and
has not ever been, in control of any of the Subject Property or
Borrower’s and the Guarantors’ affairs, and (ii) does
not have the capacity through the provisions of this Agreement or
the other Loan Documents or otherwise to influence Borrower’s
and the Guarantors’ conduct with respect to the ownership,
operation or management of any of the Subject Property or
compliance (or not) with Environmental Laws.
3.16
Insurance Policies . Borrower’s and
Guarantors’ insurance is reasonable and standard for
Borrower’s and Guarantors’ industry and geographic
location.
3.17
Deposit and Disbursement Accounts . Schedule 3.17
lists all banks and other financial institutions at which Borrower
and the Guarantors maintain deposits or other accounts or post
office lock boxes and such Schedule correctly identifies the name,
address and telephone number of each depository, the name in which
the account is held, a description of the purpose of the account,
and the complete account number. Borrower and the
Guarantors have delivered to Lender true, correct and complete
copies of all agreements, instruments and other documents relating
to any credit card programs, arrangements or agreements to which
they are a party.
3.18
Government Contracts . Except as set forth in
Schedule
3.18 , as of the Closing Date, Borrower and the Guarantors
are not party to any contract or agreement with the federal
government and no Borrower’s or Guarantors’ Accounts
are subject to the Federal Assignment of Claims Act (31
U.S.C. Section 3727).
3.19
Customer and Trade Relations . As of the Closing
Date, except as set forth on Schedule 3.19
, there exists no actual or threatened termination or cancellation
of, or any material adverse modification or change in: (a) the
business relationship of Borrower and the Guarantors with any
customer or group of customers whose purchases during the preceding
twelve (12) months caused them to be ranked among the ten (10)
largest customers of Borrower and the Guarantors; or (b) the
business relationship of Borrower and the Guarantors with any
supplier material to its operations.
3.20
Agreements and Other Documents . As of the
Closing Date, Borrower and the Guarantors have provided Lender and
its counsel, accurate and complete copies (or summaries) of all of
the following Material Contracts to which Borrower and the
Guarantors are subject and each of which are listed on Schedule 3.20
: (a) supply agreements and purchase agreements not
terminable by Borrower and the Guarantors within sixty (60) days
following written notice issued by Borrower and the Guarantors and
involving transactions in excess of $100,000 per annum; (b) any
lease of Equipment having a remaining term of one year or longer
and requiring aggregate rental and other payments in excess of
$50,000 per annum; (c) licenses and permits held by Borrower and
the Guarantors, the absence of which could be reasonably likely to
have a Material Adverse Effect; (d) instruments or documents
evidencing Indebtedness of Borrower and the Guarantors and any
security interest granted by Borrower and the Guarantors with
respect thereto; and (e) instruments and agreements evidencing the
issuance of any Stock, warrants, rights or options to purchase
Stock of Borrower and the Guarantors.
3.21
Bankruptcy Matters .
(a)
The
Chapter 11 Cases were commenced on the Petition Date in accordance
with Applicable Law and proper notice thereof and proper notice of
the hearing for the approval of the Final Order has been
given.
(b)
Pursuant
to and to the extent permitted in the Final Order, the Obligations
will constitute allowed administrative expense claims in the
Chapter 11 Cases having priority over all administrative expense
claims and unsecured claims against Borrower now existing or
hereafter arising, of any kind whatsoever, including, without
limitation, all administrative expense claims of the kind specified
in Sections 326, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c),
726, or any other provision of the Bankruptcy Code, as provided
under Section 364(c)(1) of the Bankruptcy Code, subject, as to
priority only, to the Carve-Out Amount.
(c)
Pursuant
to and to the extent provided in the Final Order, the Obligations
will be secured by a valid and perfected first priority Lien in and
against all of the Collateral.
(d)
The
Final Order is in full force and effect and has not been reversed,
stayed, modified or amended (except as may be modified or amended
with Lender’s express written consent).
(e)
Notwithstanding
the provisions of Section 362 of the Bankruptcy Code, upon the
maturity (whether by acceleration or otherwise) of any of the
Obligations, Lender shall be entitled to immediate payment of such
Obligations and to enforce the remedies provided for hereunder,
without further application to or order by the Bankruptcy
Court.
4.
FINANCIAL STATEMENTS AND INFORMATION
4.1
Reports and Notices . Borrower covenants and
agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Lender the Financial
Statements, budgets, cash flow forecasts, reports and notices at
the times and in the manner set forth in Annex B
.
4.2
Communication with Accountants . Borrower
authorizes Lender to communicate directly with its independent
certified public accountants and tax advisors (excluding legal
counsel) and authorizes those accountants and advisors to disclose
to Lender any and all work papers and financial statements and
other supporting financial documents and schedules, including
copies of any management letter with respect to the business,
financial condition and other affairs of Borrower; provided ,
however , that
Lender shall give Borrower reasonable prior notice of any such
communications and Borrower shall be invited to be present during
any such communications (but such presence shall not be a
prerequisite of such communications). At Lender’s
request, Borrower shall send a letter to such accountants and tax
advisors, and deliver a copy thereof to Lender, instructing them to
make available to Lender such information and records as Lender may
reasonably request and to otherwise comply with the provisions of
this Section 4
. In addition, at or before the Closing Date and on each
date the annual audited consolidated financial statements are
delivered to Lender as required by Annex B , such
accountants and tax advisors shall deliver a letter to Lender
stating that (a) Lender is entitled to rely upon any such
accountant’s certification of Borrower’s audited
financial statements delivered after the Closing Date and (b) such
accountants and tax advisors shall otherwise comply with this
Section
4 (including making available such information and records
as Lender may reasonably request).
4.3
Documents Filed with the Bankruptcy Court or Delivered to the
U.S. Trustee or Committee . At the
time any report (including, without limitation, monthly reports),
projection, prospectus or other similar document is filed with the
Bankruptcy Court and not otherwise served on counsel to Lender,
Borrower shall deliver to Lender copies of any such report,
projection, prospectus or other similar
document. Borrower shall also promptly provide Lender
with copies of all reports provided by or on behalf of Borrower to
the Committee, if any, with respect to the Chapter 11
Case.
5.
AFFIRMATIVE COVENANTS
Borrower
and each Guarantor covenants and agrees that, unless Lender
shall otherwise consent in writing, from and after the date
hereof and until the Termination Date, Borrower and each
Guarantor shall comply with the following affirmative
covenants:
5.1
Maintenance of Existence and Conduct of Business
. (a) Except as occasioned by the Chapter 11 Cases, do
or cause to be done all things necessary to preserve and keep in
full force and effect its statutory existence and corporate
franchises; (b) continue to conduct its business substantially as
now conducted or as otherwise permitted hereunder; (c) at all times
maintain, preserve and protect all of its material Intellectual
Property, and preserve all the remainder of its material property,
in use or useful in the conduct of its business and keep the same
in good repair, working order and condition (taking into
consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry
practices, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times, provided
that nothing in this Section 5.1(c) shall prevent Borrower from
discontinuing the use or operation of any property if such
discontinuance, in the judgment of Borrower’s Board of
Directors, is desirable in the conduct of its business; and (d)
transact business only under the names set forth in Schedule 3.2
.
5.2
Payment of Charges and Claims . To the extent
permitted hereunder and to the extent applicable in the Chapter 11
Cases, pay and discharge, or cause to be paid and discharged in
accordance with the terms thereof, (a) all Charges imposed upon it
or its income and profits, or any of its property (real, personal
or mixed) prior to the date on which penalties attach thereto, and
(b) all lawful claims for labor, materials, supplies and services
or otherwise, which, if unpaid, might or could become a Lien on its
property; provided ,
however , that
Borrower shall not be required to pay any such Charge or claim
which is being contested in good faith by proper legal actions or
proceedings, so long as at the time of commencement of any such
action or proceeding and during the pendency thereof (i) reserves
with respect thereto are established and are maintained in
accordance with GAAP, (ii) such contest operates to suspend
collection of the contested Charges or claims and is maintained and
prosecuted continuously with diligence, (iii) none of the
Collateral would be subject to forfeiture or loss by reason of the
institution or prosecution of such contest, (iv) no Liens securing
an aggregate amount in excess of $25,000 shall exist for such
Charges or claims during such action or proceeding (excluding Liens
securing obligations fully covered by insurance or otherwise bonded
to the satisfaction of Lender), and (v) if such contest is
terminated or discontinued adversely to Borrower, Borrower shall
promptly pay or discharge such contested Charges and all additional
charges, interest penalties and expenses, if any, and shall deliver
to Lender evidence reasonably acceptable to Lender of such
compliance, payment or discharge, if such contest is terminated or
discontinued adversely to Borrower.
5.3
Books and Records . Keep adequate records and
books of account with respect to its business activities, in which
proper entries, reflecting all of its consolidated and
consolidating financial transactions, are made in accordance with
GAAP and on a basis consistent with the Financial Statements in all
material respects.
5.4
Litigation . Notify Lender in writing, promptly
upon learning thereof, of any litigation, action, suit, claim,
investigation, arbitration or other proceeding commenced or
threatened, at law, in equity or otherwise against it, and of the
institution against it of any suit or administrative proceeding
which (a) could reasonably be expected to involve an amount in
excess of $25,000 individually or in the aggregate, or (b) if
adversely determined, individually or in the aggregate, could
reasonably be expected to have or result in a Material Adverse
Effect.
5.5
Insurance .
(a)
At
its sole cost and expense, maintain or cause to be maintained
policies of insurance of such type and in such amounts as is
reasonable and standard in Borrower’s industry and geographic
location and as is satisfactory to Lender and with insurers
recognized as adequate by Lender. Borrower shall notify
Lender promptly of any adverse occurrence causing a material loss
or material decline in value of any real or personal property and
the estimated (or actual, if available) amount of such loss or
material decline. Borrower hereby directs all present
and future insurers under its “All Risk” policies of
insurance to pay all proceeds payable thereunder directly to
Lender. Each of the Borrower and each Guarantor
irrevocably makes, constitutes and appoints Lender (and all
officers, employees or agents designated by Lender) as its true and
lawful agent and attorney in-fact for the purpose of, upon the
occurrence and during the continuance of a Default, making,
settling and adjusting claims under the “All Risk”
policies of insurance, endorsing the name of such Person on any
check, draft, instrument or other item of payment for the proceeds
of such “All Risk” policies of insurance, and for
making all determinations and decisions with respect to such
“All Risk” policies of insurance. In the
event Borrower at any time or times hereafter shall fail to obtain
or maintain (or fail to cause to be obtained or maintained) any of
the policies of insurance required above or to pay any premium in
whole or in part relating thereto, Lender, without waiving or
releasing any Obligations or Default hereunder, may at any time or
times thereafter (but shall not be obligated to) obtain and
maintain such policies of insurance and pay such premium and take
any other action with respect thereto which Lender deems
advisable. All sums so disbursed, including reasonable
attorneys’ fees, court costs and other charges related
thereto, shall be payable, on demand, by Borrower to Lender and
shall be additional Obligations hereunder secured by the
Collateral.
(b)
Lender
reserves the right at any time, upon review of Borrower’s
risk profile, to reasonably require additional forms and limits of
insurance to adequately protect Lender’s
interests. Borrower shall, if so requested by Lender,
deliver to Lender, as often as Lender may reasonably request, a
report of a reputable insurance broker reasonably satisfactory to
Lender with respect to its insurance policies.
5.6
Compliance with Laws . Comply in all material respects with
all federal, state and local laws (including those relating to
bankruptcy and insolvency laws), permits and regulations applicable
to it, including those relating to licensing, environmental, ERISA
and labor matters.
5.7
Agreements; Leases . (i) Perform, within all
required time periods (after giving effect to any applicable grace
periods), all of its material obligations (except where Borrower is
contesting such obligation reasonably and in good faith or where
performance is excused by the Bankruptcy Code or by an applicable
order of the Bankruptcy Court and such non-compliance would neither
have nor could be reasonably expected to have a Material Adverse
Effect on Borrower’s business or assets or upon any of the
rights, remedies or interests of the Lender) and (ii) enforce all
of its material rights under each Contract or other document or
instrument to which it is a party. Borrower shall
perform and comply in all material respects with all obligations in
respect of Chattel Paper, Instruments, Contracts, Licenses, and
Documents and all other agreements constituting or giving rise to
Collateral, except to the extent that (i) such compliance is
excused by the Bankruptcy Code or by an applicable order of the
Bankruptcy Court as to Borrower and (ii) such non-compliance would
neither have nor could reasonably be expected to have a Material
Adverse Effect on Borrower’s business or assets or upon any
of the rights, remedies or interests of the Lender.
5.8
Intentionally Omitted .
5.9
Environmental Matters . Except as otherwise
prohibited by the Chapter 11 Case, comply in all material respects
with all Environmental Laws and permits applicable to it, (b)
notify Lender promptly after Borrower becomes aware of any Release
upon any Subject Property which, individually or in the aggregate,
could reasonably be expected to have or result in a Material
Adverse Effect, and (c) promptly forward to Lender a copy of any
order, notice, permit, application, or any communication or report
by any Governmental Authority received by Borrower in connection
with any such Release or any other matter relating to the
Environmental Laws that may affect any Subject Property or
Borrower. The provisions of this Section 5.9
shall apply whether or not the Environmental Protection Agency, any
other federal agency or any state or local environmental agency has
taken or threatened any action in connection with any Release or
the presence of any Hazardous Materials.
5.10
Application of Proceeds . Use the proceeds of the
Term Loan as provided in Section 1.3
.
5.11
Fiscal Year . Maintain as its Fiscal Year the
year ending March 31st.
5.12
Subsidiaries . Not form or acquire any
Subsidiary.
5.13
Further Assurances . At its sole cost and
expense, upon request of Lender, duly execute and deliver, or cause
to be duly executed and delivered, to Lender such further
instruments and documents and do and cause to be done such further
acts as may be necessary or proper in the reasonable opinion of
Lender to carry out more effectively the provisions and purposes of
this Agreement or any other Loan Document.
5.14
Appraisals . Allow Lender and its designees from
time to time as Lender shall direct, to perform, and shall assist
Lender and its designees in performing, appraisals of
Borrower’s Inventory, Equipment, accounts receivable and
Subject Property. So long as no Default has occurred and
is continuing, Lender agrees to provide to Borrower upon the
request of Borrower any such appraisal prepared by a third party
unaffiliated with Lender which has consented to Lender so providing
such appraisal. In furtherance of the foregoing, Lender
agrees to use reasonable efforts to obtain any such
consent. Borrower agrees to pay all reasonable
out-of-pocket costs and expenses incurred by Lender in connection
with such appraisals conducted after a Default.
5.15
Intellectual Property . Conduct its business and
affairs without infringement of or interference with any
Intellectual Property of any other Person.
5.16
Schedule of Financial Affairs . On or before June
4, 2008, file with the Bankruptcy Court completed statements of
financial affairs and schedules of assets and liabilities as
required by the Bankruptcy Rules.
6.
NEGATIVE COVENANTS
Borrower
covenants and agrees that, unless Lender shall otherwise
consent in writing, from and after the date hereof and until
the Termination Date, Borrower shall not, and shall cause each
Guarantor not, to do any of the following:
6.1
Mergers, Subsidiaries, Etc . Directly or
indirectly, by operation of law or otherwise, merge, consolidate or
otherwise combine with any Person or acquire or hold all or
substantially all of the assets or capital stock of any Person, or
form, acquire or hold any Subsidiary.
6.2
Indebtedness . Create, incur, assume or permit to
exist any Indebtedness, except: (a) the Obligations; (b)
Deferred Taxes; (c) Capital Lease Obligations and Indebtedness
secured by purchase money Liens permitted under clause (b) of
Section
6.6 (including any such Capital Lease Obligations and
Indebtedness set forth in Schedule 6.2 )
and from and after the Closing Date, create, incur or assume vendor
debt in a maximum aggregate amount at any one time outstanding not
to exceed $100,000; (d) Guaranteed Indebtedness permitted under
Section
6.5 ; and (e) Indebtedness existing on the Closing Date and
set forth in Schedule 6.2
.
6.3
Affiliate and Employee Transactions . Except as
set forth in Schedule 6.3
or as otherwise expressly permitted hereunder, enter into or be
party to any lending, borrowing or other commercial transaction or
arrangement with any of its Affiliates, officers, directors or
employees, including payment of any management, consulting,
advisory, service or similar fee or any deferred compensation
(excluding salaries, bonuses and other compensation to its
officers, directors and employees in the ordinary course of
business, consistent with past practices).
6.4
Capital Structure and Business . Except as
otherwise provided in any plan of reorganization and contemplated
by the Term Sheet, (a) make any changes in its business operations
which, individually or in the aggregate, could adversely affect the
repayment of the Obligations or reasonably be expected to have or
result in a Material Adverse Effect; (b) make any change in its
capital structure or issue of any Stock or make any revision of the
terms of its outstanding Stock or amend or modify any shareholders,
voting or similar agreement to which it is a party or enter into
any such agreement, in each case, without the prior written consent
of Lender; (c) amend its articles or certificate of formation,
charter, by-laws or other organizational documents; or (d) engage
in any business other than the businesses engaged in as of the
Closing Date and other business directly related
thereto.
6.5
Guaranteed Indebtedness . Create, incur, assume
or permit to exist any Guaranteed Indebtedness except for the
Obligations under the Loan Documents and: (a)
endorsements of instruments or items of payment for deposit to a
bank account of Borrower; (b) performance bonds or indemnities
entered into in the ordinary course of business, consistent with
past practices; and (c) Guaranteed Indebtedness outstanding on the
Closing Date and listed in Schedule 6.2
.
6.6
Liens . Create or permit to exist any Lien on any
of its properties or assets except for: (a) presently
existing or hereafter created Liens in favor of Lender, to secure
the Obligations and (b) Permitted Encumbrances. The prohibition
provided for in this Section 6.6
specifically includes, without limitation, any effort by Borrower,
any Committee, or any other party-in-interest in the Chapter 11
Case to prime or create pari passu to any
claims or interest of Lender any Lien (other than for the Carve-Out
Expenses up to the Carve-Out Amount) irrespective of whether such
claims or interest may be “adequately
protected”.
6.7
Sale of Assets . Except as otherwise provided in
any plan of reorganization and contemplated by the Term Sheet,
sell, transfer, convey, assign or otherwise dispose of any of its
assets or properties, including any Collateral; provided ,
however , that
the foregoing shall not prohibit (a) the sale of Inventory in the
ordinary course of business; and (b) the sale or disposition for
fair consideration in any Fiscal Year of any assets in the ordinary
course of business which have become obsolete or surplus to the
business of Borrower having a fair market value of not greater than
$50,000 in the aggregate during such Fiscal Year.
6.8
ERISA . Acquire any new ERISA Affiliate that
maintains or has an obligation to contribute to a Pension Plan that
has either an “accumulated funding deficiency,” as
defined in Section 302 of ERISA, or any “unfunded vested
benefits,” as defined in Section 4006(a)(3)(E)(iii) of ERISA
in the case of any Pension Plan other than a Multiemployer Plan and
in Section 4211 of ERISA in the case of a Multiemployer
Plan. Additionally, no Borrower nor any ERISA Affiliate
shall: (a) permit or suffer any condition set forth in
Section 3.13 to cease to be met and satisfied at any time, other
than permitting an ERISA Affiliate acquired after the Closing Date
to sponsor a Title IV Plan, a Plan subject to IRC Section 412 or
ERISA Section 302, or a Retiree Welfare Plan; (b) terminate any
Title IV Plan where such termination could reasonably be
anticipated to result in liability to Borrower; (c) permit any
accumulated funding deficiency, as defined in Section 302(a)(2) of
ERISA, to be incurred with respect to any Pension Plan; (d) fail to
make any contributions or fail to pay any amounts due and owing as
required by the terms of any Plan before such contributions or
amounts become delinquent; (e) make a complete or partial
withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan prior; (f) fail to provide Lender with copies of
any Plan documents or governmental reports or filings, if
reasonably requested by Lender; (g) fail to make any contribution
or pay any amount due as required by IRC Section 412 or Section 302
of ERISA; (h) allow any ERISA Event or event described in Section
4062(e) of ERISA to occur with respect to any Title IV Plan; and
(i) with respect to all Retiree Welfare Plans, allow the present
value of future anticipated expenses to increase by
$500,000.
6.9
[
Intentionally
Omitted ].
6.10
Restricted Payments; Use of Proceeds . (a) Make
any Restricted Payment to any Person, except that Borrower and
Guarantors may make payments between each other in the ordinary
course of business, provided ,
that any such payments which are in the nature of loans are
evidenced by intercompany notes, repayment of which is subordinated
to repayment of the Obligations, and which notes shall be
collaterally assigned to Lender, to secure the Obligations; or (b)
utilize the Collateral and the proceeds of the Term Loan other than
for (i) working capital and general corporate purposes including
certain fees and expenses of professionals retained by Borrower,
subject to the Final Order solely for the purposes specified in the
Budget and (ii) certain other pre-petition expenses that are
approved by the Bankruptcy Court and previously approved by
Lender.
6.11
Hazardous Materials . Except as set forth in
Schedule
6.11 , (a) cause or permit a Release of Hazardous Material
on, under, in or about any Subject Property in breach of any
Environmental Law; (b) use, store, generate, treat or dispose of
Hazardous Materials, except in compliance in all material respects
with the Environmental Laws; or (c) transport any Hazardous
Materials to or from any Subject Property, except in compliance in
all material respects with the Environmental Laws.
6.12
Sale-Leasebacks . Engage in any sale-leaseback, synthetic
lease or similar transaction involving any of its property or
assets.
6.13
Cancellation of Indebtedness . Cancel any claim
or Indebtedness owing to it, except for adequate consideration
negotiated in an arm’s length transaction and in the ordinary
course of its business, consistent with past
practices.
6.14
Bank Accounts . Maintain any deposit, operating
or other bank accounts except for those accounts identified in
Schedule
3.17 .
6.15
Margin Regulations . Directly or indirectly, use
the proceeds of the Term Loan to purchase or carry any Margin Stock
or any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
6.16
Limitation on Negative Pledge Clauses . Directly or
indirectly enter into any agreement (other than the Loan Documents)
with any Person which prohibits or limits the ability of Borrower
or any Guarantor to create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired.
6.17
Material Contracts . (a) Cancel or terminate any
Material Contract unless, in the discretion of the Board of
Directors of Borrower, there occurs an event of default by any
other party to such contract; and (b) waive any default or breach
any Material Contract, or materially amend or otherwise modify any
Material Contract or take (or omit to take) any other material
adverse action in connection with any Material
Contract.
6.18
Leases . (a) Renew (by amendment, modification or
otherwise) any Lease or similar agreements other than renewals of
existing Leases upon substantially the same terms (other than
reasonable increases in rent based on market conditions) as are in
effect on the Closing Date, or (b) enter into any new Lease or
similar agreements other than as permitted under Section 6.19
.
6.19
New Premises . Except with respect to Methane
Energy Corp., enter into, or become a lessee under, any Operating
Lease of real property without the prior written consent of
Lender.
6.20
Repayment of Indebtedness . Except pursuant to a
confirmed reorganization plan and except as specifically permitted
hereunder, without the express prior written consent of Lender or
pursuant to an order of the Bankruptcy Court after notice and
hearing, make any payment or transfer with respect to any
Pre-Petition Lien or Pre-Petition Indebtedness that is subject to
the automatic stay provisions of the Bankruptcy Code whether by way
of “adequate protection” under the Bankruptcy Code or
otherwise.
6.21
Chapter 11 Claims . Incur, create, assume, suffer to exist
or permit any other super-priority administrative claim which is
pari passu
with or senior to the claims of Lender against Borrower, except as
set forth in Section 1.12
.
7.
TERM
7.1
Duration . The financing arrangement contemplated
hereby shall be in effect until the Maturity Date. On
the Maturity Date, the Term Loan and all other Obligations shall
immediately become due and payable in full, in cash.
7.2
Survival of Obligations . Except as otherwise
expressly provided for in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing
arrangement under this Agreement shall in any way affect or impair
the Obligations, duties, indemnities, and liabilities of Borrower
or other obligor under any of the Loan Documents, or the rights of
Lender relating to any Obligations, due or not due, liquidated,
contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the
performance of which is not required until after the Maturity
Date. Except as otherwise expressly provided herein or
in any other Loan Document, all undertakings, agreements,
covenants, warranties and representations of or binding upon
Borrower or other obligor under any of the Loan Documents, and all
rights of Lender, all as contained in the Loan Documents, shall not
terminate or expire, but rather shall survive such termination or
cancellation and shall continue in full force and effect until the
Termination Date on which date they shall cease.
8.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1
Events of Default . Notwithstanding the
provisions of Section 362 of the Bankruptcy Code and without
application or motion to the Bankruptcy Court or any notice to
Borrower, the occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an
“Event of Default” hereunder:
(a)
Borrower
shall fail to make any payment in respect of any Obligations
hereunder or under any of t
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