TABLE OF CONTENTS

 

Section		Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		2
SECTION 1.01. Certain Defined Terms		2
SECTION 1.02. Computation of Time Periods		45
SECTION 1.03. Accounting Terms		45
SECTION 1.04. Currency Equivalent		45
SECTION 1.05. Uniform Commercial Code		45
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT		45
SECTION 2.01. Last Out Term Advances, Revolving Credit Advances and Swingline Advances		45
SECTION 2.02. Making Last Out Term Advances, Revolving Credit Advances and Swingline Advances		46
SECTION 2.03. Issuance of and Drawings and Reimbursements Under Letters of Credit.		50
SECTION 2.04. Repayment of Advances		56
SECTION 2.05. Termination or Reduction of Commitments		56
SECTION 2.06. Prepayments		57
SECTION 2.07. Interest		58
SECTION 2.08. Fees		60
SECTION 2.09. Conversion of Advances		61
SECTION 2.10. Increased Costs, Etc		61
SECTION 2.11. Payments and Computations		63
SECTION 2.12. Taxes		64
SECTION 2.13. Sharing of Payments, Etc		68
SECTION 2.14. Use of Proceeds		69
SECTION 2.15. Defaulting Lenders		70
SECTION 2.16. Superpriority Nature of Obligations		73
SECTION 2.17. Bailee for Perfection		73
SECTION 2.18. No Discharge; Survival of Claims		74
SECTION 2.19. Extension of Maturity Date.		74
SECTION 2.20. Last Out Term Advances		75
ARTICLE III CONDITIONS OF EFFECTIVENESS AND LENDING		81
SECTION 3.01. Conditions Precedent to Initial Availability		81
SECTION 3.02. Conditions Precedent to Full Availability		86
SECTION 3.03. Conditions Precedent to Each Borrowing and Issuance		86
SECTION 3.04. Determinations Under Section 3.01		87

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES	87
SECTION 4.01. Representations and Warranties of the Borrower	87
ARTICLE V COVENANTS OF THE BORROWER	97
SECTION 5.01. Affirmative Covenants	97
SECTION 5.02. Negative Covenants	107
SECTION 5.03. Reporting Requirements	113
SECTION 5.04. Financial Covenants	119
ARTICLE VI EVENTS OF DEFAULT	120
SECTION 6.01. Events of Default	120
SECTION 6.02. Application of Funds	126
ARTICLE VII THE ADMINISTRATIVE AGENT	129
SECTION 7.01. Authorization and Action	129
SECTION 7.02. Administrative Agent’s Reliance, Etc	130
SECTION 7.03. DBTCA and Affiliates	131
SECTION 7.04. Lender Party Credit Decision	131
SECTION 7.05. Indemnification	131
SECTION 7.06. Successor Administrative Agent	133
SECTION 7.07. Lead Arranger; Syndication Agent	134
SECTION 7.08. Collateral Matters	134
SECTION 7.09. Delivery of Information	134
ARTICLE VIII MISCELLANEOUS	135
SECTION 8.01. Amendments, Etc	135
SECTION 8.02. Notices, Etc	138
SECTION 8.03. No Waiver; Remedies	138
SECTION 8.04. Costs, Expenses	138
SECTION 8.05. Right of Set off	140
SECTION 8.06. Binding Effect	140
SECTION 8.07. Assignments and Participations	140
SECTION 8.08. Replacements of Lenders Under Certain Circumstances	143
SECTION 8.09. Execution in Counterparts	144
SECTION 8.10. No Liability of an Issuing Bank	144
SECTION 8.11. Confidentiality	145
SECTION 8.12. Release of Collateral	145
SECTION 8.13. USA Patriot Act	146
SECTION 8.14. Jurisdiction, Etc	146
SECTION 8.15. Judgment	146
SECTION 8.16. Governing Law	147
SECTION 8.17. Waiver of Jury Trial	147
SECTION 8.18. Parties Including Trustees; Bankruptcy Court Proceedings	147

 

 

SECTION 8.19. Prepetition Loan Documents	148
SECTION 8.20. Conflict of Terms	148

 

SCHEDULES
Schedule I		Commitments and Lending Offices
Schedule II		Subsidiary Guarantors
Schedule 1.01(a)		Concentration Limits
Schedule 4.01(b)		Subsidiaries
Schedule 4.01(n)		Environmental Issues
Schedule 4.01(r)		Prepetition Debt
Schedule 4.01(s)		Owned Real Property
Schedule 4.01(t)		Leased Real Property
Schedule 4.01(u)		Leases of Real Property
Schedule 4.01(v)		Intellectual Property
Schedule 5.02(a)		Existing Liens
Schedule 5.02(l)		Existing Accounts
Schedule 5.04(a)		Minimum Net Cash Flow Schedule
EXHIBITS
Exhibit A1	-	Form of Revolving Credit Note
Exhibit A2	-	Form of Swingline Note
Exhibit A3	-	Form of Last Out Term Note
Exhibit B	-	Form of Notice of Revolving Credit Borrowing
Exhibit C	-	Form of Notice of Swingline Borrowing
Exhibit D	-	Form of Letter of Credit Request
Exhibit E	-	Form of Assignment and Acceptance
Exhibit F	-	Form of Opinion of Latham & Watkins LLP, Borrower’s U.S. Counsel
Exhibit G	-	Form of Opinion of In-House Counsel of Accuride Corporation
Exhibit H	-	Form of Interim Borrowing Order
Exhibit I	-	Form of Guarantee and Collateral Agreement
Exhibit J	-	Form of Borrowing Base Certificate
Exhibit K	-	Form of Daily Cash Report

 

 

SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT

 

SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT, dated as of October 9, 2009 (this “ Agreement ”), among ACCURIDE CORPORATION, a Delaware corporation (the “ Borrower ”), the institutional lenders listed on the signature pages hereof as the initial last out term lenders (the “ Initial Last Out Term Lenders ”), the banks, financial institutions and other institutional lenders listed on the signature pages hereof as the initial revolving credit lenders (the “ Initial Revolving Credit Lenders ”), DEUTSCHE BANK TRUST COMPANY AMERICAS (“ DBTCA ”), as the initial issuing bank (in such capacity, the “ Initial Issuing Bank ”) and as administrative agent (in such capacity, together with any successor appointed pursuant to Article VII, the “ Administrative Agent ”) for the Lender Parties (as hereinafter defined), DEUTSCHE BANK SECURITIES INC., as lead arranger and lead bookrunner (in such capacities, the “ Lead Arranger ”), and GENERAL ELECTRIC CAPITAL CORPORATION, as syndication agent (in such capacity, the “ Syndication Agent ”).

 

PRELIMINARY STATEMENTS:

 

(1)           On October 8, 2009 (the “ Petition Date ”), the Borrower and each of its Subsidiaries organized or incorporated in the United States (each a “ U.S. Debtor ” and collectively the “ U.S. Debtors ”) commenced Chapter 11 Cases Nos. 09-13450 through 09-13469, inclusive, as administratively consolidated as Chapter 11 Case No. 09-13449 (each a “ Chapter 11 Case ” and collectively, the “ Chapter 11 Cases ”) by filing separate voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. 101 et seq. (the “ Bankruptcy Code ”), with the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”).  The Borrower continues to operate its business and manage its properties as a debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code.

 

(2)           Prior to the Petition Date, financing was provided to the Borrower and Accuride Canada Inc., a corporation organized and existing under the law of the Province of Ontario (“ Accuride Canada ”), pursuant to that certain Fourth Amended and Restated Credit Agreement, dated as of January 31, 2005 (as amended, modified or supplemented up to, but not including, the Closing Date, the “ Prepetition Credit Agreement ”), among the Borrower, Accuride Canada, the banks, financial institutions and other institutional lenders from time to time party thereto (the “ Prepetition Lenders ”) and DBTCA, as administrative agent.

 

(3)           Pursuant to that certain Fourth Amendment and Canadian Forbearance Agreement, dated as of October 8, 2009, among the Borrower, Accuride Canada, DBTCA, as administrative agent, and certain Prepetition Lenders (the “ Fourth Amendment and Canadian Forbearance Agreement ”), the Prepetition Lenders party thereto agreed to forbear from exercising any rights under the Prepetition Loan Documents (as defined below) as a result of certain defaults under the Prepetition Credit Agreement.

 

(4)           The Borrower has requested that the Lenders (as defined below) provide it with (i) an ABL revolving credit and letter of credit facility of up to $25,000,000 (the “ Revolving Credit Facility ”) and (ii) a last out term loan facility of $25,000,000 (the “ Last Out Term

 

 

Facility ” and, together with the Revolving Credit Facility, the “ DIP Facility ”), in each case on a Post Petition (as defined below) basis on the terms and conditions set forth herein.

 

(5)           The Lenders are willing to provide such financing only if all of the Obligations (as defined below) under the Loan Documents (as defined below) and all other obligations of the U.S. Debtors (whether as borrowers or guarantors) owing to any Lender Party under the Loan Documents (a) constitute allowed administrative expenses in the Chapter 11 Cases with priority under Section 364(c)(1) of the Bankruptcy Code over any and all other administrative expenses of the kind specified or ordered pursuant to any provision of the Bankruptcy Code, including, but not limited to, Section 105, 326, 328, 503(b) 506(c) (subject to the entry of the Final Borrowing Order), 507(a), 507(b) and 726 of the Bankruptcy Code, provided that the priority status of the Obligations and the Collateral securing the same shall be subject to the Carve-Out (as defined below) and other Liens permitted herein and pursuant to the Orders (as defined below) and (b) are secured by the Collateral in which the U.S. Debtors have an interest, in each case pursuant to the Collateral Documents (as defined below) and/or as provided in the Orders (as defined below).

 

(6)           Subject to the terms and conditions of this Agreement and the other Loan Documents, and subject to the terms of the Orders, the Lenders are willing to make available to the Borrower the DIP Facility as provided for herein.

 

NOW, THEREFORE, IT IS AGREED:

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01. Certain Defined Terms .  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“ Account ” means an “ account ” as such term is defined in Article 9 of the UCC and any and all supporting obligations in respect thereof.

 

“ Account Debtor ” means each Person who is obligated on an Account.

 

“ Accounts Formula Amount ” means on any date of determination, (x) the product of (i) 85% and (ii) the Value of the Loan Parties’ Eligible Accounts minus (y) the Dilution Reserve on such date of determination.

 

“ Accounts Information ” has the meaning specified in Section 5.03(f).

 

“ Accuride Canada ” has the meaning specified in Preliminary Statement (2).

 

“ Accuride Erie ” means Accuride Erie LP, a Delaware limited partnership (formerly known as AKW L.P.).

 

“ Additional DIP Financing ” has the meaning specified in Section 2.20(o)(iv).

 

2

 

“ Additional Interest ” means 1.00% of the aggregate principal amount of Last Out Term Advances outstanding as of the Extension Effective Date.

 

“ Administrative Agent ” has the meaning specified in the recital of parties to this Agreement.

 

“ Administrative Agent’s Account ” means the account of the Administrative Agent maintained by the Administrative Agent at (a) its office at 60 Wall Street, New York, New York 10005, Reference: Accuride DIP Facility or (b) such other office of the Administrative Agent located in the United States as may from time to time hereafter be designated as such in a written notice delivered by the Administrative Agent to the Borrower and each Lender.

 

“ Advance ” means a Last Out Term Advance, a Revolving Credit Advance, a Swingline Advance or a Letter of Credit Advance.

 

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person (or, in the case of any Lender which is an investment fund, (a) the investment advisor thereof, and (b) any other investment fund having the same investment advisor), or is a director or officer of such Person.  For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to vote 10% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.

 

“ Affiliated Account Debtors ” means, with respect to an Account Debtor, an Affiliate of such Account Debtor which is also an Account Debtor.

 

“ Aggregate Exposure ” means, at any time, the sum of (a) the aggregate principal amount of all Revolving Credit Advances outstanding at such time, (b) the aggregate principal amount of all Swingline Advances outstanding at such time (exclusive of Swingline Advances which are repaid with the proceeds of, and simultaneously with the incurrence of, the respective incurrence of Revolving Credit Advances) and (c) the aggregate amount of all Letter of Credit Outstandings at such time (exclusive of Letter of Credit Outstandings that are repaid with the proceeds of, and simultaneously with the incurrence of, the respective incurrence of Revolving Credit Advances).

 

“ Agreement ” has the meaning specified in the recital of parties to this Agreement.

 

“ Anti-Terrorism Laws ” means:

 

(a)           the Executive Order No. 13224 of September 23, 2001, Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism (the “ Executive Order ”);

 

(b)           the USA Patriot Act;

 

3

 

(c)           the Money Laundering Control Act of 1986, Public Law 99-570;

 

(d)           the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., and the Trading with the Enemy Act, 50 U.S.C. App. §§ 1 et seq., and any Executive Order or regulation promulgated thereunder and administered by the Office of Foreign Assets Control (“ OFAC ”) of the U.S. Department of the Treasury; and

 

(e)           any similar law enacted in the United States of America subsequent to the date of this Agreement.

 

“ Applicable Margin ” means (i) for Advances outstanding under the Revolving Credit Facility, (x) 5.50% per annum in the case of Base Rate Advances (including Swingline Advances and Letter of Credit Advances made as Base Rate Advances) and (y) 6.50% per annum in the case of Eurodollar Rate Advances, and (ii) for Last Out Term Advances outstanding under the Last Out Term Facility, (x) 6.50% per annum in the case of Base Rate Advances and (y) 7.50% per annum in the case of Eurodollar Rate Advances.

 

“ Applicable Percentage ” means 1.00% per annum.

 

“ Appraisal Report ” shall mean any appraisal report reasonably satisfactory to the Administrative Agent and prepared by independent consultants selected by the Administrative Agent and reasonably satisfactory to the Borrower.

 

“ Approved Plan ” means a Reorganization Plan that meets the requirements set out in the Restructuring Support Lockup Agreements and the Restructuring Term Sheets.

 

“ Assignment and Acceptance ” means an assignment and acceptance entered into by a Lender Party and permitted assignee or transferee, and accepted by the Administrative Agent, in accordance with Section 8.07 and in substantially the form of Exhibit E hereto.

 

“ Assumption Agreement ” means an assumption agreement, substantially in the form of Annex 1 to the Guarantee and Collateral Agreement.

 

“ Availability Reserve ” means, with respect to the Borrowing Base, as of any date of determination, the sum (without duplication) of:

 

(a)           the Cash Management Reserve; plus

 

(b)          the Inventory Reserve; plus

 

(c)           the Rent Reserve; plus

 

(d)          the Senior Lien Reserve; plus

 

4

 

such other events, conditions or contingencies (and in such amounts) in respect of which the Administrative Agent, in its Permitted Discretion, determines additional reserves should be established from time to time.

 

“ Available LC Amount ” of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time, in each case determined (x) as if any future automatic increases in the maximum amount available that are provided for in any such Letter of Credit had in fact occurred at such time and (y) without regard to whether any conditions to drawing could then be met but after giving effect to all previous drawings made thereunder.

 

“ Avoidance Actions ” shall mean the U.S. Debtors’ claims and causes of action under Sections 502(d), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any other avoidance actions under the Bankruptcy Code and the proceeds thereof and property received thereby whether by judgment, settlement, or otherwise.

 

“ Back-Stop Arrangements ” shall mean, collectively, the Letter of Credit Back-Stop Arrangements and the Swingline Back-Stop Arrangements.

 

“ Bankruptcy Code ” has the meaning specified in Preliminary Statement (1).

 

“ Bankruptcy Court ” has the meaning specified in Preliminary Statement (1).

 

“ Base Rate ” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Eurodollar Rate for a Eurodollar Rate Advance denominated in U.S. Dollars with a one-month interest period commencing on such day plus 1.0%. For purposes of clause (c) of this definition, the Eurodollar Rate shall be determined using the Eurodollar Rate as otherwise determined by the Administrative Agent in accordance with the definition of Eurodollar Rate, except that (x) if a given day is a Business Day, such determination shall be made on such day (rather than on the second Business Day prior to the first day of an Interest Period) or (y) if a given day is not a Business Day, the Eurodollar Rate for such day shall be the rate determined by the Administrative Agent pursuant to preceding clause (x) for the most recent Business Day preceding such day; provided that the determination of the Eurodollar Rate for the purposes of clause (c) shall disregard (A) the rounding requirement set forth in the definition of Eurodollar Rate and (B) the last sentence in the definition of Eurodollar Rate.  Notwithstanding the foregoing, the Base Rate shall not be less than 3.50% per annum.

 

“ Base Rate Advance ” means an Advance that bears interest as provided in Section 2.07(a)(i).

 

“ Borrower ” has the meaning specified in the recital of parties to this Agreement.

 

“ Borrower’s Account ” means the account of the Borrower maintained by the Borrower with the Administrative Agent at its office at (i) 60 Wall Street, New York, New York 10005 or (ii) such other office of the Administrative Agent as may from time

 

5

 

to time hereafter be designated as such in a written notice delivered by the Administrative Agent to the Borrower and each Lender.

 

“ Borrowing ” means a Last Out Term Borrowing, Revolving Credit Borrowing or a Swingline Advance.

 

“ Borrowing Base ” means, as of any date of calculation, an amount equal to the sum of:

 

(a)           the Accounts Formula Amount; plus

 

(b)          the Inventory Formula Amount; minus

 

(c)           the Availability Reserves; minus

 

(d)          the aggregate outstanding principal amount of the Last Out Term Advances; minus

 

(e)           the amount of the Carve-Out pursuant to the terms of the Interim Borrowing Order or (when entered) the Final Borrowing Order, if applicable.

 

The Administrative Agent shall have the right (but no obligation) to review such computations in consultation with the Borrower and if, in its Permitted Discretion, such computations have not been calculated in accordance with the terms of this Agreement, the Administrative Agent shall have the right to correct any such errors in such manner it shall determine in its Permitted Discretion.

 

“ Borrowing Base Certificate ” means the Initial Borrowing Base Certificate and each Bring Down Borrowing Base Certificate.

 

“ Bring Down Borrowing Base Certificate ” has the meaning specified in Section 5.03(m).

 

“ Business Day ” means a day of the year on which banks are not required or authorized by law to close in New York City, and if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market.

 

“ Capital Expenditures ” means, for any Person for any period, the sum, without duplication, of all expenditures made, directly or indirectly (whether paid in cash or accrued as liabilities and including in all events all amounts expended or capitalized under Capitalized Leases, but excluding any amount representing capitalized interest), by such Person or any of its Subsidiaries during such period for equipment, fixed assets, real property or improvements, or for replacements or substitutions therefor or additions thereto, that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Person; provided that Capital Expenditures shall not include (without duplication) (a) any expenditures made in connection with the replacement, substitution, repair or restoration of any assets

 

6

 

to the extent financed (i) with insurance proceeds received by the Borrower or any of its Subsidiaries on account of the loss of, or any damage to, the assets being replaced, substituted for, repaired or restored or (ii) with the proceeds of any compensation awarded to the Borrower or any of its Subsidiaries as a result of the taking, by eminent domain or condemnation, of the assets being replaced or substituted for or (b) any expenditures for the purchase price of any equipment that is purchased simultaneously with the trade-in of any existing equipment by the Borrower or any of its Subsidiaries to the extent that the gross amount of such purchase price is reduced by any credit granted by the seller of such equipment for the equipment being traded in.

 

“ Capital Security ” shall mean, with respect to any Person, (a) any share of capital stock of or other unit of ownership interest in such Person and (b) any security convertible into, or any option, warrant or other right to acquire, any share of capital stock of or other unit of ownership interest in such Person.

 

“ Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

 

“ Carve-Out ” has the meaning provided in the Orders.

 

“ Cash Collateral ” has the meaning set forth in the Orders.

 

“ Cash Collateral Account ” has the meaning specified in Section 5.01(r)(iii).

 

“ Cash Equivalents ” means (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States government or (ii) issued by any agency of the United States of America the obligations of which are backed by the full faith and credit of the United States, in each case maturing within 24 months after the date of acquisition thereof; (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within 12 months after the date of acquisition thereof and having, at the time of the acquisition thereof, an investment grade rating generally obtainable from either Standard & Poor’s Ratings Services (“ S&P ”) or Moody’s Investors Service, Inc. (“ Moody’s ”); (c) commercial paper maturing no more than 12 months from the date of creation thereof and having, at the time of the acquisition thereof, a rating of a least A-1 from S&P or at least P-1 from Moody’s; (d) domestic certificates of deposit or bankers’ acceptances maturing within 12 months after the date of acquisition thereof and issued or accepted by any Lender or by any other commercial bank organized under the laws of the United States or any state thereof or the District of Columbia that has combined capital and surplus of not less than $500,000,000; (e) repurchase agreements with a term of not more than 30 days for underlying securities of the types described in clauses (a) and (b) above, that are entered into with any commercial bank meeting the requirements specified in clause (d) above, (f) shares of investment companies that are registered under the Investment Company Act of 1940 and that invest solely in one or more of the types of investments referred to in clauses (a) through (e) above, and (g) in the case of any Subsidiary which is not a U.S. Person, high

 

7

 

quality, short-term liquid Investments made by such Subsidiary in the ordinary course of managing its surplus cash position in a manner consistent with past practices.

 

“ Cash Management Agreement ” shall mean any agreement to provide (i) cash management services, including treasury, depository, overdraft, credit or debt card, electronic funds transfer and other cash management arrangements, (ii) commercial credit card and merchant card services, or (iii) other banking products or services as may be requested by any Loan Party, other than Letters of Credit.

 

“ Cash Management Control Agreement ” means a “ control agreement ” in form and substance reasonably acceptable to the Administrative Agent and containing terms regarding the treatment of all cash and other amounts on deposit in (or credited to) the respective Deposit Account governed by such Cash Management Control Agreement consistent with the requirements of Section 5.01(r).

 

“ Cash Management Creditors ” shall mean, collectively, Fifth Third Bank and each Lender and/or any Affiliate thereof that has entered into one or more Secured Cash Management Agreements, even if such Person is not or subsequently ceases to be a Lender under this Agreement for any reason, together with such Person’s or their Affiliate’s successors, if any, for so long as such Person or their Affiliate (or successor thereof) participates in such Secured Cash Management Agreement.

 

“ Cash Management Obligations ” means all obligations and liabilities (other than Debt) owing by any Loan Party to the Cash Management Creditors, whether now existing or hereafter incurred under, arising out of or in connection with any Secured Cash Management Agreement, whether such Secured Cash Management Agreement is now in existence or hereinafter arising.

 

“ Cash Management Reserve ” shall mean a reserve established by the Administrative Agent from time to time in its Permitted Discretion in respect of the Borrower’s liabilities (or potential liabilities) as part of its cash management system under any Secured Cash Management Agreements such as, but not limited to, reserves for returned items, customary charges for maintaining Deposit Accounts and similar items, as such amounts are from time to time notified by each Cash Management Creditor to the Administrative Agent and the Borrower.

 

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time.

 

“ Change of Control ” means, and shall be deemed to have occurred, if: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, excluding the Permitted Investors, shall have become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d) 5 under the Exchange Act), directly or indirectly, of more than 30% of the outstanding Voting Stock of the Borrower; and/or (b) at any time Continuing Directors shall not constitute a majority of the Board of Directors of the Borrower. For purposes of this definition, “Continuing Director” means, as of any date of determination, an individual (i) who is a member of the Board of Directors of the

 

8

 

Borrower on the Closing Date, (ii) who, as of such date of determination, has been a member of such Board of Directors for at least the 12 preceding months (or, if such date of determination occurs during the period comprising the first 12 months after the Closing Date, since the Closing Date), or (iii) who is recommended by at least a majority of the then Continuing Directors or who receives the vote of the Permitted Investors in his or her election by the shareholders of the Borrower.

 

“ Chapter 11 Case ” and “ Chapter 11 Cases ” respectively have the meanings specified in Preliminary Statement (1).

 

“ Closing Date ” has the meaning specified in Section 3.01.

 

“ Collateral ” means all Prepetition and Post Petition property (whether real, personal or mixed) of the Loan Parties, whether arising before or existing on the Petition Date or acquired thereafter, and the proceeds of all of the foregoing, with respect to which any security interests have been granted (or purported to be granted) pursuant to (a) any Collateral Document, (b) this Agreement, (c) the Interim Borrowing Order or the Final Borrowing Order, as applicable, and/or (d) any additional Final Orders or other orders of the Bankruptcy Court under the Chapter 11 Cases.

 

“ Collateral Documents ” means the Guarantee and Collateral Agreement, any Cash Management Control Agreements and any other agreement that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

 

“ Collection Bank ” has the meaning specified in Section 5.01(r)(i).

 

“ Commingled Inventory ” means Inventory of the Borrower or any Subsidiary Guarantor that is commingled (whether pursuant to a consignment, a toll manufacturing agreement or otherwise) with Inventory of another Person (other than the Borrower or another Subsidiary Guarantor organized under the same jurisdiction of the Borrower or such Subsidiary Guarantor) at a location owned or leased by the Borrower or a Subsidiary Guarantor to the extent that such Inventory of the Borrower or such Subsidiary Guarantor is not readily identifiable.

 

“ Commitment ” means a Last Out Term Commitment or a Revolving Credit Commitment.

 

“ Confidential Information ” has the meaning specified in Section 8.11(a).

 

“ Consolidated ” refers to the consolidation of accounts in accordance with GAAP.

 

“ Cram-down Plan ” has the meaning provided in Section 6.01(a)(ix) hereof.

 

“ Conversion ”, “ Convert ” and “ Converted ” each refer to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.09 or 2.10.

 

“ Core Concentration Account ” has the meaning specified in Section 5.01(r)(ii).

 

9

 

“ Covered Disposition ” shall mean (i) any Recovery Event with respect to Collateral and (ii) any other sale, transfer, disposition or assignment of Collateral which does not give rise to an Account.

 

“ DBTCA ” has the meaning specified in the recital of parties to this Agreement.

 

“ Debt ” of any Person means, without duplication, (a) all indebtedness, liabilities and obligations of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than trade payables and accrued expenses incurred in the ordinary course of such Person’s business) that in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), it being understood that if such Person has not assumed or otherwise become liable for such Obligations, the amount of the Debt of such Person in connection therewith shall be limited to the lesser of the face amount of the related Obligations or the fair market value of all property of such Person securing such Obligations, (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities issued for the account of such Person, (g) all Obligations of such Person in respect of Hedge Agreements, (h) all Off-Balance Sheet Liabilities of such Person, (i) all Disqualified Capital Securities issued by such Person with the amount of Debt represented by such Disqualified Capital Securities being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any, (j) all Debt of others referred to in clauses (a) through (i) above or clause (k) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss; provided that any such guaranteed Obligations shall not include endorsements of instruments for deposit or collection in the ordinary course of business, and (k) all Debt referred to in clauses (a) through (j) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt; provided that the amount of Debt of such Person under clauses (j) and (k) above shall (subject to any obligation set forth therein) be deemed to be the principal amount of the Debt guaranteed or secured thereby and, with respect to any Lien on property of such Person as described in clause (k) above, if such Person has not assumed or otherwise become liable for any such Debt, the amount of the

 

10

 

Debt of such Person in connection therewith shall be limited to the lesser of the face amount of such Debt or the fair market value of all property of such Person securing such Debt.

 

For the purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Securities which do not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Securities as if such Disqualified Capital Securities were purchased on any date on which Debt shall be required to be determined pursuant to this Agreement, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Securities, such fair market value to be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Securities. Notwithstanding the foregoing, “Debt” shall not include trade payables and accrued liabilities incurred in the ordinary course of business for the purchase of goods or services that are not secured by a Lien other than a Permitted Lien or a Lien permitted under Section 5.02(a) and that are not overdue by more than 180 days.

 

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

 

“ Defaulted Advance ” means, with respect to any Lender Party at any time, the portion of any Advance (including any Mandatory Borrowing) required to be made by such Lender Party to the Borrower pursuant to Section 2.01 or 2.02 at or prior to such time that has not been made by such Lender Party or by the Administrative Agent for the account of such Lender Party pursuant to Section 2.02(g) as of such time.  In the event that a portion of a Defaulted Advance shall be deemed made pursuant to Section 2.15(a), the remaining portion of such Defaulted Advance shall be considered a Defaulted Advance originally required to be made pursuant to Section 2.01 on the same date as the Defaulted Advance so deemed made in part.

 

“ Defaulted Amount ” means, with respect to any Lender Party at any time, any amount required to be paid by such Lender Party to the Administrative Agent or any other Lender Party hereunder or under any other Loan Document at or prior to such time which has not been so paid as of such time, including, without limitation, any amount required to be paid by such Lender Party to (a) the Administrative Agent pursuant to Section 2.02(g) to reimburse the Administrative Agent for the amount of any Advance made by the Administrative Agent for the account of such Lender Party, (b) the Swingline Bank pursuant to Section 2.02(c) to purchase a Pro Rata Share of a participation in a Swingline Advance made by the Swingline Bank, (c) an Issuing Bank, either (i) pursuant to Section 2.03(d)(i) to purchase (as Participant) its Pro Rata Share in any Letter of Credit issued by such Issuing Bank or (ii) pursuant to Section 2.03(d)(iii) to fund (as Participant) its Pro Rata Share of any unreimbursed Letter of Credit Advance made by such Issuing Bank pursuant to any Letter of Credit issued by such Issuing Bank, (d) any other Lender Party pursuant to Section 2.13 to purchase any participation in Advances owing to such other Lender Party and (e) the Administrative Agent, the Swingline Bank or an Issuing Bank pursuant to Section 7.05 to reimburse the Administrative Agent, the Swingline Bank or such Issuing Bank for such Lender Party’s

 

11

 

Pro Rata Share of any amount required to be paid by the Lender Parties to the Administrative Agent, the Swingline Bank or such Issuing Bank as provided therein.  In the event that a portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.15(b), the remaining portion of such Defaulted Amount shall be considered a Defaulted Amount originally required to be paid hereunder or under any other Loan Document on the same date as the Defaulted Amount so deemed paid in part.

 

“ Defaulting Lender ” means, at any time, any Lender Party that, at such time, (a) owes a Defaulted Advance or a Defaulted Amount or has notified the Administrative Agent, the Swingline Bank or any Issuing Bank that it does not intend to comply with its obligations under Sections 2.01(a), 2.01(b), 2.01(c) or 2.03(d) in circumstances where such non-compliance would constitute a breach of such Lender’s obligations under the respective Section, (b) has taken any action or become the subject of any action or proceeding of a type described in Section 6.01(f) (replacing references therein to any “Subsidiary of a Loan Party that is not a Debtor” with references to a “Lender”) or has notified the Administrative Agent, the Swingline Bank or any Issuing Bank of the same or (c) has become the subject of a takeover by a Governmental Authority or shall notify the Administrative Agent, the Swingline Bank or any Issuing Bank of the same; provided that, for purposes of (and only for purposes of) Section 2.03(d) and Section 2.15(e) and any documentation entered into pursuant to the Back-Stop Arrangements (and the term “ Defaulting Lender ” as used therein), the term “ Defaulting Lender ” shall also include, as to any Lender, at such time (i) any Affiliate of such Lender that has “ control ” (within the meaning provided in the definition of “Affiliate”) of such Lender that is deemed to have, or has, become the subject of any action or proceeding of a type described in Section 6.01(f) (replacing references therein to any “Subsidiary of a Loan Party that is not a Debtor” with references to a “Lender”) or has become the subject of a takeover by a Governmental Authority or does not meet a capital adequacy or liquidity requirement applicable to such Affiliate as determined by the relevant Governmental Authority, (ii) that Lender, if that Lender has previously cured a “ Defaulted Advance ” or a “ Defaulted Amount ” under this Agreement, unless such “ Defaulted Advance ” or “ Defaulted Amount ” has been cured and has subsequently ceased to exist for a period of at least 90 consecutive days prior to such time, (iii) that Lender, if it is in default with respect to its obligations under any other credit facility to which it is a party and which the Administrative Agent, the Swingline Bank or any Issuing Bank believes in good faith has occurred and is continuing, and (iv) that Lender, if that Lender has failed to make available its portion of any Advance or to fund its portion of any unreimbursed payment with respect to a Letter of Credit pursuant to Section 2.03(d)(iii) within one (1) Business Day of the date (x) the Administrative Agent (in its capacity as a Lender) or (y) (A) Revolving Credit Lenders constituting the Majority Lenders with Revolving Credit Commitments or (B) Last Out Term Lenders constituting the Last Out Requisite Lenders with Last Out Term Commitments, as the case may be, has or have, as applicable, funded its or their portion thereof.

 

“ Deposit Account ” shall mean a demand, time, savings, passbook or like account established by a Loan Party with a bank, savings and loan association, credit union or like organization located in the United States or a state thereof or the District of Columbia.

 

12

 

“ Dilution ” shall mean, as of any date of determination, as to the Accounts owned by the Loan Parties, a percentage, based upon the experience of the immediately prior three (3) consecutive months, that is the result of dividing the U.S. Dollar amount of (a) bad debt write downs, discounts, advertising allowances, credits, volume or other rebates, returns, chargebacks, aged credits or other dilutive items with respect to such Accounts during such period, by (b) billings with respect to such Accounts during such period.

 

“ Dilution Reserve ” means, as of any date of determination, as to the Accounts owned by the Loan Parties, an amount equal to the product of (x) the amount (if positive), expressed as a percentage, by which Dilution of the Accounts owned by the Loan Parties exceeds 5.00% and (y) the Value of Eligible Accounts owned by the Loan Parties.

 

“ DIP Budget ” has the meaning specified in Section 5.03(e).

 

“ DIP Facility ” has the meaning specified in Preliminary Statement (4).

 

“ DIP Forecast ” means the Interim DIP Forecast, the Initial DIP Forecast and any Updated DIP Forecast delivered in accordance with the provisions of this Agreement.

 

“ Disbursement Account ” shall mean each Deposit Account maintained by a Loan Party for its general corporate purposes, including for the purpose of paying trade payables and other operating expenses (other than a disbursement account that is an Excluded Account).

 

“ Disqualified Capital Securities ” shall mean any Capital Securities which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event (other than an event which would constitute a Change of Control), (i) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof, in whole or in part, on a date on or prior to one year after the Termination Date, in each case, other than a maturity or redemption that entitles the holder of such Capital Security to receive common stock of the Borrower as sole consideration upon maturity or redemption, or (ii) is convertible into or exchangeable for (whether at the option of the issuer or the holder thereof) (a) debt securities or (b) any Capital Securities referred to in clause (i) above, in each case at any time on a date on or prior to one year after the Termination Date; provided that only the portion of Capital Securities that so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Capital Securities.

 

“ Domestic Subsidiary ” means any Subsidiary of the Borrower that is not a Foreign Subsidiary.

 

“ Dominion Period ” shall mean any period (i) commencing on the date on which (w) an Event of Default has occurred and is continuing or (x) any Advance (other than a Last Out Term Advance) is outstanding and (ii) ending on the first date thereafter on

 

13

 

which (y) no Event of Default exists and (z) there have been no Advances (other than any Last Out Term Advances) outstanding for 30 consecutive days.

 

“ Effect of Bankruptcy ” means, with respect to any contractual obligation, contract or agreement to which the Borrower or any of its Subsidiaries is a party, any default or other legal consequences arising on account of the commencement or the filing of the Chapter 11 Cases, as applicable (including the implementation of any stay), or the rejection of any such contractual obligation, contract or agreement with the approval of the Bankruptcy Court if required under applicable Law.

 

“ Eligible Account ” means, at any time, the Value of the Accounts originated by a Loan Party in the ordinary course of its business, that arise out of its bona fide sale of goods (other than promotional products) or rendition of services substantially in accordance with the provisions of any purchase order, contract or other document relating thereto, that comply in all material respects with each of the representations and warranties relating to Eligible Accounts made in the Loan Documents. The Administrative Agent shall have the right to establish, modify or eliminate reserves against Eligible Accounts from time to time in its Permitted Discretion including the right to modify or amend the exclusions set forth below. Without limiting the Administrative Agent’s discretion provided herein, Eligible Accounts shall not include any Account:

 

(a)	which is not subject to a first priority perfected Lien in favor of the Administrative Agent for the benefit of the Secured Parties;
(b)	which is subject to any Lien other than (i) a Lien in favor of the Administrative Agent for the benefit of the Secured Parties and (ii) a Lien (if any) permitted by the Loan Documents which does not have priority over the Lien in favor of the Administrative Agent for the benefit of the Secured Parties;
(c)	with respect to which (i) the scheduled due date is more than 90 days after the original invoice date or, in respect of farm invoices only, 180 days after the original invoice date ( provided that the aggregate Value of Accounts with a scheduled due date more than 90 days after the original invoice date shall not, at any time, exceed $5,000,000), (ii) is unpaid more than 60 days after the original due date, or (iii) which has been written off the books of the Loan Party or otherwise designated as uncollectible;
(d)	which is owing by an Account Debtor for which more than 50% of the Accounts owing from such Account Debtor and its Affiliates are ineligible under Clause (c) above;
(e)	which (i) does not arise from the sale of goods or performance of services in the ordinary course of business, (ii) is not evidenced by an invoice or other documentation which has been sent to the Account Debtor, (iii) represents a progress billing, (iv) is contingent upon any Loan Party’s completion of any further performance, (v) represents a sale on a bill-and-hold, guaranteed sale,

 

14

 

	sale-and-return, sale on approval, consignment, cash-on-delivery or any other repurchase or return basis, (vi) relates to payments of interest, or (viii) includes any other terms by reason of which the payment by an Account Debtor may be conditional;
(f)	for which the goods giving rise to such Account have not been shipped (or have been shipped other than FOB (seller’s location)) and billed to the Account Debtor or for which the services giving rise to such Account have not been performed and billed by a Loan Party or if such Account was invoiced more than once;
(g)	with respect to which (A) any check or other instrument of payment has been returned uncollected for any reason or (B) any return, rejection or repossession of any of the merchandise giving rise to such Account has occurred, but only to the extent of the value of the check returned uncollected or the goods returned, rejected or repossessed;
(h)	which is owed by an Account Debtor which has (i) applied for, suffered, or consented to the appointment of any receiver, custodian, trustee, or liquidator of its assets, (ii) has had possession of all or a material part of its property taken by any receiver, custodian, trustee or liquidator, (iii) filed, or had filed against it, any request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or involuntary case under any state, provincial or federal bankruptcy laws, (iv) has admitted in writing its inability, or is generally unable to, pay its debts as they become due, (v) become insolvent, (vi) ceased operation of its business or (vii) suffered a material impairment of its financial condition;
(i)	which is owed by any Account Debtor which has sold all or a substantially all of its assets;
(j)	which is (i) owed by an Account Debtor which is not a Governmental Authority which (A) does not maintain its chief executive office in the U.S. or Canada ( provided that the aggregate Value of Accounts owed by an Account Debtor which maintains its chief executive office in Canada shall not, at any time, exceed $1,000,000) and (B) is not organized under applicable law of the U.S., Canada or any political subdivision thereof or (ii) is designated for payment collection in Canada or any other jurisdiction outside the U.S.;
(k)	which is owed in any currency other than U.S. Dollars or Canadian Dollars (up to the cap limit referred to in the proviso of paragraph (j)(i)(A));
(l)	which is owed by (i) any Governmental Authority of any country other than the U.S., or (ii) any Governmental Authority of the U.S., unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and any other steps necessary to perfect the Lien of

 

15

 

	the Administrative Agent for the benefit of the Secured Parties in such Account have been complied with to the Administrative Agent’s satisfaction;
(m)	which is owed by any Affiliate, employee, officer, director, agent or stockholder of any Loan Party;
(n)	which (A) is owed by an Account Debtor or any Affiliate of such Account Debtor which is a creditor of any Loan Party or has disputed its obligation to pay all or any portion of the Account or (B) is subject to any security, deposit (including any pallet deposit), progress payment, retainage, set-off, chargeback or other similar advance made by or for the benefit of an Account Debtor, in each case to the extent (including, without limitation, with respect to rebates, including cash rebates) of such creditor claim or amount in dispute or to the extent of such security, deposit (including any pallet deposit), progress payment, retainage, set-off, chargeback or other similar advance;
(o)	which is subject to any counterclaim, deduction, defense, setoff or dispute but only to the extent of any such counterclaim, deduction, defense, setoff or dispute;
(p)	which is evidenced by any promissory note, chattel paper, or instrument;
(q)	which was partially paid and such Loan Party created a new receivable for the unpaid portion of such Account;
(r)	which does not comply in all material respects with the requirements of all applicable laws and regulations, whether Federal, state or local, including without limitation the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board of Governors of the Federal Reserve System of the United States;
(s)	which is for goods that have been sold under a purchase order or pursuant to the terms of a contract or other agreement or understanding (written or oral) that indicates or purports that any Person other than such Loan Party has or has had an ownership interest in such goods, or which indicates any party other than such Loan Party as payee or remittance party;
(t)	which was created on cash on delivery terms;
(u)	with respect to which the applicable Loan Party has made any agreement with any Account Debtor (i) for any deduction therefrom, except for (x) volume discounts and discounts or allowances for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto and (y) returns, rebates or credits reflected in the calculation of the face value of each such invoice (in each case, only to the extent of such discount, allowance, return, rebate or credit) or (ii) for any adjustment, extension, compromise or settlement thereof, except for adjustments, extensions, compromises and settlements made in the

 

16

 

	ordinary course of business (and not related to the creditworthiness of the Account Debtor);
(v)	which have not been invoiced or which are not for a sum certain;
(w)	for which credit insurance has been requested and denied;
(x)	which is not payable to any Loan Party;
(y)	with respect to which the agreements evidencing such Accounts are not governed by the laws of any state of the United States or the District of Columbia;
(z)	which represents service charges or late fees;
(aa)	of any Account Debtor (and its Affiliated Account Debtors) whose Accounts in aggregate owing to the Loan Parties exceed 10% of the aggregate amount of all Accounts of the Loan Parties (or, in the case of those Account Debtors (collectively with their respective Affiliated Account Debtors) listed on Schedule 1.01(a), the respective percentage of the aggregate amount of all Accounts of the Loan Parties set forth opposite the names of such Account Debtors (and their respective Affiliated Account Debtors) on Schedule 1.01(a), provided that any such percentages set forth in such Schedule as applied to a particular Account Debtor (and its Affiliated Account Debtors) is subject to reduction by the Administrative Agent, in its Permitted Discretion, if the creditworthiness of such Account Debtor (and its Affiliated Account Debtors) materially deteriorates; provided , further that at the request of the Borrower, and with the consent of the Supermajority Revolving Credit Lenders, the names of additional Account Debtors (and their respective Affiliated Account Debtors) may be added to Schedule 1.01(a) from time to time.

 

All percentage limitations set forth above shall apply on an aggregate basis as among all Accounts whether owing to the Borrower or a Subsidiary Guarantor.  In the event that an Account which was previously an Eligible Account ceases to be an Eligible Account hereunder, such Loan Party shall notify the Administrative Agent thereof on and at the time of submission to the Administrative Agent of the next Borrowing Base Certificate.  In determining the amount of an Eligible Account, the face amount of an Account may, in the Administrative Agent’s Permitted Discretion, be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual (A) customer deposits, (B) returns, (C) rebates, (D) discounts (which may at the Administrative Agent’s discretion, be calculated on shortest terms), (E) claims (including warranty claims), (F) credits or credits pending, (G) promotional program allowances, (H) price adjustments, (I) bonding subrogation rights to the extent not cash collateralized, (J) accrued and unpaid Taxes (including sales, excise or other taxes) of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time and/or (K) finance charges and

 

17

 

(ii) the aggregate amount of all cash received in respect of such Account but not yet applied by such Loan Party to reduce the amount of such Account (such net amount, the “ Value ”).

 

“ Eligible Inventory ” means, at any time, all of the Inventory owned by a Loan Party reflected in the most recent Borrowing Base Certificate delivered by the Borrower to the Administrative Agent, that complies in all material respects with each of the representations and warranties relating to Eligible Inventory made in the Loan Documents.  The Administrative Agent shall have the right to establish, modify or eliminate reserves against Eligible Inventory from time to time in its Permitted Discretion including the right to modify or amend the exclusions set forth below. Without limiting the Administrative Agent’s discretion provided herein, Eligible Inventory shall not include any Inventory:

 

(a)	which is not subject to a first priority perfected Lien in favor of the Administrative Agent for the benefit of the Secured Parties;
(b)	which is subject to any Lien other than (i) a Lien in favor of the Administrative Agent for the benefit of the Secured Parties and (ii) a Permitted Lien which does not have priority over the Lien in favor of the Administrative Agent for the benefit of the Secured Parties;
(c)	which is, based upon the most recent Appraisal Report received by the Administrative Agent, slow moving, obsolete, unmerchantable, defective, used, unfit for sale, not salable at prices approximating at least the cost of such Inventory in the ordinary course of business or unacceptable due to age, type, category, quantity and/or (without double-counting) subject to management reservations;
(d)	which does not conform to all standards imposed by any Governmental Authority;
(e)	in which any Person other than such Loan Party shall (i) have any direct or indirect ownership, interest or title to such Inventory or (ii) be indicated on any purchase order or invoice with respect to such Inventory as having or purporting to have an interest therein (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the applicable Loan Party’s performance with respect to that Inventory);
(f)	which is not Finished Goods, Work-in-Process or Raw Materials, or which constitutes spare or replacement parts, subassemblies, packaging and shipping material, manufacturing supplies, samples, prototypes, displays or display items, bill-and-hold goods, goods that are returned or marked for return, repossessed goods, defective or damaged goods, goods held on consignment, or goods which are not of a type held for sale in the ordinary course of business;

 

18

 

(g)	which is not located in the U.S. or is in transit with a common carrier from vendors and suppliers;
(h)	which (i) is located with a vendor, a customer of a Loan Party or its Affiliates or outside processor or on a property owned or leased by any of the foregoing, (ii) is not located on premises owned, leased or rented by a Loan Party unless in the case of leased or rented premises, either (x) a Third Party Agreement has been delivered to the Administrative Agent or (y) a Rent Reserve reasonably satisfactory to the Administrative Agent has been established with respect thereto, or (iii) is stored with a bailee at a leased location, unless, either (x) a Third Party Agreement has been delivered to the Administrative Agent, or (y) a Rent Reserve reasonably satisfactory to the Administrative Agent has been established with respect thereto, or (iv) is stored with a bailee or warehouseman, unless, either (x) a Third Party Agreement has been received by the Administrative Agent or (y) a Rent Reserve reasonably satisfactory to the Administrative Agent has been established with respect thereto, or (v) is located at an owned location subject to a mortgage or other security interest in favor of a creditor other than the Administrative Agent unless a Third Party Agreement has been delivered to the Administrative Agent;
(i)	is covered by a negotiable document of title or warehouse receipt unless all actions have been taken to create and perfect a first priority Lien in favor of the Administrative Agent in such document of title or warehouse receipt and the Inventory covered thereby, including, without limitation, the delivery to the Administrative Agent or an agent thereof of such document of title and warehouse receipt with all necessary endorsements;
(j)	which is being processed offsite at a third party location or outside processor, or is in-transit to or from such third party location or outside processor;
(k)	which is a discontinued product or component thereof;
(l)	which is the subject of a consignment by such Loan Party as consignor;
(m)	which contains or bears any intellectual property rights licensed to such Loan Party unless the Administrative Agent is satisfied that it may sell or otherwise dispose of such Inventory without (i) infringing the rights of such licensor, (ii) violating any contract with such licensor, or (iii) incurring any liability with respect to payment of royalties other than royalties incurred pursuant to sale of such Inventory under the current licensing agreement;
(n)	which is not reflected in a current perpetual inventory report of such Loan Party (unless such Inventory is reflected in a report to the Administrative Agent as “in transit” Inventory);
(o)	for which reclamation rights have been asserted by the seller;

 

19

 

(p)	which consists of any gross profit mark-up in connection with the sale and distribution thereof to any division of any Loan Party or to any Affiliate of any Loan Party;
(q)	which consists of goods that have been returned or rejected by the buyer which are not resaleable as new;
(r)	which is subject to a down payment or security deposit;
(s)	which is not of a type held for sale in the ordinary course of any Loan Party’s business;
(t)	which is Commingled Inventory;
(u)	which is subject to a license agreement, a private label agreement or other similar arrangement with a third party which, in the Administrative Agent’s determination, restricts the ability of the Administrative Agent to exercise its rights under the Loan Documents with respect to such Inventory unless such third party has entered into an agreement in form and substance reasonably satisfactory to the Administrative Agent permitting the Administrative Agent to exercise its rights with respect to such Inventory or the Administrative Agent has otherwise agreed to allow such Inventory to be eligible in the Administrative Agent’s Permitted Discretion;
(v)	which is not covered by casualty insurance as required by the terms of this Agreement;
(w)	which consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available;
(x)	which (A) the value of which on the Inventory is reduced by any ledger reserve or (B) any capitalized variance to standard cost is maintained with respect thereto, but in each case, only to the extent of such reserve or variance which is in effect with respect thereto;
(y)	the manufacturing or distribution of which was not in material compliance with applicable law, including the FLSA; or
(z)	which consists of core (maintenance) inventory.

 

In the event that Inventory which was previously Eligible Inventory ceases to be Eligible Inventory hereunder, such Loan Party shall notify the Administrative Agent thereof on and at the time of submission to the Administrative Agent of the next Borrowing Base Certificate.

 

“ Enforcement Action ” means, with respect to the Obligations, any demand for payment or acceleration thereof, the exercise of any rights and remedies with respect to any Collateral securing such Obligations or the commencement or prosecution of

 

20

 

enforcement of any of the rights and remedies hereunder or under any other Loan Documents, or applicable law, including without limitation the exercise of any rights of set-off or recoupment, and the exercise of any rights or remedies of a secured creditor under the Uniform Commercial Code of any applicable jurisdiction or under the Bankruptcy Code.

 

“ Enhanced Yield Letter Agreement ” means the letter agreement entered into between the Borrower and each of the Initial Last Out Term Lenders dated on or about the date of this Agreement.

 

“ Environmental Action ” means any action, suit, demand, demand letter, claim, notice of non compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising from alleged injury or threat to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

 

“ Environmental Law ” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

 

“ Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

 

“ Equity Interests ” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.  Section references to ERISA are to ERISA as in effect at the date of this Agreement and any subsequent provisions of ERISA amendatory thereof, supplemental thereto or substituted therefor.

 

21

 

“ ERISA Affiliate ” means each person (as defined in Section 3(9) of ERISA) that together with any Loan Party would be deemed to be a “single employer” within the meaning of Section 414(b) or (c) of the Internal Revenue Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Internal Revenue Code, is treated as a single employer under Section 414 of the Internal Revenue Code.

 

“ Eurocurrency Liabilities ” has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“ Eurodollar Rate ” means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upward to the nearest whole multiple of 1/16 of 1% per annum) at which deposits in U.S. Dollars are offered by the principal office of the Administrative Agent in London, England to first-class banks in the London interbank market at 11:00 A.M. (London time) for U.S. Dollar deposits of amounts in immediately available funds comparable to the outstanding principal amount of the Eurodollar Rate Advance of the Administrative Agent (in its capacity as a Lender) (or, if the Administrative Agent is not a Lender with respect thereto, taking the average principal amount of the Eurodollar Rate Advance then being made by the various Lenders pursuant thereto) with maturities comparable to the Interest Period applicable to such Eurodollar Rate Advance commencing two Business Days thereafter as of 10:00 A.M. (New York City time) on the applicable Interest Determination Date by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period.  The Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Administrative Agent, subject , however , to the provisions of Section 2.07.  Notwithstanding the foregoing, the Eurodollar Rate shall not be less than 2.50% per annum.

 

“ Eurodollar Rate Advance ” means an Advance (other than a Swingline Advance) that bears interest as provided in Section 2.07(a)(ii).

 

“ Eurodollar Rate Reserve Percentage ” for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period.

 

“ Events of Default ” has the meaning specified in Section 6.01.

 

“ Excess Availability ” shall mean, as of any date of determination, the remainder of (a) the lesser of (i) the Borrowing Base at such time and (ii) the Total Revolving Credit

 

22

 

Commitment at such time minus any Specified Reserve, minus (b) the Aggregate Exposure at such time.

 

“ Excluded Accounts ” shall mean (w) Disbursement Accounts established solely for (i) payroll, (ii) tax payments, (iii) employee benefit programs or (iv) payment of medical and dental expenses in connection with health insurance programs for employees of the Borrower and the other Loan Parties, (x) petty cash accounts established (or otherwise maintained) by the Loan Parties that do not have cash balances at any time exceeding $50,000 in the aggregate for all such petty cash accounts, (y) fiduciary accounts and (z) trust accounts; provided that in no event shall Excluded Accounts include any Cash Collateral Accounts, Disbursement Accounts (other than those included in (w) above), Core Concentration Accounts, Lockbox Accounts or any other account pursuant to which a Cash Management Control Agreement or any other account control agreement has been executed and delivered to the Administrative Agent pursuant to this Agreement or any Collateral Document.

 

“ Executive Order ” has the meaning set forth in the definition of “Anti-Terrorism Laws.”

 

“ Extended Termination Date ” means, if the extension option is exercised in accordance with Section 2.19 and the Borrower has paid the Extension Fee, the date that is 12 months after the Closing Date.

 

“ Extension Effective Date ” has the meaning specified in Section 2.19.

 

“ Extension Fee ” means 1.00% of the sum of the Total Revolving Credit Commitment outstanding, as of the Extension Effective Date.

 

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“ Fee Letters ” means the letter agreements dated as of the date of this Agreement, by and among the Lead Arranger, the Administrative Agent, the Initial Revolving Credit Lenders and the Borrower.

 

“ Final Borrowing Order ” shall mean, collectively, the order of the Bankruptcy Court entered in the Chapter 11 Cases after a final hearing under Bankruptcy Rule 4001(c)(2) or such other procedures as approved by the Bankruptcy Court, which order shall be reasonably satisfactory in form and substance to the Instructing Group and the Last Out Requisite Lenders, together with all extensions, modifications and amendments thereto, in form and substance reasonably satisfactory to the Instructing Group and the Last Out Requisite Lenders, and which, among other matters but not by way of

 

23

 

limitation, authorizes the U.S. Debtors to obtain credit, incur (or guaranty) Debt, and grant Liens under (or in respect of) this Agreement and the other Loan Documents, as the case may be, and provides for the superpriority of the Administrative Agent’s and the Lenders’ claims hereunder and under the other Loan Documents.

 

“ Final Borrowing Order Entry Date ” shall mean the date on or after the Closing Date on which the Final Borrowing Order is entered by the Bankruptcy Court.

 

“ Final Order ” shall mean an order, judgment or other decree of the Bankruptcy Court or any other court or judicial body with proper jurisdiction, as the case may be, which is in full force and effect and which has not been reversed, stayed, modified or amended and as to which (i) any right to appeal or seek certiorari, review or rehearing has been waived or (ii) the time to appeal or seek certiorari, review or rehearing has expired and as to which no appeal or petition for certiorari, review or rehearing is pending.

 

“ Finished Goods ” shall mean completed goods which require no additional processing or manufacturing to be sold to third party customers by the Loan Parties in the ordinary course of business.

 

“ First Day Orders ” shall mean those orders entered by the Bankruptcy Court as a result of motions and applications filed by the U.S. Debtors with the Bankruptcy Court on the Petition Date, in each case in form and substance reasonably satisfactory to, and as approved by, the Administrative Agent pursuant to Section 3.01(m).

 

“ First Out Advances ” means all Advances other than the Last Out Term Advances.

 

“ First Out Final Payment Date ” means the first date on which the First Out Obligations (other than Unmatured Surviving Obligations) shall have been paid in full in cash, any outstanding Letters of Credit shall have been cash collateralized to the satisfaction of the Administrative Agent and each Issuing Bank and the Revolving Credit Commitments shall have been terminated in full.

 

“ First Out Lender ” means any Lender, other than the Last Out Term Lenders in their capacity as such, that is owed a First Out Advance.

 

“ First Out Lender Party ” means any Lender Party, other than the Last Out Term Lenders in their capacity as such.

 

“ First Out Obligations ” means all Obligations under the Loan Documents that are owed by the Loan Parties to (a) the Administrative Agent or (b) any First Out Lender Party and all Cash Management Obligations under the Secured Cash Management Agreements that are owed by the Loan Parties to the Cash Management Creditors.

 

“ Fiscal Quarter ” means any fiscal quarter of the Borrower and its Consolidated Subsidiaries that occurs within any Fiscal Year.

 

24

 

“ Fiscal Year ” means a fiscal year of the Borrower and its Consolidated Subsidiaries ending on December 31 in any calendar year.

 

“ FLSA ” means the Fair Labor Standards Act of 1938.

 

“ Foreign Government Scheme or Arrangement ” has the meaning specified in Section 4.01(m)(ii).

 

“ Foreign Plan ” has the meaning specified in Section 4.01(m)(ii).

 

“ Foreign Subsidiary ” means any Subsidiary of the Borrower which is a corporation organized under the laws of any jurisdiction other than the United States or any state thereof.

 

“ Fourth Amendment and Canadian Forbearance Agreement ” has the meaning specified in Preliminary Statement (3).

 

“ GAAP ” has the meaning specified in Section 1.03.

 

“ Governmental Authority ” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“ Guarantee and Collateral Agreement ” means the Guarantee and Collateral Agreement to be executed and delivered by the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit I, as such agreement may be amended, supplemented or otherwise modified from time to time.

 

“ Hazardous Materials ” means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

 

“ Hedge Agreements ” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts, commodities future or option contracts for materials used in the ordinary course of business and other similar agreements.

 

“ Indemnified Party ” has the meaning specified in Section 8.04(b).

 

“ Individual Exposure ” of any Revolving Credit Lender means, at any time, the sum of (a) the aggregate principal amount of all Revolving Credit Advances made by such Revolving Credit Lender and then outstanding, (b) such Revolving Credit Lender’s Pro Rata Share in the aggregate amount of all Swingline Advances outstanding at such

 

25

 

time and (c) such Revolving Credit Lender’s Pro Rata Share in the aggregate amount of all Letter of Credit Outstandings at such time.

 

“ Initial Borrowing Base Certificate ” means a certificate showing the calculation of the Borrowing Base as of August 31, 2009, together with all attachments and supporting documentation in form and substance reasonably satisfactory to the Instructing Group and certified as true, correct and complete in all material respects by a Responsible Officer of the Borrower.

 

“ Initial DIP Forecast ” has the meaning specified in Section 5.03(d).

 

“ Initial Issuing Bank ” has the meaning specified in the recital of parties to this Agreement.

 

“ Initial Last Out Term Lenders ” has the meaning specified in the recital of parties to this Agreement.

 

“ Initial Lenders ” means the Initial Last Out Term Lenders and the Initial Revolving Credit Lenders.

 

“ Initial Revolving Credit Lenders ” has the meaning specified in the recital of parties to this Agreement.

 

“ Insolvency Proceeding ” has the meaning specified in Section 2.20(o)(i).

 

“ Instructing Group ” means DBTCA, Eaton Vance Management and General Electric Capital Corporation; provided that if any such person ceases to be a Lender Party hereunder, such person shall cease to be, and no successor or assignee thereof shall become, a member of the Instructing Group.

 

“ Instrument ” means “ instrument ” as such term is defined in Article 9 of the UCC.

 

“ Interest Determination Date ” means, with respect to any Eurodollar Rate Advance, the second Business Day prior to the commencement of any Interest Period relating to such Eurodollar Rate Advance.

 

“ Interest Payment Date ” shall mean, with respect to any Advance (subject, in the case of any Last Out Term Advance, to Section 2.20), (a) the last day of each Interest Period applicable to the Borrowing of which such Advance is a part, and, in addition, the date of any continuation or Conversion of such Advance with or to an Advance of a different Type, (b) at maturity (whether by acceleration or otherwise), (c) after such maturity, on demand and (d) with respect to any Revolving Credit Advance, the date of termination and cancellation of the Revolving Credit Commitments in their entirety.

 

“ Interest Period ” means, for each Eurodollar Rate Advance comprising part of the same Borrowing to the Borrower, the period commencing on the date of such Eurodollar Rate Advance, the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance or the last day of the immediately preceding Interest Period and ending on

 

26

 

the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is one (1) month thereafter; provided that whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided , however , that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day.

 

“ Interim Borrowing Order ” means collectively, the order of the Bankruptcy Court entered in the Chapter 11 Cases after an interim hearing, together with all extensions, modifications and amendments thereto, in form and substance reasonably satisfactory to the Instructing Group and the Last Out Requisite Lenders, which, among other matters but not by way of limitation, authorizes, on an interim basis, the Borrower and Subsidiary Guarantors to execute and perform under the terms of this Agreement and the other Loan Documents and incur (and guarantee) and secure the Advances, Letters of Credit and other Obligations in connection therewith, which order shall be in form and substance satisfactory to the Instructing Group and the Last Out Requisite Lenders, and which shall be deemed satisfactory to each of the Instructing Group and each Last Out Term Lender if such order is substantially in the form of Exhibit H.

 

“ Interim Borrowing Order Entry Date ” means October 9, 2009.

 

“ Interim DIP Forecast ” has the meaning specified in Section 5.03(d).

 

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

“ Inventory ” means “ inventory ” as such term is defined in Article 9 of the UCC.

 

“ Inventory Formula Amount ” means, on any date of determination for Eligible Inventory, the lesser of (i) 65% of the Value of the Loan Parties’ Eligible Inventory; and (ii) 85% of the sum of the Net Orderly Liquidation Values of the Eligible Inventory by category.

 

“ Inventory Reserve ” means reserves established by the Administrative Agent in its commercially reasonable credit judgment from time to time to reflect factors that may negatively impact the Value of Inventory of the Borrower and the Subsidiary Guarantors, including:

 

(a)           any book reserves maintained by the Borrower in respect of Eligible Inventory (excluding a LIFO reserve under GAAP);

 

(b)          any change in salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks;

 

(c)           discrepancies that arise pertaining to inventory quantities on hand between a Loan Party’s perpetual accounting system, and physical counts of the

 

27

 

inventory which will be equal to the greater of 2% or the results of the physical inventory counts taken over the past 12 months with the variance expressed as a percentage of Inventory;

 

(d)          discontinuance or speed of turnover;

 

(e)           designation for return to vendor

 

(f)             damage, quality or failure to meet customer specifications;

 

(g)          revaluation for deduction of capitalized favorable variances;

 

(h)          exclusion of revaluation for addition of unfavorable variances; and

 

(i)              to reflect differences between a Loan Party’s actual cost to produce versus its selling price to third parties, determined on a product line basis.

 

“ Investment ” in any Person means any loan or advance to such Person, any purchase or other acquisition of any capital stock or other ownership or profit interest, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person, including, without limitation, any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (h) or (i) of the definition of “ Debt ” in respect of such Person.

 

“ Issuing Bank ” means the Initial Issuing Bank and any other Lender reasonably acceptable to the Administrative Agent and the Borrower that agrees to issue Letters of Credit hereunder.  Any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by one or more Affiliates of such Issuing Bank (and such Affiliate shall be deemed to be an “Issuing Bank” for all purposes of the Loan Documents).

 

“ Last Out Obligations ” means all Obligations under the Loan Documents that are owed by the Loan Parties to the Last Out Term Lenders, in their capacity as such.

 

“ Last Out Requisite Lenders ” means, at any time, Last Out Term Lenders owed or holding at least a majority in interest of the sum of (a) the aggregate principal amount of the Last Out Term Advances outstanding at such time and (b) the aggregate unused Last Out Term Commitments at such time; provided , however , that if any Last Out Term Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Last Out Requisite Lenders at such time the aggregate principal amount of the Last Out Term Advances owing to such Last Out Term Lender.

 

“ Last Out Term Advance ” has the meaning specified in Section 2.01(a).

 

“ Last Out Term Borrowing ” means a borrowing consisting of simultaneous Last Out Term Advances of the same Type made by the Last Out Term Lenders.

 

28

 

“ Last Out Term Commitment ” means, with respect to any Last Out Term Lender at any time, the amount set forth opposite such Lender’s name on Schedule I hereto under the caption “ Last Out Term Commitment ” or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(d) as such Lender’s “ Last Out Term Commitment ”.

 

“ Last Out Term Facility ” has the meaning specified in Preliminary Statement (4).

 

“ Last Out Term Lender ” means any Lender that has a Last Out Term Commitment or that is owed or holds a Last Out Term Advance.

 

“ Last Out Term Note ” means a promissory note of the Borrower payable to the order of any Last Out Term Lender, in substantially the form of Exhibit A3 hereto, evidencing the indebtedness of the Borrower to such Lender resulting from the Last Out Term Advance made by such Lender.

 

“ L/C Supportable Obligations ” shall mean (i) obligations of the Borrower or any of its Subsidiaries with respect to workers compensation, surety bonds and other similar statutory obligations and (ii) such other obligations of the Borrower or any of its Subsidiaries as are reasonably acceptable to the respective Issuing Bank and otherwise permitted to exist pursuant to the terms of this Agreement (other than obligations in respect of (w) Prepetition Obligations outstanding under the Prepetition Credit Agreement, (x) the Senior Subordinated Notes, (y) any other Debt or other obligations that are subordinated in right of payment to the Obligations and (z) any Equity Interests).

 

“ Lead Arranger ” has the meaning specified in the recital of parties to this Agreement.

 

“ Leases ” has the meaning specified in Section 4.01(u).

 

“ Lender Party ” means any Lender, the Swingline Bank and each Issuing Bank.

 

“ Lenders ” means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 8.07.

 

“ Lending Office ” means, with respect to any Lender Party, the office of such Lender Party specified as its “Lending Office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, as the case may be, or such other office of such Lender Party as such Lender Party may from time to time specify to the Borrower and the Administrative Agent.

 

“ Letter of Credit ” has the meaning specified in Section 2.03(a)(i).

 

“ Letter of Credit Advance ” means an advance made by an Issuing Bank pursuant to Section 2.03(e)(i).

 

29

 

“ Letter of Credit Back-Stop Arrangements ” has the meaning specified in Section 2.15(d).

 

“ Letter of Credit Disbursement ” has the meaning specified in Section 2.03(e)(ii).

 

“ Letter of Credit Outstandings ” shall mean, at any time, the sum of (i) the Available LC Amount of all outstanding Letters of Credit at such time and (ii) the aggregate amount of all Letter of Credit Advances at such time.

 

“ Letter of Credit Request ” has the meaning specified in Section 2.03(c)(i).

 

“ Letter of Credit Sub-Limit ” means $5,000,000.

 

“ Lien ” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, any agreement to give any of the foregoing, any lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

 

“ Liquidity ” means, as of any date of determination, an amount equal to the sum of (a) cash and Cash Equivalents held by (i) any Loan Party in (A) any Cash Collateral Account or (B) any other Deposit Account in the United States subject to a Cash Management Control Agreement or over which the Orders grant a perfected Lien in favor of the Secured Parties or (ii) any Mexican Subsidiary, but only up to a maximum amount of $2,500,000, plus (b) the Unused Revolving Credit Commitments available to be drawn on such date by the Borrower, as reduced by any amount required to satisfy the applicable conditions precedent to any extension of credit, tested as of such date, provided that until the limitation on availability set forth in the Interim Borrowing Order and the condition on availability set forth in Section 3.02(b) are, respectively, satisfied, the limitation on availability set forth in the Interim Borrowing Order and the availability block in Section 3.02(b) shall be disregarded when calculating the amount of the Unused Revolving Credit Commitments for the purposes of calculating Liquidity; provided further that amounts held in Excluded Accounts or amounts pledged on a first priority basis to Persons other than the Secured Parties or that are secured by Senior Third Party Liens shall be excluded in calculating Liquidity.

 

“ Loan Documents ” means (i) this Agreement, (ii) the Notes, (iii) the Collateral Documents, (iv) the Interim Borrowing Order or (when entered) the Final Borrowing Order (v) after the execution and delivery thereof pursuant to the terms of this Agreement, each Note and each additional Collateral Document and (vi) each other document, instrument or agreement designated as a “Loan Document” by the Administrative Agent and the Borrower, in each case as amended, supplemented or otherwise modified from time to time.

 

“ Loan Parties ” means the Borrower and the Subsidiary Guarantors.

 

“ Lockbox Account ” shall mean each U.S. Deposit Account established at a Collection Bank subject to a Cash Management Control Agreement into which funds shall be transferred as provided in Section 5.01(r)(i).

 

30

 

“ Majority Lenders ” means (A) at any time prior to the occurrence of the First Out Final Payment Date, Revolving Credit Lenders owed or holding at least a majority in interest of the sum of (a) the aggregate principal amount of the Revolving Credit Advances (other than Swingline Advances) outstanding at such time, (b) the aggregate principal amount of the Swingline Advances outstanding at such time, (c) the aggregate Available LC Amount of all Letters of Credit outstanding at such time and (d) the aggregate Unused Revolving Credit Commitments at such time; provided , however , that if any Revolving Credit Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Majority Lenders at such time (i) the aggregate principal amount of the Revolving Credit Advances (other than Swingline Advances) owing to such Revolving Credit Lender and outstanding at such time, (ii) such Revolving Credit Lender’s Pro Rata Share of the aggregate principal amount of the Swingline Advances outstanding at such time, (iii) such Revolving Credit Lender’s Pro Rata Share of the aggregate Available LC Amount of all Letters of Credit issued and outstanding at such time, and (iv) the Unused Revolving Credit Commitment of such Revolving Credit Lender at such time, and (B) at any time following the occurrence of the First Out Final Payment Date, the Last Out Requisite Lenders.  For purposes of this definition prior to the occurrence of the First Out Final Payment Date, the aggregate principal amount of Swingline Advances owing to the Swingline Bank and the aggregate principal amount of Letter of Credit Advances owing to each Issuing Bank and the Available LC Amount of each Letter of Credit shall, in each case, be considered to be owed to the Revolving Credit Lenders ratably in accordance with their respective Revolving Credit Commitments.

 

“ Margin Stock ” has the meaning specified in Regulation U.

 

“ Mandatory Borrowing ” shall have the meaning provided in Section 2.02(c).

 

“ Material Adverse Effect ” means a material adverse effect on (a) the business, financial condition, operations, assets or liabilities of any Loan Party or any of its Subsidiaries, (b) the rights and remedies of the Administrative Agent or any Lender Party under any Loan Document or Related Document or (c) the ability of any Loan Party to perform its Obligations under any Loan Document or Related Document to which it is or is to be a party (it being understood and agreed that a Material Adverse Effect will not be deemed to exist as a result of the filing of the Chapter 11 Cases, or the Effects of Bankruptcy or the circumstances or events leading up thereto).

 

“ Mexican Subsidiary ” means any company organized and existing under the laws of Mexico that is a Subsidiary.

 

“ Milestone Termination Date ” means, for the purposes of the Fourth Amendment and Canadian Forbearance Agreement, the earliest to occur of any of the following:

 

(a)           any failure to comply with Section 5.01(q);

 

(b)           any failure to comply with Section 5.02(h);

 

(c)           any failure to comply with Section 5.02(m);

 

31

 

(d)           the occurrence of a Default under Section 6.01(n); or

 

(e)           the occurrence of a Default under Section 6.01(j).

 

“ Minimum Net Cash Flow Schedule ” means the schedule attached hereto as Schedule 5.04(a), in form and substance satisfactory to the Instructing Group, provided by the Borrower to the Administrative Agent on the Closing Date, as amended or updated by the Borrower with the approval of the Instructing Group and pursuant to Section 5.04(a).

 

“ Moody’s ” has the meaning specified in the definition of “Cash Equivalents” in this Section 1.01.

 

“ NAIC ” means the National Association of Insurance Commissioners.

 

“ Net Cash Flow ” means, for any period, the sum of the line items entitled “Net Cash Flow” for each week that is included in such period, as set forth in the most recent Variance Report delivered to the Administrative Agent in accordance with Section 5.03(g).

 

“ Net Cash Proceeds ” means, with respect to any sale, lease, transfer or other disposition of any asset or any Recovery Event, the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration, but only as and when received)) by or on behalf of such Person in connection with such transaction or event after deducting therefrom only (without duplication):

 

(a)           reasonable and customary fees, commissions, expenses, issuance costs, discounts and other costs paid by the Borrower or any of its Subsidiaries in connection with such transaction or event;

 

(b)           the amount of taxes paid or estimated to be payable in connection with or as a result of such transaction or event;

 

(c)           the amount of the outstanding principal amount of, premium or penalty, if any, and interest on any Debt (other than pursuant to the Facilities) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of any such transaction or event;

 

(d)           the amount of any reasonable reserves established in accordance with GAAP against any liabilities (other than taxes described in clause (b) above) that are (i) associated with the assets that are the subject of such transaction or event and (ii) retained by the Borrower or any of its Subsidiaries,

 

provided , however , that in the event the amount of any estimated tax payable described in clause (b) above exceeds the amount actually paid, or upon any subsequent reduction in the amount of any reserve described in clause (d) above, the Borrower or its applicable Subsidiary shall be deemed to have received Net Cash Proceeds in an amount

 

32

 

equal to such excess or reduction, at the time of payment of such taxes or on the date of such reduction, as the case may be.

 

“ Net Orderly Liquidation Value ” means the “ net orderly liquidation value ” determined separately for raw materials, work-in-process and finished goods Inventory by an unaffiliated valuation company acceptable to the Administrative Agent after performance of an inventory valuation to be done at the Administrative Agent’s request and the Borrower’s expense, less the amount estimated by such valuation company for marshalling, reconditioning, carrying, and sales expenses designated to maximize the resale value of such Inventory on an “as is” basis and assuming that the time required to dispose of such Inventory is customary with respect to such Inventory and expressed as a percentage of the net book value of such raw materials, work-in-process and finished goods Inventory.

 

“ Non-Binding Restructuring Term Sheet ” means the non-binding restructuring term sheet attached as Exhibit A to the Noteholder New Capital Commitment Agreement, as further amended, supplemented, modified or waived from time to time.

 

“ Note ” means a Revolving Credit Note, a Last Out Term Note or a Swingline Note.

 

“ Noteholder Restructuring Support Lockup Agreement ” means the Restructuring Support Agreement dated as of October 7, 2009 by and among the Borrower and certain holders of the Senior Subordinated Notes, as further amended, supplemented, modified or waived from time to time.

 

“ Noteholder New Capital Commitment Agreement ” means the Convertible Notes Commitment Agreement dated as of October 7, 2009, entered into by the Borrower and Blackrock Financial Management, Inc., Brigade Capital Management, LLC, Canyon Capital Advisors LLC, Sankaty Advisors, LLC and Tinicum Capital Partners II, LP, (the “ Backstop Commitment Providers ” pursuant to which the Backstop Commitment Providers will underwrite, on the terms and subject to the conditions set out therein and in the Noteholder New Capital Term Sheet, the issuance by the Borrower of 7.5% convertible notes due 2019 in an aggregate principal amount of $140,000,000, to be issued on the effective date of an Approved Plan, as further amended, supplemented, modified or waived from time to time.

 

“ Noteholder New Capital Term Sheet ” means the new capital term sheet attached as Exhibit A to the Noteholder New Capital Commitment Agreement, as further amended, supplemented, modified or waived from time to time.

 

“ Notice of Last Out Term Borrowing ” has the meaning specified in Section 2.02(a).

 

“ Notice of Revolving Credit Borrowing ” has the meaning specified in Section 2.02(b).

 

“ Notice of Swingline Borrowing ” has the meaning specified in Section 2.02(c)

 

33

 

“ NPL ” means the National Priorities List under CERCLA.

 

“ Obligation ” means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured. Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents include (a) the unpaid principal of and interest on the Advances, reimbursement obligations in respect of Swingline Advances, Letters of Credit, Letter of Credit commissions, charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by any Loan Party under any Loan Document (including, without limitation, interest accruing at the then applicable rate provided herein after the maturity of the Advances and reimbursement obligations in respect of Swingline Advances and Letter of Credit Advances and Letters of Credit) to the Administrative Agent or any Lender Party, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, the other Loan Documents, any Letter of Credit or any other document made, delivered or given in connection with any of the foregoing, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lender Parties that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements) and (b) the obligation of any Loan Party to reimburse any amount in respect of any of the foregoing that any Lender Party, in its sole discretion, may elect to pay or advance on behalf of such Loan Party.

 

“ OFAC ” has the meaning set forth in the definition of “Anti-Terrorism Laws.”

 

“ Off-Balance Sheet Liabilities ” of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactions that do not create a liability on the balance sheet of such Person, (iii) any obligation under a Synthetic Lease or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.

 

“ Orders ” means the Interim Borrowing Order and the Final Borrowing Order.

 

“ Original Termination Date ” means the date that is nine (9) months after the Closing Date.

 

“ Other Taxes ” has the meaning specified in Section 2.12(b).

 

“ Participant ” has the meaning specified in Section 2.03(d)(i).

 

“ PBGC ” means the Pension Benefit Guaranty Corporation (or any successor).

 

34

 

“ Permitted Discretion ” means the exercise of the Administrative Agent’s good faith judgment (from the perspective of a secured asset-based lender) in consideration of any factor which will or is reasonably likely to (i) adversely affect the value of any Collateral, the enforceability or priority of the Liens thereon or the amount that the Administrative Agent and the Revolving Credit Lenders would be likely to receive (after giving consideration to delays in payment and costs of enforcement) in the liquidation thereof, (ii) suggest that any collateral report or financial information delivered to the Administrative Agent or the Revolving Credit Lenders by any Person on behalf of the Borrower or any other Loan Party is incomplete, inaccurate or misleading in any material respect, (iii) materially increase the likelihood that the Revolving Credit Lenders would not receive payment in full in cash for all of the Obligations or (iv) otherwise materially adversely affect the interests of the Secured Parties.  In exercising such judgment, the Administrative Agent may consider such factors already included in or tested by the definition of Eligible Accounts or Eligible Inventory, as well as any of the following:  (i) the changes in collection history and Dilution or collectability with respect to the Accounts; (ii) changes in demand for, pricing of, or product mix of Inventory; (iii) changes in any concentration of risk with respect to the respective Loan Party’s Accounts or Inventory; and (iv) any other factors that change the credit risk of lending to the Borrower on the security of any Loan Party’s Accounts or Inventory.  The burden of establishing lack of good faith hereunder shall be on the Borrower.

 

“ Permitted Investors ” means Sun Capital Securities Group LLC, Sun Capital Partners V, L.P. and their affiliates.

 

“ Permitted Liens ” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced:  (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business outstanding at any time and securing indebtedness that is not overdue for a period of more than 30 days; (c) Liens arising from judgments or decrees in circumstances not constituting an Event of Default under Section 6.01(g); (d) Liens incurred or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business; (e) ground leases in respect of real property on which facilities owned or leased by the Borrower or any of its Subsidiaries are located; (f) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business of the Borrower and its Subsidiaries taken as a whole; (g) any interest or title of a lessor or secured by a lessor’s interest under any lease permitted by this Agreement and any Liens arising from any financing statement filed in connection with such lease; (h) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (i) Liens on goods the purchase price of which is financed by a documentary letter of credit issued for the account of the Borrower or any of its Subsidiaries; provided that such Lien secures only

 

35

 

the obligations of the Borrower or such Subsidiaries in respect of such letter of credit to the extent permitted under Section 5.02(b); and (j) leases or subleases granted to others not interfering in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole.

 

“ Person ” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

 

“ Petition Date ” has the meaning specified in Preliminary Statement (1).

 

“ Plan ” means any multiemployer or single-employer plan, as defined in Section 4001 of ERISA and subject to Title IV of ERISA, that is or was within any of the preceding five plan years maintained or contributed to by (or to which there is or was an obligation to contribute or to make payments of) any Loan Party or an ERISA Affiliate.

 

“ Pledged Stock ” means, at any time, any promissory notes, stock certificates or other securities now or hereafter included in the Collateral, including all certificates, instruments or other documents representing or evidencing any such Collateral.

 

“ Post Petition ” means the time period beginning immediately upon the filing of the Chapter 11 Cases.

 

“ Prepetition ” means the time period prior to the filing of the Chapter 11 Cases.

 

“ Prepetition Administrative Agent ” means the “Administrative Agent” as defined in the Prepetition Credit Agreement.

 

“ Prepetition Collateral ” shall have the meaning set forth in the Interim Borrowing Order or the Final Borrowing Order, as applicable.

 

“ Prepetition Collateral Agent ” shall have the meaning provided in Section 2.17(a).

 

“ Prepetition Collateral Documents ” means the “Collateral Documents” under, and as defined in, the Prepetition Credit Agreement, in each case as amended, modified or supplemented through the Petition Date.

 

“ Prepetition Credit Agreement ” has the meaning specified in Preliminary Statement (2).

 

“ Prepetition Debt ” means Debt of any Loan Party outstanding on the Petition Date, including Debt under the Prepetition Loan Documents and the Subordinated Debt Documents.

 

36

 

“ Prepetition Facilities ” means each “Facility” under, and as defined in, the Prepetition Credit Agreement, in each case as amended, modified or supplemented through the Petition Date.

 

“ Prepetition Lender Restructuring Support Lockup Agreement ” means the Restructuring Support Agreement dated as of October 7, 2009 by and among the Borrower and certain of the Prepetition Lenders.

 

“ Prepetition Lender Restructuring Term Sheet ” means the term sheet setting forth the commercial terms for a restructuring of the Prepetition Facilities to be implemented on the effective date of an Approved Plan, attached as Exhibit A to the Noteholder New Capital Commitment Agreement, as further amended, supplemented, modified or waived from time to time.

 

“ Prepetition Lenders ” has the meaning specified in Preliminary Statement (2).

 

“ Prepetition Loan Documents ” means the Prepetition Credit Agreement, the Hedge Agreements (as defined in the Prepetition Credit Agreement) and the related guaranties, pledge agreements, security agreements, mortgages, notes and other agreements and instruments entered into in connection with the Prepetition Credit Agreement and such Hedge Agreements, (including the Prepetition Collateral Documents) in each case as amended, modified or supplemented through the Petition Date.

 

“ Prepetition Obligations ” means the “Obligations” as defined in the Prepetition Credit Agreement.

 

“ Prepetition Payment ” means a payment (by way of adequate protection or otherwise) of principal or interest or otherwise on account of any Prepetition Debt of any Loan Party, “critical vendor payments” or trade payables (including, without limitation, in respect of reclamation claims) or other Prepetition claims against any Loan Party.

 

“ Prepetition Secured Parties ” means the “Secured Parties” under, and as defined in, the Prepetition Credit Agreement, in each case as amended, modified or supplemented through the Petition Date.

 

“ Prepetition Steering Committee ” means the informal “Prepetition Lender Steering Committee”, comprised of certain Prepetition Lenders previously identified to the Borrower.

 

“ Primary Obligations ” shall mean (x) in the case of the Obligations that are First Out Obligations, all principal (or Available LC Amount, as applicable) of, premium, fees and interest on, all Advances (other than Last Out Term Advances) and all Letter of Credit Outstandings and (y) in the case of Cash Management Obligations, all amounts due under each Secured Cash Management Agreement that is a Qualified Secured Cash Management Agreement (other than indemnities, fees (including, without limitation, attorneys’ fees) and similar obligations and liabilities),

 

37

 

“ Prime Rate ” means the rate which the Administrative Agent announces from time to time as its prime lending rate, the Prime Rate to change when and as such prime lending rate changes.  The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer by the Administrative Agent, which may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.

 

“ Pro Rata Share ” of any amount means the product of such amount times a fraction the numerator of which is the amount of such Lender’s Revolving Credit Commitment at such time and the denominator of which is the aggregate principal amount of the Total Revolving Credit Commitment at such time; provided that if the Pro Rate Share of any Lender is to be determined after the Total Revolving Credit Commitment has been terminated, then the Pro Rata Share of such Lender shall be determined immediately prior (and without giving effect) to such termination.

 

“ Qualified Secured Cash Management Agreement ” shall mean each Cash Management Agreement entered into by the Borrower or any Subsidiary Guarantor with any Lender or any Affiliate thereof (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason) so long as such Cash Management Agreement is designated as a Qualified Secured Cash Management Agreement pursuant to Section 5.01(t).

 

“ Raw Materials ” shall mean any items or materials used or consumed in the manufacture of goods to be sold by the Loan Parties in the ordinary course of business.

 

“ Recovery Event ” means any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of the Borrower or any Loan Party or any of their respective Subsidiaries (in each case, other than any non-Debtor Subsidiary).

 

“ Register ” has the meaning specified in Section 8.07(d).

 

“ Regulation U ” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“ Related Fund ” means any Person that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) a Person or an Affiliate of a Person that administers or manages a Lender.

 

“ Rent Reserve ” means a reserve established by the Administrative Agent in respect of rent payments made by the Borrower or a Subsidiary Guarantor for each location at which Inventory of the Borrower or a Subsidiary Guarantor is located that is not subject to a Third Party Agreement equal to three times the monthly gross rent or warehouse payments for each such location, as adjusted from time to time by the Administrative Agent in its Permitted Discretion.

 

“ Reorganization Plan ” means a plan of reorganization in any of the Chapter 11 Cases.

 

38

 

“ Reportable Event ” means an event described in Section 4043 of ERISA and the regulations thereunder, as to which the PBGC has not waived the notification requirement of Section 4043(a).

 

“ Requirements of Law ” means, with respect to any Person, all laws, constitutions, statutes, treaties, ordinances, rules and regulations, all orders, writs, decrees, injunctions, judgments, determinations or awards of an arbitrator, a court or any other governmental authority, and all governmental authorizations, binding upon or applicable to such Person or to any of its properties, assets or businesses.

 

“ Responsible Officer ” means any officer of any Loan Party or any of its Subsidiaries.

 

“ Restricted Party ” means any person listed:

 

(a)            in the Annex to the Executive Order;

 

(b)            on the “Specially Designated Nationals and Blocked Persons” list maintained by the OFAC;

 

(c)            in any successor list to either of the foregoing; or

 

(d)            any person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order.

 

“ Restructuring Support Lockup Agreements ” means the Prepetition Lender Restructuring Support Lockup Agreement and the Noteholder Restructuring Support Lockup Agreement.

 

“ Restructuring Term Sheets ” means the Non-Binding Restructuring Term Sheet, the Prepetition Lender Restructuring Term Sheet and the Noteholder New Capital Term Sheet.

 

“ Retained Advisors ” means Houlihan Lokey, as advisors to the Lenders in connection with this Agreement and their credit evaluation of the Borrower and its Subsidiaries.

 

“ Revolving Credit Borrowing ” means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by the Lenders.

 

“ Revolving Credit Advance ” has the meaning specified in Section 2.01(b).

 

“ Revolving Credit Commitment ” means, with respect to any Lender at any time, the amount set forth opposite such Lender’s name on Schedule I hereto under the caption “Revolving Credit Commitment” or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(d) as such Lender’s “Revolving Credit Commitment”, as such amount may be (x) reduced from time to time or terminated as

 

39

 

provided herein or (y) changed from time to time pursuant to the Interim Borrowing Order or the Final Borrowing Order.

 

“ Revolving Credit Facility ” has the meaning specified in Preliminary Statement (4)

 

“ Revolving Credit Lender ” means each Lender that has a Revolving Credit Commitment or that is owed or holds Revolving Credit Advances.

 

“ Revolving Credit Note ” means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A1 hereto, with blanks appropriately completed in conformity with this Agreement, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender.

 

“ S&P ” has the meaning specified in the definition of “Cash Equivalents” in this Section 1.01.

 

“ Secondary Obligations ” shall mean all Cash Management Obligations under Secured Cash Management Agreements that are not Qualified Secured Cash Management Agreements.

 

“ Secured Cash Management Agreement ” shall mean each Cash Management Agreement entered into by a Loan Party with any Cash Management Creditor.

 

“ Secured Parties ” means the Administrative Agent, the Lead Arranger, the Lender Parties and the Cash Management Creditors.

 

“ Senior Lien Reserve ” means a reserve established by the Administrative Agent in respect of the aggregate amount of liabilities secured by Liens upon Eligible Accounts and/or Eligible Inventory that are senior to the Administrative Agent’s Liens (but imposition of any such reserve shall not waive any Event of Default arising therefrom).

 

“ Senior Subordinated Note Indenture ” means the indenture entered into by the Borrower and certain of its Subsidiaries in connection with the issuance of the Senior Subordinated Notes, together with all instruments and other agreements entered into by the Borrower or such Subsidiaries in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 5.02(h).

 

“ Senior Subordinated Notes ” means the senior subordinated notes due 2015 in an aggregate principal amount of $275,000,000 of the Borrower issued on January 31, 2005, pursuant to the Senior Subordinated Note Indenture.

 

“ Senior Third Party Liens ” has the meaning provided in the Orders.

 

“ Specified Reserve ” shall mean, as of any date of determination, the sum of (x) all or any portion of any Availability Reserve which the Administrative Agent in its

 

40

 

Permitted Discretion elects to designate as a “Specified Reserve” plus (y) all or any amount of the Carve-Out pursuant to the terms of the Interim Borrowing Order or (when entered) the Final Borrowing Order, as applicable, which any member of the Instructing Group directs the Administrative Agent to designate as a “Specified Reserve”.

 

“ Subordinated Debt ” means (a) the Debt evidenced by the Senior Subordinated Notes, (b) any other Debt of the Borrower that is expressly subordinated to the Obligations of the Borrower under the Loan Documents in a manner no less favorable to the Lender Parties than those applicable to the Senior Subordinated Notes and (c) guaranty Obligations of any Subsidiary Guarantor in respect of any such Debt referred to in the foregoing clauses (a) and (b), so long as such guaranty Obligations are subordinated to the Obligations of such Subsidiary Guarantor under the Loan Documents in a manner no less favorable to the Lender Parties than those applicable to the guaranty Obligations of such Subsidiary Guarantor in respect of the Senior Subordinated Notes.

 

“ Subordinated Debt Documents ” means the Senior Subordinated Note Indenture and all other agreements, indentures and instruments pursuant to which Subordinated Debt is issued.

 

“ Subsidiary ” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

 

“ Subsidiary Guarantors ” means each Subsidiary of the Borrower that is a U.S. Debtor and is listed on Schedule II hereto, and each other Subsidiary of the Borrower that shall be required to deliver an Assumption Agreement pursuant to this Agreement.

 

“ Supermajority Revolving Credit Lenders ” shall mean those Revolving Credit Lenders which are not Defaulting Lenders which would constitute the Majority Lenders under, and as defined in, this Agreement, if the reference to “a majority” contained therein were changed to “66.67%”.

 

“ Superpriority Claim ” means a claim against any Loan Party in any of the Chapter 11 Cases which is an administrative expense claim having priority over any or all administrative expenses of the kind specified in Sections 503(b) or 507(b) of the Bankruptcy Code.

 

“ Swingline Advance ” has the meaning specified in Section 2.01(c).

 

“ Swingline Back-Stop Arrangements ” has the meaning specified in Section 2.15(f).

 

41

 

“ Swingline Bank ” means the Administrative Agent, in its capacity as Swingline Bank hereunder.

 

“ Swingline Expiry Date ” means that date which is five Business Days prior to the Original Termination Date or, if applicable, the Extended Termination Date.

 

“ Swingline Note ” means a promissory note of the Borrower payable to the order of the Swingline Bank, in substantially the form of Exhibit A2 hereto, with blanks appropriately completed in conformity with this Agreement, evidencing the aggregate indebtedness of the Borrower to the Swingline Bank resulting from the Swingline Advances made by the Swingline Bank.

 

“ Swingline Sub-Limit ” means $5,000,000.

 

“ Syndication Agent ” has the meaning specified in the recital of the parties to this Agreement.

 

“ Synthetic Lease ” shall mean a lease transaction under which the parties intend that (i) the lease will be treated as an “operating lease” by the lessee and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.

 

“ Taxes ” has the meaning specified in Section 2.12(a).

 

“ Termination Date ” means the earliest of (i) the Original Termination Date (or, if extended in accordance with the provisions of Section 2.19, the Extended Termination Date, (ii) the effective date of a Reorganization Plan in the Chapter 11 Cases, as specified in any such Reorganization Plan, (iii) the date of termination of the Revolving Credit Commitments of the Lenders and their obligations to make Advances hereunder and the termination of the obligation of any Issuing Bank to issue Letters of Credit hereunder and the cancellation and/or Cash Collateralization of all outstanding Letters of Credit pursuant to the exercise of remedies under Section 6.01 as a result of the occurrence of an Event of Default which is continuing, (iv) the date on which neither the Interim Borrowing Order nor the Final Borrowing Order is a Final Order, (v) the date that is 45 days after the Interim Borrowing Order Entry Date if the Final Borrowing Order has not been entered by the Bankruptcy Court by such date, (vi) the date of entry of an order of the Bankruptcy Court confirming a Reorganization Plan in the Chapter 11 Cases that has not been consented to by the Lenders and fails to provide for the payment in full in cash of all Obligations under this Agreement and the other Loan Documents on the effective date of such plan, (vii) if a Reorganization Plan that has been consented to by the Lenders or that provides for payment in full in cash of all Obligations under this Agreement and the other Loan Documents has been confirmed by order of the Bankruptcy Court, the earlier of the effective date of such Reorganization Plan or the sixtieth (60th) day after the date of entry of such confirmation order, (viii) the date of the closing of a sale, transfer or other disposition of all or a material portion of the assets or stock of the Loan Parties pursuant to Section 363 of the Bankruptcy Code or otherwise, (ix) the date of entry of an order converting any of the Chapter 11 Cases to one under Chapter 7 of the

 

42

 

Bankruptcy Code, (x) the date of indefeasible prepayment in full by the Borrower of the Advances and the cancellation and/or Cash Collateralization of all outstanding Letters of Credit and the permanent reduction of the Revolving Credit Commitments to zero dollars ($0) in accordance with Section 2.05.

 

“ Third Party Agreement ” shall mean (a) an agreement, in form and substance reasonably acceptable to the Administrative Agent, pursuant to which a landlord, warehouseman, processor, shipper, customs broker or freight forwarder, repairman, mechanic, consignee, bailee or other third party who stores, processes, maintains or holds Collateral acknowledges, among other things, the Administrative Agent’s Lien on such Collateral, the Administrative Agent’s ability to enforce its Lien on such Collateral and the subordination of any Lien held by such landlord, warehouseman, processor, shipper, customs broker or freight forwarder, repairman, mechanic, consignee, bailee or other third party on such Collateral to the Administrative Agent’s Lien thereon or (b) an agreement, in form and substance reasonably acceptable to the Administrative Agent, pursuant to which a holder of a Lien on premises of the Borrower or any Subsidiary Guarantor where Eligible Inventory is located agrees and acknowledges, among other things, that the Administrative Agent may without interference from such Lien holder (i) gain access to, remove and exercise its rights against any Inventory located at such premises after an Event of Default, and that such Lien holder may not remove or exercise any remedies against such Inventory except as agreed, (ii) for a period of time not less than ninety (90) days (or such shorter time period as the Administrative Agent may agree in its sole discretion) after the Administrative Agent shall have taken possession of such Inventory, (A) store such Inventory at such premises and (B) conduct a sale of such Inventory at such premises and (iii) examine and make copies of books and records of the Borrower or any Subsidiary Guarantor located at such premises with respect to such Inventory.

 

“ Total Revolving Credit Commitment ” shall mean, at any time, the sum of all Revolving Credit Commitments of the Lenders at such time. The initial amount of the Total Revolving Credit Commitment of all Lenders is the lesser of (a) on and after the Final Borrowing Order Entry Date, $25,000,000 (less the amount, if any, by which the Revolving Credit Commitments have been reduced as provided herein) or (b) such lesser amount as is set forth in the Final Borrowing Order as then in effect, provided that to the extent the Final Borrowing Order designates that the Total Revolving Credit Commitment of all Lenders is less than $25,000,000 (less the amount, if any, by which the Revolving Credit Commitments have been reduced as provided herein), each Lender’s Revolving Credit Commitment shall be proportionately reduced and Schedule I shall be amended (without the consent of the Loan Parties) accordingly.

 

“ Transactions ” means (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party, the making of Revolving Credit Advances and the use of the proceeds thereof and the issuance of Letters of Credit hereunder and (b) the commencement of the Chapter 11 Cases.

 

“ Type ” refers to the distinction between Advances bearing interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.

 

43

 

“ UCC ” means the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.

 

“ Unfunded Current Liability ” of any Plan means the amount, if any, by which the present value of the accumulated benefits under the Plan exceeds the fair market value of the assets allocable thereto as determined in accordance with Statement of Financial Accounting Standards No. 87 as reported in the most recent actuarial report available for such Plan.

 

“ United States ” and “ U.S. ” each mean the United States of America.

 

“ Unmatured Surviving Obligations ” means Obligations which by their terms survive termination of this Agreement or any other Loan Document, as applicable, and which, at the relevant time, are not then due and payable.

 

“ Unused Revolving Credit Commitment ” means, with respect to any Lender at any time, (a) such Lender’s Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all Revolving Credit Advances made by such Lender and outstanding at such time, plus (ii) such Lender’s Pro Rata Share of (A) the aggregate principal amount of all Swingline Advances made by the Swingline Bank pursuant to Section 2.01(c) and outstanding at such time, (B) the aggregate Available LC Amount of all Letters of Credit outstanding at such time and (C) the aggregate principal amount of all Letter of Credit Advances made by each Issuing Bank pursuant to Section 2.03(e) and outstanding at such time.

 

“ Updated DIP Forecast ” means an update to the Initial DIP Forecast delivered pursuant to Section 2.19(b)(vi) or Section 5.03(d).

 

“ U.S. Debtor ” and “ U.S. Debtors ” respectively have the meanings specified in Preliminary Statement (1).

 

“ U.S. Dollar Equivalent ” of an amount denominated in a currency other than U.S. Dollars shall mean, at any time for the determination thereof, the amount of U.S. Dollars which could be purchased with the amount of such currency involved in such computation at the spot exchange rate therefor as quoted by the Administrative Agent as of 11:00 A.M. (New York time) on the date two Business Days prior to the date of any determination thereof for purchase on such date.

 

“ U.S. Person ” means any Person which is organized under the laws of a jurisdiction of the United States.

 

“ USA Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, Title III of Public Law 107-56 (signed into law October 26, 2001).

 

“ Value ” means (a) for Inventory, its value determined on the basis of the lower of cost or market, calculated on a first-in, first out basis, and excluding any reserves established by the Loan Parties and any portion of cost attributable to intercompany profit

 

44

 

among the Loan Parties; and (b) for an Account, the meaning set forth in the final paragraph of the definition of “Eligible Account”.

 

“ Variance Report ” has the meaning specified in Section 5.03(g).

 

“ Voting Stock ” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

 

“ Work-in-Process ” shall mean Inventory which consists of work-in-process including, without limitation, materials other than Raw Materials, Finished Goods or saleable products, title to which and sole ownership of which is vested in a Loan Party.

 

“ $ ” or “ U.S. Dollars ” means the lawful currency of the United States of America.

 

SECTION 1.02. Computation of Time Periods .  In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

 

SECTION 1.03. Accounting Terms .  All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(f) (“ GAAP ”).

 

SECTION 1.04. Currency Equivalent .  For purposes of construction of the terms hereof, the equivalent in another currency of an amount in U.S. Dollars shall be determined by using the quoted spot rate at which DBTCA’s principal office in New York City offers to purchase such other currency with the equivalent in dollars in New York City at 9:00 A.M. (New York City time) on the date on which such equivalent is to be determined.

 

SECTION 1.05. Uniform Commercial Code .  Unless otherwise defined herein or in the other Documents, terms used herein which are defined in the UCC as in effect in the State of New York from time to time are used herein as therein defined.

 

ARTICLE II

 

AMOUNTS AND TERMS OF THE ADVANCES

AND THE LETTERS OF CREDIT

 

SECTION 2.01. Last Out Term Advances, Revolving Credit Advances and Swingline Advances .  (a)  Last Out Term Advances .  Each Last Out Term Lender severally agrees, on the terms and conditions hereinafter set forth, to make a single term advance (the “ Last Out Term Advances ”) to the Borrower on the Closing Date in the amount of such Last Out Term Lender’s Last Out Term Commitment at such time.  The Last Out Term Borrowing shall consist of Last Out Term Advances made simultaneously by the Last Out Term Lenders ratably

 

45

 

according to their Last Out Term Commitments.  Amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed.

 

(b)           Revolving Credit Advances .  Each Revolving Credit Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a “ Revolving Credit Advance ”) to the Borrower from time to time on any Business Day during the period from the Closing Date until the Termination Date; provided that a Revolving Credit Advance shall not be made (and shall not be required to be made) by any Revolving Credit Lender in any instance where the incurrence thereof (after giving effect to the use of the proceeds thereof on the date of the incurrence thereof to repay any amounts theretofore outstanding pursuant to this Agreement) would cause (x) the Individual Exposure of such Revolving Credit Lender to exceed the amount of its Revolving Credit Commitment at such time or (y) the Aggregate Exposure (after giving effect to the use of the proceeds thereof on the date of the incurrence thereof to repay any amounts theretofore outstanding pursuant to this Agreement) to exceed (A) the Total Revolving Credit Commitment at such time minus (B) the Specified Reserve at such time.  Each Borrowing shall be in an aggregate amount of $1,000,000 or an integral multiple of $250,000 in excess thereof (other than a Borrowing the proceeds of which shall be used solely to repay or prepay in full outstanding Swingline Advances or Letter of Credit Advances) and shall consist of Revolving Credit Advances made simultaneously by the Revolving Credit Lenders ratably according to their Revolving Credit Commitments.  The Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01 in accordance with the provisions of this Agreement.

 

(c)           Swingline Advances .  The Borrower may request the Swingline Bank to make, and the Swingline Bank shall make, on the terms and conditions hereinafter set forth, a revolving loan or revolving loans (each, a “ Swingline Advance ” and collectively, the “ Swingline Advances ”) to the Borrower from time to time on any Business Day during the period from the Closing Date until the Swingline Expiry Date in an aggregate amount not to exceed at any time outstanding the lesser of (i) the Swingline Sub-Limit and (ii) an amount that would not cause the Aggregate Exposure (after giving effect to the use of the proceeds thereof on the date of the incurrence thereof to repay any amounts theretofore outstanding pursuant to this Agreement) to exceed (A) the Total Revolving Credit Commitment at such time minus (B) the Specified Reserve at such time.  No Swingine Advance shall be used for the purpose of funding the payment of principal of any other Swingline Advance.  Each Swingline Advance shall be in an amount of $500,000 or an integral multiple of $250,000 in excess thereof and shall be made as a Base Rate Advance.  Within the limits of the Swingline Sub-Limit and within the limits referred to in clause (ii) above, the Borrower may borrow under this Section 2.01(c), repay pursuant to Section 2.04(c) or prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(c).

 

SECTION 2.02. Making Last Out Term Advances, Revolving Credit Advances and Swingline Advances .  (a)  Last Out Term Advances .  The Last Out Term Borrowing shall be made on the Closing Date on notice, given not later than 12:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Last Out Term Borrowing consisting of Eurodollar Rate Advances, or the first Business Day prior to the date of the proposed Borrowing in the case of a Last Out Term Borrowing consisting of Base Rate Advances, by the Borrower to the Administrative Agent, which shall give to each Last Out Term Lender prompt notice thereof by telecopier or electronic mail.  Each

 

46

 

such notice of a Borrowing (a “ Notice of Last Out Term Borrowing ”) shall be by telephone, confirmed immediately in writing by telecopier or electronic mail in PDF format, in substantially the form of Exhibit B hereto, specifying therein the requested (i) Type of Advances comprising such Borrowing and (ii) aggregate amount of such Borrowing, which shall equal the aggregate Last Out Term Commitments of all of the Last Out Term Lenders.  Each Last Out Term Lender shall, before 12:00 P.M. (New York City time) on the Closing Date, make available for the account of its Lending Office to the Administrative Agent at the Administrative Agent’s Account, in same day funds, such Last Out Term Lender’s ratable portion of the Last Out Term Borrowing in accordance with the respective Last Out Term Commitments of such Last Out Term Lender and the other Last Out Term Lenders.  After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower’s Account, for onward transmission to the bank account notified to the Administrative Agent by the Borrower from time to time into which monies are permitted to be deposited in accordance with the provisions of this Agreement.  Notwithstanding anything herein to the contrary, the Borrower is deemed to have provided a Notice of Last Out Term Borrowing to the Administrative Agent in accordance with the foregoing provisions requesting that on the Closing Date (i) a Last Out Term Borrowing of Base Rate Advances be made by all Last Out Term Lenders, and (ii) such Last Out Term Borrowing equal the aggregate Last Out Term Commitments of all Last Out Term Lenders.

 

(b)           Revolving Credit Advances .  Each Borrowing shall be made on notice, given not later than 12:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances, or the first Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances (but excluding for this purpose Swingline Advances and Revolving Credit Advances made pursuant to a Mandatory Borrowing) by the Borrower to the Administrative Agent, which shall give to each Revolving Credit Lender prompt notice thereof by telecopier or electronic mail.  Each such notice of a Borrowing (a “ Notice of Revolving Credit Borrowing ”) shall be by telephone, confirmed immediately in writing by telecopier or electronic mail in PDF format, in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing and (iii) aggregate amount of such Borrowing.  Each Revolving Credit Lender shall, before 12:00 P.M. (New York City time) on the date of such Borrowing, make available for the account of its Lending Office to the Administrative Agent at the Administrative Agent’s Account, in same day funds, such Revolving Credit Lender’s ratable portion of such Borrowing in accordance with the respective Revolving Credit Commitments of such Revolving Credit Lender and the other Revolving Credit Lenders.  After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower’s Account, for onward transmission to the bank account notified to the Administrative Agent by the Borrower from time to time into which monies are permitted to be deposited in accordance with the provisions of this Agreement; provided , however , that the Administrative Agent shall first make a portion of such funds equal to the aggregate principal amount of any Swingline Advances made by the Swingline Bank or any Letter of Credit Advances made by any Issuing Bank and outstanding on the date of such Borrowing, plus interest accrued and unpaid thereon to and as of such date,

 

47

 

available to the Swingline Bank or to such Issuing Bank, as the case may be, for repayment of such Swingline Advances or such Letter of Credit Advances.

 

(c)           Each Swingline Advance shall be made on notice, given not later than 1:00 P.M. (New York City time) on the date of the proposed Swingline Advance, by the Borrower to the Swingline Bank and the Administrative Agent.  Each such notice of a Swingline Advance (a “ Notice of Swingline Borrowing ”) shall be made by telephone, and confirmed immediately in writing by telecopier or electronic mail in PDF format, in substantially the form of Exhibit C hereto, and shall specify in each case (i) the date of such Swingline Advance, (ii) the amount of such Swingline Advance and (iii) the maturity of such Swingline Advance (which maturity shall be no later than the earlier of (A) the seventh day after the requested date of such Swingline Advance and (B) the Swingline Expiry Date).  The Swingline Bank will make the amount thereof available to the Administrative Agent at the Administrative Agent’s Account, in same day funds.  After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower’s Account, for onward transmission to the bank account notified to the Administrative Agent by the Borrower from time to time into which monies are permitted to be deposited in accordance with the provisions of this Agreement.  On any Business Day, the Swingline Bank may, in its sole discretion, give notice to the Revolving Credit Lenders, with a copy of notice to the Administrative Agent, that the Swingline Bank’s outstanding Swingline Advances shall be funded with one or more Borrowings of Revolving Credit Advances (provided that such notice shall be deemed to have been automatically given upon the occurrence of a Default or an Event of Default under Section 6.01 or upon the exercise of any of the remedies provided in the last paragraph of Section 6.01), in which case one or more Borrowings of Revolving Credit Advances constituting Base Rate Advances (each such Borrowing, a “ Mandatory Borrowing ”) shall be made on the immediately succeeding Business Day by all Revolving Credit Lenders pro rata based on each such Revolving Credit Lender’s Pro Rata Share as of the date of such demand (determined before giving effect to any termination of the Revolving Credit Commitments pursuant to the last paragraph of Section 6.01) and the proceeds thereof shall be applied directly by the Swingline Bank to repay the Swingline Bank for such outstanding Swingline Advances.  Each Revolving Credit Lender hereby irrevocably agrees to make Revolving Credit Advances upon one Business Day’s notice pursuant to each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the date specified in writing by the Swingline Bank notwithstanding (i) the amount of the Mandatory Borrowing may not comply with any minimum borrowing amount otherwise required hereunder, (ii) whether any conditions specified in Article III are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) the date of such Mandatory Borrowing, and (v) the amount of the Total Revolving Credit Commitment at such time.  In the event that any Mandatory Borrowing cannot for any reason be made on the date otherwise required above, then each Revolving Credit Lender hereby agrees that it shall forthwith purchase (as of the date the Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) from the Swingline Bank, and the Swingline Bank shall sell and assign to each such other Revolving Credit Lender, such participations in the outstanding Swingline Advances as shall be necessary to cause the Revolving Credit Lenders to share in such Swingline Advances ratably based upon their respective Pro Rata Share as of the date of such demand (determined before giving effect to any termination of the Revolving Credit Commitments pursuant to the last paragraph of Section

 

48

 

6.01), by making available for the account of its Lending Office to the Administrative Agent for the account of the Swingline Bank, by deposit to the Administrative Agent’s Account, in same day funds, an amount equal to the portion of the participation in the outstanding principal amount of such Swingline Advance to be purchased by such Revolving Credit Lender, provided that (x) all interest payable on the Swingline Advances shall be for the account of the Swingline Bank until the date as of which the respective participation is required to be purchased and, to the extent attributable to the purchased participation, shall be payable to the participant from and after such date and (y) at the time any purchase of participations pursuant to this sentence is actually made, the purchasing Revolving Credit Lender shall be required to pay the Swingline Bank interest on the principal amount of participation purchased for each day from and including the day upon which the Mandatory Borrowing would otherwise have occurred to but excluding the date of payment for such participation, at the overnight Federal Funds Rate for the first three days and at the interest rate otherwise applicable to Revolving Credit Advances maintained as Base Rate Advances hereunder for each day thereafter. The Borrower hereby agrees to each such sale and assignment of participations in Swingline Advances. Each Revolving Credit Lender agrees to purchase its Pro Rata Share of a participation in an outstanding Swingline Advance on (i) the Business Day on which demand therefor is made by the Swingline Bank; provided that notice of such demand is given not later than 1:00 P.M. (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time.  Upon any such assignment by the Swingline Bank to any other Revolving Credit Lender of a participation in a Swingline Advance, the Swingline Bank represents and warrants to such other Revolving Credit Lender that the Swingline Bank is the legal and beneficial owner of such participation being assigned by it, but makes no other representation or warranty and assumes no responsibility with respect to such participation in such Swingline Advance, the Loan Documents or any Loan Party.

 

(d)           Mandatory Borrowings shall be made upon the notice specified in Section 2.02(c) above, with the Borrower irrevocably agreeing, by its incurrence of any Swingline Advance, to the making of the Mandatory Borrowings as set forth in Section 2.02(c) above.

 

(e)           Anything in subsection (a) or (b) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $1,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or Section 2.10 and (ii) the Revolving Credit Advances made on any date may not be outstanding on any date as part of more than ten separate Borrowings.

 

(f)            Each Notice of Last Out Term Borrowing, Notice of Revolving Credit Borrowing and Notice of Swingline Borrowing shall be irrevocable and binding on the Borrower.  In the case of any Borrowing that the related Notice of Last Out Term Borrowing or Notice of Revolving Credit Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Last Out Term Borrowing or Notice of Revolving Credit Borrowing, as the case may be, for such Borrowing, the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Eurodollar Rate

 

49

 

Advance to be made by such Lender as part of such Borrowing when such Eurodollar Rate Advance, as a result of such failure, is not made on such date.

 

(g)           Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a), (b) or (c) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.  If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay or pay to the Administrative Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid or paid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at such time under Section 2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate.  If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender’s Revolving Credit Advance as part of such Borrowing for all purposes.

 

(h)           The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, 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 the date of any Borrowing.

 

SECTION 2.03.  Issuance of and Drawings and Reimbursements Under Letters of Credit.

 

(a)           Letters of Credit . (b)

 

(i)            Subject to and upon the terms and conditions set forth herein, the Borrower may request that an Issuing Bank issue, at any time and from time to time on and after the Closing Date and prior to the 30 th  day prior to the Original Termination Date or (if applicable) the Extended Termination Date, for the account of the Borrower and for the benefit of (x) any holder (or any trustee, agent or other similar representative for any such holders) of L/C Supportable Obligations, an irrevocable standby letter of credit, in a form customarily used by such Issuing Bank or in such other form as is reasonably acceptable to such Issuing Bank, and (y) sellers of goods to the Borrower or any of its Subsidiaries, an irrevocable trade letter of credit, in a form customarily used by such Issuing Bank or in such other form as has been approved by such Issuing Bank, in each case other than any irrevocable standby letter of credit or irrevocable trade letter of credit that is issued in substitution for (whether for renewal or extension purposes) a Prepetition Letter of Credit (each such letter of credit, a “ Letter of Credit ” and, collectively, the “ Letters of Credit ”).  All Letters of Credit shall be denominated in U.S. Dollars and shall be issued on a sight basis only.

 

(ii)           Subject to and upon the terms and conditions set forth herein, each Issuing

 

50

 

Bank agrees that it will, at any time and from time to time on and after the Closing Date and prior to the 30 th  day prior to the Termination Date, following its receipt of the respective Letter of Credit Request, issue for the account of the Borrower (or renew or extend), one or more Letters of Credit as are permitted to remain outstanding hereunder without giving rise to a Default or an Event of Default, provided that no Issuing Bank shall be under any obligation to issue (or renew or extend) any Letter of Credit of the types described and permitted above if at the time of such issuance (or renewal or extension):

 

(A)          any order, judgment or decree of any Governmental Authority or arbitrator shall purport by its terms to enjoin or restrain such Issuing Bank from issuing such Letter of Credit or any requirement of law applicable to such Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction or reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect with respect to such Issuing Bank on the date hereof, or any unreimbursed loss, cost or expense which was not applicable or in effect with respect to such Issuing Bank as of the date hereof and which such Issuing Bank reasonably and in good faith deems material to it; or

 

(B)           such Issuing Bank shall have received from the Borrower, any other Loan Party or the Majority Lenders prior to the issuance of such Letter of Credit notice of the type described in the second sentence of Section 2.03(c)(ii).

 

(b)           Maximum Letter of Credit Outstandings; Final Maturities .  Notwithstanding anything to the contrary contained in this Agreement, (i) no Letter of Credit shall be issued the Available LC Amount of which, when added to the Letter of Credit Outstandings (exclusive of Letter of Credit Advances which are repaid on the date of, and prior to the issuance of, the respective Letter of Credit) at such time would exceed the lesser of (x) the Letter of Credit Sub-Limit at such time and (y) an amount that would cause the Aggregate Exposure (after giving effect to such issuance) to exceed (A) the Total Revolving Credit Commitment at such time minus (B) the Specified Reserve at such time, (ii) no Letter of Credit shall be issued (or required to be issued) at any time when the Aggregate Exposure exceeds (or would after giving effect to such issuance exceed) the Borrowing Base at such time and (iii) each Letter of Credit (whether being issued for the first time or being renewed or extended) shall by its terms terminate (x) in the case of standby Letters of Credit, on or before the earlier of (A) the date which occurs 12 months after the date of issuance (or renewal or extension) thereof and (B) ten Business Days prior to the Original Termination Date or, if applicable, the Extended Termination Date and (y) in the case of trade Letters of Credit, on or before the earlier of (A) the date which occurs 180 days after the date of issuance (or renewal or extension) thereof and (B) ten Business Days prior to the Original Termination Date or, if applicable, the Extended Termination Date.

 

(c)           Letter of Credit Requests, Minimum Stated Amount .

 

51

 

(i)            Whenever the Borrower desires that a Letter of Credit be issued for its account, the Borrower shall give the Administrative Agent and the respective Issuing Bank at least five Business Days’ (or such shorter period as is acceptable to such Issuing Bank) written notice thereof (including by way of telecopier or email).  Each notice shall be in the form of Exhibit D, appropriately completed (each, a “ Letter of Credit Request ”).

 

(ii)           The making of each Letter of Credit Request shall be deemed to be a representation and warranty by the Borrower to the First Out Lenders that such Letter of Credit may be issued in accordance with, and will not violate the requirements of, Section 2.03(b).  Unless the respective Issuing Bank has received notice from the Borrower, any other Loan Party or the Majority Lenders before it issues a Letter of Credit that one or more of the conditions specified in Article III are not then satisfied, or that the issuance of such Letter of Credit would violate Section 2.03(b), then such Issuing Bank shall, subject to the terms and conditions of this Agreement, issue the requested Letter of Credit for the account of the Borrower in accordance with such Issuing Bank’s usual and customary practices.  Upon the issuance of or modification or amendment to any standby Letter of Credit, each Issuing Bank shall promptly notify the Borrower and the Administrative Agent, in writing of such issuance, modification or amendment and such notice shall be accompanied by a copy of such Letter of Credit or the respective modification or amendment thereto, as the case may be.  Promptly after receipt of such notice, the Administrative Agent shall notify the Participants, in writing, of such issuance, modification or amendment.  On the first Business Day of each week, each Issuing Bank shall furnish the Administrative Agent with a written (including via telecopier or email) report of the daily aggregate outstandings of trade Letters of Credit issued by such Issuing Bank for the immediately preceding week.  The initial Available LC Amount of each Letter of Credit shall not be less than $100,000 or such lesser amount as is acceptable to the respective Issuing Bank.

 

(d)           Letters of Credit Participations .

 

(i)            Immediately upon the issuance by an Issuing Bank of any Letter of Credit, such Issuing Bank shall be deemed to have sold and transferred to each Revolving Credit Lender, and each such Revolving Credit Lender (in its capacity under this Section 2.03(d), a “Participant ”) shall be deemed irrevocably and unconditionally to have purchased and received from such Issuing Bank, without recourse or warranty, an undivided interest and participation, to the extent of such Participant’s Pro Rata Share, in such Letter of Credit, each drawing or payment made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guarantee pertaining thereto.  Upon any change in the Revolving Credit Commitments or Pro Rata Shares of the Revolving Credit Lenders pursuant to Section 8.07, it is hereby agreed that, with respect to all outstanding Letters of Credit and Letter of Credit Advances relating thereto, there shall be an automatic adjustment to the participations pursuant to this Section 2.03(d) to reflect the new Pro Rata Shares of the assignor and assignee Revolving Credit Lender, as the case may be.

 

(ii)           In determining whether to pay under any Letter of Credit, no Issuing Bank shall have any obligation relative to the other Revolving Credit Lenders other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear to substantially comply on their face with the requirements of such Letter of Credit.  Any action taken or omitted to be taken by an Issuing Bank under or in

 

52

 

connection with any Letter of Credit issued by it shall not create for such Issuing Bank any resulting liability to the Borrower, any other Loan Party, any Revolving Credit Lender or any other Person unless such action is taken or omitted to be taken with gross negligence or willful misconduct on the part of such Issuing Bank (as determined by a court of competent jurisdiction in a final and non-appealable decision).

 

(iii)          In the event that an Issuing Bank makes a Letter of Credit Advance under any Letter of Credit issued by it and the Borrower shall not have reimbursed such amount in full to such Issuing Bank pursuant to Section 2.03(e)(i), such Issuing Bank shall promptly notify the Administrative Agent, which shall promptly notify each Participant of such failure, and each Participant shall promptly and unconditionally pay to such Issuing Bank the amount of such Participant’s Pro Rata Share of such unreimbursed payment in U.S. Dollars and in same day funds.  If the Administrative Agent so notifies, prior to 12:00 Noon (New York City time) on any Business Day, any Participant required to fund a payment under a Letter of Credit, such Participant shall make available to the respective Issuing Bank in U.S. Dollars such Participant’s Pro Rata Share of the amount of such payment on such Business Day in same day funds.  If and to the extent such Participant shall not have so made its Pro Rata Share of the amount of such payment available to the respective Issuing Bank, such Participant agrees to pay to such Issuing Bank, forthwith on demand, such amount, together with interest thereon, for each day from such date until the date such amount is paid to such Issuing Bank at the overnight Federal Funds Rate for the first three days and at the interest rate applicable to Base Rate Advances for each day thereafter.  The failure of any Participant to make available to an Issuing Bank its Pro Rata Share of any payment under any Letter of Credit issued by such Issuing Bank shall not relieve any other Participant of its obligation hereunder to make available to such Issuing Bank its Pro Rata Share of any payment under any Letter of Credit on the date required, as specified above, but no Participant shall be responsible for the failure of any other Participant to make available to such Issuing Bank such other Participant’s Pro Rata Share of any such payment.

 

(iv)          Whenever an Issuing Bank receives a payment of a reimbursement obligation as to which it has received any payments from the Participants pursuant to Section 2.03(d)(iii) above, such Issuing Bank shall pay to each such Participant that has paid its Pro Rata Share thereof, in U.S. Dollars and in same day funds, an amount equal to such Participant’s share (based upon the proportionate aggregate amount originally funded by such Participant to the aggregate amount funded by all Participants) of the principal amount of such reimbursement obligation and interest thereon accruing after the purchase of the respective participations.

 

(v)           Upon the request of any Participant, each Issuing Bank shall furnish to such Participant copies of any standby Letter of Credit issued by it and such other documentation as may reasonably be requested by such Participant.

 

(vi)          The obligations of the Participants to make payments to each Issuing Bank with respect to Letters of Credit shall be irrevocable and not subject to any qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances:

 

53

 

(A)                               any lack of validity or enforceability of this Agreement or any of the other Loan Documents;

 

(B)                                 the existence of any claim, setoff, defense or other right which the Borrower or any of its Subsidiaries may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, any Participant, or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower or any Subsidiary of the Borrower and the beneficiary named in any such Letter of Credit);

 

(C)                                 any draft, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

 

(D)                                the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; or

 

(E)                                  the occurrence of any Default or Event of Default.

 

(e)                                   Agreement to Repay Letter of Credit Advances .

 

(i)                                      The Borrower agrees to reimburse each Issuing Bank, by making payment to the Administrative Agent in immediately available funds at its Lending Office, for any payment or disbursement made by such Issuing Bank under any Letter of Credit issued by it (each such amount, so paid until reimbursed by the Borrower, a “ Letter of Credit Advance ”), not later than one Business Day following receipt by the Borrower of notice of such payment or disbursement, with interest on the amount so paid or disbursed by such Issuing Bank, to the extent not reimbursed prior to 12:00 Noon (New York City time) on the date of such payment or disbursement, from and including the date paid or disbursed to but excluding the date such Issuing Bank was reimbursed by the Borrower therefor at a rate per annum equal to the Base Rate as in effect from time to time plus the Applicable Margin as in effect from time to time for Base Rate Advances; provided , however , to the extent such amounts are not reimbursed prior to 12:00 Noon (New York City time) on the third Business Day following the receipt by the Borrower of notice of such payment, interest shall thereafter accrue on the amounts so paid or disbursed by such Issuing Bank (and until reimbursed by the Borrower) at a rate per annum equal to the Base Rate as in effect from time to time plus the Applicable Margin for Base Rate Advances as in effect from time to time plus 2.00%, with such interest to be payable on demand.  Each Issuing Bank shall give the Borrower prompt written notice of each Letter of Credit Disbursement (as defined below) under any Letter of Credit issued by it, provided that the failure to give any such notice shall in no way affect, impair or diminish the Borrower’s obligations hereunder.

 

(ii)                                   The obligations of the Borrower under this Section 2.03(e) to reimburse

 

54

 

each Issuing Bank with respect to drafts, demands and other presentations for payment under Letters of Credit issued by it (each, a “ Letter of Credit Disbursement ”) (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower or any Subsidiary of the Borrower may have or have had against any Revolving Credit Lender (including in its capacity as an Issuing Bank or as a Participant), including, without limitation, any defense based upon the failure of any drawing under a Letter of Credit to conform to the terms of the Letter of Credit or any nonapplication or misapplication by the beneficiary of the proceeds of such Letter of Credit Disbursement; provided , however , that the Borrower shall not be obligated to reimburse any Issuing Bank for any wrongful payment made by such Issuing Bank under a Letter of Credit issued by it as a result of acts or omissions constituting willful misconduct or gross negligence on the part of such Issuing Bank (as determined by a court of competent jurisdiction in a final and non-appealable decision).

 

(f)                                     Increased Costs .  If at any time after the Closing Date, the introduction of or any change in any applicable law, rule, regulation, order, guideline or request or in the interpretation or administration thereof by the NAIC or any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Issuing Bank or any Participant with any request or directive by the NAIC or by any such Governmental Authority (whether or not having the force of law), shall either (i) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against letters of credit issued by any Issuing Bank or participated in by any Participant, or (ii) impose on any Issuing Bank or any Participant any other conditions relating, directly or indirectly, to this Agreement or any Letter of Credit; and the result of any of the foregoing is to increase the cost to any Issuing Bank or any Participant of issuing, maintaining or participating in any Letter of Credit, or reduce the amount of any sum received or receivable by any Issuing Bank or any Participant hereunder or reduce the rate of return on its capital with respect to Letters of Credit (except for changes in the rate of tax on, or determined by reference to, the net income or net profits of such Issuing Bank or such Participant pursuant to the laws of the jurisdiction in which it is organized or in which its principal office or applicable lending office is located or any subdivision thereof or therein), then, upon the delivery of the certificate referred to below to the Borrower by any Issuing Bank or any Participant (a copy of which certificate shall be sent by such Issuing Bank or such Participant to the Administrative Agent), the Borrower agrees to pay to such Issuing Bank or such Participant such additional amount or amounts as will compensate such Issuing Bank or such Participant for such increased cost or reduction in the amount receivable or reduction on the rate of return on its capital.  Any Issuing Bank or any Participant, upon determining that any additional amounts will be payable to it pursuant to this Section 2.03(f), will give prompt written notice thereof to the Borrower, which notice shall include a certificate submitted to the Borrower by such Issuing Bank or such Participant (a copy of which certificate shall be sent by such Issuing Bank or such Participant to the Administrative Agent), setting forth in reasonable detail the basis for the calculation of such additional amount or amounts necessary to compensate such Issuing Bank or such Participant.  The certificate required to be delivered pursuant to this Section 2.03 shall, absent manifest error, be final and conclusive and binding on the Borrower.

 

(g)                                  Cash Collateralization .  If any Letters of Credit remain outstanding at any time (i) while an Event of Default has occurred and is continuing, (ii) that the Aggregate

 

55

 

Exposure exceeds the Borrowing Base or (iii) less than thirty (30) Business Days prior to the Original Termination Date or Extended Termination Date, as applicable, and arrangements satisfactory to the Administrative Agent and the applicable Issuing Banks have not been made for a “backstop letter of credit” facility, then the Borrower shall, at each Issuing Bank’s or the Administrative Agent’s request, on the next Business Day cash collateralize the Available LC Amount of all outstanding Letters of Credit by depositing in the Cash Collateral Account an amount in cash equal to 105% of the Available LC Amount as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, if any Letters of Credit remain outstanding and undrawn on the Termination Date and a “backstop letter of credit” reasonably acceptable to each Issuing Bank shall not have been provided as collateral for such Letters of Credit.  Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Obligations of the Borrower under this Agreement.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such Cash Collateral Account.  Any funds standing to the credit of such Cash Collateral Account shall be applied by the Administrative Agent to reimburse the relevant Issuing Bank for Letter of Credit Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the Available LC Amount at such time. If the Borrower fails to provide any cash collateral as required hereunder, the Lenders may (and shall upon direction of the Administrative Agent) advance, as Revolving Credit Advances, the amount of the cash collateral required (whether or not the Termination Date shall have occurred or the conditions in Article III are not are satisfied).

 

SECTION 2.04. Repayment of Advances .  (a)  Last Out Term Advances .  The Borrower shall repay to the Administrative Agent for the ratable account of the Last Out Term Lenders the aggregate outstanding principal amount of the Last Out Term Advances on the Termination Date provided , however , that no repayment or prepayment of Last Out Term Advances may be made until the First Out Final Payment Date has occurred.

 

(b)                                  Revolving Credit Advances .  The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders on the Termination Date the aggregate outstanding principal amount of the Revolving Credit Advances then outstanding.

 

(c)                                   Swingline Advances .  The Borrower shall repay to the Administrative Agent for the account of the Swingline Bank the outstanding principal amount of each Swingline Advance made by it on the earlier of the maturity date specified in the applicable Notice of Swingline Borrowing (which maturity shall be no later than the seventh day after the requested date of such Swingline Advance) and the Termination Date.

 

SECTION 2.05. Termination or Reduction of Commitments .  (a)  Optional .  The Borrower may, upon at least two Business Days’ notice to the Administrative Agent, terminate in whole or reduce in part the Unused Revolving Credit Commitments; provided , however , that each partial reduction of the DIP Facility (i) shall be in an aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess thereof and (ii) shall be made ratably among the Lenders in accordance with their Revolving Credit Commitments with respect to such DIP Facility.

 

56

 

(b)                                  Mandatory .  (i) The Last Out Term Commitment of each Lender shall terminate in its entirety on the Closing Date (after giving effect to the incurrence of Last Out Term Advances on such date).

 

(ii)                                   The DIP Facility (and the Revolving Credit Commitment of each Lender) shall terminate in its entirety on the Termination Date.

 

SECTION 2.06. Prepayments .  (a)  Optional .  The Borrower may, on same Business Day’s notice in the case of Base Rate Advances and one Business Day’s notice in the case of Eurodollar Rate Advances, in each case to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding aggregate principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid; provided , however , that (x) each partial prepayment shall be in an aggregate principal amount of $1,000,000 or an integral multiple of $500,000 in excess thereof and (y) if any prepayment of a Eurodollar Rate Advance is made on a date other than the last day of an Interest Period for such Advance, the Borrower shall also pay any amounts owing pursuant to Section 8.04(c).  No Last Out Term Advances may be prepaid in whole or in part prior to the First Out Final Payment Date.  On or after the occurrence of the First Out Final Payment Date, Last Out Term Advances may be prepaid in accordance with the provisions of this paragraph (a).

 

(b)                                  Mandatory .  (i) On any day on which (A) (x) the Aggregate Exposure at such time exceeds (I) the Total Revolving Credit Commitment at such time minus (II) the Specified Reserve at such time, and/or (y) the aggregate Swingline Advances outstanding at such time exceeds the Swingline Sub-Limit and/or (z) the aggregate Letter of Credit Outstandings at such time exceeds the Letter of Credit Sub-Limit or (B) the Aggregate Exposure exceeds the Borrowing Base at such time, the Borrower shall repay the First Out Advances in an amount equal to or greater than such excess (and if the amount of such excess is greater than the then aggregate outstanding principal amount of the First Out Advances and the Letter of Credit Outstandings, the Borrower shall cash collateralize outstanding Letters of Credit in accordance with Section 2.03(g) to the extent necessary) so that the Aggregate Exposure at such time no longer exceeds (I) the Total Revolving Credit Commitment at such time minus (II) the Specified Reserve at such time, the aggregate Swingline Advances outstanding at such time no longer exceed the Swingline Sub-Limit, the aggregate Letter of Credit Outstandings at such time no longer exceed the Letter of Credit Sub-Limit or the Aggregate Exposure no longer exceeds the Borrowing Base, as the case may be.

 

(ii)                                   The Borrower shall, on the date of receipt of Net Cash Proceeds by any Loan Party or any of its Subsidiaries from (x) the sale, lease, transfer or other disposition (other than inventory sold in the ordinary course of business) of any assets of the Borrower or any Loan Party or any of their respective Subsidiaries (in each case, other than any non-Debtor Subsidiary), or (y) any Recovery Event, apply all such Net Cash Proceeds which, in either case exceed $2,500,000 in aggregate during the term of the DIP Facility, to prepay an aggregate principal amount of the Advances comprising part of the same Borrowings equal to 100% of the amount by which such Net Cash Proceeds, when aggregated with the amount of all other Net Cash Proceeds previously received by the Borrower or any Loan Party or any of their respective

 

57

 

Subsidiaries (in each case, other than any non-Debtor Subsidiary), exceed $2,500,000 during the term of the DIP Facility. Each such prepayment shall be applied as set forth in clause (iii) below.

 

(iii)                                Prepayments of Advances made pursuant to clause (i) of this Section 2.06(b), applications of Net Cash Proceeds required to be made pursuant to clause (ii) of this Section 2.06(b) and the application of all collected amounts held in the Core Concentration Account during any Dominion Period shall be applied, first , (x) if no Event of Default is continuing, to prepay Letter of Credit Advances then outstanding until such Letter of Credit Advances are paid in full, and (y) if an Event of Default is continuing, to prepay Letter of Credit Advances then outstanding until such Letter of Credit Advances are paid in full and then to the Cash Collateral Account until the Available LC Amount of all outstanding Letters of Credit is cash collateralized to the extent required pursuant to Section 2.03(g), second , to prepay Swingline Advances then outstanding until such Swingline Advances are paid in full, third , ratably to prepay Revolving Credit Advances then outstanding comprising part of the same Borrowings until all Revolving Credit Advances are paid in full, and, fourth , (x) prior to the occurrence of the First Out Final Payment Date, unless an Event of Default is continuing, to the Borrower for use by the Borrower in accordance with Section 2.14, provided that the Borrower shall not be permitted to transfer amounts to any Excluded Account that is a petty cash account or to any other Excluded Account in an amount which exceeds the amount required to fund the activities for which funds deposited in such Excluded Account are applied as set forth in the most recent DIP Budget delivered to the Administrative Agent in accordance with Section 5.03(e) and (y) on or after the occurrence of the First Out Final Payment Date, ratably to the outstanding aggregate principal amount of the Last Out Term Advances.

 

(iv)                               All prepayments under this subsection (b) shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid.

 

(v)                                  Notwithstanding any of the other provisions of this Section 2.06(b), so long as no Default under Section 6.01(a) or Event of Default shall have occurred and be continuing, if any prepayment of Eurodollar Rate Advances is required to be made under this Section 2.06(b) other than on the last day of the Interest Period therefor, the Borrower may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made hereunder into the Cash Collateral Account of the Borrower until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from the Borrower) to apply such amount to the prepayment of such Advances in accordance with this Section 2.06(b).

 

SECTION 2.07. Interest .  (a)  Scheduled Interest .  The Borrower shall pay interest on the unpaid principal amount of each Advance owing by it to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:

 

(i)                                      Base Rate Advances .  During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (A) the Base Rate in effect from time to time plus (B) the Applicable Margin in effect from time to time, payable (x) in arrears monthly on the last Business Day of each month during such periods and (y) at maturity (whether by acceleration or otherwise) and, after such maturity, on demand,

 

58

 

subject, however, to the provisions of subsection (b) of this Section 2.07.

 

(ii)                                   Eurodollar Rate Advances .  During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (A) the Eurodollar Rate for such Interest Period for such Advance plus (B) the Applicable Margin in effect on the first day of such Interest Period, payable in arrears on each Interest Payment Date and on the date such Eurodollar Rate Advance shall be Converted, subject, however, to the provisions of subsection (b) of this Section 2.07.

 

(b)                                  Default Interest .  At the election of the Majority Lenders, in the case of amounts owing in respect of the First Out Obligations, or the Last Out Requisite Lenders, in the case of amounts owing in respect of the Last Out Obligations, upon the occurrence and continuation of an Event of Default, to the extent permitted by law, principal and interest in respect of each Advance and any other amount payable hereunder and under any other Loan Document shall, in each case, bear interest at a rate per annum equal to the greater of (x) in the case of principal and interest in respect of an Advance, the rate which is 2% in excess of the rate then borne by such Advances or Letters of Credit and (y) in all other cases, the rate which is 2% in excess of the rate otherwise applicable to Base Rate Advances from time to time.  Interest that accrues under this Section 2.07(b) shall be payable on demand; provided that prior to the First Out Final Payment Date, additional default interest that accrues under this Section 2.07(b) in respect of any Last Out Obligation shall not be payable (and no demand therefor shall be made) in cash but shall be paid in kind.

 

(c)                                   Notice of Interest Rate .  Promptly after receipt of a Notice of Last Out Term Borrowing pursuant to Section 2.02(a) or a Notice of Revolving Credit Borrowing pursuant to Section 2.02(b), the Administrative Agent shall give notice to the Borrower and each Lender to which such Notice of Last Out Term Borrowing or Notice of Revolving Credit Borrowing, as the case may be, of the applicable interest rate determined by the Administrative Agent for purposes of clause (a)(i) or (ii).

 

(d)                                  Interest Rate Determination . Upon each Interest Determination Date, the Administrative Agent shall determine the Eurodollar Rate for each Interest Period applicable to the respective Eurodollar Rate Advances and shall promptly notify the Borrower and the Lenders thereof.  Each such determination shall, absent manifest error, be final and conclusive and binding on all parties hereto.  If on any Interest Determination Date, the Administrative Agent determines that, by reason of any changes arising after the date of this Agreement affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate, the Administrative Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances and (A) each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (B) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

 

59

 

SECTION 2.08. Fees: Last Out Yield Enhancement .  (a)  Commitment Fee .  The Borrower shall pay to the Administrative Agent for the account of each Revolving Credit Lender having a Revolving Credit Commitment a commitment fee, from the date hereof in the case of each Initial Revolving Credit Lender and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Revolving Credit Lender in the case of each other Revolving Credit Lender until the Termination Date, payable in arrears on the date of the initial Borrowing hereunder, and thereafter monthly on the last Business Day of each month and on the Termination Date, at the rate per annum equal to the Applicable Percentage of the sum of the daily Unused Revolving Credit Commitment plus in respect of each Revolving Credit Lender, other than the Swingline Bank, its Pro Rata Share of the daily outstanding Swingline Advances during such month; provided , however, that no commitment fee shall accrue on any of the Revolving Credit Commitments of a Defaulting Lender so long as such Revolving Credit Lender shall be a Defaulting Lender.

 

(b)                                  Letter of Credit Fees, Etc .  (i) The Borrower shall pay to the Administrative Agent for the account of each Revolving Credit Lender a commission, payable in arrears monthly on the last Business Day of each month, on the earliest to occur of the full drawing under, expiration, termination or cancellation of any Letter of Credit and on the Termination Date, on such Revolving Credit Lender’s Pro Rata Share of the daily aggregate Available LC Amount of all Letters of Credit outstanding from time to time at a rate per annum equal to the Applicable Margin for Eurodollar Rate Advances under the DIP Facility then in effect.

 

(ii)                                   The Borrower shall pay to each Issuing Bank, for its own account, (A) a fronting fee, payable in arrears monthly on the last Business Day of each month, on the earliest to occur of the full drawing under, expiration, termination or cancellation of any such Letter of Credit and on the Termination Date, on the daily aggregate Available LC Amount of all Letters of Credit outstanding from time to time issued by it at the rate of 0.25% per annum and (B) such other reasonable and customary commissions, transfer fees and other fees and charges in connection with the issuance or administration of each Letter of Credit as the Borrower and such Issuing Bank shall agree.