EXHIBIT 10.1
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DEBTOR IN POSSESSION REVOLVING CREDIT AGREEMENT
AMONG
A.B. DICK COMPANY,
AS A DEBTOR IN POSSESSION AND LEAD BORROWER
AND
PARAGON CORPORATE HOLDINGS, INC.,
AS A DEBTOR IN POSSESSION AND BORROWER
AND
INTERACTIVE MEDIA GROUP, INC.,
AS A DEBTOR IN POSSESSION AND BORROWER
AND
KEYBANK NATIONAL ASSOCIATION
AS ADMINISTRATIVE AGENT
AND
KEYBANK NATIONAL ASSOCIATION AND PRESSTEK, INC.
AS LENDERS
DATED AS OF JULY 13, 2004
$7,000,000
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DEBTOR IN POSSESSION REVOLVING CREDIT AGREEMENT, dated as of
July
13, 2004, among A.B. DICK COMPANY, a
Delaware corporation and a debtor in
possession (the "LEAD BORROWER"), PARAGON
CORPORATE HOLDINGS, INC., a Delaware
corporation and debtor in possession
("Paragon"), INTERACTIVE MEDIA GROUP, INC.,
an Ohio corporation ("IMG"; Paragon and
IMG, together with the Lead Borrower,
jointly and severally, the "BORROWERS"),
KEYBANK NATIONAL ASSOCIATION
("KEYBANK") and PRESSTEK, INC. ("PRESSTEK";
and together with KeyBank a "LENDER"
and, KeyBank and Presstek being
collectively referred to as the "Lenders") and
KEYBANK NATIONAL ASSOCIATION, as
administrative agent (the "ADMINISTRATIVE
AGENT") for the Lenders. Unless otherwise
defined herein, all capitalized terms
used herein and defined in Section 11 are
used herein as so defined.
W I T N E S S E T H:
WHEREAS, on July 13, 2004 (the "FILING DATE"), the Borrowers
collectively, the "DEBTORS") filed a
petition under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court
for the District of Delaware; and
WHEREAS, the Debtors intend to continue to operate their
respective
businesses pursuant to Sections 1107 and
1108 of the Bankruptcy Code; and
WHEREAS, before the Filing Date, Paragon, parent of the Lead
Borrower, and KeyBank, successor by
assignment to Key Corporate Capital Inc.
("KCCI"), as Agent, Bank and Letter of
Credit Bank (KCCI, in such capacities,
being herein referred to as the
"PREPETITION LENDER"), entered into that certain
Credit and Security Agreement dated as of
April 1, 1998 (as amended and in
effect from time to time prior to the
Filing Date, the "PREPETITION CREDIT
AGREEMENT"), pursuant to which the
Prepetition Lender extended credit to
Paragon, including in respect of letters of
credit, on the terms set forth
therein; and
WHEREAS, the Lead Borrower guaranteed the full and prompt payment
of
Paragon's obligations under the Prepetition
Credit Agreement; and
WHEREAS, as of the Filing Date, the Prepetition Lender under
the
Prepetition Credit Agreement is owed
$23,112,797.98 in principal obligations
incurred directly by Paragon, plus
interest, fees, costs and expenses, and
letter of credit reimbursement obligations
(the "PREPETITION OBLIGATIONS"); and
WHEREAS, the Prepetition Obligations are secured by Liens (the
"PREPETITION LIENS") on substantially all
of the existing and after-acquired
assets of Paragon, such Liens are perfected
and, except as otherwise permitted
in the Prepetition Credit Agreement, have
priority over other Liens; and
WHEREAS, the Borrowers have requested that the Lenders provide
financing to the Borrowers pursuant to
Section 364(c)(1), (2) and (3) and
Section 364(d) of the
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Bankruptcy Code, and enter into this
Agreement pursuant to which the Lenders
would extend to the Borrowers a revolving
credit facility not to exceed at any
one time outstanding $7,000,000 (as such
amount may be reduced pursuant to this
Agreement) to be available in the form of
revolving loans advanced by the
Lenders from time to time; and
WHEREAS, the Lenders are willing to extend such credit to the
Borrowers on terms and conditions set forth
herein and in the other Credit
Documents in accordance with Section
364(c)(1), (2) and (3) and Section 364(d)
of the Bankruptcy Code, so long as:
(a) such postpetition credit obligations are (i) secured
by Liens on substantially all of the property and interest, real
and
personal, tangible and intangible, of the Borrowers whether now
owned or hereafter acquired, subject in priority only to
certain
Liens and claims in respect of the Carve Out as herein provided
and
(ii) given superpriority status as provided in the Orders; and
(b) KCCI receives certain adequate protection for the
Borrowers' use, sale or lease of collateral, including the
Borrowers' use of cash collateral, and the priming of the
Prepetition Liens securing the Prepetition Obligations; and
WHEREAS, the Borrowers have agreed to provide such collateral,
superpriority claims and adequate
protection subject to the approval of the
Bankruptcy Court; and
WHEREAS, each Borrower and each guarantor thereof will derive
substantial direct and indirect benefit
from the credit made available by the
Lenders to the Borrowers and is willing to
guarantee all obligations (including
letter of credit reimbursement obligations,
if any) of the Borrowers hereunder.
NOW, THEREFORE, in consideration of these premises and of the
mutual
undertakings set forth herein, the parties
hereto hereby agree as follows:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 The Commitments. The commitments provided for hereunder
consist
of (a) the commitment of Presstek (the
"TRANCHE A COMMITMENT") to advance,
subject to the terms and conditions of this
Agreement, revolving credit loans at
the request of the Lead Borrower in amounts
that, after the making of the Loan,
do not result in the aggregate amount of
the principal balance of all Tranche A
Loans then outstanding exceeding
$4,000,000.00 (the "TRANCHE A Loans"), (b) the
commitment of Presstek (the "TRANCHE B
COMMITMENT") to advance, subject to the
terms and conditions of this Agreement,
revolving credit loans at the request of
the Lead Borrower in amounts that, after
the making of the Loan, result in the
aggregate amount of the principal balance
of all Tranche A Loans and Tranche B
Loans then outstanding exceeding
$4,000,000.00, but not exceeding $5,500,000.00
(the "TRANCHE B LOANS"), and (c) the
commitment of
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KeyBank (the "TRANCHE C COMMITMENT") to
advance, subject to the terms and
conditions of this Agreement, revolving
credit loans at the request of the Lead
Borrower in amounts that, after the making
of the Loan, result in the aggregate
amount of the principal balance of all
Tranche A Loans, Tranche B Loans and
Tranche C Loans then outstanding exceeding
$5,500,000.00, but not exceeding
$7,000,000.00. Subject to the terms and
conditions set forth in this Agreement,
Presstek agrees to advance Tranche A Loans
and, at such times as all Tranche A
Loans have been made, Presstek agrees to
advance Tranche B Loans and at such
times as all Tranche A Loans and Tranche B
Loans have been made, KeyBank agrees
to advance Tranche C Loans (each Tranche A
Loan, Tranche B Loan and Tranche C
Loan being referred to herein as a "LOAN"
and, collectively, as the "LOANS") to
the Borrowers on the request of the Lead
Borrower from time to time from the
Closing Date to (but not including) the
Maturity Date, in an aggregate principal
amount not to exceed at any time the amount
of such Lender's Commitment;
provided, that the aggregate principal
amount of all Loans outstanding (giving
effect to any requested Borrowings) shall
not at any time exceed the least of
(a) the Total Commitments at such time, (b)
the amount, if any, by which (i) the
sum of (1) the Borrowing Base at such time
and (2) the applicable amount in the
"Cushion/(Over Advance)" line of the then
current Budget exceeds (ii) the
principal amount of the Prepetition
Obligations and (c) the amount approved to
be advanced to the Borrowers by way of
Loans pursuant to the Orders. The
Borrowers may use the Commitments prior to
the Maturity Date by borrowing,
prepaying and re-borrowing Loans in whole
or in part, all in accordance with the
terms of this Agreement. Notwithstanding
anything to the contrary set forth in
this Agreement the Lenders may, in their
sole discretion, advance to the
Borrowers Loans in aggregate principal
amount exceeding the maximum amount
otherwise applicable under clause (b) of
the second preceding sentence of this
Section 1.01, but in no event exceeding the
least of the amounts applicable
under clauses (a) and (c) of such sentence
at the time any such Loan is to be
made.
1.02 Notice of Borrowing. (a) To request a Loan the Lead
Borrower
shall give the Administrative Agent at its
Notice Office, prior to 12:00 noon
(Cleveland, Ohio time), on the Business Day
which is the requested date of a
proposed Borrowing, written notice of such
Borrowing. Each such notice shall be
in the form of Exhibit A, shall be
irrevocable and shall specify (i) the
aggregate principal amount of the Loans to
be made pursuant to such Borrowing,
and (ii) the date of such Borrowing (which
shall be a Business Day). Except as
hereinafter permitted, each such Notice of
Borrowing shall be in writing signed
by the Lead Borrower and transmitted by the
Lead Borrower to the Administrative
Agent by telecopier, telex or cable (in the
case of telex or cable, confirmed in
writing prior to the date of the requested
Borrowing). The Administrative Agent
shall promptly give each Lender obligated
to fund the requested Loan written
notice of each proposed Borrowing, of the
amount such Lender is obligated to
advance in respect thereof and of the other
matters covered by the Notice of
Borrowing. Each of the Borrowers hereby
irrevocably authorize the Lead Borrower
to make all requests for Borrowing
hereunder.
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(b) Without in any way limiting the obligation of the
Lead Borrower to confirm in writing any
telephonic notice of any Borrowing of
Loans, the Administrative Agent may act
without liability upon the basis of
telephonic notice of such Borrowing,
believed by the Administrative Agent in
good faith to be from the President or the
Chief Financial Officer of the Lead
Borrower (or any other officer of the Lead
Borrower designated in writing to the
Administrative Agent by the President or
the Chief Financial Officer as being
authorized to give such notices under this
Agreement) prior to receipt of
written confirmation. In each such case,
the Borrowers hereby waive the right to
dispute the Administrative Agent's record
of the terms of such telephonic notice
of such Borrowing of Loans. The Lead
Borrower may request a Borrowing
telephonically so long as (i) a written
Notice of Borrowing confirmation is
received by the Administrative Agent by
12:30 p.m. (Cleveland, Ohio time) and
(ii) the other requirements of this Section
1.03 are complied with.
1.03 Disbursement of Funds. (a) Promptly after receipt of a
Notice
of Borrowing, the Administrative Agent
shall elect, in its sole discretion,
either (i) to require same day funding
pursuant to Section 1.03(b) for Loans in
connection with such requested Borrowing or
(ii) to request KeyBank to make a
Settlement Advance pursuant to Section
1.03(c) in the amount of the requested
Borrowing; provided, however, that if
KeyBank declines, in its sole discretion,
to make such Settlement Advance, the
Administrative Agent shall elect to have
the terms of Section 1.03(b) apply to such
requested Borrowing.
(b) In the event the Administrative Agent has elected to
have same day funding of a Borrowing
pursuant to this Section 1.03(b), the
Administrative Agent shall notify each
Lender of each Notice of Borrowing no
later than 12:30 p.m. (Cleveland, Ohio
time) on the date received by telecopy,
telephone or similar form of transmission.
Unless the Administrative Agent
elects to have periodic funding of Loans by
the Lenders in accordance with
Section 1.03(c), each Lender shall, before
3:00 p.m. (Cleveland, Ohio time) on
the date of each Borrowing requested, make
available to the Administrative
Agent, in immediately available funds at
the account of the Administrative Agent
maintained at its Payment Office as shall
have been notified by the Agent to the
Lenders prior to such date, such Lender's
amount of funds, if any, required by
its Commitment in respect of the Borrowing
requested to be made on such date. On
the date requested by the Lead Borrower for
a Borrowing, after the
Administrative Agent's receipt of the funds
representing a Lender's portion, as
required by its Commitment, of such
Borrowing and subject to the terms and
conditions set forth in this Agreement, the
Administrative Agent shall make such
Loan of such Lender available to the Lead
Borrower, in immediately available
funds, by wire transfer or intrabank
transfer in accordance with the
instructions of the Lead Borrower
consistent with the terms of this Agreement.
Unless the Administrative Agent shall have
received notice from a Lender prior
to the time of any Borrowing that such
Lender will not make available to the
Administrative Agent such Lender's portion
of such Borrowing, the Administrative
Agent may assume that such Lender has made
its portion of such Borrowing
available to the Administrative Agent
on
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the date of such Borrowing in accordance
with this Section 1.03(b). In reliance
upon such assumption, the Administrative
Agent may, but shall not be obligated
to, make available to the Lead Borrower, on
such date, a corresponding portion
of such Borrowing. Any disbursement by the
Administrative Agent in reliance on
such assumption shall be deemed a Tranche A
Loan, a Tranche B Loan or a Tranche
C Loan, as applicable, by such Lender.
(c) In the event the Administrative Agent elects, in its
sole discretion, with the consent of
KeyBank, to have periodic
funding of Borrowings of Tranche A Loans or
Tranche B Loans pursuant to this
Section 1.03(c), KeyBank shall, upon the
request of the Administrative Agent, on
the date requested by the Lead Borrower for
a Borrowing, make a Tranche A Loan
or a Tranche B Loan, as applicable, to the
Lead Borrower from its own funds and
on a nonratable basis pending settlement
pursuant to Section 1.03(d) below in
the amount of such requested Borrowing (any
Loan made solely by KeyBank pursuant
to this Section 1.03(c) being hereinafter
referred to as a "SETTLEMENT ADVANCE"
and, collectively with all such Settlement
Advances, as "SETTLEMENT ADVANCES");
provided, that the outstanding amount of
Settlement Advances advanced by KeyBank
shall not at any time exceed an amount
equal to the Total Commitment of the
Lenders in effect at such time, minus the
aggregate outstanding principal
balance of all Loans at such time. If
KeyBank has agreed to make requested
Settlement Advances, KeyBank shall, before
2:00 p.m. (Cleveland, Ohio time) on
the date requested by the Lead Borrower for
such Borrowing, make such Settlement
Advance available to the Lead Borrower, in
immediately available funds, by wire
transfer or intrabank transfer in
accordance with the instructions of the Lead
Borrower consistent with the terms of this
Agreement. Each Settlement Advance
shall be deemed for all purposes hereof to
be a Loan hereunder and shall be
subject to all of the terms and conditions
applicable to other Loans except that
all payments thereon shall be payable to
KeyBank solely for its own account (and
for the account of the holder of any
participation interest with respect to such
Loan purchased pursuant to Section 13.04 of
this Agreement). The Administrative
Agent shall not request KeyBank to make any
Settlement Advances if the
Administrative Agent has received written
notification from any Lender that one
or more conditions set forth in Section 6
will not be satisfied on the date
requested by the Lead Borrower for such
Borrowing. Prior to making, in its sole
discretion, any Settlement Advance, KeyBank
shall not be otherwise required to
determine whether the conditions precedent
set forth in Section 6 of this
Agreement have been satisfied or whether
the requested Borrowing would exceed
the Total Commitment of the Lenders then in
effect.
(d) The Administrative Agent and the Lenders hereby
agree that, except in the case of
Settlement Advances pending settlement as
provided in this Section 1.03(d), each
Lender's funded portion of such
Settlement Advances is intended to be equal
to such Lender's portion of Tranche
A Loans or Tranche B Loans, as applicable,
required by its Commitments. The
Administrative Agent and the Lenders agree
(which agreement shall not be for the
benefit of or enforceable by any of the
Borrowers) that, in
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order to facilitate the administration of
this Agreement and the other Credit
Documents, the Administrative Agent may
elect, with the consent of KeyBank, to
settle accounts (each settlement of
accounts hereunder a "SETTLEMENT") as to the
Settlement Advances among the Lenders on a
periodic basis in accordance with
this Section 1.03(d). The Administrative
Agent shall request such Settlement of
accounts of the Lenders as to Settlement
Advances on a basis not less frequently
than once during each five (5) Business Day
period, or on a more frequent basis
if so determined by the Administrative
Agent, by notifying the other Lenders by
telecopy, telephone or other similar form
of transmission, of such requested
Settlement, no later than 12:30 p.m.
(Cleveland, Ohio time) on the date of such
requested Settlement (the "SETTLEMENT
DATE"). The Settlement Date for
outstanding Settlement Advances shall be
such day of each calendar week as the
Administrative Agent shall notify the
Lenders from time to time. Each Lender
(other than KeyBank) shall make the amount
of such Lender's portion of the
outstanding principal amount of the
Settlement Advances with respect to which
Settlement is requested available to the
Administrative Agent, for the account
of KeyBank, in immediately available funds
at the account of the Agent
maintained at the Payment Office not later
than 2:00 p.m. (Cleveland, Ohio
time), on the Settlement Date applicable
thereto. Such Settlement shall occur
regardless of whether the applicable
conditions precedent set forth in Section 6
have then been satisfied. Such amounts made
available to the Administrative
Agent shall be applied against the amounts
of the applicable Settlement Advance
and shall constitute Tranche A Loans or
Tranche B Loans, as applicable.
Notwithstanding the occurrence of a Default
or an Event of Default and
regardless of whether the Administrative
Agent has requested a Settlement with
respect to a Settlement Advance, in the
event that any Loan pursuant to this
Section 1.03(d) cannot be made by the
Lenders because one or more of the Lenders
shall determine that such Lenders are
legally prohibited from making such a
Loan, each such Lender shall irrevocably
and unconditionally purchase and
receive from KeyBank, without recourse or
warranty, an undivided interest and
participation in such Settlement Advance to
the extent of such Lender's portion
thereof as required by its Commitment by
paying to the Administrative Agent, in
immediately available funds, an amount
equal to such Lender's portion, as
required by its Commitment, of such
Settlement Advance on the date the Loan
would have been made pursuant to this
Section 1.03(d). If such amount is not in
fact made available to the Administrative
Agent by any Lender, the
Administrative Agent shall be entitled to
recover such amount on demand from
such Lender together with interest thereon
at the Federal Funds Effective Rate
for the first three (3) days from and after
such demand and thereafter at the
interest rate then applicable to the Loans.
From and after the date, if any, on
which a Lender purchases an undivided
interest and participation in any
Settlement Advance pursuant to this Section
1.03(d) and subject to Sections
13.04 and 13.06 of this Agreement, such
Lender shall be entitled to its portion
of all payments made by or on behalf of the
Borrowers in respect of, and all
Collections and Remittances received by the
Administrative Agent and credited
to, such Settlement Advance. Pursuant to
the Administrative Agent's election for
periodic funding, the Administrative Agent
and KeyBank may be advancing and may
be receiving repayments in respect of Loans
prior to the time the Lenders
actually advance or are actually repaid
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Loans. Each of: (i) KeyBank with respect to
Settlement Advances, and (ii) each
Lender with respect to the Loans other than
Settlement Advances, shall be
entitled to interest at the applicable rate
or rates payable under this
Agreement accruing on the amount of funds
employed by reason of actual Loans by
KeyBank or such Lender. Funds shall be
deemed employed by KeyBank or the
Lenders, as the case may be, until such
time as: (I) in the case of KeyBank,
payments are credited to the Borrowers
pursuant to Section 5.08 or Collections
or Remittances are received by the
Administrative Agent by reason of deposit to
the Borrower Cash Collateral Account and
credited to the Borrowers pursuant to
Sections 5.04-.07 or (II) in the case of a
Lender, funds representing such
Lender's portion of such payment or
Collections and Remittances are received by
such Lender from the Administrative Agent
pursuant to Section 5.06 of this
Agreement.
(e) If and to the extent that any Lender shall not have
made available to the Administrative Agent
such Lender's portion as required by
its Commitment of any Borrowing advanced by
the Administrative Agent on behalf
of the Lenders on the Closing Date or
thereafter (whether advanced by KeyBank on
behalf of the Lenders pursuant to Section
1.04(d) or otherwise pursuant to this
Agreement), such Lender agrees to pay, and
the Borrowers agree to repay to the
Administrative Agent, severally and not
jointly and severally, immediately upon
demand by the Administrative Agent, an
amount equal to such Lender's portion of
such Borrowing, together with interest
thereon for each day from the date such
amount is made available to the Lead
Borrower until the date such amount is
repaid to the Administrative Agent, at: (i)
in the case of the Lender, the
Federal Funds Effective Rate for the first
three (3) days from and after the
date of the Borrowing and thereafter at the
interest rate then applicable to
such Borrowings and (ii) in the case of the
Borrowers, the interest rate
applicable at the time to such Borrowings.
If such Lender pays to the
Administrative Agent the Lender's portion
required by its Commitment of such
Borrowing prior to repayment of such amount
by the Borrowers, the amount so
repaid shall constitute such Lender's
portion of such Borrowing, and the
Borrowers shall have no further obligation
to make the payment required by this
Section 1.04(e).
(f) Nothing herein shall be deemed to relieve any Lender
from its obligation to fulfill its
Commitment(s) hereunder or to prejudice any
rights which the Borrowers may have against
any Lender as a result of any
default by such Lender hereunder.
1.04 Notes. (a) At the request of any Lender, the Borrowers'
obligation to pay the principal of and
interest on all the Loans made to it by
each Lender shall be evidenced by a
promissory note (each a "NOTE" and,
collectively the "NOTES") duly executed and
delivered by the Borrowers
substantially in the form of Exhibit B
hereto, with blanks appropriately
completed in conformity herewith.
(b) Each Lender will note on its internal records the
amount of each Loan made by it and each
payment in respect thereof and will,
prior to any transfer of its
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Notes, endorse on the reverse side thereof
the outstanding principal amount of
Loans evidenced thereby. Such notation
shall be conclusive absent manifest
error, although the failure to make any
such notation shall not affect the
Borrowers' obligations in respect of such
Loans.
1.05 Allocations of Borrowings. All Borrowings of Tranche A
Loans
under this Agreement shall be incurred
solely from Presstek on the basis of
Presstek's Tranche A Commitment, all
Borrowings of Tranche B Loans under this
Agreement shall be incurred solely from
Presstek on the basis of Presstek's
Tranche B Commitment and all Borrowings of
Tranche C Loans under this Agreement
shall be incurred solely from KeyBank on
the basis of KeyBank's Tranche C
Commitment. No Lender shall be responsible
for any default by any other Lender
in its obligation to fund Loans hereunder
and each Lender shall be obligated to
make the Loans provided to be made by it
hereunder, regardless of the failure of
any other Lender to fulfill its Commitments
hereunder.
1.06 Interest. (a) Except as provided in this Section 1.07(b),
the
unpaid principal amount of each Loan shall
bear interest from the date of the
Borrowing thereof to the date such Loan is
repaid, at a rate per annum which
shall at all times equal the lesser of (i)
100 basis points less than the Prime
Rate in effect from time to time and (ii)
three percent (3.00%).
(b) During the continuance of an Event of Default, the
principal of the Loans (and overdue
interest and all other overdue amounts
payable hereunder to the extent permitted
by applicable law) shall upon notice
by the Administrative Agent, until such
Event of Default has been cured or
remedied or waived pursuant to Section
13.12, bear interest at a rate per annum
equal to two percent (2%) above the rate of
interest otherwise applicable to
such Loans pursuant to Section 1.07(a).
(c) Interest shall accrue from and including the date of
any Borrowing to but excluding the date of
any repayment thereof and shall be
payable in arrears on each Monthly Payment
Date and the Maturity Date, and after
the Maturity Date, on demand.
(d) As adequate protection for the use of the
Prepetition Collateral, Postpetition
Interest shall (i) be paid to KCCI solely
for its own account as a Prepetition Lender
on each Monthly Payment Date, and
after the Maturity Date on demand and (ii)
be paid to the Prepetition Lenders in
accordance with the terms of the
Prepetition Credit Agreement. All computations
of interest hereunder shall be made in
accordance with Section 13.07(b).
1.07 Increased Costs, Illegality, etc. If the Administrative
Agent
or any Lender shall have determined that
after the Closing Date, the adoption or
effectiveness of any applicable law, rule
or regulation regarding capital
adequacy, or any change therein, or any
change in the interpretation or
administration thereof by any
Governmental
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Authority, central bank or comparable
agency charged by relevant authority with
the interpretation or administration
thereof, or compliance by the
Administrative Agent or such Lender (or any
corporation controlling such Lender)
with any request or directive regarding
capital adequacy (whether or not having
the force of law) of any such authority,
central bank or comparable agency, has
or would have the effect of reducing, by an
amount reasonably deemed by the
Administrative Agent or such Lender to be
material, the rate of return on the
Administrative Agent's or such Lender's (or
such controlling corporation's)
capital or assets as a consequence of its
commitments or obligations hereunder
to a level below that which the
Administrative Agent or such Lender (or such
controlling corporation) could have
achieved but for such adoption,
effectiveness, change or compliance (taking
into consideration such Lender's (or
such controlling corporation's) policies
with respect to capital adequacy), then
from time to time, within fifteen (15) days
after written demand by the
Administrative Agent or such Lender (with a
copy to the Administrative Agent and
accompanied by the notice described in the
last sentence of this Section 1.08),
the Borrowers shall, subject to the
provisions of Section 13.17 (to the extent
applicable), pay to the Administrative
Agent or such Lender such additional
amount or amounts as will compensate the
Administrative Agent or such Lender (or
such controlling corporation) for such
reduction. The Administrative Agent and
each Lender, upon determining that any
additional amounts will be payable
pursuant to this Section 1.08, will give
prompt written notice thereof to the
Lead Borrower, which notice shall set forth
in reasonable detail the basis of
the calculation of such additional amounts,
which basis shall be reasonable,
although the failure to give any such
notice shall not release or diminish any
of the Borrowers' obligations to pay
additional amounts pursuant to this Section
1.08 upon the subsequent receipt of such
notice.
1.08 Change of Lending Office. Each Lender agrees that, upon
the
occurrence of any event giving rise to the
operation of Section 1.08 or Section
4.04 with respect to such Lender, it will,
if requested by the Lead Borrower,
use reasonable efforts (subject to overall
policy considerations of such Lender)
to designate another lending office for any
Loans or its Commitment, as the case
may be, if affected by such event, provided
that such designation is made on
such terms that such Lender and its lending
office suffer no economic, legal or
regulatory disadvantage, with the object of
avoiding the consequence of the
event giving rise to the operation of any
such Section. Nothing in this Section
1.09 shall affect or postpone any of the
obligations of the Borrowers or the
right of any Lender provided in Section
1.08 or Section 4.04.
SECTION 2. [Reserved---Letters of
Credit.]
SECTION 3. Fees, Commitments.
3.01 Fees. (a) The Borrowers agree to pay to the Administrative
Agent a commitment commission ("COMMITMENT
COMMISSION") for the account of each
Lender for the period from and including
the Closing Date to, but not including,
the date
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the Total Commitments have been terminated,
computed at a rate for each day
equal to 0.50% per annum on the daily
average of such Lender's Unutilized
Commitment. Such Commitment Commission
shall be due and payable in arrears on
each Monthly Payment Date of each year and
on the date upon which the Total
Commitments are terminated.
(b) The Borrowers agrees to pay to the Administrative
Agent at closing a facility fee in the
amount of $50,000.00, which shall be
deemed to be fully earned at closing, of
which 80% shall be allocated to
Presstek and 20% shall be allocated to
KeyBank.
(c) All computations of Fees shall be made in accordance
with Section 13.07(b).
3.02 Voluntary Reduction of Commitments. Upon at least three
(3)
Business Days' prior written notice (or
telephonic notice confirmed in writing)
to the Administrative Agent at its Notice
Office (which notice the
Administrative Agent shall promptly
transmit to each of the Lenders), the
Borrowers shall have the right, without
premium or penalty, to terminate or
partially reduce the Total Commitment,
provided, that (a) any such partial
reduction shall first permanently reduce
the Tranche C Commitment until such
Commitment is reduced to zero and only
thereafter may the Tranche B Commitment
be reduced, (b) only after the Tranche B
Commitment is reduced to zero may the
Tranche A Commitment be reduced, (c) any
termination must terminate all
Commitments and (d) any partial reduction
pursuant to this Section 3.02 shall be
in the amount of at least $500,000.
3.03 Mandatory Reductions of Commitments, etc. (a) The
Commitments
shall terminate on the Maturity Date and be
automatically reduced permanently to
zero.
(b) In addition, the Total Commitments shall be reduced
as provided in Section 4.02.
SECTION 4. Payments.
4.01 Voluntary Prepayments. The Borrowers shall have the right
to
prepay Loans in whole or in part, without
premium or penalty, from time to time
on the following terms and conditions:
(a) the Lead Borrower shall give the Administrative
Agent at the Payment Office written notice
(or telephonic notice promptly
confirmed in writing) of its intent to
prepay the Loans and the amount of such
prepayment, which notice shall be given by
the Lead Borrower at least one
Business Day prior to the date of such
prepayment, and which notice shall
promptly be transmitted by the
Administrative Agent to each of the Lenders;
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(b) each partial prepayment shall be in an aggregate
principal amount of at least $500,000;
and
(c) each partial prepayment shall first be applied to
repayment of all Tranche C Loans and only
after all Tranche C Loans have been
repaid in full shall any prepayments be
applied to Settlement Advances, and only
after all Settlement Advances have been
repaid in full shall any prepayments be
applied to Tranche B Loans, and only after
all Tranche B Loans have been repaid
in full shall any prepayments be applied to
any Tranche A Loans.
The notice provisions, the provisions with
respect to the minimum amount of any
prepayment, and the provisions requiring
prepayments in integral multiples above
such minimum amount of this Section 4.01
are for the benefit of the
Administrative Agent and may be waived
unilaterally by the Administrative Agent.
4.02 Mandatory Prepayments and Repayment.
(a) The Loans shall become due and payable in full, and
the Borrowers shall repay the Loans in
full, on the Maturity Date, together with
any and all accrued and unpaid interest
thereon and any fees and other
obligations due and payable hereunder;
provided, however, that Collections and
Remittances deposited into the Borrower
Cash Collateral Account will be applied
to the Loans on an ongoing basis in
accordance with Section 5.07 of this
Agreement.
(b) If on any date the sum of the aggregate outstanding
principal amount of Loans then outstanding
exceeds an amount equal to the lesser
of (i) the aggregate Commitments at such
time, and (ii) the amount approved to
be advanced to the Borrowers by way of
Loans pursuant to the Orders, the
Borrowers shall repay on such date Loans in
an aggregate amount equal to such
excess.
(c) On the first Business Day after receipt by any of
the Borrowers or any of their Subsidiaries
of Net Cash Proceeds from any Asset
Sale, the Borrowers shall pay to the
Administrative Agent an amount equal to the
lesser of (i) one hundred percent (100%) of
such Net Cash Proceeds and (ii) the
sum of the aggregate amount of Loans then
outstanding (together with accrued and
unpaid interest thereon), to repay such
Loans, and the Total Commitments shall
be permanently reduced by an amount equal
to one hundred percent (100%) of such
Net Cash Proceeds, with the Tranche C
Commitment to be reduced first until such
Commitment is reduced to zero, the Tranche
B Commitment to be reduced next until
such Commitment is reduced to zero and the
Tranche A Commitment to be reduced
last.
(d) On the first Business Day after receipt by any of
the Borrowers or any of their Subsidiaries
of Net Offering Proceeds of the sale
or issuance of Capital Stock of (or cash
capital contributions to) the Borrowers
or any of their Subsidiaries the
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<PAGE>
Borrowers shall pay to the Administrative
Agent an amount equal to the lesser of
(i) one hundred percent (100%) of such Net
Offering Proceeds and (ii) the sum of
the aggregate amount of Loans then
outstanding (together with accrued and unpaid
interest thereon), to repay such Loans, and
the Total Commitments shall be
permanently reduced by an amount equal to
one hundred percent (100%) of such Net
Offering Proceeds, with the Tranche C
Commitment to be reduced first until such
Commitment is reduced to zero, the Tranche
B Commitment to be reduced next until
such Commitment is reduced to zero and the
Tranche A Commitment to be reduced
last.
(e) On the first Business Day after receipt by the
Borrowers or any of their Subsidiaries of
proceeds from any Recovery Event, the
Borrowers shall pay to the Administrative
Agent an amount equal to the lesser of
(i) one hundred percent (100%) of such
proceeds (net of reasonable costs and
taxes incurred in connection with such
Recovery Event) and (ii) the sum of the
aggregate amount of Loans then outstanding
(together with accrued and unpaid
interest thereon), to repay such Loans, and
the Total Commitments shall be
permanently reduced by an amount equal to
one hundred percent (100%) of such
proceeds, with the Tranche C Commitment to
be reduced first until such
Commitment is reduced to zero, the Tranche
B Commitment to be reduced next until
such Commitment is reduced to zero and the
Tranche A Commitment to be reduced
last; provided that with the prior consent
of the Administrative Agent (which
consent may be granted or withheld in the
sole discretion of the Administrative
Agent) the Borrowers may apply such
proceeds to repair or replace assets lost or
damaged in connection with such Recovery
Event and no such repayment of Loans
shall be required to the extent of such
application of proceeds.
(f) On the first Business Day after receipt by any of
the Borrowers or any of their Domestic
Subsidiaries of any United States federal
tax refund the Borrowers shall pay to the
Administrative Agent an amount equal
to the lesser of (i) one hundred percent
(100%) of such tax refund and (ii) the
sum of the aggregate amount of Loans then
outstanding (together with accrued and
unpaid interest thereon), to repay such
Loans, and the Total Commitments shall
be permanently reduced by an amount equal
to one hundred percent (100%) of such
refund, with the Tranche C Commitment to be
reduced first until such Commitment
is reduced to zero, the Tranche B
Commitment to be reduced next until such
Commitment is reduced to zero and the
Tranche A Commitment to be reduced last
(g) Except as expressly provided in this Agreement, all
prepayments of principal made by the
Borrowers pursuant to Section 4.02 shall be
applied: (i) to the payment of the then
outstanding balance of the Loans in
accordance with the provisions of Section
4.01(c) with a corresponding permanent
reduction of the Commitments in the amount
of such payment; and (ii) held as
cash collateral in accordance with Section
8.14.
4.03 Method and Place of Payment. Except as otherwise
specifically
provided herein, all payments under this
Agreement shall be made to the
Administrative
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<PAGE>
Agent for the account of the Lenders
entitled thereto (which funds the
Administrative Agent shall promptly forward
to such Lenders), not later than
1:00 P.M. (Cleveland, Ohio time) on the
date when due and shall be made in
immediately available funds and in lawful
money of the United States of America
at the Payment Office, it being understood
that written notice by the Lead
Borrower to the Administrative Agent to
make a payment from the funds in the
Borrower Cash Collateral Account at the
Payment Office shall constitute the
making of such payment to the extent of
such funds held in such account. Any
payments under this Agreement which are
made later than 1:00 P.M. (Cleveland,
Ohio time) shall be deemed to have been
made on the next succeeding Business
Day. Whenever any payment to be made
hereunder shall be stated to be due on a
day which is not a Business Day, the due
date thereof shall be extended to the
next succeeding Business Day and, with
respect to payments of principal,
interest shall be payable during such
extension at the applicable rate in effect
immediately prior to such extension.
4.04 Net Payments. (a) All payments made by the Borrowers
hereunder
or under any Credit Document will be made
without setoff, counterclaim or other
defense. Except as provided in this Section
4.04, all payments hereunder and
under any of the Credit Documents
(including, without limitation, payments on
account of principal and interest and fees)
shall be made by the Borrowers free
and clear of and without deduction or
withholding for or on account of any
present or future tax, duty, levy, impost,
assessment or other charge of
whatever nature now or hereafter imposed by
any Governmental Authority, but
excluding therefrom
(i) a tax imposed on or measured by the overall net
income (including a franchise tax based on
net income) of the lending office of
the Lender in respect of which the payment
is made by the jurisdiction in which
the Lender is incorporated or the
jurisdiction (or political subdivision or
taxing authority thereof) in which its
lending office is located,
(ii) in the case of any Lender organized under the laws
of any jurisdiction other than the United
States or any state thereof (including
the District of Columbia), any taxes
imposed by the United States by means of
withholding at the source unless such
withholding results from a change in
applicable law, treaty or regulations or
the interpretation or administration
thereof (including, without limitation, any
guideline or policy not having the
force of law) by any authority charged with
the administration thereof
subsequent to the date such Lender becomes
a Lender with respect to the Loans or
portion thereof affected by such change,
and
(iii) any tax imposed on or measured by the overall net
income (including a franchise tax based on
net income) of a Lender or an office
or branch thereof by the United States of
America or any political subdivision
or taxing authority thereof or therein
(such tax or taxes, other than excluded
tax or taxes, being herein referred to as
"TAX" or "TAXES"). If the Borrowers
are required by law to make any deduction
or withholding of any Taxes from any
payment due hereunder or under any of the
Credit
13
<PAGE>
Documents, then the amount payable will be
increased to such amount which, after
deduction from such increased amount of all
such Taxes required to be withheld
or deducted therefrom, will not be less
than the amount due and payable
hereunder had no such deduction or
withholding been required. A certificate as
to any additional amounts payable to a
Lender under this Section 4.04 submitted
to the Lead Borrower by such Lender shall
show in reasonable detail the amount
payable and the calculations used to
determine in good faith such amount and
shall, absent manifest error, be final,
conclusive and binding upon all parties
hereto.
(b) If the Borrowers make any payment hereunder or under
any of the Credit Documents in respect of
which they are required by law to make
any deduction or withholding of any Taxes,
the Borrowers shall pay the full
amount to be deducted or withheld to the
relevant taxation or other authority
within the time allowed for such payment
under applicable law and shall deliver
to the Lenders within thirty (30) days
after it has made such payment to the
applicable authority a receipt issued by
such authority evidencing the payment
to such authority of all amounts so
required to be deducted or withheld from
such payment.
(c) Without prejudice to the other provisions of Section
4.04, if any Lender, or the Administrative
Agent on its behalf, is required by
law to make any payment on account of Taxes
on or in relation to any amount
received or receivable hereunder or under
any of the Credit Documents by such
Lender, or the Administrative Agent on its
behalf, or any liability for Tax in
respect of any such payment is imposed,
levied or assessed against any Lender or
the Administrative Agent on its behalf, the
Borrowers will promptly, following
receipt of the certificate described in the
immediately following sentence,
indemnify such person against such Tax
payment or liability, together with any
interest, penalties and expenses (including
reasonable counsel fees and
expenses) payable or incurred in connection
therewith, including any tax of any
Lender arising by virtue of payments under
this Section 4.04(c), computed in a
manner consistent with this Section
4.04(c). A certificate prepared in good
faith as to the amount of such payment by
such Lender, or the Administrative
Agent on its behalf, absent manifest error,
shall be final, conclusive and
binding upon all parties hereto for all
purposes.
(d) Each Lender that is not a United States person (as
such term is defined in Section 7701(a)(30)
of the Code) agrees to deliver to
the Lead Borrower and the Administrative
Agent on or prior to the Closing Date,
or in the case of a Lender that is an
Assignee of an interest under this
Agreement pursuant to Section 13.04 (unless
the respective Lender was already a
Lender hereunder immediately prior to such
assignment), on the date of such
assignment to such Lender, (i) two accurate
and complete original signed copies
of IRS Form W-8BEN, W-8ECI or W-8IMY (or
successor or other applicable forms
prescribed by the IRS) certifying to such
Lender's entitlement to a complete
exemption from or reduced rate of United
States withholding tax on interest
payments to be made under this Agreement
and under any Note, or (ii) if the
Lender is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code
and
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<PAGE>
cannot deliver the applicable form pursuant
to clause (i) above, (x) a
certificate substantially in the form of
Exhibit C (any such certificate, a
"SECTION 4.04(D)(II) CERTIFICATE") and (y)
two accurate and complete original
signed copies of IRS Form W-8 (or successor
form) certifying to such Lender's
entitlement to a complete exemption from
United States withholding tax on
payments of interest to be made under this
Agreement and under any Note;
provided, however, that no Lender shall be
required to deliver an IRS Form
W-8BEN, W-8ECI, W-8IMY, or Section
4.04(d)(ii) Certificate under this Section
4.04(d) to the extent that the delivery of
such form is not authorized by law;
provided, further, however, that in the
event that a Lender provides the
Borrowers or the Administrative Agent with
an IRS Form W-8IMY (or substitute
form) indicating that it is a "flow
through" entity, as defined in Treasury
Regulations promulgated under Section 1441
of the Code, or otherwise, not a
beneficial owner of interest payments under
this Agreement and under any Note,
such Lender agrees, on or prior to the
Closing Date, or the date of assignment
to such Lender, as applicable, to take any
actions necessary, and to deliver to
the Borrowers and the Administrative Agent
all forms necessary, to establish
such Lender's entitlement to a complete
exemption from, or a reduction in,
United States withholding tax on payments
of interest to be made under this
Agreement and under any Note, including
causing its partners, members,
beneficiaries, beneficial owners, and their
beneficial owners, if any, to take
any actions and deliver any forms necessary
to establish such exemption.
Notwithstanding the foregoing, (i) a
fiscally transparent entity may provide an
IRS Form W-8BEN to claim a treaty exemption
or rate reduction to the extent that
such entity is receiving interest and is
not treated as fiscally transparent by
its own jurisdiction, provided, that the
satisfaction of such conditions
entitles the Lender to an exemption or
reduction from withholding at the time
such Lender becomes a party to this
Agreement and (ii) a withholding foreign
partnership, withholding foreign trust, and
qualified intermediary shall only
provide such information as is required by
Treasury Regulations promulgated
under Code Section 1441. For purposes of
this Agreement, the term "Forms" shall
include any attachments to IRS Forms W-8
IMY required to be filed by the Lender.
In addition, each Lender agrees that from
time to time after the Closing Date,
when a lapse in time or change in
circumstances renders the previous
certification obsolete or inaccurate in any
material respect, such Lender will
deliver to the Lead Borrower and the
Administrative Agent two new accurate and
complete original signed copies of an IRS
Form W-8BEN, W-8ECI, or W-8IMY and a
Section 4.04(d)(ii) Certificate, as the
case may be, and such other forms as may
be required in order to confirm or
establish the entitlement of such Lender (or
its partners, members, beneficiaries, or
beneficial owners) to a continued
exemption from or reduction in United
States withholding Tax on interest
payments under this Agreement and any Note,
or it shall immediately notify the
Borrower and the Administrative Agent of
its inability to deliver any such form
or certificate; provided, however, that no
Lender shall be required to deliver
an IRS Form W8-BEN, W-8ECI, or W-8IMY under
this Section 4.04(d) to the extent
that the delivery of such form is not
authorized by law; provided, further,
however, that any Lender which does not
deliver the applicable form pursuant to
this Section 4.04(d) shall be entitled to
additional payment pursuant to Section
4.04(a) or indemnification under Section
4.04(c) only if and to the extent (i)
such failure results
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<PAGE>
from a change in law or (ii) the Tax to
which such additional payment or
indemnification relates would have been
imposed regardless of whether such
Lender provided such forms. Notwithstanding
anything to the contrary contained
in Section 4.04, any Lender that has not
provided to the Borrower the IRS Forms
required to be provided to the Borrowers
pursuant to this Section 4.04(d) shall
not be entitled to any payment of
additional amounts pursuant to Section 4.04(a)
or indemnification under Section 4.04(c)
with respect to any deduction or
withholding which would not have been
required if such Lender had provided such
forms.
(e) Each Lender that is incorporated or organized under
the laws of the United States of America or
a state thereof shall provide two
properly completed and duly executed copies
of IRS Form W-9, or any successor or
other applicable form. Each Lender shall
deliver to the Borrowers and the
Administrative Agent (provided that such
Lender remains lawfully able to do so),
two further duly executed forms and
statements, properly completed in all
material respects, at or before the time
any such form or statement expires or
becomes obsolete, or otherwise as
reasonably requested by the Borrower. Each
Lender shall promptly notify the Borrowers
at any time it determines that it is
no longer in a position to provide any
previously delivered certificate to the
Borrower (or any other form or
certification adopted by U.S. taxing authorities
for such purpose).
(f) Each Lender agrees that, as promptly as practicable
after it becomes aware of the occurrence of
any event or the existence of any
condition that would cause the Borrowers to
make a payment in respect of any
Taxes to such Lender pursuant to Section
4.04(a) or a payment in indemnification
for any Taxes pursuant to Section 4.04(c),
it will use reasonable efforts to
make, fund or maintain the Loan (or portion
thereof) of such Lender with respect
to which the aforementioned payment is or
would be made through another lending
office of such Lender or take any other
action reasonably requested by the Lead
Borrower if as a result thereof the
additional amounts which would otherwise be
required to be paid by the Borrowers in
respect of such Loans (or portions
thereof) pursuant to Section 4.04(a) or
Section 4.04(c) would be materially
reduced, and if, as determined by such
Lender, in its reasonable discretion, the
making, funding or maintaining of such
Loans (or portions thereof) through such
other lending office or taking of such
other action would not otherwise
materially adversely affect such Loans or
such Lender. The Borrowers agrees to
pay all reasonable expenses incurred by any
Lender in utilizing another lending
office of such Lender or taking of such
other action pursuant to this Section
4.04(f).
SECTION 5. Priority and Collateral
Security.
5.01 Superpriority Claims and Collateral Security. The
Borrowers
hereby represent, warrant and covenant
that, except as otherwise expressly
provided in this Section 5.01, upon the
entry of the Final Order:
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<PAGE>
(a) subject to the Carve Out, the Tranche A Loans shall
be:
(i) secured by first priority liens on and security
interests pursuant to Section 364(c)(2) of
the Bankruptcy Code in all of the
outstanding capital stock of the Debtors'
Subsidiaries in the United Kingdom and
Canada;
(ii) pursuant to Section 364(c)(3) of the Bankruptcy
Code, secured by liens and security
interests that are junior to the liens and
security interests of the Prepetition
Lender under the Prepetition Financing
Documents, on all of the assets of the
Borrowers and their Domestic
Subsidiaries, including without limitation,
all goods (including without
limitation, equipment and inventory),
deposit accounts, investment property,
accounts, chattel paper, instruments,
documents, letter-of-credit rights,
commercial tort claims, insurance claims,
supporting obligations and liens, real
estate interests and general intangibles of
the Borrowers and their Domestic
Subsidiaries of any nature, whether now
owned or hereafter acquired, but
excluding Avoidance Claims; and
(iii) entitled to Superpriority Claim status pursuant to
Section 364(c)(1) of the Bankruptcy Code
senior to any other claims of any
entity, including, without limitation, any
claims under Sections 503, 507, 1113
and 1114 of the Bankruptcy Code, except
that any Superpriority Claim status
accorded to the Tranche A Loans shall have
equal priority, pari passu, with any
Superpriority Claim held by the Prepetition
Lender pursuant to Section 507(b) of
the Bankruptcy Code.
The liens described in Subsections (a)(i)
and (a)(ii) above are referred to as
the "TRANCHE A LIENS".
(b) subject to the Carve Out, the Tranche B Loans and
the Tranche C Loans shall be:
(i) secured pursuant to Section 364(d)(1) of the
Bankruptcy Code by first priority security
interests in and liens on (A) all of
the assets of the Borrowers and their
Domestic Subsidiaries, including, without
limitation, all goods (including without
limitation, equipment and inventory),
deposit accounts, investment property,
accounts, chattel paper, instruments,
documents, letter-of-credit rights,
commercial tort claims, insurance claims,
supporting obligations and liens, real
estate interests, Avoidance Claims and
general intangibles of the Borrowers and
their Domestic Subsidiaries of any
nature, whether now owned or hereafter
acquired and (B) any assets of the
Borrowers in which the Prepetition Lender
was not granted a security interest or
lien under the terms of the Prepetition
Financing Documents, senior in priority
to all other security interests and liens
(the "TRANCHE B AND TRANCHE C LIENS");
and
(ii) entitled to Superpriority Claim status pursuant to
Section 364(c)(1) of the Bankruptcy code
senior to any Superpriority Claim
granted as adequate protection in respect
to the Prepetition Lender and any
other claims of any entity,
17
<PAGE>
including, without limitation, any claims
under Sections 503, 507, 1113 and 1114
of the Bankruptcy Code.
(c) the Tranche A Liens and the Tranche B and Tranche C
Liens are not subject to Section 551 of the
Bankruptcy Code.
5.02 Collateral Security Perfection. The Borrowers agree to take
all
actions that the Administrative Agent or
any Lender may reasonably request as a
matter of nonbankruptcy law to perfect and
protect the Administrative Agent's
and the Lenders' Liens upon the Collateral
and for such Liens to obtain the
priority therefor contemplated hereby,
including, without limitation, executing
and delivering such documents and
instruments, financing statements, providing
such notices and assents of third parties,
obtaining such governmental approvals
and providing such other instruments and
documents in recordable form as the
Administrative Agent or any Lender may
request. Each of the Borrowers hereby
irrevocably authorizes the Administrative
Agent at any time and from time to
time to file in any filing office in any
Uniform Commercial Code jurisdiction
any initial financing statements and
amendments thereto that (a) indicate the
Collateral (i) as "all assets of the
Borrower" or words of similar effect,
regardless of whether any particular asset
comprised in the Collateral falls
within the scope of Article 9 of the UCC of
such jurisdiction, or (ii) as being
of an equal or lesser scope or with greater
detail, and (b) provide any other
information required by part 5 of Article 9
of the Uniform Commercial Code of
any jurisdiction for the sufficiency or
filing office acceptance of any
financing statement or amendment, including
(i) whether such Borrower is an
organization, the type of organization and
any organization identification
number issued to such Borrower and, (ii) in
the case of a financing statement
filed as a fixture filing, a sufficient
description of real property to which
the Collateral relates. Each of the
Borrowers agree to furnish any such
information to the Administrative Agent
promptly upon the Administrative Agent's
request.
5.03 No Discharge; Survival of Claims. The Borrowers agree that
(a)
the Obligations shall not be discharged by
the entry of an order confirming a
Reorganization Plan (and the Borrowers
pursuant to Section 1141(d)(4) of the
Bankruptcy Code, hereby waive any such
discharge), (b) the Superpriority Claim
granted to the Administrative Agent and
Lenders pursuant to the Orders and the
Liens granted to the Administrative Agent,
for the benefit of the Administrative
Agent and the Lenders pursuant to the
Orders and the other Security Documents,
shall not be affected in any manner by the
entry of an order confirming a
Reorganization Plan and (c) the Borrowers
shall not propose or support any
Reorganization Plan that is not conditioned
upon the Payment In Full on or prior
to the Maturity Date, and, with respect to
Obligations arising pursuant to
Section 13.01 after such date, thereafter
for the payment in full of such
Obligations in cash when due and
payable.
5.04 Receipt of Collections and Remittances. All Collections or
Remittances received directly by any
Borrower shall be deemed held by such
Borrower
18
<PAGE>
in trust and as fiduciary for the
Administrative Agent for the benefit of the
Lenders. Each Borrower immediately shall
deposit any such Collection or
Remittance, in its original form, into the
Borrower Cash Collateral Account.
Pending such deposit, each Borrower agrees
that it will not commingle any such
Collection or Remittance with any of such
Borrower's other funds or property,
but will hold it separate and apart
therefrom in trust and as fiduciary for the
Administrative Agent until deposit is made
into the Borrower Cash Collateral
Account.
5.05 Cash Collateral Accounts. Paragon has established the
Borrower
Cash Collateral Account with KeyBank
National Association. All Collections and
Remittances of any kind deposited in the
Borrower Cash Collateral Account are
the sole and exclusive property of the
Administrative Agent for the benefit of
the Lenders. Each Borrower shall cause all
Collections and Remittances not
deposited into the Borrower Cash Collateral
Account to be swept to the Borrower
Cash Collateral Account on a daily basis.
All funds at any time in the Borrower
Cash Collateral Account shall be deemed to
be the property of the Administrative
Agent for the benefit of the Lenders and
shall be subject only to the signing
authority designated from time to time by
the Administrative Agent. No Borrower
shall have any interest therein or control
over such funds. Nevertheless, to the
extent funds in the Borrower Cash
Collateral Account are deemed to be the
property of any Borrower, each Borrower
hereby grants to the Administrative
Agent a security interest in all funds held
in the Borrower Cash Collateral
Account, as security for the Obligations.
The Borrower Cash Collateral Account
shall not be subject to any deduction,
set-off, banker's lien or any other right
in favor of any person or entity other than
the Administrative Agent.
5.07 Application of Collections and Remittances. Deposits to
the
Borrower Cash Collateral Account in respect
of any Borrower shall be credited to
the Borrowers as follows: (i) first, to the
payment of Adequate Protection
Payments, to the extent not previously
paid; (ii) second, to the payment of
interest due on the Tranche C Loans, if
any, made to the Borrowers; (iii) third,
to the outstanding principal amount of any
Tranche C Loans, and any other fees,
expenses, costs or other Obligations owed
with respect to the Tranche C Loans;
(iv) fourth, to the payment of interest due
on the Tranche B Loans, if any, made
to the Borrowers; (v) fifth, to the
outstanding principal amount of any Tranche
B Loans, and any other fees, expenses,
costs or other Obligations owed with
resepct to the Tranche B Loans (A) first to
Tranche B Loans comprised of
Settlement Advances and (B) then to other
Tranche B Loans in such order as the
Administrative Agent may choose in its sole
discretion; (vi) sixth, to the
payment of interest due on the Tranche A
Loans made to the Borrowers; (vii)
seventh, to the outstanding principal of
any Tranche A Loans, and any other
fees, expenses, costs or other Obligations
owed with respect to the Tranche C
Loans (A) first to Tranche A Loans
comprised of Settlement Advances and (B) then
to other Tranche A Loans in such order as
the Administrative Agent may choose in
its sole discretion; (viii) eighth, to late
charges until paid in full; (ix)
ninth, to payment of Prepetition
Indebtedness consisting of principal; and (x)
last, to any portion of Prepetition
Indebtedness consisting of costs and
expenses.
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<PAGE>
5.08 Crediting of Collections and Remittances. For the purpose
of
calculating in respect of the Borrowers
interest and determining the aggregate
Loans outstanding and resulting
availability hereunder, all Collections and
Remittances shall be credited to the
Borrowers: (a) in the case of Collections
and Remittances received by wire transfer
prior to 12:00 noon (Cleveland, Ohio
time), on the same Business Day as
received, (b) in the case of Collections and
Remittances received by wire transfer after
12:00 noon (Cleveland, Ohio time),
on the next succeeding Business Day after
such receipt and (c) in the case of
all other Collections and Remittances
received, two Business Days after the
Business Day on which the Administrative
Agent receives notice of the deposit of
the proceeds of such Collections and
Remittances into the Borrower Cash
Collateral Account, and is in good funds
with respect thereto prior to 12:00
noon (Cleveland, Ohio time). From time to
time, upon advance written notice to
the Lead Borrower, the Administrative Agent
may adopt such additional or
modified regulations and procedures as it
may deem reasonable and appropriate
with respect to the operation of the
Borrower Cash Collateral Account and the
services to be provided by the
Administrative Agent under this Agreement not
inconsistent with the terms of this
Agreement.
SECTION 6. Conditions Precedent to the
Closing Date and to all Credit Events.
The obligation of the Lenders to make each
Loan hereunder are each subject, at
the time thereof (except as otherwise
hereinafter indicated), to the
satisfaction of each of the following
conditions:
6.01 Commencement of the Cases. The Case of the Borrowers shall
have
commenced on or before July 15, 2004, and
the Closing Date shall be no later
than five (5) days after the Filing
Date.
6.02 Entry of Interim Order. The Cases shall have commenced and
the
Bankruptcy Court shall have entered the
Interim Order, such Interim Order shall
be in full force and effect and shall not
have been amended, modified, stayed or
reversed.
6.03 Execution of Agreement. On or prior to the Closing Date,
(i)
this Agreement shall have been executed and
delivered and as provided in Section
13.10 and (ii) there shall have been
delivered to the Administrative Agent for
the account of each Lender the appropriate
Notes payable to the account of each
applicable Lender in the amount of their
respective Commitments, executed by the
Borrowers, and in the amount, maturity and
as otherwise provided herein.
6.04 No Default; Representations and Warranties. On the Closing
Date
and at the time of each Credit Event and
after giving effect thereto, (i) there
shall exist no Default or Event of Default
and (ii) all representations and
warranties contained herein and in the
other Credit Documents in effect at such
time shall be true and correct in all
material respects with the same effect as
though such representations and warranties
had been made on and as of the date
of such Credit Event, except to the extent
that such
20
<PAGE>
representations and warranties expressly
relate to an earlier date, in which
case such representations and warranties
will be true and correct in all
material respects as of such earlier
date.
6.05 Officer's Certificate. On or prior to the Closing Date,
the
Administrative Agent shall have received a
certificate dated such date signed by
the President or any Vice President of each
of the Borrowers stating that all of
the applicable conditions set forth in
Section 6.01, Section 6.02, Section 6.04
and Section 6.08 exist or have been
satisfied as of such date.
6.06 Corporate Proceedings. (a) On or prior to the Closing Date,
the
Administrative Agent shall have received
from each Credit Party a certificate,
dated the Closing Date, signed by the
President or any Vice-President of each
such Credit Party in the form of Exhibit D
with appropriate insertions and
deletions, together with copies of the
certificate of incorporation, the by-laws
or other organizational documents of each
such Credit Party and the resolutions
of each such Credit Party referred to in
such certificate and all of the
foregoing shall be satisfactory to the
Administrative Agent.
(b) On or prior to the Closing Date, all corporate and
legal proceedings and all instruments and
agreements in connection with the
transactions contemplated by this Agreement
and the other Documents shall be
satisfactory in form and substance to the
Administrative Agent, and the
Administrative Agent shall have received
all information and copies of all
certificates, documents and papers,
including good standing certificates and any
other records of corporate proceedings and
governmental approvals, if any, which
the Administrative Agent may have
reasonably requested in connection therewith,
such documents and papers, where
appropriate, to be certified by proper
corporate or governmental authorities.
6.07 Material Adverse Effect. Since May 31, 2004, there shall
have
occurred no event, and no condition shall
exist, that could result in a Material
Adverse Effect.
6.08 Initial Budget. On or prior to the Closing Date, the
Borrowers
shall have prepared the initial Budget, and
the Lenders and the Administrative
Agent shall have approved the initial
Budget in their sold discretion.
6.09 Agency Agreement. On or prior to the Closing Date, the
Administrative Agent shall have received
Agency Agreements with respect to each
of the bank accounts listed on Annex I
hereto.
6.10 Security Agreement and Pledge Agreement. (a) On the
Closing
Date, (i) each of the Borrowers shall have
duly authorized, executed and
delivered a Security Agreement in the form
of Exhibit E (each such security
agreement, as amended, modified or
supplemented from time to time, a "SECURITY
Agreement"), (ii) the
21
<PAGE>
Borrowers shall have duly authorized,
executed and delivered a Pledge Agreement
in the form of Exhibit F (such pledge
agreement, as amended, modified or
supplemented from time to time, the "PLEDGE
AGREEMENT"), and (iii) the Borrowers
shall have taken all actions reasonably
requested by the Administrative Agent
(including, without limitation, the
obtaining of UCC search reports or
equivalent reports and the filing of
UCC-1's or UCC-3's, if applicable) in
connection with the perfection and first
priority status of the Liens intended
to be created and/or maintained by the
Pledge Agreement and each Security
Agreement in the Pledge Agreement
Collateral and the Security Agreement
Collateral.
(b) On the Closing Date,
(i) the Lenders shall have received evidence that the
completion of all recordings and filings
necessary or, in the reasonable opinion
of the Collateral Agent, desirable to
perfect and protect the security interests
purported to be created by the Security
Agreement have been taken;
(ii) the Collateral Agent shall have in its possession
all of the Securities which shall be either
endorsed in blank (in the case of
promissory notes constituting Securities)
or accompanied by executed and undated
stock powers (in the case of Capital Stock
constituting Securities);
(iii) the Lenders shall have received evidence that all
other actions necessary or, in the
reasonable opinion of the Collateral Agent,
desirable to perfect and protect the first
priority Lien in the Pledge Agreement
Collateral and the Security Agreement
Collateral, subject only to Permitted
Encumbrances, have been taken, or
arrangements therefor have been made on a
basis satisfactory to the Collateral Agent
and shall be in place; and
(iv) the Collateral Agent shall have received a duly
executed Perfection Certificate from each
of the Borrowers.
6.11 Insurance Policies. On or prior to the Closing Date, the
Collateral Agent shall have received
evidence of insurance complying with the
requirements of Section 8.06 for the
business and properties of the Borrowers
and their Subsidiaries, in form and
substance satisfactory to the Administrative
Agent and, naming the Collateral Agent as
an additional insured and/or loss
payee, as the case may be, and stating that
such insurance shall not be
cancelled or revised without 30 days' prior
written notice by the insurer to the
Collateral Agent.
6.12 Fees. On or prior to the Closing Date, the Borrowers shall
have
paid to the Administrative Agent and the
Lenders all Fees and expenses
(including, without limitation, reasonable
fees and expenses of counsel) agreed
upon by such parties to be paid on or prior
to such date.
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<PAGE>
6.13 Notice of Borrowing; Borrowing Base Certificates. Prior to
the
making of each Loan, the Administrative
Agent shall have received a Notice of
Borrowing meeting the requirements of
Section 1.02(a) and a Borrowing Base
Certificate as of a date not earlier than
one week prior to the date the Loan is
requested to be made.
6.14 Prepetition Interest, Fees and Expenses. The
Administrative
Agent shall have received, for the account
of the Prepetition Lender and its
advisors and counsels, and advisors and
experts retained by such advisors and
counsels) payment of all fees and expenses
incurred and accrued and unpaid
interest due and payable under the
Prepetition Credit Agreement to the extent
authorized by the Bankruptcy Court or in
any order entered by the Bankruptcy
Court.
The acceptance of the benefits of each Credit Event shall
constitute
a representation and warranty by the
Borrowers to the Administrative Agent and
each of the Lenders that all of the
applicable conditions specified above exist
as of that time. All of the certificates,
legal opinions and other documents and
papers referred to in this Section 6,
unless otherwise specified, shall be
delivered to the Administrative Agent at
its Notice Office for the account of
each of the Lenders and, except for the
Notes, in sufficient counterparts or
copies for each of the Lenders and shall be
satisfactory in form and substance
to the Administrative Agent.
SECTION 7. Representations, Warranties and
Agreements. In order to induce the
Lenders to enter into this Agreement and to
make the Loans, each of the
Borrowers represents and warrants to, and
agrees with, the Lenders, that all of
the representations and warranties made by
the Lead Borrower under and pursuant
to Article 3 of the Asset Purchase
Agreement are true and correct, that all such
representations and warranties shall
survive the execution and delivery of this
Agreement and the making of the Loans (with
the making of each Credit Event
thereafter being deemed to constitute a
representation and warranty that the
matters specified in this Section 7 are
true and correct in all material
respects on and as of the date of each such
Credit Event unless such
representation and warranty expressly
indicates that it is being made as of any
specific date, in which case such
representation and warranty shall be true and
correct in all material respects as of such
specific date).
SECTION 8. Affirmative Covenants. The
Borrowers and each of them covenant and
agree that as of the Closing Date and
thereafter for so long as this Agreement
is in effect and until the Total Commitment
has terminated, no Notes are
outstanding and the Loans and all interest,
Fees and all other Obligations
(other than indemnities described in
Section 13.13 hereof which are not then due
and payable) incurred hereunder, are paid
in full:
8.01 Information Covenants. The Borrowers will furnish to the
Administrative Agent and each Lender:
23
<PAGE>
(a) Annual Financial Statements. As soon as practicable,
but in any event no later than September
15, 2004, the consolidated annual
balance sheet of the Borrowers and their
Subsidiaries, for the fiscal year ended
December 31, 2003 and the related
consolidated statements of income and retained
earnings and of cash flows for such fiscal
year, in each case setting forth
comparative consolidated figures for the
preceding fiscal year, and in the case
of the consolidated financial statements,
examined by Ernst & Young LLP or such
other independent certified public
accountants of recognized national standing
acceptable to the Administrative Agent
whose opinion shall not be qualified
except with respect to uncertainties
inherent in the Case resulting in
substantial doubt about any Borrower's or
any Subsidiary's ability to continue
as a going concern, together with a
certificate of such accounting firm stating
that in the course of its regular audit of
the business of the Borrowers, which
audit was conducted in accordance with
generally accepted auditing standards,
such accounting firm has obtained no
knowledge of any Default or Event of
Default which has occurred and is
continuing or, if in the opinion of such
accounting firm such a Default or Event of
Default has occurred and is
continuing, a statement as to the nature
thereof.
(b) Quarterly Financial Statements. As soon as available
and in any event within forty-five (45)
days after the close of each of the
first three quarterly accounting periods in
the fiscal year of the Borrowers,
the consolidated balance sheet of the
Borrowers and their Subsidiaries, as at
the end of such quarterly accounting period
and the related consolidated
statements of income and retained earnings
and of cash flows for such quarterly
accounting period and for the elapsed
portion of the fiscal year ended with the
last day of such quarterly accounting
period, and in each case setting forth
comparative consolidated figures for the
related periods in the prior fiscal
year, all of which shall have been reviewed
by Ernst & Young LLP or such other
independent certified public accountants of
recognized national standing
acceptable to the Administrative Agent and
shall be certified by the chief
financial officer or controller of the Lead
Borrower, subject to changes
resulting from audit and normal year-end
audit adjustments.
(c) Monthly Report. As soon as practicable, and in any
event within thirty (30) days after the end
of each monthly accounting period of
the fiscal year of the Borrowers, monthly
reports in a form reasonably
satisfactory to the Administrative Agent,
which shall include the consolidated
balance sheet of the Borrowers and their
Subsidiaries, as at the end of such
monthly accounting period, and the related
consolidated statements of income and
cash flow for such monthly accounting
period, setting forth (i) in the case of
the balance sheet, comparative figures to
the balance sheet delivered pursuant
to Section 8.01(a) for the 2003 fiscal year
and (ii) in the case of statements
of cash flow, a summary of cash flows for
the elapsed portion of the fiscal year
ended with the last day of such monthly
accounting period.
(d) Weekly Reports. Before 5:00 p.m. (Cleveland, Ohio
time) or the first Business Day of each
week the Lead Borrower shall deliver to
Administrative Agent
24
<PAGE>
and each Lender a Borrowing Base
Certificate as of the close of business the
last Business Day of the immediately
preceding week and a report reflecting (i)
the cash flows of the Borrowers and their
Subsidiaries for the immediately
preceding calendar week and cash flow
projections for the following consecutive
thirteen calendar weeks, which shall
include identification of all variances
from the then current Budget for each such
period, (ii) then current accounts
payable agings, including a summary of
postpetition accounts payable and (iii)
daily cash receipts forecast for the
following two weeks, in all respects in
form and substance satisfactory to the
Administrative Agent and the Lenders.
(e) Officer's Certificates. At the time of the delivery
of the financial statements provided for in
Section 8.01(a) (b), (c) and (d), a
certificate of the chief financial officer,
controller or other Authorized
Officer of the Lead Borrower to the effect
that no Default or Event of Default
exists or, if any Default or Event of
Default does exist, specifying the nature
and extent thereof, which certificate, in
the case of the certificate delivered
pursuant to Section 8.01(a) and (b), shall
set forth the calculations required
to establish whether the Borrowers and
their Subsidiaries were in compliance
with the provisions of Section 9.10 and
Sections 9.16 through 9.20.
(f) [Intentionally Omitted]
(g) Notice of Default or Litigation. Promptly, and in
any event within three (3) Business Days
after any Borrower obtains knowledge
thereof, notice of (x) the occurrence of
any event which constitutes a Default
or an Event of Default, which notice shall
specify the nature thereof, the
period of existence thereof and what action
the Borrower proposes to take with
respect thereto or (y) the commencement of
or any significant development in the
Case or any other litigation or
governmental proceeding pending against any
Borrower or any Subsidiary which is
reasonably likely to have a Material Adverse
Effect or is reasonably likely to have a
material adverse effect on the ability
of the Borrowers or any other Credit Party
to perform its obligations hereunder
or under any other Credit Document.
(h) Environmental Matters. Promptly upon, and in any
event within ten (10) Business Days after,
an officer of any of the Borrowers or
any of their Subsidiaries obtains knowledge
thereof, notice of one or more of
the following environmental matters, unless
such environmental matters (i) have
already been disclosed to the Lenders or
(ii) could not, individually or when
aggregated with all other such
environmental matters, be reasonably expected to
have a Material Adverse Effect:
(i) any pending or threatened Environmental Claim
against any Borrower or any of its
Subsidiaries or any Real Property owned or
operated by the Borrower or any of its
Subsidiaries;
25
<PAGE>
(ii) any condition or occurrence on or arising from any
Real Property owned or operated by any
Borrower or any of its Subsidiaries that
(a) results in noncompliance by the
Borrower or any of its Subsidiaries with any
applicable Environmental Law or (b) could
reasonably be expected to form the
basis of an Environmental Claim against any
Borrower or any of its Subsidiaries
or any such Real Property;
(iii) any condition or occurrence on any Real Property
owned or operated by any Borrower or any of
its Subsidiaries that could
reasonably be expected to cause such Real
Property to be subject to any
restrictions on the ownership, occupancy,
use or transferability by any Borrower
or any of its Subsidiaries of such Real
Property under any Environmental Law;
and
(iv) the taking of any removal or remedial action in
response to the actual or alleged presence
of any Hazardous Material on any Real
Property owned or operated by any Borrower
or any of its Subsidiaries as
required by any Environmental Law or any
governmental or other administrative
agency; provided, that in any event the
Borrower shall deliver to each Lender
all notices received by it or any of its
Subsidiaries from any government or
governmental agency under, or pursuant to,
CERCLA.
All such notices shall describe in
reasonable detail the nature of the claim,
investigation, condition, occurrence or
removal or remedial action and the
Borrower's or such Subsidiary's response
thereto. In addition, each Borrower
will provide the Lenders with copies of all
material communications with any
government or governmental agency relating
to Environmental Laws, all material
communications with any Person (other than
its attorneys) relating to any
Environmental Claim of which notice is
required to be given pursuant to this
Section 8.01(h), and such detailed reports
of any such Environmental Claim as
may reasonably be requested by the
Lenders.
(i) Auditors' Reports. Promptly upon receipt thereof, a
copy of each final report or "management
letter" submitted to the Borrowers by
their independent accountants in connection
with any annual, interim or special
audit made by it of the books of the
Borrowers.
(ii) Claims Against Collateral. Immediately upon
becoming aware thereof, notice in writing
of any setoff, claims, withholdings or
other defenses to which any of the
Collateral, or any of the Lenders' rights
with respect to the Collateral, are
subject.
(iii) Other Information. From time to time, such other
information or documents (financial or
otherwise) as the Administrative Agent on
its own behalf or on behalf of the Required
Lenders may reasonably request from
time to time.
8.02 Retention of Financial Advisors. [reserved]
26
<PAGE>
8.03 Communications with Professionals. The Borrowers authorize
the
Administrative Agent, each Lender and any
of the Administrative Agent's or the
Lenders' respective representatives and
counsel to communicate directly with the
Borrowers' professionals and authorizes
such professionals to disclose to the
Administrative Agent, each Lender and the
Administrative Agent's and the
Lenders' respective representatives and
counsel, as the case may be, such
information as may be reasonably requested
by such Person with respect to the
business, financial condition and other
affairs of the Borrowers or any of their
Subsidiaries; provided that the Borrowers'
professionals shall not be required
to disclose privileged or confidential
information to the extent that disclosure
cannot be made without compromising such
information's privileged or
confidential status.
8.04 Collateral Preservation. The Borrowers shall take all such
further actions as the Administrative Agent
may from time to time reasonably
request to preserve, protect, perfect and
ensure the priority of the Collateral,
subject to Permitted Liens entitled to
priority under applicable law.
8.05 Executory Contracts. Prior to the Borrowers rejecting any
contract or making any motion to reject any
contract, the Borrowers shall notify
the Administrative Agent in writing of the
Borrowers' reasons why such rejection
(a) will be in the best interests of the
Borrowers and (b) will not have a
Material Adverse Effect on the Borrowers
and avoid proceeding with such
rejection if such rejection will have a
Material Adverse Effect on any of the
Borrowers.
8.06 Maintenance of Property, Insurance. The Borrowers will,
and
will cause each of their Subsidiaries to,
at all times maintain in full force
and effect insurance in such amounts,
covering such risks and liabilities and
with such deductibles or self-insured
retentions as are in accordance with
normal industry practice. At any time that
insurance at the levels described in
Annex II is not being maintained by the
Borrowers and their Subsidiaries, the
Borrowers will notify the Lenders in
writing thereof and, if thereafter notified
by the Administrative Agent to do so, the
Borrowers will, and will cause each of
their Subsidiaries to, obtain insurance at
such levels at least equal to those
set forth in Annex II to the extent then
generally available, or otherwise as
are acceptable to the Administrative Agent.
The Borrowers will, and will cause
each of their Subsidiaries to, furnish on
the Closing Date a summary of the
insurance carried together with
certificates of insurance and other evidence of
such insurance, if any, naming the
Collateral Agent as an additional insured
and/or loss payee.
8.07 Payment of Taxes. The Borrowers will pay and discharge,
and
will cause each of their Subsidiaries to
pay and discharge, all taxes,
assessments and governmental charges or
levies imposed upon it or upon its
income or profits, or upon any properties
belonging to it, prior to the date on
which material penalties attach thereto,
and all lawful claims for sums that
have become due and payable which, if
unpaid, might become a Lien not otherwise
permitted pursuant to Section 9.03(a) or
charge upon any
27
<PAGE>
properties of the Borrowers or any of their Subsidiaries,
provided,
that none of the Borrowers or any of their
Subsidiaries shall be required to pay
any such tax, assessment, charge, levy or
claim which is being contested in good
faith and by proper proceedings if it has
maintained adequate reserves (in the
good faith judgment of the management of
the Lead Borrower) with respect thereto
in accordance with GAAP.
8.08 Corporate Franchises. The Borrowers will do, and will
cause
each of their Subsidiaries to do, or cause
to be done, all things necessary to
preserve and keep in full force and effect
its existence, material rights and
authority, provided, that any transaction
permitted by Section 9.02 will not
constitute a breach of this Section
8.08.
8.09 Compliance with Statutes, etc. Except as otherwise permitted
by
the Bankruptcy Court, the Borrowers will,
and will cause each of their
Subsidiaries to, comply with all applicable
statutes (including, without
limitation, all applicable Environmental
Laws), regulations and orders of, and
all applicable restrictions imposed by, all
governmental bodies, domestic or
foreign, in respect of the conduct of its
business and the ownership of its
property except for such non-compliance
which would not have a Material Adverse
Effect or would not have a material adverse
effect on the ability of any Credit
Party to perform its obligations under any
Credit Document to which it is party.
8.10 ERISA. As soon as possible and, in any event, within ten
(10)
days after any Borrower, any Subsidiary of
any Borrower or any ERISA Affiliate
knows or has reason to know of the
occurrence of any of the following, the
Borrowers will deliver to the
Administrative Agent a certificate of the chief
financial officer of the affected Borrower
setting forth the full details as to
such occurrence and the action, if any,
which such Borrower, a Subsidiary or an
ERISA Affiliate is required or proposes to
take, together with any notices
required or proposed to be given to or
filed with or by the Borrower, the
Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant or the Plan
administrator with respect thereto: that a
Reportable Event has occurred;
(except to the extent that the Borrower has
previously delivered to the Lenders
a certificate and notices (if any)
concerning such event pursuant to the next
clause hereof); that a contributing sponsor
as defined in Section 4001(a)(13) of
ERISA of a Plan subject to the requirements
of PBGC Regulation Section 4043.61
(without regard to subparagraph (b)(1)
thereof) and an event described in
subsection .62, .63, .64, .65, .66, .67 or
.68 of PBGC Regulation Section 4043
is reasonably expected to occur with
respect to such Plan within the following
30 days; that an accumulated funding
deficiency within the meaning of Section
412 of the Code or Section 302 of ERISA has
been incurred or an application may
be or has been made for a waiver or
modification of the minimum funding standard
(including any required installment
payments) or an extension of any
amortization period under Section 412 of
the Code or Section 303 or 304 of
ERISA, with respect to a Plan; that any
contribution required to be made with
respect to a Plan has not been timely made;
that a Plan has been or may be
terminated, reorganized, partitioned or
declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current
Liability; that proceedings may
28
<PAGE>
be or have been instituted to terminate a
Plan which is subject to Title IV of
ERISA; that a proceeding has been
instituted pursuant to Section 515 of ERISA to
collect a delinquent contribution to a
Plan; that any Borrower, any Subsidiary
of any Borrower or any ERISA Affiliate will
or may incur any material liability
to or on account of the termination of or
withdrawal from a Plan under Section
4062, 4063, 4064, 4069, 4201, 4204 or 4212
of ERISA or with respect to a Plan
under Section 401(a)(29), 4971, 4975 or
4980 of the Code or Section 409, 502(i)
or 502(l) of ERISA or with respect to a
group health plan (as defined in Section
607(l) of ERISA or Section 4980B(g)(2) of
the Code) under Section 4980B of the
Code; or that any Borrower or any
Subsidiary of any Borrower may incur any
liability pursuant to any employee welfare
benefit plan (as defined in Section
3(l) of ERISA) that provides benefits to
retired employees or other former
employees (other than as required by
Section 601 of ERISA) or any Plan other
than any Plan subject to Title IV of ERISA
and/or Section 412 of the Code. The
Borrowers will deliver to the Lenders (i) a
complete copy of the annual report
(on Internal Revenue Service Form
5500-series) of each Plan (including, to the
extent required, the related financial and
actuarial statements and opinions and
other supporting statements,
certifications, schedules and information) required
to be filed with the Internal Revenue
Service and (ii) copies of any records,
documents or other information that must be
furnished to the PBGC with respect
to any Plan pursuant to Section 4010 of
ERISA. In addition to any certificates
or notices delivered to the Lenders
pursuant to the first sentence hereof,
copies of annual reports and any records,
documents and other information
required to be furnished to the PBGC, and
any material notices received by any
Borrower, any Subsidiary of any Borrower or
any ERISA Affiliate with respect to
a Plan shall be delivered to the Lenders no
later than ten (10) days after the
date such report has been filed with the
Internal Revenue Service or such
records, documents and/or information has
been furnished to the PBGC or such
notice has been received by any Borrower,
the Subsidiary or the ERISA Affiliate,
as applicable.
8.11 Good Repair. The Borrowers will, and will cause each of
their
Subsidiaries to, ensure that its material
properties and equipment used or
useful in its business in whomsoever's
possession they may be, are kept, in all
material respects, in good repair, working
order and condition, normal wear and
tear excepted, and, subject to Section
9.16, that from time to time there are
made in such properties and equipment all
needful and proper repairs, renewals,
replacements, extensions, additions,
betterments and improvements thereto, to
the extent and in the manner useful or
customary for companies in similar
businesses.
8.12 End of Fiscal Years, Fiscal Quarters. The Borrowers will,
for
financial reporting and tax purposes, cause
(i) each of their, and each of their
Subsidiaries' fiscal years to end on
December 31 of each year and (ii) each of
their, and each of their Subsidiaries'
fiscal quarters to end on March 31, June
30, September 30 and December 31 of each
year.
29
<PAGE>
8.13 Use of Proceeds. All proceeds of the Loans shall be used
solely
for the disbursements to be made in
accordance with the Budget.
8.14 Cash Management Arrangements; Depository Arrangements. The
Borrowers shall and shall cause each
Domestic Subsidiary to:
(a) Maintain in place cash management arrangements in
accordance with the First Day Orders in
connection with the Case relating to the
Borrowers' cash management system and in
form and substance reasonably
satisfactory to the Administrative Agent.
Without limiting the generality of the
foregoing, the parties agree that:
(i) all cash and Cash Equivalents held by the Credit
Parties and all proceeds of receivables and
other accounts, chattel paper,
general intangibles, instruments and other
payment rights for which any of the
Credit Parties is an obligee shall be
deposited into either the Borrower Cash
Collateral Account or any bank accounts of
the Credit Parties subject to any of
the Agency Agreements; and
(ii) all cash and Cash Equivalents held by the Credit
Parties and all such proceeds of
receivables and other accounts, chattel paper,
general intangibles, instruments and other
payment rights shall, on each
Business Day or such other frequency as may
be agreed to by the Administrative
Agent, be transferred to the Borrower Cash
Collateral Account, to the extent not
already transferred to the Borrower Cash
Collateral Account, for application to
the Obligations pursuant to the provisions
hereof.
(b) In the event that any of the Credit Parties receives
any cash, checks or other cash proceeds of
Collateral, promptly upon receipt
thereof, in the identical form received
(except for any endorsements thereon
which may be required by the Administrative
Agent), cause such cash, checks and
cash proceeds to be paid directly into the
Borrower Cash Collateral Account or
into any agency account subject to an
Agency Agreement.
(c) Except to the extent that the Borrowers shall be
required to make payments to the
Administrative Agent or any other Person
pursuant to the terms of this Agreement or
the other Credit Documents, and
subject to the rights and remedies that may
from time to time be available to
the Administrative Agent and the Lenders
upon the occurrence of an Event of
Default, the Borrowers may use the proceeds
of Borrowings for the disbursements
set forth in the Budget, subject in any
case to the terms and conditions of this
Agreement and the other Credit Documents,
and no such funds may be applied to
the Prepetition Obligations except as
otherwise provided in this Agreement or
any other Credit Document or as permitted
by the Bankruptcy Court or in any
order e
