UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 10, 2015
THE STANDARD REGISTER COMPANY
(Exact Name of Registrant as Specified in Charter)
Ohio | 1-1097 | 31-0455440 |
(State or Other Jurisdiction | (Commission | (IRS Employer |
600 Albany Street, Dayton, Ohio | 45417 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant's telephone number, including area code: (937) 221-1000
(Former Name or Former Address, if Changed Since Last Report)
N/A
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01
Entry into a Material Definitive Agreement
DIP Facilities
As previously disclosed in a Current Report on Form 8-K filed August 1, 2013, The Standard Register Company (the “Company”) is party to (i) a First Lien Credit Agreement (the “First Lien Credit Facility”), by and among the Company, the First Lien Lenders, Silver Point Finance, LLC (the “Term Agent”), as administrative agent to the First Lien Lenders and Standard Register International, Inc., Standard Register Technologies, Inc. iMedConsent, LLC and Standard Register of Puerto Rico Inc., as guarantors (collectively, the “Guarantors”); (ii) a Second Lien Credit Agreement (the “Second Lien Credit Facility”), by and among the Company, the Second Lien Lenders, the Term Agent, as administrative agent to the Second Lien Lenders and the Guarantors; and (iii) an Amended and Restated Loan and Security Agreement (the “ABL Credit Facility” and, together with the First Lien Credit Facility and the Second Lien Credit Facility, the “Pre-Petition Credit Facilities”), by and among the Company, Standard Register International, Inc., Standard Register Technologies, Inc., iMedConsent, LLC and Standard Register of Puerto Rico Inc., as borrowers, the ABL Lenders and Bank of America, N.A. (the “ABL Agent”), as administrative agent for the ABL Lenders.
In conjunction with the Asset Purchase Agreement (as defined below) and the Chapter 11 Cases described in Item 1.03 of this Current Report, the Company has reached agreements with (x) the Term Agent, for a superpriority, multiple-draw secured term loan facility in an aggregate principal amount of up to $30,000,000 (the “Term DIP Facility”) and (y) the ABL Agent, for a superpriority, secured, asset-based revolving credit facility in the principal amount of up to $125,000,000 (the “ABL DIP Facility” and together with the Term DIP Facility, the “DIP Facilities”) to support the Company’s continued operations during the pendency of the bankruptcy case. The DIP Facilities are subject to, and did receive, approval by the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
Maturity
The maturity date of the Term DIP Facility is September 8, 2015, subject to shortening as a result of the occurrence of any event of default and the maturity date of the ABL DIP Facility is September 8, 2015, subject to shortening as a result of the occurrence of any event of default.
Interest, Security and Guarantees
Interest on the revolving credit of the ABL DIP Facility will be payable at a per annum rate equal to LIBOR plus 225 basis points or Base Rate (as defined in the ABL DIP Facility) plus 125 basis points. Interest on the term loan of the Term DIP Facility will be payable at a per annum rate equal to LIBOR plus 950 basis points or Alternate Base Rate (as defined in the Term DIP Facility) plus 850 basis points. Subject to certain carve-outs and exceptions, the Company’s obligations under the DIP Facilities are secured by all pre-petition and post-petition assets of the Debtors (as defined below).
Other Terms and Conditions
Each DIP Facility includes customary provisions, including, among others, certain representations and warranties, affirmative and negative covenants and events of default. Additionally, funding under the DIP Facilities requires that the Company obtain approval of the Bankruptcy Court to enter into the ABL DIP Facility and the Term DIP Facility and that the Company provide adequate protection for the interests of the ABL Agent and the Term Agent in the pre-petition collateral under the
respective Pre-Petition Credit Facilities pursuant to Sections 361 and 363 of title 11 of the United States Code (the “Bankruptcy Code”).
The foregoing description of the DIP Facilities is not complete and is qualified in its entirety by reference to the full text of the ABL DIP Facility and the Term DIP facility, copies of which are attached to this Current Report on Form 8-K as Exhibit 10.1 and Exhibit 10.2, respectively, and incorporated herein by reference.
Asset Purchase Agreement
On March 12, 2015, the Company and all of its subsidiaries (collectively, the “Sellers”) entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Standard Acquisition Holdings, LLC, an affiliate of the Term Agent (the “Buyer”), pursuant to which the Buyer has agreed to acquire substantially all of the Sellers’ assets and assume certain of the Sellers’ liabilities, for aggregate consideration of approximately $275 million. The consideration will be paid by a combination of cash, a credit bid of secured debt held by affiliates of the Buyer, and the assumption of certain liabilities.
The asset purchases pursuant to the Asset Purchase Agreement are expected to be conducted under the provisions of Section 363 of the Bankruptcy Code and will be subject to proposed bidding procedures and receipt of a higher and better bid at auction. Upon entry by the Bankruptcy Court, the bidding procedures order will provide that the Buyer is the “stalking horse” bidder for the assets identified in the Asset Purchase Agreement.
The Asset Purchase Agreement contains representations, warranties and covenants customary for a transaction of this nature and is subject to a number of closing conditions, including, among others, (i) the approval by the Bankruptcy Court in the Chapter 11 Cases (as defined below) commenced by the Company, as described in Item 1.03 of this Current Report on Form 8-K; (ii) the accuracy of representations and warranties of the parties; (iii) material compliance with the obligations set forth in the Asset Purchase Agreement; (iv) the cash component of the purchase price being less than $140 million; (v) the aggregate liability to cure pre-petition claims under transferred contracts being less than $14 million; and (vi) the aggregate liability of accounts payable to be assumed by the Buyer being less than $18 million.
The Asset Purchase Agreement may be terminated in certain circumstances, including if the Bankruptcy Court does not approve the Asset Purchase Agreement or because the transaction does not close within 180 days. The Asset Purchase Agreement provides that the Sellers will pay a break-up fee to the Buyer equal to 2.0% of the purchase price upon the consummation of an alternative transaction involving the sale of a material portion of Sellers’ assets to any person or entity other than the Buyer. In addition, the Asset Purchase Agreement provides for the reimbursement of the Buyer’s expenses, in an amount not to exceed 1.5% of the purchase price, incurred in connection with the Asset Purchase Agreement in the event the Asset Purchase Agreement is terminated for specified reasons, including if the Buyer is not the winning bidder at the auction.
The foregoing description of the Asset Purchase Agreement is not complete and is qualified in its entirety by reference to the full text of the Asset Purchase Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 2.1 and incorporated herein by reference.
Item 1.03
Bankruptcy or Receivership.
On March 12, 2015, the Company and each of its subsidiaries (collectively with the Company, the “Debtors”) filed voluntary petitions for reorganization relief under the provisions of chapter 11 of
Bankruptcy Code in the Bankruptcy Court (the “Chapter 11 Cases”). The Debtors have filed a motion with the Bankruptcy Court for entry of an order directing joint administration of the Chapter 11 Cases under the Company’s caption and case number, In re: The Standard Register Company, et al., Case No. 15-10541. The Debtors plan to continue to operate their businesses as “debtors-in-possession” under jurisdiction of the Bankruptcy Court and in accordance with applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
The Company’s shareholders are cautioned that trading in shares of the Company’s common stock during the pendency of the Chapter 11 Cases will be highly speculative and will pose substantial risks. In connection with the Chapter 11 Cases, the Company has filed a motion to restrict certain trading. Trading prices for the Company’s common stock may bear little or no relationship to the actual recovery, if any, by holders thereof in the Company’s Chapter 11 Cases and the Company believes it is probable that there will be no recovery for any equity holder in connection with the Chapter 11 Cases. Accordingly, the Company urges extreme caution with respect to existing and future investments in its common stock.
On March 12, 2015, the Company issued a press release relating to the Chapter 11 Cases, a copy of which is filed herewith as Exhibit 99.1. The information provided in Item 1.01 above is incorporated by reference into this Item 1.03.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off Balance Sheet Arrangement.
On March 12, 2015, the Company and certain of its subsidiaries entered into the DIP Facilities. The information provided in Item 1.01 above related to the DIP Facilities is incorporated by reference into this Item 2.03.
Item 2.04
Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The filing of the Chapter 11 Cases constituted an event of default or otherwise triggered the acceleration of (or the right to accelerate) repayment obligations under a number of prepetition instruments and agreements relating to the Debtors (the “Debt Documents”). As a result, all debt outstanding (including, but not limited to, any accrued and unpaid interest thereon) under the Debt Documents became (or may become) immediately due and payable, subject to the applicable provisions of the Bankruptcy Code. Any efforts by creditors to enforce the repayment obligations under the Debt Documents are stayed as a result of the Chapter 11 Cases and are subject to the applicable provisions of the Bankruptcy Code. The approximate principal amount of debt currently outstanding under certain of the Debt Documents, the acceleration of which is material to the Company, is as follows:
1.
The approximate amount of principal and accrued interest currently outstanding under the First Lien Credit Agreement, dated as of August 1, 2013, by and among the Company, the subsidiary guarantors party thereto, the lender parties thereto and Silver Point Finance LLC, as administrative agent, as amended is $115,400,000.
2.
The approximate amount of principal and accrued interest currently outstanding under the Second Lien Credit Agreement, dated as of August 1, 2013, by and among the Company, the subsidiary guarantors party thereto, the lender parties thereto and Silver Point Finance LLC, as administrative agent, as amended, is $98,600,000.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 10, 2015, Roy W. Begley, Jr. notified the Company that he was resigning from the Board of Directors, effective immediately. At the time of his resignation, Mr. Begley was a member of the Compensation Committee and a member of the Corporate Governance and Nominating Committee.
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits
Exhibit No. |
| Title |
2.1 |
| Asset Purchase Agreement dated March 12, 2015 by and among Standard Acquisition Holdings, LLC, The Standard Register Company and the other Sellers party thereto. |
10.1 |
| Post-Petition Loan and Security Agreement dated March 12, 2015 by and among Bank of America, N.A., The Standard Register Company and the other Borrowers party thereto. |
10.2 |
| Super-Priority Priming Debtor in Possession Delayed Draw Term Loan Credit Agreement dated March 12, 2015 by and among Silver Point Finance, LLC, The Standard Register Company and the other Borrowers party thereto. |
99.1 |
| Press release dated March 12, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 13, 2015
THE STANDARD REGISTER COMPANY
By: /s/ Gerard D. Sowar______________
Name: Gerard D. Sowar
Title: Executive Vice President, General Counsel and Secretary
EXHIBIT INDEX
Exhibit No. |
| Title |
2.1 |
| Asset Purchase Agreement dated March 12, 2015 by and among Standard Acquisition Holdings, LLC, The Standard Register Company and the other Sellers party thereto. |
10.1 |
| Post-Petition Loan and Security Agreement dated March 12, 2015 by and among Bank of America, N.A., The Standard Register Company and the other Borrowers party thereto. |
10.2 |
| Super-Priority Priming Debtor in Possession Delayed Draw Term Loan Credit Agreement dated March 12, 2015 by and among Silver Point Finance, LLC, The Standard Register Company and the other Borrowers party thereto. |
99.1 |
| Press release dated March 12, 2015. |
EXECUTION VERSION
ASSET PURCHASE AGREEMENT
by and among
STANDARD ACQUISITION HOLDINGS, LLC,
as a Buyer,
THE STANDARD REGISTER COMPANY,
STANDARD REGISTER INTERNATIONAL, INC.,
STANDARD REGISTER TECHNOLOGIES, INC.,
STANDARD REGISTER HOLDING COMPANY,
STANDARD REGISTER MEXICO HOLDING COMPANY,
IMEDCONSENT, LLC,
STANDARD REGISTER OF PUERTO RICO INC.,
STANDARD REGISTER HOLDING, S. DE R.L. DE C.V.,
STANDARD REGISTER SERVICIOS S. DE R.L. DE C.V.,
STANDARD REGISTER DE MEXICO, S. DE R.L. DE C.V.,
and
STANDARD REGISTER TECHNOLOGIES CANADA ULC,
as the Sellers
Dated as of March 12, 2015
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
2
Section 1.1
Certain Defined Terms
2
Section 1.2
Table of Definitions
10
ARTICLE II PURCHASE AND SALE
12
Section 2.1
Purchase and Sale of Assets
12
Section 2.2
Excluded Assets
14
Section 2.3
Assumed Liabilities
15
Section 2.4
Excluded Liabilities
16
Section 2.5
Consents to Certain Assignments
17
Section 2.6
Contract Designation
18
Section 2.7
Consideration
20
Section 2.8
Minimum Deposit
20
Section 2.9
Closing
21
Section 2.10
Tax Allocation
24
Section 2.11
Designated Buyer(s)
25
Section 2.12
Withholding
25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER
25
Section 3.1
Organization
26
Section 3.2
Authority
26
Section 3.3
No Conflict; Required Filings and Consents
26
Section 3.4
Transferred Assets
27
Section 3.5
Financial Statements; No Undisclosed Liabilities
27
Section 3.6
Absence of Certain Changes or Events
29
Section 3.7
Compliance with Law; Permits
29
Section 3.8
Litigation
30
Section 3.9
Employee Plans
30
Section 3.10
Labor and Employment Matters
31
Section 3.11
Insurance
33
Section 3.12
Real Property
33
Section 3.13
Intellectual Property
35
Section 3.14
Taxes
36
Section 3.15
Environmental Matters
38
Section 3.16
Material Contracts
39
Section 3.17
Accounts Receivable; Inventory.
40
Section 3.18
Customers and Suppliers.
41
Section 3.19
Certain Payments
41
Section 3.20
Brokers
42
i
TABLE OF CONTENTS
(Continued)
Page
Section 3.21
Exclusivity of Representations and Warranties
42
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER
42
Section 4.1
Organization
42
Section 4.2
Authority
42
Section 4.3
No Conflict; Required Filings and Consents
42
Section 4.4
Financing
43
Section 4.5
Brokers
43
Section 4.6
Buyer’s Investigation and Reliance
43
ARTICLE V COVENANTS
44
Section 5.1
Conduct of Business Prior to the Closing
44
Section 5.2
Covenants Regarding Information
47
Section 5.3
Notification of Certain Matters
48
Section 5.4
Intercompany Arrangements
49
Section 5.5
Employee Matters
49
Section 5.6
Consents and Filings; Further Assurances
51
Section 5.7
Refunds and Remittances
53
Section 5.8
Public Announcements
53
Section 5.9
Bankruptcy Court Filings and Approval
53
Section 5.10
Name Change
55
Section 5.11
Assumed Liabilities; Adequate Assurance of Future Performance
55
Section 5.12
Sale Free and Clear
56
Section 5.13
Intellectual Property License
56
Section 5.14
Intellectual Property Registrations
56
Section 5.15
Wind-Down Amount
56
Section 5.16
Creation of Mexico Buyer
57
Section 5.17
Business Plan
57
Section 5.18
D&O Insurance
57
Section 5.19
Disclosure Schedule Update
57
Section 5.20
Transition Services
58
Section 5.21
Employee Incentive Plan
58
ARTICLE VI TAX MATTERS
58
Section 6.1
Transfer Taxes
58
Section 6.2
Tax Cooperation
59
Section 6.3
Certain Tax Elections
59
Section 6.4
Apportionment of Certain Taxes
59
ii
TABLE OF CONTENTS
(Continued)
Page
ARTICLE VII CONDITIONS TO CLOSING
60
Section 7.1
General Conditions
60
Section 7.2
Conditions to Obligations of the Sellers
60
Section 7.3
Conditions to Obligations of the Buyer
61
ARTICLE VIII TERMINATION
62
Section 8.1
Termination
62
Section 8.2
Effect of Termination
64
Section 8.3
Break-Up Fee; Expense Reimbursement Amount
65
ARTICLE IX GENERAL PROVISIONS
66
Section 9.1
Nonsurvival of Representations, Warranties and Covenants
66
Section 9.2
Fees and Expenses
66
Section 9.3
Transition of Permits
66
Section 9.4
Amendment and Modification
66
Section 9.5
Waiver
67
Section 9.6
Notices
67
Section 9.7
Interpretation
68
Section 9.8
Entire Agreement
68
Section 9.9
Parties in Interest
69
Section 9.10
Governing Law
69
Section 9.11
Submission to Jurisdiction
69
Section 9.12
Disclosure Generally
70
Section 9.13
Personal Liability
70
Section 9.14
Assignment; Successors
70
Section 9.15
Enforcement
70
Section 9.16
Currency
71
Section 9.17
Severability
71
Section 9.18
Waiver of Jury Trial
71
Section 9.19
Counterparts
71
Section 9.20
Facsimile or .pdf Signature
71
Section 9.21
Time of Essence
71
Section 9.22
No Punitive Damages
71
Section 9.23
No Presumption Against Drafting Party
71
Exhibit 1
Form of Joinder
Exhibit 2
Form of Sale Order
Exhibit 3
Form of Sale Procedures Order
Exhibit 4
Escrow Agreement
Exhibit 5
Form of US Bill of Sale
iii
TABLE OF CONTENTS
(Continued)
Page
Exhibit 6
Form of US Assumption Agreement
Exhibit 7
Form of IP Assignment Agreement
Exhibit 8
Form of Domain Transfer Agreement
Exhibit 9
Form of Mexico P&A Agreement
Exhibit 10
Form of Mexico Assumption Agreement
Exhibit 11
Form of Mexico Lease Assignments
Exhibit 12
Form of Mexico IP Assignment Agreement
Exhibit 13
Form of Certificate of Non-Foreign Status
Exhibit 14
Form of Certificate of US Real Property Interest
iv
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 12, 2015 (this “Agreement”), by and among The Standard Register Company, an Ohio corporation (“Seller Parent”), Standard Register International, Inc., an Ohio corporation, Standard Register Technologies, Inc., an Ohio corporation, Standard Register Holding Company, an Ohio corporation, Standard Register Mexico Holding Company, an Ohio corporation, iMedConsent, LLC, a Delaware limited liability company, Standard Register of Puerto Rico Inc., a Delaware corporation, Standard Register Holding, S. de R.L. de C.V., a Mexican limited company, Standard Register Servicios S. de R.L. de C.V., a Mexican limited company, Standard Register de Mexico, S. de R.L. de C.V., a Mexican limited company, and Standard Register Technologies Canada ULC, a Nova Scotia unlimited liability company (Seller Parent together with the foregoing entities, each a “Seller” and collectively, the “Sellers”) and Standard Acquisition Holdings, LLC, a Delaware Limited Liability Company (the “US Buyer”).
RECITALS
A.
Following the Auction, if US Buyer is the Successful Bidder, US Buyer will form, or procure that its Affiliates or owners form, one or more entities established under the laws of Mexico (each, a “Mexico Buyer” and collectively the “Mexico Buyers” and together with the US Buyer, the “Buyers”), and cause each Mexico Buyer to execute a joinder in the form attached hereto as Exhibit 1 to become party to this Agreement (the “Joinder”).
B.
The Sellers are engaged in the business of aligning communications with corporate standards and priorities of its customers by providing market specific insights and a portfolio of solutions to address the changing business landscape in healthcare, financial services, commercial and industrial markets (the “Business”).
C.
Seller Parent and each of the other Sellers intend to file voluntary petitions for relief commencing a case under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
D.
The Sellers believe, following consultation with their financial advisors and consideration of available alternatives, that, in light of the current circumstances, a sale of certain of the Sellers’ assets as provided herein is necessary to preserve and maximize value, and is in the best interest of the Sellers, their creditors, and equity holders.
E.
The Sellers desire to sell to the Buyers all of the Transferred Assets and transfer to the Buyers the Assumed Liabilities and the Buyers desire to purchase from the Sellers the Transferred Assets and assume the Assumed Liabilities, upon the terms and conditions hereinafter set forth.
F.
The Transferred Assets held by the Sellers shall be sold, transferred, assigned, conveyed and delivered by the Sellers established under the laws of the United States, or any state thereof, to the US Buyer (the “US Transferred Assets”) and the Transferred Assets held by a Seller established under the laws of Mexico (each, a “Mexico Seller” and, collectively, the
“Mexico Sellers”) shall be sold, transferred, assigned, conveyed and delivered by the Mexico Sellers to the applicable Mexico Buyer (collectively, the “Mexico Transferred Assets”).
G.
The Assumed Liabilities held by the Sellers shall be sold, transferred, assigned, conveyed and delivered by the Sellers established under the laws of the United States, or any state thereof, to the US Buyer, and the Assumed Liabilities held by the Sellers established under the laws of Mexico shall be sold, transferred, assigned, conveyed and delivered by such Mexico Seller to the applicable Mexico Buyer.
H.
The execution and delivery of this Agreement and the Sellers’ ability to consummate the transactions set forth in this Agreement are subject to, among other things, the entry of the Sale Order under, inter alia, Sections 363 and 365 of the Bankruptcy Code, as further set forth herein. The Parties desire to consummate the proposed transaction as promptly as practicable after the Bankruptcy Court enters the Sale Order.
AGREEMENT
In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1
Certain Defined Terms. For purposes of this Agreement:
“ABL Credit Facility” means the credit facility pursuant to that certain Amended and Restated Loan and Security Agreement dated as of August 1, 2013 among Seller Parent, the subsidiary guarantors party thereto, Bank of America, N.A., as administrative agent, and the lenders from time to time party thereto, as amended, restated, supplemented, or modified from time to time.
“ABL Term Intercreditor” means that certain Intercreditor Agreement dated as of August 1, 2013 by and among Seller Parent and certain of its affiliates, Bank of America, N.A., and Silver Point Finance, LLC.
“Action” means any claim, action, suit, arbitration or proceeding by or before any Governmental Authority, other than an Avoidance Action.
“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.
“Alternative Transaction” means at any time within the later of twelve (12) months after the Petition Date and twelve (12) months following the Termination Date, the sale, transfer or other disposition, directly or indirectly, including through an asset sale, share sale, merger, amalgamation, or other similar transaction, including a plan of reorganization approved by the Bankruptcy Court, or resulting from the Auction, of a material portion of Sellers’ assets, in a transaction or series of transactions with one or more Persons other than Buyers.
2
“Ancillary Agreements” means, collectively, the agreements to be executed in connection with the transactions contemplated by this Agreement, including the US Bill of Sale, the US Assumption Agreement, the IP Assignment Agreement, the Domain Transfer Agreement, the Mexico Closing Documents and the Escrow Agreement.
“Antitrust Law” means the HSR Act and any competition, merger control and antitrust Law of any other applicable supranational, national, federal, state, provincial or local Law designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolizing or restraining trade or lessening competition of any other country or jurisdiction, to the extent applicable to the transactions contemplated by this Agreement.
“Auction” shall have the meaning set forth in the Sale Procedures.
“Avoidance Actions” means any and all claims for relief of the Sellers under chapter 5 of the Bankruptcy Code, or state fraudulent conveyance, fraudulent transfer, or similar laws.
“Back-Up Bidder” has the meaning set forth in the Sale Procedures.
“Bankruptcy Case” means the bankruptcy cases commenced by the Sellers under chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
“Bankruptcy Code” means Title 11 of the United States Code, Sections 101 et seq., as in effect or as may be amended from time to time.
“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the city of New York.
“Business Employees” means all individuals employed by the Sellers immediately prior to the Closing Date whose duties relate primarily to the Business regardless of the company payroll on which such individuals are listed, including Mexico Sellers Personnel.
“Buyer Material Adverse Effect” means any event, change, occurrence or effect that would prevent, materially delay or materially impede the performance by the Buyers of their obligations under this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby.
“Code” means the Internal Revenue Code of 1986, as amended.
“Competing Bid” shall mean any bid contemplating an Alternative Transaction.
“Contract” means any contract, agreement, Lease, insurance policy, capitalized lease, license, sublicense, sales order, purchase order, instrument, or other commitment, that is binding on any Person or any part of its property under applicable Law.
“control,” including the terms “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the
3
management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by contract or otherwise.
“Cure Claims” means amounts that must be paid and obligations that otherwise must be satisfied, pursuant to Sections 365(b)(1)(A) and (B) of the Bankruptcy Code, in connection with the assumption and assignment of the Transferred Contracts to be assumed and assigned to the Buyers, as determined pursuant to the process set forth in the Sale Procedures Order.
“Cure Claims Cap” means $12,200,000.
“DIP ABL Credit Agreement” means that certain Post-Petition Loan and Security Agreement, dated as of March 12, 2015, among the Lenders (as defined therein) and Bank of America, N.A.
“DIP Credit Agreement” means that certain Super-Priority Priming Debtor In Possession Delayed Draw Term Loan Credit Agreement, dated as of March 12, 2015, by and among the Sellers, the subsidiary guarantors from time to time parties thereto, the various financial institutions and other persons from time to time parties thereto and Silver Point Finance, LLC.
“DIP Credit Parties” has the meaning given to it in the Interim Financing Order (as defined in the DIP Credit Agreement) as it may be modified by the Final Financing Order (as defined in the DIP Credit Agreement).
“DIP Obligations” has the meaning given to it in the Interim Financing Order (as defined in the DIP Credit Agreement) as it may be modified by the Final Financing Order (as defined in the DIP Credit Agreement).
“Employee Plans” means all “employee benefit plans” within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA, and all other compensation and benefit plans, contracts, policies, programs, practices and arrangements of the Sellers (other than routine administrative procedures) in connection with the Business in effect as of the date hereof, whether written or unwritten, formal or informal, including all pension, retirement, supplemental retirement, profit-sharing, savings and thrift, bonus, stock bonus, stock option or other cash or equity-based incentive or deferred compensation, employment, severance pay, change in control, vacation, sick leave, paid time off, welfare, fringe and medical, surgical, hospitalization, accident death and dismemberment and life insurance plans, contracts, policies, programs, practices or arrangements in which any of the Business Employees or their dependents participate.
“Encumbrance” means any charge, claim, mortgage, lien, encumbrance, option, pledge, security interest or other restriction of any kind.
“Environmental Claim” means any action, cause of action, claim, suit, proceeding, investigation, order, demand or notice by any Person alleging Liability (including Liability for investigatory costs, governmental response costs, remediation or clean-up costs, natural resources damages, property damages, personal injuries, attorneys’ fees, fines or penalties) arising out of, based on, resulting from or relating to (a) the presence, Release or
4
threatened Release of, or exposure to any Hazardous Materials; (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law; or (c) any other matters covered or regulated by, or for which liability is imposed under, Environmental Laws.
“Environmental Law” means any Law relating to pollution, the protection of, restoration or remediation of or prevention of harm to the environment or natural resources, or the protection of human health and safety, ecological planning or zoning including Laws relating to: (a) the exposure to, or Releases or threatened Releases of, Hazardous Materials; (b) the generation, manufacture, processing, distribution, use, transport, treatment, containment, storage, disposal, or handling of Hazardous Materials; or (c) recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials.
“Environmental Permit” means any Permit required under or issued pursuant to any Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means all employers, trades or businesses (whether or not incorporated) that would be treated together with the Sellers as a single employer for purposes of Section 4001 of ERISA or Sections 414 (b), (c), (m) or (o) of the Code.
“Final Order” means an order of the Bankruptcy Court or any other court of competent jurisdiction (a) as to which the time to appeal shall have expired and as to which no appeal shall then be pending or (b) if a timely appeal shall have been filed or sought, either (i) no stay of the Order shall be in effect, (ii) no motion or application for a stay of the Order shall be filed and pending or such motion or application shall have been denied, or (iii) if such a stay shall have been granted, then (A) the stay shall have been dissolved or (B) a final order of the district court or circuit court having jurisdiction to hear such appeal shall have affirmed the Order and the time allowed to appeal from such affirmance or to seek review or rehearing (other than a motion pursuant to Rule 60(b) of the Federal Rules of Civil Procedure) thereof shall have expired and the taking or granting of any further hearing, appeal or petition for certiorari shall not be permissible, and if a timely appeal of such district court or circuit court Order or timely motion to seek review or rehearing of such Order shall have been made, any appellate court having jurisdiction to hear such appeal or motion (or any subsequent appeal or motion to seek review or rehearing) shall have affirmed the district court’s (or lower appellate court’s) order upholding the Order of the Bankruptcy Court and the time allowed to appeal from such affirmance or to seek review or rehearing thereof shall have expired and the taking or granting of any further hearing, appeal or petition for certiorari shall not be permissible; provided, however, that the Buyers in their sole discretion may treat any Order for which a motion or application for a stay is filed or pending as a Final Order by affirmatively agreeing to such treatment in a writing signed by the Buyers.
“First Lien Term Loan Facility” means the credit facility pursuant to that certain First Lien Credit Agreement dated as of August 1, 2013 by and among Seller Parent, WorkflowOne LLC, the subsidiary guarantors party thereto, the lenders party thereto, and Silver Point Finance, LLC, as amended, restated, supplemented, or modified from time to time.
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“Full Payment” has the meaning given to it in the Interim Financing Order (as defined in the DIP Credit Agreement) as it may be modified by the Final Financing Order (as defined in the DIP Credit Agreement).
“GAAP” means United States generally accepted accounting principles as in effect on the date hereof.
“Governmental Authority” means any United States or non-United States national, federal, state or local governmental, regulatory or administrative authority, agency, court or commission or any other judicial or arbitral body, including, without limitation the Bankruptcy Court.
“Hazardous Materials” means any material, substance, chemical, or waste (or combination thereof) that (a) is listed, defined, designated, regulated or classified as hazardous, toxic, radioactive, dangerous, a pollutant, a contaminant, petroleum, oil, or words of similar meaning or effect under any Law relating to pollution, waste, or the environment; or (b) can form the basis of any Liability under any Law relating to pollution, waste, or the environment.
“Infringe” means infringe, misappropriate or otherwise violate.
“Initial Credit Bid” means a credit bid by the Agent (as defined in the First Lien Term Loan Facility) or a subagent of such Agent under the First Lien Term Loan Facility on behalf of the related Lenders (as defined in the First Lien Term Loan Facility) in the full amount of the indebtedness under such First Lien Term Loan Facility.
“Intellectual Property” means all intellectual property and intellectual property rights and rights in confidential information of every kind and description throughout the world, including all U.S. and foreign (a) trade names, trademarks and service marks, business names, corporate names, domain names, trade dress, logos, slogans, design rights, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing (“Trademarks”); (b) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions thereof (“Patents”); (c) copyrights and copyrightable subject matter (whether registered or unregistered) (“Copyrights”); (d) rights in computer programs (whether in source code, object code, or other form) and software systems, algorithms, databases, compilations and data, technology supporting the foregoing, and all documentation, including user manuals and training materials, related to any of the foregoing (“Software”); (e) confidential or proprietary information, trade secrets and know-how, and all other inventions, proprietary processes, formulae, models, and methodologies (“Trade Secrets”); (f) rights of publicity, privacy rights, and rights to personal information; (g) all rights in the foregoing and in other similar intangible assets; (h) all applications and registrations for any of the foregoing; and (i) all rights and remedies (including the right to sue for and recover damages) against past, present, and future infringement, misappropriation, or other violation relating to any of the foregoing.
“IRS” means the Internal Revenue Service of the United States.
“Knowledge” with respect to the Sellers means the actual (but not constructive or imputed) knowledge of the persons listed in Schedule 1.1(a) of the Disclosure Schedules as of
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the date of this Agreement after due inquiry (or, with respect to a certificate delivered pursuant to this Agreement, as of the date of delivery of such certificate).
“Law” means any statute, law, ordinance, regulation, rule, code, injunction, judgment, decree or order of any Governmental Authority.
“Lease” means a lease, sublease, license, or other use or occupancy agreement with respect to the real property to which a Seller is a party as lessee, sublessee, tenant, subtenant or in a similar capacity (other than those Leases rejected pursuant to that certain Debtors’ First Omnibus Motion for Order Authorizing Rejection of Certain Unexpired Leases Effective as of the Petition Date).
“Leased Real Property” means the leasehold interests held by Sellers under the Leases (other than any Leases withdrawn pursuant to Section 2.6).
“Liability” means any debt, loss, claim, damage, demand, fine, judgment, penalty, liability or obligation (whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due).
“Material Adverse Effect” means any event, change, condition, occurrence or effect that would individually or in the aggregate (a) result in, or is reasonably likely to result in, a material adverse effect on the business, properties, liabilities, financial condition, results of operations or prospects of the Business or Transferred Assets, taken as a whole, or the Assumed Liabilities or (b) prevent, materially delay or materially impede the performance by the Sellers of their obligations under this Agreement or the consummation of the transactions contemplated hereby, other than any event, change, condition, occurrence or effect or arising out of, attributable to or resulting from, alone or in combination, (i) general changes or developments in the industry in which the Business operates, (ii) changes in general economic, financial market or geopolitical conditions, (iii) natural disasters or calamities, (iv) changes in any applicable Laws or GAAP or interpretations thereof, (vi) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (vii) the filing of the Bankruptcy Case and any actions approved by the Bankruptcy Court, or (viii) any action taken by the Sellers which is required by this Agreement; provided, however, that changes or developments set forth in clauses (i), (ii) or (iv) may be taken into account in determining whether there has been or is Material Adverse Effect if such changes or developments have a disproportionate impact on the Transferred Assets, taken as a whole, relative to the other participants in the industries and markets in which the Business operates.
“Order” means any award, writ, injunction, judgment, order or decree entered, issued, made, or rendered by any Governmental Authority.
“Ordinary Course of Business” means the operation of the Business in the ordinary and usual course consistent in nature, scope and magnitude with past practice and custom of the Sellers, as such practice and custom is, or may have been, reasonably modified as a result of the Bankruptcy Case, and taken in the ordinary course of normal, day-to-day operations in compliance with applicable Law in all material respects, in each case subject to (a) the filing of the Bankruptcy Case, (b) any Orders of the Bankruptcy Court, and (c) the conduct of
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the auction process as contemplated by the bidding procedures set forth in the Sale Procedures Order.
“Owned Real Property” means the owned real property described in Schedule 3.12(a) of the Disclosure Schedules, including all improvements and structures thereon and appurtenances belonging thereto.
“Party” or “Parties” means, individually or collectively, the Buyers and the Sellers.
“Permitted Encumbrance” means (a) statutory liens for current Taxes not yet due and delinquent (or which may be paid without interest or penalties) or the validity or amount of which is being contested in good faith by appropriate proceedings, (b) mechanics’, carriers’, workers’, repairers’ and other similar liens arising or incurred in the Ordinary Course of Business relating to obligations as to which there is no default on the part of the Seller for a period with respect to amounts not yet overdue (provided that such amounts arising or accruing prior to Closing remain Excluded Liabilities), or pledges, deposits or other liens securing the performance of bids, trade contracts, leases or statutory obligations (including workers’ compensation, unemployment insurance or other social security legislation), (c) with respect to the Real Property, minor title defects or irregularities that do not, individually or in the aggregate, materially impair the value or use of such Real Property, (d) as to any Lease, any Encumbrance affecting solely the interest of the landlord thereunder and not the interest of the tenant thereunder, which do not materially impair the value or use of such Lease, and (e) other exceptions, restrictions, easements, imperfections of title, charges, rights-of-way and encumbrances that do not materially interfere with the use or value of the Transferred Assets that are Owned Real Property subject to such encumbrances (the Encumbrances in clauses (d) and (e), the “Lease Encumbrances”).
“Person” means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing.
“Petition Date” means the date on which the Sellers commence the Bankruptcy Case.
“Pre-Petition ABL Debt” has the meaning given to it in the Interim Financing Order (as defined in the DIP Credit Agreement) as it may be modified by the Final Financing Order (as defined in the DIP Credit Agreement).
“Qualified Leave Recipient” means any Business Employee who is employed by Sellers in the Business and who is absent from work as of immediately prior to the Closing Date as a result of an approved leave of absence, including (a) those on military leave and family and medical leave, (b) those on other approved leaves of absence, but only to the extent they have reemployment rights guaranteed under federal or state Law, under any applicable collective bargaining agreement or under any leave of absence policy of the Sellers and (c) those on short-term disability under the Sellers’ short-term disability program.
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“Real Property” shall mean the Leased Real Property and the Owned Real Property.
“Release” means any release, spill, emission, discharge, leaking, pouring, dumping or emptying, pumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including, without limitation, soil, ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or property.
“Representatives” means, with respect to any Person, the officers, directors, principals, employees, agents, auditors, advisors, bankers and other representatives of such Person.
“Return” means any return, declaration, report, statement, information statement and other document, including any schedule or attachment thereto or amendment thereof, required to be filed with any Governmental Authority with respect to Taxes.
“Sale Hearing” means the hearing conducted by the Bankruptcy Court to approve the transactions contemplated by this Agreement.
“Sale Order” means an Order of the Bankruptcy Court approving this Agreement and the transactions contemplated hereby, the form of which Order is attached hereto as Exhibit 2, with such changes as may be required by the Bankruptcy Court that are in form and substance acceptable to the Buyers and the Sellers.
“Sale Procedures” means the bidding procedures set forth in the Sale Procedures Order, to be entered by the Bankruptcy Court.
“Sale Procedures Hearing” means the hearing conducted by the Bankruptcy Court to approve the Sales Procedures Order.
“Sale Procedures Order” means the form of order attached hereto as Exhibit 3, or once entered, the Order of the Bankruptcy Court, which Order shall be substantially in the form attached hereto as Exhibit 3, with such changes as may be required by the Bankruptcy Court that are in form and substance reasonably satisfactory to the Buyers and the Sellers.
“Second Lien Term Loan Facility” means the credit facility pursuant to that certain Second Lien Credit Agreement dated as of August 1, 2013 by and among Seller Parent, WorkflowOne LLC, the subsidiary guarantors party thereto, the lenders party thereto, and Silver Point Finance, LLC, as amended, restated, supplemented, or modified from time to time.
“Subsidiary” means, with respect to any Person, any other Person of which at least 50% of the outstanding voting securities or other voting equity interests are owned or controlled by such Person or by one or more of its respective Subsidiaries.
“Successful Bidder” shall have the meaning set forth in the Sale Procedures.
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“Taxes” means (a) any and all U.S. federal, state and local, foreign, and other taxes, charges, fees, duties, levies, tariffs, imposts, tolls, customs or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, branch profits, profit share, license, lease, service, service use, value added, withholding, payroll, employment, fringe, fringe benefits, excise, estimated, severance, stamp, occupation, premium, property, windfall profits, wealth, net wealth, net worth, export and import fees and charges, registration fees, tonnage, vessel, deposits, or other taxes, fees, assessments, customs, duties, levies, tariffs, imposts, tolls, or charges of any kind whatsoever imposed by any Governmental Authority, together with any interest, penalties, inflationary adjustments, additions to tax, fines or other additional amounts imposed thereon, with respect thereto, or related thereto, wherever and whenever imposed, (b) any and all liability for the payment of any items described in clause (a) above arising from, through, attributable to, or with respect to a place of business, permanent establishment, or a branch or as a result of being (or ceasing to be) a member of a fiscal unity, affiliated, consolidated, combined, unitary, or other similar group (or being included) in any Return related to such group, (c) any and all liability for the payment of any amounts as a result of any successor or transferee liability, in respect of any items described in clause (a) or (b) above, and (d) any and all liability for the payment of any items described in clause (a) or (b) above as a result of, or with respect to, any express or implied obligation to indemnify any other Person pursuant to any tax sharing, tax indemnity or tax allocation agreement or similar agreement or arrangement with respect to taxes.
“Term Loan Facilities” means the First Lien Term Loan Facility and the Second Lien Term Loan Facility.
“Transferred Contracts” means all Contracts and Leases of each Seller that relate to the Business and which are listed in Schedule 1.1(b) of the Disclosure Schedules, which schedule shall be provided by US Buyer to the Sellers as provided in, and may be adjusted pursuant to, Section 2.6.
“Wind-Down Amount” means an amount specified in the Wind-Down Budget which shall be funded pursuant to the DIP Credit Agreement to Seller Parent prior to Closing to be held in trust and administered by the Sellers in accordance with Section 5.15 and the Wind-Down Budget; provided that any remaining amount of the Wind-Down Amount not required to fund the costs of winding down the Sellers’ estates after the Closing Date in accordance with Section 5.15 shall be promptly delivered by the Sellers to the Buyers.
“Wind-Down Budget” means a budget as set forth in the DIP Credit Agreement.
Section 1.2
Table of Definitions. The following terms have the meanings set forth in the Sections referenced below:
Definition
Location
Agreement
Preamble
Allocation
Section 2.10(a)
Allocation Dispute
Section 2.10(a)
Allocation Dispute Notice
Section 2.10(a)
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Antitrust Authority
Section 5.6(a)
Apportioned Taxes
Section 6.4
Assumed Liabilities
Section 2.3(a)
Balance Sheet
Section 3.5(e)
Bankruptcy Court
Recitals
Break-Up Fee
Section 8.3(a)
Business
Recitals
Business Permits
Section 2.1(g)
Business Plan
Section 5.17
Buyer Default Termination
Section 2.8
Buyer Plans
Section 5.5(f)
Buyers
Recitals
Cash Component
Section 2.7(a)
Closing
Section 2.9(a)
Closing Date
Section 2.9(a)
Company SEC Documents
Section 3.5(a)
Copyrights
Section 1.1
Designated Buyer
Section 2.11(a)
Disclosure Schedules
ARTICLE III
Dispute
Section 2.10(a)
Disputed Cure Claims
Section 2.6(c)
Domain Transfer Agreement
Section 2.9(b)(iii)
Employee Incentive Plan
Section 5.21
Employment Offer
Section 5.5(b)
Escrow Agent
Section 2.8
Escrow Agreement
Section 2.8
Exchange Act
Section 3.5(a)
Excluded Assets
Section 2.2
Excluded Liabilities
Section 2.4
Executory Contract
Section 2.6(a)
Executory Contract List
Section 2.6(a)
Expense Reimbursement Amount
Section 8.3(b)
Foreign Benefit Plan
Section 3.9(g)
HSR Act
Section 3.3(b)
IMSS
Section 3.10(k)
INFONAVIT
Section 3.10(k)
Inventory
Section 2.1(f)
IP Assignment Agreement
Section 2.9(b)(iii)
Joinder
Recitals
Lease Assignment Documents
Section 2.9(b)(ix)
Lease Encumbrances
Section 1.1
Lender Owner
Section 2.7(b)
Material Contracts
Section 3.16(a)
Mexico Assumption Agreement
Section 2.9(b)(iv)
Mexico Buyer
Recitals
Mexico Buyers
Recitals
Mexico Closing Documents
Section 2.9(b)(iv)
Mexico Lease Assignments
Section 2.9(b)(iv)
Mexico P&A Agreement
Section 2.9(b)(iv)
Mexico Seller
Recitals
Mexico Sellers
Recitals
Mexico Sellers Personnel
Section 5.5(j)(i)
Mexico Transferred Assets
Recitals
MFLL
Section 5.5(j)(i)
Minimum Deposit
Section 2.8
MSSL
Section 5.5(j)(i)(A)
Neutral Firm
Section 2.10(a)
Non-Transferred Mexico Sellers Employee
Section 5.5(j)(i)
Permits
Section 3.7(b)
Phase I Assessments
Section 5.2(b)
Post-Closing Tax Period
Section 6.4
Pre-Closing Tax Period
Section 6.4
Purchase Price
Section 2.7(a)
Sale Motion
Section 5.9(a)
SAR
Section 3.10(k)
SEC
Section 3.5(a)
Securities Act
Section 3.5(a)
Seller
Preamble
Seller Financial Statements
Section 3.5(b)
Seller Parent
Preamble
Sellers
Preamble
Software
Section 1.1
Termination Date
Section 8.1
Trade Secrets
Section 1.1
Trademarks
Section 1.1
Transfer Taxes
Section 6.1
Transferred Assets
Section 2.1
Transferred Employee
Section 5.5(b)
Undisputed Cure Claims
Section 2.6(a)
US Assumption Agreement
Section 2.9(b)(ii)
US Bill of Sale
Section 2.9(b)(i)
US Buyer
Preamble
US Transferred Assets
Recitals
ARTICLE II
PURCHASE AND SALE
Section 2.1
Purchase and Sale of Assets. Upon the terms and subject to the conditions of this Agreement, at the Closing, the Sellers established under the laws of the United States, or any state thereof, as to the US Transferred Assets, and Mexico Sellers, as to the
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Mexico Transferred Assets, and as to any Transferred Assets held by Standard Register Technologies Canada ULC as designated by US Buyer, shall sell, assign, transfer, convey and deliver to the applicable Buyer all of the Sellers’ right, title and interest as of the Closing Date in and to the Transferred Assets, and the Buyers shall purchase, acquire, accept and pay for the Transferred Assets and assume the applicable Assumed Liabilities. “Transferred Assets” shall mean all right, title and interest of the Sellers to or under the properties and assets of Sellers of every kind and description, wherever located, whether real, personal or mixed, tangible or intangible (but excluding in each case, for the avoidance of doubt, any Excluded Assets), including all right, title and interest of the Sellers in, to or under:
(a)
all Transferred Contracts, but only to the extent designated as Transferred Contracts pursuant to Section 2.6;
(b)
all Real Property and other interests in real property, together in each case with the Sellers’ right, title and interest in and to all structures, facilities or improvements located thereon and all easements, licenses, rights and appurtenances relating to the foregoing;
(c)
all Intellectual Property owned, licensed, used or held for use by or on behalf of a Seller, including all Intellectual Property listed on Schedule 3.13(a)(i) of the Disclosure Schedules;
(d)
all accounts receivable, notes receivable and other receivables due to the Sellers, together with any unpaid interest or fees accrued thereon or other amounts due with respect thereto;
(e)
all machinery, equipment, furniture, furnishings, parts, spare parts, vehicles and other tangible personal property owned by the Sellers;
(f)
all raw materials, works-in-progress, finished goods, supplies, packaging materials and other inventories owned by the Sellers (the “Inventory”);
(g)
all Permits held by the Sellers (the “Business Permits”), but only to the extent such Permits may be transferred under applicable Law;
(h)
all books of account, general, financial, accounting and personnel records, files, invoices, customers’ and suppliers’ lists, other distribution lists, billing records, sales and promotional literature, manuals and customer and supplier correspondence owned by the Sellers relating to the Business;
(i)
telephone, telex and telephonic facsimile numbers and other directory listings used by the Sellers;
(j)
all goodwill associated with the Transferred Assets or the Business;
(k)
except for the Wind-Down Amount (other than amounts to be returned to the Buyers as set forth in Section 5.15(e) and Section 5.15(f)), all of the Sellers’ cash and cash equivalents, and bank accounts;
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(l)
to the extent related to the Transferred Assets or Business and except as set forth in Section 2.2(c), all rights, claims or causes of action of the Sellers against third parties arising out of events occurring prior to the Closing, including and, for the avoidance of doubt, arising out of events occurring prior to the Petition Date, and including any rights under or pursuant to any and all warranties, representations and guarantees made by suppliers, manufacturers and contractors relating to products sold, or services provided, to the Sellers;
(m)
all copies of Tax records related to the Transferred Assets or the Business;
(n)
with respect to the Sellers, all rights to Tax refunds, credits or similar benefits relating to the Transferred Assets or the Business;
(o)
the equity interests listed in Schedule 2.1(o) of the Disclosure Schedules;
(p)
all of the rights and claims of the Sellers available under the U.S. Bankruptcy Code, of whatever kind or nature, as set forth in sections 544 through 551, inclusive, 553, 558 and any other applicable provisions of the U.S. Bankruptcy Code solely with respect to trade obligations paid prior to the Petition Date, and any related claims and actions arising under such sections by operation of Law or otherwise, including any and all proceeds of the foregoing, (such rights and claims not to be prosecuted by the Buyers or any other entity); and
(q)
all credits, prepaid expenses, security deposits, other deposits, refunds, prepaid assets or charges, rebates, setoffs, and loss carryforwards of the Sellers.
At any time at least one (1) Business Day prior to the Closing, the Buyers may, in their discretion by written notice to the Sellers, designate any of the Transferred Assets as additional Excluded Assets, which notice shall set forth in reasonable detail the Transferred Assets so designated; provided, that there shall be no reduction in the Purchase Price if they elect to designate any Transferred Asset as an Excluded Asset. Notwithstanding any other provision hereof, the Liabilities of the Sellers under or related to any Transferred Asset excluded under this paragraph will constitute Excluded Liabilities.
Section 2.2
Excluded Assets. Notwithstanding anything contained in Section 2.1 to the contrary, the Sellers are not selling, and the Buyers are not purchasing, any assets other than the Transferred Assets, and without limiting the generality of the foregoing, the term “Transferred Assets” shall expressly exclude the following assets of the Sellers, all of which shall be retained by the Sellers (collectively, the “Excluded Assets”):
(a)
the Sellers’ documents prepared in connection with this Agreement or the transactions contemplated hereby or relating to the Bankruptcy Case, Returns or Tax work papers or records, and any books and records that any Seller is required by Law to retain;
(b)
all accounting records (including records relating to Taxes) and internal reports to the extent relating to the business activities of the Sellers that are not Transferred Assets;
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(c)
except those described in Section 2.1(p), all Avoidance Actions;
(d)
all insurance policies and binders;
(e)
all rights, claims and causes of action relating to any Excluded Asset or any Excluded Liability;
(f)
except those described in Section 2.1(o), shares of capital stock or other equity interests of any Seller or securities convertible into or exchangeable or exercisable for shares of capital stock or other equity interests of any Seller;
(g)
all of Sellers’ rights under any Employee Plan and the assets thereof;
(h)
except to the extent designated as a Transferred Contract at Closing, all contracts between a Seller, on the one hand, and any direct or indirect Affiliate of such Seller, on the other hand, and all intercompany receivables owed to a Seller by any direct or indirect Affiliate of such Seller, including contracts or intercompany receivables relating to Taxes;
(i)
the assets of the Sellers listed in Schedule 2.2(i) of the Disclosure Schedules; and
(j)
all rights of the Sellers under this Agreement and the Ancillary Agreements.
Section 2.3
Assumed Liabilities.
(a)
In connection with the purchase and sale of the Transferred Assets pursuant to this Agreement, at the Closing, the applicable Buyer shall assume and pay, discharge, perform or otherwise satisfy only the following Liabilities (excluding in each case, for the avoidance of doubt, any Excluded Liabilities) (the “Assumed Liabilities”):
(i)
any Liabilities for Transfer Taxes to be paid by such Buyer pursuant to Section 6.1;
(ii)
all Liabilities of the Sellers under the Transferred Contracts and the transferred Business Permits to be performed on or after, or in respect of periods following, the Closing Date;
(iii)
the Cure Claims up to the Cure Claims Cap unless agreed as set forth in Section 2.6;
(iv)
all Liabilities for the trade payables arising after the Petition Date, or subject to administrative expense status under section 503(b)(9) of the Bankruptcy Code with the vendors provided to the US Buyer prior to the date hereof;
(v)
all Liabilities (i) arising under the Employee Incentive Plan to the extent not paid pursuant to the DIP Budget (as defined in the DIP Credit Agreement); and (ii) assumed by the Buyers pursuant to Section 5.5; and
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(vi)
all Liabilities for the customer programs listed on Schedule 2.3(a)(vi) of the Disclosure Schedules to the extent US Buyer agrees to assume such obligations in its sole discretion.
(b)
Notwithstanding anything in this Agreement to the contrary, the Sellers hereby acknowledge and agree that the Buyers are not assuming from the Sellers, nor are in any way responsible for, the Excluded Liabilities. The transactions contemplated by this Agreement shall in no way expand the rights or remedies of any third party against the Buyers or the Sellers as compared to the rights and remedies that such third party would have had against the Sellers or the Buyers absent the Bankruptcy Case or Buyers assumption of such Assumed Liabilities. Other than the Assumed Liabilities, the Buyers are not assuming and shall not be liable for any Liabilities of the Sellers.
Excluded Liabilities. Notwithstanding any other provision of this Agreement to the contrary, the Buyers are not assuming any Liability that is not an Assumed Liability (the “Excluded Liabilities”), including the following:
(a)
any and all Liabilities for Taxes arising from or with respect to (i) the Transferred Assets or the operation of the Business that are incurred in, or attributable to, any taxable period, or portion thereof, ending on or prior to the Closing Date, or (ii) the transactions contemplated by this Agreement that occur on the Closing Date, other than Transfer Taxes that are Assumed Liabilities;
(b)
any and all Liabilities of the Sellers under any Contract of the Sellers that is not a Transferred Contract whether accruing prior to, at, or after the Closing Date;
(c)
any and all Liabilities of any Seller resulting from the failure to comply with any applicable “bulk sales,” “bulk transfer” or similar Law;
(d)
any Liability retained by the Sellers pursuant to Section 5.5 or arising in respect of or relating to Business Employees (whether arising before or after the Closing) or any Employee Plan, whenever arising, except for Liabilities assumed by the Buyers pursuant to Section 5.5;
(e)
any and all Liabilities in any way attributable to (i) the employment or service of current or former employees, directors or consultants of the Sellers or any current or former Subsidiary of the Sellers who is not a Transferred Employee, regardless of whether such Liability is attributable to the period before, on or after the Closing Date, (ii) the employment of Transferred Employees to the extent attributable to the period at or before the Closing, or (iii) any Employee Plans;
(f)
without impacting the scope of Section 2.4(e), any pension or retirement Liability of the Sellers to their current or former employees;
(g)
all Liabilities arising under any collective bargaining laws, agreements or arrangements;
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(h)
any non-ordinary course Liability of the Sellers arising in the Bankruptcy Case;
(i)
any indebtedness for borrowed money, or guarantees thereof, of the Sellers;
(j)
any Liability to distribute to any Seller’s shareholders or otherwise apply all or any part of the consideration received hereunder;
(k)
any and all Liabilities arising under any Environmental Law or any other Liability in connection with any environmental, health, or safety matters arising from or related to (i) the ownership or operation of the Business or the Transferred Assets on or before the Closing Date, (ii) any action or inaction of the Sellers or of any third party relating to the Business or Transferred Assets on or before the Closing Date, (iii) any formerly owned, leased or operated properties of the Sellers, or (iv) any condition first occurring or arising on or before the Closing Date with respect to the Business or the Transferred Assets;
(l)
any and all Liability for: (i) costs and expenses incurred by the Sellers or owed in connection with the administration of the Bankruptcy Case (including the U.S. Trustee fees, the fees and expenses of attorneys, accountants, financial advisors, consultants and other professionals retained by Sellers, and any official or unofficial creditors’ or equity holders’ committee and the fees and expenses of the post-petition lenders or the pre-petition lenders incurred or owed in connection with the administration of the Bankruptcy Case); (ii) all costs and expenses of the Sellers incurred in connection with the negotiation, execution and consummation of the transactions contemplated under this Agreement; and (iii) all costs and expenses arising out of or related to any third party claims against the Sellers, pending or threatened, including any warranty or product claims;
(m)
other than as set forth in Section 2.3(a)(i), any Liabilities for Taxes of Sellers arising on or after the Closing;
(n)
any Liability of the Sellers under this Agreement or the Ancillary Agreements; and
(o)
any Liability or obligation to the extent solely relating to an Excluded Asset.
Section 2.5
Consents to Certain Assignments.
(a)
Notwithstanding anything in this Agreement or any Ancillary Agreement to the contrary, this Agreement and the Ancillary Agreements shall not constitute an agreement to transfer or assign any asset, permit, claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment thereof, without the consent of a third party, would constitute a breach or other contravention under any agreement or Law to which any Seller is a party or by which it is bound, or in any way adversely affect the rights of the Sellers or, upon transfer, the Buyers under such asset, permit, claim or right, unless the applicable provisions of the Bankruptcy Code permits and/or the Sale Order authorizes the assumption and assignment of such asset, permit, claim, or right irrespective of the consent or
17
lack thereof of a third party. If, with respect to any Transferred Asset, such consent is not obtained or such assignment is not attainable pursuant to the Bankruptcy Code or the Sale Order, then such Transferred Asset shall not be transferred hereunder, and the Closing shall proceed with respect to the remaining Transferred Assets and the Sellers shall use their reasonable best efforts (which efforts will be subject to any winding-down of operations and related capabilities of the Sellers post-Closing), and the Buyers shall cooperate with the Sellers, to obtain any such consent and to resolve the impracticalities of assignment after the Closing, provided, that the Sellers shall not have any liability to the Buyers arising out of or relating to the failure to obtain any such consent on a post-Closing basis.
(b)
If (i) notwithstanding the applicable provisions of Sections 363 and 365 of the Bankruptcy Code and the Sale Order and the reasonable best efforts of the Sellers, any consent is not obtained prior to Closing and as a result thereof the Buyers shall be prevented by a third party from receiving the rights and benefits with respect to a Transferred Asset intended to be transferred hereunder, (ii) any attempted assignment of a Transferred Asset would adversely affect the rights of the Sellers thereunder so that the Buyers would not in fact receive all the rights and benefits contemplated, or (iii) any Transferred Asset is not otherwise capable of sale and/or assignment (after giving effect to the Sale Order and the Bankruptcy Code), then, in each case, the Sellers shall, subject to any approval of the Bankruptcy Court that may be required, at the request of the Buyers cooperate with Buyers in any lawful and commercially reasonable arrangement under which the Buyers would, to the extent practicable, obtain the economic claims, rights and benefits under such asset and assume the economic burdens and obligations with respect thereto in accordance with this Agreement, including by subcontracting, sublicensing or subleasing to the Buyers; provided, that all reasonable out-of-pocket expenses of such cooperation and related actions shall be paid by the Buyers. Seller Parent shall promptly pay to the Buyers when received all monies received by the Sellers under such Transferred Asset or any claim or right or any benefit arising thereunder and the Buyers shall indemnify and promptly pay the Sellers for all Liabilities of the Sellers associated with such arrangement, if requested.
Section 2.6
Contract Designation.
(a)
No later than March 31, 2015, Sellers shall deliver to the Buyers a true, correct and complete, to the best of the Sellers’ knowledge, list (the “Executory Contract List”) of all Contracts related to the Transferred Assets or otherwise used, or held for use, in connection with the Business as it is conducted by the Sellers (each, an “Executory Contract”). The Executory Contract List shall describe the monetary amounts that must be paid and nonmonetary obligations that otherwise must be satisfied, including pursuant to Section 365(b)(1)(A) and (B) of the Bankruptcy Code, in order for Buyers to assume the Transferred Contracts pursuant to this Agreement (“Undisputed Cure Claims”). The Sellers will use commercially reasonable efforts to provide the Buyers with copies of each such Contract so as to permit Buyer to review such Contracts to determine such other commercial information related to the Contracts listed thereon as Buyer desires.
(b)
Subject to the entry of the Sale Procedures Order and to the terms and provisions thereof, no later than the tenth (10th) Business Day following entry of the Sale Procedures Order, a copy of the Executory Contract List, which shall be in form and substance
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reasonably acceptable to Buyers, shall be served on all necessary parties. The Executory Contract List shall identify the Undisputed Cure Claim, if any, associated with each Contract listed therein, shall identify the Buyers, and shall indicate that the Buyers will, if necessary, provide evidence of adequate assurance of future performance at the Sale Hearing. Any counterparty to an Executory Contract included on the Executory Contract List shall have the time period prescribed by the Sale Procedures Order, or, if no such time period is given, a reasonable amount of time prior to the Auction, to object to the Cure Claims listed on the Executory Contract List and to adequate assurance of future performance.
(c)
To the extent a counterparty to an Executory Contract objects or otherwise challenges the Undisputed Cure Claims determined by Sellers and asserts a different monetary amount that must be paid and/or nonmonetary obligations that otherwise must be satisfied, including pursuant to Section 365(b)(1)(A) and (B) of the Bankruptcy Code, in order for Buyers to assume such Executory Contract pursuant to this Agreement, the difference between the Undisputed Cure Claims determined by Sellers and such amounts and/or nonmonetary obligations determined by such counterparty shall be referred to as the “Disputed Cure Claims.”
(d)
On or prior to the third (3rd) Business Day before Closing, Buyers may designate in writing any Executory Contract as a Transferred Contract to be assumed by it pursuant to this Agreement or remove any Executory Contract previously designated by Buyers as a Transferred Contract. The Buyers shall be obligated to pay at Closing any Undisputed Cure Claims associated with the assumption of a Transferred Contract that is an Executory Contract or such other amount as agreed to between the applicable Buyer and the counterparty. The Disputed Cure Claims shall only be paid pursuant to an Order of the Bankruptcy Court or mutual agreement between the Buyers and the counterparty to the applicable Transferred Contract. To the extent any Transferred Contract is subject to a Cure Claim, the Buyers shall pay such Cure Claim directly to the applicable counterparty; provided, however, that the Buyers’ obligation to pay Cure Claims in connection with the Transferred Contracts shall not exceed the Cure Claims Cap unless otherwise agreed to between the applicable Buyer and the counterparty. In no event shall the Sellers be responsible for curing any defaults under the Transferred Contracts or otherwise satisfying the Cure Claims relating to the Transferred Contracts. Notwithstanding anything contained herein to the contrary, Buyers shall only assume, and shall only be responsible for, Contracts designated by it as Transferred Contracts, and which Transferred Contracts are in fact assumed and assigned to the Buyers at Closing, pursuant to this Section 2.6.
(e)
Sellers shall use commercially reasonable efforts to reduce, and shall use commercially reasonable efforts to cooperate with Buyers in its efforts to reduce, the Disputed Cure Claims and negotiate rent reductions with respect to Leases that are Transferred Contracts. Such efforts shall include providing Buyers with access to relevant business records, personnel, equipment, and Buyers’ other reasonable requests in order to allow Buyers to assist with evaluating the Disputed Cure Claims, in each case, at Sellers’ sole cost and expense prior to the Closing and at Buyers’ sole cost and expense if such assistance, access and cooperation occurs during the post-Closing period.
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(f)
At any time at least two (2) Business Days prior to Closing, the Buyer, in its discretion by written notice to Sellers, may exclude from being assigned pursuant hereto any Contracts or Leases, and, in such circumstances, such Contracts or Leases shall not constitute Transferred Contracts and shall be Excluded Assets, and Buyers shall not acquire any rights or assume any Liabilities with respect thereto pursuant to Section 2.3 hereof. Upon Buyers’ reasonable request, Sellers shall use commercially reasonable efforts to provide additional information as to the Liabilities under the Contracts and Leases sufficient for Buyers to make an informed assessment whether to designate such Contracts or Leases as Excluded Assets.
Section 2.7
Consideration
(a)
The aggregate consideration for the sale, assignment, transfer, conveyance and delivery of the Transferred Assets to the Buyers at the Closing, shall consist of: (i) cash consideration necessary to result in Full Payment of (A) the DIP Obligations (to the extent the DIP Obligations have not been satisfied pursuant to Section 2.7(b)) and (B) Pre-Petition ABL Debt ((A) and (B) collectively, the “Cash Component”), and (C) the Initial Credit Bid ((A)-(C) collectively, the “Purchase Price”), and (ii) the assumption of the Assumed Liabilities. The amount of the Purchase Price together with the Assumed Liabilities is estimated to be $275,000,000 as of the Closing Date (assuming a Closing Date of June 26, 2015), including an estimated Cash Component of $130,000,000 and an estimated Initial Credit Bid of $113,000,000.
(b)
To the extent any of the Purchase Price will be paid to a lender under the DIP Credit Agreement that is a direct or indirect owner of a Buyer (a “Lender Owner”), the Buyers may deduct from the Purchase Price and be deemed as having paid to the Sellers such amount as otherwise would have been distributed in cash to such Lender Owner. In the event of a dispute over the obligations owed to a Lender Owner under the DIP Credit Agreement, the Buyers shall have no obligation to otherwise fund the Purchase Price with cash relating to such amount that would be paid to the Lender Owner until final resolution of any and all disputes over such obligations owed to such Lender Owner under the DIP Credit Agreement.
Section 2.8
Minimum Deposit. Within five (5) Business Days of entry of the Sale Procedures Order, the Buyers shall deliver to Seller Parent a federal reference number evidencing the wire transfer of a deposit into escrow of an amount in cash equal to Two Million Dollars ($2,000,000) (such amount, the “Minimum Deposit”) in immediately available funds with U.S. Bank National Association (the “Escrow Agent”) pursuant to the terms of an escrow agreement in substantially the form attached hereto as Exhibit 4 (the “Escrow Agreement”) by and among the Escrow Agent, Seller Parent and the US Buyer. Prior to Closing, US Buyer shall prepare and Seller Parent and US Buyer shall execute a Joint Written Direction (as defined in the Escrow Agreement) directing the Escrow Agent to, subject to the occurrence of the Closing, deliver the Minimum Deposit to pay amounts necessary (i) for Full Payment of the DIP Obligations, or (ii) for the Full Payment of Pre-Petition ABL Debt. If this Agreement is terminated pursuant to Section 8.1(d)(i) or (iii) in accordance with Section 8.2(b) (a “Buyer Default Termination”), US Buyer shall prepare and Seller Parent and US Buyer shall execute a Joint Written Direction (as defined in the Escrow Agreement) instructing the Escrow Agent to, within two (2) Business Days after such instruction, pay the Minimum Deposit to Seller Parent,
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and if this Agreement is terminated for any reason other than Section 8.1(d)(i) or (iii), the Minimum Deposit shall be returned to the Buyers. If this Agreement is terminated prior to Closing for any reason other than a Buyer Default Termination, US Buyer shall prepare and Seller Parent and US Buyer shall execute a Joint Written Direction (as defined in the Escrow Agreement) instructing the Escrow Agent to, within two (2) Business Days after such instruction, return the Minimum Deposit to the Buyer. The Minimum Deposit shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any Seller or the Buyer. The Sellers, on the one hand, and Buyers, on the other hand, shall take, or cause to be taken, all actions, necessary, proper or advisable to consummate the Escrow Agreement and the actions contemplated thereby. All costs associated with the Escrow Agreement shall be borne by the Buyers.
Section 2.9
Closing.
(a)
The sale and purchase of the Transferred Assets and the assumption of the Assumed Liabilities contemplated by this Agreement shall take place at a closing (the “Closing”) to be held at the offices of Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, NY, at 10:00 a.m. New York time on the fifth (5th) Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver of all conditions to the obligations of the Parties set forth in Article VII (other than such conditions as may, by their terms, only be satisfied at the Closing or on the Closing Date), or at such other place or at such other time or on such other date as the Sellers and the Buyers mutually may agree in writing. The day on which the Closing takes place is referred to as the “Closing Date.”
(b)
At or prior to the Closing, the Sellers shall deliver or cause to be delivered to the applicable Buyer:
(i)
to the US Buyer (or a Designated Buyer), one or more bills of sale substantially in the form of Exhibit 5 (the “US Bill of Sale”), duly executed by the applicable Sellers;
(ii)
to the US Buyer (or a Designated Buyer), one or more assumption agreements, substantially in the form of Exhibit 6 (the “US Assumption Agreement”), duly executed by the applicable Sellers;
(iii)
(A) one or more intellectual property assignment agreements substantially in the form of Exhibit 7 (the “IP Assignment Agreement”) and (B) a domain transfer agreement substantially in the form of Exhibit 8 (the “Domain Transfer Agreement”), in each case duly executed by the applicable Sellers;
(iv)
to the applicable Mexico Buyer, (A) one or more purchase and assignment agreements, substantially in the form of Exhibit 9 (the “Mexico P&A Agreement”); (B) one or more assignment and assumption agreements, substantially in the form of Exhibit 10 (the “Mexico Assumption Agreement”); (C) one or more lease assignment agreements, substantially in the form of Exhibit 11 (the “Mexico Lease Assignments”); and (D) if applicable, one or more IP assignment agreements, substantially in the form of Exhibit 12, in each of cases (A)-(D), duly executed by the applicable Mexico Sellers (the “Mexico Closing Documents”);
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(v)
a certified copy of the Sale Order;
(vi)
a duly executed certificate of non-foreign status of each of the Sellers, other than the Mexico Sellers and Standard Register Technologies Canada ULC, in the form and manner that comply with the requirements of Section 1445(b)(2) of the Code and Treasury Regulations Section 1.1445-2(b), substantially in the form of Exhibit 13. Notwithstanding anything to the contrary contained herein, if any such Seller fails to provide such a certificate, the Buyers shall proceed with the Closing and shall be entitled to withhold from the consideration payable pursuant to this Agreement to such Seller the requisite amounts in accordance with Section 1445 of the Code;
(vii)
a duly executed certificate of each Mexico Seller and Standard Register Technologies Canada ULC, certifying that none of the Transferred Assets transferred by such Seller constitutes “United States real property interest” within the meaning of Section 897(c) of the Code and the Treasury Regulations promulgated thereunder, as set forth on Exhibit 14. Notwithstanding anything to the contrary contained herein, if any such Seller fails to provide such a certificate, the Buyers shall proceed with the Closing and shall be entitled to withhold from the consideration payable pursuant to this Agreement to such Seller the requisite amounts in accordance with Section 1445 of the Code;
(viii)
bargain and sale deeds, with covenants against grantor’s acts, in recordable form for all Owned Real Property, duly executed by the applicable Sellers;
(ix)
one or more instruments of assignment and assumption, substantially in form and substance customary in similar transactions, with respect to all Leased Real Property (the “Lease Assignment Documents”), duly executed by the applicable Sellers;
(x)
such Transfer Tax Returns as prepared by US Buyer and provided to the Sellers in accordance with Section 6.1, duly executed by applicable the Sellers, which the Sellers are required to execute and deliver (subject to their rights to review, comment and approve) in accordance with the provisions of Section 6.1;
(xi)
to the applicable Mexico Buyer, the Mexico formal invoices (facturas) issued by Mexico Seller as owner of the Mexico Transferred Assets, in compliance with applicable Mexico Tax Law and consistent with the Allocation pursuant to Section 2.10 hereof;
(xii)
a duly executed certificate of an executive officer of Seller Parent certifying the fulfillment of the conditions set forth in Section 7.3(a); and
(xiii)
all other documents, instruments or writings of conveyance reasonably necessary or customary to consummate the Agreement, including any further documents, instruments or writings required to convey any Mexico Transferred Assets, to be prepared by the Buyers; provided such documents are (A) in form and substance reasonably acceptable to the applicable Seller, (B) required to be executed only by the Sellers or an agent of Sellers (in his or her capacity as such) and (C) identified and provided by Buyers to Sellers in a form acceptable to such Buyers at least seven (7) Business Days before the Closing Date.
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(c)
At or prior to the Closing, the Buyers shall deliver or cause to be delivered (including by directing the delivery of the Minimum Deposit in accordance with Section 2.8):
(i)
to the Persons indicated in a payoff letter to be delivered in connection with the Closing, the amount required for the Full Payment of Pre-Petition ABL Debt; and
(ii)
to the Persons indicated in a payoff letter to be delivered in connection with the Closing, the amount required for the Full Payment of the DIP Obligations (to the extent such obligations are not discharged pursuant to Section 2.7(b));
(iii)
to Seller Parent,
(A)
evidence that the amount of the Initial Credit Bid will be credited; and
(B)
an amount in cash equal to the Purchase Price, by wire transfer of immediately available funds to a bank account or bank accounts designated in writing by Seller Parent to the Buyers at least two (2) Business Days prior to the Closing Date, less
(1)
any amount paid pursuant to clause (i) above in respect of the Full Payment of Pre-Petition ABL Debt;
(2)
any amount paid pursuant to clause (ii) above in respect of the Full Payment of the DIP Obligations (including any amounts discharged pursuant to Section 2.7(b)); and
(3)
the Initial Credit Bid;
(iv)
to the Sellers, the Bill of Sale, duly executed by the applicable Buyers;
(v)
to the Sellers, the Assumption Agreement, duly executed by the applicable Buyers;
(vi)
to the Sellers, the Mexico Closing Documents, duly executed by the applicable Buyers;
(vii)
to the Sellers, the Lease Assignment Documents, duly executed by the applicable Buyers;
(viii)
to the Sellers, (A) the IP Assignment Agreement and (B) the Domain Transfer Agreement, in each case duly executed by the applicable Buyers; and
(ix)
to the Sellers, a duly executed certificate of an executive officer of US Buyer certifying the fulfillment of the conditions set forth in Section 7.2(a).
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Section 2.10
Tax Allocation
(a)
The Purchase Price (plus Assumed Liabilities and any other consideration payable pursuant to this Agreement, to the extent properly taken into account under the Code), shall be allocated among the Transferred Assets in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the “Allocation”). The Allocation shall be prepared by the Buyers and delivered to the Sellers as promptly as reasonably practicable, and in any event no later than thirty (30) days prior to the Closing Date. The Allocation shall be considered final and binding on the Parties unless Seller Parent conveys written objections (an “Allocation Dispute Notice”) to the Buyers within ten (10) Business Days of receipt of the Allocation. The Buyers and Seller Parent shall endeavor in good faith to resolve any such disagreement within ten (10) days following the delivery of the Allocation Dispute Notice, and if resolution of such disagreement is reached, the Allocation shall immediately become final and binding. If the Buyers and Seller Parent are unable to completely resolve any such disagreement within ten (10) days, the unresolved issues (the “Allocation Dispute”) shall be resolved by the Neutral Firm in accordance with Section 2.10(b). Upon the Allocation becoming final and binding, the Buyers and the Sellers agree to (i) be bound by the Allocation, (ii) act in accordance with the Allocation for all applicable Tax purposes (including filing IRS Form 8594 with their U.S. federal income Return for the taxable year that includes the Closing Date and any other Returns required under U.S. or foreign Tax Law, and in the course of any Tax audit, review or litigation), and (iii) take no position and cause their Affiliates to take no position inconsistent with the Allocation for all applicable Tax purposes, unless otherwise required by applicable Law or unless the other Parties consent thereto.
(b)
If the Buyers and the Sellers are unable to completely resolve any Allocation Dispute within the ten (10) day period referred to in Section 2.10(a), the unresolved issues (and only such unresolved issues) (such unresolved issues collectively, the “Dispute”) shall be promptly submitted for resolution to Deloitte LLP (the “Neutral Firm”). The Neutral Firm shall be instructed to resolve any outstanding Dispute; provided, that the Neutral Firm’s determination of any amount subject to the Dispute shall be no (i) less than the lesser of the amounts claimed by the Buyers and Seller Parent, respectively, or (ii) greater than the greater of the amounts claimed by the Buyers and Seller Parent, respectively. The Parties shall instruct the Neutral Firm to render its determination with respect to the entire Dispute within fourteen (14) days of the referral of the Dispute thereto, and the determination of the Neutral Firm shall be final and binding upon the Parties for all purposes of this Agreement. The fees and expenses of the Neutral Firm shall be borne by the Buyer, on the one hand, and the Sellers, on the other hand, in the same proportion that the dollar amount subject to the Dispute which is not resolved in favor of the Buyers and the Sellers, as applicable, bears to the total dollar amount subject to the Dispute resolved by the Neutral Firm. For illustration purposes only, if the total amount of the Dispute is One Hundred Thousand Dollars ($100,000), and the Sellers are awarded Twenty Five Thousand Dollars ($25,000) by the Neutral Firm, the Sellers shall bear seventy-five percent (75%) and the Buyers shall bear twenty-five percent (25%) of the Neutral Firm’s fees and expenses.
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Section 2.11
Designated Buyer(s).
(a)
In connection with the Closing, the Buyers shall be entitled to designate, in accordance with the terms and subject to the limitations set forth in this Section 2.11, one (1) or more wholly-owned Subsidiaries or Affiliates to (i) purchase specified Transferred Assets (including specified Transferred Contracts) and pay the corresponding Purchase Price amount and Cure Claims, as applicable, (ii) assume specified Assumed Liabilities, and/or (iii) employ specified Transferred Employees on and after the Closing Date (any such wholly-owned Subsidiary or Affiliate of the Buyers that shall be properly designated by the Buyers in accordance with this clause, a “Designated Buyer”). At the Closing, the Buyers shall, or shall cause their Designated Buyer(s) to, honor their obligations at the Closing. Any reference to the Buyers made in this Agreement in respect of any purchase, assumption or employment referred to in this Agreement shall include reference to the appropriate Designated Buyer(s), if any. After the Closing, all obligations of the Buyers and their Designated Buyer(s) under this Agreement shall be several and not joint and the only party with Liability as to a particular Assumed Liability is the Buyer or the Designated Buyer assuming such obligation at the Closing and no other Buyer or Designated Buyer.
(b)
The above designation in Section 2.11(a) shall be made by the Buyers by way of a written notice to be delivered to the Sellers in no event later than three (3) Business Days prior to Closing which written notice shall contain appropriate information about the Designated Buyer(s) and shall indicate which Transferred Assets, Assumed Liabilities and Transferred Employees the Buyers intend such Designated Buyer(s) to purchase, assume and/or employ, as applicable, hereunder and include a signed counterpart to this Agreement in a form acceptable to the Sellers, agreeing to be bound by the terms of this Agreement as it relates to such Designated Buyer(s) and authorizing the Buyers to act as such Designated Buyer(s)’ agent for all purposes hereunder.
Section 2.12
Withholding. Notwithstanding anything in this Agreement to the contrary, the Buyers and the Escrow Agent shall be entitled to deduct and withhold from the consideration otherwise payable to the Sellers pursuant to this Agreement such Taxes as may be required to be deducted and withheld from such consideration under the Code or any other applicable provision of U.S. or foreign Tax Law. To the extent that any amounts are so deducted or withheld by a Buyer or the Escrow Agent, as the case may be, such deducted and withheld amounts shall be (a) remitted by the Buyer or the Escrow Agent, as the case may be, to the applicable Governmental Authority and (b) treated for all purposes of this Agreement as having been paid to the Seller in respect of which such deduction and withholding was made by the Buyer or the Escrow Agent, as the case may be.
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
Except as set forth in the Disclosure Schedules attached hereto (collectively, as updated pursuant to Section 5.19, the “Disclosure Schedules”), each of the Sellers jointly and severally represent and warrant to the Buyers as follows:
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Section 3.1
Organization. Each Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all necessary corporate (or equivalent) power and authority to own, lease and operate the Transferred Assets and to carry on the Business as it is now being conducted and to perform its obligations hereunder and under any Ancillary Agreement. Each Seller is qualified or authorized to do business and is in good standing under the Laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing is the result of the filing of the Bankruptcy Case or as would not be material to the conduct of the Business. Neither Seller Parent nor any other Seller has any Subsidiaries other than those Subsidiaries that are Parties to this Agreement.
Section 3.2
Authority. Subject to the Bankruptcy Case and to the extent that any Bankruptcy Court approval is required (a) each Seller has the corporate (or equivalent) power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, (b) the execution, delivery and performance by such Seller of this Agreement and each of the Ancillary Agreements to which it will be a party and the consummation by such Seller of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate (or equivalent) action and (c) this Agreement has been, and upon their execution each of the Ancillary Agreements to which such Seller will be a party will have been, duly executed and delivered by such Seller and, assuming due execution and delivery by each of the other parties hereto and thereto, this Agreement constitutes, and upon their execution each of the Ancillary Agreements to which such Seller will be a party will constitute, the legal, valid and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).
Section 3.3
No Conflict; Required Filings and Consents.
(a)
The execution, delivery and performance by each Seller of this Agreement and each of the Ancillary Agreements to which such Seller will be a party, and the consummation of the transactions contemplated hereby and thereby, or compliance by each Seller with any of the provisions hereof, do not and will not:
(i)
conflict with or violate the certificate of incorporation or bylaws or other similar organizational documents of such Seller;
(ii)
conflict with or violate any Law applicable to such Seller, the Business or any of the Transferred Assets or by which such Seller, the Business or any of the Transferred Assets may be bound or affected;
(iii)
conflict with or violate any Order of any Governmental Authority; or
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(iv)
conflict with, result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, or give rise to a right of termination, modification, notice or cancellation or require any consent of any Person pursuant to, any Transferred Contract of Sellers;
except (A) in each case, for the Bankruptcy Case and to the extent that any Bankruptcy Court approval is required, and (B) in the case of clause (ii), (iii) or (iv), for any such conflicts, violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent, materially delay or materially impede the performance by the Sellers of their obligations under this Agreement or the Ancillary Agreements to which each Seller will be a party or the consummation of the transactions contemplated hereby or thereby, or that arise as a result of any facts or circumstances relating to the Buyers or any of its Affiliates.
(b)
The Sellers are not required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by the Sellers of this Agreement and each of the Ancillary Agreements to which each Seller will be a party or the consummation of the transactions contemplated hereby or thereby, except (i) for any filings required to be made under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (ii) for requisite Bankruptcy Court approval, (iii) for entry of the Sale Order, and (iv) where failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or to prevent, materially delay or materially impede the performance by the Sellers of their obligations under this Agreement or the Ancillary Agreements to which each Seller will be a party or the consummation of the transactions contemplated hereby or thereby.
Section 3.4
Transferred Assets.
(a)
Except as would not be expected to materially impact the Business, each Seller, as applicable, has indefeasible title to, and owns and possesses all material rights and interests in, including the right to use, each of the Transferred Assets, or with respect to leased Transferred Assets, valid leasehold interests in, or with respect to licensed Transferred Assets, valid licenses to use.
(b)
This Agreement and the instruments and documents to be delivered by the Sellers to the Buyers at or following the Closing shall be adequate and sufficient to transfer (i) Sellers’ entire right, title and interest in and to the Transferred Assets and (ii) to the Buyers good title to the Transferred Assets, free and clear of all Encumbrances (other than Lease Encumbrances), claims, and interests, other than Assumed Liabilities, subject to (A) the Bankruptcy Case and (B) entry of the Sale Order.
Section 3.5
Financial Statements; No Undisclosed Liabilities.
(a)
Seller Parent has filed or otherwise transmitted all forms, reports, statements, certifications and other documents (including all exhibits, amendments and
27
supplements thereto) required to be filed by it with the Securities and Exchange Commission (the “SEC”) since January 1, 2012 (all such forms, reports, statements, certificates and other documents filed since January 1, 2012 and prior to the date hereof, collectively, the “Company SEC Documents”). As of their respective dates, or, if amended, as of the date of the last such amendment, each of the Company SEC Documents complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended, and the regulations promulgated thereunder (the “Securities Act”) and the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations promulgated thereunder, (the “Exchange Act) as the case may be, each as in effect on the date so filed. As of their respective filing dates (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of such amendment or superseding filing), none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b)
The consolidated financial statements of Seller Parent (including any related notes thereto) included in the Company SEC Documents together, in the case of a year-end statement, with reports thereon by Battelle Rippe Kingston LLP, Certified Public Accountants, the independent auditors of Seller Parent for the periods included therein, including in each case a consolidated balance sheet, a consolidated statement of income, a consolidated statement of stockholders’ equity and a consolidated statement of cash flows, and accompanying notes (the “Seller Financial Statements”) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of Seller Parent and its Subsidiaries at the respective dates thereof and the results of their operations and cash flows for the periods indicated. The consolidated balance sheets (including the related notes) included in the Seller Financial Statements fairly present in all material respects the consolidated financial position of Seller Parent and its Subsidiaries as at the respective dates thereof, and the consolidated statements of income, consolidated statements of stockholders’ equity and consolidated statements of cash flows (in each case including the related notes) included in such Seller Financial Statements present fairly in all material respects the consolidated results of operations, stockholders’ equity and cash flows of Seller Parent and its Subsidiaries for the respective periods indicated, except as otherwise noted therein. The unaudited consolidated financial statements of Seller Parent (including any related notes thereto) included in Seller Parent’s Quarterly Reports on Form 10-Q filed with the SEC since December 29, 2013 have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or may be permitted by the SEC under the Exchange Act) and fairly present in all material respects the consolidated financial position of Seller Parent and its Subsidiaries as of the respective dates thereof and the results of their operations and cash flows for the periods indicated (subject to normal period-end adjustments).
(c)
Seller Parent maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) designed to ensure that material information relating to Seller Parent, including its Subsidiaries, is made known to the chief executive officer and the chief financial officer of Seller Parent by others within those entities. Seller Parent maintains internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)
28
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
(d)
There are no outstanding or unresolved comments in comment letters from the SEC staff with respect to any of the Company SEC Documents. To the Knowledge of Sellers, as of the date hereof, none of the Company SEC Documents are the subject of ongoing SEC review.
(e)
To the Knowledge of the Sellers, neither Seller Parent nor any of its Subsidiaries has any material Liabilities or obligations of any nature, whether or not accrued, known or unknown, contingent or otherwise, and whether required by GAAP to be disclosed or reflected on or reserved against a consolidated balance sheet (or the notes thereto) of Seller Parent and its Subsidiaries, except for liabilities and obligations (i) reflected or reserved against in Seller Parent’s consolidated balance sheet as of September 28, 2014 (or the notes thereto) (the “Balance Sheet”) included in the Company SEC Documents, (ii) incurred in the Ordinary Course of Business since the date of the Balance Sheet, (iii) which have been discharged or paid in full prior to the date of this Agreement and (iv) incurred pursuant to the transactions contemplated by this Agreement.
Section 3.6
Absence of Certain Changes or Events. Since December 31, 2013 through the date of this Agreement, there has not been, with respect to the Sellers or the Business, any change, event, circumstance or effect that, by itself or in conjunction with all other such changes, whether or not arising in the Ordinary Course of Business, has had or would be reasonably expected to have a Material Adverse Effect.
Section 3.7
Compliance with Law; Permits.
(a)
The Business is being conducted in material compliance with, and Sellers have in all material respects complied with, all applicable Laws relating to the operation of the Business and the Transferred Assets. None of the Sellers has received any material notice or written claims from any Governmental Authority within the last three (3) years preceding the date hereof relating to any non-compliance of the Business or the Transferred Assets with any applicable Law and there are no such notices or claims pending or, to the Knowledge of Sellers, any such notice or claims threatened.
(b)
The Sellers are in possession of all permits, licenses, franchises, approvals, certificates, consents, waivers, concessions, exemptions, orders, registrations, notices or other authorizations of any Governmental Authority (the “Permits”) necessary for them to own, lease and operate the Transferred Assets and to carry on the Business as currently conducted, except for Permits that are not material. All material Permits held by the Sellers: (i) are valid and in full force and effect and no Seller is in default under, or in violation of, any such Permit, except for such defaults or violations which would not reasonably be expected, individually or in the aggregate, to materially restrict or interfere with Buyers’ ability to operate the Business as currently operated and no suspension or cancellation of any such Permit is pending (other than pursuant to its terms) or, to Sellers’ Knowledge, threatened and (ii) subject to entry of the Sale Order, each such Permit may be transferred or reissued to the
29
appropriate Buyers in accordance with this Agreement and without the approval of any Person (other than the Bankruptcy Court).
(c)
No representation or warranty is made under this Section 3.7 with respect to ERISA, Taxes or environmental matters, which are covered exclusively by Section 3.9, Section 3.14 and Section 3.15, respectively.
Section 3.8
Litigation. As of the date hereof, except for the Bankruptcy Case, and any Order entered in the Bankruptcy Case, there is no material Action by or against any Seller in connection with the Business or the Transferred Assets pending, or to the Knowledge of the Sellers, threatened.
Section 3.9
Employee Plans.
(a)
Schedule 3.9 of the Disclosure Schedules sets forth all material Employee Plans. The Seller has made available to the Buyers a true and complete copy of the following documents: (i) each writing constituting an Employee Plan, (ii) the current summary description of each Employee Plan and any material modifications thereto and (iii) the most recent determination or opinion letter from the IRS, if any, with respect to any Employee Plan intended to be qualified under Section 401(a) of the Code.
(b)
With respect to the Employee Plans: (i) each of the Employee Plans has been operated and administered in all material respects in accordance with applicable Law and administrative or governmental rules and regulations, including ERISA and the Code, except where non-compliance has not resulted in pending or threatened claims or will not have a Material Adverse Effect, and (ii) there are no pending or threatened claims by, on behalf of or against any Employee Plan (other than routine claims for benefits).
(c)
Each Employee Plan intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination or opinion letter as to such qualification from the IRS and, to the Knowledge of the Sellers, no event has occurred, either by reason of any action or failure to act, which would cause the loss of any such qualification.
(d)
None of the Employee Plans is subject to Title IV of ERISA, is a multiemployer plan (within the meaning of Section 3(37) of ERISA) or provides post-employment welfare benefits except to the extent required by Section 4980B of the Code or similar state Law.
(e)
Neither Seller nor any ERISA Affiliate has or could become subject to any Liability under Title I or Title IV of ERISA that could become a Liability of Buyers or their respective Affiliates.
(f)
The consummation of the transactions contemplated by this Agreement, whether alone or together with any other event, will not (i) entitle any Transferred Employee to severance pay, unemployment compensation or any other payment or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any Transferred Employee.
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(g)
With respect to each Employee Plan established or maintained outside of the United States of America primarily for benefit of current or former employees of Sellers or any of their respective subsidiaries residing outside the United States of America (a “Foreign Benefit Plan”): (i) all employer and employee contributions to each Foreign Benefit Plan required by law or by the terms of such Foreign Benefit Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices; (ii) the fair market value of the assets of each funded Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit Plan funded through insurance or the book reserve established for any Foreign Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Foreign Benefit Plan and no transaction contemplated by this Agreement shall cause such assets or insurance obligations to be less than such benefit obligations; and (iii) each Foreign Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities.
(h)
All contributions and premiums required by Law or by the terms of any Employee Plan have been timely made to any funds or trusts established thereunder or in connection therewith in all material respects, except for quarterly contributions to the defined benefit pension plan in an amount not exceeding One Million Dollars ($1,000,000) in the aggregate.
Section 3.10
Labor and Employment Matters.
(a)
Except as set forth on Schedule 3.10 of the Disclosure Schedules, the Seller is not a party to any labor or collective bargaining contract that pertains to any Business Employees. There are no material pending or, to the Knowledge of the Sellers, threatened Actions concerning labor matters with respect to the Business. No employees of the Sellers are represented by any labor union, labor organization or works council with respect to their employment with the Sellers. Prior to the date hereof, the Sellers have not taken any action at any single site of employment in the ninety (90)-day period prior to the Closing Date that would constitute a “mass layoff” or “plant closing” within the meaning of the WARN Act, or any similar applicable state or local Law.
(b)
Since January 1, 2012, there are no material unfair labor practice charges, work stoppages, slowdowns, strikes, lockouts, grievances, picketings, or other similar activities relating to labor matters pending, or to the Knowledge of Sellers, threatened against any Seller.
(c)
No labor union, labor organization, or group of employees of any Seller has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or, to the Knowledge of Sellers, threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority. To the Knowledge of Sellers, there are no labor union organizing activities with respect to any employees of any Seller.
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(d)
Prior to the execution date of this Agreement, the Sellers have satisfied any material legal or contractual requirement to provide notice to, or to enter into any consultation procedure with, any labor union or other organization, which is representing any employee, in connection with the execution of this Agreement or the transactions contemplated by this Agreement.
(e)
To the Knowledge of Sellers, each Seller is in compliance in all material respects with all applicable laws respecting employment and employment practices, including all laws respecting terms and conditions of employment, wages, hours, equal employment opportunity, employment discrimination, worker classification (including the proper classification of workers as independent contractors and consultants and exempt or non-exempt for overtime pay), immigration, work authorization, occupational health and safety, workers’ compensation, the payment of social security and other employment taxes, disability rights or benefits, plant closures and layoffs, affirmative action, labor relations, employee leave issues and unemployment insurance.
(f)
Each employee of the Sellers has all work permits, immigration permits, visas or other authorizations, each as required by applicable Law for such employee given the duties and nature of such employee’s employment.
(g)
Each of the Sellers is not and has not been: (i) a “contractor” or “subcontractor” (as defined by Executive Order 11246), (ii) required to comply with Executive Order 11246 or (iii) required to maintain an affirmative action plan.
(h)
To the Knowledge of the Sellers, no key employee of any of the Sellers is in any respect in violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, non-competition agreement, restrictive covenant or other obligation: (i) to any of the Sellers or (ii) to a former employer of any such employee relating (A) to the right of any such employee to be employed by any such Seller or (B) to the knowledge or use of trade secrets or proprietary information.
(i)
The Sellers are not delinquent in payments to any employees or former employees for any services or amounts required to be reimbursed or otherwise paid.
(j)
The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in any breach or other violation of any collective bargaining agreement, employment agreement, consulting agreement or any other labor-related agreement to which the Sellers are a party.
(k)
The Mexico Sellers are in material compliance with all of their obligations, including any and all payments, under any and all social security and labor Law (including their contribution obligations to the Mexico Social Security Institute (“IMSS”) and/or contributions to the National Workers’ Housing Fund Institute (“INFONAVIT”) and the National Pension Fund System (“SAR”)). To the Knowledge of the Sellers, all the employees of the Mexico Sellers have contractual employment relationships with one or more of the Mexico Sellers, and none of the Mexico Sellers’ employees has been hired as service providers
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(prestadores de servicios) or through agency or commission agreements (contratos de agencia o comision mercantil).
(l)
Schedule 3.10(l) of the Disclosure Schedules contains a true and complete list and description of the following information for each employee of the Mexico Sellers engaged in the Business on the date hereof, categorized by function: (i) an identification number; (ii) current annual terms of compensation (identifying incentive or bonus compensation separately); (iii) employment status; (iv) years of service; and (v) identity of employer.
Section 3.11
Insurance. Schedule 3.11 of the Disclosure Schedules sets forth a true and complete list of all material insurance policies in force with respect to the Business and the Transferred Assets.
Section 3.12
Real Property.
(a)
Schedule 3.12(a) of the Disclosure Schedules lists the street address of each parcel of Owned Real Property. The applicable Seller has good, valid and marketable fee simple title to the Owned Real Property, free and clear of all Encumbrances, other than Permitted Encumbrances.
(b)
Schedule 3.12(b) of the Disclosure Schedules lists (i) the street address of each parcel of Leased Real Property, (ii) if applicable, the unit designation of the space leased under the applicable Lease, (iii) the identity of the lessor of each such parcel of Leased Real Property, (iv) if applicable, the identity of each sublessee or occupant other than Sellers at each such parcel of Leased Real Property, (v) the commencement date and, to the extent readily available, expiration date under the Lease for each such parcel of Leased Real Property, (vi) the base rent under the Lease for each such parcel of Leased Real Property and (vii) the security deposit, if any, deposited pursuant to the terms of the Lease for each such parcel of Leased Real Property. The Seller party thereto has a valid leasehold estate in all Leased Real Property, free and clear of all Encumbrances, other than Permitted Encumbrances.
(c)
Subject to the approval of the Bankruptcy Court pursuant to the Sale Order and the assumption and assignment of the Leases pursuant thereto, each of the Leases relating to Leased Real Property is a valid and subsisting leasehold interest of the applicable Seller, free of subtenancies and other occupancy rights and Encumbrances (other than Permitted Encumbrances), except as set forth in Schedule 3.12(c) of the Disclosure Schedules, and, except as limited by the Bankruptcy Code, is a binding obligation of the applicable Seller, enforceable against such Seller in accordance with its terms, and is in full force and effect. To the Knowledge of Sellers, following the assumption and upon the assignment of such Leases by Sellers to Buyers in accordance with the provisions of Section 365 of the Bankruptcy Code and the requisite Order of the Bankruptcy Court, there will be no monetary defaults thereunder and no circumstances or events which, with notice or the passage of time or both, would constitute defaults under such leases except, in either instance, for defaults which, individually or in the aggregate, do not or would not reasonably be expected to have a material impact on the use of such property or are unenforceable due to operation of Section 365(b)(2) of the
33
Bankruptcy Code or have been or shall be cured pursuant to Section 365 (b)(1) of the Bankruptcy Code and the provisions of this Agreement.
(d)
To the Knowledge of Sellers, there are no defects in the plants, stores, buildings, improvements and structures, fixtures or equipment located on or at the Real Property which would substantially impair the conduct of the Business by Buyers immediately following the Closing relative to the conduct of the Business on the date hereof.
(e)
The Sellers have not granted to any Person (other than pursuant to this Agreement) any right to occupy or possess or otherwise encumber any portion of the Real Property other than as set forth in Schedule 3.12(e) of the Disclosure Schedules. Sellers’ interests with respect to the Leases have not been assigned or pledged and are not subject to any Encumbrances, other than as collateral for the Sellers secured indebtedness under the First Lien Credit Agreement, the ABL Credit Facility, the DIP Credit Agreement, the DIP ABL Credit Agreement and Permitted Encumbrances. No Seller has vacated or abandoned any portion of the Real Property or given notice to any Person of their intent to do the same.
(f)
No Seller is a party to or obligated under any option, right of first refusal or other contractual right to sell, dispose of or lease any of the Real Property or any portion thereof or interest therein to any Person other than the Buyers.
(g)
To the Knowledge of the Sellers, there is no Contract to which Sellers are a party, other than the Transferred Contracts, affecting any of the Real Property for which the Buyers will be responsible or liable after Closing, except those which (i) are terminable on not more than sixty (60) days’ notice without premium or penalty or (ii) require payment of less than $100,000 per month per location but will expire or be terminated within one (1) year of the Closing.
(h)
To the Knowledge of the Sellers, the Sellers have not received any written notice in the past two (2) years of any pending, threatened or contemplated condemnation proceeding affecting any of the Real Property or any part thereof or of any sale or other disposition of any of the Real Property or any part thereof in lieu of condemnation.
(i)
To the Knowledge of the Sellers, the Sellers have not received any written notices in the past two (2) years from any Governmental Authority stating or alleging that any improvements located on the Real Property have not been constructed in compliance with applicable Law or are being operated in violation of applicable Law.
(j)
To the Knowledge of the Sellers, the Sellers have not received any written notices in the past two (2) years from any Governmental Authority requiring or advising as to the need for any material repair, alteration, restoration or improvement in connection with the Real Property.
(k)
To the Knowledge of Sellers, the Real Property is in all material respects in good condition and repair and adequate in all material respects for the continued conduct of the business to which it relates.
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(l)
With respect to the Leased Real Property, to the Knowledge of the Sellers:
(i)
the Leases are in full force and effect; none of the Sellers have received any written notice or oral notice that any material default, or condition which with the passage of time would constitute a default, exists under the Leases, except such notices as to which the alleged defaults have been cured or otherwise resolved;
(ii)
true, correct and complete copies of the Leases have been delivered to Buyers prior to the date hereof and such Leases have not been amended or modified since that date;
(iii)
none of the Leased Real Property has been pledged by any of the Sellers or is subject to any Encumbrance (other than pursuant to this Agreement; Permitted Encumbrances and Encumbrances in favor of Sellers’ lenders); and
(iv)
none of the Sellers have given any notice to any landlord under any of the Leases indicating that it will not be exercising any extension or renewal options under the Leases. All security deposits required under the Leases have been paid to and are being held by the applicable landlord under the Leases.
(m)
Since January 1, 2014, none of the Real Property has been affected in any way as a result of flood, fire, explosion or other casualty which would reasonably be expected to result in a Material Adverse Effect.
Section 3.13
Intellectual Property.
(a)
Schedule 3.13(a) of the Disclosure Schedules sets forth a true, correct and complete list of all U.S. and foreign (i) issued Patents and pending Patent applications, (ii) registered Trademarks and applications to register any Trademarks, (iii) registered Copyrights and applications for registration of Copyrights, and (iv) domain name registrations, in each case, which are owned by or registered to a Seller. Sellers are the sole and exclusive beneficial and record owners of all of the Intellectual Property set forth in Schedule 3.13(a) of the Disclosure Schedules, and all such Intellectual Property are subsisting, enforceable and, to the Knowledge of Sellers, valid (and there has been no Action asserted or, to the Knowledge of Sellers, threatened challenging the scope, validity or enforceability of any such Intellectual Property).
(b)
The Sellers own, or have a valid right to use, free and clear of all Encumbrances (other than Permitted Encumbrances), all material Intellectual Property used or held for use in the Business.
(c)
The conduct of the Business (including the products and services of the Sellers) does not Infringe (and, in the past three (3) years, has not Infringed), in any material respect, any Person’s Intellectual Property rights, and there has been no such Action asserted or, to the Knowledge of Sellers, threatened against any Seller or, to the Knowledge of Sellers, any other Person.
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(d)
To the Knowledge of Sellers, no Person is Infringing, in any material respect, any Intellectual Property owned, used, or held for use by Sellers in the conduct of the Business, and no such Actions have been asserted or threatened against any Person by any Seller or, to the Knowledge of Sellers, any other Person.
(e)
Each Seller takes reasonable measures to protect the confidentiality of material Trade Secrets.
(f)
Each Seller has at all times complied, in all materials respects, with all applicable Laws, as well as its own rules, policies, and procedures, relating to privacy, data protection, and the collection and use of personal information collected, used, or held for use by the Sellers. No Actions have been asserted or, to the Knowledge of Sellers, threatened against a Seller alleging a violation of any Person’s privacy or personal information or data rights. Each Seller takes reasonable measures to ensure that such information is protected against unauthorized access, use, modification, or other misuse.
(g)
The consummation of the transactions contemplated by this Agreement will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, the Buyer’s right to own, use, or hold for use any material Intellectual Property as owned, used, or held for use by Sellers in the conduct of the Business.
(h)
In the past three (3) years, (i) the Sellers have not experienced any material defects in the Software used in the Business, (ii) to the Knowledge of Sellers, there have been no material security breaches in Sellers’ information technology systems, and (iii) there have been no disruptions in any of the Sellers’ information technology systems that materially adversely affected the Business. With respect to the Software used or held for use in the Business, to the Knowledge of the Sellers, no such Software (A) contains any device or feature designed to disrupt, disable or otherwise impair the functioning of any Software or information technology systems, or (B) is subject to the terms of any “open source” or other similar license that provides for any source code of any Software included in the Transferred Assets to be disclosed, licensed, publicly distributed or dedicated to the public.
Section 3.14
Taxes. Except as set forth in Schedule 3.14 of the Disclosure Schedules:
(a)
There are no Taxes of the Sellers for which the Buyers will become liable as a result of the transactions contemplated by this Agreement, except as agreed to by the Parties explicitly in this Agreement.
(b)
All income and other material Returns relating to the Transferred Assets and the Business that were required to be filed have been duly and timely filed, and all such Returns were true, correct and complete in all material respects when filed. Subject to any obligation of the Sellers under the Bankruptcy Code, all Taxes relating to the Business or the Transferred Assets (i) that were due and payable have been duly and timely paid and (ii) that accrued and are not yet due and payable, have had adequate provision in accordance with GAAP made for their payment.
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(c)
All material Taxes relating to the Business or the Transferred Assets required to be withheld and paid, including in connection with any amounts owing to any employee, independent contractor, creditor, stockholder or third party, have been duly and timely withheld and remitted to the appropriate Governmental Authority.
(d)
There is no action, suit, claim, assessment, or audit, pending, proposed in writing, or, to the Sellers’ Knowledge, threatened with respect to Taxes relating to the Business or the Transferred Assets. No Governmental Authority has made a claim in writing that the Business and/or the Transferred Assets may be subject to Tax, or that a Return relating to the Business and/or the Transferred Assets may be required to be filed, in a jurisdiction where no such Returns have been filed.
(e)
There are no Encumbrances for Taxes upon the Transferred Assets other than Permitted Encumbrances described in clause (a) of the definition thereof.
(f)
No Tax election has been made with respect to any of the Business or the Transferred Assets that has, or may have, continuing effect on the Business or any Transferred Asset after the Closing Date.
(g)
No property relating to the Business or the Transferred Assets is “tax-exempt use property” within the meaning of Section 168(h) of the Code or property that the Buyers will be required to treat as being owned by another Person pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect immediately prior to the enactment of the Code.
(h)
No waiver, extension, or comparable consent regarding the application of the statute of limitations with respect to any Taxes or Returns relating to the Business or the Transferred Assets is outstanding, nor is there pending any request for such a waiver, extension, or comparable consent.
(i)
None of the Mexico Sellers is, or would be at the Closing Date, a transferor of a “United States real property interest” (within the meaning of Section 897(c) of the Code).
(j)
With respect to any entity that is classified as a partnership for U.S. federal income tax purposes an interest in which constitutes a Transferred Asset, (i) such entity has complied in all material respects with all provisions of Tax Law applicable to it, (ii) none of the Sellers, any representative or Affiliate of any Seller that acts as “tax matters partner” within the meaning of Section 6231(a)(7) of the Code with respect to such entity, or to the knowledge of a Seller, any interest holder in such entity, has received any notice of any action, suit, claim, assessment, or audit, pending, proposed in writing, or, to the knowledge of a Seller, otherwise threatened, with respect to Taxes relating to such entity that has not been settled in full or which may have a continuing effect after the Closing Date, (iii) no Governmental Authority has made a claim in writing that such entity may be subject to Tax, or that a Return relating to such entity may be required to be filed, in a jurisdiction where no such Returns have been filed, (iv) no interest in any such entity held by any Seller has associated with it a negative capital account or any deficit restoration obligation, and (v) such entity has in effect,
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or the transferee of any such interest will be entitled to make, a Section 754 of the Code election with respect thereto.
(k)
The representations and warranties contained in this Section 3.14 are the only representations and warranties being made with respect to Taxes.
Section 3.15
Environmental Matters.
(a)
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Sellers and the Business are, and have been, in compliance with all applicable Environmental Laws.
(b)
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Sellers and the Business are, and have been, in compliance with all Environmental Permits required in connection with the conduct or operation of the Business and the ownership or use of the Transferred Assets. All such Environmental Permits are in full force and effect and there is no claim or action currently pending or, to the Knowledge of the Sellers, threatened, that is or would reasonably be expected to result in the cancellation, revocation or other adverse or limiting modification of any such Environmental Permit.
(c)
There is no Environmental Claim pending or, to the Knowledge of Sellers, threatened against or affecting any Seller or the Business that is or would reasonably be expected to have a Material Adverse Effect.
(d)
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, there are no actions, activities, circumstances, facts, conditions, events or incidents, including the presence of any Hazardous Material, which would be reasonably likely to form the basis of any Environmental Claim against or affecting any Seller or the Business that is or would reasonably be expected to be material to the Business.
(e)
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, there has been no material Release by any Seller, or to Sellers’ Knowledge, by any third party, of any Hazardous Materials in, on, at, under or from, or affecting any Owned Real Property or Leased Real Property.
(f)
No Seller is subject to or a party to any Order under Environmental Law or with respect to the Release of, or exposure to, Hazardous Materials, excluding such Orders that have been fully settled and resolved without future obligation to the Sellers or the Business.
(g)
Within fourteen (14) days of the date hereof, the Sellers shall have made available correct and complete copies of all material environmentally related audits, studies, reports, analyses and results of investigations that have been performed with respect to the Owned Real Property or Leased Real Property within the last five (5) years and that are in their possession or control.
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Section 3.16
Material Contracts.
(a)
Schedule 3.16 of the Disclosure Schedules lists a true, correct and complete list of each of the following Contracts (collectively with the Leases that are Transferred Contracts, the “Material Contracts”):
(i)
any Contract that would be required to be filed by Seller Parent as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed by Seller Parent on a Current Report on Form 8-K;
(ii)
Contracts with any Affiliate or current or former officer, director, or employee of any Seller (other than employment related Contracts);
(iii)
Contracts relating to the acquisition by any Seller of any operating business, real property, capital expenditures (including capital expenditures relating to information technology systems) or securities of any other Person (other than any Seller) (including investment in joint ventures and minority equity investments but excluding accounts receivable or other forms of trade credit) for aggregate consideration in excess of $250,000 pursuant to which there are remaining liabilities, including contingent liabilities;
(iv)
all Contracts relating to indebtedness for borrowed money;
(v)
collective bargaining agreements or other labor related agreements or arrangements;
(vi)
Contracts regarding a guaranty, undertaking to be liable for the debts of any Person other than a Seller or provision of an indemnity in respect of liabilities, obligations or commitments of any Person other than a Seller, in each case in excess of $500,000;
(vii)
any Contract (or group of related Contracts) the performance of which, in the twelve (12) months preceding the date hereof has resulted in, or in the twelve (12) months following the Agreement would reasonably be expected to result in, consideration or payment in excess of $2,000,000 per annum to or from any Seller;
(viii)
any Contract pursuant to which a Seller (A) is granted or obtains or agrees to grant or obtain any right to use or otherwise exploit any material Intellectual Property, (B) is restricted in its right to use or register any material Intellectual Property, or (C) permits or agrees to permit any other Person to use, enforce or register any material Intellectual Property, including any license agreements, coexistence agreements and covenants not to sue;
(ix)
any material Contract or consent decree with or from any Governmental Authority;
(x)
Contracts which are capital leases as determined pursuant to GAAP and involve annual payments by any Seller in excess of $100,000;
39
(xi)
any Contract with a non-solicitation or special pricing arrangement;
(xii)
any Contract with the customers and suppliers required to be listed on Schedule 3.18(a) or 3.18(b) of the Disclosure Schedules;
(xiii)
any Contract providing for the sale, transfer or other disposition of any material asset or other property owned, leased or held for use by any Seller or its Affiliates, other than Inventory, that but for such Contract, would constitute a Transferred Asset pursuant to this Agreement;
(xiv)
Contracts for the employment of any individual on a full-time, part-time or consulting or other basis providing annual compensation (whether in base salary, commission, or otherwise), severance or bonus arrangements providing for annual payments in excess of $150,000;
(xv)
any Contract with a sole source supplier, pursuant to which such supplier provides to a Seller equipment, materials or services that are necessary for the sale, performance, manufacturing or support of the Business;
(xvi)
any material agreement relating to any strategic alliance, joint development, joint marketing, partnership, joint venture or similar arrangement; and
(xvii)
all Contracts that limit or purport to limit in any respect the ability of the Business to compete in any line of business or with any Person or in any geographic area or during any period of time.
(b)
Sellers have made available to Buyers a true, correct and complete copy of each Contract listed on Schedule 3.16 of the Disclosure Schedule, as amended to date, and a written summary setting forth the terms and conditions of each oral Material Contract. Each Material Contract is valid and binding on the Sellers and, to the Knowledge of the Sellers, the counterparties thereto, and is in full force and effect. To the Knowledge of Sellers, no party has repudiated any provision of a Material Contract or given written notice that a Material Contract has terminated or will be terminating and, excluding the effect of the filing and administration of the Bankruptcy Case or the insolvency or financial condition of the Sellers, no Seller is in breach of, or default under, in any material respect, a Material Contract to which it is a party. To the Knowledge of the Sellers, the assignment of each Material Contract to Buyers will not result in any penalty, premium or variation of the rights, remedies, benefits or obligations of any party thereunder.
Section 3.17
Accounts Receivable; Inventory.
(a)
The accounts receivable shown in the Seller Financial Statements and that constitute Transferred Assets arose in the Ordinary Course of Business. Allowances for doubtful accounts have been prepared in accordance with GAAP and in accordance with the past practices of the Sellers. The accounts receivable of the Business constituting Transferred Assets arising after December 31, 2014, and prior to the Closing Date arose or will arise in the Ordinary Course of Business. The accounts receivable of the Business constituting Transferred Assets are not
40
subject to any material claim of offset, recoupment, set off or counter-claim and, to the Knowledge of Sellers, there are no specific facts or circumstances (whether asserted or unasserted) that could give rise to any such claim in any such case, except to the extent otherwise reflected in the allowances for doubtful accounts as provided for in the Seller Financial Statements or, with respect to accounts receivable arising after December 31, 2014, and prior to the Closing Date, as determined in the Ordinary Course of Business. The Business does not have any accounts receivable from any director, officer or employee or Affiliate of any Seller.
(b)
The Inventory is of a quality and quantity usable and merchantable and, with respect to finished goods, of a quality saleable at customary gross margins, in the Ordinary Course of Business, except for obsolete items or as otherwise reflected in the reserves in the Seller Financial Statements. The Inventory is adequate for the conduct of the Business.
Section 3.18
(a)
Listed in Schedule 3.18(a) of the Disclosure Schedules are the twenty (20) largest customers of the Business, taken as a whole, by revenue for the year ended December 31, 2014, and set forth next to each such customer is the approximate percentage of net revenue of the Business represented by such customer for such period. As of the date hereof, no Seller has received any written notice, or, to the Knowledge of Sellers, has any reason to believe, that any of the customers listed on Schedule 3.18(a) of the Disclosure Schedules has materially decreased since December 31, 2014, or will materially decrease, its purchase of the products, equipment, goods and services of the Business. From December 31, 2014, to the date hereof, to the Knowledge of Sellers, there has been no termination, cancellation, or material limitation of, or any material modification or change in, the business relationship between any Seller and any customer listed on Schedule 3.18(a) of the Disclosure Schedules.
(b)
Listed in Schedule 3.18(b) of the Disclosure Schedules are the twenty (20) largest suppliers of services, raw materials, supplies, merchandise and other goods for the Business, taken as a whole, by cost for the year ended December 31, 2014. No Seller has received any written notice, or, to the Knowledge of Sellers, has any reason to believe, that any such supplier will not provide such services or sell such raw materials, supplies, merchandise and other goods to the Business at any time after the Closing on terms and conditions materially similar to those used in its current sales to the Sellers, subject only to general and customary price increases or decreases and the effects of the filing and administration of the Bankruptcy Cases.
Section 3.19
Certain Payments. Since January 1, 2012, none of the Sellers (nor, to the Knowledge of Sellers, any of their respective directors, executives, representatives, agents or employees) (a) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) has used or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees; (c) has violated or is violating any provision of the Foreign Corrupt Practices Act of 1977; (d) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties; or (e) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature.
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Section 3.20
Brokers. Except for Lazard Middle Market LLC, the fees, commissions and expenses of which will be paid by the Sellers, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Sellers.
Section 3.21
Exclusivity of Representations and Warranties. Neither the Sellers nor any of their Affiliates or Representatives is making any representation or warranty of any kind or nature whatsoever, oral or written, express or implied (including, but not limited to, any relating to financial condition or results of operations of the Business or maintenance, repair, condition, design, performance, value, merchantability or fitness for any particular purpose of the Transferred Assets), except as expressly set forth in this Article III and the Disclosure Schedules, and the Sellers hereby disclaim any such other representations or warranties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyers hereby represent and warrant to the Sellers as follows; provided, that Mexico Buyers shall only make such representations and warranties, at the earliest, as of the date the applicable Mexico Buyer executes and delivers a Joinder:
Section 4.1
Organization. Each Buyer is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all necessary corporate (or equivalent) power and authority to perform its obligations hereunder and under any Ancillary Agreement.
Section 4.2
Authority. Each Buyer has the corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by the Buyers of this Agreement and each of the Ancillary Agreements to which they will be a party and the consummation by the Buyers of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action and this Agreement has been, and upon their execution each of the Ancillary Agreements to which the Buyers will be a party will have been, duly executed and delivered by the Buyers and assuming due execution and delivery by each of the other parties hereto and thereto, this Agreement constitutes, and upon their execution each of the Ancillary Agreements to which the Buyers will be a party will constitute, the legal, valid and binding obligations of the Buyers, enforceable against the Buyers in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).
Section 4.3
No Conflict; Required Filings and Consents.
(a)
The execution, delivery and performance by the Buyers of this Agreement and each of the Ancillary Agreements to which a Buyer will be a party, and the consummation
42
of the transactions contemplated hereby and thereby, or compliance by each Buyer with any of the provisions hereof, do not and will not:
(i)
conflict with or violate the certificate of incorporation or bylaws of a Buyer;
(ii)
conflict with or violate any Law applicable to the Buyers or by which any property or asset of the Buyers are bound or affected;
(iii)
conflict with or violate any Order of any Governmental Authority; or
(iv)
conflict with, result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, or give rise to a right of termination, modification, notice or cancellation or require any consent of any Person pursuant to, any material contract or agreement to which a Buyer is a party;
except, in the case of clause (ii), (iii) or (iv), for any such conflicts, violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect or that arise as a result of any facts or circumstances relating to the Sellers or any of their Affiliates.
(b)
The Buyers are not required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by the Buyers of this Agreement and each of the Ancillary Agreements to which it will be a party or the consummation of the transactions contemplated hereby or thereby, except (i) for any filings required to be made under the HSR Act or other applicable Antitrust Law or (ii) where failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.
Section 4.4
Financing. The Buyers shall have at the Closing, sufficient funds to permit the Buyers to consummate the transactions contemplated by this Agreement and the Ancillary Agreements, and to pay all related fees and expenses. Notwithstanding anything to the contrary contained herein, the Buyers acknowledge and agree that their obligations to consummate the transactions contemplated hereby are not contingent upon their ability to obtain any third-party financing.
Section 4.5
Brokers. The fees, commissions and expenses of any broker, finder or investment banker engaged by or on behalf of the Buyers in connection with the transactions contemplated hereby will be paid by the Buyers.
Section 4.6
Buyer’s Investigation and Reliance. The Buyers are sophisticated purchasers and have made their own independent investigation, review and analysis regarding the Business, the Transferred Assets, the Assumed Liabilities and the transactions contemplated hereby, which investigation, review and analysis was conducted by the Buyers together with expert advisors, including legal counsel, that it has engaged for such purpose. The
43
Buyers and its Representatives have been provided with reasonable access to the Representatives, properties, offices, plants and other facilities, books and records of the Sellers relating to the Business and other information that they have requested in connection with their investigation of the Business, the Transferred Assets, the Assumed Liabilities and the transactions contemplated hereby. Neither the Sellers nor any of their Affiliates or Representatives has made any representation or warranty, express or implied, as to the accuracy or completeness of any information concerning the Business, the Transferred Assets or the Assumed Liabilities contained herein or made available in connection with the Buyers’ investigation of the foregoing, except as expressly set forth in this Agreement. The Buyers acknowledge that, should the Closing occur, the Buyers shall acquire the Business and the Transferred Assets without any surviving representations or warranties, on an “as is” and “where is” basis. The Buyers acknowledge and agree that the representations and warranties in Article III are the result of arms’ length negotiations between sophisticated parties.
Section 5.1
Conduct of Business Prior to the Closing.
(a)
Except (1) as otherwise contemplated by this Agreement, (2) as set forth on Schedule 5.1 of the Disclosure Schedules, (3) as required by the Bankruptcy Code or arising out of the Bankruptcy Case, (4) as otherwise required by Law or any Order, or (5) with the prior written consent of the US Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement until the Closing Date, the Sellers shall:
(i)
the Sellers shall use commercially reasonable efforts, taking into account the Bankruptcy Case, to conduct the Business in the Ordinary Course of Business and preserve the material business relationships with customers, suppliers, distributors and others with whom the Sellers deal in the Ordinary Course of Business;
(ii)
use commercially reasonable efforts to maintain the Transferred Assets in good working condition and repair (normal wear and tear excepted), pay expenses and payables of the Business and collect accounts receivable of the Business;
(iii)
use commercially reasonable efforts to (A) comply in all material respects with all Laws and Transferred Contracts, (B) maintain all material Permits relating to the Business and (C) pay all applicable Taxes that Sellers are required to pay (taking into account any relief pursuant to the Bankruptcy Case); and
(iv)
use commercially reasonable efforts to transfer, assign, record or perfect in its name good title to any Transferred Assets that are not presently held or recorded in its name.
(b)
From the date of this Agreement until the Closing Date or earlier termination of this Agreement, the Sellers shall not, in connection with the Business without the prior written consent of the US Buyer (which consent shall not be unreasonably withheld, conditioned or delayed):
44
(i)
sell, transfer, lease, sublease, encumber or otherwise dispose of any Transferred Assets or any interest therein, other than immaterial dispositions and Inventory sold or disposed of in the Ordinary Course of Business;
(ii)
acquire any corporation, partnership, limited liability company, other business organization or division thereof;
(iii)
merge or consolidate with or into any legal entity, dissolve, liquidate or otherwise terminate its existence;
(iv)
enter into any transaction relating to (i) the acquisition of fixed assets that will constitute Transferred Assets in excess of $100,000 or (ii) the incurrence of Liabilities that will constitute Assumed Liabilities in excess of $250,000 other than accounts payable relating to the acquisition of Inventory in the Ordinary Course of Business;
(v)
amend their certificate of incorporation, by-laws or comparable organizational documents;
(vi)
enter into or amend any Contract that would be a Material Contract or amend the DIP ABL Credit Agreement;
(vii)
take any action (other than any actions required by the Bankruptcy Court or applicable Law) in breach of this Agreement, the Sale Procedures, the Sale Order or the consummation of the transactions contemplated hereby;
(viii)
fail to exercise any rights of renewal with respect to any Leased Real Property that by its terms would otherwise expire, unless the Buyers have indicated that they wish the Sellers to reject such Lease and such Lease does not relate to a facility where the Buyers intend to conduct transition services pursuant to Section 5.20 (so long as during the post-Closing period the Buyers remit the amounts required by Section 5.20 relating to such Lease);
(ix)
grant, announce or effectuate any increase or modification in the salaries, bonuses or other benefits payable or to be provided to any Business Employees, other than (A) as required by Law, or (B) as required pursuant to any plans, programs or agreements existing on the date hereof;
(x)
materially modify or amend any Transferred Contract or modify, waive, release or assign any material rights or claims thereunder, in each case whether in connection with any extension, renewal or replacement of such Transferred Contract, or otherwise;
(xi)
engage in (A) any trade loading practices or any other promotional sales or discount activity with any customers or distributors with the intent of accelerating to pre-Closing periods sales to customers or distributors that would otherwise be expected (based on past practice) to occur in post-Closing periods, (B) any practice (including providing any discount, accommodation or other concession outside the Ordinary Course of Business) with the intent of accelerating to pre-Closing periods collections of accounts receivable that would otherwise be expected (based on past practice) to be made in post-Closing periods, (C) any
45
practice with the intent of postponing to post-Closing periods payments with respect to any Transferred Assets or Assumed Liabilities that would otherwise be expected (based on past practice) to be made in pre-Closing periods or (D) any other promotional sales, discount activity or deferred revenue activity outside the Ordinary Course of Business;
(xii)
(A) reject or terminate any Material Contract or seek Bankruptcy Court approval to do so, or (B) fail to use commercially reasonable efforts to oppose any action by a third party to terminate (including any action by a third party to obtain Bankruptcy Court approval to terminate) any Material Contract, except in each case, to the extent the Buyers have indicated that they wish the Sellers to reject such Contract and in the case of a Material Contract that is a Lease, only to the extent such Lease does not relate to a facility where the Buyers intend to conduct transition services pursuant to Section 5.20 (so long as during the post-Closing period the Buyers remit the amounts required by Section 5.20 relating to such Lease); provided that prior to the Closing Date, Sellers may reject or terminate any Material Contract that is readily replaceable (and so replaced) at no more than the same cost, without disruption to the operation of the Business and otherwise on terms and conditions consistent with such rejected or terminated Material Contract, following consultation with Buyers regarding such rejection or termination;
(xiii)
with respect to any Transferred Asset (A) agree to allow any form of relief from the automatic stay in the Bankruptcy Cases; or (B) fail to use reasonable best efforts to oppose any action by a third party to obtain relief from the automatic stay in the Bankruptcy Cases;
(xiv)
modify, amend or terminate any of the Leases unless (x) any such modification or amendment shall be to the benefit of Sellers or waive, release or assign any material rights or claims to the extent included in the Leases or (y) the Buyers have indicated that they wish the Sellers to reject such Lease, except in the Ordinary Course of Business and if such Lease does not relate to a facility where the Buyers intend to conduct transition services pursuant to Section 5.20 (so long as during the post-Closing period the Buyers remit the amounts required by Section 5.20 relating to such Lease);
(xv)
enter into, establish, adopt, amend, terminate or fund any Employee Plan or any arrangement that would be an Employee Plan if in effect on the date of this Agreement, in respect of any present or former officer or employee or other similar service provider of or to the Sellers or their Affiliates;
(xvi)
grant or acquire, or dispose of or permit to lapse, any rights to any material Intellectual Property, or disclose or agree to disclose to any Person, other than Representatives of the Buyers, any material Trade Secret;
(xvii)
hire, terminate (other than for cause) or transfer any Business Employee participating in the Employee Incentive Plan;
(xviii)
hire any Business Employee with annual compensation over $75,000;
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(xix)
compromise, settle or agree to settle, or consent to judgment in, any one or more Actions or institute any Action concerning any material Intellectual Property;
(xx)
make, revoke or change any election relating to Taxes, file any amended Return, request, enter into or obtain any Tax ruling with or from a Governmental Authority, or execute or file, or agree to execute or file, with any Governmental Authority any agreement or other document extending, or having the effect of extending, the period of assessment or collection of any Taxes, in each case, that could reasonably have any adverse Tax effect on the Buyers or any of their Affiliates, for any taxable period, or portion thereof, starting after the Closing Date;
(xxi)
make any change in any method of accounting or accounting practice or policy, except as required by applicable Law or GAAP; or
(xxii)
agree or commit to any of the foregoing.
(c)
From the date of this Agreement until the Closing Date or earlier termination of this Agreement, the Sellers shall not without the prior written consent of the US Buyer (which consent shall be granted in US Buyer’s sole discretion):
(i)
voluntarily pursue or seek, or fail to use commercially reasonable efforts to oppose any third party in pursuing or seeking, a conversion of the Bankruptcy Cases to cases under chapter 7 of the Bankruptcy Code, the appointment of a trustee under chapter 11 or chapter 7 of the Bankruptcy Code and/or the appointment of an examiner with expanded powers;
(ii)
enter into any Contract that provides for “exclusivity” or any similar requirement or under which Buyers would after the Closing be restricted in any respect, with respect to distribution, licensing, marketing, purchasing or development of products or services;
(iii)
subject any of the Transferred Assets to any Encumbrance (other than any Encumbrance under the DIP ABL Credit Agreement and DIP Credit Agreement and Permitted Encumbrances);
(iv)
authorize, or make any commitment with respect to, any single capital expenditure that is in excess of $250,000 or capital expenditures that are, in the aggregate, in excess of $750,000 for the Business taken as a whole; or
(v)
other than the DIP Credit Agreement or the ABL DIP Credit Agreement, incur any indebtedness for borrowed money, enter into any capital lease or guarantee any such indebtedness, in each case that would constitute an Assumed Liability.
Section 5.2
Covenants Regarding Information.
(a)
From the date hereof until the Closing Date, upon reasonable request, the Sellers shall afford the Buyers and its Representatives reasonable access to make investigation of the properties (including, at the Buyers’ sole cost and discretion, the performance of Phase I Environmental Site Assessments (“Phase I Assessments”),
47
environmental compliance audits, and, if recommended by a Phase I Assessment, Phase II Environmental Site Investigations), offices, plants and other facilities, books and records (including Tax records) of the Sellers, and shall furnish the Buyers with such financial, operating and other data and information, and access to all the officers, key employees, accountants and other Representatives of Sellers as the Buyers may reasonably request and to make extracts and copies of such books and records. In addition, Sellers shall cooperate to allow Buyers reasonable access to employees in order to determine their designation of Transferred Employees. Notwithstanding anything to the contrary in this Agreement, the Sellers shall not be required to disclose any information to the Buyers or their Representatives if such disclosure would adversely affect any attorney-client or other legal privilege or contravene any applicable Laws. Subject to the foregoing and upon reasonable notice, Sellers shall also afford Buyers reasonable access, during normal business hours, to the Business, to all operations of the Business and to all Transferred Assets and Assumed Liabilities. Upon the Buyers’ reasonable request, the Sellers agree to cooperate with Buyers to obtain an affidavit of title, in such form as may be reasonably required by the Buyers’ title insurance company, to allow such company to issue an owner’s title insurance policy in favor of the Buyers with respect to all Owned Real Property, subject only to Permitted Encumbrances.
(b)
From and after the date hereof, Sellers shall within one (1) Business Day (i) advise Buyers, and communicate to Buyers the terms (unless expressly prohibited by the terms thereof) of, any proposal or other communication regarding a proposal for the acquisition of the Business or any of the Transferred Assets that any Seller or any of their respective directors, officers, managers, employees, representatives or Affiliates has made, may receive or has become aware of and (ii) furnish Buyers with a true, complete and correct copy of any such written proposal or communication and any document relating thereto, unless expressly prohibited by the terms thereof.
(c)
The Sellers shall use commercially reasonable efforts to cause its employees to, on a timely basis, provide all reasonable cooperation requested by the Buyers and/or any potential lender that is reasonably necessary and customary to assist the Buyers in connection with such financing, including (i) requesting its certified independent auditors to provide auditors’ reports and customary comfort letters with respect to financial information relating to the Sellers in customary form and (ii) causing appropriate personnel of the Sellers to participate at reasonable times in a reasonable number of sessions with prospective lenders; provided, that the Sellers shall not be required to produce and deliver any financial statements or other financial information not currently completed in the Ordinary Course of Business. Any and all reasonable and documented out-of-pocket costs and expenses incurred at the request of the US Buyer in connection with any cooperation, investigation or other matter related to this Section 5.2 shall be borne by the Buyers.
Section 5.3
Notification of Certain Matters. Until the Closing, each party hereto shall promptly notify the other party in writing of any fact, change, condition, circumstance or occurrence or nonoccurrence of any event of which it is aware that will or is reasonably likely to result in any of the conditions set forth in Article VII of this Agreement becoming incapable of being satisfied.
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Section 5.4
Intercompany Arrangements. All intercompany and intracompany accounts or Contracts between the Business, on the one hand, and the Sellers and its Affiliates, on the other hand, shall be cancelled without any consideration or further liability to any party and without the need for any further documentation, immediately prior to the Closing.
Section 5.5
Employee Matters.
(a)
With respect to each Business Employee, not later than April 30, 2015, the Sellers shall provide the Buyers with a list setting forth, to the extent such information is permitted to be disclosed under applicable Law and reasonably available: (i) title or job/position, (ii) job designation (i.e., salaried or hourly), (iii) location of employment, (iv) employment status (active, on leave or on unpaid leave), (v) with respect to Mexico Sellers Personnel, date of hire (seniority), and (vi) annual base rate of compensation for all salaried employees and any bonus amount that he or she has received for the fiscal year ended December 31, 2014, and also, to the extent known, with respect to the Mexico Sellers Personnel, whether any bonus payment has been made during 2015.
(b)
Prior to the Closing, the Buyers shall provide (or cause one of their Subsidiaries to provide) to all Business Employees (including each Qualified Leave Recipient) other than Mexico Sellers Personnel not already subject to a written employment agreement with a Seller an offer of employment on an “at will” basis (the “Employment Offer”), in each case to commence immediately following the Closing, or in the case of a Qualified Leave Recipient, the date of his or her return to active employment; provided that such Qualified Leave Recipient returns to active status within thirty (30) days following the Closing Date. Each Business Employee or Qualified Leave Recipient who accepts the Employment Offer and who becomes an active employee of the Buyers or of one of its Subsidiaries shall be a “Transferred Employee.” The Sellers shall reasonably cooperate with the Buyers in effecting the Transferred Employees’ transfer of employment from the Sellers to the Buyers or a Subsidiary of the Buyers as contemplated hereby. Within ten (10) days prior to the anticipated Closing Date, Sellers shall provide Buyers with a list of any applicable individuals who are expected to be Qualified Leave Recipients as of the Closing Date and shall update that list from time to time through the Closing Date as necessary. Each offer of employment made pursuant to this Section 5.5 shall be contingent upon the Closing and the issuance of the Sale Order.
(c)
The Buyers shall assume and pay all unpaid wages and salaries, in respect of Transferred Employees, which are earned or accrued during the payroll period in which the Closing Date occurs. The Sellers shall retain all Liabilities relating to unpaid wages, salaries, commissions and other amounts, earned or accrued by or in respect of Business Employees that are not assumed by the Buyers as described in the preceding sentence.
(d)
To the extent permitted by Law, all unused vacation and paid time off of the Transferred Employees accrued as of the Closing Date shall, effective as of the Closing Date or, if later, the date on which such Transferred Employee becomes an employee of the Buyer, be transferred to and assumed by the Buyers and the Buyers shall honor such accrued vacation on the same basis as under the Sellers’ vacation policy as in effect immediately prior
49
to the Closing. To the extent the Sellers are not permitted by Law to transfer accrued vacation of Transferred Employees, such accrued vacation shall be paid out by the Buyers to the Transferred Employees at the time of Closing.
(e)
The Buyers shall assume all health plan coverage obligations under Section 4980B of the Code with respect to all “M&A qualified beneficiaries” as defined in Treasury Regulation section 54.4980B-9.
(f)
The Buyers shall cause the employee benefit plans of the Buyers or their Affiliates in which Transferred Employees participate (collectively, the “Buyer Plans”) to grant the Transferred Employees not already subject to a written employment agreement with a Seller credit for their service with the Sellers and their Affiliates prior to the Closing Date (i) under any Buyer Plans in which they are otherwise eligible to participate (except for benefit accrual service under any defined benefit pension plan or to the extent that such crediting would result in duplication of benefits), and (ii) for purposes of vacation accrual and severance.
(g)
As soon as practicable following the Closing Date, with respect to the Employee Plans that are tax-qualified defined contribution plans, the Buyers shall permit the Transferred Employees to roll over their account balances and outstanding loan balances, if any, thereunder into an “eligible retirement plan” within the meaning of Section 402(c)(8)(B) of the Code maintained by the Buyers or an Affiliate.
(h)
From and after the Closing Date, the Sellers shall retain all (i) employment obligations with regard to those employees and former employees of the Sellers (or who are otherwise related to the Business) who are not Transferred Employees, and (ii) any Liabilities related to any Transferred Employees to the extent not assumed by the Buyers in this Section 5.5 or under Section 2.3.
(i)
Without limitation of Section 9.9, nothing in this Section 5.5 shall (i) be treated as an amendment of, or undertaking to amend, any Employee Plan, (ii) obligate the Buyer, the Sellers, or any of their respective Affiliates to retain the employment of any particular employee, or (iii) confer any rights or benefits on any Person, including any Transferred Employee, other than the Parties to this Agreement.
(j)
Mexico Employee Matters:
(i)
Notwithstanding the foregoing, as of the Closing Date, the applicable Mexico Buyer will become the employer of the employees of Mexico Sellers (y) as of the Closing Date (all such current workers are separately identified in Schedule 5.5(j) of the Disclosure Schedules, which may be updated by Mexico Buyer no later than five (5) days prior to the Closing Date in order to reflect the exclusion of any Non-Transferred Mexico Seller Employees, and are referred hereafter as “Mexico Sellers Personnel”) and (z) whose transfer is confirmed by the Mexico Buyers (any Business Employee that will not become an employee of the Mexico Buyer, a “Non-Transferred Mexico Sellers Employee”) and will do so by means of any of the following alternatives, as determined by Mexico Buyer in its sole discretion:
(A)
an “employer substitution” as provided for under the Mexico Federal Labor Law (the “MFLL”) and the Mexico Social Security Law (the “MSSL”).
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Accordingly, subject to the provisions of the MFLL, (1) no severance will be payable to the Mexico Sellers Personnel who are transferred by Mexico Seller pursuant to such employer substitution, (2) Mexico Buyer will maintain the labor conditions and recognize the seniority of all Mexico Sellers Personnel and agrees to pay them after the date of this Agreement upon the same basis as the salaries, fringe benefits and any other compensation, which they are receiving as of the date of the Closing Date, and (3) Mexico Sellers shall, at the time required by applicable Law, pay the mandatory Mexico profit sharing accrued to the Closing Date in accordance to the MFLL, (4) all severance costs and payments related to the termination of the Non-Transferred Mexico Sellers Employees shall be solely borne and made by Mexico Buyers on the Closing Date, and (5) Mexico Sellers shall deliver to Mexico Buyer evidence that the employment terminations relating to the Non-Transferred Mexico Seller Employees were completed in accordance with applicable Law, in form and substance reasonably satisfactory to Mexico Buyers; or
(B)
the termination of all employment relationships with the Mexico Sellers Personnel and the Non-Transferred Mexico Sellers Employees immediately prior to Closing, in which case, subject to the provisions of the MFLL and the MSSL, (1) all severance costs and payments shall be solely borne and made by Mexico Buyers on the Closing Date, (2) Mexico Sellers shall deliver to Mexico Buyer evidence that the employment terminations were completed in accordance with applicable Law, in form and substance reasonably satisfactory to Mexico Buyers, and (3) Mexico Buyers (or any of its designees) shall offer employment to the Mexico Sellers Personnel.
(ii)
Mexico Seller and Mexico Buyer agree to provide each other information and assistance, and execute such documents as are reasonably necessary and required by applicable Mexico Law related to the transfer of the Mexico Sellers Personnel and/or the Non-Transferred Mexico Sellers Employees, including agreements with the union (if applicable) and notices to each of the Mexico Sellers Personnel and/or the Non-Transferred Mexico Sellers Employees, as well as notices to IMSS, INFONAVIT, SAR and any other governmental agency, within the time periods established by applicable Mexico Law.
Section 5.6
Consents and Filings; Further Assurances.
(a)
Except as set forth in Schedule 5.6 of the Disclosure Schedules, each of the Parties shall use all reasonable best efforts to take, or cause to be taken, all appropriate action to do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements and to confirm Buyers’ ownership of the Transferred Assets as promptly as practicable, including to use commercially reasonable efforts to obtain all necessary waivers, consents and approvals and effecting all necessary registrations and filings, including all necessary waivers, consents and approvals from customers and other parties. Without limiting the generality of the previous sentence, the Parties shall use commercially reasonable efforts to (i) obtain from Governmental Authorities all consents, approvals, authorizations, qualifications and orders as are necessary for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements; (ii) promptly (and in no event later than three (3) Business Days after the determination that US Buyer is the Successful Bidder) make all necessary filings, and thereafter make any other required
51
submissions, with respect to this Agreement required under the HSR Act or any other applicable Law, including any other Antitrust Law; (iii) comply at the earliest practicable date with any request under the HSR Act, or other Antitrust Law, for additional information, documents or other materials received by each of them or any of their respective Subsidiaries from the Federal Trade Commission, the Antitrust Division of the United States Department of Justice or any other Governmental Authority in respect of such filings (collectively, an “Antitrust Authority”); (iv) cooperate with each other in connection with any such filing or request (including, to the extent permitted by applicable Law, providing copies of all such documents to the non-filing parties prior to filing and considering all reasonable additions, deletions or changes suggested in connection therewith) and in connection with resolving any investigation or other inquiry of any of the Antitrust Authorities under the HSR Act or other Antitrust Law with respect to any such filing; (iv) not extend any waiting period under the HSR Act or enter into any agreement with an Antitrust Authority not to consummate the transactions contemplated hereby; and (v) defend and resolve any investigation or other inquiry of any Governmental Authority under all applicable Laws, including by defending against and contesting administratively and in court any litigation or adverse determination initiated or made by a Governmental Authority under applicable law. The Buyers shall pay all filing fees and other charges for the filing under the HSR Act or other Antitrust Law by the Parties.
(b)
Each of the Parties shall promptly notify the other Parties of any communication it or any of its Affiliates receives from any Governmental Authority relating to the matters that are the subject of this Agreement and permit the other Parties to review in advance any proposed communication by such Party to any Governmental Authority. Seller shall not agree to participate in any meeting with any Governmental Authority in respect of any filings, investigation or other inquiry unless it consults with the other Parties in advance and, to the extent permitted by such Governmental Authority, gives the other Parties the opportunity to attend and participate at such meeting. The Parties will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other Parties may reasonably request in connection with the foregoing and in seeking early termination of any applicable waiting periods, including under the HSR Act. Subject to applicable Law, the Parties will provide each other with copies of all correspondence, filings or communications between them or any of their Representatives, on the one hand, and any Governmental Authority or members of its staff, on the other hand, with respect to this Agreement and the transactions contemplated hereby.
(c)
From time to time, whether at or following the Closing, the Sellers and the Buyers shall execute, acknowledge and deliver all such further conveyances, notices, assumptions and releases and such other instruments, and shall take such further actions, as may be necessary or appropriate to vest in Buyers all the right, title, and interest in, to or under the Transferred Assets, to provide Buyers and the Sellers all rights and obligations to which they are entitled and subject pursuant to this Agreement and the Ancillary Agreements, and to otherwise make effective as promptly as practicable the transactions contemplated by this Agreement and the Ancillary Agreements. Each of the Parties will use its commercially reasonable efforts to cause all of the obligations imposed upon it in this Agreement to be duly complied with and to cause all conditions precedent to such obligations to be satisfied.
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Section 5.7
Refunds and Remittances.
(a)
After the Closing: (i) if the Sellers or any of their Affiliates receive any refund or other amount that is a Transferred Asset or is otherwise properly due and owing to the Buyers in accordance with the terms of this Agreement, the Sellers promptly shall remit, or shall cause to be remitted, such amount to the Buyers and (ii) if the Buyers or any of their Affiliates receive any refund or other amount that is an Excluded Asset or is otherwise properly due and owing to the Sellers or any of their Affiliates in accordance with the terms of this Agreement, the Buyers promptly shall remit, or shall cause to be remitted, such amount to the Sellers.
(b)
In the event that, after the Closing Date, (i) either Party reasonably believes Sellers or any their Affiliates have retained ownership of an asset intended to be conveyed to Buyers as a Transferred Asset as contemplated by this Agreement, for no additional consideration to the Sellers or any of their Affiliates, the Sellers shall and shall cause their controlled Affiliates to convey, assign or transfer promptly such Transferred Asset to Buyers, and the Parties hereto shall execute all other documents and instruments, and take all other lawful actions reasonably requested, in order to assign and transfer such Transferred Asset to Buyers or their designees or (ii) either Party reasonably believes an Excluded Asset has been conveyed to Buyers, Buyers shall convey, assign or transfer promptly such Excluded Asset to the Sellers, and the Parties shall execute all other documents and instruments, and take all other lawful actions reasonably requested, in order to assign and transfer such Excluded Asset to Sellers or their designee.
Section 5.8
Public Announcements. On and after the date hereof and through the Closing Date, the Parties shall consult with each other before making any press release, securities filing or otherwise making any public statements with respect to this Agreement or the transactions contemplated hereby, and neither the Buyers nor the Sellers shall make any press release, securities filing or any public statement prior to obtaining the Seller Parent’s (in the case of the Buyer) or the Buyer’s (in the case of the Sellers) written approval, which approval shall not be unreasonably withheld, except that no such approval shall be necessary to the extent disclosure may be required by applicable Law or any listing agreement of any party hereto.
Section 5.9
Bankruptcy Court Filings and Approval.
(a)
Not later than two (2) Business Days after the date this Agreement is executed, Seller Parent and each of the other Sellers shall file voluntary petitions for relief commencing a case under chapter 11 of the Bankruptcy Code in the Bankruptcy Court, and file and serve one or more motions, each in form and substance reasonably acceptable to the Buyer, seeking approval of the Sale Procedures Order and the Sale Order (together, the “Sale Motion”).
(b)
Seller Parent and each of the other Sellers shall use reasonable best efforts to cause the Bankruptcy Court to enter (i) the Sale Procedures Order on or prior to the date that is thirty (30) days after the Petition Date and (ii) the Sale Order on or prior to the date that is ninety-three (93) days after the date hereof, which Sale Order shall approve a sale to the
53
Successful Bidder at any Auction conducted under the Sale Procedures Order or to Buyers if there are no other qualified bidders.
(c)
The Buyers agree that they will promptly take such actions as are reasonably requested by Sellers to assist in obtaining entry of the Sale Procedures Order and the Sale Order and, consistent with Section 5.11 below, a finding by the Bankruptcy Court of adequate assurance of future performance by Buyer.
(d)
The Sellers and the Buyers acknowledge that this Agreement and the sale of the Transferred Assets and the assumption of the Assumed Liabilities are subject to Bankruptcy Court approval. The Sellers and the Buyers acknowledge that to obtain such approval, (i) the Sellers must demonstrate that they have taken reasonable steps to obtain the highest, best, or otherwise financially superior offer possible for the Transferred Assets and (ii) the Buyers must provide adequate assurance of future performance with respect to the Transferred Contracts.
(e)
From the date hereof until the entry of the Sale Procedures Order, the Buyers agree and acknowledge that the Sellers and their Affiliates shall be permitted, and shall be permitted to cause their Representatives, to initiate contact with, solicit or encourage submission of any inquiries, proposals or offers by, respond to any unsolicited inquiries, proposals or offers submitted by, and enter into any discussions or negotiations regarding any of the foregoing with, any Person (in addition to the Buyers and its Affiliates, agents and Representatives) relating to a Competing Bid; provided that Sellers shall (i) promptly (and in any event within one (1) day) notify Buyers of any Competing Bid, or any indication that any Person is considering making, a Competing Bid (ii) promptly (and in any event within one (1) day) notify Buyers of the identity of any Person making a Competing Bid (or considering making a Competing Bid) and provide a copy of any Competing Bid (or, where no such copy is available, a reasonably detailed description of such Competing Bid), (iii) subject to applicable Law, keep Buyers informed on a current basis of the status of any Competing Bid (or the consideration of any Competing Bid) and any developments, discussions and negotiations related thereto (including by updating any copies of a Competing Bid provided to Buyers), (iv) provide reasonable updates regarding the Sellers’, and their Affiliates and Representatives’, efforts in soliciting and encouraging submission of any Competing Bid and (v) ensure Buyers have been provided all information provided to such Persons or its Representatives making a Competing Bid.
(f)
The Buyers agree and acknowledge that, after entry of the Sale Procedures Order, the Sellers and their Affiliates shall be permitted, and shall be permitted to cause their Representatives, to initiate contact with, solicit or encourage submission of any inquiries, proposals or offers by, respond to any unsolicited inquiries, proposals or offers submitted by, and enter into any discussions or negotiations regarding any of the foregoing with, any Person (in addition to the Buyers and its Affiliates, agents and Representatives) in accordance with the terms of the Sale Procedures Order.
(g)
The Sellers shall, to the extent reasonably practicable, give Buyers advanced notice and proposed drafts of all pleadings, motions, orders, other papers, hearings, and other proceedings relating to this Agreement and the transactions contemplated hereby,
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and shall provide Buyers and their counsel with a reasonably opportunity to review such papers prior to filing with the Bankruptcy Court.
(h)
The Sellers shall use reasonable best efforts to serve notices of assumption of the Transferred Contracts, including designation of Cure Claims, on all necessary parties by the twenty-eighth (28th) Business Day following the Sale Procedures Hearing.
(i)
In the event an appeal is taken or a stay pending appeal is requested, from the Sale Order, Sellers shall immediately notify Buyers of such appeal or stay request and shall provide to Buyers promptly a copy of the related notice of appeal or order of stay. Sellers shall also provide Buyers with written notice of any motion or application filed in connection with any appeal from such orders. The Sellers agree to take all action as may be reasonable and appropriate to defend against such appeal or stay request and the Sellers and Buyers agree to use their reasonable efforts to obtain an expedited resolution of such appeal or stay request; provided that nothing herein shall preclude the parties hereto from consummating the transactions contemplated hereby, if the Sale Order shall have been entered and has not been stayed and the Buyers, in their sole and absolute discretion, waive in writing the condition that the Sale Order be a Final Order.
(j)
After entry of the Sale Order, to the extent the Buyers are the Successful Bidder at the Auction, neither the Buyers nor the Sellers shall take any action which is intended to, or fail to take any action the intent of which failure to act is to, result in the reversal, voiding, modification or staying of the Sale Order.
Section 5.10
Name Change. The Sellers shall, as promptly as practicable (but in no event later than thirty (30) Business Days) after the Closing, cease using and displaying any trademarks that are included in the Transferred Assets, and in accordance with such requirement, the Sellers shall use commercially reasonable efforts to, no later than sixty (60) Business Days after the Closing, legally change their corporate and business names (to the extent such names include such trademarks or a confusingly similar trademarks) to names that are not confusingly similar to such trademarks, and file notices of such name changes with the Bankruptcy Court. Subject to the approval of the Bankruptcy Court to change Seller Parent’s name for purposes of the Bankruptcy Case (which approval Seller Parent shall seek and use commercially reasonable efforts to obtain promptly following the Closing), under no circumstance shall the Sellers, after the Closing, use or otherwise exploit the trademarks included in the Transferred Assets or any other indicia confusingly similar to the trademarks included in the Transferred Assets, copyrights included in the Transferred Assets, or any work substantially similar to the copyrights included in the Transferred Assets, as a source identifier in connection with any Seller product, service or corporate, business or domain name.
Section 5.11
Assumed Liabilities; Adequate Assurance of Future Performance. The Parties agree that they will promptly take commercially reasonable actions to provide the evidence required to establish that the Buyers can provide adequate assurance of future performance of the Transferred Contracts, including such affidavits, non-confidential financial information and other documents or information as may be necessary or desirable for
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filing with the Bankruptcy Court and making the Buyer’s and Sellers’ Representatives available to testify before the Bankruptcy Court.
Section 5.12
Sale Free and Clear. The Sellers acknowledge and agree, and the Sale Order shall be drafted to provide, without limitation, that, (a) on the Closing Date and concurrently with the Closing, all then existing or thereafter arising obligations, Liabilities and Encumbrances, against or created by the Sellers, any of their Affiliates, or the bankruptcy estate, to the fullest extent permitted by Section 363 of the Bankruptcy Code, shall be fully released from and with respect to the Transferred Assets and (b) the Buyers are not successors to any Seller or the bankruptcy estate by reason of any theory of law or equity, and the Buyers shall not assume or in any way be responsible for any Liability of the Sellers, any of their Affiliates and/or the bankruptcy estate, except as expressly provided in this Agreement. On the Closing Date, the Transferred Assets shall be transferred to the Buyers free and clear of all obligations, Liabilities and Encumbrances (other than Lease Encumbrances) to the fullest extent permitted by Section 363 of the Bankruptcy Code.
Section 5.13
Intellectual Property License. To the extent that Sellers own or license any Intellectual Property that is used or held for use in the Business and that is not a Transferred Asset, Sellers hereby grant to Buyers, effective as of the Closing, a non-exclusive, royalty-free, fully paid-up, perpetual, irrevocable, worldwide, sublicensable license to use and otherwise exploit such Intellectual Property. The foregoing license shall be freely assignable and transferable by Buyers.
Section 5.14
Intellectual Property Registrations. Prior to the Closing Date, the Sellers shall use commercially reasonable efforts to effect the necessary change of ownership and recordals with all patent, trademark, and copyright offices and domain name registrars and other similar authorities (i) where Intellectual Property of any Seller is still recorded in the name of legal predecessors of any Seller or any Person other than a Seller or (ii) where, to the Knowledge of the Sellers, the relevant recordals of the patent, copyright, and trademark offices, and domain name registrars, and other similar authorities, with respect to any Seller’s Intellectual Property, are materially incorrect for any other reason.
Section 5.15
Wind-Down Amount. On and after the Closing Date, the Sellers shall hold the Wind-Down Amount in trust for the benefit of persons entitled to be paid costs covered by the Wind-Down Amount in accordance with the Wind-Down Budget and the following provisions:
(a)
All claims for costs to be paid from the Wind-Down Amount pursuant to the Wind-Down Budget must be submitted to the Sellers and the Buyers in writing.
(b)
Upon the submission of any such claims for costs to be paid from the Wind-Down Amount, the Buyers shall have ten (10) days to object in writing to any such claim on the basis that it is not (i) consistent in kind or amount with the Wind-Down Budget or (ii) reasonably necessary for the winding-down of the Sellers’ estates.
(c)
In the event that an objection is made by the Buyers and an agreement cannot be reached between the claimant and the Buyers, the amount of any such payment still
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in dispute shall be determined, on application by the Buyers or the Sellers, and on notice to the Buyers and any affected beneficiary of the Wind-Down Amount, by Order of the Bankruptcy Court. The costs of any such application shall be paid: (i) in the case of the Sellers, from the Wind-Down Amount; (ii) in the case of the claimant, by the claimant; and (iii) in the case of the Buyers, by the Buyers, unless the Buyers are successful in their complaint, in which case their costs of the application shall be paid from the Wind-Down Amount.
(d)
Once the amount of any such claim has either been agreed to or determined by the Bankruptcy Court, as set forth above, the Sellers shall promptly pay such claim from the Wind-Down Amount.
(e)
Subsequent to the Closing Date, the Sellers shall reduce the amount of the Wind-Down Amount as and to the extent that the Sellers may agree, or the Bankruptcy Court, on application by the Buyers or otherwise, determines, that it, or portions of it, are no longer required to fund the wind-down costs of the Sellers’ estates and by distributing to the Buyers the amount of such reductions.
(f)
All right, title and interest in and to any amounts in the Wind-Down Amount that are not used to pay costs associated with winding-down the Sellers’ estates and shall vest absolutely in the Buyers as at the Closing Date and shall promptly be distributed to the Buyers in accordance with this Section 5.15.
Section 5.16
Creation of Mexico Buyer. Prior to Closing, if US Buyer is the Successful Bidder, US Buyer will form, or procure that its Affiliates form, one or more entities to serve as Mexico Buyers. Any such entity formed to be a Mexico Buyer shall be permitted to join this Agreement by executing a Joinder hereto.
Section 5.17
Business Plan. No later than March 31, 2015, the Sellers shall deliver a draft of a business plan to Buyers (the “Business Plan”). No later than April 15, 2015, the Business Plan, in a form reasonably acceptable to Buyers, shall have been submitted to the board of directors of Seller Parent for consideration.
Section 5.18
D&O Insurance. Prior to Closing, Seller Parent shall have obtained tail directors’ and officer’s insurance coverage, the cost and premium of which shall be added to amounts included in the Wind-Down Budget, extending the terms of Seller Parent’s existing directors’ and officers’ insurance coverage for a period of six years, such tail policy to take effect as of the later of the Closing Date and the completion of any wind-down of the Sellers.
Section 5.19
Disclosure Schedule Update. The Sellers may, upon the prior written consent of the US Buyer (which consent shall not be unreasonably withheld), within fourteen (14) days of the date hereof, update the Disclosure Schedules relating to Article III hereof; provided that (a) such update and revision shall not disclose factors or circumstances that constitute a Material Adverse Effect, (b) the Sellers shall not update the introduction to the Disclosure Schedules, (c) the Sellers shall not update Schedules 3.3(b), 3.10(a), 3.10(j) or 3.16(a)(v) of the Disclosure Schedules, and (d) the Sellers shall not update the Disclosure Schedules to include any action, event or occurrence taking place after the date hereof. The
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Parties hereto agree that additions to the Disclosure Schedules pursuant to this Section 5.19 shall not be considered a failure of the representations and warranties of Sellers set forth in this Agreement to be true and correct as of the Closing Date or the date hereof, and the Disclosure Schedules as updated and revised in accordance with this Section 5.19 shall supersede the version of the Disclosure Schedules delivered by Sellers to Buyers on the date hereof.
Section 5.20
Transition Services. If requested by the Buyers, (a) to the extent the Sellers have access thereto and/or possession thereof, the Sellers shall permit any Transferred Employees to work at any facility that is an Excluded Asset and (b) the Sellers and the Buyers shall negotiate, in good faith, on a post-closing transition services agreement on terms that are mutually acceptable to the Parties, in each of case (a) and (b), in order to provide for the movement of any Transferred Assets, transfer of customer relationships and employees and such other assistance as the Buyers may reasonably need to facilitate any separation of the Transferred Assets from Excluded Assets; provided that any such transition services to be provided by the Sellers shall be subject to any winding-down of operations and related capabilities of the Sellers post-Closing. The cost of transition services (including the post-Closing costs during the transition period of maintaining the Leases that would have been rejected but for the Buyers’ intention to use the facilities related to such Leases to conduct transition services) shall be borne by the applicable Buyer or Designated Buyer. The Sellers will not reject any Lease relating to a location for which the Buyers are requesting transition services; provided that during the post-Closing period while the Buyers are using the transition services, the Buyers shall remit the amounts required by this Section 5.20.
Section 5.21
Employee Incentive Plan. The Sellers and the Buyers may determine to seek Bankruptcy Court authorization to implement an employee incentive plan, in a mutually agreed upon form (which form shall be agreed by each of the Parties in their sole discretion) (the “Employee Incentive Plan”).
ARTICLE VI
TAX MATTERS
Section 6.1
Transfer Taxes. Any and all sales, harmonized sales, use, property transfer or gains, real estate or land transfer or gains, documentary, stamp, registration, recording, filing, goods and services or other similar Taxes payable solely as a result of the sale or transfer of the Transferred Assets and the assumption of the Assumed Liabilities pursuant to this Agreement (“Transfer Taxes”) shall (to the extent not subject to an exemption under the Bankruptcy Code) be borne by the Buyers. The Sellers and the Buyers shall use commercially reasonable efforts and cooperate in good faith to mitigate, reduce, or eliminate any such Transfer Taxes. The Buyers shall prepare and file all necessary Returns or other documents with respect to all such Transfer Taxes. In the event any such Return requires execution by the Sellers, the Buyers shall prepare and deliver to the Sellers for their review, comment and approval, which approval shall not be unreasonably withheld, conditioned or delayed, a copy of such Return at least ten (10) Business Days before the due date thereof (taking into account any valid extension), and upon the Sellers’ approval thereof, the Sellers shall promptly execute such Return and deliver it to the Buyer, which shall cause it to be filed.
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Section 6.2
Tax Cooperation. The Buyers and the Sellers agree to furnish or cause to be furnished to each other, upon reasonable request, as promptly as practicable, such information and assistance relating to the Business, the Transferred Assets and the Assumed Liabilities as is reasonably necessary for the filing of all Returns, the making of any election relating to Taxes, the preparation for any audit by any Governmental Authority and the prosecution or defense of any claim, suit or proceeding relating to any Tax; provided, however, that neither the Buyers nor any Seller shall be required to disclose the contents of its Returns to any Person. Any reasonable expenses incurred in furnishing such information or assistance pursuant to this Section 6.2 shall be borne by the Party requesting it.
Section 6.3
Certain Tax Elections.
(a)
Notwithstanding any other provisions in this Agreement, the Buyers and the Sellers hereby waive compliance with all “bulk sales,” “bulk transfer” and similar Laws that may be applicable with respect to the sale and transfer of any or all of the Transferred Assets to the Buyer.
(b)
The Buyers and the Sellers agree (i) to use the “standard procedure” described in Section 4 of IRS Revenue Procedure 2004-53, 2004-2 C.B. 320 with respect to the Sellers’ Tax filing and payment obligations relating to the Business and the Business Employees and (ii) that US Buyer shall file (or cause to be filed) an IRS Form W-2 for each Business Employee with respect to the portion of the year during which such Business Employee is employed by US Buyer that includes the Closing Date, excluding the portion of such year that such Business Employee was employed by the Sellers or their respective Affiliates.
Section 6.4
Apportionment of Certain Taxes. All real property, personal property and similar ad valorem Taxes, if any, levied with respect to the Transferred Assets for a taxable period which includes (but does not end on) the Closing Date (collectively, the “Apportioned Taxes”) shall be apportioned between the Sellers and the Buyers based on the number of days of such taxable period ending on and including the Closing Date (such portion of such taxable period, the “Pre-Closing Tax Period”) and the number of days of such taxable period after the Closing Date (such portion of such taxable period, the “Post-Closing Tax Period”). The Sellers shall be responsible for the proportionate amount of such Apportioned Taxes that is attributable to the Pre-Closing Tax Period, and the Buyers shall be responsible for the proportionate amount of such Apportioned Taxes that is attributable to the Post-Closing Tax Period. Any Apportioned Taxes shall be timely paid, and all applicable Returns shall be timely filed, as provided by applicable Law. The paying Party shall be entitled to reimbursement from the non-paying Party for the non-paying Party’s portion of the Apportioned Taxes in accordance with this Section 6.4. Upon payment of any such Apportioned Taxes, the paying Party shall present a statement to the non-paying Party setting forth the amount of reimbursement to which the paying Party is entitled under this Section 6.4, together with such supporting evidence as is reasonably necessary to calculate the amount to be reimbursed. The non-paying Party shall make such reimbursement by wire transfer in immediately available funds within ten (10) days of receipt of such statement to an account designated by the paying Party.
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ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1
General Conditions. The respective obligations of the Buyers and the Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may, to the extent permitted by applicable Law, be waived in writing by any Party in its sole discretion (provided, that such waiver shall only be effective as to the obligations of such Party):
(a)
No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent), that is then in effect and that enjoins, restrains, makes illegal or otherwise prohibits the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements.
(b)
Any waiting period (and any extension thereof) under the HSR Act applicable to the transactions contemplated by this Agreement and the Ancillary Agreements shall have expired or shall have been terminated. All other material consents of, or registrations, declarations or filings with, any Governmental Authority legally required for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements shall have been obtained or filed.
(c)
The Bankruptcy Court shall have entered the Sale Order, and the Sale Order and the Sale Procedures Order shall each be a Final Order.
Section 7.2
Conditions to Obligations of the Sellers. The obligations of the Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by Seller Parent in its sole discretion:
(a)
The representations and warranties of the Buyers contained in this Agreement or any Ancillary Agreement or any certificate delivered pursuant hereto shall be true and correct both when made and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date, except where the failure to be so true and correct (without giving effect to any limitation or qualification as to “materiality” (including the word “material”) or “Buyer Material Adverse Effect” set forth therein) would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect. The Buyers shall have, in all material respects, performed all obligations and agreements and complied with all covenants and conditions required by this Agreement or any Ancillary Agreement to be performed or complied with by it prior to or at the Closing. The Sellers shall have received from the Buyers a certificate to the effect set forth in the preceding sentences, signed by a duly authorized officer thereof.
(b)
The Sellers shall have received an executed counterpart of each document listed in Section 2.9(c), signed by each party other than the Sellers.
(c)
The Wind-Down Amount shall have been funded to Seller Parent.
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Section 7.3
Conditions to Obligations of the Buyer. The obligations of the Buyers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by the Buyers in their sole discretion:
(a)
The representations and warranties of the Sellers contained in this Agreement or any Ancillary Agreement or any certificate delivered pursuant hereto shall be true and correct both when made and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date, except where the failure to be so true and correct (without giving effect to any limitation or qualification as to “materiality” (including the word “material”) or “Material Adverse Effect” set forth therein) would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Sellers shall have, in all material respects, performed all obligations and agreements and complied with all covenants and conditions required by this Agreement or any Ancillary Agreement to be performed or complied with by them prior to or at the Closing. The Buyers shall have received from the Sellers a certificate to the effect set forth in the preceding sentences, signed by duly authorized officers thereof.
(b)
The Buyers shall have received an executed counterpart of each document listed in Section 2.9(b), signed by each party other than the Buyer.
(c)
The Bankruptcy Court shall have approved and authorized the assumption and assignment of the Material Contracts that are Transferred Contracts, subject to Section 2.5.
(d)
The total aggregate value of the Cure Claims (including all Disputed Cure Claims) has been finally determined by the Buyers with the parties to the Transferred Contracts and does not exceed $14,000,000.
(e)
No “Event of Default” (as such term is defined in the DIP Credit Agreement) shall have occurred and is continuing as of the Closing Date.
(f)
The aggregate amount of the Cash Component shall not exceed $140,000,000.
(g)
The aggregate amount of the Assumed Liabilities pursuant to Section 2.3(a)(iv) shall not exceed $18,000,000.
(h)
There shall not have occurred and be continuing any changes, effects or circumstances constituting, or which would reasonably be likely to result in, individually or in the aggregate, a Material Adverse Effect.
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Section 8.1
Termination. This Agreement may be terminated at any time prior to the Closing (the date on which this Agreement terminates in accordance with its terms, the “Termination Date”):
(a)
by mutual written consent of the Buyers and Seller Parent;
(b)
either Seller Parent or Buyers, if:
(i)
any Governmental Authority shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; provided, that the Party so requesting termination shall have complied with Section 5.6; or
(ii)
the Sellers enter into a definitive agreement with respect to an Alternative Transaction because the Buyer is not the Successful Bidder at the Auction; provided, however, that if the Buyer is the Back-Up Bidder, then Buyer may not terminate this Agreement pursuant to this Section 8.1(b)(ii) for a period of sixty (60) days from the entry of the Sale Order (for the avoidance of doubt, nothing in this Section 8.1(b)(ii) shall restrict the ability of the Buyers to terminate this Agreement in accordance with any other provision of this Agreement);
(c)
by the Buyers, if:
(i)
the Buyers are not in material breach of this Agreement and the Sellers breach or fail to perform in any respect any of their representations, warranties or covenants contained in this Agreement or any Ancillary Agreement and such breach or failure to perform (A) would give rise to the failure of a condition set forth in Section 7.3, (B) cannot be or has not been cured within fifteen (15) days following delivery of written notice of such breach or failure to perform and (C) has not been waived by the Buyer;
(ii)
the Bankruptcy Case is not filed by Sellers within five (5) Business Days of the execution hereof;
(iii)
the Sale Hearing is not held on or before June 19, 2015, or if the Sale Hearing is delayed due to the Bankruptcy Court’s unavailability, the next Business Day on which the Bankruptcy Court is available;
(iv)
the Bankruptcy Court has not entered the Sale Procedures Order on or before April 10, 2015, unless otherwise extended by agreement of the Parties;
(v)
the Auction is not held on or before June 15, 2015;
(vi)
the Closing shall not have occurred by the date that is one hundred eighty (180) days after the date hereof; provided, that the right to terminate this Agreement under
62
this Section 8.1(c)(vi) shall not be available to the Buyers if they shall have been the cause of the failure of the Closing to occur on or prior to such date;
(vii)
the Bankruptcy Court has not entered the Sale Order on or before June 19, 2015, or if approval of the Sale Order is delayed due to the Bankruptcy Court’s unavailability, the next Business Day on which the Bankruptcy Court is available;
(viii)
if the Bankruptcy Case is dismissed or converted to a case under chapter 7 of the Bankruptcy Code, and neither such dismissal nor conversion expressly contemplates the transactions provided for in this Agreement;
(ix)
Sellers withdraw or seek authority to withdraw the Sale Motion;
(x)
a “Termination Date” (as defined in the DIP Credit Agreement) occurs and within five (5) Business Days thereof, (A) the Sellers have not obtained replacement financing and/or (B) the Bankruptcy Court has not (1) authorized the Sellers to use cash collateral in an amount sufficient to fund the Sellers through the Closing and (2) enjoined the Agent and the Lenders (each as defined under the DIP ABL Credit Agreement) from exercising remedies under the DIP ABL Credit Agreement;
(xi)
a Material Adverse Effect has occurred;
(xii)
notices of assumption of the Transferred Contracts, including designation of Cure Claims, are not served on all material parties by the twenty-eighth (28th) Business Day following the Sale Procedures Hearing;
(xiii)
(A) the Buyers have provided the Sellers with written notice that they are prepared to consummate the transactions contemplated by this Agreement, (B) the conditions to Closing set forth in Section 7.1 and Section 7.2 have been satisfied (or waived by the Sellers), other than those conditions that by their nature can only be satisfied at the Closing, and (C) the Closing Date does not occur within ten (10) Business Days of the Buyers providing the Sellers with such notice;
(xiv)
the Sellers publicly announce any plan of reorganization or plan of liquidation or support any such plan filed by any other party; or
(xv)
for any reason (including, without limitation, an order of the Bankruptcy Court), the Buyers are unable, pursuant to Section 363(k) of the Bankruptcy Code, to credit bid up to the full amount of the Liabilities under the Term Loan Facilities in satisfaction of all or any portion of the Purchase Price (other than the Cash Component) as set forth in Section 2.7;
(d)
by Seller Parent, if:
(i)
Sellers are not in material breach of this Agreement and the Buyers breach or fail to perform in any respect any of their representations, warranties or covenants contained in this Agreement or any Ancillary Agreement and such breach or failure to perform (A) has rendered the satisfaction of any condition set forth in Section 7.3 impossible and (B)
63
Buyers has failed to cure such breach within fifteen (15) days following receipt of notification thereof by Seller;
(ii)
the Closing shall not have occurred by the date that is three hundred sixty-five (365) days after the date hereof; provided, that the right to terminate this Agreement under this Section 8.1(d)(ii) shall not be available to Seller Parent if any Seller shall have been the cause of the failure of the Closing to occur on or prior to such date; or
(iii)
(A) the Sellers have provided the Buyers with written notice that they are prepared to consummate the transactions contemplated by this Agreement, (B) the conditions to Closing set forth in Section 7.1 and Section 7.3 have been satisfied (or waived by the Buyer), other than those conditions that by their nature can only be satisfied at the Closing, and (C) the Closing Date does not occur within ten (10) Business Days of the Sellers providing the Buyers with such notice.
The Party seeking to terminate this Agreement pursuant to this Section 8.1 (other than Section 8.1(a)) shall, if such Party is Seller Parent, give prompt written notice of such termination to the Buyer, and if such Party is a Buyer, give prompt written notice of such termination to the Sellers.
Section 8.2
Effect of Termination.
(a)
In the event of termination of this Agreement as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no liability on the part of any Party except (i) for the provisions of Section 3.20 and Section 4.5 relating to broker’s fees and finder’s fees, Section 5.8 relating to public announcements, Section 9.2 relating to fees and expenses, Section 9.6 relating to notices, Section 9.9 relating to third-party beneficiaries, Section 9.10 relating to governing law, Section 9.11 relating to submission to jurisdiction and this Article VIII and (ii) that nothing herein shall relieve any Party from liability for any willful and material breach of this Agreement or any agreement made as of the date hereof or subsequent thereto pursuant to this Agreement.
(b)
In the event of termination of this Agreement as provided in Section 8.1(d)(i) or (iii), the Minimum Deposit shall be retained by the Sellers for their own account. Notwithstanding anything to the contrary contained in this Agreement, if any Buyer shall default under or breach any of its obligations in this Agreement, the Minimum Deposit shall constitute Sellers’ full and complete liquidated damages; provided that the Sellers specifically reserve the right to seek specific performance against the Buyers in respect of any claim against the Buyers arising under this Agreement pursuant to Section 9.15. The Sellers shall be entitled to pursue both a grant of specific performance and the Minimum Deposit as liquidated damages hereunder; provided, further, that the Sellers shall not be entitled to both specific performance and the Minimum Deposit and in the event that the Buyers are compelled to, and in fact, consummate the transaction pursuant to Section 9.15, the Minimum Deposit shall not be paid over to the Sellers as damages and instead shall be applied in respect of the Purchase Price as provided in Section 2.8.
(c)
If the Buyers are not the Successful Bidder or the Back-Up Bidder at the Auction, the Sellers shall promptly (but in any event within two (2) Business Days of such
64
termination) cause the Escrow Agent to return to Buyers the Minimum Deposit by wire transfer of immediately available funds, and the return thereof shall, except as specified in Section 8.2(d) or Section 8.3, constitute the sole and exclusive remedy of Buyers in the event of such a termination hereunder.
(d)
If, following entry of the Sale Procedures Order, this Agreement is terminated in the circumstances set forth in Section 8.3(a) or Section 8.3(b), then the Sellers, jointly and severally, shall pay to Buyers the Break-Up Fee and/or the Expense Reimbursement Amount, as applicable, subject to and in accordance with Section 8.3(a) and Section 8.3(b), and Buyers’ right to enforce payment thereof shall survive the termination of this Agreement.
Section 8.3
Break-Up Fee; Expense Reimbursement Amount.
(a)
If this Agreement is terminated following entry of the Sale Procedures Order pursuant to Section 8.1(b)(ii), then the Sellers, jointly and severally, shall pay in cash to the Buyers, subject to the consummation of the Alternative Transaction upon the closing of such Alternative Transaction, a break-up fee of 2.0% of the Purchase Price (the “Break-Up Fee”) by wire transfer of immediately available funds to the account specified by the Buyers to the Sellers in writing.
(b)
If this Agreement is terminated in accordance with the terms set forth in Section 8.1 (other than any termination pursuant to Section 8.1(a), Section 8.1(b)(i) or Section 8.1(d)), then the Sellers, jointly and severally, shall pay to the Buyers in cash not later than (i) in the case of a termination pursuant to Section 8.1(b)(ii), the closing of an Alternative Transaction and (ii) two (2) Business Days following receipt of documentation supporting the request for reimbursement of out-of-pocket costs, fees and expenses, an amount equal to the reasonable out-of-pocket costs, fees and expenses incurred by the Buyers and its Affiliates (including fees and expenses of legal, accounting and financial advisors) in connection with the development, execution, delivery and approval by the Bankruptcy Court of this Agreement and the transactions contemplated hereby in an amount not to exceed 1.5% of the Purchase Price (the “Expense Reimbursement Amount”), in each case by wire transfer of immediately available funds to an account specified by the Buyers to the Sellers in writing. The Sellers’ obligation to pay the Expense Reimbursement Amount pursuant to the terms of this Section 8.3(b) shall be subordinate to the obligations under the DIP Credit Agreement and DIP ABL Credit Agreement and to the “Carve-Out” (as defined therein).
(c)
The obligations of the Sellers to pay the Break-Up Fee and the Expense Reimbursement Amount as provided herein shall be entitled to superpriority administrative expense status pursuant to Sections 503(b)(1) and 507(a)(2) of the Bankruptcy Code, senior to all other general administrative expense claims and superpriority administrative expense claims granted such status pursuant to Sections 503(b)(1) and 507(a)(2) other than superpriority administrative expense claims granted in favor of the DIP Credit Parties, in the Bankruptcy Case.
(d)
The Sellers agree and acknowledge that the Buyer’s due diligence, efforts, negotiation, and execution of this Agreement have involved substantial investment of management time and have required significant commitment of financial, legal, and other
65
resources by the Buyers and their Affiliates, and that such due diligence, efforts, negotiation, and execution have provided value to the Sellers and, in the Sellers’ reasonable business judgment, is necessary for the preservation of the value of the Sellers’ estate. The Sellers further agree and acknowledge that the Break-Up Fee and Expense Reimbursement Amount are reasonable in relation to Buyers’ efforts, Buyers’ lost opportunities from pursuing this transaction, and the magnitude of the transactions contemplated hereby. The provision of the Break-Up Fee and the Expense Reimbursement Amount is an integral part of this Agreement, without which the Buyers would not have entered into this Agreement. The Sellers’ obligation to pay the Break-Up Fee and Expense Reimbursement Amount shall be joint and several among the Sellers.
Section 9.1
Nonsurvival of Representations, Warranties and Covenants. The respective representations, warranties and covenants of the Sellers and the Buyers contained in this Agreement and the Ancillary Agreements and any certificate delivered pursuant hereto shall terminate at, and not survive, the Closing or Termination Date; provided, that this Section 9.1 shall not limit any covenant or agreement of the Parties that by its terms requires performance after the Closing.
Section 9.2
Fees and Expenses. Except as otherwise provided herein, all fees and expenses incurred in connection with or related to this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby shall be paid by the Party incurring such fees or expenses, whether or not such transactions are consummated. In the event of termination of this Agreement, the obligation of each Party to pay its own expenses will be subject to any rights of such Party arising from a breach of this Agreement by the other. The Buyers shall pay the cost of all filing fees with respect to any consents from any Governmental Authority, including with any Antitrust Authority or in regard to any Antitrust Law, payable upon or in connection with, and all surveys, title insurance policies and title reports obtained in connection with, this Agreement and the transactions contemplated hereby.
Section 9.3
Transition of Permits. To the extent that the Buyers have not, using reasonable best efforts obtained all of the Permits that are necessary for the Buyers to take title to all of the Transferred Assets at the Closing and thereafter operate all aspects of the Business at the Closing, Sellers shall, to the extent permitted by applicable Laws, use reasonable best efforts (which efforts shall be subject to any winding-down of operations and related capabilities of the Sellers post-Closing) to maintain after the Closing such Permits that the Buyers reasonably request, at the Buyers’ sole expense, until the Buyers have obtained such Permits. The Buyers shall indemnify the Sellers for and hold the Sellers harmless against any claim, expense, or liability incurred without bad faith or willful misconduct on the part of the Sellers in connection with the Buyers’ use of such Permits.
Section 9.4
Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each Party.
66
Section 9.5
Waiver. No failure or delay of any Party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. Any agreement on the part of either Party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such Party.
Section 9.6
Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile, upon written confirmation of receipt by facsimile or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier, (c) on the day of transmission if sent via e-mail transmission to the e-mail address(es) given below during regular business hours on a Business Day and, if not, then on the following Business Day or (d) on the earlier of confirmed receipt or the fifth (5th) Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:
(i)
if to the Sellers, to:
The Standard Register Company
600 Albany Street
Dayton, Ohio 45417
Attention: General Counsel
E-mail: Gerald.Sowar@standardregister.com
with a copy (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166-0193
Attention: Barbara L. Becker
Facsimile: (212) 351-6202
E-mail: bbecker@gibsondunn.com
(ii)
if to the Buyer, to:
67
Standard Acquisition Holdings, LLC
c/o Silver Point Finance, LLC
2 Greenwich Plaza, First Floor
Greenwich, CT 06830
Attention: General Counsel
Facsimile: (203) 542-4524
E-mail: creditadmin@silverpointcapital.com
Email: adinello@silverpointcapital.com
Email: tmontague@silverpointcapital.com
Email: ops-spintralinks@silverpointcapital.com
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
155 N. Wacker Drive
Chicago, Illinois 60606
Attention: Kimberly A. deBeers
Attention: Ron E. Meisler
Facsimile: (312) 407-8576
E-mail: kimberly.debeers@skadden.com
E-mail: ron.meisler@skadden.com
Section 9.7
Interpretation. When a reference is made in this Agreement to a Section, Article, Exhibit or Schedule such reference shall be to a Section, Article, Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Exhibit or Schedule are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” References to days mean calendar days unless otherwise specified.
Section 9.8
Entire Agreement. This Agreement (including the Exhibits and Schedules hereto) and the Ancillary Agreements constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings between the Parties with respect to the subject matter hereof and thereof. Neither this Agreement nor any Ancillary Agreement shall be deemed to contain or imply any restriction, covenant, representation, warranty, agreement or undertaking of any Party with respect to the transactions contemplated hereby or thereby other than those expressly set forth herein or therein or in any
68
document required to be delivered hereunder or thereunder, and none shall be deemed to exist or be inferred with respect to the subject matter hereof. Notwithstanding any oral agreement or course of conduct of the Parties or their Representatives to the contrary, no Party to this Agreement shall be under any legal obligation to enter into or complete the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the Parties.
Section 9.9
Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (including employees of the Sellers) other than the Parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 9.10
Governing Law. Except to the extent of the mandatory provisions of the Bankruptcy Code, this Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby (in contract or tort) shall be governed by, and construed in accordance with the internal laws of the State of New York, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of New York; provided, however, to the extent required by the law of Mexico or any state thereof, or Canada, certain Ancillary Agreements shall be governed by the law of Mexico, or an applicable state thereof, or Canada.
Section 9.11
Submission to Jurisdiction. Without limitation of any Party’s right to appeal any Order of the Bankruptcy Court, (x) the Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of this Agreement and to decide any claims or disputes which may arise or result from, or be connected with, this Agreement, any breach or default hereunder, or the transactions contemplated hereby and (y) any and all claims relating to the foregoing shall be filed and maintained only in the Bankruptcy Court, and the Parties hereby consent and submit to the exclusive jurisdiction and venue of the Bankruptcy Court and irrevocably waive the defense of an inconvenient forum to the maintenance of any such Action or proceeding; provided, however, that, if the Bankruptcy Case is closed, each of the Parties irrevocably agrees that any Action or proceeding arising out of or relating to this Agreement brought by another Party or its successors or assigns shall be heard and determined in a Delaware state court or a federal court sitting in Delaware, and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the
69
venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 9.12
Disclosure Generally. Notwithstanding anything to the contrary contained in the Disclosure Schedules or in this Agreement, the information and disclosures contained in any Disclosure Schedule shall be deemed to be disclosed and incorporated by reference in any other Disclosure Schedule as though fully set forth in such Disclosure Schedule for which applicability of such information and disclosure is reasonably apparent on its face. The fact that any item of information is disclosed in any Disclosure Schedule shall not be construed to be an admission by any Party to any third party of any liability or obligation or to mean that such information is required to be disclosed by this Agreement. Such information and the dollar thresholds set forth herein shall not be used as a basis for interpreting the terms “material” or “Material Adverse Effect” or other similar terms in this Agreement.
Section 9.13
Personal Liability. This Agreement shall not create or be deemed to create or permit any personal liability or obligation on the part of any direct or indirect stockholder of the Sellers or the Buyers or any officer, director, employee, Representative or investor of any Party hereto.
Section 9.14
Assignment; Successors. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any Seller without the prior written consent of the Buyers, and by the Buyers without the prior written consent of Seller Parent, and any such assignment without such prior written consent shall be null and void; provided, however, that no assignment shall limit the assignor’s obligations hereunder. Notwithstanding the foregoing, Buyers may, assign any of their rights and/or obligations under this Agreement to any of their Affiliates, subject to Buyers providing evidence reasonably satisfactory to Seller Parent that any such assignee has the ability to fully discharge perform and discharge the obligations of the assignor hereunder. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.
Section 9.15
Enforcement. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the Parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement; provided, that the Sellers shall not be entitled to both specific performance and the Minimum Deposit and in the event that the Buyers are compelled to, and in fact, consummate the transaction pursuant to this Section 9.15, the Minimum Deposit shall not be paid over to the Sellers as damages and instead shall be applied in respect of the Purchase Price as provided in Section 2.8. Each of the Parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any law to post security as a prerequisite to obtaining equitable relief.
70
Section 9.16
Currency. All references to “dollars” or “$” or “US$” in this Agreement or any Ancillary Agreement refer to United States dollars, which is the currency used for all purposes in this Agreement and any Ancillary Agreement.
Section 9.17
Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
Section 9.18
Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.19
Counterparts. Notwithstanding anything else herein to the contrary, this Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties.
Section 9.20
Facsimile or .pdf Signature. This Agreement may be executed by facsimile or .pdf signature and a facsimile or .pdf signature shall constitute an original for all purposes.
Section 9.21
Time of Essence. Time is of the essence with regard to all dates and time periods set forth or referred to in this Agreement. When calculating the period of time before which, within which or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.
Section 9.22
No Punitive Damages. The Parties hereto expressly acknowledge and agree that no Party hereto shall have any liability under any provision of this Agreement for any punitive damages relating to the breach or alleged breach of this Agreement.
Section 9.23
No Presumption Against Drafting Party. Each of the Buyers and the Sellers acknowledges that each Party to this Agreement has been represented by legal counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting Party has no application and is expressly waived.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the Sellers and the Buyers have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| THE STANDARD REGISTER COMPANY By: ________________________________ Name: Title: |
|
|
| STANDARD REGISTER INTERNATIONAL, INC. By: ________________________________ Name: Title: |
|
|
| STANDARD REGISTER TECHNOLOGIES, INC. By: ________________________________ Name: Title: |
|
|
| STANDARD REGISTER HOLDING COMPANY By: ________________________________ Name: Title: |
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
| STANDARD REGISTER TECHNOLOGIES CANADA ULC By: ________________________________ Name: Title: |
|
|
| STANDARD REGISTER MEXICO HOLDING COMPANY By: ________________________________ Name: Title: |
|
|
| STANDARD REGISTER HOLDING, S. DE R.L. DE C.V. By: ________________________________ Name: Title: |
|
|
| STANDARD REGISTER SERVICIOS, S. DE R.L. DE C.V. By: ________________________________ Name: Title: |
|
|
| STANDARD REGISTER DE MEXICO, S. DE R.L. DE C.V. By: ________________________________ Name: Title: |
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
| IMEDCONSENT, LLC By: ________________________________ Name: Title: |
|
|
| STANDARD REGISTER OF PUERTO RICO INC. By: ________________________________ Name: Title: |
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
| STANDARD ACQUISITION HOLDINGS, LLC By: ________________________________ Name: Title: |
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
_________________________________________________________________
POST-PETITION LOAN AND SECURITY AGREEMENT
Dated: March 12, 2015
_________________________________________________________________
_________________________________________________________________
THE STANDARD REGISTER COMPANY,
STANDARD REGISTER INTERNATIONAL, INC.,
STANDARD REGISTER TECHNOLOGIES, INC.,
IMEDCONSENT, LLC,
STANDARD REGISTER OF PUERTO RICO INC.,
STANDARD REGISTER HOLDING COMPANY,STANDARD REGISTER TECHNOLOGIES CANADA ULC,
STANDARD REGISTER MEXICO HOLDING COMPANY,
STANDARD REGISTER HOLDINGS, S de R.L. de C.V.
STANDARD REGISTER de MEXICO, S de R.L. de C.V.
STANDARD REGISTER SERVICIOS, S de R.L. de C.V.
as Borrowers,
CERTAIN FINANCIAL INSTITUTIONS,
as Lenders,
and
BANK OF AMERICA, N.A.,
as Administrative and Collateral Agent
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
TABLE OF CONTENTS
SECTION 1. DIP FACILITY
2
1.1.
Commitment.
2
1.2.
Letters of Credit.
4
1.3.
Sections 364(c)(1) and 503(b) Priority.
10
SECTION 2. INTEREST, FEES AND CHARGES
10
2.1.
Interest.
10
2.2.
Fees.
12
2.3.
Computation of Interest and Fees.
14
2.4.
Reimbursement Obligations.
14
2.5.
Bank Charges.
15
2.6.
Illegality..
15
2.7.
Increased Costs.
16
2.8.
Capital Adequacy.
17
2.9.
Funding Losses.
18
2.10.
Maximum Interest..
18
SECTION 3. LOAN ADMINISTRATION
19
3.1.
Manner of Borrowing and Funding Revolver Loans.
19
3.2.
Defaulting DIP Lender.
23
3.3.
Special Provisions Governing LIBOR Loans.
24
3.4.
Borrowers’ Representative.
25
3.5.
All Revolver Loans to Constitute One Obligation.
25
SECTION 4. PAYMENTS
25
4.1.
General Repayment Provisions.
25
4.2.
Repayment of Revolver Loans.
26
4.3.
Mandatory Prepayments.
27
4.4.
Payment of Other Obligations.
28
4.5.
Marshaling; Payments Set Aside.
28
4.6.
Allocation of Payments and Collections.
28
4.7.
Dominion Account.
30
4.8.
Loan Account; Account Stated.
30
4.9.
Taxes.
30
4.10.
DIP Lender Tax Information.
33
4.11.
Nature and Extent of Each Borrower’s Liability.
34
SECTION 5. TERM AND TERMINATION OF COMMITMENTS
37
5.1.
Term of Commitments
37
5.2.
Termination.
37
SECTION 6. COLLATERAL SECURITY
38
6.1.
Grant of Security Interest.
38
6.2.
Lien on Deposit Accounts; Cash Collateral.
39
i
6.3.
Lien on Real Estate.
39
6.4.
Other Collateral.
39
6.5.
Lien Perfection; Further Assurances.
40
6.6.
Limitations.
40
SECTION 7. COLLATERAL ADMINISTRATION
40
7.1.
General Provisions.
40
7.2.
Administration of Accounts.
42
7.3.
Administration of Inventory.
44
7.4.
Administration of Equipment.
45
7.5.
Borrowing Base Certificates.
45
SECTION 8. REPRESENTATIONS AND WARRANTIES
46
8.1.
General Representations and Warranties.
46
8.2.
Complete Disclosure.
53
8.3.
Reaffirmation of Representations and Warranties.
53
8.4.
Survival of Representations and Warranties.
53
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
53
9.1.
Affirmative Covenants.
53
9.2.
Negative Covenants.
60
SECTION 10. CONDITIONS PRECEDENT
64
10.1.
Conditions Precedent to Initial Revolver Loans.
64
10.2.
Conditions Precedent to All Credit Extensions.
67
10.3.
Inapplicability of Conditions.
69
10.4.
Limited Waiver of Conditions Precedent.
69
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
69
11.1.
Events of Default.
69
11.2.
Remedies upon Default.
74
11.3.
License.
76
11.4.
Setoff.
76
11.5.
Remedies Cumulative; No Waiver; Disclosures to Committee.
77
11.6.
Consent to Receivership.
78
SECTION 12. DIP AGENT
78
12.1.
Appointment, Authority and Duties of DIP Agent.
78
12.2.
Agreements Regarding Collateral.
81
12.3.
Reliance By DIP Agent.
81
12.4.
Action Upon Default.
81
12.5.
Ratable Sharing.
82
12.6.
Indemnification of DIP Agent.
83
12.7.
Limitation on Responsibilities of DIP Agent.
84
12.8.
Successor DIP Agent and Co-DIP Agents.
84
12.9.
Consents, Amendments and Waivers; Overadvances.
85
12.10.
Due Diligence and Non-Reliance.
88
ii
12.11.
Representations and Warranties of DIP Lenders.
88
12.12.
Required DIP Lenders.
89
12.13.
Several Obligations.
89
12.14.
DIP Agent in its Individual Capacity.
89
12.15.
Third Party Beneficiaries.
89
12.16.
Notice of Transfer.
90
12.17.
Replacement of Certain DIP Lenders.
90
12.18.
Remittance of Payments and Collections.
91
12.19.
Bank Product Providers.
91
12.20.
Intercreditor Agreements.
92
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
92
13.1.
Successors and Assigns.
92
13.2.
Participations.
92
13.3.
Assignments.
94
13.4.
Tax Treatment.
95
SECTION 14. MISCELLANEOUS
96
14.1.
Power of Attorney.
96
14.2.
General Indemnity.
96
14.3.
Survival of All Indemnities.
97
14.4.
Modification of Agreement.
97
14.5.
Severability.
97
14.6.
Cumulative Effect; Conflict of Terms.
97
14.7.
Execution in Counterparts.
98
14.8.
Consent.
98
14.9.
Notices and Communications.
98
14.10.
Performance of Borrowers’ Obligations.
99
14.11.
Credit Inquiries.
100
14.12.
Time of Essence.
100
14.13.
Indulgences Not Waivers.
100
14.14.
Entire Agreement; Appendix A, Exhibits and Schedules.
100
14.15.
Interpretation.
100
14.16.
Obligations of DIP Lenders Several.
100
14.17.
Confidentiality.
100
14.18.
Governing Law; Consent to Forum.
101
14.19.
Waivers by Borrowers.
102
14.20.
Patriot Act Notice.
103
14.21.
Cumulative Effect; Conflict of Terms.
103
14.22.
No Advisory or Fiduciary Responsibility.
103
iii
LIST OF EXHIBITS AND SCHEDULES
Exhibit A
Form of Revolver Note
Exhibit B
Form of Notice of Conversion/Continuation
Exhibit C
Form of Notice of Borrowing
Exhibit D
Form of Compliance Certificate
Exhibit E
Form of Assignment and Acceptance
Exhibit F
Form of Notice of Assignment
Exhibit G
Letter of Credit Application Form
Exhibit H
Fiscal Calendar
Exhibit I
Borrowing Base Certificate
Schedule 1.1
Commitments
Schedule 1.2.1
Existing Letters of Credit
Schedule 7.1.1
Location of Inventory
Schedule 8.1.4
Capital Structure of Borrowers
Schedule 8.1.5
Corporate Names
Schedule 8.1.6
Chief Executive Office/Service of Process Agents
Schedule 8.1.12
Tax Identification Numbers of Borrowers and Subsidiaries
Schedule 8.1.21
Pension Plans
Schedule 8.1.23
Labor Contracts
Schedule 9.1.21
Post Closing Covenants
Schedule 14.9
DIP Lender Addresses
iv
POST-PETITION LOAN AND SECURITY AGREEMENT
THIS POST-PETITION LOAN AND SECURITY AGREEMENT (this "Agreement") is made on March 12, 2015, by and among THE STANDARD REGISTER COMPANY, an Ohio corporation (individually and, in its capacity as the representative of the other Borrowers pursuant to Section 3.4 hereof, “SRC”); STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”); STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”); IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”); STANDARD REGISTER OF PUERTO RICO INC f/k/a WorkflowOne of Puerto Rico Inc., a Delaware corporation (“SRPR”); STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holding”); STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”); STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”); STANDARD REGISTER HOLDINGS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR MX Holdings”); STANDARD REGISTER de MEXICO, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Mexico”); STANDARD REGISTER SERVICIOS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Servicios”, and together with SRC, SRI, SRT, iMed, SRPR, SR Holding, SR MX Holdco, SR Canada, SR MX Holdings, and SR Mexico, each a “Borrower” and each a Chapter 11 debtor-in-possession, and collectively, “Borrowers”); the financial institutions party to this Agreement from time to time as lenders and their respective successors and permitted assigns (collectively, "DIP Lenders"); and BANK OF AMERICA, N.A., a national banking association, as collateral and administrative agent for DIP Lenders (together with its successors in such capacity, “DIP Agent”). Capitalized terms used in this Agreement have the meanings assigned to them in Appendix A, General Definitions.
R e c i t a l s:
SRC, SRI, SRT, iMed and SRPR (collectively, "U.S. Borrowers"), Bank of America, N.A., in its capacity as agent (together with its successors and assigns in such capacity, "Pre-Petition ABL Agent") for certain financial institutions party thereto from time to time in their capacities as lenders (collectively, "Pre-Petition ABL Lenders"), and such Pre-Petition ABL Lenders are parties to that certain Amended and Restated Loan and Security Agreement dated August 1, 2013 (as at any time amended, modified, restated, or supplemented, the "Pre-Petition ABL Loan Agreement"), pursuant to which Pre-Petition ABL Lenders have made loans and other extensions of credit to U.S. Borrowers secured by all or substantially all of the real and personal property of U.S. Borrowers.
Prior to the Petition Date (as defined below), WorkflowOne, LLC, a Delaware limited liability company ("WorkflowOne") and an original borrower under the Pre-Petition ABL Loan Agreement, merged into SRC effective December 31, 2014, with SRC as the surviving corporation.
On the Petition Date, each Borrower filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Case" and, collectively, the "Chapter 11 Cases") in the United States Bankruptcy Court for the District of Delaware (together with any other court
1
having jurisdiction over any of the Chapter 11 Cases or any proceeding therein from time to time, the "Court"), as Case Numbers 15-________, 15-________, 15-________, 15-________, 15-________, 15-________,15-________, 15-________, 15-________, and 15-________. In connection with the filing of the Chapter 11 Cases, Borrowers have requested that DIP Lenders extend financing to U.S. Borrowers in accordance with the provisions of this Agreement.
DIP Lenders are willing to make loans and other extensions of credit to U.S. Borrowers, subject to the terms and conditions of this Agreement and subject to the terms and conditions set forth in orders of the Court approving the proposed financing.
NOW, THEREFORE, for good and valuable consideration, the parties hereto hereby agree as follows:
SECTION 1. DIP FACILITY
Subject to the terms and conditions of, and in reliance upon the representations and warranties made in, this Agreement and the other DIP Loan Documents, DIP Lenders severally agree to the extent and in the manner hereinafter set forth to make their respective Pro Rata shares of the Commitments available to U.S. Borrowers, in an aggregate amount of $125,000,000 (subject to the limitations set forth herein), as follows:
1.1.
Commitment.
1.1.1. Revolver Loans. Each DIP Lender agrees, severally to the extent of its Commitment and not jointly with the other DIP Lenders, upon the terms and subject to the conditions set forth herein, to make Revolver Loans to U.S. Borrowers on any Business Day during the period from the Closing Date through the Commitment Termination Date in the amounts shown as in the DIP Budget (with Permitted Variances), not to exceed in aggregate principal amount outstanding at any time such DIP Lender’s Commitment at such time; provided, however, that, subject to the entry and terms of the Interim DIP Financing Order and to Borrowers' satisfaction of each of the conditions precedent set forth in Section 10, initial Borrowings may be obtained by U.S. Borrowers on a revolving basis as of the Closing Date and during the Interim Period. Upon entry of the Final DIP Financing Order, and subject to Borrowers' satisfaction of each of the conditions precedent set forth in Section 10, the full amount of the DIP Facility shall be available for Borrowings on a revolving basis in accordance with this Agreement. The Revolver Loans may be repaid and re-borrowed in accordance with the provisions of this Agreement. No Borrower other than a U.S. Borrower shall be entitled to request a Revolver Loan under the DIP Facility, and in no event shall DIP Lenders have any obligation to honor a request by any U.S. Borrower for a Revolver Loan (a) if any Default or Event of Default exists or would result therefrom; (b) if U.S. Borrowers have not furnished to DIP Agent the Borrowing Base Certificate required pursuant to Section 7.5 hereof; (c) on or after the Commitment Termination Date, (d) if at the time of such proposed funding the aggregate principal amount of all of the Revolver Loans then outstanding exceeds, or would exceed after the funding of such Revolver Loan, the Borrowing Base; provided, however, that the foregoing shall not impair DIP Agent's right to make Protective Advances or DIP Lenders' right to fund deemed requests for Revolver Loans as further provided herein. Each Borrowing of Revolver Loans shall be funded by DIP Lenders on a Pro Rata basis in accordance with their
2
respective Commitments. The Revolver Loans shall bear interest as set forth in Section 2.1 hereof. The initial Revolver Loan shall consist solely of Base Rate Loans. Each subsequent Revolver Loan shall, at the option of U.S. Borrowers, be made or continued as, or converted into, part of one or more Borrowings that, unless specifically provided herein, shall consist entirely of Base Rate Loans or LIBOR Loans.
1.1.2. Out of Formula Loan. If the unpaid balance of Revolver Loans outstanding at any time exceeds the Borrowing Base at such time (an "Out of Formula Condition"), and DIP Lenders, in their sole and absolute discretion, are nonetheless willing to make a Revolver Loan (an "Out of Formula Loan"), each such Out of Formula Loan shall nevertheless constitute Obligations secured by the Collateral and shall be entitled to all benefits of the DIP Loan Documents. Any funding of an Out of Formula Loan or sufferance of an Out of Formula Condition shall not constitute a waiver of the Default or Event of Default caused thereby. In the event that DIP Lenders are willing, in their sole and absolute discretion, to make an Out of Formula Loan, each such Out of Formula Loan shall be payable on demand and shall bear interest as provided in Section 2.1.5.
1.1.3. Use of Proceeds. All proceeds of Revolver Loans, and any Cash Collateral that is permitted to be used by Borrowers pursuant to the DIP Financing Orders, shall be used by Borrowers during the pendency of the Chapter 11 Cases exclusively for one or more of the following purposes (subject to any additional restrictions on the use of such proceeds and any such Cash Collateral set forth in the Interim DIP Financing Order): (a) to pay expenses and fees required to be paid to the office of the clerk of the Court or the office of the U.S. Trustee; (b) to pay Professional Fees subject to any limitations in the DIP Financing Orders and the DIP Budget, allowance by the Court, a Borrower's receipt of an itemized billing and expense statement from a Professional Person, as applicable, and DIP Agent's right to object to the allowance or payment of any such Professional Fees; (c) to pay any of the Obligations; (d) to pay taxes with respect to any ABL Priority Collateral to the extent nonpayment thereof is secured by a Lien senior to DIP Agent's Liens thereon; (e) to pay the Pre-Petition ABL Obligations to the extent authorized by the Court; (f) with DIP Lender's consent after the occurrence of an Event of Default, to fund the costs of an orderly liquidation of the Collateral; and (g) to pay other expenses that are incurred during the pendency of the Chapter 11 Cases and described in the DIP Budget not to exceed the Permitted Variances or that are authorized by the Court in orders entered in the Chapter 11 Cases that are acceptable to DIP Agent, but excluding payment of any Pre-Petition Term Loan Obligations and any Term DIP Obligations other than interest accruing on the Term DIP Obligations and on the Pre-Petition First Lien Term Loan Obligations not to exceed the amount shown on the DIP Budget. Notwithstanding anything to the contrary contained herein, in no event shall proceeds of Revolver Loans be used to pay Professional Fees incurred in connection with the assertion of or joinder in any claim, counterclaim, action, contested matter, objection, defense or other proceeding, the purpose of which is to seek or the result of which would be to obtain any order, judgment, declaration, or similar relief (i) seeking damages from DIP Agent, any DIP Lender, Pre-Petition ABL Agent or any Pre-Petition ABL Lender on account of any alleged cause of action arising on, before or after the Petition Date; (ii) invalidating, setting aside, avoiding or subordinating, in whole or in part, (A) any of the Obligations or Pre-Petition ABL Obligations, or (B) any of the Liens granted to DIP Agent under any of the DIP Loan Documents or to Pre-Petition ABL Agent under any of the Pre-Petition ABL Loan Documents, or to either of them under the DIP Financing Orders; (iii) declaring any
3
of the DIP Loan Documents or Pre-Petition ABL Loan Documents to be invalid, not binding or unenforceable in any respect; (iv) preventing, enjoining, hindering or otherwise delaying DIP Agent's or Pre-Petition ABL Agent's enforcement of any of the DIP Loan Documents or Pre-Petition ABL Loan Documents, or any realization upon any Collateral or any Pre-Petition ABL Collateral, as applicable (unless such enforcement or realization is in direct violation of an explicit provision in any of the DIP Financing Orders); (v) declaring any Liens granted or purported to be granted under any of the DIP Loan Documents or Pre-Petition ABL Loan Documents to have a priority other than the priority set forth therein or in the DIP Financing Orders; (vi) objecting to the amount or method of calculation by DIP Agent, any DIP Lender, Pre-Petition ABL Agent, or any Pre-Petition ABL Lender of the Pre-Petition ABL Obligations or any of the Obligations, or any accounting rendered by DIP Agent, any DIP Lender, Pre-Petition ABL Agent, or any Pre-Petition ABL Lender with respect to any of those obligations; or (vii) seeking to use the cash proceeds of any of the Collateral or of any of the Pre-Petition ABL Collateral other than as expressly authorized by the DIP Financing Orders, without the prior written consent of Pre-Petition ABL Lenders or DIP Lenders, as applicable. Nothing in this Section 1.1.3 shall be construed to waive DIP Agent's right to object to any requests, motions or applications made in or filed with the Court, including any applications for interim or final allowances of Professional Fees.
1.1.4. Revolver Notes. The Revolver Loans made by each DIP Lender and interest accruing thereon shall be evidenced by the records of DIP Agent and such DIP Lender. At the request of any DIP Lender, Borrowers shall deliver a Revolver Note to such DIP Lender, which shall be payable to such DIP Lender (or the assignee of such DIP Lender), shall be executed by each Borrower, and shall be completed in conformity with this Agreement. All outstanding principal amounts and accrued interest under the Revolver Loans shall be due and payable as set forth in Section 4.2 hereof.
1.1.5. Termination of Commitments. The Commitments shall terminate on the Revolver Maturity Date, unless sooner terminated in accordance with this Agreement. On the Commitment Termination Date, Borrowers shall make Full Payment of all Obligations, and any right of Borrowers to use Cash Collateral shall automatically terminate.
1.2.
Letters of Credit.
1.2.1. Existing Letters of Credit. Schedule 1.2.1 attached hereto reflects all Existing Letters of Credit as of the Petition Date. On and after the Closing Date, each Existing Letter of Credit shall be deemed to have been issued hereunder and shall cease to be regarded as part of the Pre-Petition ABL Obligations, shall constitute a Letter of Credit for all purposes hereof, and accordingly shall be entitled to all of the benefits and security of this Agreement and the other DIP Loan Documents. All fees heretofore paid in respect of such Existing Letter of Credit shall be deemed to have been paid on account of Pre-Petition ABL Obligations, and any unpaid fees in respect of such Existing Letters of Credit accrued as of the Closing Date and accruing subsequent thereto shall be deemed to be part of the Obligations.
1.2.2. Agreement to Issue. Subject to the terms and conditions of this Agreement, Letter of Credit Issuer shall issue for the account of U.S. Borrowers one or more
4
Letters of Credit from time to time during the term of this Agreement, at the request of U.S. Borrowers.
1.2.3. Amounts; Outside Expiration Date. Letter of Credit Issuer shall not have any obligation to issue any Letter of Credit at any time if: (i) the issuance of such Letter of Credit would cause the Unused DIP Letter of Credit Subfacility to be exceeded; (ii) the maximum undrawn amount of the requested Letter of Credit and all commissions, fees, and charges due from Borrowers in connection with the issuance thereof would exceed Availability at such time; or (iii) such Letter of Credit has an expiration date less than thirty (30) days prior to the DIP Commitment Termination Date or more than twelve (12) months from the date of issuance for standby letters of credit and 180 days for documentary letters of credit; provided that such Letter of Credit may have an expiration date after the DIP Commitment Termination Date if (a) each of DIP Agent and Letter of Credit Issuer consent in writing prior to the issuance thereof, and (b) all Obligations associated with any such Letter of Credit are Cash Collateralized or otherwise supported in a manner satisfactory to DIP Agent and such Letter of Credit Issuer on or prior to the DIP Commitment Termination Date. With respect to any Letter of Credit which contains any “evergreen” or automatic renewal provision, each DIP Lender shall be deemed to have consented to any such extension or renewal unless any such DIP Lender shall have provided to DIP Agent, written notice that such DIP Lender declines to consent to any such extension or renewal at least thirty (30) days prior to the date on which Letter of Credit Issuer is entitled to decline to extend or renew such Letter of Credit. If all of the requirements of this Section 1.2 are met and no Default or Event of Default has occurred and is continuing, no DIP Lender shall decline to consent to any such extension or renewal.
1.2.4. Other Conditions. In addition to conditions precedent contained in Section 10, the obligation of Letter of Credit Issuer to issue any Letter of Credit is subject to the following conditions precedent having been satisfied in a manner reasonably satisfactory to DIP Agent:
(i)
U.S. Borrowers shall have delivered to Letter of Credit Issuer, at such times and in such manner as such Letter of Credit Issuer may prescribe, an application containing the information described on Exhibit G (which shall be delivered in form and substance satisfactory to such Letter of Credit Issuer and reasonably satisfactory to DIP Agent for the issuance of such Letter of Credit) and such other documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be reasonably satisfactory to DIP Agent and Letter of Credit Issuer, and the Letter of Credit shall be issued only for purposes authorized in Section 1.1.3;
(ii)
As of the date of issuance, no order of any Governmental Authority shall purport by its terms to enjoin or restrain Letter of Credit Issuer or money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that such proposed Letter of Credit Issuer refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit; and
5
(iii)
If a Defaulting DIP Lender exists, such Defaulting DIP Lender or Borrowers have entered into arrangements satisfactory to DIP Agent and Letter of Credit Issuer to eliminate any Fronting Exposure associated with such Defaulting DIP Lender.
1.2.5. Issuance of Letters of Credit.
(i)
Request for Issuance. A U.S. Borrower requesting a Letter of Credit must notify DIP Agent of such requested Letter of Credit at least three (3) Business Days prior to the proposed issuance date. Such notice shall be irrevocable and must specify the original face amount of such Letter of Credit requested, the Business Day of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the Business Day on which such requested Letter of Credit is to expire, the purpose for which such Letter of Credit is to be issued, and the beneficiary of such requested Letter of Credit. U.S. Borrowers shall attach to such notice the proposed form of such Letter of Credit.
(ii)
Responsibilities of DIP Agent; Issuance. As of the Business Day immediately preceding the requested issuance date of a Letter of Credit, DIP Agent shall determine the amount of the applicable Unused DIP Letter of Credit Subfacility and Availability. If (x) the face amount of such requested Letter of Credit is less than the Unused DIP Letter of Credit Subfacility and (y) the amount of such requested Letter of Credit and all commissions, fees, and charges due from Borrowers in connection with the issuance thereof would not exceed Availability, DIP Agent shall cause Letter of Credit Issuer to issue such requested Letter of Credit on the requested issuance date so long as the other conditions hereof are met.
(iii)
No Extensions or Amendment. DIP Agent shall not be obligated to cause Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant hereto unless the requirements of this Section 1.2 are met as though a new Letter of Credit were being requested and issued.
1.2.6. Payments Pursuant to Letters of Credit. Each Borrower agrees jointly and severally to reimburse Letter of Credit Issuer immediately for any draw under any Letter of Credit and to pay Letter of Credit Issuer the amount of all other charges and fees payable to such Letter of Credit Issuer in connection with any Letter of Credit immediately when due, irrespective of any claim, setoff, defense or other right which any Borrower may have at any time against such Letter of Credit Issuer or any other Person. Each drawing under any Letter of Credit shall constitute a request by Borrowers to DIP Agent for a Revolver Loan in the amount of such drawing. The funding date with respect to such Borrowing shall be the date of such drawing.
1.2.7. Indemnification; Exoneration; Power of Attorney.
(i)
Assumption of Risk by Borrowers. As among Borrowers, DIP Lenders, and DIP Agent, Borrowers assume all risks of the acts and omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, DIP Lenders and DIP Agent shall not
6
be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any Person in connection with the application for and issuance of and presentation of drafts with respect to any of the Letters of Credit, even if any such document should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (C) the failure of the beneficiary of any Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (G) the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any consequences arising from causes beyond the control of DIP Lenders or DIP Agent, including any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority or (I) Letter of Credit Issuer’s honor of a draw for which the draw or any certificate fails to comply in any respect with the terms of the Letter of Credit. None of the foregoing shall affect, impair or prevent the vesting of any rights or powers of DIP Agent or any DIP Lender under this Section 1.2.7(i).
(ii)
Exoneration. Without limiting the foregoing, no action or omission whatsoever by DIP Agent or any DIP Lender (excluding any DIP Lender in its capacity as a Letter of Credit Issuer) shall result in any liability of DIP Agent or any DIP Lender to any Borrower, or relieve any Borrower of any of its obligations hereunder to any such Person. In connection with its administration of and enforcement of rights or remedies under any Letters of Credit or Letter of Credit Documents, Letter of Credit Issuer shall be entitled to act, and shall be fully protected in acting, upon any certification, documentation or communication in whatever form believed by such Letter of Credit Issuer, in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person. Letter of Credit Issuer may consult with and employ legal counsel, accountants and other experts to advise it concerning its obligations, rights and remedies, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by such experts. Letter of Credit Issuer may employ agents and attorneys-in-fact in connection with any matter relating to any Letters of Credit or Letter of Credit Documents, and shall not be liable for the negligence, default, or misconduct of any such agents and attorneys-in-fact selected by such Letter of Credit Issuer with reasonable care.
(iii)
Rights Against Letter of Credit Issuer. Nothing contained in this Agreement is intended to limit any Borrower's rights, if any, with respect to Letter of Credit Issuer which arise as a result of any Letter of Credit Documents.
(iv)
Account Party. Borrowers hereby authorize and direct any Letter of Credit Issuer to name one or more Borrowers as the “Account Party” therein and to deliver to DIP Agent all instruments, documents and other writings and property received
7
by such Letter of Credit Issuer pursuant to the Letter of Credit, and to accept and rely upon DIP Agent’s instructions and agreements with respect to all matters arising in connection with such Letter of Credit or the application therefor.
1.2.8. Participations.
(i)
Immediately upon the issuance by Letter of Credit Issuer of any Letter of Credit, each DIP Lender shall be deemed to have irrevocably and unconditionally purchased and received from such Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation equal to the Pro Rata share of such DIP Lender (a “Participating DIP Lender”) in all Letter of Credit Outstandings arising in connection with such Letter of Credit and any security therefor or guaranty pertaining thereto, but in no event greater than an amount which, when added to such DIP Lender’s Pro Rata share of all Revolver Loans and Letter of Credit Outstandings then outstanding, exceeds such DIP Lender’s Commitment.
(ii)
If Letter of Credit Issuer makes any payment under a Letter of Credit and Borrowers do not repay or cause to be repaid the amount of such payment on the applicable reimbursement date, such Letter of Credit Issuer shall promptly notify DIP Agent, which shall promptly notify each Participating DIP Lender, of such payment and each Participating DIP Lender shall promptly (and in any event within one (1) Business Day after its receipt of notice from DIP Agent) and unconditionally pay to DIP Agent, for the account of such Letter of Credit Issuer, in immediately available funds, the amount of such Participating DIP Lender’s Pro Rata share of such payment, and DIP Agent shall promptly pay such amounts to such Letter of Credit Issuer. If a Participating DIP Lender does not make its Pro Rata share of the amount of such payment available to DIP Agent, on a timely basis as herein provided, such Participating DIP Lender agrees to pay to DIP Agent for the account of such Letter of Credit Issuer, forthwith on demand, such amount together with interest thereon at the Federal Funds Rate until paid. The failure of any Participating DIP Lender to make available to DIP Agent for the account of such Letter of Credit Issuer such Participating DIP Lender’s Pro Rata share of the Letter of Credit Outstandings shall not relieve any other Participating DIP Lender of its obligation hereunder to make available to DIP Agent its Pro Rata share of the Letter of Credit Outstandings, but no Participating DIP Lender shall be responsible for the failure of any other Participating DIP Lender to make available to DIP Agent its Pro Rata share of the Letter of Credit Outstandings on the date such payment is to be made.
(iii)
Whenever Letter of Credit Issuer receives a payment on account of the Letter of Credit Outstandings, including any interest thereon, as to which DIP Agent has previously received payments from any DIP Lender for the account of such Letter of Credit Issuer, such Letter of Credit Issuer shall promptly pay to each Participating DIP Lender which has funded its participating interest therein, in immediately available funds, an amount equal to such Participating DIP Lender’s Pro Rata share thereof.
(iv)
The obligation of each Participating DIP Lender to make payments to DIP Agent for the account of Letter of Credit Issuer in connection with such Letter of Credit Issuer’s payment under a Letter of Credit shall be absolute, unconditional and
8
irrevocable, not subject to any counterclaim, setoff, qualification or exception whatsoever (other than for such Letter of Credit Issuer’s gross negligence or willful misconduct), and shall be made in accordance with the terms and conditions of this Agreement under all circumstances and irrespective of whether or not any or all Borrowers may assert or have any claim for any lack of validity or unenforceability of this Agreement or any of the other Loan Documents; the existence of any Default or Event of Default; any draft, certificate or other document presented under a Letter of Credit having been determined to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; the existence of any setoff or defense any Obligor may have with respect to any of the Obligations; or the termination of the Commitments.
(v)
Neither Letter of Credit Issuer nor any of its officers, directors, employees or agents shall be liable to any Participating DIP Lender for any action taken or omitted to be taken under or in connection with any Letter of Credit Documents except as a result of actual gross negligence or willful misconduct on the part of such Letter of Credit Issuer. Letter of Credit Issuer does not assume any responsibility for any failure or delay in performance or breach by any or all Borrowers or any other Person of any of their respective obligations under any of the Letter of Credit Documents. Letter of Credit Issuer does not make to Participating DIP Lenders any express or implied warranty, representation or guaranty with respect to the Collateral, any Letter of Credit Documents, or any Obligor. Letter of Credit Issuer shall not be responsible to any Participating DIP Lender for any recitals, statements, information, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of or any of the Letter of Credit Documents; the validity, genuineness, enforceability, collectibility, value or sufficiency of any of the Collateral or the perfection of any Lien therein; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Borrower, any other Obligor, or any Account Debtor. In connection with its administration of and enforcement of rights or remedies under any of the Letter of Credit Documents, Letter of Credit Issuer shall be entitled to act, and shall be fully protected in acting upon, any certification, notice or other communication in whatever form believed by such Letter of Credit Issuer, in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person. Letter of Credit Issuer may consult with and employ legal counsel, accountants and other experts and to advise it concerning its rights, powers and privileges under any Letter of Credit Documents and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by such experts. Letter of Credit Issuer may employ agents and attorneys in fact in connection with any matter relating to any Letter of Credit Documents and shall not be liable for the negligence, default or misconduct of any such agents or attorneys in fact selected by such Letter of Credit Issuer with reasonable care; nor shall Letter of Credit Issuer have any liability to any Participating DIP Lender by reason of Letter of Credit Issuer’s refraining to take any action under any of the Letter of Credit Documents without having first received written instructions from the Required DIP Lenders to take such action.
(vi)
Upon the request of any Participating DIP Lender, Letter of Credit Issuer shall furnish to such Participating DIP Lender copies (to the extent then available to such
9
Letter of Credit Issuer) of each outstanding Letter of Credit and related Letter of Credit Documents and all other documentation pertaining to such Letter of Credit as may be in the possession of such Letter of Credit Issuer and reasonably requested from time to time by such Participating DIP Lender.
1.2.9. Supporting Letter of Credit; Cash Collateral. If, notwithstanding the provisions of Section 1.2.3, any Letter of Credit is outstanding at any time (a) that an Event of Default under Section 11.1.1 exists or (b) within twenty (20) Business Days prior to the Commitment Termination Date, then Borrowers shall, at Letter of Credit Issuer’s or DIP Agent’s request, Cash Collateralize all outstanding Letters of Credit. Borrowers shall, on demand by Letter of Credit Issuer or DIP Agent from time to time, Cash Collateralize the Fronting Exposure of any Defaulting DIP Lender. If Borrowers fail to provide any Cash Collateral as required hereunder, DIP Lenders may (and shall upon direction of DIP Agent) advance, as Revolver Loans, the amount of the Cash Collateral required (whether or not the Commitments have terminated, an Out of Formula Condition exists or an Out of Formula Loan results thereform, or the conditions in Section 10 are satisfied).
1.3.
Sections 364(c)(1) and 503(b) Priority. All Revolver Loans, Letters of Credit and other credit accommodations made or issued hereunder to, and all Bank Product Obligations owing by, any Borrower shall constitute and be deemed a cost and expense of administration in the Chapter 11 Cases and shall be entitled to administrative status under Section 503(b) of the Bankruptcy Code and priority under Section 364(c)(1) of the Bankruptcy Code ahead of all other costs and expenses of administration incurred in any of the Chapter 11 Cases or in any superseding Chapter 7 case, as and to the extent set forth in each DIP Financing Order.
SECTION 2. INTEREST, FEES AND CHARGES
2.1.
Interest.
2.1.1. Rates of Interest. Borrowers jointly and severally agree to pay interest in respect of all unpaid principal amounts of the Revolver Loans from the respective dates such principal amounts are advanced until paid (whether at stated maturity, on acceleration or otherwise) at a rate per annum equal to (i) for Revolver Loans made or outstanding as Base Rate Loans, the Applicable Margin plus the Base Rate in effect from time to time; or (ii) for Revolver Loans made or outstanding as LIBOR Loans, the Applicable Margin plus the LIBOR Rate for the applicable Interest Period selected by a Borrower in conformity with this Agreement. Upon determining the LIBOR Rate for any Interest Period requested by Borrowers, DIP Agent shall promptly notify Borrowers thereof by telephone and promptly confirm the same in writing. Such determination shall, absent manifest error, be final, conclusive and binding on all parties and for all purposes. The applicable rate of interest for all Revolver Loans (or portions thereof) bearing interest based upon the Base Rate shall be increased or decreased, as the case may be, by an amount equal to any increase or decrease in the Base Rate, with such adjustments to be effective as of the opening of business on the day that any such change in the Base Rate becomes effective. Interest on each Revolver Loan shall accrue from and including the date on which such Revolver Loan is made, converted to a Revolver Loan of another Type or continued as a LIBOR Loan to (but excluding) the date of any repayment thereof. If a Revolver Loan is repaid on the same day made, one (1) day's interest shall accrue. The Base Rate on the date
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hereof is 3.25% per annum, and, therefore, the rate of interest in effect on the date hereof, expressed in simple interest terms, is 6.50% per annum for Base Rate Revolver Loans.
2.1.2. Conversions and Continuations.
(i)
Borrowers may on any Business Day, subject to the giving of a proper Notice of Conversion/Continuation as hereinafter described, elect (A) to continue all or any part of a LIBOR Loan by selecting a new Interest Period therefor, to commence on the last day of the immediately preceding Interest Period, or (B) to convert all or any part of a Revolver Loan of one Type into a Revolver Loan of another Type; provided, however, that no outstanding Revolver Loans may be converted into or continued as LIBOR Loans when any Default or Event of Default exists. Any conversion of a LIBOR Loan into a Base Rate Loan shall be made on the last day of the Interest Period for such LIBOR Loan. Any conversion or continuation made with respect to less than the entire outstanding balance of the Revolver Loans must be allocated among DIP Lenders on a Pro Rata basis, and the Interest Period for Revolver Loans converted into or continued as LIBOR Loans shall be coterminous for each DIP Lender.
(ii)
Whenever any Borrower desires to convert or continue Revolver Loans under Section 2.1.2(i), SRC shall give DIP Agent written notice (which may be by internet or telephonic notice promptly confirmed in writing) substantially in the form of Exhibit B, signed by an authorized officer of such Borrower, at least one (1) Business Day before the requested conversion date, in the case of a conversion into a Base Rate Loan, and at least three (3) Business Days before the requested conversion or continuation date, in the case of a conversion into or continuation of a LIBOR Loan. Promptly after receipt of a Notice of Conversion/Continuation, DIP Agent shall notify each DIP Lender in writing of the proposed conversion or continuation. Each such Notice of Conversion/Continuation shall be irrevocable and shall specify the aggregate principal amount of the Revolver Loans to be converted or continued, the date of such conversion or continuation (which shall be a Business Day) and whether such Revolver Loans are being converted into or continued as LIBOR Loans (and, if so, the duration of the Interest Period to be applicable thereto) or Base Rate Loans. If, upon the expiration of any Interest Period in respect of any LIBOR Loans Borrowers shall have failed to deliver the Notice of Conversion/Continuation, Borrowers shall be deemed to have elected to convert such LIBOR Loans to Base Rate Loans.
2.1.3. Interest Periods. In connection with the making or continuation of, or conversion into, each Borrowing of LIBOR Loans, Borrowers shall select an interest period (each an “Interest Period”) to be applicable to such LIBOR Loan, which interest period shall commence on the date such LIBOR Loan is made and shall be for a period of thirty (30) days; provided, however, that:
(i)
the initial Interest Period for a LIBOR Loan shall commence on the date of such Borrowing (including the date of any conversion from a Revolver Loan of another Type) and each Interest Period occurring thereafter in respect of such Revolver Loan shall commence on the date on which the next preceding Interest Period expires;
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(ii)
if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day, provided that, if any Interest Period in respect of LIBOR Loans would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day;
(iii)
any Interest Period that begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall expire on the last Business Day of such calendar month; and
(iv)
no Interest Period shall extend beyond the Revolver Maturity Date.
2.1.4. Interest Rate Not Ascertainable. If, due to any circumstance affecting the London interbank market, DIP Agent determines that adequate and fair means do not exist for ascertaining LIBOR Rate on any applicable date or any Interest Period is not available on the basis provided herein, then, and in any such event, DIP Agent shall forthwith give notice (by telephone and promptly confirmed in writing which may be by electronic means) to Borrowers of such determination. Until DIP Agent notifies Borrowers that the circumstances giving rise to the suspension described herein no longer exist, the obligation of DIP Lenders to make LIBOR Loans shall be suspended, and such affected Revolver Loans then outstanding shall, at the end of the then applicable Interest Period or at such earlier time as may be required by Applicable Law, bear the same interest as Base Rate Loans.
2.1.5. Default Rate of Interest. After the occurrence of any Event of Default and if DIP Agent or the Required DIP Lenders in their discretion so elect, the Obligations shall bear interest at the Default Rate (whether before or after any judgment). Each Borrower acknowledges that the cost and expense to DIP Agent and DIP Lenders due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate DIP Agent and DIP Lenders for such cost and expense (each Borrower further acknowledging that the Default Rate may not be the only compensation that DIP Agent and DIP Lenders require to cover costs and expenses incurred in connection with any waiver, forbearance or other agreement after the occurrence of an Event of Default).
2.2.
Fees. In consideration of DIP Lenders' establishment of the Commitments in favor of Borrowers, and DIP Agent’s agreement to serve as collateral and administrative agent hereunder, Borrowers, jointly and severally, agree to pay the following fees:
2.2.1. Closing Fee. On the Closing Date, Borrowers shall pay to DIP Agent, for the Pro Rata benefit of DIP Lenders, a closing fee in the amount of $625,000.
2.2.2. Unused Commitment Fee. Borrowers shall pay to DIP Agent, for the Pro Rata benefit of DIP Lenders, a fee equal to the Unused Commitment Fee Rate times the amount by which the Revolver Commitments exceed the average daily balance of Revolver Loans and stated amounts of Letters of Credit during any month. Such fee shall be payable in arrears, on the first day of each month and on the Commitment Termination Date; but if the Commitments are terminated on a day other than the first day of a month, then any such fee
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payable for the month in which termination shall occur shall be paid on the effective date of such termination.
2.2.3. Letter of Credit Fee. Borrowers shall pay to DIP Agent, for the Pro Rata benefit of the DIP Lenders, for each Letter of Credit issued or deemed issued hereunder after the Petition Date, a fee (the “Letter of Credit Fee”) equal to the Letter of Credit Fee Percentage per annum in effect from time to time and to DIP Agent for the benefit of Letter of Credit Issuer a fronting fee of twentyfive (25) basis points per annum of the undrawn face amount of such Letter of Credit, and to Letter of Credit Issuer, all reasonable out of pocket costs, fees and expenses incurred by such Letter of Credit Issuer in connection with the application for, processing of, issuance of, or amendment to such Letter of Credit, which costs, fees and expenses shall not include any additional “fronting fee” to such Letter of Credit Issuer. The Letter of Credit Fee shall be payable monthly in arrears on the first day of each month following any month in which a Letter of Credit is outstanding and on the Commitment Termination Date. The Letter of Credit Fee shall be computed on the basis of a 360 day year for the actual number of days elapsed.
2.2.4. Audit and Appraisal Fees. Borrowers shall reimburse DIP Agent and DIP Lenders for all reasonable costs and expenses incurred by DIP Agent and DIP Lenders in connection with all audits, inspections, examinations and appraisals with respect to any Obligor or Collateral as DIP Agent shall deem appropriate in the exercise of its reasonable credit judgment; provided, however, Borrowers shall only be obligated to reimburse DIP Agent for up to four (4) field examinations and up to two (2) Inventory Appraisals per Fiscal Year; and provided further that upon and during the continuance of an Event of Default, Borrowers shall be obligated to reimburse DIP Agent for any and all field examinations and Inventory Appraisals conducted by DIP Agent or a third party on its behalf. The foregoing fees shall be due and payable ten (10) days after Borrowers receive invoices therefor from DIP Agent; provided, however, upon and during the continuance of an Event of Default, such fees shall be due and payable on demand. On the Closing Date, Borrowers shall pay to DIP Agent all appraisal and audit fees incurred by DIP Agent prior to the Closing Date in connection with the consummation of the transactions evidenced hereby together with all reasonable out of pocket expenses incurred by DIP Agent in connection therewith, which fees and expenses shall be described in reasonable detail in an invoice from DIP Agent delivered to Borrowers not less than one (1) Business Day prior to the Closing; provided that failure to provide such invoice within such time period shall not relieve Borrowers of their obligation to pay DIP Agent for such fees and expenses. Borrowers agree to pay DIP Agent’s then standard charges for examination activities, including the standard charges of DIP Agent’s internal examination and appraisal groups (such customary charges are currently $1,100 per day per employee for each day that an employee of DIP Agent shall be engaged in any field examination or audit, plus all reasonable out of pocket expenses incurred in connection therewith), as well as the charges of any third party used for such purposes.
2.2.5. General Provisions. All fees shall be fully earned by the identified recipient thereof pursuant to the foregoing provisions of this Agreement on the due date thereof (and, in the case of a Letter of Credit, upon each issuance, renewal or extension of such Letter of Credit) and, except as otherwise set forth herein or required by Applicable Law, shall not be subject to rebate, refund or proration. All fees provided for in Section 2.2 are and shall be
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deemed to be compensation for services and are not, and shall not be deemed to be, interest or any other charge for the use, forbearance or detention of money.
2.3.
Computation of Interest and Fees. All interest, fees and other charges provided for in this Agreement that are calculated as a per annum percentage of any amount, shall be calculated daily and shall be computed on the actual number of days elapsed over a year of 365/366 days for Base Rate Loans and 360 days for LIBOR Loans and all fees and charges. For purposes of computing interest and other charges hereunder, all Payment Items and other forms of payment received by DIP Agent shall be deemed applied by DIP Agent on account of the Obligations (subject to final payment of such items) on the Business Day that DIP Agent receives such items in immediately available funds in the Payment Account, and DIP Agent shall be deemed to have received such Payment Item on the date specified in Section 4.1 hereof. DIP Agent's determination of any interest, fees, charges or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.
2.4.
Reimbursement Obligations.
2.4.1. Borrowers shall reimburse DIP Agent (and to the extent provided in Section 4.6.2, DIP Lenders) for all Extraordinary Expenses. Borrowers shall also reimburse DIP Agent and, during any period that an Event of Default then exists, each DIP Lender, for all accounting, appraisal and other fees and expenses (including reasonable attorneys’ fees) incurred by DIP Agent or any DIP Lender in connection with (i) the negotiation and preparation of any of the DIP Loan Documents, any amendment or modification thereto, any waiver of any Default or Event of Default thereunder, or any restructuring or forbearance with respect thereto; (ii) the monitoring and administration of and actions relating to any of the Chapter 11 Cases, any Collateral, any of the DIP Loan Documents and the transactions contemplated thereby, to the extent that such fees and expenses are expressly provided for in this Agreement or any of the other DIP Loan Documents; (iii) action taken to perfect or maintain the perfection or priority of any of DIP Agent’s Liens with respect to any of the Collateral; (iv) subject to the limits of Section 2.2.4, each audit, inspection, examination or appraisal with respect to any Obligor or Collateral, whether prepared by DIP Agent’s personnel or a third party; (v) any effort to verify, protect, preserve, or restore any of the Collateral or to collect, sell, liquidate or otherwise dispose of or realize upon any of the Collateral; (vi) subject to the provisions of Section 14.2 of this Agreement, any litigation, contest, dispute, suit, proceeding or action (whether instituted by or against DIP Agent, any DIP Lender, any Obligor or any other Person) in any way arising out of or relating to any of the Collateral (or the validity, perfection or priority of any of DIP Agent’s Liens thereon), any of the DIP Loan Documents, or the validity, allowance or amount of any of the Obligations; (vii) the protection or enforcement of any rights or remedies of DIP Agent or any DIP Lender in any of the Chapter 11 Cases; (viii) any actions taken to maintain any insurance required hereunder or under any other DIP Loan Document; and (ix) any other action taken by DIP Agent or any DIP Lender to enforce any of the rights or remedies of DIP Agent or such DIP Lender against any Obligor or any Account Debtors to enforce collection of any of the Obligations or payments with respect to any of the Collateral. All amounts chargeable to Borrowers under this Section 2.4 shall constitute Obligations that are secured by all of the Collateral and shall be payable ten (10) days after Borrowers receive demand therefor from DIP Agent or applicable DIP Lender; provided, however, upon and during the continuance of an Event of Default, such fees and expenses shall be due and payable on demand. Borrowers shall
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also reimburse DIP Agent for reasonable expenses incurred by DIP Agent in its administration of any of the Collateral to the extent and in the manner provided in Section 7 hereof or in any of the other DIP Loan Documents. The foregoing shall be in addition to, and shall not be construed to limit, any other provision of any of the DIP Loan Documents regarding the reimbursement by Borrowers of costs, expenses or liabilities suffered or incurred by DIP Agent or any DIP Lender.
2.4.2. If at any time DIP Agent or (with the consent of DIP Agent) any DIP Lender shall agree to indemnify any Person against losses or damages that such Person may suffer or incur in its dealings or transactions with any or all of Borrowers, or shall guarantee any liability or obligation of any or all of Borrowers to such Person, or otherwise shall provide assurances of any Borrower’s payment or performance under any agreement with such Person, including indemnities, guaranties or other assurances of payment or performance given by DIP Agent or any DIP Lender with respect to Bank Products or Letters of Credit, then the Contingent Obligation of DIP Agent or any DIP Lender providing any such indemnity, guaranty or other assurance of payment or performance, together with any payment made or liability incurred by DIP Agent or any DIP Lender in connection therewith, shall constitute Obligations that are secured by the Collateral and, subject to the provisions of Section 14.2 of this Agreement, Borrowers shall repay, on demand, any amount so paid or any liability incurred by DIP Agent or any DIP Lender in connection with any such indemnity, guaranty or assurance. Nothing herein shall be construed to impose upon DIP Agent or any DIP Lender any obligation to provide any such indemnity, guaranty or assurance except to the extent provided in Section 1.2 hereof. The foregoing agreement of Borrowers shall apply whether or not such indemnity, guaranty or assurance is in writing or oral and regardless of any Borrower’s knowledge of the existence thereof, and shall be in addition to any provision of the DIP Loan Documents regarding reimbursement by Borrowers of costs, expenses or liabilities suffered or incurred by DIP Agent or any DIP Lender.
2.5.
Bank Charges. Borrowers shall pay to DIP Agent, within ten (10) days after invoice prior to the occurrence of an Event of Default or on demand upon and during the continuance of an Event of Default, any and all fees, costs or expenses which DIP Agent or any DIP Lender pays to a bank or other similar institution (including any fees paid by DIP Agent or any DIP Lender to any DIP Participant) arising out of or in connection with (i) the forwarding to any Borrower or any other Person on behalf of any Borrower by DIP Agent or any DIP Lender of proceeds of any Revolver Loan made by DIP Lenders to any Borrower pursuant to this Agreement and (ii) the depositing for collection by DIP Agent or any DIP Lender of any Payment Item received or delivered to DIP Agent or any DIP Lender on account of the Obligations. Each Borrower acknowledges and agrees that DIP Agent may charge such costs, fees and expenses to Borrowers based upon DIP Agent’s good faith estimate of such costs, fees and expenses as they are incurred by DIP Agent or any DIP Lender.
2.6.
Illegality. Notwithstanding anything to the contrary contained elsewhere in this Agreement, if (i) any change in any law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration thereof shall make it unlawful for a DIP Lender to make or maintain a LIBOR Loan or to give effect to its obligations as contemplated hereby with respect to a LIBOR Loan or (ii) at any time such DIP Lender determines that the making or continuance of any LIBOR Loan has become impracticable as a result of a contingency occurring after the date hereof which adversely affects the London
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interbank market, then such DIP Lender shall give, after such determination, DIP Agent and Borrowers notice thereof and may thereafter (a) declare that LIBOR Loans will not thereafter be made by such DIP Lender, whereupon any request by a U.S. Borrower for a LIBOR Loan shall be deemed a request for a Base Rate Loan unless such DIP Lender’s declaration shall be subsequently withdrawn (which declaration shall be withdrawn promptly after the cessation of the circumstances described in clause (i) or (ii) above); and (b) require that all outstanding LIBOR Loans made by such DIP Lender be converted to Base Rate Loans, under the circumstances of clause (i) or (ii) of this Section 2.6 insofar as such DIP Lender determines the continuance of LIBOR Loans to be impracticable, in which event all such LIBOR Loans shall be converted automatically to Base Rate Loans as of the date of any Borrower’s receipt of the aforesaid notice from such DIP Lender.
2.7.
Increased Costs.
2.7.1. If, by reason of any Change in Law:
(i)
any Recipient shall be subject to Taxes (other than (i) Indemnified Taxes, (ii) Taxes described in clauses (b), (c) or (d) of the definition of Excluded Taxes, or (iii) Connection Income Taxes) with respect to any Revolver Loan, Letter of Credit, Commitment or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(ii)
any reserve (including any imposed by the Board of Governors), special deposits or similar requirement against assets of, deposits with or for the account of, or credit extended by, any DIP Lender or Letter of Credit Issuer shall be imposed or deemed applicable or any other condition affecting its LIBOR Loans, a Letter of Credit, any of the DIP Loan Documents or its obligation to make LIBOR Loans, to participate in Letter of Credit obligations or to extend any other credit hereunder shall be imposed on such DIP Lender or Letter of Credit Issuer;
and as a result thereof there shall be any increase in the cost to such DIP Lender of agreeing to make or making, funding or maintaining LIBOR Loans (except to the extent already included in the determination of the applicable LIBOR Rate for LIBOR Loans), or to increase the costs to such DIP Lender or Letter of Credit Issuer of participating in, issuing or maintaining any Letter of Credit, or there shall be a reduction in the amount received or receivable by such DIP Lender or Letter of Credit Issuer, then such DIP Lender or Letter of Credit Issuer shall, promptly after determining the existence or amount of any such increased costs or reduced amounts for which such DIP Lender or Letter of Credit Issuer seeks payment hereunder, give Borrowers a certificate as to the amount of such increased cost or reduced amounts thereof (with a copy to DIP Agent) and, provided that any such additional amount shall be applicable to all customers of such DIP Lender or Letter of Credit Issuer under loan facilities of the type provided for under this Agreement, Borrowers shall pay to DIP Agent for the account of such DIP Lender or Letter of Credit Issuer an additional amount sufficient to indemnify such DIP Lender or Letter of Credit Issuer against such increased costs or reduced amounts within ten (10) days after the receipt of such certificate; provided, however, Borrowers shall pay such
16
amount on the date of the receipt of such certificate upon and during the continuance of an Event of Default hereunder.
2.7.2. DIP Agent will promptly notify SRC and DIP Lenders if, in connection with a Borrowing of, conversion to or continuation of a LIBOR Loan, (a) DIP Agent determines that (i) Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable Revolver Loan amount or Interest Period, or (ii) adequate and reasonable means do not exist for determining LIBOR for the applicable Interest Period; or (b) the Required DIP Lenders determine for any reason that LIBOR for the applicable Interest Period does not adequately and fairly reflect the cost to DIP Lenders of funding such Revolver Loan. Thereafter, the obligation of DIP Lenders to make or maintain LIBOR Loans shall be suspended to the extent of the affected LIBOR Loan or Interest Period until DIP Agent (upon instruction by the Required DIP Lenders) revokes the notice. Upon receipt of such notice, SRC may revoke any pending request for a Borrowing, conversion or continuation of a LIBOR Loan or, failing that, will be deemed to have submitted a request for a Base Rate Loan.
For purposes of this Section 2.7, all references to a DIP Lender or Letter of Credit Issuer shall be deemed to include any bank holding company or bank parent of such DIP Lender or Letter of Credit Issuer.
2.8.
Capital Adequacy. If any DIP Lender or Letter of Credit Issuer determines that after the date hereof any Change in Law has the effect of reducing the return on any DIP Lender’s or Letter of Credit Issuer’s capital to a level below that which such DIP Lender or Letter of Credit Issuer could have achieved (taking into consideration such DIP Lender’s and its holding company’s policies or such Letter of Credit Issuer’s and its holding company’s policies with respect to capital adequacy immediately before such adoption, change or compliance and assuming that such DIP Lender’s or Letter of Credit Issuer’s capital was fully utilized prior to such adoption, change or compliance) but for such Change in Law:
(i)
DIP Agent shall promptly, after its receipt of a certificate from such DIP Lender or Letter of Credit Issuer setting forth such DIP Lender’s or Letter of Credit Issuer’s determination of such occurrence, give notice thereof to Borrowers and DIP Lenders; and
(ii)
provided that any such additional fee shall be applicable to all customers of such DIP Lender or Letter of Credit Issuer under loan facilities of the type provided for under this Agreement, Borrowers shall pay to DIP Agent, for the account of such DIP Lender or Letter of Credit Issuer, as an additional fee from time to time, within ten (10) days of such notice prior to the occurrence of an Event of Default or on demand upon and during the continuance of an Event of Default, such amount as such DIP Lender or Letter of Credit Issuer certifies to be the amount reasonably calculated to compensate such DIP Lender or Letter of Credit Issuer for such reduction.
Such certificate will set forth, in reasonable detail, the nature of the occurrence giving rise to such compensation, the additional amount or amounts to be paid to such DIP Lender or Letter of Credit Issuer (including the basis for such DIP Lender’s or Letter of Credit Issuer’s determination of such amount), and the method by which such amounts were determined. In
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determining such amount, such DIP Lender or Letter of Credit Issuer may use any reasonable averaging and attribution method. For purposes of this Section 2.8, all references to a DIP Lender or Letter of Credit Issuer shall be deemed to include any bank holding company or bank parent of such DIP Lender or Letter of Credit Issuer. Notwithstanding the foregoing, Borrowers shall not be liable to DIP Agent, any DIP Lender or Letter of Credit Issuer for any amounts claimed under this Section 2.8 in connection with events that occurred more than 180 days before Borrowers’ receipt of a DIP Lender’s or Letter of Credit Issuer’s certificate claiming entitlement to such compensation.
2.9.
Funding Losses. If for any reason (other than due to a default by a DIP Lender or as a result of a DIP Lender’s refusal to honor a LIBOR Loan request due to circumstances described in Section 2.6 or 2.7 hereof) (i) a Borrowing of, or conversion to or continuation of, LIBOR Loans does not occur on the date specified therefor in a Notice of Borrowing or Notice of Conversion/ Continuation (whether or not withdrawn), (ii) if any repayment (including any conversions pursuant to Section 2.1.2 hereof) of any of its LIBOR Loans occurs on a date that is not the last day of an Interest Period applicable thereto, (iii) a DIP Lender (other than a Defaulting DIP Lender) is required to assign a LIBOR Loan prior to the end of its Interest Period pursuant to Section 12.17, or (iv) if for any reason Borrowers default in their obligation to repay LIBOR Loans when required by the terms of this Agreement, then Borrowers shall jointly and severally pay to DIP Agent, for the ratable benefit of the affected DIP Lenders, within ten (10) days after DIP Agent’s or an affected DIP Lender’s demand therefor, DIP Agent’s customary administrative charges and to each DIP Lender all resulting losses and expenses, including loss of anticipated profits and any loss or expense arising from liquidation or redeployment of funds or from fees payable to terminate deposits of matching funds. Borrowers shall pay such amount upon presentation by DIP Agent of a statement setting forth the amount and DIP Agent’s calculation thereof pursuant hereto, which statement shall be deemed true and correct absent manifest error. For purposes of this Section 2.9, all references to a DIP Lender shall be deemed to include any bank holding company or bank parent of such DIP Lender. DIP Lenders shall not be required to purchase Dollar deposits in any interbank or offshore Dollar market to fund any LIBOR Loan, but this Section 2.9 shall apply as if each DIP Lender had purchased such deposits.
2.10.
Maximum Interest. Regardless of any provision contained in any of the DIP Loan Documents, in no contingency or event whatsoever shall the aggregate of all amounts that are contracted for, charged or received by DIP Agent and DIP Lenders pursuant to the terms of this Agreement or any of the other DIP Loan Documents and that are deemed interest under Applicable Law exceed the highest rate permissible under any Applicable Law. No agreements, conditions, provisions or stipulations contained in this Agreement or any of the other DIP Loan Documents or the exercise by DIP Agent of the right to accelerate the payment or the maturity of all or any portion of the Obligations, or the exercise of any option whatsoever contained in any of the DIP Loan Documents, or the prepayment by any or all Borrowers of any of the Obligations, or the occurrence of any contingency whatsoever, shall entitle DIP Agent or any DIP Lender to charge or receive, in any event, interest or any charges, amounts, premiums or fees deemed interest by Applicable Law (such interest, charges, amounts, premiums and fees referred to herein collectively as “Interest”) in excess of the Maximum Rate and in no event shall any Borrower be obligated to pay Interest exceeding such Maximum Rate, and all agreements, conditions or stipulations, if any, which may in any event or contingency whatsoever operate to
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bind, obligate or compel any Borrower to pay Interest exceeding the Maximum Rate shall be without binding force or effect, at law or in equity, to the extent only of the excess of Interest over such Maximum Rate. If any Interest is charged or received in excess of the Maximum Rate (“Excess”), each Borrower acknowledges and stipulates that any such charge or receipt shall be the result of an accident and bona fide error, and such Excess, to the extent received, shall be applied first to reduce the principal Obligations and the balance, if any, returned to Borrowers, it being the intent of the parties hereto not to enter into a usurious or otherwise illegal relationship. The right to accelerate the maturity of any of the Obligations does not include the right to accelerate any Interest that has not otherwise accrued on the date of such acceleration, and DIP Agent and DIP Lenders do not intend to collect any unearned Interest in the event of any such acceleration. Each Borrower recognizes that, with fluctuations in the rates of interest set forth in Section 2.1.1 of this Agreement and in the Maximum Rate, such an unintentional result could inadvertently occur. All monies paid to DIP Agent or any DIP Lender hereunder or under any of the other DIP Loan Documents, whether at maturity or by prepayment, shall be subject to any rebate of unearned Interest as and to the extent required by Applicable Law. By the execution of this Agreement, each Borrower covenants that (i) the credit or return of any Excess shall constitute the acceptance by such Borrower of such Excess, and (ii) no Borrower shall seek or pursue any other remedy, legal or equitable, against DIP Agent or any DIP Lender, based in whole or in part upon contracting for, charging or receiving any Interest in excess of the Maximum Rate. For the purpose of determining whether or not any Excess has been contracted for, charged or received by DIP Agent or any DIP Lender, all Interest at any time contracted for, charged or received from any or all Borrowers in connection with any of the DIP Loan Documents shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread in equal parts throughout the full term of the Obligations. Borrowers, DIP Agent and DIP Lenders shall, to the maximum extent permitted under Applicable Law, (i) characterize any non-principal payment as an expense, fee or premium rather than as Interest and (ii) exclude voluntary prepayments and the effects thereof. The provisions of this Section 2.10 shall be deemed to be incorporated into every DIP Loan Document (whether or not any provision of this Section is referred to therein). All such DIP Loan Documents and communications relating to any Interest owed by any or all Borrowers and all figures set forth therein shall, for the sole purpose of computing the extent of Obligations, be automatically recomputed by Borrowers, and by any court considering the same, to give effect to the adjustments or credits required by this Section 2.10.
SECTION 3. LOAN ADMINISTRATION
3.1.
Manner of Borrowing and Funding Revolver Loans.
Borrowings under the Commitments established pursuant to Section 1.1 hereof shall be made and funded as follows:
3.1.1. Notice of Borrowing.
(i)
Whenever U.S. Borrowers desire to make a Borrowing under Section 1.1 of this Agreement, U.S. Borrowers shall give DIP Agent prior written notice (which may be by internet or telephonic notice promptly confirmed in writing) of such Borrowing request (a “Notice of Borrowing”), which shall be in the form of Exhibit C annexed hereto and signed by an authorized officer of SRC. Such Notice of Borrowing shall be given by such U.S. Borrower no later than 12:00 noon at the office of DIP Agent
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designated by DIP Agent from time to time (a) on the Business Day of the requested funding date of such Borrowing, in the case of Base Rate Loans, and (b) at least three (3) Business Days prior to the requested funding date of such Borrowing, in the case of LIBOR Loans. Notices received after 12:00 noon shall be deemed received on the next Business Day. The Revolver Loans made by each DIP Lender on the Closing Date shall be made as Base Rate Loans and thereafter may be made or continued as or converted into Base Rate Loans or LIBOR Loans. Each Notice of Borrowing (or telephonic notice thereof) shall be irrevocable and shall specify (a) the principal amount of the Borrowing, (b) the date of Borrowing (which shall be a Business Day), (c) whether the Borrowing is to consist of Base Rate Loans or LIBOR Loans, (d) in the case of LIBOR Loans, the duration of the Interest Period to be applicable thereto, and (e) the account of U.S. Borrowers to which the proceeds of such Borrowing are to be disbursed. U.S. Borrowers may not request any LIBOR Loans if an Event of Default exists.
(ii)
Unless payment is otherwise timely made by Borrowers, the becoming due of any amount required to be paid under this Agreement or any of the other DIP Loan Documents with respect to any Obligations (whether as principal, accrued interest, fees or other charges, including Extraordinary Expenses, Bank Product Obligations, and the repayment of any Letter of Credit Outstandings) shall be deemed irrevocably to be a request (without any requirement for the submission of a Notice of Borrowing) for Revolver Loans on the due date of, and in an aggregate amount required to pay, such Obligations, and the proceeds of such Revolver Loans may be disbursed by way of direct payment of the relevant Obligation and shall bear interest as a Revolver Loan. Neither DIP Agent nor any DIP Lender shall have any obligation to Borrowers to honor any deemed request for a Revolver Loan after the Commitment Termination Date, when an Out of Formula Condition exists or would result therefrom, or when any condition precedent set forth in Section 10 hereof is not satisfied, but may do so in their discretion and without regard to the existence of, and without being deemed to have waived, any Default or Event of Default and regardless of whether such Revolver Loan is funded after the Commitment Termination Date. DIP Lenders may fund Professional Fees as provided in the DIP Financing Orders, and all such fundings, if made, shall constitute Revolver Loans. In addition, DIP Agent may, at its option, charge such Obligations against any operating, investment or other account of a Borrower maintained with DIP Agent or any of its Affiliates.
(iii)
As an accommodation to Borrowers, DIP Agent and DIP Lenders may permit electronic requests for Borrowings and shall permit electronic transmittal of instructions, authorizations, agreements or reports to DIP Agent by Borrowers. Neither DIP Agent nor any DIP Lender shall have any liability to any Borrower for any loss or damage suffered by such Borrower as a result of DIP Agent’s or any DIP Lender’s honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it electronically and purporting to have been sent to DIP Agent or DIP Lenders by a Borrower, and neither DIP Agent nor any DIP Lender shall have any duty to verify the origin of any such communication or the identity or authority of the Person sending it.
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(iv)
If Borrowers maintain any disbursement account with DIP Agent or any Affiliate of DIP Agent, then presentation for payment of any Payment Item when there are insufficient funds to cover it shall be deemed to be a request by U.S. Borrowers for a Revolver Loan on the date of such presentation, in the amount of the Payment Item. The proceeds of such Revolver Loan may be disbursed directly to the disbursement account or other appropriate account.
3.1.2. Fundings by DIP Lenders. Subject to its receipt of notice from DIP Agent of a Notice of Borrowing as provided in Section 3.1.1(i) (except in the case of a deemed request by a U.S. Borrower for a Revolver Loan as provided in Sections 3.1.1(ii), 3.1.1(iv) or 3.1.3(ii) hereof, in which event no Notice of Borrowing need be submitted), each DIP Lender shall timely honor its Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans that is properly requested by a U.S. Borrower and that such U.S. Borrower is entitled to receive under this Agreement. DIP Agent shall endeavor to notify DIP Lenders of each Notice of Borrowing (or deemed request for a Borrowing pursuant to Sections 3.1.1(ii) or 3.1.1(iv) hereof) by 12:00 noon on the proposed funding date (in the case of Base Rate Loans) or by 3:00 p.m. at least two (2) Business Days before the proposed funding date (in the case of LIBOR Loans). Each DIP Lender shall deposit with DIP Agent an amount equal to its Pro Rata share of the Borrowing requested or deemed requested by such U.S. Borrower at DIP Agent’s designated bank in immediately available funds not later than 2:00 p.m. on the date of funding of such Borrowing, unless DIP Agent’s notice to DIP Lenders is received after 12:00 noon on the proposed funding date, in which event DIP Lenders shall deposit with DIP Agent their respective Pro Rata shares of the requested Borrowing on or before 11:00 a.m. of the next Business Day. Subject to its receipt of such amounts from DIP Lenders, DIP Agent shall make the proceeds of the Revolver Loans received by it available to such U.S. Borrower by disbursing such proceeds in accordance with such U.S. Borrower’s disbursement instructions set forth in the applicable Notice of Borrowing. Neither DIP Agent nor any DIP Lender shall have any liability on account of any delay by any bank or other depository institution in treating the proceeds of any Revolver Loan as collected funds or any delay in receipt, or any loss, of funds that constitute a Revolver Loan, the wire transfer of which was initiated by DIP Agent in accordance with wiring instructions provided to DIP Agent. Unless DIP Agent shall have been notified in writing by a DIP Lender prior to the proposed time of funding that such DIP Lender does not intend to deposit with DIP Agent an amount equal such DIP Lender’s Pro Rata share of the requested Borrowing (or deemed request for a Borrowing pursuant to Sections 3.1.1(ii), or 3.1.1(iv) hereof), DIP Agent may assume that such DIP Lender has deposited or promptly will deposit its share with DIP Agent, and DIP Agent may in its discretion disburse a corresponding amount to such U.S. Borrower on the applicable funding date. If a DIP Lender’s Pro Rata share of such Borrowing or of any settlement pursuant to Section 3.1.3(i) is not in fact deposited with DIP Agent, then, if DIP Agent has disbursed to such U.S. Borrower an amount corresponding to such share, then such DIP Lender agrees to pay, and in addition Borrowers jointly and severally agree to repay, to DIP Agent forthwith on demand such corresponding amount, together with interest thereon, for each day from the date such amount is disbursed by DIP Agent to or for the benefit of such U.S. Borrower until the date such amount is paid or repaid to DIP Agent, (a) in the case of Borrowers, at the interest rate applicable to such Borrowing and (b) in the case of such DIP Lender, at the Federal Funds Rate. If such DIP Lender repays to DIP Agent such corresponding amount, such amount so repaid shall constitute a Revolver Loan, and if both such DIP Lender and Borrowers shall have repaid such corresponding amount, DIP Agent shall promptly return to
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Borrowers such corresponding amount in same day funds. A notice from DIP Agent submitted to any DIP Lender with respect to amounts owing under this Section 3.1.2 shall be conclusive, absent manifest error.
3.1.3. Settlement and Settlement Loans.
(i)
In order to facilitate the administration of the Revolver Loans under this Agreement, DIP Lenders agree (which agreement shall be solely between DIP Lenders and DIP Agent and shall not be for the benefit of or enforceable by any Borrower) that settlement among them with respect to the Revolver Loans may take place on a periodic basis on dates determined from time to time by DIP Agent (each a “Settlement Date”), which may occur before or after the occurrence or during the continuance of a Default or Event of Default and whether or not all of the conditions set forth in Section 10 of this Agreement have been met. On each Settlement Date, payment shall be made by or to each DIP Lender in the manner provided herein and in accordance with the Settlement Report delivered by DIP Agent to DIP Lenders with respect to such Settlement Date so that, as of each Settlement Date and after giving effect to the transaction to take place on such Settlement Date, each DIP Lender shall hold its Pro Rata share of all Revolver Loans and participations in Letter of Credit Outstandings then outstanding. DIP Agent shall request settlement with DIP Lenders on a basis not less frequently than once every five (5) Business Days.
(ii)
Between Settlement Dates, DIP Agent may request BofA to advance, and BofA may, but shall in no event be obligated to, advance to U.S. Borrowers out of BofA’s own funds the entire principal amount of any Borrowing of Revolver Loans requested or deemed requested pursuant to this Agreement (any such Revolver Loan funded exclusively by BofA being referred to as a “Settlement Loan”). Each Settlement Loan shall constitute a Revolver Loan hereunder and shall be subject to all of the terms, conditions and security applicable to other Revolver Loans, except that all payments thereon shall be payable to BofA solely for its own account. The obligation of Borrowers to repay such Settlement Loans to BofA shall be evidenced by the records of BofA and need not be evidenced by any promissory note. DIP Agent shall not request BofA to make any Settlement Loan if (a) DIP Agent shall have received written notice from any DIP Lender that one or more of the applicable conditions precedent set forth in Section 10 hereof will not be satisfied on the requested funding date for the applicable Borrowing or (b) the requested Borrowing would exceed the amount of Availability on the funding date or would cause the then outstanding principal balance of all Settlement Loans to exceed 12.5% of the aggregate Commitments. BofA shall not be required to determine whether the applicable conditions precedent set forth in Section 10 hereof have been satisfied or the requested Borrowing would exceed the amount of Availability on the funding date applicable thereto prior to making, in its sole discretion, any Settlement Loan. On each Settlement Date, or, if earlier, upon demand by DIP Agent for payment thereof, the then outstanding Settlement Loans shall be immediately due and payable. As provided in Sections 3.1.1(ii) and 3.1.1(iv), U.S. Borrowers shall be deemed to have requested (without the necessity of submitting any Notice of Borrowing) Revolver Loans to be made on each Settlement Date in the amount of all outstanding Settlement Loans and to have DIP Agent cause the proceeds of such Revolver Loans to be applied to the
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repayment of such Settlement Loans and interest accrued thereon. DIP Agent shall notify DIP Lenders of the outstanding balance of Revolver Loans prior to 12:00 noon on each Settlement Date, and each DIP Lender (other than BofA) shall deposit with DIP Agent (without setoff, counterclaim or reduction of any kind) an amount equal to its Pro Rata share of the amount of Revolver Loans deemed requested in immediately available funds not later than 2:00 p.m. on such Settlement Date, and without regard to whether any of the conditions precedent set forth in Section 10 hereof are satisfied or the Commitment Termination Date has occurred. The proceeds of Settlement Loans may be used solely for purposes for which Revolver Loans generally may be used in accordance with Section 1.1.3 hereof. If any amounts received by BofA in respect of any Settlement Loans are later required to be returned or repaid by BofA to any or all Borrowers or any other Obligor or their respective representatives or successors-in-interest, whether by court order, settlement or otherwise, other DIP Lenders shall, upon demand by BofA with notice to DIP Agent, pay to DIP Agent for the account of BofA, an amount equal to each other DIP Lender’s Pro Rata share of all such amounts required to be returned by BofA.
3.1.4. Disbursement Authorization. Each U.S. Borrower hereby irrevocably authorizes DIP Agent to disburse the proceeds of each Revolver Loan requested by any U.S. Borrower, or deemed to be requested pursuant to Section 3.1.1 or Section 3.1.3(ii), as follows: (i) the proceeds of each Revolver Loan requested under Section 3.1.1(i) shall be disbursed by DIP Agent in accordance with the terms of the written disbursement letter from U.S. Borrowers in the case of the initial Borrowing, and, in the case of each subsequent Borrowing, by wire transfer to such bank account as may be agreed upon by any U.S. Borrower and DIP Agent from time to time or elsewhere if pursuant to a written direction from such Borrower; and (ii) the proceeds of each Revolver Loan requested under Sections 3.1.1(ii), 3.1.1(iv) or 3.1.3(ii) shall be disbursed by DIP Agent by way of direct payment of the relevant interest or other Obligation. Any Revolver Loan proceeds received by any U.S. Borrower or in payment of any of the Obligations shall be deemed to have been received by all Borrowers.
3.2.
Defaulting DIP Lender.
3.2.1. Reallocation of Pro Rata Share; Amendments. For purposes of determining DIP Lenders’ obligations to fund or participate in Revolver Loans or Letters of Credit, DIP Agent may exclude the Commitments and Revolver Loans of any Defaulting DIP Lender(s) from the calculation of Pro Rata shares. A Defaulting DIP Lender shall have no right to vote on any amendment, waiver or other modification of a DIP Loan Document, except as provided in Section 12.9.1.
3.2.2. Payments; Fees. DIP Agent may, in its discretion, receive and retain any amounts payable to a Defaulting DIP Lender under the DIP Loan Documents, and a Defaulting DIP Lender shall be deemed to have assigned to DIP Agent such amounts until all Obligations owing to DIP Agent, non-Defaulting DIP Lenders and other DIP Secured Parties have been paid in full. DIP Agent, in its discretion, may use such amounts to cover the Defaulting DIP Lender’s defaulted obligations, to Cash Collateralize such Defaulting DIP Lender’s Fronting Exposure, to readvance the amounts to U.S. Borrowers, or to repay Obligations. A DIP Lender shall not be entitled to receive any fees accruing hereunder during the period in which it is a Defaulting DIP Lender, and the unfunded portion of its Commitment
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shall be disregarded for purposes of calculating the unused commitment fee under Section 2.2.2. If any Letter of Credit Outstandings owing to a Defaulted DIP Lender are reallocated to other DIP Lenders, fees attributable to such Letter of Credit Outstandings under Section 2.2.3 shall be paid to such other DIP Lenders. DIP Agent shall be paid all fees attributable to Letter of Credit Outstandings that are not reallocated.
3.2.3. Status; Cure. DIP Agent may determine in its discretion that a DIP Lender constitutes a Defaulting DIP Lender and the effective date of such status shall be conclusive and binding on all parties, absent manifest error. Borrowers, DIP Agent and Letter of Credit Issuer may agree in writing that a DIP Lender has ceased to be a Defaulting DIP Lender, whereupon Pro Rata shares shall be reallocated without exclusion of the reinstated DIP Lender’s Commitments and Revolver Loans, and the Revolver Commitments and other exposures under the Revolver Commitments shall be reallocated among DIP Lenders and settled by DIP Agent (with appropriate payments by the reinstated DIP Lender, including payment of any breakage costs for reallocated LIBOR Loans) in accordance with the readjusted Pro Rata shares. Unless expressly agreed by Borrowers, DIP Agent and Letter of Credit Issuer, no reinstatement of a Defaulting DIP Lender shall constitute a waiver or release of claims against such DIP Lender. The failure of any DIP Lender to fund a Revolver Loan, to make a payment in respect of Letter of Credit Outstandings or otherwise to perform obligations hereunder shall not relieve any other DIP Lender of its obligations under any DIP Loan Document, and no DIP Lender shall be responsible for any default by another DIP Lender.
3.3.
Special Provisions Governing LIBOR Loans.
3.3.1. Number of LIBOR Loans. In no event may the number of LIBOR Loans outstanding at any time to any DIP Lender exceed seven (7).
3.3.2. Minimum Amounts. Each Borrowing of LIBOR Loans pursuant to Section 3.1.1(i), and each continuation of or conversion to LIBOR Loans pursuant to Section 2.1.2 hereof, shall be in a minimum amount of $3,000,000 and integral multiples of $500,000 in excess of that amount.
3.3.3. LIBOR Lending Office. Each DIP Lender’s initial LIBOR Lending Office is set forth opposite its name on Schedule 14.9 hereto. Each DIP Lender shall have the right at any time and from time to time to designate a different office of itself or of any Affiliate as such DIP Lender’s LIBOR Lending Office, and to transfer any outstanding LIBOR Loans to such LIBOR Lending Office. No such designation or transfer shall result in any liability on the part of Borrowers for increased costs or expenses resulting solely from such designation or transfer (except any such transfer that is made by a DIP Lender pursuant to Section 2.6 or Section 2.7 hereof, or otherwise for the purpose of complying with Applicable Law). Increased costs or expenses resulting from a change in Applicable Law occurring subsequent to any such designation or transfer shall be deemed not to result solely from such designation or transfer. To the extent commercially feasible, each DIP Lender shall designate an alternate LIBOR Lending Office with respect to LIBOR Loans to reduce the risk of Borrowers’ liability to such DIP Lender under Sections 2.7 and 2.8 and to avoid the type of advance under Section 2.6, so long as such designation is not commercially unreasonable under the circumstances.
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3.3.4. Funding of LIBOR Loans. Each DIP Lender may, if it so elects, fulfill its obligation to make, continue or convert LIBOR Loans hereunder by causing one of its foreign branches or Affiliates (or an international banking facility created by such DIP Lender) to make or maintain such LIBOR Loans; provided, however, that such LIBOR Loans shall nonetheless be deemed to have been made and to be held by such DIP Lender, and the obligation of Borrowers to repay such LIBOR Loans shall nevertheless be to such DIP Lender for the account of such foreign branch, Affiliate or international banking facility. The calculation of all amounts payable to DIP Lender under Sections 2.7 and 2.9 shall be made as if each DIP Lender had actually funded or committed to fund its LIBOR Loans through the purchase of an underlying deposit in an amount equal to the amount of such LIBOR Loans and having a maturity comparable to the relevant Interest Period for such LIBOR Loans; provided, however, each DIP Lender may fund its LIBOR Loans in any manner it deems fit and the foregoing presumption shall be utilized only for the calculation of amounts payable under Section 2.7 and Section 2.9.
3.4.
Borrowers’ Representative. Each Borrower hereby irrevocably appoints SRC, and SRC agrees to act under this Agreement, as the agent and representative of SRC and each other Borrower for all purposes under this Agreement, including requesting Borrowings, selecting whether any Revolver Loan or portion thereof is to bear interest as a Base Rate Loan or a LIBOR Loan, and receiving account statements and other notices and communications to Borrowers (or any of them) from DIP Agent. DIP Agent may rely, and shall be fully protected in relying, on any Notice of Borrowing, disbursement instructions, reports, information, Borrowing Base Certificate, or any other notice or communication made or given by SRC, whether in its own name, on behalf of any Borrower, or on behalf of “the Borrowers,” and DIP Agent shall have no obligation to make any inquiry or request any confirmation from or on behalf of any other Borrower as to the binding effect on such Borrower of any such Notice of Borrowing, instruction, report, information, Borrowing Base Certificate, or other notice or communication, nor shall the joint and several character of Borrowers’ liability for the Obligations be affected; provided that the provisions of this Section 3.4 shall not be construed so as to preclude any U.S. Borrower from directly requesting Borrowings or any Borrower from taking other actions permitted to be taken by “a Borrower” hereunder. DIP Agent may maintain a single Loan Account in the name of “SRC” hereunder, and each future Borrower shall be deemed to have agreed to such arrangement and to have confirmed that such arrangement shall have no effect on the joint and several character of such Borrower’s liability for the Obligations.
3.5.
All Revolver Loans to Constitute One Obligation. The Revolver Loans, Letter of Credit Outstandings and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any DIP Security Document) shall be secured by DIP Agent’s Lien upon all of the Collateral; provided, however, that DIP Agent and each DIP Lender shall be deemed to be a creditor of each Borrower and the holder of a separate claim against each Borrower to the extent of any Obligations jointly and severally owed by Borrowers to DIP Agent or such DIP Lender.
SECTION 4. PAYMENTS
4.1.
General Repayment Provisions. All payments (including all prepayments) of principal of and interest on the Revolver Loans, Letters of Credit and other Obligations that are
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payable to DIP Agent or any DIP Lender shall be made to DIP Agent in Dollars without any offset or counterclaim and free and clear of (and without deduction for) any present or future Taxes, and, with respect to payments made other than by application of balances in the Payment Account, in immediately available funds not later than 12:00 noon on the due date (and payment made after such time on the due date to be deemed to have been made on the next succeeding Business Day). All payments received by DIP Agent shall be distributed by DIP Agent in accordance with Section 4.6 hereof, subject to the rights of offset that DIP Agent may have as to amounts otherwise to be remitted to a particular DIP Lender by reason of amounts due DIP Agent from such DIP Lender under any of the DIP Loan Documents. Borrowers agree that, subject to the terms herein, in the Intercreditor Agreements, and in the DIP Financing Orders, DIP Agent shall have the continuing, exclusive right to apply and reapply payments and proceeds of Collateral against the Obligations, in such manner as DIP Agent deems advisable, but whenever possible, any prepayment of Revolver Loans shall be applied first to Base Rate Loans and then to LIBOR Loans.
4.2.
Repayment of Revolver Loans.
4.2.1. Payment of Principal. The outstanding principal amounts with respect to the Revolver Loans shall be repaid as follows:
(i)
On each date that a Borrower (or a representative of creditors of a Borrower), DIP Agent or a DIP Lender shall receive any cash proceeds of ABL Priority Collateral consisting of Accounts or Inventory, to the extent of such proceeds, provided that, until the Court enters the Final DIP Financing Order or other order authorizing the roll up of the Pre-Petition ABL Obligations into the Obligations, such proceeds shall be presumed to constitute and arise from Pre-Petition ABL Priority Collateral and shall be applied first to the Pre-Petition ABL Obligations before application to the Obligations.
(ii)
Any portion of the Revolver Loans consisting of the principal amount of Base Rate Loans shall be paid by Borrowers to DIP Agent, for the Pro Rata benefit of DIP Lenders (or, in the case of Settlement Loans, for the sole benefit of BofA) unless timely converted to a LIBOR Loan in accordance with this Agreement, immediately upon (a) the Revolver Maturity Date, and (b) in the case of Settlement Loans, the earlier of BofA’s demand for payment or on each Settlement Date with respect to all Settlement Loans outstanding on such date.
(iii)
Any portion of the Revolver Loans consisting of the principal amount of LIBOR Loans shall be paid by Borrowers to DIP Agent, for the Pro Rata benefit of DIP Lenders, unless converted to a Base Rate Loan or continued as a LIBOR Loan in accordance with the terms of this Agreement, immediately upon (a) the last day of the Interest Period applicable thereto and (b) the Revolver Maturity Date. In no event shall Borrowers be authorized to make a voluntary prepayment with respect to any Revolver Loan outstanding as a LIBOR Loan prior to the last day of the Interest Period applicable thereto unless (x) otherwise agreed in writing by DIP Agent or Borrowers are otherwise expressly authorized or required by any other provision of this Agreement to pay any LIBOR Loan outstanding on a date other than the last day of the Interest Period applicable thereto, and (y) Borrowers pay to DIP Agent, for the Pro Rata benefit of DIP
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Lenders, concurrently with any prepayment of a LIBOR Loan, any amount due DIP Agent and DIP Lenders under Section 2.9 hereof as a consequence of such prepayment.
(iv)
Notwithstanding anything to the contrary contained elsewhere in this Agreement, if an Out of Formula Condition shall exist, Borrowers shall, on the sooner to occur of DIP Agent’s demand or the first Business Day after Borrowers’ Knowledge of such Out of Formula Condition, repay the outstanding Revolver Loans that are Base Rate Loans in an amount sufficient to reduce the aggregate unpaid principal amount of all Revolver Loans by an amount sufficient to eliminate the Out of Formula Condition; and, if such payment of Base Rate Loans is not sufficient to eliminate the Out of Formula Condition, then Borrowers shall immediately, at Borrowers’ option, either (a) deposit with DIP Agent, for the Pro Rata benefit of DIP Lenders, for application to any outstanding Revolver Loans bearing interest as LIBOR Loans as the same become due and payable (whether at the end of the applicable Interest Periods or on the Revolver Maturity Date) cash in an amount sufficient to eliminate such Out of Formula Condition, to be held by DIP Agent pending disbursement of same to DIP Lenders, but subject to DIP Agent’s Lien thereon and rights of offset with respect thereto, or (b) pay the Revolver Loans outstanding as LIBOR Loans to the extent necessary to eliminate such Out of Formula Condition and also pay to DIP Agent for the Pro Rata benefit of DIP Lenders any and all amounts required by Section 2.9 hereof to be paid by reason of the prepayment of a LIBOR Loan prior to the last day of the Interest Period applicable thereto.
4.2.2. Payment of Interest. Interest accrued on the Revolver Loans shall be due and payable on (i) the first calendar day of each month (for the immediately preceding month), computed through the last calendar day of the preceding month, with respect to any Revolver Loan (whether a Base Rate Loan or LIBOR Loan) and (ii) the last day of the applicable Interest Period in the case of a LIBOR Loan. All accrued interest shall be paid by Borrowers on the Commitment Termination Date. With respect to any Base Rate Loan converted into a LIBOR Loan pursuant to Section 2.1.2 on a day when interest would not otherwise have been payable with respect to such Base Rate Loan, accrued interest to the date of such conversion on the amount of such Base Rate Loan so converted shall be paid on the conversion date.
4.3.
Mandatory Prepayments.
4.3.1. Collections of Proceeds. In the event any proceeds are received from any sale, lease, collection, or other disposition of any Collateral or from any loss, destruction or condemnation of any Collateral, in each case exclusive of proceeds of Inventory, but inclusive of Term Loan Priority Collateral, such proceeds shall be applied as a mandatory prepayment of the Obligations with the effect stated in Section 4.3.2, provided that if the proceeds are derived from (i) Pre-Petition ABL Priority Collateral, such proceeds may be applied first to the Pre-Petition ABL Obligations or (ii) Term Loan Priority Collateral, such proceeds shall be applied first to the Full Payment of the Term Loan Obligations in accordance with the Intercreditor Agreements, then to the Pre-Petition ABL Obligations until Full Payment thereof, and then to the Obligations until Full Payment thereof; provided, however, that so long as no Event of Default exists, Borrowers shall not be required to prepay any portion of such proceeds on account of any LIBOR Loan on any day that is not the last day of the applicable Interest
27
Period if such prepayment would trigger payment of any amount under Section 2.9 so long as such portion of such proceeds is deposited into a segregated Deposit Account of Borrowers maintained with BofA until such time as such prepayment would not trigger payment of any amount under Section 2.9.
4.3.2. Application of Prepayments. Prepayments made pursuant to Section 4.3.1 and applied to the Obligations shall reduce both the Obligations, if applied to the Revolver Loans, shall reduce the Revolver Commitments on a dollar-for-dollar basis, and shall be applied first to Base Rate Loans and then to LIBOR Loans in direct order of maturity.
4.4.
Payment of Other Obligations. The balance of the Obligations requiring the payment of money, including the Letter of Credit Outstandings and Extraordinary Expenses incurred by DIP Agent or any DIP Lender, shall be repaid by Borrowers to DIP Agent for allocation among DIP Agent and DIP Lenders at the times for payment provided in the DIP Loan Documents, or, if no time of payment is otherwise specified in the DIP Loan Documents, on demand.
4.5.
Marshaling; Payments Set Aside. Neither DIP Agent nor any DIP Lender shall be under any obligation to marshal any assets in favor of any Borrower or any other Obligor or against or in payment of any or all of the Obligations. To the extent that any Borrower makes a payment or payments to DIP Agent or any DIP Lender or any of such Persons receives payment from the proceeds of any Collateral or exercises its right of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other Person, then to the extent of any loss by DIP Agent or DIP Lenders, the Obligations or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment or proceeds had not been made or received and any such enforcement or setoff had not occurred. The provisions of the immediately preceding sentence of this Section 4.5 shall survive Full Payment of the Obligations.
4.6.
Allocation of Payments and Collections.
4.6.1. Application. Payments made by Borrowers hereunder and collections of proceeds of Collateral shall be applied as among the Obligations, Pre-Petition ABL Obligations and Term Loan Obligations as set forth herein and in the DIP Financing Orders and, to the extent applied to the Obligations, shall be applied (a) first, as specifically required or authorized herein; (b) second, to Obligations then due and owing; and (c) third, as determined by DIP Agent in its discretion.
4.6.2. Post-Default Allocation. Notwithstanding anything in any DIP Loan Document to the contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as follows:
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(i)
first, to DIP Agent to pay principal and accrued interest on any portion of the Revolver Loans which DIP Agent may have advanced on behalf of any DIP Lender and for which DIP Agent has not been reimbursed by such DIP Lender or any Borrower;
(ii)
second, to BofA to pay the principal and accrued interest on any portion of the Settlement Loans outstanding, to be shared with any DIP Lenders (other than Defaulting DIP Lenders) that have acquired a participating interest in such Settlement Loans;
(iii)
third, to the extent that Letter of Credit Issuer has not received from any Participating DIP Lender a payment as required by Section 1.2.8 hereof, to Letter of Credit Issuer to pay all amounts owing to such Letter of Credit Issuer pursuant to Section 1.2.8 hereof;
(iv)
fourth, to DIP Agent to pay the amount of Extraordinary Expenses and amounts owing to DIP Agent pursuant to Section 14.10 hereof that have not been reimbursed to DIP Agent by any Borrower or any DIP Lender, together with interest accrued thereon at the rate applicable to Revolver Loans;
(v)
fifth, to DIP Agent to pay any Indemnified Amount that has not been paid to DIP Agent by any Obligor or any DIP Lender, together with interest accrued thereon at the rate applicable to Revolver Loans;
(vi)
sixth, to DIP Agent to pay any fees due and payable to DIP Agent;
(vii)
seventh, to DIP Lenders (other than Defaulting DIP Lenders) for any Indemnified Amount that they have paid to DIP Agent and any Extraordinary Expenses that they have reimbursed to DIP Agent or themselves incurred, to the extent that such DIP Lenders have not been reimbursed by any Obligor therefor;
(viii)
eighth, to Letter of Credit Issuer to pay principal and interest with respect to Letter of Credit Outstandings (or if any of the Letter of Credit Outstandings are contingent and an Event of Default then exists, deposited in the Cash Collateral Account to Cash Collateralize such Letter of Credit Outstandings), which payment shall be shared with Participating DIP Lenders in accordance with Section 1.2.8(iii) hereof;
(ix)
ninth, to DIP Lenders (other than Defaulting DIP Lenders) in payment of the unpaid principal and accrued interest in respect of the Revolver Loans, and to Bank Product Obligations arising under Hedge Agreements (including Cash Collateralization thereof) up to the amount of the Bank Product Reserve existing therefor;
(x)
tenth, to all other Bank Product Obligations; and
(xi)
eleventh, to all remaining Obligations.
Amounts shall be applied to payment of each category of Obligations only after Full Payment of amounts payable from time to time under all preceding categories. If amounts are insufficient to satisfy a category, they shall be paid ratably among outstanding Obligations in such category.
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Monies and proceeds obtained from an Obligor shall not be applied to its Excluded Swap Obligations, but appropriate adjustments shall be made with respect to amounts obtained from other Obligors to preserve the allocations in any applicable category. DIP Agent shall have no obligation to calculate the amount of any Bank Product Obligation and may request a reasonably detailed calculation thereof from the applicable Bank Product Provider. If such Bank Product Provider fails to deliver the calculation within five (5) days following request, DIP Agent may assume the amount is zero. The allocations set forth in this Section 4.6 are solely to determine the rights and priorities of DIP Agent and DIP Lenders as among themselves and may be changed by DIP Agent and DIP Lenders without notice to or the consent or approval of any Borrower or any other Person. This Section is not for the benefit of or enforceable by any Obligor, and each Borrower irrevocably waives the right to direct the application of any payments or Collateral proceeds subject to this Section 4.6.
4.6.3. Erroneous Allocation. DIP Agent shall not be liable for any allocation, application or distribution of payments made by it in good faith and, if any such allocation, application or distribution is subsequently determined to have been made in error, the sole recourse of any DIP Lender or other Person to whom payment was due but not made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any DIP lender, such DIP Lender hereby agrees to return any such erroneous payments received by it).
4.7.
Dominion Account. The ledger balance in the Dominion Accounts shall be immediately transferred to the Payment Account as of the end of a Business Day and shall be applied to the Obligations at the beginning of the next Business Day. If a credit balance results from such application, it shall not accrue interest in favor of Borrowers and shall be made available to Borrowers as long as no Default or Event of Default exists. Each Borrower irrevocably waives the right to direct the application of any payments or Collateral proceeds, and agrees that DIP Agent shall have the continuing, exclusive right to apply and reapply same against the Obligations, in such manner as DIP Agent deems advisable, except as otherwise stated in Sections 4.3 and 4.6.1.
4.8.
Loan Account; Account Stated. DIP Agent shall maintain, in accordance with its customary practices, an account or accounts (each a "Loan Account") evidencing the Debt of Borrowers hereunder. Any failure of DIP Agent to record anything in a Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder. DIP Agent may maintain a single Loan Account in the name of one Borrower, and each other Borrower confirms that such arrangement shall have no effect on its liability for the Obligations. Entries made in a Loan Account shall constitute presumptive evidence of the information contained therein. If any information contained in a Loan Account is provided to or inspected by any Person, the information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies DIP Agent in writing within thirty (30) days after receipt or inspection that specific information is subject to dispute.
4.9.
Taxes.
4.9.1. Payments Free of Taxes; Obligation to Withhold; Tax Payment.
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(i)
All payments of Obligations by Obligors shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If Applicable Law (as determined by DIP Agent in its discretion) requires the deduction or withholding of any Tax from any payment by DIP Agent or an Obligor, then DIP Agent or such Obligor shall be entitled to make such deduction or withholding based on information and documentation provided pursuant to Section 4.10.
(ii)
If DIP Agent or any Obligor is required by the Code to withhold or deduct Taxes, including backup withholding and withholding taxes, from any payment, then (i) DIP Agent shall pay the full amount that it determines is to be withheld or deducted to the relevant Governmental Authority pursuant to the Code, and (ii) to the extent the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Obligor shall be increased as necessary so that the Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.
(iii)
If DIP Agent or any Obligor is required by any Applicable Law other than the Code to withhold or deduct Taxes from any payment, then (i) DIP Agent or such Obligor, to the extent required by Applicable Law, shall timely pay the full amount to be withheld or deducted to the relevant Governmental Authority, and (ii) to the extent the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Obligor shall be increased as necessary so that the Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.
4.9.2. Payment of Other Taxes. Without limiting the foregoing, Borrowers shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at DIP Agent’s option, timely reimburse DIP Agent for payment of, any Other Taxes.
4.9.3. Tax Indemnification.
(i)
Each Borrower shall indemnify and hold harmless, on a joint and several basis, each Recipient against any Indemnified Taxes (including those imposed or asserted on or attributable to amounts payable under this Section) payable or paid by a Recipient or required to be withheld or deducted from a payment to a Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Each Borrower shall indemnify and hold harmless DIP Agent against any amount that a DIP Lender or Letter of Credit Issuer fails for any reason to pay indefeasibly to DIP Agent as required pursuant to this Section. Each Borrower shall make payment within ten (10) days after demand for any amount or liability payable under this Section. A certificate as to the amount of such payment or liability delivered to Borrowers by a DIP Lender or Letter of Credit Issuer (with a copy to DIP Agent), or by DIP Agent on its own behalf or on behalf of any Recipient, shall be conclusive absent manifest error.
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(ii)
Each DIP Lender and Letter of Credit Issuer shall indemnify and hold harmless, on a several basis, (i) DIP Agent against any Indemnified Taxes attributable to such DIP Lender or Letter of Credit Issuer (but only to the extent Borrowers have not already paid or reimbursed DIP Agent therefor and without limiting Borrowers’ obligation to do so), (ii) DIP Agent and Obligors, as applicable, against any Taxes attributable to such DIP Lender’s failure to maintain a DIP Participant register as required hereunder, and (iii) DIP Agent and Obligors, as applicable, against any Excluded Taxes attributable to such DIP Lender or Letter of Credit Issuer, in each case, that are payable or paid by DIP Agent or an Obligor in connection with any Obligations, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Each DIP Lender and Letter of Credit Issuer shall make payment within (10) days after demand for any amount or liability payable under this Section. A certificate as to the amount of such payment or liability delivered to any DIP Lender or Letter of Credit Issuer by DIP Agent shall be conclusive absent manifest error
4.9.4. Evidence of Payments. If DIP Agent or an Obligor pays any Taxes pursuant to this Section, then upon request, DIP Agent shall deliver to SRC or SRC shall deliver to DIP Agent, respectively, a copy of a receipt issued by the appropriate Governmental Authority evidencing the payment, a copy of any return required by Applicable Law to report the payment, or other evidence of payment reasonably satisfactory to DIP Agent or SRC, as applicable.
4.9.5. Treatment of Certain Refunds. Unless required by Applicable Law, at no time shall DIP Agent have any obligation to file for or otherwise pursue on behalf of a DIP Lender or Letter of Credit Issuer, or to pay to any DIP Lender or Letter of Credit Issuer, any refund of Taxes withheld or deducted from funds paid for the account of a DIP Lender or Letter of Credit Issuer. If a Recipient determines in its discretion that it has received a refund of any Taxes as to which it has been indemnified by Borrowers or with respect to which a Borrower has paid additional amounts pursuant to this Section, such Recipient shall pay Borrowers an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrowers with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that Borrowers agree, upon request such the Recipient, to repay the amount paid over to Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Recipient if such Recipient is required to repay such refund to the Governmental Authority. Notwithstanding anything herein to the contrary, no Recipient shall be required to pay any amount to Borrowers if such payment would place such Recipient in a less favorable net after-Tax position than it would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. In no event shall DIP Agent or any Recipient be required to make its tax returns (or any other information relating to its taxes that it deems confidential) available to any Obligor or other Person. Each party’s obligations under this Section 4.9 or Section 4.10 shall survive the resignation or replacement of DIP Agent or any assignment of rights by or replacement of a DIP Lender or Letter of Credit Issuer, the termination of the Commitments, and the repayment, satisfaction, discharge or Full Payment of any Obligations.
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4.10.
DIP Lender Tax Information.
4.10.1. Status of DIP Lenders. Any DIP Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments of Obligations shall deliver to Borrowers and DIP Agent properly completed and executed documentation reasonably requested by Borrowers or DIP Agent as will permit such payments to be made without or at a reduced rate of withholding. In addition, any DIP Lender, if reasonably requested by Borrowers or DIP Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by Borrowers or DIP Agent to enable them to determine whether such DIP Lender is subject to backup withholding or information reporting requirements. Notwithstanding the foregoing, such documentation (other than documentation described in Sections 4.10.2(ii)(a), (b) and (d)) shall not be required if a DIP Lender reasonably believes delivery of the documentation would subject it to any material unreimbursed cost or expense or would materially prejudice its legal or commercial position.
4.10.2. Documentation. Without limiting the foregoing, if any Borrower is a U.S. Person,
(i)
Any DIP Lender that is a U.S. Person shall deliver to Borrowers and DIP Agent on or prior to the date on which such DIP Lender becomes a DIP Lender hereunder (and from time to time thereafter upon reasonable request of Borrowers or DIP Agent), executed originals of IRS Form W-9, certifying that such DIP Lender is exempt from U.S. federal backup withholding Tax;
(ii)
Any Foreign DIP Lender shall, to the extent it is legally entitled to do so, deliver to Borrowers and DIP Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign DIP Lender becomes a DIP Lender hereunder (and from time to time thereafter upon reasonable request of Borrowers or DIP Agent), whichever of the following is applicable:
(a)
in the case of a Foreign DIP Lender claiming the benefits of an income tax treaty to which the United States is a party, (x) with respect to payments of interest under any DIP Loan Document, executed originals of IRS Form W-8BEN establishing an exemption from or reduction of U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty, and (y) with respect to other payments under the DIP Loan Documents, IRS Form W-8BEN establishing an exemption from or reduction of U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(b)
executed originals of IRS Form W-8ECI;
(c)
in the case of a Foreign DIP Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate in form satisfactory to DIP Agent to the effect that such Foreign DIP Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C)
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of the Code (“U.S. Tax Compliance Certificate”), and (y) executed originals of IRS Form W-8BEN; or
(d)
to the extent a Foreign DIP Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate in form satisfactory to DIP Agent, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign DIP Lender is a partnership and one or more direct or indirect partners of such Foreign DIP Lender are claiming the portfolio interest exemption, such Foreign DIP Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;
(iii)
any Foreign DIP Lender shall, to the extent it is legally entitled to do so, deliver to Borrowers and DIP Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign DIP Lender becomes a DIP Lender hereunder (and from time to time thereafter upon the reasonable request of Borrowers or DIP Agent), executed originals of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit Borrowers or DIP Agent to determine the withholding or deduction required to be made; and
(iv)
if payment of an Obligation to a DIP Lender would be subject to U.S. federal withholding Tax imposed by FATCA if such DIP Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code), such DIP Lender shall deliver to Borrowers and DIP Agent at the time(s) prescribed by law and otherwise as reasonably requested by Borrowers or DIP Agent such documentation prescribed by Applicable Law (including Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrowers or DIP Agent as may be necessary for them to comply with their obligations under FATCA and to determine that such DIP Lender has complied with its obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iv), “FATCA” shall include any amendments made to FATCA after the date hereof.
4.10.3. Redelivery of Documentation. If any form or certification previously delivered by a DIP Lender pursuant to this Section expires or becomes obsolete or inaccurate in any respect, such DIP Lender shall promptly update the form or certification or notify Borrowers and DIP Agent in writing of its inability to do so.
4.11.
Nature and Extent of Each Borrower’s Liability.
4.11.1. Joint and Several Liability. Each Borrower shall be liable for, on a joint and several basis, and hereby guarantees the timely payment by all other Borrowers of, all of the Revolver Loans and other Obligations (except its Excluded Swap Obligations), regardless of which Borrower actually may have received the proceeds of any Revolver Loans or other
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extensions of credit hereunder or the amount of such Revolver Loans received or the manner in which DIP Agent or any DIP Lender accounts for such Revolver Loans or other extensions of credit on its books and records, it being acknowledged and agreed that Revolver Loans to any U.S. Borrower inure to the mutual benefit of all Borrowers and that DIP Agent and DIP Lenders are relying on the joint and several liability of Borrowers in extending the Revolver Loans and other financial accommodations hereunder. Each Borrower hereby unconditionally and irrevocably agrees that upon default in the payment when due (whether at stated maturity, by acceleration or otherwise) of any principal of, interest owed on, or other amount owing with respect to any of the Revolver Loans or other Obligations, such Borrower shall forthwith pay the same, without notice or demand.
4.11.2. Unconditional Nature of Liability. Each Borrower’s joint and several liability hereunder with respect to, and guaranty of, the Revolver Loans and other Obligations shall, to the fullest extent permitted by Applicable Law, be unconditional irrespective of (i) the validity, enforceability, avoidance or subordination of any of the Obligations or of any promissory note or other document evidencing all or any part of the Obligations, (ii) the absence of any attempt to collect any of the Obligations from any other Obligor or any Collateral or other security therefor, or the absence of any other action to enforce the same, (iii) the waiver, consent, extension, forbearance or granting of any indulgence by DIP Agent or any DIP Lender with respect to any provision of any instrument evidencing or securing the payment of any of the Obligations, or any other agreement now or hereafter executed by any other Borrower and delivered to DIP Agent or any DIP Lender, (iv) the failure by DIP Agent to take any steps to perfect or maintain the perfected status of its security interest in or Lien upon, or to preserve its rights to or interests in, any of the Collateral or other security for the payment or performance of any of the Obligations or DIP Agent’s release of any Collateral or any of its Liens upon any Collateral, (v) DIP Agent’s or DIP Lenders’ election, in any proceeding instituted under the Bankruptcy Code, for the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the release or compromise, in whole or in part, of the liability of any Obligor for the payment of any of the Obligations, (viii) any amendment or modification of any of the DIP Loan Documents or waiver of any Default or Event of Default thereunder, (ix) any increase in the amount of the Obligations beyond any limits imposed herein or in the amount of any interest, fees or other charges payable in connection therewith, or any decrease in the same, or (x) any other circumstance that might constitute a legal or equitable discharge or defense of any Borrower; provided, however, nothing contained in the foregoing shall limit Borrowers’ right to institute an action for any alleged breach by DIP Agent or any DIP Lender of any of its obligations hereunder. Under no circumstances shall any Borrower be construed to have waived defenses based upon payment, willful misconduct, gross negligence or general principles of equity and fairness. After the occurrence and during the continuance of any Event of Default, DIP Agent may proceed directly and at once, without notice to any Obligor, against any or all of Obligors to collect and recover all or any part of the Obligations, without first proceeding against any other Obligor or against any Collateral or other security for the payment or performance of any of the Obligations, and each Borrower waives any provision that might otherwise require DIP Agent under Applicable Law to pursue or exhaust its remedies against any Collateral or Obligor before pursuing another Obligor. Each Borrower consents and agrees that DIP Agent shall be under no obligation to
35
marshal any assets in favor of any Obligor or against or in payment of any or all of the Obligations.
4.11.3. Partial Release of Liability for Obligations. No payment or payments made by an Obligor or received or collected by DIP Agent from a Borrower or any other Person by virtue of any action or proceeding or any setoff or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Borrower for the balance of Obligations remaining due under this Agreement, and each Borrower shall remain jointly and severally liable for the payment and performance of all Revolver Loans and other Obligations until Full Payment of the Obligations.
4.11.4. Contribution. Each Borrower is unconditionally obligated to repay the Obligations as a joint and several obligor under this Agreement. If, as of any date, the aggregate amount of payments made by a Borrower on account of the Obligations and proceeds of such Borrower’s Collateral that are applied to the Obligations exceeds the aggregate amount of Revolver Loan proceeds actually used by such Borrower in its business (such excess amount being referred to as an “Accommodation Payment”), then, unless DIP Agent agrees otherwise, each of the other Borrowers (each such Borrower being referred to as a “Contributing Borrower”) shall be obligated to make contribution to such Borrower (the “Paying Borrower”) in an amount equal to (A) the product derived by multiplying the sum of each Accommodation Payment of each Paying Borrower by the Allocable Percentage (as defined below) of the Contributing Borrower from whom contribution is sought less (B) the amount, if any, of the then outstanding Accommodation Payment of such Contributing Borrower (such last mentioned amount which is to be subtracted from the aforesaid product to be increased by any amounts theretofore paid by such Contributing Borrower by way of contribution hereunder, and to be decreased by any amounts theretofore received by such Contributing Borrower by way of contribution hereunder); provided, however, that a Paying Borrower’s recovery of contribution hereunder from the other Borrowers shall be limited to that amount paid by such Paying Borrower in excess of its Allocable Percentage of all Accommodation Payments then outstanding of all Borrowers. As used herein, the term “Allocable Percentage” shall mean, on any date of determination thereof, a fraction the denominator of which shall be equal to the number of Borrowers who are parties to this Agreement on such date and the numerator of which shall be one (1); provided, however, that such percentages shall be modified in the event that contribution from a Borrower is not possible by reason of insolvency, bankruptcy or otherwise by reducing such Borrower’s Allocable Percentage equitably and by adjusting the Allocable Percentage of the other Borrowers proportionately so that the Allocable Percentages of all Borrowers at all times equals 100%. DIP Agent and DIP Lenders shall have the right, at any time in their discretion, to condition Revolver Loans and Letters of Credit upon a separate calculation of Availability for each U.S. Borrower and to restrict the disbursement of such Revolver Loans and Letters of Credit to such U.S. Borrower.
4.11.5. Qualified ECP. Each Obligor that is a Qualified ECP when its guaranty of or grant of Lien as security for a Swap Obligation becomes effective hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide funds or other support to each Specified Obligor with respect to such Swap Obligation as may be needed by such Specified Obligor from time to time to honor all of its obligations under the DIP Loan
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Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP’s obligations and undertakings under this Section 4.11.5 voidable under any applicable fraudulent transfer or conveyance act). The obligations and undertakings of each Qualified ECP under this Section 4.11.5 shall remain in full force and effect until Full Payment of all Obligations. Each Obligor intends this Section to constitute, and this Section shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support or other agreement” for the benefit of, each Obligor for all purposes of the Commodity Exchange Act.
4.11.6. Subordination. Each Borrower hereby subordinates any claims, including any right of payment, subrogation, contribution and indemnity, that it may have from or against any other Obligor, and any successor or assign of any other Obligor, including any trustee, receiver or debtor-in-possession, howsoever arising, due or owing or whether heretofore, now or hereafter existing, to the Full Payment of the Obligations.
SECTION 5. TERM AND TERMINATION OF COMMITMENTS
5.1.
Term of Commitments Subject to each DIP Secured Party's right to cease making Revolver Loans and other extensions of credit to Borrowers when any Default or Event of Default exists or upon termination of the Commitments as provided in Section 5.2 hereof, the Commitments shall be in effect for a period beginning on the Closing Date and ending on the close of business on the Revolver Maturity Date.
5.2.
Termination.
5.2.1. Termination by Borrowers. Upon at least ten (10) days prior written notice to DIP Agent, any Borrower may, at its option, terminate the Commitments. Any notice of termination given by Borrowers shall be irrevocable unless DIP Agent otherwise agrees in writing. Borrowers may elect to terminate the Commitments in their entirety only. No section of this Agreement, Type of Revolver Loan or other type of credit extension available hereunder, or Commitment may be terminated by Borrowers singly.
5.2.2. Effect of Termination. On the effective date of termination of the Commitments by DIP Agent or by Borrowers, all of the Obligations shall be immediately due and payable, and any DIP Lender may terminate its and its Affiliates’ Bank Products (including, only with the consent of DIP Agent, any Cash Management Services). All undertakings, agreements, covenants, warranties and representations of each Borrower contained in the DIP Loan Documents shall survive any such termination, and DIP Agent shall retain its Liens in the Collateral and all of its rights and remedies under the DIP Loan Documents, notwithstanding such termination, until Full Payment of the Obligations. Notwithstanding Full Payment of the Obligations, DIP Agent shall not be required to terminate its Liens unless it receives Cash Collateral or a written agreement, in each case satisfactory to it, protecting DIP Agent and DIP Lenders from the dishonor or return of any Payment Items previously applied to the Obligations. Upon Full Payment of the Obligations and DIP Agent's receipt of an agreement or Cash Collateral in accordance with the preceding sentence, DIP Agent will, at Borrowers' sole expense, (i) promptly release any Lien obtained by DIP Agent after the Petition Date with respect to the Collateral (other than such Cash Collateral, if any), and (ii) execute and file, to the
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extent obtained or recorded by DIP Agent after the Petition Date, such Lien releases and UCC termination statements as may be reasonably necessary to give effect to the foregoing. The provisions of Sections 1.2, 2.1, 2.4, 2.7, 2.8, 4.5, 4.9, 4.10, 12, 14.2 and this Section 5.2.2, and all obligations of Borrowers to indemnify DIP Agent or any DIP Lender pursuant to this Agreement or any of the other DIP Loan Documents, and each provision of a DIP Loan Document expressly stating that such provision survives Full Payment of the Obligations or termination of the Commitments shall in all events survive Full Payment of the Obligations and termination of the Commitments.
SECTION 6. COLLATERAL SECURITY
6.1.
Grant of Security Interest. To secure the prompt payment and performance of all Obligations, each Borrower hereby grants to DIP Agent, for the benefit of DIP Secured Parties, a continuing security interest in and Lien upon all real and personal Property of such Borrower, including all of the following Property, whether now owned or hereafter acquired, and wherever located (irrespective of whether the same existed on or was created or acquired after the Petition Date):
(a)
all Accounts;
(b)
all Chattel Paper, including Electronic Chattel Paper;
(c)
all Commercial Tort Claims;
(d)
all Deposit Accounts;
(e)
all Documents;
(f)
all General Intangibles, including Intellectual Property;
(g)
all Goods, including Inventory, Equipment and Fixtures;
(h)
all Real Estate;
(i)
all Instruments;
(j)
all Investment Property;
(k)
all Letter-of-Credit Rights;
(l)
all Supporting Obligations;
(m)
all cash, whether or not in the possession or under the control of DIP Agent or a DIP Lender or a bailee or Affiliate of DIP Agent or a DIP Lender, including any Cash Collateral;
(n)
all accessions to, substitutions for, and all replacements, products, and cash and non-cash Proceeds of the foregoing, including Proceeds of and unearned premiums with
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respect to insurance policies, and claims against any Person for loss, damage or destruction of any Collateral;
(o)
subject to entry of the Final DIP Financing Order so providing, all Avoidance Actions and all proceeds thereof; and
(p)
all books and records (including customer lists, files, correspondence, tapes, computer programs, print-outs and computer records) pertaining to the foregoing.
The security interests and Liens granted to DIP Agent pursuant to the provisions of this Agreement and pursuant to any of the other DIP Loan Documents shall be in addition to and not in lieu of all Liens conferred upon DIP Agent pursuant to the terms of the DIP Financing Orders. Subject to the entry of the Interim DIP Financing Order, the Obligations shall constitute a Superpriority Claim.
6.2.
Lien on Deposit Accounts; Cash Collateral.
6.2.1. Deposit Accounts. To further secure the prompt payment and performance of all Obligations, each Borrower hereby grants to DIP Agent, for the benefit of DIP Secured Parties, a continuing security interest in and Lien upon all amounts credited to any Deposit Account of such Borrower, including any sums in any blocked or lockbox accounts or in any accounts into which such sums are swept. Each Borrower hereby authorizes and directs each bank or other depository to deliver to DIP Agent all balances in any Deposit Account maintained by such Borrower, without inquiry into the authority or right of DIP Agent to make such request.
6.2.2. Cash Collateral. Any Cash Collateral may be invested, at DIP Agent’s discretion, in Cash Equivalents, but DIP Agent shall have no duty to do so, regardless of any agreement or course of dealing with any Borrower, and shall have no responsibility for any investment or loss. Each Borrower hereby grants to DIP Agent, for the benefit of the DIP Lenders and the other DIP Secured Parties, as security for the Obligations, a security interest in all Cash Collateral held from time to time and all proceeds thereof, whether such Cash Collateral is held in a Cash Collateral Account or elsewhere. DIP Agent may apply Cash Collateral to the payment of any Obligations, in such order as DIP Agent may elect, as such Obligations become due and payable. Each Cash Collateral Account and all Cash Collateral shall be under the sole dominion and control of DIP Agent.
6.3.
Lien on Real Estate. All of the Obligations shall be secured by Liens granted pursuant to the DIP Financing Orders on all Real Estate of each Borrower or other Obligor. If so requested by DIP Agent, each Borrower shall (and shall cause each other Obligor to) execute a Mortgage in favor of DIP Agent, for the benefit of DIP Secured Parties, in form and substance satisfactory to DIP Agent, with respect to each parcel of Real Estate to confirm and evidence of record Liens on such Real Estate in favor of DIP Agent.
6.4.
Other Collateral.
6.4.1. Commercial Tort Claims. Each Borrower shall promptly notify DIP Agent in writing if such Borrower has a Commercial Tort Claim and shall take such actions as DIP Agent deems appropriate to subject such claim of record to duly perfected, first priority Liens in favor of DIP Agent for the benefit of DIP Secured Parties.
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6.4.2. Certain After-Acquired Collateral. Each Borrower shall promptly notify DIP Agent in writing if, after the Closing Date, such Borrower obtains any interest in any Collateral consisting of Deposit Accounts, Chattel Paper, Documents, Instruments, Intellectual Property, Investment Property or Letter-of-Credit Rights and, upon DIP Agent's request, shall promptly take such actions as DIP Agent deems appropriate to effect of record DIP Agent's duly perfected Lien upon such Collateral, including obtaining any appropriate possession, control agreement or Lien Waiver, provided that such Liens shall nevertheless be valid and perfected without the necessity of any such filing pursuant to the DIP Financing Orders and shall have priorities consistent with the DIP ABL/Term Loan Intercreditor Agreement. If any Collateral is in the possession of a third party (including Term DIP Agent), at DIP Agent's request, Borrowers shall obtain an acknowledgment that such third party holds the Collateral for the benefit of DIP Agent.
6.5.
Lien Perfection; Further Assurances. All Liens granted to DIP Agent under the DIP Loan Documents are for the benefit of DIP Secured Parties. Promptly after DIP Agent’s request therefor, each Borrower shall execute or cause to be executed and deliver to DIP Agent such instruments, assignments, title certificates or other documents as are necessary under the UCC or other Applicable Law to perfect of record (or continue the perfection of) DIP Agent’s Liens upon the Collateral, and shall take such other action as may be reasonably requested by DIP Agent to give effect to or carry out the intent and purposes of this Agreement, provided that such Liens shall nevertheless be valid and perfected without the necessity of any such filing pursuant to the DIP Financing Orders. Unless prohibited by Applicable Law, each Borrower hereby authorizes DIP Agent to execute and file any such financing statement on such Borrower’s behalf. The parties agree that a carbon, photographic or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof. Each Borrower authorizes DIP Agent to file any financing statement that describes the Collateral as “all assets” or “all personal property” of such Borrower, or words to similar effect, and ratifies any action taken by DIP Agent before the Closing Date to effect or perfect its Lien on any Collateral.
6.6.
Limitations. The Liens on Collateral granted hereunder are given as security only and shall not subject DIP Agent or any DIP Lender to, or in any way modify, any obligation or liability of any Borrower relating to any Collateral.
SECTION 7. COLLATERAL ADMINISTRATION
7.1.
General Provisions.
7.1.1. Location of Inventory. As of the date hereof, all Inventory (other than Inventory in transit) shall be kept by Borrowers at one or more of the business locations of Borrowers (including owned, leased and other third-party locations of Borrowers) identified in Schedule 7.1.1, except that each Borrower may make sales or other dispositions of Collateral in accordance with Section 9.2.2.
7.1.2. Insurance of Collateral; Condemnation Proceeds.
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(i)
Each Borrower shall maintain and pay for insurance upon all Collateral, wherever located, in accordance with the requirements of the Pre-Petition ABL Loan Agreement, including those policies in the amounts and with the insurance companies listed in Schedule 7.1.2 to the Pre-Petition ABL Loan Agreement. Subject to the terms of the Intercreditor Agreements, all proceeds payable under each such policy shall be applied to reduce the Pre-Petition ABL Obligations and the Obligations, whether such proceeds are payable to Borrowers or to DIP Agent. From time to time upon request, Borrowers shall deliver copies of such policies to DIP Agent. Unless DIP Agent shall agree in writing otherwise, each policy insuring the Collateral (except fidelity coverage against theft and malicious mischief) will (a) include a loss payee endorsement satisfactory to DIP Agent, naming DIP Agent as loss payee and (b) additional insured as appropriate. Each such policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than thirty (30) days prior written notice to DIP Agent in the event of cancellation of the policy for any reason whatsoever (except that in the case of cancellation for non-payment of the premium, the insurer shall give ten (10) days’ prior written notice to DIP Agent) and a clause specifying that the interest of DIP Agent shall not be impaired or invalidated by any act or neglect of any Borrower or the owner of the property in which the Collateral is stored or by the occupation of the premises for purposes more hazardous than are permitted by said policy. If any Borrower fails to provide and pay for such insurance, DIP Agent may, at its option, but shall not be required to, procure the same and charge each Borrower therefor. Each Borrower agrees to deliver to DIP Agent, promptly as rendered, true copies of all claims and reports relating to claims submitted to insurance companies issuing policies insuring the Collateral. For so long as no Default or Event of Default exists, each Borrower shall have the right to settle, adjust and compromise any claim with respect to any insurance maintained by each Borrower with respect to the Collateral; provided that all proceeds thereof are applied in the manner specified in this Agreement, and DIP Agent agrees promptly to provide any necessary endorsement to any checks or drafts issued in payment of any such claim. At any time that an Event of Default exists, only DIP Agent shall be authorized to settle, adjust and compromise such claims. DIP Agent shall have all rights and remedies with respect to such policies of insurance on the Collateral as are provided for in this Agreement and the other DIP Loan Documents, and consistent with the applicable insurance policies.
(ii)
Subject to the terms of the Intercreditor Agreements, any proceeds of insurance referred to in this Section 7.1.2 and any awards arising from condemnation of any Collateral shall be paid to DIP Agent and shall be applied to the payment of the Pre-Petition ABL Obligations and the Obligations in such order as DIP Agent may elect in its discretion.
(iii)
If requested by Borrowers in writing within fifteen (15) days after DIP Agent’s receipt of any insurance proceeds or condemnation awards relating to any loss or destruction of Equipment or Real Estate, and subject to the terms of the Intercreditor Agreements, Borrowers may use such proceeds or awards to repair or replace such Equipment or Real Estate (and until so used, the proceeds shall be held by DIP Agent as Cash Collateral) as long as (a) no Default or Event of Default exists; (b) such repair or replacement is promptly undertaken and concluded, in accordance with plans satisfactory
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to DIP Agent; (c) replacement buildings are of comparable size, quality and utility to the destroyed buildings; (d) the repaired or replaced Property is free of Liens, other than Permitted Liens that are not Purchase Money Liens; and (e) Borrowers comply with disbursement procedures for such repair or replacement as DIP Agent may reasonably require.
7.1.3. Protection of Collateral. All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping any Collateral, all Taxes imposed under any Applicable Law on any of the Collateral or in respect of the sale thereof, and all other payments required to be made by DIP Agent to any Person to realize upon any Collateral shall be borne and paid by Borrowers. DIP Agent shall not be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto (except for reasonable care in the custody thereof while any Collateral is in DIP Agent’s actual possession) or for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency, or other Person whomsoever, but the same shall be at Borrowers’ sole risk.
7.1.4. Defense of Title to Collateral. Each Borrower shall at all times defend its title to the Collateral and DIP Agent’s Liens therein against all Persons and all claims and demands whatsoever other than Permitted Liens.
7.2.
Administration of Accounts.
7.2.1. Records and Schedules of Accounts. Each Borrower shall keep accurate and complete records of its Accounts and all payments and collections thereon and shall submit to DIP Agent on such periodic basis as DIP Agent shall request a “Sales and Collections Report” for the preceding period, in the form mutually agreed upon. Borrowers shall also provide to DIP Agent on or before the 15th day of each Fiscal Month a detailed aged trial balance of all Accounts existing as of the last day of the preceding Fiscal Month, specifying the names, face value and dates of invoices for each Account Debtor obligated on an Account so listed (“Schedule of Accounts”), and, upon DIP Agent’s request therefor, copies of proof of delivery and a copy of all documents, including repayment histories and present status reports relating to the Accounts so scheduled and such other matters and information relating to the status of then existing Accounts as DIP Agent shall reasonably request. In addition, if Accounts in an aggregate face amount in excess of $1,000,000 cease to be Eligible Accounts in whole or in part on account of discounts, disputes, returns, Insolvency Proceedings or Liens, Borrowers shall notify DIP Agent of such occurrence promptly (and in any event within two (2) Business Days) after Borrowers’ Knowledge of such occurrence, and the Borrowing Base shall thereupon be adjusted to reflect such occurrence, and, at Borrowers’ option, Borrowers may submit an updated Borrowing Base Certificate reflecting such adjustments. Upon the request of DIP Agent, each Borrower shall deliver to DIP Agent copies of invoices or invoice registers related to all of such Borrower's Accounts.
7.2.2. Discounts, Disputes and Returns. If any Borrower grants any discounts, allowances or credits that are not shown on the face of the invoice for the Account involved, Borrowers shall report such discounts, allowances or credits, as the case may be, to DIP Agent as part of the next required Schedule of Accounts and, if reasonably requested by DIP Agent, explaining in detail the reason for the dispute or return, all claims related thereto, and the
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amount in controversy. Upon and during the continuance of an Event of Default, DIP Agent shall have the right to settle or adjust all disputes and claims directly with the Account Debtor and to compromise the amount or extend the time for payment of any Accounts comprising a part of the Collateral upon such terms and conditions as DIP Agent may deem advisable in its reasonable credit judgment, and to charge the deficiencies, costs and expenses thereof, including attorneys’ fees, to Borrowers.
7.2.3. Taxes. If an Account of any Borrower includes a charge for any Taxes payable to any governmental taxing authority, DIP Agent is authorized, in its sole discretion if such Borrower has failed to do so, to pay the amount thereof to the proper taxing authority for the account of such Borrower and to charge Borrowers therefor; provided, however, that neither DIP Agent nor DIP Lenders shall be liable for any Taxes that may be due by any or all Borrowers.
7.2.4. Account Verification. Whether or not a Default or an Event of Default exists, DIP Agent shall have the right at any time, at reasonable intervals, to verify the validity, amount or status of any Accounts of any Borrower by mail, telephone, or other written communication. Subject to DIP Agent’s rights under Section 7.2.6, all such communications shall be conducted in the name of such Borrower or any other entity designated by DIP Agent (but not in the name of DIP Agent, any DIP Lender or any other bank or lending institution). So long as no Default or Event of Default exists, verifications of Accounts shall be conducted at the sole cost and expense of DIP Agent and DIP Lenders. Borrowers shall cooperate fully with DIP Agent in an effort to facilitate and promptly conclude any such verification process.
7.2.5. Deposit Accounts and Securities Accounts.
(i)
Borrowers shall maintain at all times Dominion Accounts pursuant to lockbox or other arrangements acceptable to DIP Agent and, in the case of any such Dominion Account and lockbox arrangement, with such bank as may be selected by Borrowers and be acceptable to DIP Agent. Borrowers shall obtain a deposit account control agreement (in form and substance satisfactory to DIP Agent) from each lockbox servicer and Dominion Account bank that maintains a Deposit Account of each Borrower, establishing DIP Agent’s control over and Lien in the lockbox and any such Dominion Account, requiring immediate deposit of all remittances received in the lockbox to a Dominion Account, and waiving offset rights of such servicer or bank, except for customary administrative charges. All funds in each Dominion Account shall be immediately transferred to the Payment Account and shall be applied to the Obligations at the beginning of the next Business Day in accordance with Section 4.7. DIP Agent and DIP Lenders assume no responsibility to Borrowers for any lockbox arrangement or Dominion Account, including any claim of accord and satisfaction or release with respect to any Payment Items accepted by any bank. Borrowers shall request in writing and otherwise take commercially reasonable steps to ensure that all payments on Accounts or otherwise relating to Collateral are made directly to a Dominion Account (or a lockbox relating to a Dominion Account). If a Borrower or any Subsidiary receives Cash or Payment Items with respect to any ABL Priority Collateral, or, subject to the terms of the Intercreditor Agreements, any other Collateral, it shall hold same in trust for Pre-Petition ABL Agent and DIP Agent and promptly (not later than the next Business
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Day) deposit same into a Dominion Account. For avoidance of doubt, no Dominion Account shall constitute an Excluded Deposit Account.
(ii)
Each Borrower shall, if so requested at any time by DIP Agent, obtain a securities account control agreement (in form and substance satisfactory to DIP Agent) from each securities intermediary that maintains a securities account of such Borrower, establishing DIP Agent’s control over and Lien in the securities account, requiring acknowledgement that the securities intermediary has custody, control or possession of such securities account on behalf of DIP Agent and will comply with entitlement orders originated by DIP Agent with respect to such securities account, and has such other terms and conditions as DIP Agent may reasonably require.
7.2.6. Collection of Accounts and Proceeds of Collateral. To expedite collection, Borrowers shall endeavor in the first instance to make collection of Borrowers’ Accounts. All Payment Items received by any Borrower in respect of its Accounts, together with the proceeds of any other Collateral, shall be held by such Borrower as trustee of an express trust for the benefit of Pre-Petition ABL Agent and DIP Agent, and such Borrower shall immediately deposit same in kind in a Dominion Account. DIP Agent retains the right at all times during the continuance of a Default or an Event of Default to notify Account Debtors of any or all Borrowers that Accounts have been assigned to DIP Agent and to collect Accounts directly in its own name and to charge to Borrowers the collection costs and expenses incurred by DIP Agent or DIP Lenders, including reasonable attorneys’ fees.
7.3.
Administration of Inventory.
7.3.1. Records and Reports of Inventory. Each Borrower shall keep accurate and complete records of its Inventory, including costs and daily withdrawals and additions, and shall submit to DIP Agent inventory and reconciliation reports in form and detail satisfactory to DIP Agent, on such periodic basis as DIP Agent may request. Each Borrower shall conduct a physical inventory at least once per calendar year (and on a more frequent basis if requested by DIP Agent when an Event of Default exists) and periodic cycle counts consistent with historical practices, and shall provide to DIP Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as DIP Agent may request. DIP Agent may participate in and observe each physical count.
7.3.2. Returns of Inventory. No Borrower shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (i) such return is in the Ordinary Course of Business; (ii) no Default, Event of Default or Out of Formula Condition exists or would result therefrom; (iii) DIP Agent is promptly notified if the aggregate Value of all Inventory returned in any month exceeds $250,000; and (iv) any payment received by a Borrower for a return is promptly remitted to DIP Agent for application to the Pre-Petition ABL Obligations or the Obligations as elected by DIP Agent in its discretion.
7.3.3. Acquisition, Sale and Maintenance. Each Borrower shall take all steps to assure that all Inventory is produced in accordance with Applicable Law, including the FLSA. No Borrower shall sell any Inventory on approval or any other basis under which the customer may return or require such Borrower to repurchase such Inventory, except pursuant to a
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consignment arrangement so long as the amount of Inventory sold on consignment does not exceed $500,000 in the aggregate at any time. Borrowers shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.
7.4.
Administration of Equipment.
7.4.1. Record and Schedules of Equipment. Each Borrower shall keep accurate and complete records of its Equipment, including kind, quality, quantity, cost, acquisitions and dispositions thereof, and shall submit to DIP Agent, on such periodic basis as DIP Agent may request, a current schedule thereof, in form satisfactory to DIP Agent. Promptly upon request, each Borrower shall deliver to DIP Agent evidence of its ownership interest in any Equipment.
7.4.2. Dispositions of Equipment. Borrowers shall not sell, lease or otherwise dispose of any Equipment, without the prior written consent of DIP Agent (but subject to the Intercreditor Agreements), other than replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens other than Permitted Liens.
7.4.3. Condition of Equipment. Each Borrower shall service and maintain its Equipment in the Ordinary Course of Business to ensure that such Equipment is generally capable of performing the functions for which such Equipment type was designed, in accordance with manufacturer specifications, and is available to support the business of such Borrower.
7.5.
Borrowing Base Certificates. On or before the Closing Date, and thereafter on Wednesday of each week, Borrowers shall deliver to DIP Agent (and DIP Agent shall promptly deliver a copy of the same to each DIP Lender) a Borrowing Base Certificate prepared as of the last day of the prior week in the form attached as Exhibit I, and at such other times as DIP Agent may request. All calculations of Availability in connection with any Borrowing Base Certificate shall originally be made by Borrowers and certified to DIP Agent by SRC, provided that DIP Agent shall have the right to review and adjust any such calculation (i) to reflect its reasonable estimate of declines in value of any of the Eligible Accounts and Eligible Inventory described therein and (ii) to the extent that such calculation is not in accordance with this Agreement or does not accurately reflect the amount of the Availability Reserve; and provided further, that errors in the Borrowing Base Certificate (whether or not known to the certifying officers of Borrowers) shall be promptly corrected.
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1.
General Representations and Warranties. To induce DIP Agent and DIP Lenders to enter into this Agreement and to make available the Commitments, Revolver Loans and Letters of Credit, each Borrower warrants and represents to DIP Secured Parties that:
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8.1.1. Organization and Qualification. Each Borrower and each of its Subsidiaries are entities duly organized, validly existing and in good standing under the laws of the jurisdiction of their respective organization. Each Borrower and each of its Subsidiaries are duly qualified and are authorized to do business and are in good standing as a foreign corporation in each state or jurisdiction in which the failure of any such Borrower or any of such Subsidiaries to be so qualified would have a Material Adverse Effect.
8.1.2. Power and Authority. Subject to the entry of the Interim DIP Financing Order, and thereafter upon the entry of the Final DIP Financing Order, each Borrower and each of its Subsidiaries is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and each of the other DIP Loan Documents. The execution, delivery and performance of this Agreement and each of the other DIP Loan Documents have been duly authorized by all necessary action and do not and will not (i) require any consent or approval of any of the holders of the Equity Interests of any Borrower or any of its Subsidiaries; (ii) contravene the Organization Documents of any Borrower or any of its Subsidiaries; (iii) violate, or cause any Borrower or any of its Subsidiaries to be in default under, any provision of any Applicable Law, order, writ, judgment, injunction, decree, determination or award in effect having applicability to such Borrower or any such Subsidiary; (iv) result in a breach of or constitute a default under (a) any indenture or loan or credit agreement or (b) any other agreement, lease or instrument to which any Borrower or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected the consequence of which would constitute a Material Adverse Effect; or (v) result in, or require, the creation or imposition of any Lien (other than Permitted Liens) upon or with respect to any of the Properties now owned or hereafter acquired by any Borrower or any of its Subsidiaries.
8.1.3. Legally Enforceable Agreement. Subject to the entry of the Interim DIP Financing Order, and thereafter upon the entry of the Final DIP Financing Order, this Agreement is, and each of the other DIP Loan Documents when delivered under this Agreement will be, legal, valid and binding obligations of each Borrower and each of its Subsidiaries signatories thereto enforceable against them in accordance with the respective terms of such DIP Loan Documents, except as the enforceability thereof may be limited by principles of equity affecting the enforcement of creditors' rights.
8.1.4. Capital Structure. Schedule 8.1.4 reflects, as of the date hereof, (i) the correct name of each Borrower and each Subsidiary, its jurisdiction of incorporation and the percentage of its Equity Interests having Voting Powers owned by each Person, (ii) the name of each corporate Affiliate of each Borrower and the nature of the affiliation, and (iii) the number of authorized and issued Equity Interests (and treasury shares) of each Borrower and each of its Subsidiaries as of the date of the Pre-Petition ABL Loan Agreement. As of the date hereof, each Borrower has good title to all of the shares it purports to own of the Equity Interests of each of its Subsidiaries, free and clear in each case of any Lien other than Permitted Liens. As of the date hereof (x) all such Equity Interests have been duly issued and are fully paid and non-assessable; and (y) since the date of the financial statements of Borrowers referred to in Section 8.1.9 hereof, no Borrower has made, or obligated itself to make, any Distribution except as shown in Schedule 8.1.4. Except as shown in Schedule 8.1.4, no Borrower nor any Subsidiary holds, and no shares of the capital stock of any Borrower or any Subsidiary are subject to, outstanding options to purchase, or any rights or warrants to subscribe for, or any commitments or
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agreements to issue or sell, or any Equity Interests or obligations convertible into, or any powers of attorney relating to such Equity Interests.
8.1.5. Corporate Names. During the 5-year period preceding the date of this Agreement: (i) no Borrower nor any of its Subsidiaries has been known as or used any corporate, fictitious or trade names except those listed on Schedule 8.1.5; and (ii) except as set forth on Schedule 8.1.5, no Borrower nor any of its Subsidiaries has been the surviving corporation of a merger or consolidation or acquired all or substantially all of the assets of any Person.
8.1.6. Business Locations; Agent for Process. Schedule 8.1.6 contains a true and complete list of the following information, as of the date hereof: (i) the chief executive office of each Borrower and each of its Subsidiaries including any other executive offices of such Borrower and each of its Subsidiaries during the 5-year period preceding the date of this Agreement, and (ii) the agent for service of process of each Borrower and each of its Subsidiaries in their respective states of organization. All of the plant facilities and warehouses of each Borrower and its Subsidiaries effective as of the date hereof are listed on Schedule 7.1.1.
8.1.7. Title to Properties; Priority of Liens. As of the date hereof, each Borrower and each of its Subsidiaries has good and marketable title to and fee simple ownership of, or valid and subsisting leasehold interests in, all of its real Property, and good title to all of its personal Property (other than the Collateral), including all Property reflected in the financial statements referred to in Section 8.1.9 or delivered pursuant to Section 9.1.4. Each Borrower has good title to all Collateral in each case free and clear of all Liens except Permitted Liens. Each Borrower has paid or discharged all lawful claims which, if unpaid, might become a Lien against any Collateral of such Borrower that is not a Permitted Lien. Upon entry of the Interim DIP Financing Order by the Court, the Liens granted to DIP Agent pursuant to this Agreement are first priority Liens in and upon the Collateral subject only to Permitted Senior Liens.
8.1.8. Accounts. DIP Agent may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by a Borrower with respect to any Account as of the date of the most current Borrowing Base Certificate and Schedule of Accounts submitted pursuant to Section 7.2.1. Unless otherwise specifically stated in the Borrowing Base Certificate or Schedule of Accounts, Borrowers make each of the following warranties (subject to the limitation in the last paragraph of this Section 8.1.8) as of the date of each Borrowing Base Certificate and Schedule of Accounts with respect to each Account included in the computation of the Borrowing Base:
(i)
The Account is genuine and in all respects what it purports to be, and it is not evidenced by a judgment;
(ii)
The Account arises out of a completed, bona fide sale and delivery of Inventory (or appropriate agreement respecting storage entered into in the Ordinary Course of Business) or rendition of services by a U.S. Borrower in the Ordinary Course of Business and substantially in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto and forming a part of the contract between such U.S. Borrower and the Account Debtor;
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(iii)
The Account is for a sum certain maturing as stated in the invoice covering such sale or rendition of services, a copy of which has been furnished or is available to DIP Agent on request;
(iv)
The Account, and DIP Agent’s security interest therein, is not subject to any claims for offset (except claims for offset netted out in the computation of Eligible Accounts included in the Borrowing Base Certificate), Lien (other than Permitted Liens), deduction, defense, dispute, counterclaim or any other adverse condition except conditions in the Ordinary Course of Business or claims where the amount in controversy is immaterial, and each such Account is absolutely owing to a U.S. Borrower and is not contingent in any respect or for any reason;
(v)
The contract under which such Account arose does not expressly condition or restrict a U.S. Borrower’s right to assign its right to payment thereunder to DIP Agent, unless such U.S. Borrower has obtained the Account Debtor’s consent to such collateral assignment of rights to payment or complied with any conditions to such assignment of rights of payment (regardless of whether under the UCC or other Applicable Law any such restrictions are ineffective to prevent the grant of a Lien upon such Account in favor of DIP Agent);
(vi)
No U.S. Borrower has made any agreement with any Account Debtor thereunder for any extension, compromise, settlement or modification of any such Account or any deduction therefrom, except discounts or allowances which are granted by such U.S. Borrower for prompt payment or otherwise in the Ordinary Course of Business and which are reflected in the calculation of the net amount of each respective invoice related thereto and are reflected in the Schedules of Accounts submitted to DIP Agent pursuant to (and to the extent required by) Section 7.2.1 hereof or accounted for in the computation of Eligible Accounts included in the Borrowing Base Certificate;
(vii)
There are no facts, events or occurrences which are reasonably likely to impair the validity or enforceability of any such Account or reduce the amount payable thereunder from the face amount of the invoice with respect thereto;
(viii)
The Account Debtor had the capacity to contract when the Account arose, continues to meet such Borrower's customary credit standards, is Solvent, is not contemplating or subject to an Insolvency Proceeding, and has not failed, or suspended or ceased doing business; and
(ix)
There are no proceedings or actions which are threatened or pending against any Account Debtor thereunder and which are reasonably likely to result in any material adverse change in the collectibility of such Account.
For purposes of determining whether an Account is an Eligible Account, the foregoing representations are made regardless of whether Borrowers’ Knowledge exists with respect to an event or condition that would constitute a breach of any of such representations. For all other purposes of this Agreement (including the purpose of determining whether an Event of Default
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has occurred hereunder), the representations are only made to the extent of Borrowers’ Knowledge.
8.1.9. Financial Statements. The consolidated and consolidating balance sheets as of January 31, 2015, and related statements of income and cash flow of each Borrower and its Subsidiaries delivered to DIP Agent and DIP Lenders by Borrowers for the month ending January 31, 2015, were prepared in accordance with GAAP consistently applied except to the extent provided in the notes to such financial statements and subject, in the case of the unaudited financial statements and reports, to normal year-end adjustments and the absence of footnotes, and fairly present in all material respects the financial positions and results of each Borrower and its Subsidiaries at the dates and for the periods indicated. Any projections included in the DIP Budget have been and will be prepared in good faith, and are based on reasonable assumptions in light of the circumstances at such time. Since January 31, 2015, there has been no change in the condition, financial or otherwise, of any Borrower (other than commencement of the Chapter 11 Cases) that could reasonably be expected to have a Material Adverse Effect. No financial statement of operations of any Borrower and its Subsidiaries delivered to DIP Agent or DIP Lenders by Borrowers on or prior to the Closing Date contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading.
8.1.10. Full Disclosure. No DIP Loan Document, financial statement referred to in Section 8.1.9 hereof or other written statement made by any Borrower contains any untrue statement of a material fact or omits any material fact necessary to make the statements contained herein or therein not materially misleading. To Borrowers’ Knowledge, there is no fact or circumstances in existence on the date hereof which any Borrower has failed to disclose to DIP Agent in writing that may reasonably be expected to have a Material Adverse Effect.
8.1.11. Surety Obligations. No Borrower nor any of its Subsidiaries is obligated as surety or indemnitor under any surety or similar bond or other contract to assure payment, performance or completion of performance of any undertaking or obligation of any Person, excluding obligations entered into in the Ordinary Course of Business and excluding all leases.
8.1.12. Taxes. The FEIN of each Borrower and each of its Subsidiaries as of the date hereof is as shown on Schedule 8.1.12. To Borrowers’ Knowledge, each Borrower and each of its Subsidiaries has filed all federal, state and local tax returns and other reports such Borrower and each of its Subsidiaries are required by law to file (or with respect to amounts in the aggregate which are less than $100,000, are undertaking good faith efforts to make any such filings) and have paid, or made provision for the payment of, all Taxes upon such Borrower and its Subsidiaries and their respective income and Properties as and when such Taxes are due and payable, except to the extent being Properly Contested. To Borrowers’ Knowledge, the provision for Taxes on the books of each Borrower and each of its Subsidiaries are adequate for all years not closed by applicable statutes, and for their respective current Fiscal Years.
8.1.13. Brokers. There are no claims against any Borrower for brokerage commissions, finder’s fees or investment banking fees in connection with the transactions contemplated by this Agreement or any of the other DIP Loan Documents.
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8.1.14. Intellectual Property. Each Borrower and each of its Subsidiaries owns or has the lawful right to use all Intellectual Property necessary for the present and planned future conduct of its business without any conflict with the rights of others likely to have a Material Adverse Effect; and there is no objection to, or pending or threatened Intellectual Property Claim with respect to any Borrower’s or any Subsidiary’s right to use any such Intellectual Property (and no Borrower is aware of any grounds for challenge or objection thereto) that is reasonably likely to have a Material Adverse Effect.
8.1.15. Governmental Approvals. Each Borrower and each of its Subsidiaries has, and is in good standing with respect to, all Governmental Approvals necessary to continue to conduct its business as heretofore or proposed to be conducted by it and to own or lease and operate its Properties as now owned or leased by it, except for issues relating to licenses, certificates of occupancy and other matters that are not reasonably likely to have a Material Adverse Effect.
8.1.16. Compliance with Laws. Each Borrower and each of the Subsidiaries has duly complied with, and its Properties, business operations and leaseholds are in compliance in all material respects with, the provisions of all Applicable Law; there have been no citations, notices or orders of noncompliance issued to any Borrower or any of the Subsidiaries under any such law, rule or regulation that could be reasonably expected to have a Material Adverse Effect; and no Inventory has been produced in violation of the FLSA except for items of noncompliance that are not reasonably likely to have a Material Adverse Effect.
8.1.17. Burdensome Contracts. No Borrower nor any of the Subsidiaries is a party or subject to any contract, agreement, or charter or other corporate restriction, which has or could be reasonably expected to have a Material Adverse Effect. No Borrower nor any of the Subsidiaries is a party or subject to any Restrictive Agreement.
8.1.18. Litigation. Except for the Chapter 11 Cases, there are no actions, suits, proceedings or investigations pending or, to Borrowers’ Knowledge, threatened on the date hereof, against or affecting any Borrower or any of the Subsidiaries, or the business, operations, Properties, prospects, profits or condition of any Borrower or any of the Subsidiaries, (i) which relates to any of the DIP Loan Documents or any of the transactions contemplated thereby or (ii) which, if determined adversely to any Borrower or any of the Subsidiaries, could reasonably be expected to have a Material Adverse Effect. To Borrowers’ Knowledge, no Borrower nor any of the Subsidiaries is in default on the date hereof with respect to any order, writ, injunction, judgment, decree or rule of any Governmental Authority or arbitration board or tribunal.
8.1.19. No Defaults. No event has occurred and no condition exists which would, upon or immediately after the execution and delivery of this Agreement or any Borrower’s performance hereunder, constitute a Default or an Event of Default; and no Borrower nor any of its Subsidiaries is in default, and no event has occurred and no condition exists which constitutes or which with the passage of time or the giving of notice or both would constitute a default, under any Material Contract or in the payment of any Debt of any Borrower or a Subsidiary to any Person for Money Borrowed, except solely as a result of the filing of the Chapter 11 Cases or for conditions that could not reasonably be expected to have a Material Adverse Effect.
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8.1.20. Leases. No Borrower has any capitalized and operating lease of that constitutes a Material Contract.
8.1.21. Pension Plans. Except as disclosed on Schedule 8.1.21, no Borrower nor any of its Subsidiaries has any Plan on the date hereof. Except as disclosed on Schedule 8.1.21, (i) each Borrower and each of its Subsidiaries is in full compliance with the requirements of ERISA and the regulations promulgated thereunder with respect to each Plan in all material respects; (ii) no fact or situation that is reasonably likely to have a Material Adverse Effect exists in connection with any Plan; and (iii) no Borrower or any of its Subsidiaries has any withdrawal liability in connection with a Multi-employer Plan.
8.1.22. Trade Relations. To Borrowers’ Knowledge, there exists no actual or threatened termination, cancellation or limitation of, or any materially adverse modification or change in, the business relationship between any Borrower and any customer or any group of customers whose purchases individually or in the aggregate are material to the business of such Borrower, or with any material supplier or group of suppliers, which in either case is reasonably likely to have a Material Adverse Effect.
8.1.23. Labor Relations. Except as described on Schedule 8.1.23, no Borrower nor any of the Subsidiaries is a party to any collective bargaining agreement on the date hereof. To Borrowers’ Knowledge on the date hereof, (i) there are no grievances, disputes or controversies with any union or any other organization of any Borrower’s or any Subsidiary’s employees reasonably likely to have a Material Adverse Effect, or (ii) any threats of strikes, work stoppages or any asserted pending demands for collective bargaining by any union or organization.
8.1.24. Investment Company Act. No Borrower (i) is an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940 or (ii) is subject to regulation under the Interstate Commerce Act or any other Applicable Law regarding its authority to incur Debt.
8.1.25. Margin Stock. No Borrower nor any of its Subsidiaries (i) is engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock.
8.1.26. Insurance. The properties of Borrowers and their respective Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of any Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Borrowers or the applicable Subsidiary operate.
8.1.27. Casualty, Etc. Neither the businesses nor the properties of any Borrower or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
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8.1.28. DIP Security Documents. The provisions of any DIP Security Documents are effective to create in favor of DIP Agent for the benefit of DIP Lenders a legal, valid and enforceable first priority Lien in and upon the ABL Priority Collateral and, in the case of the Term Loan Priority Collateral, a legal, valid and enforceable Lien with the priority set forth in the DIP Financing Orders (subject to Permitted Liens) on all right, title and interest of the respective Borrowers in the Collateral described therein. No filing or other action will be necessary to perfect or protect such Liens.
8.1.29. OFAC. No Borrower or Subsidiary, nor to the knowledge of any Borrower or Subsidiary, any director, officer, employee or affiliate thereof, or any agent or representative acting at the direction thereof, is a Person currently the subject of any Sanctions. No Borrower or Subsidiary is located, organized or resident in a Designated Jurisdiction.
8.1.30. Compliance with Environmental Laws. No Borrower's or any Subsidiary's past or present operations, Real Estate owned or controlled by any Borrower or any Subsidiary, or other Properties are subject to any federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up; (ii) neither any Borrower nor any Subsidiary has received any Environmental Notice; and (iii) neither any Borrower nor any Subsidiary has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned or controlled by any Borrower or any Subsidiary, in each case except as could not, individually or in the aggregate be reasonably expected to have a Material Adverse Effect.
8.1.31. Chapter 11 Cases. The Chapter 11 Cases were commenced on the Petition Date in accordance with Applicable Law and proper notice thereof, and the hearing for the approval of the Interim DIP Financing Order has been given as identified in the certificate of service filed with the Court.
8.1.32. DIP Financing Orders. The Interim DIP Financing Order and, after it has been entered, the Final DIP Financing Order, and the transactions contemplated by this Agreement and the other DIP Loan Documents are in full force and effect, and have not, in whole or in part, been reversed, modified, amended, stayed, vacated, appealed or subject to a stay pending appeal or otherwise challenged or subject to any pending or threatened challenge or proceeding in any jurisdiction, and each Borrower is in compliance with each DIP Financing Order.
8.2.
Complete Disclosure. No DIP Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Borrower has failed to disclose to DIP Agent in writing that could reasonably be expected to have a Material Adverse Effect.
8.3.
Reaffirmation of Representations and Warranties. Each representation and warranty contained in this Article 8 shall be deemed to be reaffirmed by each Borrower on each day that any U.S. Borrower requests or is deemed to have requested an extension of credit hereunder, unless Borrowers have notified DIP Agent prior to any such extension of credit that
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Borrowers are no longer able to make any such representation or warranty and except for changes in the nature of a Borrower’s business or operations, or, if applicable, any of its Subsidiaries’ businesses or operations, that may occur after the date hereof in the Ordinary Course of Business so long as DIP Agent has consented to such changes or such changes are not violative of any provision of this Agreement or any other DIP Loan Document. Notwithstanding the foregoing, representations and warranties which by their terms are applicable only to a specific date shall be deemed made only at and as of such date.
8.4.
Survival of Representations and Warranties. All representations and warranties of Borrowers contained in this Agreement or any of the other DIP Loan Documents shall survive the execution, delivery and acceptance thereof by DIP Agent, DIP Lenders and the parties thereto and the closing of the transactions described therein or related thereto.
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
9.1.
Affirmative Covenants. For so long as there are any Commitments outstanding and thereafter until Full Payment of the Obligations, each Borrower covenants that, unless the Required DIP Lenders have otherwise consented in writing, it shall and shall cause each Subsidiary to:
9.1.1. Visits and Inspections. Permit representatives of DIP Agent, from time to time, as often as may be reasonably requested, but only during normal business hours and (except when a Default or Event of Default exists) upon reasonable prior notice to a Borrower, to visit and inspect the Properties of such Borrower and each of its Subsidiaries, inspect, audit, examine, conduct appraisals, and make extracts from each Borrower’s and each Subsidiary’s books and records, and discuss with its officers, its employees and its independent accountants, such Borrower’s and each Subsidiary’s business, financial condition, business prospects and results of operations. Such visits, inspections, audits, examinations and appraisals shall be at DIP Agent’s or Borrowers’ expense as provided in Section 2.2.4. Representatives of each DIP Lender shall be authorized to accompany DIP Agent on each such visit and inspection and to participate with DIP Agent therein, but at their own expense, unless a Default or Event of Default exists. Neither DIP Agent nor any DIP Lender shall have any duty to make any such inspection, nor to share any results of any inspection, appraisal or report with any Borrower, and shall not incur any liability to any Borrower or any other Person by reason of its failure to conduct or delay in conducting any such inspection. Each Borrower acknowledges that all inspections, appraisals and reports are prepared by DIP Agent and DIP Lenders solely for their purposes, and no Borrower shall be entitled to rely upon them.
9.1.2. Notices. Notify DIP Agent and DIP Lenders in writing, within five (5) days after Borrowers' Knowledge thereof, (i) of the commencement of any litigation affecting any Obligor or any of its Properties, whether or not the claims asserted in such litigation are considered by any Borrower to be covered by insurance, and of the institution of any administrative proceeding, to the extent that such litigation or administrative proceeding, if determined adversely to such Obligor, would reasonably be expected to have a Material Adverse Effect; (ii) of any material labor dispute to which any Obligor may become a party, and any strikes or walkouts relating to any of its plants or other facilities; (iii) of any Post-Petition material default by any Obligor under, termination or expiration of any Material Contract, or of
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any note, indenture, loan agreement, mortgage, lease, deed, guaranty or other similar agreement relating to any Debt of such Obligor exceeding $500,000; (iv) of the existence of any Default or Event of Default; (v) of any Post-Petition default by any Person under any note or other evidence of Debt payable to an Obligor in an amount exceeding $500,000; (vi) of any Post-Petition judgment against any Obligor in an amount exceeding $1,000,000; (vii) of the assertion by any Person of any Intellectual Property Claim, the adverse resolution of which could reasonably be expected to have a Material Adverse Effect; (viii) of any violation or asserted violation by any Borrower of any Applicable Law (including ERISA, OSHA, FLSA or any Environmental Laws), the adverse resolution of which could reasonably be expected to have a Material Adverse Effect; (ix) of any Environmental Release by an Obligor or on any Property owned or occupied by an Obligor which could reasonably be expected to have a Material Adverse Effect; (x) of the discharge of any Borrower's independent accountants or any withdrawal of resignation by such independent accountants from their acting in such capacity; (xi) the issuance or incurrence of any Debt; (xii) the issuance or sale of any Equity Interests of any Borrower or any Subsidiary; (xiii) any disposition of any assets or Property or any interest therein to or in favor of any Person in excess of $500,000 other than sales of Inventory in the Ordinary Course of Business; (xiv) whether any Obligor fails to constitute a Qualified ECP Obligor; and (xv) copies of all notices, requests and other documents (including amendments, waivers and other modifications) received by any Obligor or any Subsidiary under or pursuant to any Term Loan Documents and, from time to time upon request by DIP Agent, such information and reports regarding the Term Loans as DIP Agent may request. In addition, Borrowers shall give DIP Agent at least five (5) Business Days prior written notice of any Borrower’s opening of any new chief executive office.
9.1.3. Bankruptcy Case Notices. Each Borrower shall provide, or shall cause its counsel in the Chapter 11 Cases to provide, DIP Agent's and DIP Lenders' counsel with copies of all pleadings, motions, reports, applications and other papers filed by such Borrower with the Court as well as copies of all billing and expense statements received from any Professional Person. Each Borrower shall include counsel for DIP Agent and counsel for each DIP Lender on any "Special Notice List" or other similar list of parties to be served with papers in the Chapter 11 Cases.
9.1.4. Financial and Other Reporting. Keep adequate records and books of account with respect to its business activities in which proper entries are made in accordance with GAAP reflecting all its financial transactions; and cause to be prepared and to be furnished to DIP Agent and DIP Lenders the following (all to be prepared in accordance with GAAP applied on a consistent basis, unless such Borrower's certified public accountants concur in any change therein, such change is disclosed to DIP Agent and is consistent with GAAP):
(i)
as soon as available, but in no event later than April 30, 2015, unaudited balance sheets of Borrowers and their respective Subsidiaries as of the end of Fiscal Year 2014 and the related statements of income, shareholders’ equity and cash flow, on a Consolidated basis, setting forth in each case in comparative form, the corresponding figures for the preceding Fiscal Year, and certified by the principal financial officer of SRC as prepared in accordance with GAAP and fairly presenting the Consolidated financial position and results of operations of Borrowers and their Subsidiaries for such Fiscal Year subject only to changes from audit and year end adjustments and except that such statements need not contain notes;
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(ii)
as soon as available, and in any event within forty-five (45) days after the end of each of the first three (3) Fiscal Quarters in any Fiscal Year, excluding the last Fiscal Quarter of Borrowers’ Fiscal Year, unaudited balance sheets of Borrowers and their Subsidiaries and the related unaudited Consolidated Statements of income and cash flow in each case for such Fiscal Quarter and for the portion of Borrowers’ Fiscal Year then elapsed, on a Consolidated basis, setting forth in each case in comparative form, the corresponding figures for the preceding Fiscal Year, and certified by the principal financial officer of Borrowers as prepared in accordance with GAAP and fairly presenting the Consolidated financial position and results of operations of Borrowers and their Subsidiaries for such Fiscal Quarter and period subject only to changes from audit and year end adjustments and except that such statements need not contain notes;
(iii)
as soon as available, and in any event within thirty (30) days after the end of each Fiscal Month hereafter, unaudited balance sheets of Borrowers and their Subsidiaries and the related unaudited Consolidated Statements of income and cash flow in each case for such month and for the portion of Borrowers’ Fiscal Year then elapsed, on a Consolidated basis, setting forth in each case in comparative form, the corresponding figures for the preceding Fiscal Year, and certified by the principal financial officer of SRC as prepared in accordance with GAAP and fairly presenting the Consolidated financial position and results of operations of Borrowers and their Subsidiaries for such Fiscal Month and period subject only to changes from audit and year end adjustments and except that such statements need not contain notes;
(iv)
[Reserved];
(v)
not later than fifteen (15) days after each Fiscal Month, if so requested by DIP Agent, (a) a listing of all of each Borrower’s trade payables as of the last Business Day of such Fiscal Month, specifying the name of and balance due each trade creditor, and, at DIP Agent’s request, monthly detailed trade payable agings in the form customarily prepared by Borrowers and approved by DIP Agent and (b) Inventory reports by each location of Borrowers and their respective Subsidiaries;
(vi)
promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which any Borrower has made generally available to its shareholders and copies of any regular, periodic and special public reports or registration statements which any Borrower files with the SEC or any Governmental Authority which may be substituted therefor, or any national securities exchange;
(vii)
all information, reports and other documents provided at any time by a Borrower to Term DIP Agent or to a Term DIP Lender, promptly after the sending of such information, reports or other documents;
(viii)
an initial 13-week professional fees budget and an updated professional fees budget for each successive 13-week period thereafter (the “Professional Fees Budget”) setting forth in reasonable detail and specificity the projected fees and reimbursable expenses of the Professionals;
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(ix)
(i) As soon as practicable in advance of filing with the Court or delivering to the Committee appointed in a Chapter 11 Case, if any, or to the United States Trustee for the District of Delaware, as the case may be, the Final DIP Financing Order, all other proposed orders and pleadings related to the Chapter 11 Cases, the DIP Facility and/or any sale contemplated in accordance with Section 9.1.18 hereof (all of which must be in form and substance satisfactory to DIP Agent), any Chapter 11 Plan and/or any disclosure statement related thereto and (ii) substantially simultaneously with the filing with the Court or delivering to the Committee appointed in any Chapter 11 Case, if any, or to the United States Trustee for the District of Delaware, as the case may be, all other notices, filings, motions, pleadings or other information concerning the financial condition of Borrowers or the Chapter 11 Cases that may be filed with the Court or delivered to the Committee appointed in any Chapter 11 Case, if any, or to the United States Trustee for the District of Delaware;
(x)
An updated DIP Budget and an updated Professional Fee Budget every two (2) weeks, each in form and substance satisfactory to DIP Agent: and
(xi)
such other reports and information (financial or otherwise) as DIP Agent may reasonably request from time to time in connection with any Collateral or any Obligor’s financial condition or business.
Concurrently with the delivery of the financial statements described in clause (i) of this Section 9.1.4, or more frequently if requested by DIP Agent or any DIP Lender during any period that a Default or Event of Default exists, Borrowers shall cause to be prepared and furnished to DIP Agent and DIP Lenders a Compliance Certificate executed by the chief financial officer of SRC.
Promptly after the sending or filing thereof, Borrowers shall also provide to DIP Agent copies of any annual report to be filed in accordance with ERISA in connection with each Plan and such other data and information (financial and otherwise) as DIP Agent, from time to time, may reasonably request bearing upon or related to the Collateral or any Borrower’s and each of its Subsidiaries’ financial condition or results of operations.
Borrowers hereby acknowledge that (i) DIP Agent or BofA will make available to DIP Lenders and Letter of Credit Issuer materials and/or information provided by or on behalf of Borrowers hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (ii) certain of DIP Lenders (each, a “Public DIP Lender”) may have personnel who do not wish to receive material non-public information with respect to Borrowers or their Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Borrowers hereby agree that (a) all Borrower Materials that are to be made available to Public DIP Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (b) by marking Borrower Materials “PUBLIC,” Borrowers shall be deemed to have authorized DIP Agent, Letter of Credit Issuer and DIP Lenders to treat such Borrower Materials as not containing any material non-public information with respect to Borrowers or their securities for purposes of United States Federal and state securities laws; (c) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion
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of the Platform designated “Public Side Information;” and (d) DIP Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”
9.1.5. Landlord and Storage Agreements. Upon the reasonable request of DIP Agent, provide DIP Agent with copies of: (i) any of the existing agreements, and (ii) any future agreements, between any Borrower and any landlord, warehouseman or bailee which owns any premises at which any Collateral may, from time to time, be kept or that otherwise may possess or handle any Collateral.
9.1.6. Taxes. Pay and discharge all Post-Petition Taxes prior to the date on which such Taxes become delinquent or penalties attach thereto, except and to the extent only that such Taxes are being Properly Contested or, that such Taxes are in an aggregate amount of less than $250,000, and are filed and paid in good faith as, to Borrowers’ Knowledge, such Taxes become due.
9.1.7. Compliance with Law. Comply with (a) each DIP Financing Order and all other orders entered by the Court in the Chapter 11 Cases, and (b) all Applicable Law, including ERISA, all Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and all laws, statutes, regulations and ordinances regarding the collection, payment and deposit of Taxes, and obtain and keep in force any and all Governmental Approvals necessary to the ownership of its Properties or to the conduct of its business, but only to the extent that any such failure to comply (other than failure to comply with Anti-Terrorism Laws), obtain or keep in force could be reasonably expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Environmental Release shall occur at or on any of the Properties of any Borrower or any of its Subsidiaries, Borrowers shall, or shall cause the applicable Subsidiary to, act promptly and diligently to investigate and report to DIP Agent and all appropriate Governmental Authorities the extent of, and to take appropriate remedial action to eliminate, such Environmental Release, whether or not ordered or otherwise directed to do so by any Governmental Authority.
9.1.8. Insurance. In addition to the insurance required herein with respect to the Collateral, maintain, with any Approved Insurers, (i) insurance with respect to each Borrower's and each of its Subsidiaries' respective Properties and businesses against such casualties and contingencies of such type (including product liability, workers’ compensation, or larceny, embezzlement or other criminal misappropriation insurance) and in such amounts, and with such coverages and deductibles, as are customary in the respective business of such Borrower or such Subsidiary and (ii) business interruption insurance in an amount not less than $20,000,000, with deductibles and subject to a collateral insurance assignment satisfactory to DIP Agent as security for the Obligations.
9.1.9. Collateral. Notwithstanding anything to the contrary, Borrowers shall execute and deliver to DIP Agent, for the benefit of DIP Secured Parties, Mortgages, deposit accounts control agreements, Lien Waivers and other DIP Security Documents to the extent provided to any Term DIP Agent or executed in respect of any Delayed Draw Term DIP Loans.
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9.1.10. Payment of Administrative Expenses. Pay and discharge as the same shall become due and payable, all its Post-Petition obligations and liabilities, including all tax liabilities, assessments and governmental charges or levies upon it or its Properties or assets, unless being Properly Contested, provided that the foregoing shall not be construed to override any provisions herein or in any DIP Financing Order regarding any impermissible use of Cash Collateral or proceeds of any Revolver Loan or as a consent by any DIP Secured Party to any surcharge of any Collateral under Section 506(c) of the Bankruptcy Code or otherwise to pay any such obligation or liability.
9.1.11. Preservation of Existence, Etc. Except as otherwise provided in the DIP Financing Orders, (i) preserve, renew and maintain in full force and effect its legal existence and good standing under the laws of the jurisdiction of its organization except in a transaction permitted by Section 9.2.1 or 9.2.2; (ii) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (iii) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation or non-renewal of which could reasonably be expected to have a Material Adverse Effect.
9.1.12. Maintenance of Properties. Except as otherwise provided in the DIP Financing Orders, (i) maintain, preserve and protect all of its material Properties necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (ii) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (iii) use the standard of care typical in the industry in the operation and maintenance of its facilities.
9.1.13. Compliance with Terms of Leaseholds. Make all payments and otherwise perform all obligations arising after the Petition Date in respect of all leases of real property to which such Borrower or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify DIP Agent of any default by any party with respect to such leases and cooperate with DIP Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not be reasonably likely to have a Material Adverse Effect or upon rejection of such lease, with the prior written consent of DIP Agent, pursuant to a Final Order of the Court entered under Section 365 of the Bankruptcy Code.
9.1.14. Lien Searches. Promptly following receipt of the acknowledgment copy of any financing statements filed under the UCC in any jurisdiction by or on behalf of DIP Lenders, deliver to DIP Agent completed requests for information listing such financing statement and all other effective financing statements filed in such jurisdiction that name such Borrower as debtor, together with copies of such other financing statements.
9.1.15. Material Contracts. Except as otherwise permitted under Section 365 of the Bankruptcy Code, and except as to any Material Contract rejected by any Borrower, with the prior written consent of DIP Agent, pursuant to a Final Order of the Court entered upon
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proper notice and an opportunity to be heard, perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, enforce each such Material Contract in accordance with its terms, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; and promptly notify DIP Agent of any material modification of a Material Contract or termination of a Material Contract.
9.1.16. Debtor-in-Possession Obligations. Comply in a timely manner with its obligations and responsibilities as a debtor-in-possession under the Bankruptcy Code, the Bankruptcy Rules, Local Court Rules, and any order of the Court.
9.1.17. DIP Budget. Comply with the terms of the DIP Budget, subject to any Permitted Variances.
9.1.18. Sale. Diligently pursue and prosecute the Sale such that:
(i)
Not later than two (2) Business Days after all of the parties thereto have executed the Purchase Agreement, Borrowers shall file and serve the Sale Motions, each in form and substance acceptable to DIP Agent and the Required DIP Lenders, seeking approval of the Sale Procedures Order and the Sale Order (each as defined below);
(ii)
After the parties thereto have executed the Purchase Agreement, and in no event later than April 10, 2015, the Court shall have entered an order, in form and substance satisfactory to DIP Agent and the Required DIP Lenders, approving the bid procedures for the Sale (the “Sale Procedures Order”);
(iii)
Not later than June 19, 2015, the Court shall have entered an order, in form and substance satisfactory to DIP Agent and the Required DIP Lenders, approving the Sale Motion and the Purchase Agreement pursuant to Sections 363(f) and 363(m) of the Bankruptcy Code (the “Sale Order”);
(iv)
The Sale shall be consummated not later than the earlier of (i) thirty (30) days after the entry of the Sale Order if the Sale has not closed for any reason other than (i) the issuance of a stay pending appeal from the Sale Order (in which case, the 30-day period referred to in this clause shall automatically be extended to the earlier of (A) the fifth business day following the day such stay ceases to be in effect or (B) the Termination Date (as defined in the Purchase Agreement), (ii) the winning bidder has failed to consummate the Sale, except as a result of a breach by Sellers of a representation or covenant in the Purchase Agreement, or (iii) 180 days after the parties have executed the Purchase Agreement; and
(v)
Borrowers shall provide to DIP Agent, at the time or times reasonably requested by DIP Agent, but in no event less than Friday of each week after the Closing Date, a report on the status of the Sale and such other information regarding the Sale as DIP Agent may reasonably request.
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9.1.19. Consultants. Provide DIP Agent and DIP Lenders with reasonable access to any consultant, turnaround management, broker or financial advisory firm retained by any Borrower in any of the Chapter 11 Cases.
9.1.20. Term DIP Facility. Keep and maintain the Term DIP Facility in full force and effect in an amount not less than $30,000,000; promptly obtain advances thereunder on any date that Availability is less than Borrowers' aggregate funding needs; and use the proceeds of each such advance solely for purposes and in amounts (subject to Permitted Variances) set forth in the DIP Budget or permitted by this Agreement or the DIP Financing Orders.
9.1.21. Post-Closing Covenants. Promptly after DIP Agent's request therefor, execute and deliver the documents and complete the tasks set forth on Schedule 9.1.21, in each case as provided in such schedule.
9.2.
Negative Covenants. For so long as there are any Commitments outstanding and thereafter until Full Payment of the Obligations, each Borrower covenants that, unless the Required DIP Lenders have otherwise consented in writing, it shall not and shall not permit any of its Subsidiaries to:
9.2.1. Fundamental Changes. (i) Merge, reorganize, combine, consolidate or amalgamate with any Person, or liquidate, wind up its affairs or dissolve itself and (ii) shall not change any Borrower’s name or conduct business under any new fictitious name or change any Borrower’s FEIN.
9.2.2. Disposition of Assets. Make any Asset Disposition, except (i) sales of Inventory in the Ordinary Course of Business; (ii) sales or other dispositions of items of Equipment which are obsolete, worn out or no longer useful in any Borrower's business; (iii) other dispositions of Collateral that are consented to in writing by DIP Agent and the Required DIP Lenders and are authorized by the Court after notice and hearing; and (iv) the rejection pursuant to Section 365 of the Bankruptcy Code of unexpired leases and executory contracts that are consented to in writing by DIP Agent and are authorized by the Court after notice and hearing.
9.2.3. Tax Consolidation. File or consent to the filing of any consolidated income tax return with any Person other than Borrowers and their Subsidiaries.
9.2.4. Accounting Changes. Subject to the terms of the paragraph identified as “Accounting Terms” in Appendix A, make any significant change in accounting treatment or reporting practices, except as may be permitted or required by GAAP and/or applicable requirements of the SEC, or establish a fiscal year different from the Fiscal Year, unless such Borrower has notified DIP Agent of any such change and complied with all disclosure and other requirements of Applicable Law.
9.2.5. Organization Documents. Amend, modify or otherwise change any of the terms or provisions in any of its Organization Documents as in effect on the date hereof, except for changes that do not affect in any way such Borrower’s or any of its Subsidiaries’
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rights and obligations to enter into and perform the DIP Loan Documents to which it is a party and to pay all of the Obligations and that do not otherwise have a Material Adverse Effect.
9.2.6. Restrictive Agreements. Enter into or become party to any Restrictive Agreement.
9.2.7. Conduct of Business. Engage in any business other than the business engaged in by it on the Petition Date and any business or activities which are substantially similar, related or incidental thereto or reasonably evolve therefrom.
9.2.8. Liens. Create or permit any Liens on any of the now owned or hereafter acquired Collateral except for the following (collectively, “Permitted Liens”):
(i)
Liens in favor of DIP Agent securing the Obligations;
(ii)
Post-Petition Liens for Taxes not yet due or being Properly Contested;
(iii)
Post-Petition Purchase Money Liens securing Purchase Money Debt permitted by Section 9.2.9;
(iv)
Post-Petition statutory Liens (other than Liens for Taxes, imposed under ERISA or in favor of the Pension Benefit Guaranty Corporation) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of such Borrower or any Subsidiary;
(v)
Post-Petition Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Debt for Money Borrowed), statutory obligations and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to DIP Agent’s Liens;
(vi)
Post-Petition Liens arising in the Ordinary Course of Business that are at all times junior to the Liens in favor of DIP Agent;
(vii)
easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;
(viii)
bankers’ Liens with respect to depository account arrangements entered into in the Ordinary Course of Business securing obligations not past due and Liens of a collecting bank on Payment Items in the course of collection;
(ix)
Liens in existence on the Petition Date, but only if and to the extent such Liens are permitted under the Pre-Petition ABL Loan Agreement, including Liens on the Collateral securing the Term Loan Obligations subject to the terms of the Pre-Petition ABL/Term Loan Intercreditor Agreement;
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(x)
Liens granted to Term DIP Agent for the benefit of Term DIP Lenders under the Term DIP Loan Documents and approved by the DIP Financing Orders, subject to the DIP ABL/Term Loan Intercreditor Agreement; and
(xi)
other Liens expressly granted and approved in the DIP Financing Orders.
9.2.9. Debt. Create, incur, guarantee or suffer to exist any Debt, except the following (without duplication):
(i)
the Pre-Petition ABL Obligations and the Term Loan Obligations and other Debts outstanding on the Petition Date that are reflected in the schedules filed by each Borrower in the Chapter 11 Cases;
(ii)
the Obligations, including Bank Product Obligations;
(iii)
Permitted Contingent Obligations arising after the Petition Date;
(iv)
the Term DIP Obligations in an aggregate principal amount not to exceed $30,000,000 on any date;
(v)
indebtedness that is incurred in the Ordinary Course of Business by a Borrower during the pendency of its Chapter 11 Case not in contravention of the Bankruptcy Code or any order of the Court, is included (and does not exceed amounts shown) in the DIP Budget, and that is not secured by a Lien upon any Collateral except as expressly provided in the DIP Financing Orders;
(vi)
indebtedness of a Borrower owing to another Borrower; provided that if such indebtedness is owed by SR MX Holdco, SR MX Holdings, SR Mexico, SR Servicios or SR Canada, such indebtedness shall be evidenced by a promissory note, in form and substance satisfactory to DIP Agent, duly executed and delivered by such company and the sole original of which is pledged by any holder of such note to DIP Agent as security for the Obligations; and
(vii)
Professional Fees, fees payable to the Office of the United States Trustee, and fees payable to the Clerk of the Court.
9.2.10. Restricted Investments. Make any Restricted Investment.
9.2.11. Loans. Make any loans or other advances of money to any Person, except (i) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (ii) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (iii) deposits with financial institutions permitted hereunder; and (iv) intercompany loans permitted by Section 9.2.9(vi), provided that such loan is in an amount and for a purpose permitted under the DIP Budget.
9.2.12. Distributions. Declare or make any Distribution, except Upstream Payments; or create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary to make any Upstream Payment, except for restrictions under the DIP Loan
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Documents, under Applicable Law or in effect on the Closing Date as shown on Schedule 8.1.18 to the Pre-Petition ABL Loan Agreement.
9.2.13. Affiliate Transactions. Enter into or be party to any transaction with an Affiliate, except (i) transactions authorized by the DIP Loan Documents; (ii) payment of reasonable compensation to officers and employees for services actually rendered, and loans and advances permitted by Section 9.2.11; (iii) payment of customary directors’ fees and indemnities; and (iv) transactions solely among Borrowers and other Obligors.
9.2.14. Restrictions on Payment of Certain Debt. Make any payments (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to any Pre-Petition Debt other than (i) the Pre-Petition ABL Obligations and the Pre-Petition Term Obligations in accordance with the DIP Financing Orders or a Final Order of the Court, (ii) payments to critical vendors to the extent approved by Final Order of the Court and reflected in the DIP Budget, or (iii) payment of Debt secured by a valid, perfected and unavoidable Lien on any Collateral, but only to the extent such Lien is senior in priority to Liens in favor of DIP Agent on ABL Priority Collateral, such payment is approved by Final Order of the Court, and such payment is reflected in the DIP Budget.
9.2.15. Restrictions on Payment of Term Loan Obligations. Make (i) any payment (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) in respect of any Term Loan Obligations from the proceeds of the ABL Priority Collateral until Full Payment of the Pre-Petition ABL Obligations and the Obligations or (ii) any voluntary prepayment with respect of any Term Loan Obligations from the proceeds of Revolver Loans.
9.2.16. Amendments to Certain Debt.
(i)
Subordinated Debt. Amend, supplement or otherwise modify any document, instrument or agreement relating to any Subordinated Debt.
(ii)
Pre-Petition Term Loan Documents. Amend, supplement or otherwise modify any Pre-Petition Term Loan Document except to the extent permitted under the Pre-Petition ABL/Term Loan Intercreditor Agreement and authorized by a Final Order of the Court.
(iii)
Term DIP Loan Documents. Amend, supplement or otherwise modify any Term DIP Loan Document except to the extent not prohibited under the DIP ABL/Term Loan Intercreditor Agreement and (to the extent required) authorized by a Final Order of the Court.
9.2.17. Lease Obligations. Create, incur or assume after the Petition Date any obligations as lessee (i) for the rental or hire of real or personal Property in connection with any sale and leaseback transaction, or (ii) for the rental or hire of other real or personal Property of any kind under leases or agreements to lease having an original term of one year or more.
9.2.18. Employee Plans. Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Petition Date.
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9.2.19. Modifications to DIP Financing Orders. Seek or consent to any amendment, supplement or any other modification of any of the terms of the DIP Financing Orders after such Orders are entered by the Court without the prior written consent of DIP Agent (and with respect to any material change, the Required DIP Lenders).
9.2.20. Filing of Motions and Applications. Without the prior written consent of DIP Agent (and with respect to any material change or modification, Required DIP Lenders), apply to the Court for, or join in or support any motion or application seeking, authority to (a) take any action that is prohibited by the terms of any of the DIP Loan Documents or the DIP Financing Orders, (b) refrain from taking any action that is required to be taken by the terms of any of the DIP Loan Documents or the DIP Financing Orders, or (c) permit any Debt or Claim to be pari passu with or senior to any of the Obligations, except as expressly stated in the DIP Financing Orders.
9.2.21. Superpriority Claim. Incur, create, assume, suffer to exist or permit any other Superpriority Claim which is pari passu with or senior to the claims of DIP Agent and DIP Lenders against Borrowers, except as expressly stated in the DIP Financing Orders.
9.2.22. Use of Proceeds. Use any proceeds of Revolver Loans or Cash Collateral for a purpose that is not specifically permitted by this Agreement and the DIP Financing Orders and expressly set forth in the DIP Budget.
9.2.23. DIP Budget. Amend or modify the DIP Budget without the prior written consent of DIP Agent and the Required DIP Lenders.
SECTION 10. CONDITIONS PRECEDENT
10.1.
Conditions Precedent to Initial Revolver Loans. DIP Lenders shall not be required to fund any Revolver Loan or other extensions of credit requested by any U.S. Borrower, unless, on or before March 12, 2015, each of the following conditions has been satisfied:
10.1.1. Loan Documents. Each of the other DIP Loan Documents shall have been duly executed and delivered to DIP Agent by each of the signatories thereto (and, with the exception of the Notes, in sufficient counterparts for each DIP Lender) and accepted by DIP Agent and DIP Lenders, and each Obligor shall be in compliance with all of the terms thereof.
10.1.2. Borrowing Base Certificate. DIP Agent shall have received from Borrowers the Borrowing Base Certificate in accordance with Section 7.5.
10.1.3. Evidence of Perfection and Priority of Liens. DIP Agent shall have received acknowledgments of all filings or recordations necessary to perfect its Liens in the Collateral;
10.1.4. Incumbency Certificates. DIP Agent shall have received a certificate of a duly authorized officer of each Borrower, certifying (i) that attached copies of such Borrower’s Organization Documents are true and complete, and in full force and effect,
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without amendment except as shown; (ii) that an attached copy of resolutions authorizing execution and delivery of the DIP Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this DIP Facility; and (iii) to the title, name and signature of each Person authorized to sign the DIP Loan Documents. DIP Agent may conclusively rely on this certificate until it is otherwise notified by the applicable Borrower in writing.
10.1.5. Organization Documents. DIP Agent shall have received copies of the Organization Documents of each Borrower, and all amendments thereto, certified by the Secretary of State or other appropriate official of the jurisdiction of each Borrower’s organization.
10.1.6. Good Standing Certificates. DIP Agent shall have received such good standing certificates for each Borrower as agreed to by DIP Agent and SRC.
10.1.7. Officer’s Certificates. DIP Agent shall have received certificates, in form and substance satisfactory to it, from a knowledgeable Senior Officer of each Borrower certifying that, after giving effect to the initial Revolver Loans and the other Initial Transactions, (i) no Default or Event of Default exists or will occur after giving effect to the Initial Transactions; (ii) the representations and warranties set forth in Section 8 are true and correct in all material respects, provided, however, that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects; (iii) such Borrower has complied with all agreements and conditions to be satisfied by it under the DIP Loan Documents; (iv) either (a) all consents, licenses and approvals required in connection with the consummation by such Obligor of the Initial Transactions, and the execution, delivery and performance by such Obligor and the validity against such Obligor of the DIP Loan Documents to which it is a party, have been obtained and are in full force and effect and are attached to such certificate, or (b) no such consents, licenses or approvals are so required.
10.1.8. DIP ABL/Term Loan Intercreditor Agreement. DIP Agent shall have received the DIP ABL/Term Loan Intercreditor Agreement duly executed by all of the parties thereto.
10.1.9. Compliance with Laws and DIP Loan Documents. DIP Agent shall have determined or received assurances satisfactory to it that none of the DIP Loan Documents or any of the transactions contemplated thereby violate any Applicable Law, court order or agreement binding upon any Obligor.
10.1.10. Patriot Act Disclosures. DIP Agent and each DIP Lender shall have received all Patriot Act Disclosures requested by them prior to execution of this Agreement.
10.1.11. No Default or Event of Default. No Default or Event of Default shall exist, or would result from such proposed Revolver Loan or other extension of credit or from the application of the proceeds thereof.
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10.1.12. Representations and Warranties. The representations and warranties of Borrowers contained in Section 8 of this Agreement and in any other DIP Loan Document shall be true and correct in all material respects on and as of the Closing Date (except to the extent that any such representation and warranty (x) is qualified as to materiality, in which case such representation and warranty shall be true and correct in all material respects on and as of the date of such Revolver Loan or other credit extension, or (y) specifically refers to an earlier date, in which case such representation or warranty is true and correct as of such earlier date).
10.1.13. No Material Adverse Effect. Since the Petition Date, no event has occurred that has or could reasonably be expected to have either a Material Adverse Effect on any Borrower's business, finances, assets or prospects or on the Collateral.
10.1.14. Payment of Fees. Borrowers shall have paid all fees and expenses to be paid hereunder to DIP Agent and DIP Lenders on the Closing Date (or shall have made arrangements reasonably acceptable to DIP Agent to have all such fees and expenses paid with proceeds of Revolver Loans on the Closing Date).
10.1.15. Letter of Credit Conditions. With respect to the issuance of any Letter of Credit on the Closing Date, each of the conditions required in connection therewith hereunder shall have been satisfied.
10.1.16. Joint Administration of Chapter 11 Cases. The Court has entered an order providing for the joint administration of the Chapter 11 Cases.
10.1.17. Motions and First Day Orders. All motions filed and First Day Orders entered by the Court in any of the Chapter 11 Cases on or prior to the Closing Date shall be in form and substance reasonably satisfactory to DIP Agent and the Required DIP Lenders ,and DIP Agent shall be reasonably satisfied with any cash collateral arrangements applicable to any material pre-Petition Date secured obligations of Borrowers.
10.1.18. Interim DIP Financing Order. Following proper notice thereof, the interim hearing on the DIP Financing Motion shall have been held, with the presentation of evidence and with any objections to the DIP Financing Motion or to the proposed Interim DIP Financing Order resolved in a manner satisfactory to DIP Agent (and with respect to any material change from the Initial Approved Form of the Interim DIP Financing Order, the Required DIP Lenders), the Interim DIP Financing Order shall have been entered by the Court in the Chapter 11 Cases no later than fifteen (15) days after the Petition Date, and Borrowers shall be in compliance with the Interim DIP Financing Order.
10.1.19. Availability Under DIP Facility. After effecting the initial Revolver Loans and the other Initial Transactions (including any such Revolver Loans made to pay or otherwise reimburse DIP Agent and DIP Lenders for all fees, costs and expenses payable on the Closing Date), Availability under the DIP Facility equals or exceeds $16,000,000.
10.1.20. DIP Budget. DIP Agent and DIP Lenders shall have reviewed and approved the DIP Budget and the Professional Fees Budget, each of which shall be in the Initial Approved Form.
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10.1.21. No Litigation. Except for the Chapter 11 Cases, no action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of this Agreement, or which is related to or arises out of, this Agreement or any of the other DIP Loan Documents or the consummation of the transactions contemplated hereby or thereby.
10.1.22. Term DIP Facility. The Term DIP Documents shall be in form and substance satisfactory to DIP Agent, shall have been duly executed and delivered by all of the signatories thereto, all provisions of the Term DIP Documents are in full force and effect, and Term DIP Lenders are ready and willing to fund the Delayed Draw Term DIP Loans in accordance with the Term DIP Loan Documents and the Financing Orders.
Execution and delivery to DIP Agent by a DIP Lender of a counterpart of this Agreement shall be deemed confirmation by such DIP Lender that (i) all conditions precedent in this Section 10.1 have been fulfilled to the satisfaction of such DIP Lender, (ii) the decision of such DIP Lender to execute and deliver to DIP Agent an executed counterpart of this Agreement was made by such DIP Lender independently and without reliance on DIP Agent or any other DIP Lender as to the satisfaction of any condition precedent set forth in this Section 10.1, and (iii) all documents sent to such DIP Lender for approval consent, or satisfaction were and are acceptable to such DIP Lender.
10.2.
Conditions Precedent to All Credit Extensions. DIP Agent and DIP Lenders shall not be required to fund any Revolver Loans or grant any other accommodation to or for the benefit of any U.S. Borrower, and Letter of Credit Issuer shall not be required to issue any Letter of Credit, unless and until each of the conditions set forth in Section 10.1 and of the following conditions has been and continues to be satisfied:
10.2.1. Representation and Warranties. The representations and warranties of each Borrower in the DIP Loan Documents shall be true and correct on the date of, and upon giving effect to, the funding of any Revolver Loan or extension of credit, except for representations and warranties that expressly relate to an earlier date (in which case such representations and warranties shall have been true and correct on and as of such earlier date).
10.2.2. No Defaults. No Default or Event of Default exists at the time, or would result from the funding, of any Revolver Loan or other extension of credit.
10.2.3. Satisfaction of Conditions in Other Documents. The request for Revolver Loans or other extensions of credit shall be in accordance with the DIP Budget (and Permitted Variances) and the DIP Financing Orders, and each of the conditions precedent to funding set forth in any other DIP Loan Document shall have been and remain satisfied as of the funding date.
10.2.4. No Litigation. Except for the Chapter 11 Cases, no action, proceeding, contested matter, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of this Agreement, or which is related to or
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arises out of, this Agreement or any of the other DIP Loan Documents or the consummation of the transactions contemplated hereby or thereby.
10.2.5. No Material Adverse Effect. No event shall have occurred or circumstance or condition shall exist that has or could reasonably be expected to have a Material Adverse Effect.
10.2.6. Notice of Borrowing and Borrowing Base Certificate. DIP Agent shall have received the Notice of Borrowing and each Borrowing Base Certificate required by the terms of this Agreement.
10.2.7. Letter of Credit Conditions. With respect to the issuance of any Letter of Credit after the Closing Date, each of the conditions required in connection therewith hereunder shall have been satisfied.
10.2.8. Payment of Fees. Each Borrower shall have paid all fees and expenses then due and payable as provided for herein or in any of the other DIP Loan Documents.
10.2.9. Cash Collateral. Each Borrower shall have, at the time of the delivery of each Notice of Borrowing for a proposed Revolver Loan, remitted to DIP Agent all cash on hand and all Cash Collateral available to such Borrower except for the amounts held by DIP Agent in the Cash Collateral Account, if any, and except for cash proceeds of Term Loan Priority Collateral.
10.2.10. Interim DIP Financing Order. With respect to all Revolver Loans and other extensions of credit requested on or after the Closing Date but before the expiration of the Interim Period, the Interim DIP Financing Order shall have been entered, shall be in full force and effect, and shall not have been vacated, reversed, modified, amended or stayed after its entry, without the prior written consent of DIP Agent and the Required DIP Lenders.
10.2.11. Final DIP Financing Order. With respect to all Revolver Loans and other extensions of credit requested after the expiration of the Interim Period, following proper notice and a hearing thereon, the final hearing on the DIP Financing Motion shall have been held, with the presentation of evidence and the resolution of any objections to the DIP Financing Motion or to the proposed Final DIP Financing Order in a manner satisfactory to DIP Agent (and with respect to any material change to the form of Interim DIP Financing Order entered by the Court, Required DIP Lenders), and the Final DIP Financing Order shall have been entered on or before the expiration of the Interim Period, shall be in full force and effect and shall not have been vacated, reversed, modified, amended or stayed after its entry without the prior written consent of DIP Agent and Required DIP Lenders.
10.3.
Inapplicability of Conditions. None of the conditions precedent set forth in Sections 10.1 or 10.2 shall be conditions to the obligation of (i) each Participating DIP Lender to make payments to Letter of Credit Issuer pursuant to Section 1.2.8, (ii) each DIP Lender to deposit with DIP Agent such DIP Lender’s Pro Rata share of a Borrowing in accordance with Section 3.1.2, (iii) each DIP Lender to fund its Pro Rata share of a Revolver Loan to repay
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outstanding Settlement Loans to BofA as provided in Section 3.1.3(ii), (iv) each DIP Lender to pay any amount payable to DIP Agent or any other DIP Lender pursuant to this Agreement, or (v) DIP Agent to pay any amount payable to any DIP Lender pursuant to this Agreement.
10.4.
Limited Waiver of Conditions Precedent. If DIP Lenders shall make any Revolver Loans or otherwise extend any credit to any U.S. Borrower under this Agreement or if Letter of Credit Issuer shall issue a Letter of Credit, in each case at a time when any of the foregoing conditions precedent are not satisfied (regardless of whether the failure of satisfaction of any such conditions precedent was known or unknown to DIP Agent, DIP Lenders or Letter of Credit Issuer), the funding of such Revolver Loan or the issuance of such Letter of Credit shall not operate as a waiver of the right of DIP Agent and DIP Lenders to insist upon the satisfaction of all conditions precedent with respect to each subsequent Borrowing or issuance of a Letter of Credit requested by any U.S. Borrower or a waiver of any Default or Event of Default as a consequence of the failure of any such conditions to be satisfied, unless DIP Agent, with the prior written consent of Required DIP Lenders, in writing waives the satisfaction of any condition precedent, in which event such waiver shall only be applicable for the specific instance given and only to the extent and for the period of time expressly stated in such written waiver.
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1.
Events of Default. The occurrence or existence of any one or more of the following events or conditions shall constitute an “Event of Default” (each of which Events of Default shall be deemed to exist unless and until waived by DIP Agent and DIP Lenders in accordance with the provisions of Section 12.9 hereof):
11.1.1. Payment of Obligations. Borrowers shall fail to pay any of the Obligations on the due date thereof (whether due at stated maturity, on demand, upon acceleration or otherwise).
11.1.2. Misrepresentations. Any representation, warranty or other written statement to DIP Agent or any DIP Lender that is made by any Borrower in this Agreement or in any other DIP Loan Document or furnished in compliance with or in reference to any of the DIP Loan Documents, proves to have been false or misleading in any material respect when made or furnished or when reaffirmed pursuant to Section 8.3 hereof.
11.1.3. Breach of Specific Covenants. (i) Any Borrower shall fail or neglect to perform, keep or observe any covenant contained in Sections 6.5, 6.6, 7.1.2, 7.2.1, 7.2.5, 7.2.6, 7.3.1, 7.5, 9.1.1, 9.1.2(i), (iv) and (viii), 9.1.20, or 9.2 hereof on the date that such Borrower is required to perform, keep or observe such covenant or (ii) any Borrower shall fail or neglect to perform, keep or observe any covenant contained in Section 9.1.4 hereof on the date such Borrower is required to perform, keep or observe such covenant; provided, however, the foregoing shall not constitute an Event of Default so long as the breach of such covenant is cured to DIP Agent’s and Required DIP Lenders’ satisfaction within two (2) Business Days after (i) any Senior Officer’s receipt of written notice of any such breach from Agent or (ii) any Senior Officer obtaining actual knowledge of any such breach; and provided further, however, that such notice and opportunity to cure shall not apply in the case of any failure to perform, keep or
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observe any such covenant which is not capable of being cured or which is a willful breach by any Borrower.
11.1.4. Breach of Other Covenants. Any Borrower shall fail or neglect to perform, keep or observe any covenant contained in this Agreement (other than a covenant which is dealt with specifically elsewhere in this Section 11.1) and the breach of such other covenant is not cured to DIP Agent’s and the Required DIP Lender’s satisfaction within fifteen (15) Business Days after the sooner to occur of any Senior Officer’s receipt of notice of such breach from DIP Agent or the date of Borrowers’ Knowledge of such failure or neglect; provided, however, that such notice and opportunity to cure shall not apply in the case of any failure to perform, keep or observe any covenant which is not capable of being cured at all or within such fifteen (15) Business Day period or which is a willful breach by any Borrower.
11.1.5. Default Under Other DIP Loan Documents. Any Borrower or any other Obligor shall default in the due and punctual observance or performance of any liability or obligation to be observed or performed by it under any of the other DIP Loan Documents, and such default shall not have been cured within the applicable grace and cure period, if any, provided in such other DIP Loan Documents; provided, however, that such notice and opportunity to cure shall not apply in the case of any failure to perform, keep or observe any liability or obligation which is not capable of being cured or which is a willful breach by any Borrower.
11.1.6. Other Defaults. There shall occur any default or event of default on the part of any Borrower or any Subsidiary under any Post-Petition agreement, document or instrument to which such Borrower or such Subsidiary is a party or by which such Borrower or such Subsidiary or any of their respective Properties is bound, creating or relating to any Debt (other than the Obligations) in excess of $250,000 if the payment or maturity of such Debt may be accelerated in consequence of such event of default or demand for payment of such Debt may be made.
11.1.7. Uninsured Losses. Any loss, theft, damage or destruction of any of the Inventory not fully covered (subject to such deductibles as DIP Agent shall have permitted) by insurance if the amount not covered by insurance exceeds $100,000.
11.1.8. Material Adverse Effect. There shall occur any event or condition that has a Material Adverse Effect.
11.1.9. Business Disruption; Condemnation. There shall occur a cessation of a substantial part of the business of any Obligor for a period which may be reasonably expected to have a Material Adverse Effect; or any Obligor shall suffer the loss or revocation of any license or permit now held or hereafter acquired by such Obligor which is necessary to the continued or lawful operation of its business and such loss or revocation may be reasonably expected to have a Material Adverse Effect; or any Obligor shall be enjoined, restrained or in any way prevented by court, governmental or administrative order from conducting all or any material part of its business affairs for a period which may be reasonably expected to have a Material Adverse Effect; or any material lease or agreement pursuant to which any Obligor leases or occupies any premises on which any Collateral is located shall be
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canceled or terminated prior to the expiration of its stated term and such cancellation or termination has a Material Adverse Effect or results in an Out of Formula Condition; or any material part of the Collateral shall be taken through condemnation or the value of such Collateral shall be materially impaired through condemnation and, in either case, Borrowers shall not have received compensation.
11.1.10. Change of Control. There shall occur a Change of Control with respect to SRC or any other Borrower.
11.1.11. ERISA. A Reportable Event shall occur which DIP Agent, in its reasonable discretion, shall determine constitutes grounds for the termination by the Pension Benefit Guaranty Corporation of any Plan or for the appointment by the appropriate United States district court of a trustee for any Plan, or if any Plan shall be terminated or any such trustee shall be requested or appointed, or if any Borrower or any Subsidiary is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from such Borrower’s or such Subsidiary’s complete or partial withdrawal from such Plan; and any such event may be reasonably expected to have a Material Adverse Effect.
11.1.12. Challenge to DIP Loan Documents. Any Obligor or any of its Affiliates shall challenge or contest in any action, suit or proceeding the validity or enforceability of any of the DIP Loan Documents, the legality, validity or enforceability of any of the Obligations, or the perfection or priority of any Lien granted to DIP Agent, or any of the DIP Loan Documents ceases to be in full force or effect for any reason other than a full or partial waiver or release by DIP Agent and DIP Lenders in accordance with the terms thereof.
11.1.13. Judgment. One or more judgments or orders for the payment of money in an amount that exceeds, individually or in the aggregate $250,000 shall be entered against any Borrower or any other Obligor after the Petition Date and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.
11.1.14. Criminal Forfeiture. Any Borrower or any of its Senior Officers is criminally indicted or convicted for (i) a felony committed in the conduct of any Borrower's business, or (ii) violating any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act), in each case that could lead to forfeiture of any material Property or any Collateral.
11.1.15. Status of Debt. If (i) the Obligations shall at any time fail to constitute “Senior Debt”, “Designated Senior Debt” or any similar designation under and as defined in any agreement or instrument governing any Debt that is subordinated to the Obligations, (ii) the subordination provisions of any agreement or instrument governing any Debt in a principal amount in excess of $250,000 that is subordinated to the Obligations shall for any reason (other than as a result of any action or inaction of DIP Agent or any DIP Lender) be revoked or invalidated, or otherwise cease to be in full force and effect, unless such Debt would otherwise be permitted to be incurred as “Senior Debt” at such time, or any Obligor shall contest in any manner the validity or enforceability thereof, or (iii) any Debt other than the Debt
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evidenced by this Agreement and/or Bank Product Obligations shall be designated as an “ABL Facility” or any similar designation under and as defined in the Pre-Petition Term Loan Documents.
11.1.16. Insolvency Proceeding Defaults. Any Borrower shall breach any financial, affirmative, and negative covenant in the DIP Loan Documents; any Borrower shall fail to comply with any of the provisions of the DIP Financing Orders or any other order entered by the Court; Borrowers shall fail to achieve any of the Sale Benchmarks, breach any material provision of the Purchase Agreement, or fail to comply in any material respect with the Sale Procedures Order or Sale Order; the Purchase Agreement or any similar agreement entered into in connection with an Alternative Transaction (as defined in the Purchase Agreement) is terminated (other than in connection with the consummation of the Sale or such Alternative Transaction or with the written consent of the Required DIP Lenders) or any Seller is in default thereof; unless otherwise approved by DIP Agent and the Required DIP Lenders, an order of the Court shall be entered providing for a change in venue with respect to any Chapter 11 Case, and such order shall not be reversed or vacated within ten (10) days after its entry; any Borrower shall make an expenditure not authorized by the DIP Budget, subject to the Permitted Variances; a trustee shall be appointed in any of the Chapter 11 Cases; a responsible officer or an examiner shall be appointed in any of the Chapter 11 Cases with enlarged powers (powers beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code; any of the Chapter 11 Cases shall be dismissed or converted to a case under Chapter 7, or the filing, or not opposing, by any Borrower of a motion seeking such relief; any Borrower shall make a payment on account of a Pre-Petition Debt other than in accordance with an order of the Court and permitted by the DIP Budget (and any Permitted Variances), including in connection with adequate protection payments, in connection with the assumption of executory contracts and unexpired leases, or in respect of payroll and related expenses and employee benefits accrued as of the Petition Date; the Court shall enter an order terminating the exclusive right of any Borrower to file a Chapter 11 Plan; any Borrower shall obtain Court approval of a disclosure statement for a Chapter 11 Plan other than an Acceptable Plan or a Confirmation Order shall be entered with respect to a Chapter 11 Plan (regardless of the proponent of such Chapter 11 Plan) if such Chapter 11 Plan is not an Acceptable Plan; Borrowers shall enter into an agreement for, or shall file (or support or fail to oppose) a motion seeking, or the Court shall enter, an order authorizing, a sale of all or substantially all of Borrowers' assets for a cash price or other terms that will not result in Full Payment of the Obligations and the Pre-Petition ABL Obligations (and Cash Collateralization of any Contingent Obligations) at the closing of such sale unless the terms are otherwise acceptable to DIP Agent and DIP Lenders in their sole and absolute discretion; any Borrower shall file a motion seeking authority to consummate a sale of assets of such Borrower or any of its Subsidiaries (other than any such sale of assets that is permitted by the DIP Loan Documents) having a value in excess of $100,000 outside the Ordinary Course of Business, or any sale of any part of the Collateral pursuant to Section 363 of the Bankruptcy Code, in each case without the Required DIP Lenders’ consent or unless expressly provided for in the DIP Budget; any substantial part of a Borrower's assets, other than the Collateral, shall be sold by such Borrower, and, as a consequence of such sale, such Borrower is not able to continue its business operations in substantially the same manner as was conducted by it prior to such sale; without the prior written consent of DIP Agent and the Required DIP Lenders, any Borrower shall file a motion to alter, amend, vacate, supplement, modify, or reconsider, in any respect, either of the DIP Financing Orders after entry
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by the Court or either of the DIP Financing Orders is amended, vacated, stayed, reversed or otherwise modified, whether on appeal or otherwise; the Court shall enter an order granting any Person, other than DIP Agent, relief from the automatic stay to permit foreclosure on or repossession of any material assets of any Borrower or to permit the commencement or continuation of Pre-Petition litigation against any Borrower for any purpose other than to liquidate the amount of a disputed claim involving potential liability not covered by insurance and in excess of $250,000 in the aggregate; an order shall be entered for the substantive consolidation of the Estate of any Borrower with any other Person, unless such Person is another Borrower, and such order granting substantive consolidation provides that the assets of such Borrower shall remain subject to the Liens of DIP Lenders and Pre-Petition ABL Lenders securing the Obligations and the Pre-Petition ABL Obligations, respectively; any order is entered prohibiting or otherwise unduly restricting, or the Bankruptcy Court shall prohibit or otherwise unduly restrict, the ability of Pre-Petition ABL Lenders to credit bid the Pre-Petition ABL Obligations outstanding under the Pre-Petition ABL Loan Documents; the DIP Facility shall cease to be in full force and effect, the Court shall declare the DIP Facility to be null and void, any Borrower shall contest the validity or enforceability of the DIP Facility, any Borrower shall deny in writing that such Borrower has any further liability or obligation under the DIP Facility, or DIP Lenders shall cease to have the benefit of the Liens granted by either of the DIP Financing Orders; an order shall be entered by the Court avoiding or requiring disgorgement by DIP Agent or any DIP Lender of any amounts received in respect of the Obligations; any Borrower shall not have sufficient Availability, together with unused commitments under the Term DIP Loan Documents, for a period of thirty (30) consecutive days to pay, or shall otherwise fail to pay as and when due and payable, all costs and expenses of administration that are incurred by such Borrower in the Chapter 11 Cases, other than fees and expenses covered by the Carve-Out; a Borrower shall file any motion or other request with the Court seeking authority to use any cash proceeds of the Collateral or the Pre-Petition ABL Collateral or to obtain any financing under Section 364(d) of the Bankruptcy Code secured by a priming Lien, or Lien of equal priority with DIP Agent's Liens, upon any Collateral, in each case without DIP Agent's prior written consent; except as permitted in the DIP Financing Orders, the Court enters any order in any of the Chapter 11 Cases granting to any Person a Superpriority Claim or Lien pari passu with or senior to that granted to DIP Agent under the DIP Financing Orders; any Borrower or another party in interest on behalf of a Borrower shall file any action, suit or other proceeding or contested matter challenging the validity, perfection or priority of any Liens of DIP Agent securing the Obligations or any Liens of Pre-Petition ABL Agent securing the Pre-Petition ABL Obligations, or the validity or enforceability of any of the DIP Loan Documents or Pre-Petition ABL Loan Documents, or asserting any Avoidance Actions against DIP Agent, any DIP Lender, Pre-Petition ABL Agent or any Pre-Petition ABL Lender, or seeking to recover any monetary damages from DIP Agent, any DIP Lender, Pre-Petition ABL Agent or any Pre-Petition ABL Lender; any Borrower shall file a motion or other pleading seeking relief that, if granted, could reasonably be expected to result in the occurrence of an Event of Default (unless such relief, if granted (or the relevant transaction) would result in Full Payment of the Obligations and the Pre-Petition ABL Obligations immediately upon consummation of the matter addressed by such motion or pleading, whether pursuant to a Chapter 11 Plan or otherwise); or without DIP Lenders’ consent, any Borrower discontinues or suspends all or any material part of its business operations or commences an orderly wind-down or liquidation of its business.
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11.1.17. Default under Term DIP Loan Documents. There shall occur any default or event of default on the part of any Borrower or any Subsidiary under any Term DIP Loan Document; provided, however, that, in the event such default or event of default is waived by Term DIP Agent and Term DIP Lenders (and DIP Agent is provided with a copy of the writing by Term DIP Agent confirming such waiver) and such default or event of default is not otherwise a Default or Event of Default hereunder except by operation of this Section 11.1.17, such default or event of default shall not constitute an Event of Default hereunder.
11.2.
Remedies upon Default. Upon and after the occurrence of an Event of Default and for so long as such Event of Default shall exist, subject to giving five (5) Business Days' written notice to Borrowers and any other applicable notice parties under the DIP Financing Orders (in either event, the "Default Notice Period"), DIP Agent may in its discretion (and, upon receipt of written direction of the Required DIP Lenders, shall) exercise from time to time the following rights and remedies (without prejudice to the rights of DIP Agent or any DIP Lender to enforce its claim against any or all Obligors):
11.2.1. The right to declare the principal of and any accrued interest on the Revolver Loans and all other Obligations owing under any of the DIP Loan Documents to be immediately due and payable, whereupon the same shall become due and payable without diligence, presentment, demand, protest or notice of any kind (all of which each Borrower expressly waives).
11.2.2. The right to terminate, reduce or condition any Commitment.
11.2.3. The right to require Borrowers to Cash Collateralize Letter of Credit Obligations, Bank Product Obligations and other Obligations that are contingent or not yet due and payable, and, if Borrowers fail promptly to deposit such Cash Collateral, DIP Agent may advance the required Cash Collateral as Revolver Loans (whether or not an Out of Formula Condition exists or is created thereby or such Revolver Loan constitutes an Out of Formula Loan, or the conditions in Section 10 are satisfied); provided, however, that no DIP Lender shall be required to fund any such Revolver Loan that would cause such DIP Lender's Pro Rata share of the Revolver Loans to exceed its Revolver Commitment.
11.2.4. All of the rights and remedies of a secured party under the UCC or under other Applicable Law, and all other legal and equitable rights to which DIP Agent may be entitled under any of the DIP Loan Documents and Applicable Law, all of which rights and remedies shall be cumulative and shall be in addition to any other rights or remedies contained in this Agreement or any of the other DIP Loan Documents or authorized by Applicable Law, and none of which shall be exclusive.
11.2.5. The right to collect all amounts at any time payable to a Borrower from any Account Debtor or other Person at any time indebted to such Borrower.
11.2.6. The right to take immediate possession of any of the Collateral, and to (i) require Borrowers to assemble the Collateral, at Borrowers’ expense, and make it available to DIP Agent at a place designated by DIP Agent which is reasonably convenient to both parties, and (ii) enter any premises where any of the Collateral shall be located and to keep
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and store the Collateral on said premises until sold (and if said premises be the Property of a Borrower, then such Borrower agrees not to charge DIP Agent for storage thereof).
11.2.7. The right to sell or otherwise dispose of all or any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale or sales, with such notice as may be required by Applicable Law, in lots or in bulk, for cash or on credit, all as DIP Agent, in its sole discretion, may deem advisable. Each Borrower agrees that any requirement of notice to Borrowers or any other Obligor of any proposed public or private sale or other disposition of Collateral by DIP Agent shall be deemed reasonable notice thereof if given at least ten (10) days prior thereto, and each such sale may be at such location or locations as DIP Agent may designate in said notice. DIP Agent shall have the right to conduct such sales on any Borrower’s or any other Obligor’s premises, without charge therefor, and such sales may be adjourned from time to time in accordance with Applicable Law. DIP Agent shall have the right to sell, lease or otherwise dispose of the Collateral, or any part thereof, for cash, credit or any combination thereof, and DIP Agent may purchase all or any part of the Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Obligations. The proceeds realized from any sale or other disposition of any Collateral may be applied, after allowing two (2) Business Days for collection, first to any Extraordinary Expenses incurred by DIP Agent, second to interest accrued with respect to any of the Obligations; and third, to the principal balance of the Obligations. If any deficiency shall arise, Obligors shall remain jointly and severally liable to DIP Agent and DIP Lenders therefor.
11.2.8. The right to the appointment of a receiver, without notice of any kind whatsoever, to take possession of all or any portion of the Collateral and to exercise such rights and powers as the court appointing such receiver shall confer upon such receiver.]
11.2.9. The right to require Borrowers to deposit with DIP Agent funds equal to the Letter of Credit Outstandings and, if Borrowers fail promptly to make such deposit, DIP Agent may (and shall upon the direction of Required DIP Lenders) advance such amount as a Revolver Loan (whether or not an Out of Formula Condition exists or is created thereby). Any such deposit or advance shall be held by DIP Agent as Cash Collateral to fund future payments with respect to any Letter of Credit Outstandings. At such time as the Letter of Credit Outstandings have been paid or terminated and all Letters of Credit have been drawn upon or expired, any amounts remaining in such reserve shall be applied against any outstanding Obligations, or, if all Obligations have been indefeasibly paid in full, returned to Borrowers.
Until the Default Notice Period has expired, and Borrowers have failed to cure such Event of Default during such period to the extent such Event of Default is curable, DIP Agent shall not be entitled to exercise any of the foregoing remedies under the DIP Loan Documents or Applicable Law on account of such Event of Default, other than to contest an assertion by any Borrower that such Event of Default has not occurred or is not continuing. Notwithstanding anything to the contrary herein, during such Default Notice Period, no Borrower shall have any right to request or obtain further Borrowings or other extensions of credit under the DIP Facility, unless consented to by DIP Agent and DIP Lenders.
11.3.
License. DIP Agent is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to
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any Person), after the occurrence and during the continuance of an Event of Default, any or all Intellectual Property of each Borrower, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels, packaging materials and other Property, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral. Each Borrower's rights and interests under Intellectual Property shall inure to DIP Agent's benefit.
11.4.
Setoff. In addition to any Liens granted under any of the DIP Loan Documents and any rights and remedies now or hereafter available under Applicable Law (including other rights of setoff), DIP Agent and each DIP Lender (and each of their respective Affiliates) is hereby authorized by Borrowers at any time that an Event of Default exists, without notice to Borrowers or any other Person (any such notice being hereby expressly waived) to set off and to appropriate and to apply any and all deposits, general or special (including Debt evidenced by certificates of deposit whether matured or unmatured (but not including trust accounts)) and any other Debt at any time held or owing by DIP Agent, such DIP Lender or any of their Affiliates to or for the credit or the account of any Borrower against and on account of the Obligations of Borrowers arising under the DIP Loan Documents to DIP Agent, such DIP Lender or any of their Affiliates, including all Revolver Loans and Letter of Credit Outstandings and all claims of any nature or description arising out of or in connection with this Agreement, irrespective of whether or not (i) DIP Agent or such DIP Lender shall have made any demand hereunder, (ii) DIP Agent, at the request or with the consent of Required DIP Lenders, shall have declared the principal of and interest on the Revolver Loans and other amounts due hereunder to be due and payable as permitted by this Agreement and even though such Obligations may be contingent or unmatured, or (iii) the Collateral for the Obligations is adequate. Notwithstanding the foregoing, each of DIP Agent and DIP Lenders agrees with each other that it shall not, without the express consent of Required DIP Lenders, and that it shall (to the extent that it is lawfully entitled to do so) upon the request of Required DIP Lenders, exercise its setoff rights hereunder against any accounts of any Borrower now or hereafter maintained with DIP Agent, such DIP Lender or any Affiliate of any of them, but no Borrower shall have a claim or cause of action against DIP Agent or any DIP Lender for any setoff made without the consent of Required DIP Lenders, and the validity of any such setoff shall not be impaired by the absence of such consent. If any party (or its Affiliate) exercises the right of setoff provided for hereunder, such party shall be obligated to share any such setoff in the manner and to the extent required by Section 12.5.
11.5.
Remedies Cumulative; No Waiver; Disclosures to Committee.
11.5.1. All covenants, conditions, provisions, warranties, guaranties, indemnities, and other undertakings of Borrowers contained in this Agreement and the other DIP Loan Documents, or in any document referred to herein or contained in any agreement supplementary hereto or in any schedule or contained in any other agreement between DIP Agent or any DIP Lender and any or all Borrowers, heretofore, concurrently, or hereafter entered into, shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions, or agreements of Borrowers herein contained. The rights and remedies of DIP Agent and DIP Lenders under this Agreement and the other DIP Loan Documents shall be cumulative and not exclusive of any rights or remedies that DIP Agent or any DIP Lender would otherwise have. All such rights and remedies shall continue in full force and effect until Full Payment of all Obligations.
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11.5.2. Neither (i) the failure or delay of DIP Agent or any DIP Lender to require strict performance by any Borrower of any provision of any of the DIP Loan Documents or to exercise or enforce any rights, Liens, powers, or remedies under any of the DIP Loan Documents or Applicable Law or with respect to any Collateral, (ii) the making of any Revolver Loan during a Default, Event of Default or other failure to satisfy any conditions precedent, nor (iii) acceptance by DIP Agent or any DIP Lender of any payment or performance by a Borrower under any DIP Loan Documents in a manner other than that specified therein shall not operate as a waiver of such performance, Liens, rights, powers and remedies or a course of dealing, but all such requirements, Liens, rights, powers, and remedies shall continue in full force and effect until all Revolver Loans and all other Obligations owing or to become owing from any Borrower to DIP Agent and DIP Lenders shall have been fully satisfied. None of the undertakings, agreements, warranties, covenants and representations of Borrowers contained in this Agreement or any of the other DIP Loan Documents and no Event of Default by any Borrower under this Agreement or any other DIP Loan Documents shall be deemed to have been suspended or waived by DIP Agent or any DIP Lender, unless such suspension or waiver is by an instrument in writing specifying such suspension or waiver and is signed by a duly authorized representative of DIP Agent or such DIP Lender and directed to Borrowers.
11.5.3. If DIP Agent or any DIP Lender shall accept performance by a Borrower, in whole or in part, of any obligation that a Borrower is required by any of the DIP Loan Documents to perform only when a Default or Event of Default exists, or if DIP Agent or any DIP Lender shall exercise any right or remedy under any of the DIP Loan Documents that may not be exercised other than when a Default or Event of Default exists, DIP Agent’s or DIP Lender’s acceptance of such performance by a Borrower or DIP Agent’s or DIP Lender’s exercise of any such right or remedy shall not operate to waive any such Default or Event of Default or to preclude the exercise by DIP Agent or any DIP Lender of any other right or remedy, unless otherwise expressly agreed in writing by DIP Agent or such DIP Lender, as the case may be.
11.5.4. DIP Agent and any DIP Lender may discuss any Borrower's business and financial condition and assets and liabilities with any Committee.
11.6.
Consent to Receivership. Effective on and at all times after the Commitment Termination Date, and subject to DIP Agent obtaining appropriate stay relief, each Borrower irrevocably (a) stipulates and agrees that DIP Agent and Pre-Petition ABL Agent (collectively, the "Agents") may seek the appointment of a receiver for ABL Priority Collateral in the United States District Court for the Southern District of Ohio, the United States District Court for the District of Delaware, or any other judicial forum selected by an Agent (in each case, the "Receivership Court") on an expedited basis under Rule 65 of the Federal Rules of Civil Procedure or other Applicable Law or rules, (b) stipulates and agrees that absent appointment of a receiver, there is imminent danger that such ABL Priority Collateral will decline speedily in value and may dissipate or be lost, causing irreparable injury to the interests of Agents in such ABL Priority Collateral and leaving Agents without an adequate remedy at law, and that other good and sufficient grounds exist for appointment of such receiver, (c) waives any right that such Borrower may have to contest or to oppose the appointment of a receiver for such ABL Priority Collateral and irrevocably consents to the appointment of such a receiver by a Receivership Court, and (d) stipulates and agrees that among other things, any receiver that is appointed may
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be authorized to (i) enter any business premises and other facilities where any of such ABL Priority Collateral is located and to use such premises or other facilities to the extent necessary to foreclose upon and liquidate such ABL Priority Collateral, subject to the terms of the Intercreditor Agreements, (ii) collect, sell and otherwise dispose of such ABL Priority Collateral, subject to the terms of the Intercreditor Agreements, and (iii) borrow money from either of Pre-Petition ABL Lenders or DIP Lenders, with such borrowings to be treated as costs and expenses associated with protecting and preserving the Collateral that will constitute Pre-Petition ABL Lender Debt or Obligations (as applicable) secured by all of the Collateral. Nothing herein shall be construed as an election of remedies or to require any Agent to pursue one remedy prior to exercising any other remedy, and each Agent shall be fully authorized to exercise any and all of its remedies separately and in any order or concurrently, to the fullest extent permitted by the Pre-Petition ABL Loan Documents, the DIP Loan Documents and Applicable Law and consistent with the Intercreditor Agreements.
SECTION 12. DIP AGENT
12.1.
Appointment, Authority and Duties of DIP Agent.
12.1.1. Each DIP Lender hereby irrevocably appoints and designates BofA as DIP Agent to act as herein specified. DIP Agent may, and each DIP Lender irrevocably authorizes DIP Agent to, enter into all DIP Loan Documents to which DIP Agent or such DIP Lender is or is intended to be a party and all amendments hereto and all DIP Security Documents at any time executed by any Borrower, for the benefit of DIP Agent and the Pro Rata benefit of DIP Lenders and, except as otherwise provided in this Section 12, to exercise such rights and powers under this Agreement and the other DIP Loan Documents as are specifically delegated to DIP Agent by the terms hereof and thereof, together with such other rights and powers as are reasonably incidental thereto. Each DIP Lender agrees that any action taken by DIP Agent or the Required DIP Lenders in accordance with the provisions of this Agreement or any of the other DIP Loan Documents, and the exercise by DIP Agent or the Required DIP Lenders of any of the rights or powers set forth herein or therein, together with such other rights and powers as are reasonably incidental thereto, shall be authorized and binding upon all DIP Lenders. Without limiting the generality of the foregoing, DIP Agent shall have the sole and exclusive right and authority to (i) act as the disbursing and collecting agent for DIP Lenders with respect to all payments and collections arising in connection with this Agreement and the other DIP Loan Documents; (ii) execute and deliver as DIP Agent each DIP Loan Document and accept delivery of each such agreement delivered by any or all Borrowers or any other Obligor; (iii) act as collateral agent for DIP Lenders for purposes of the perfection of all security interests and Liens created by this Agreement or the DIP Security Documents with respect to all material items of the Collateral and, subject to the direction of Required DIP Lenders, for all other purposes stated therein; provided that DIP Agent hereby appoints, authorizes and directs each DIP Lender to act as a collateral sub-agent for DIP Agent and the other DIP Lenders for purposes of the perfection of all security interests and Liens with respect to a Borrower’s Deposit Accounts maintained with, and all cash and Cash Equivalents held by, such DIP Lender; (iv) subject to the direction of Required DIP Lenders, manage, supervise or otherwise deal with the Collateral; and (v) take any Enforcement Action or otherwise exercise any rights or remedies with respect to any of the Collateral under the DIP Loan Documents relating thereto, Applicable Law or otherwise. The duties of DIP Agent shall be ministerial and administrative in nature, and DIP Agent shall not
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have by reason of this Agreement or any other DIP Loan Document a fiduciary relationship with any DIP Secured Party (or any DIP Lender’s Participants). Unless and until its authority to do so is revoked in writing by Required DIP Lenders, DIP Agent alone shall be authorized to determine whether any Accounts or Inventory constitute Eligible Accounts or eligible Inventory (basing such determination in each case upon the meanings given to such terms in Appendix A), or whether to impose or release any reserve, and to exercise its own credit judgment in connection therewith, which determinations and judgments, if exercised in good faith, shall exonerate DIP Agent from any liability to DIP Secured Parties or any other Person for any errors in judgment.
12.1.2. DIP Agent (which term, as used in this sentence, shall include reference to DIP Agent’s officers, directors, employees, attorneys, agents and Affiliates and to the officers, directors, employees, attorneys and agents of DIP Agent’s Affiliates) shall not: (i) have any duties or responsibilities except those expressly set forth in this Agreement and the other DIP Loan Documents or (ii) be required to take, initiate or conduct any litigation, foreclosure or collection proceedings hereunder or under any of the other DIP Loan Documents except to the extent directed to do so by the Required DIP Lenders during the continuance of any Event of Default. The conferral upon DIP Agent of any right or power hereunder shall not imply a duty on DIP Agent’s part to exercise any such right or power unless instructed to do so by the Required DIP Lenders in accordance with this Agreement.
12.1.3. DIP Agent may perform any of its duties by or through its agents and employees and may employ and consult with DIP Agent Professionals and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by a DIP Agent Professional. DIP Agent shall not be responsible for the negligence or misconduct of any such agents, employees or DIP Agent Professionals selected by DIP Agent with reasonable care.
12.1.4. The rights, remedies, powers and privileges conferred upon DIP Agent hereunder and under the other DIP Loan Documents may be exercised by DIP Agent without the necessity of the joinder of any other parties unless otherwise required by Applicable Law. If DIP Agent shall request instructions from the Required DIP Lenders with respect to any act or action (including the failure to act) in connection with this Agreement or any of the other DIP Loan Documents, DIP Agent shall be entitled to refrain from such act or taking such action unless and until DIP Agent shall have received instructions from Required DIP Lenders; and DIP Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no DIP Secured Party shall have any right of action whatsoever against DIP Agent as a result of DIP Agent acting or refraining from acting hereunder or under any of the DIP Loan Documents pursuant to or in accordance with the instructions of the Required DIP Lenders except for DIP Agent’s own gross negligence or willful misconduct in connection with any action taken by it. Notwithstanding anything to the contrary contained in this Agreement, DIP Agent shall not be required to take any action that is in its opinion contrary to Applicable Law or the terms of any of the DIP Loan Documents or that would in its opinion subject it or any of its officers, employees or directors to personal liability; provided, however, that if DIP Agent shall fail or refuse to take action that is not contrary to Applicable Law or to any of the terms of any of the DIP Loan Documents even if such action in DIP Agent’s opinion would subject it to potential liability, the Required DIP Lenders may remove DIP Agent and appoint a successor DIP Agent
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in the same manner and with the same effect as is provided in this Agreement with respect to DIP Agent’s resignation.
12.1.5. DIP Agent shall promptly, upon receipt thereof, forward to each DIP Lender (i) copies of any significant written notices, reports, certificates and other information received by DIP Agent from any Obligor (but only if and to the extent such Obligor is not required by the terms of the DIP Loan Documents to supply such information directly to DIP Lenders) with respect to any Borrower or any Collateral, (ii) copies of the results of any field audits or Inventory Appraisals with respect to any Borrower, and (iii) copies of any Borrowing Base Certificate delivered by Borrowers (all such documents described in subparagraphs (i) through (iii) being hereinafter referred to collectively as the "Reports"). DIP Agent shall have no liability to any DIP Secured Party for any errors in or omissions from any Report, unless such error or omission was the direct result of DIP Agent’s willful misconduct. Each DIP Lender agrees (a) that neither BofA nor DIP Agent makes any representation or warranty as to the accuracy or completeness of any Report and that neither BofA nor DIP Agent shall be liable for any information contained in or omitted from any Report; (b) that the Reports are not intended to be comprehensive audits or examinations, and that DIP Agent or any other Person performing any audit or examination will inspect only specific information regarding Borrowers, the Obligations or the Collateral and will rely significantly upon Borrowers' books and records as well as upon representations of Borrowers' officers and employees; and (c) to keep all Reports confidential and strictly for such DIP Lender's internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such DIP Lender's Participants, attorneys and accountants) or use any Report in any manner other than administration of the Revolver Loans and other Obligations. Each DIP Lender agrees to indemnify and hold harmless DIP Agent and any other Person preparing a Report from any action such DIP Lender may take as a result of or any conclusion it may draw from any Report, as well as from any Claims arising as a direct or indirect result of DIP Agent furnishing a Report to such DIP Lender.
12.2.
Agreements Regarding Collateral. DIP Secured Parties hereby irrevocably authorize DIP Agent, at its option and in its discretion, to release any Lien upon any Collateral (i) upon Full Payment of the Obligations; (ii) which is sold or disposed of in accordance with the terms of this Agreement if Borrowers certify to DIP Agent that the disposition is made in compliance with the terms of this Agreement (and DIP Agent may rely conclusively on any such certificate, without further inquiry); (iii) having a value of less than $1,000,000 in the aggregate during any 12 month period; (iv) which constitutes Term Loan Priority Collateral, if required to pursuant to the Intercreditor Agreements; or (v) if approved or ratified by Required DIP Lenders. DIP Agent shall, if directed to do so by Required DIP Lenders, release any Lien upon any Collateral having a value of less than $1,000,000 in the aggregate during any 12 month period. Except as expressly authorized or required by this Agreement or Applicable Law, DIP Agent shall not execute any release or termination of any Lien upon any of the Collateral without the prior written authorization of all DIP Lenders and other DIP Secured Parties. DIP Agent shall have no obligation whatsoever to any of the DIP Secured Parties to assure that any of the Collateral exists or is owned by a Borrower or is cared for, protected or insured or has been encumbered, or that DIP Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected or enforced or entitled to any particular priority or to exercise any duty of care with respect to any of the Collateral.
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12.3.
Reliance By DIP Agent. DIP Agent shall be entitled to rely, and shall be fully protected in so relying, upon any certification, notice or other communication (including any thereof by telephone, telex, telegram, telecopier message or cable) believed by it to be genuine and correct and to have been signed, sent or made by or on behalf of the proper Person or Persons, and upon advice and statements of DIP Agent Professionals. As to any matters not expressly provided for by this Agreement or any of the other DIP Loan Documents, DIP Agent shall in all cases be fully protected in acting or refraining from acting hereunder and thereunder in accordance with the instructions of Required DIP Lenders, and such instructions of Required DIP Lenders, and any action taken or failure to act pursuant thereto shall be binding upon DIP Secured Parties.
12.4.
Action Upon Default. DIP Agent shall not be deemed to have knowledge of the occurrence of a Default or an Event of Default unless DIP Agent has received written notice from the Required DIP Lenders or any or all Borrowers specifying the occurrence and nature of such Default or Event of Default. If DIP Agent shall receive such a notice of a Default or an Event of Default or shall otherwise acquire actual knowledge of any Default or Event of Default, DIP Agent shall promptly notify DIP Lenders in writing, and DIP Agent shall take such action and assert such rights under this Agreement and the other DIP Loan Documents, or shall refrain from taking such action and asserting such rights, as the Required DIP Lenders shall direct from time to time. If any DIP Lender shall receive a notice of a Default or an Event of Default or shall otherwise acquire actual knowledge of any Default or Event of Default, such DIP Lender shall promptly notify DIP Agent and the other DIP Lenders in writing. As provided in Section 12.3 hereof, DIP Agent shall not be subject to any liability by reason of acting or refraining to act pursuant to any request of the Required DIP Lenders except for DIP Agent's own willful misconduct or gross negligence in connection with any action taken by it. Before directing DIP Agent to take or refrain from taking any action or asserting any rights or remedies under this Agreement and the other DIP Loan Documents on account of any Event of Default, the Required DIP Lenders shall consult with and seek the advice of (but without having to obtain the consent of) each other DIP Lender, and promptly after directing DIP Agent to take or refrain from taking any such action or asserting any such rights, the Required DIP Lenders will so advise each other DIP Lender of the action taken or refrained from being taken and, upon request of any DIP Lender, will supply information concerning actions taken or not taken. In no event shall the Required DIP Lenders, without the prior written consent of each DIP Lender, direct DIP Agent to accelerate and demand payment of the Revolver Loans held by one DIP Lender without accelerating and demanding payment of all other Revolver Loans or to terminate the Commitments of one or more DIP Lenders without terminating the Commitments of all DIP Lenders. Each DIP Secured Party agrees that, except as otherwise provided in any of the DIP Loan Documents and without the prior written consent of the Required DIP Lenders, such DIP Secured Party will not take any Enforcement Action, accelerate or otherwise enforce its portion of the Obligations under any DIP Loan Documents. Without limiting the generality of the foregoing, none of DIP Secured Parties may exercise any right that any DIP Secured Party might otherwise have under Applicable Law to credit bid at foreclosure sales, Section 363 sales, UCC sales or other similar sales or dispositions of any of the Collateral except as authorized by the Required DIP Lenders. Notwithstanding anything to the contrary set forth in this Section 12.4 or elsewhere in this Agreement, each DIP Lender shall be authorized to take such action to preserve or enforce its rights against any Obligor where a deadline or limitation period is otherwise applicable and would, absent the taking of specified action, bar the enforcement of Obligations
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held by such DIP Lender against such Obligor, including the filing of proofs of claim in any Insolvency Proceeding.
12.5.
Ratable Sharing. If any DIP Lender shall obtain any payment or reduction (including any amounts received as adequate protection of a bank account deposit treated as cash collateral under the Bankruptcy Code) of any Obligation of Borrowers hereunder (whether voluntary, involuntary, through the exercise of any right of set off or otherwise) in excess of its Pro Rata share of payments or reductions on account of such Obligations obtained by all DIP Lenders, such DIP Lender shall forthwith (i) notify the other DIP Lenders and DIP Agent of such receipt and (ii) purchase from the other DIP Lenders such participations in the affected Obligations as shall be necessary to cause such purchasing DIP Lender to share the excess payment or reduction, net of costs incurred in connection therewith, on a Pro Rata basis; provided that if all or any portion of such excess payment or reduction is thereafter recovered from such purchasing DIP Lender or additional costs are incurred, the purchase shall be rescinded and the purchase price restored to the extent of such recovery or such additional costs, but without interest. Each Borrower agrees that any DIP Lender so purchasing a participation from another DIP Lender pursuant to this Section 12.5 may, to the fullest extent permitted by Applicable Law, exercise all of its rights of payment (including the right of set off) with respect to such participation as fully as if such DIP Lender were the direct creditor of Borrowers in the amount of such participation; provided that no DIP Lender shall set off against any Dominion Account without DIP Agent’s prior consent. Notwithstanding the foregoing, if a Defaulting DIP Lender obtains a payment or reduction of any Obligation, it shall immediately turn over the amount thereof to DIP Agent for application under Section 3.2.2, and such Defaulting DIP Lender shall provide a written statement to DIP Agent describing the Obligation affected by such payment or reduction.
12.6.
Indemnification of DIP Agent.
12.6.1. Each DIP Lender agrees to indemnify and defend DIP Agent Indemnitees (to the extent not reimbursed by Borrowers under this Agreement, and without limiting the indemnification obligation of Borrowers under this Agreement), on a Pro Rata basis, and to hold each of DIP Agent Indemnitees harmless from and against, any and all Claims which may be imposed on, incurred by or asserted against any of DIP Agent Indemnitees in any way related to or arising out of this Agreement or any of the other DIP Loan Documents or any other document contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses which Borrowers are obligated to pay under Section 14.2 hereof or amounts DIP Agent may be called upon to pay in connection with any lockbox or Dominion Account arrangement contemplated hereby) or the enforcement of any of the terms hereof or thereof or of any such other documents; provided that no DIP Lender shall be liable to any DIP Agent Indemnitee for any of the foregoing to the extent that they result solely from the willful misconduct or gross negligence of such DIP Agent Indemnitee.
12.6.2. Without limiting the generality of the foregoing provisions of this Section 12.6, if DIP Agent should be sued by any receiver, trustee in bankruptcy, debtorinpossession or other Person on account of any alleged preference or fraudulent transfer received or alleged to have been received from any Borrower or any other Obligor as the result of any transaction under the DIP Loan Documents, then in such event any monies paid by DIP
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Agent in settlement or satisfaction of such suit, together with all Extraordinary Expenses incurred by DIP Agent in the defense of same, shall be promptly reimbursed to DIP Agent by each DIP Lender to the extent of its Pro Rata share.
12.6.3. Without limiting the generality of the foregoing provisions of this Section 12.6, if at any time (whether prior to or after the Commitment Termination Date) any action or proceeding shall be brought against any of DIP Agent Indemnitees by an Obligor or by any other Person claiming by, through or under an Obligor, to recover damages for any act taken or omitted by DIP Agent under any of the DIP Loan Documents or in the performance of any rights, powers or remedies of DIP Agent against any Obligor, any Account Debtor, the Collateral or with respect to any Revolver Loans, or to obtain any other relief of any kind on account of any transaction involving any DIP Agent Indemnitees under or in relation to any of the DIP Loan Documents, each DIP Lender agrees to indemnify, defend and hold DIP Agent Indemnitees harmless with respect thereto and to pay to DIP Agent Indemnitees such DIP Lender’s Pro Rata share of such amount as any of DIP Agent Indemnitees shall be required to pay by reason of a judgment, decree, or other order entered in such action or proceeding or by reason of any compromise or settlement agreed to by DIP Agent Indemnitees, including all interest and costs assessed against any of DIP Agent Indemnitees in defending or compromising such action, together with attorneys’ fees and other legal expenses paid or incurred by DIP Agent Indemnitees in connection therewith; provided, however, that no DIP Lender shall be liable to any DIP Agent Indemnitee for any of the foregoing to the extent that they arise solely from the willful misconduct or gross negligence of such DIP Agent Indemnitee. In DIP Agent’s discretion, DIP Agent may also reserve for or satisfy any such judgment, decree or order from proceeds of Collateral prior to any distributions therefrom to or for the account of DIP Lenders.
12.7.
Limitation on Responsibilities of DIP Agent. DIP Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall have received further assurances to its satisfaction from DIP Lenders of their indemnification obligations under Section 12.6 hereof against any and all Claims which may be incurred by DIP Agent by reason of taking or continuing to take any such action. DIP Agent shall not be liable to any DIP Secured Party (or any DIP Lender’s participants) for any action taken or omitted to be taken under or in connection with this Agreement or the other DIP Loan Documents except as a result of actual gross negligence or willful misconduct on the part of DIP Agent. DIP Agent does not assume any responsibility for any failure or delay in performance or breach by any Obligor or any DIP Secured Party of its obligations under this Agreement or any of the other DIP Loan Documents. DIP Agent does not make to any DIP Secured Party, and no DIP Secured Party makes to DIP Agent or the other DIP Secured Parties, any express or implied warranty, representation or guarantee with respect to the Revolver Loans, the Collateral, the DIP Loan Documents or any Obligor. Neither DIP Agent nor any of its officers, directors, agents, attorneys or employees shall be responsible to any DIP Secured Party, and no DIP Secured Party or any of its officers, directors, employees, attorneys or agents shall be responsible to DIP Agent or the other DIP Secured Parties, for: (i) any recitals, statements, information, representations or warranties contained in any of the DIP Loan Documents or in any certificate or other document furnished pursuant to the terms thereof; (ii) the execution, validity, genuineness, effectiveness or enforceability of, any of the DIP Loan Documents; (iii) the validity, genuineness, enforceability, collectibility, value, sufficiency or existence of any Collateral, or the perfection or priority of any Lien therein; or (iv) the assets, liabilities, financial condition, results of operations, business,
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creditworthiness or legal status of any Obligor or any Account Debtor. Neither DIP Agent nor any of its officers, directors, employees, attorneys or agents shall have any obligation to any DIP Secured Party to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any Obligor of any of the duties or agreements of such Obligor under any of the DIP Loan Documents, or the satisfaction of any conditions precedent contained in any of the DIP Loan Documents. DIP Agent may consult with and employ DIP Agent Professionals and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by such DIP Agent Professionals.
12.8.
Successor DIP Agent and Co-DIP Agents.
12.8.1. Subject to the appointment and acceptance of a successor DIP Agent as provided below, DIP Agent may resign at any time by giving at least thirty (30) days written notice thereof to each DIP Lender and Borrowers. Upon receipt of any notice of such resignation, the Required DIP Lenders, after prior consultation with (but without having to obtain consent of) each DIP Lender, shall have the right to appoint a successor DIP Agent which shall be (i) a DIP Lender, (ii) a United States based Affiliate of a DIP Lender or (iii) a commercial bank that is organized under the laws of the United States or of any State thereof and has a combined capital surplus of at least $200,000,000 and, provided no Default or Event of Default then exists, is reasonably acceptable to Borrowers (and for purposes hereof, any successor to BofA shall be deemed acceptable to Borrowers). Upon the acceptance by a successor DIP Agent of an appointment to serve as a DIP Agent hereunder, such successor DIP Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring DIP Agent without further act, deed or conveyance, and the retiring DIP Agent shall be discharged from its duties and obligations hereunder. After any retiring DIP Agent’s resignation hereunder as DIP Agent, the provisions of this Section 12 (including the provisions of Section 12.6 hereof) shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as DIP Agent. Notwithstanding anything to the contrary contained in this Agreement, any successor by merger or acquisition of the stock or assets of BofA shall continue to be DIP Agent hereunder, unless such successor shall resign in accordance with the provisions hereof.
12.8.2. It is the purpose of this Agreement that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business as agent or otherwise in any jurisdiction. It is recognized that, in case of litigation under any of the DIP Loan Documents, or in case DIP Agent deems that by reason of present or future laws of any jurisdiction DIP Agent might be prohibited from exercising any of the powers, rights or remedies granted to DIP Agent or DIP Lenders hereunder or under any of the DIP Loan Documents or from holding title to or a Lien upon any Collateral or from taking any other action which may be necessary hereunder or under any of the DIP Loan Documents, DIP Agent may appoint an additional Person as a separate collateral agent or co-collateral agent which is not so prohibited from taking any of such actions or exercising any of such powers, rights or remedies. If DIP Agent shall appoint an additional Person as a separate collateral agent or co-collateral agent as provided above, each and every remedy, power, right, claim, demand or cause of action intended by any of the DIP Loan Documents to be exercised by or vested in or conveyed to DIP Agent with respect thereto shall be exercisable by and vested in such separate collateral agent or co-collateral agent, but only to the extent necessary to enable such separate collateral agent or
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co-collateral agent to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate collateral agent or co-collateral agent shall run to and be enforceable by either of them. Should any instrument from DIP Lenders be required by the separate collateral agent or co-collateral agent so appointed by DIP Agent in order more fully and certainly to vest in and confirm to him or it such rights, powers, duties and obligations, any and all of such instruments shall, on request, be executed, acknowledged and delivered by DIP Lenders whether or not a Default or Event of Default then exists. In case any separate collateral agent or co-collateral agent, or a successor to either, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, duties and obligations of such separate collateral agent or co-collateral agent, so far as permitted by Applicable Law, shall vest in and be exercised by DIP Agent until the appointment of a new collateral agent or successor to such separate collateral agent or co-collateral agent.
12.9.
Consents, Amendments and Waivers; Overadvances.
12.9.1. No amendment or modification of any provision of this Agreement or any other DIP Loan Document shall be effective without the prior written agreement of the Required DIP Lenders and Borrowers, and no waiver of any Default or Event of Default shall be effective without the prior written consent of the Required DIP Lenders; provided, however, that
(i)
without the prior written consent of DIP Agent, no amendment or waiver shall be effective with respect to any provision of any of the DIP Loan Documents (including this Section 12) to the extent such provision relates to the rights, remedies, duties, discretion or immunities of DIP Agent;
(ii)
without the prior written consent of Letter of Credit Issuer, no amendment to the provisions of Sections 1.2 and, without the prior written consent of BofA, no amendment to the provisions of Section 3.1.3 shall be effective;
(iii)
without the prior written consent of each affected DIP Lender (including a Defaulting DIP Lender), no amendment, modification or waiver shall be effective that would (a) increase the Commitment of such DIP Lender or (b) reduce the amount of, or waive or delay or extend the time for any payment or repayment of, any principal, interest or fees payable to such DIP Lender;
(iv)
without the prior written consent of all DIP Lenders (except a Defaulting DIP Lender as provided in Section 3.2 of this Agreement), (a) no amendment, modification or waiver shall be effective that would alter the provisions of Sections 4.6, 4.7 or 12.9.1, (b) no amendment, modification or waiver shall be effective that would amend (1) the definitions of “Pro Rata” or “Required DIP Lenders,” or any provision of this Agreement obligating DIP Agent to take certain actions at the direction of the Required DIP Lenders, or any provision of any of the DIP Loan Documents regarding the Pro Rata treatment or obligations of DIP Lenders or (2) the definition of “Borrowing Base” (and the other defined terms used in such definition) if the effect would be to increase the amount of Availability, (c) no amendment, modification or waiver shall be effective that would increase any advance rate above the levels in effect on the Closing
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Date, (d) no amendment, modification or waiver shall be effective that would subordinate the payment of any of the Obligations to any other Debt or the priority of any Liens granted to DIP Agent under any of the DIP Loan Documents to Liens granted to any other Person, except for Liens granted by an Obligor to financial institutions with respect to amounts on deposit with such financial institutions to cover returned items, processing and analysis charges and other charges in the Ordinary Course of Business that relate to deposit accounts with such financial institutions, (e) no amendment, modification or waiver shall be effective that would release any Obligor from liability for any of the Obligations, or (f) no amendment, modification or waiver shall be effective that would release all or substantially all of the Collateral; and
(v)
Schedule 2 to the Pre-Petition ABL Loan Agreement may be amended or supplemented from time to time in accordance with the definition of “Specified Account Debtor”.
No DIP Lender shall be authorized to amend or modify any Note held by it, unless such amendment or modification is consented to in writing by all DIP Lenders; provided, however, that the foregoing shall not be construed to prohibit an amendment or modification to any provision of this Agreement that may be effected pursuant to this Section 12.9.1 by agreement of Borrowers and the Required DIP Lenders even though such an amendment or modification results in an amendment or modification of the Notes by virtue of the incorporation by reference in each of the Notes of this Agreement. The making of any Revolver Loans hereunder by any DIP Lender during the existence of a Default or Event of Default shall not be deemed to constitute a waiver by such DIP Lender of such Default or Event of Default. Any waiver or consent granted by any DIP Lender hereunder shall be effective only if in writing and then only in the specific instance and for the specific purpose for which it was given.
12.9.2. In connection with any proposed amendment to any of the DIP Loan Documents or waiver of any of the terms thereof or any Default or Event of Default thereunder, no Borrower shall solicit, request or negotiate for or with respect to any such proposed amendment or waiver of any of the provisions of this Agreement or any of the other DIP Loan Documents unless each DIP Lender shall be informed thereof by Borrowers or DIP Agent (to the extent known by DIP Agent) and shall be afforded an opportunity of considering the same and supplied by Borrowers with sufficient information to enable each DIP Lender to make an informed decision with respect thereto. No Borrower will, directly or indirectly, pay or cause to be paid any remuneration or other thing of value, whether by way of supplemental or additional interest, fee or otherwise, to any DIP Lender (in its capacity as a DIP Lender hereunder) as consideration for or as an inducement to the consent to or agreement by such DIP Lender with any waiver or amendment of any of the terms and provisions of this Agreement or any of the other DIP Loan Documents unless such remuneration or thing of value is concurrently paid, on the same terms, on a Pro Rata basis to all DIP Lenders.
12.9.3. DIP Agent may require DIP Lenders to honor requests by U.S. Borrowers for Out of Formula Loans (in which event, and notwithstanding anything to the contrary set forth in Section 1.1.1 or elsewhere in this Agreement, DIP Lenders shall continue to make Revolver Loans up to their Pro Rata share of the Commitments) and to forbear from
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requiring Borrowers to cure an Out of Formula Condition, (1) when no Event of Default exists (or if an Event of Default exists, when the existence of such Event of Default is not known by DIP Agent), if and for so long as (i) such Out of Formula Condition does not continue for a period of more than fifteen (15) consecutive days, following which no Out of Formula Condition exists for at least fifteen (15) consecutive days before another Out of Formula Condition exists (provided, however, there shall not be more than four (4) of such fifteen (15) day Out of Formula Condition periods during any Fiscal Year), (ii) the amount of the Revolver Loans outstanding at any time does not exceed the aggregate Commitments at such time, and (iii) the Out of Formula Condition (including the Out of Formula Condition after the making of any such Revolver Loan pursuant to this Section 12.9.3) is not known by DIP Agent at the time in question to exceed $10,000,000; and (2) regardless of whether or not an Event of Default exists, if DIP Agent discovers the existence of an Out of Formula Condition not previously known by it to exist, DIP Lenders shall be obligated to continue making such Revolver Loans as directed by DIP Agent only (A) if the amount of the Out of Formula Condition is not increased by more than $2,500,000 above the amount determined by DIP Agent to exist on the date of discovery thereof and (B) for a period not to exceed five (5) Business Days. Notwithstanding the foregoing, the sum of (I) the aggregate amount of Out of Formula Loans plus (II) the aggregate amount of Protective Advances made pursuant to Section 12.9.4 then outstanding, shall not exceed an aggregate amount equal to 10% of the Borrowing Base. In no event shall any Borrower or any other Obligor be deemed to be a beneficiary of this Section 12.9.3 or authorized to enforce any of the provisions of this Section 12.9.3. The Required DIP Lenders may at any time revoke DIP Agent’s authority to make further Out of Formula Loans by written notice to DIP Agent. Absent such revocation, DIP Agent’s determination that funding of an Out of Formula Loan is appropriate shall be conclusive.
12.9.4. DIP Agent shall be authorized, in its discretion, at any time that any conditions in Section 10 are not satisfied, to make Revolver Loans (“Protective Advances”) (i) up to an aggregate amount of 10% of the Borrowing Base outstanding at any time, if DIP Agent deems such Protective Advances necessary or desirable to preserve or protect Collateral, or to enhance the collectibility or repayment of Obligations; or (ii) to pay any other amounts chargeable to Obligors under any DIP Loan Documents, including costs, fees and expenses. Notwithstanding the foregoing, the sum of (I) the aggregate amount of Protective Advances plus (II) the aggregate amount of Out of Formula Loans made pursuant to Section 12.9.3 then outstanding, shall not exceed an aggregate amount equal to 10% of the Borrowing Base. Notwithstanding anything herein to the contrary, each DIP Lender shall participate in each Protective Advance on a Pro Rata basis. The Required DIP Lenders may at any time revoke DIP Agent’s authority to make further Protective Advances by written notice to DIP Agent. Absent such revocation, DIP Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive.
12.10.
Due Diligence and Non-Reliance. Each DIP Lender hereby acknowledges and represents that such DIP Lender has, independently and without reliance upon DIP Agent or the other DIP Lenders, and based upon such documents, information and analyses as such DIP Lender has deemed appropriate, made its own credit analysis of each Obligor and its own decision to enter into this Agreement and the other DIP Loan Documents and to fund the Loans to be made by such DIP Lender hereunder and to purchase participations in the Letter of Credit Outstandings pursuant to Section 1.2.8 hereof, and each DIP Lender has made such inquiries
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concerning the DIP Loan Documents, the Collateral and each Obligor as such DIP Lender feels necessary and appropriate, and has taken such care on its own behalf as would have been the case had such DIP Lender entered into this Agreement and the other DIP Loan Documents without the intervention or participation of the other DIP Lenders or DIP Agent. Each DIP Lender hereby further acknowledges and represents that the other DIP Lenders and DIP Agent have not made any representations or warranties to such DIP Lender concerning any Obligor, any of the Collateral or the legality, validity, sufficiency or enforceability of any of the DIP Loan Documents. Each DIP Lender also hereby acknowledges that it will, independently and without reliance upon the other DIP Lenders or DIP Agent, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making Loans and in taking or refraining to take any other action under this Agreement or any of the other DIP Loan Documents. Except for notices, reports and other information expressly required to be furnished to DIP Lenders by DIP Agent hereunder, DIP Agent shall not have any duty or responsibility to provide any DIP Lender with any notices, reports or certificates furnished to DIP Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of DIP Agent or any of DIP Agent’s Affiliates.
12.11.
Representations and Warranties of DIP Lenders. By its execution of this Agreement, each DIP Lender hereby represents and warrants to each Borrower and the other DIP Lenders that it has the power to enter into and perform its obligations under this Agreement and the other DIP Loan Documents, and that it has taken all necessary and appropriate action to authorize its execution and performance of this Agreement and the other DIP Loan Documents to which it is a party, each of which will be binding upon it and the obligations imposed upon it herein or therein will be enforceable against it in accordance with the respective terms of such documents.
12.12.
Required DIP Lenders. As to any provisions of this Agreement or the other DIP Loan Documents under which action may or is required to be taken upon direction or approval of the Required DIP Lenders, the direction or approval of the Required DIP Lenders shall be binding upon each DIP Lender to the same extent and with the same effect as if each DIP Lender had joined therein. Notwithstanding anything to the contrary contained in this Agreement, Borrowers shall not be deemed to be a beneficiary of, or be entitled to enforce, sue upon or assert as a defense to any of the Obligations, any provisions of this Agreement that requires DIP Agent or any DIP Lender to act, or conditions their authority to act, upon the direction or consent of the Required DIP Lenders; and any action taken by DIP Agent or any DIP Lender that requires the consent or direction of the Required DIP Lenders as a condition to taking such action shall, insofar as Borrowers are concerned, be presumed to have been taken with the requisite consent or direction of the Required DIP Lenders.
12.13.
Several Obligations. The obligations and commitments of each DIP Lender under this Agreement and the other DIP Loan Documents are several, and neither DIP Agent nor any DIP Lender shall be responsible for the performance by any other DIP Lender of its obligations or commitments hereunder or thereunder. Notwithstanding any liability of DIP Lenders stated to be joint and several to third Persons under any of the DIP Loan Documents, such liability shall be shared, as among DIP Lenders, Pro Rata according to the respective Commitments of DIP Lenders.
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12.14.
DIP Agent in its Individual Capacity.
With respect to its obligation to lend under this Agreement, the Revolver Loans made by it and each Note issued to it, BofA, as a DIP Lender, shall have the same rights and powers hereunder and under the other DIP Loan Documents as any other DIP Lender or holder of a Note and may exercise the same as though it were not performing the duties specified herein in its capacity as DIP Agent; and the terms “DIP Lenders,” “Required DIP Lenders,” or any similar term shall, unless the context clearly otherwise indicates, include BofA in its capacity as a DIP Lender. BofA and its Affiliates may each accept deposits from, maintain deposits or credit balances for, invest in, lend money to, act as trustee under indentures of, serve as financial advisor to, and generally engage in any kind of business with any Borrower or any other Obligor, or any Affiliate of a Borrower or any other Obligor, as if it were any other bank and without any duty to account therefor (or for any fees or other consideration received in connection therewith) to the other DIP Lenders. In their individual capacities, BofA and its Affiliates may receive information regarding a Borrower, its Affiliates and its Account Debtors (including information subject to confidentiality obligations), and each DIP Lender agrees that BofA and its Affiliates shall be under no obligation to provide such information to DIP Lenders, if acquired in such individual capacity and not as DIP Agent hereunder.
12.15.
Third Party Beneficiaries. This Section 12 is an agreement solely among DIP Lenders and DIP Agent, and shall survive Full Payment of the Obligations. This Section 12 is not intended to confer any rights or benefits upon any Borrower or any other Person except DIP Lenders and DIP Agent, and no Person (including any or all Borrowers) other than DIP Lenders and DIP Agent shall have any right to enforce any of the provisions of this Section 12 except as expressly provided in Section 12.17 hereof. As between Borrowers and DIP Agent, any action that DIP Agent may take or purport to take on behalf of DIP Lenders under any of the DIP Loan Documents shall be conclusively presumed to have been authorized and approved by DIP Lenders as herein provided.
12.16.
Notice of Transfer. DIP Agent may deem and treat a DIP Lender party to this Agreement as the owner of such DIP Lender’s portion of the Revolver Loans for all purposes, unless and until a written notice of the assignment or transfer thereof executed by such DIP Lender has been received by DIP Agent.
12.17.
Replacement of Certain DIP Lenders. If a DIP Lender (“Affected DIP Lender”) (i) is a Defaulting DIP Lender, (ii) shall have requested compensation from Borrowers under Section 2.7 to recover increased costs incurred by such DIP Lender (or its parent or holding company) which are not being incurred generally by the other DIP Lenders (or their respective parents or holding companies), (iii) shall have delivered a notice pursuant to Section 2.6 hereof claiming that such DIP Lender is unable to extend LIBOR Loans to U.S. Borrowers for reasons not generally applicable to the other DIP Lenders, or (iv) fails to give its consent to any amendment, waiver or action for which consent of all DIP Lenders or each DIP Lender affected thereby was required and the Required DIP Lenders consented, then, in any such case and in addition to any other rights and remedies that DIP Agent, any other DIP Lender or any Borrower may have against such Affected DIP Lender, any Borrower or DIP Agent may, within 120 days after such event, make written demand on such Affected DIP Lender (with a copy to DIP Agent in the case of a demand by a Borrower and a copy to Borrowers in the case of a demand by DIP Agent) for the Affected DIP Lender to assign, and such Affected DIP Lender
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shall assign pursuant to one or more duly executed Assignment and Acceptances within five (5) Business Days after the date of such demand, to one or more DIP Lenders willing to accept such assignment or assignments, or to one or more Eligible Assignees designated by DIP Agent, all of such Affected DIP Lender’s rights and obligations under this Agreement (including its Commitments and all Revolver Loans owing to it) in accordance with Section 13 hereof. DIP Agent is hereby irrevocably authorized to execute one or more Assignment and Acceptances as attorney-in-fact for any Affected DIP Lender which fails or refuses to execute and deliver the same within five (5) Business Days after the date of such demand. The Affected DIP Lender shall be entitled to receive, in cash and concurrently with execution and delivery of each such Assignment and Acceptance, all amounts owed to the Affected DIP Lender hereunder or under any other DIP Loan Document, including the aggregate outstanding principal amount of the Revolver Loans owed to such Affected DIP Lender, together with accrued interest thereon and any fees owed to such Affected DIP Lender through the date of such assignment. Upon the replacement of any Affected DIP Lender pursuant to this Section 12.17, such Affected DIP Lender shall cease to have any participation in, entitlement to, or other right to share in the Liens of DIP Agent in any Collateral, and such Affected DIP Lender shall have no further liability to DIP Agent, any DIP Lender or any other Person under any of the DIP Loan Documents (except as provided in Section 12.6 hereof as to events or transactions which occur prior to the replacement of such Affected DIP Lender), including any commitment to make Revolver Loans or purchase participations in Letter of Credit Outstandings.
12.18.
Remittance of Payments and Collections.
12.18.1. All payments by any DIP Lender to DIP Agent shall be made not later than the time set forth elsewhere in this Agreement on the Business Day such payment is due; provided, however, that if such payment is due on demand by DIP Agent and such demand is made on the paying DIP Lender after 12:00 noon on such Business Day, then payment shall be made by 12:00 noon on the next Business Day. Payment by DIP Agent to any DIP Lender shall be made by wire transfer, promptly following DIP Agent’s receipt of funds for the account of such DIP Lender and in the type of funds received by DIP Agent; provided, however, that if DIP Agent receives such funds at or prior to 12:00 noon, DIP Agent shall pay such funds to such DIP Lender by 2:00 p.m. on such Business Day, but if DIP Agent receives such funds after 12:00 noon, DIP Agent shall pay such funds to such DIP Lender by 2:00 p.m. on the next Business Day.
12.18.2. If any DIP Secured Party fails to pay any amount when due by it to DIP Agent pursuant to the terms hereof, such amount shall bear interest, from the due date until paid in full, at the rate determined by DIP Agent as customary for interbank compensation for two (2) Business Days and thereafter at the Default Rate. In no event shall any Borrower be entitled to receive any credit for any interest paid by DIP Agent to any DIP Lender, or by any DIP Lender to DIP Agent, at the Federal Funds Rate as provided herein, nor shall any Defaulting DIP Lender be entitled to interest on any amounts held by DIP Agent pursuant to Section 3.2.
12.18.3. If DIP Agent pays any amount to a DIP Lender in the belief or expectation that a related payment has been or will be received by DIP Agent from an Obligor and such related payment is not received by DIP Agent, then DIP Agent shall be entitled to recover such amount from each DIP Lender that receives such amount. If DIP Agent determines
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at any time that any amount received by it under this Agreement or any of the other DIP Loan Documents must be returned to an Obligor or paid to any other Person pursuant to any Applicable Law, court order or otherwise, then, notwithstanding any other term or condition of this Agreement or any of the other DIP Loan Documents, DIP Agent shall not be required to distribute such amount to any DIP Lender. If any amounts received and applied by DIP Agent to any Obligations are later required to be returned by DIP Agent pursuant to Applicable Law, each DIP Lender shall pay to DIP Agent, on demand, such DIP Lender's Pro Rata share of the amounts required to be returned.
12.19.
Bank Product Providers. Each Bank Product Provider, by delivery of a notice to DIP Agent of a Bank Product, agrees to be bound by Section 4.6 and this Section 12. Each Bank Product Provider shall indemnify and hold harmless DIP Agent Indemnitees, to the extent not reimbursed by Obligors, against all Claims that may be incurred by or asserted against any DIP Agent Indemnitee in connection with such provider’s Bank Product Obligations. Except as otherwise expressly set forth herein or in any DIP Security Document, no Bank Product Provider shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other DIP Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a DIP Lender and, in such case, only to the extent expressly provided in the DIP Loan Documents. Notwithstanding any other provision of this Agreement to the contrary, DIP Agent shall not be required to calculate the amount or verify the payment of, or that other satisfactory arrangements have been made with respect to, Bank Product Obligations, nor shall DIP Agent have any knowledge thereof unless DIP Agent has received written notice of such Bank Product Obligations, together with such supporting documentation as DIP Agent may request, from the applicable Bank Product Provider, as the case may be. On the last Business Day of each March, June, September and December (or at the end of each month, if requested by DIP Agent), each Bank Product Provider shall deliver to DIP Agent written notice setting forth a reasonably detailed calculation of the liabilities and obligations of the Obligors in respect of each Bank Product (and, with respect to any Hedge Agreement, the mark-to-market exposure thereunder) of such Bank Product Provider at such time.
12.20.
Intercreditor Agreements. Each DIP Lender (a) agrees to be bound by the provisions of each of the Intercreditor Agreements, and (b) authorizes and instructs DIP Agent to enter into amendments, restatements, amendments and restatements of, or to supplement or otherwise modify either of the Intercreditor Agreements with the consent of the Required DIP Lenders or enter into one or more other intercreditor agreements having terms reasonably satisfactory to DIP Agent and either in form and substance substantially similar to the existing Intercreditor Agreements or reasonably satisfactory to the Required DIP Lenders, from time to time, in connection with the incurrence of Refinancing Debt in respect of the Pre-Petition Term Loans.
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
13.1.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Borrowers, DIP Agent and DIP Lenders and their respective successors and assigns (which, in the case of DIP Agent, shall include any successor DIP Agent appointed pursuant to Section 12.8 hereof), except that (i) no Borrower shall have the right to assign its rights or
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delegate performance of any of its obligations under any of the DIP Loan Documents and (ii) any assignment by any DIP Lender must be made in compliance with Section 13.3 hereof. DIP Agent may treat the payee of any Note as the owner thereof for all purposes hereof unless and until such payee complies with Section 13.3 in the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with DIP Agent. Any assignee or transferee of a Note agrees by acceptance thereof to be bound by all the terms and provisions of the DIP Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the holder of a Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor.
13.2.
Participations.
13.2.1. Permitted Participants; Effect. Any DIP Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to one or more banks or other financial institutions (each a “Participant”) a participating interest in any of the Obligations owing to such DIP Lender, any Commitment of such DIP Lender or any other interest of such DIP Lender under any of the DIP Loan Documents. In the event of any such sale by a DIP Lender of participating interests to a Participant, such DIP Lender’s obligations under the DIP Loan Documents shall remain unchanged, such DIP Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such DIP Lender shall remain the holder of any Note for all purposes under the DIP Loan Documents, all amounts payable by Borrowers under this Agreement and any of the Notes shall be determined as if such DIP Lender had not sold such participating interests, and Borrowers and DIP Agent shall continue to deal solely and directly with such DIP Lender in connection with such DIP Lender’s rights and obligations under the DIP Loan Documents. If a DIP Lender sells a participation to a Person other than an Affiliate of such DIP Lender, then such DIP Lender shall give prompt written notice thereof to Borrowers, DIP Agent and the other DIP Lenders. A Participant that would be a Foreign DIP Lender if it were a DIP Lender shall not be entitled to the benefits of Section 4.9 unless each Borrower agrees otherwise in writing.
13.2.2. Voting Rights. Each DIP Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the DIP Loan Documents other than an amendment, modification or waiver with respect to any Revolver Loans or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the stated interest rate or the stated rates at which fees are payable with respect to any such Revolver Loan or Commitment, postpones the Commitment Termination Date, or any date fixed for any regularly scheduled payment of interest or fees on such Revolver Loan or Commitment, or releases from liability any Borrower or releases any substantial portion of any of the Collateral.
13.2.3. Participant Register. Each DIP Lender that sells a participation shall, acting as a non-fiduciary agent of Borrowers (solely for tax purposes), maintain a register in which it enters the Participant’s name, address and interest in Commitments, Revolver Loans (and stated interest) and Letter of Credit Outstandings. Entries in the register shall be conclusive, absent manifest error, and such DIP Lender shall treat each Person recorded in the register as the owner of the participation for all purposes, notwithstanding any notice to the
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contrary. No DIP Lender shall have an obligation to disclose any information in such register except to the extent necessary to establish that a Participant’s interest is in registered form under the Code.
13.2.4. Benefit of Set-Off. Each Borrower agrees that each Participant shall be deemed to have the right of set-off provided in Section 11.4 hereof in respect of its participating interest in amounts owing under the DIP Loan Documents to the same extent and subject to the same requirements under this Agreement (including Section 12.5) as if the amount of its participating interest were owing directly to it as a DIP Lender under the DIP Loan Documents; provided that each DIP Lender shall retain the right of set-off provided in Section 11.4 hereof with respect to the amount of participating interests sold to each Participant. DIP Lenders agree to share with each Participant, and each Participant by exercising the right of set-off provided in Section 11.4 agrees to share with each DIP Lender, any amount received pursuant to the exercise of such Participant's right of set-off, such amounts to be shared in accordance with Section 12.5 hereof as if each Participant were a DIP Lender.
13.2.5. Notices. Each DIP Lender shall be solely responsible for notifying its Participants of any matters relating to the DIP Loan Documents to the extent that any such notice may be required, and neither DIP Agent nor any other DIP Lender shall have any obligation, duty or liability to any Participant of any other DIP Lender. Without limiting the generality of the foregoing, neither DIP Agent nor any DIP Lender shall have any obligation to give notices or to provide documents or information to a Participant of another DIP Lender.
13.3.
Assignments.
13.3.1. Permitted Assignments. Subject to its giving at least two (2) Business Days prior notice to DIP Agent and Borrowers, any DIP Lender may, in accordance with Applicable Law, at any time assign to any Eligible Assignee all or any part of its rights and obligations under the DIP Loan Documents, so long as (i) each assignment is of a constant, and not a varying, ratable percentage of all of the transferor DIP Lender’s rights and obligations under the DIP Loan Documents with respect to the Revolver Loans and the Letter of Credit Outstandings and, in the case of a partial assignment, is in a minimum principal amount of $5,000,000 (unless otherwise agreed by DIP Agent in its sole discretion) and integral multiples of $1,000,000 in excess of that amount; (ii) except in the case of an assignment in whole of a DIP Lender’s rights and obligations under the DIP Loan Documents or an assignment by a DIP Lender to another DIP Lender, immediately after giving effect to any assignment, the aggregate amount of the Commitments retained by the transferor DIP Lender shall in no event be less than $5,000,000 (unless otherwise agreed by DIP Agent in its sole discretion); and (iii) the parties to each such assignment shall execute and deliver to DIP Agent, for its acceptance and recording, an Assignment and Acceptance. The consent of Borrowers (except upon and during the continuance of an Event of Default) and DIP Agent shall be required prior to an assignment becoming effective with respect to an Eligible Assignee that is not a DIP Lender or an Affiliate of a DIP Lender (such consent of Borrowers and DIP Agent not to be unreasonably withheld or delayed). Nothing contained herein shall limit in any way the right of any DIP Lender to assign all or any portion of the Revolver Loans owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank; provided that, in the case of this
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clause (ii), any payment in respect of such assigned Revolver Loans made by Borrowers to the assigning DIP Lender in accordance with the terms of this Agreement shall satisfy Borrowers’ obligations hereunder in respect of such assigned Revolver Loans to the extent of such payment, but no such assignment shall release the assigning DIP Lender from its obligations hereunder.
13.3.2. Effect; Effective Date. Upon (i) delivery to DIP Agent of a notice of assignment substantially in the form attached as Exhibit F hereto, together with any consents required by Section 13.3.1, and (ii) payment of a $3,500 fee to DIP Agent for processing any assignment to an Eligible Assignee that is not an Affiliate of the transferor DIP Lender, such assignment shall become effective on the effective date specified in such notice of assignment. On and after the effective date of such assignment, such Eligible Assignee shall for all purposes be a DIP Lender party to the Agreement and any other DIP Loan Document executed by DIP Lenders and shall have all the rights and obligations of a DIP Lender under the DIP Loan Documents to the same extent as if such Eligible Assignee was an original party thereto, and no further consent or action by Borrowers, DIP Lenders or DIP Agent shall be required to release the transferor DIP Lender with respect to the Commitment (or portion thereof) of such DIP Lender and Obligations assigned to such Eligible Assignee. Upon the consummation of any assignment to an Eligible Assignee pursuant to this Section 13.3.2, the transferor DIP Lender, DIP Agent and Borrowers shall make appropriate arrangements so that replacement Notes are issued to such transferor DIP Lender and new Notes or, as appropriate, replacement Notes, are issued to such Eligible Assignee, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. If the transferor DIP Lender shall have assigned all of its interests, rights and obligations under this Agreement pursuant to Section 13.3.1 hereof, such transferor DIP Lender shall no longer have any obligation to indemnify DIP Agent with respect to any transactions, events or occurrences that transpire after the effective date of such assignment, and each Eligible Assignee to which such transferor shall make an assignment shall be responsible to DIP Agent to indemnify DIP Agent in accordance with this Agreement with respect to transactions, events and occurrences transpiring on and after the effective date of such assignment to it.
13.3.3. Dissemination of Information. Each Borrower authorizes each DIP Lender and DIP Agent to disclose to any Participant, any Eligible Assignee or any other Person acquiring an interest in the DIP Loan Documents by operation of law (each a “Transferee”), and any prospective Transferee, any and all information in DIP Agent’s or such DIP Lender’s possession concerning each Borrower, the Subsidiaries of each Borrower or the Collateral, subject to appropriate confidentiality undertakings on the part of such Transferee.
13.3.4. Certain Assignees. No assignment or participation may be made to a Borrower, Affiliate of a Borrower, Defaulting DIP Lender, or natural person. Any assignment by a Defaulting DIP Lender shall be effective only upon payment by the Eligible Assignee or Defaulting DIP Lender to DIP Agent of an aggregate amount sufficient, upon distribution (through direct payment, purchases of participations or other compensating actions as DIP Agent deems appropriate), to satisfy all funding and payment liabilities then owing by such Defaulting DIP Lender hereunder. If an assignment by a Defaulting DIP Lender shall become effective under Applicable Law for any reason without compliance with the foregoing sentence, then the assignee shall be deemed a Defaulting DIP Lender for all purposes until such compliance occurs.
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13.3.5. Register. DIP Agent, acting as a non-fiduciary agent of Borrowers (solely for tax purposes), shall maintain (a) a copy (or electronic equivalent) of each Assignment and Acceptance delivered to it, and (b) a register for recordation of the names, addresses and Commitments of, and the Revolver Loans, interest and Letter of Credit Outstandings owing to, each DIP Lender. Entries in the register shall be conclusive, absent manifest error, and Borrowers, DIP Agent and DIP Lenders shall treat each lender recorded in such register as a DIP Lender for all purposes under the DIP Loan Documents, notwithstanding any notice to the contrary. DIP Agent may choose to show only one Borrower as the borrower in the register, without any effect on the liability of any Obligor with respect to the Obligations. The register shall be available for inspection by Borrowers or any DIP Lender, from time to time upon reasonable notice
13.4.
Tax Treatment. If any interest in any DIP Loan Document is transferred to any Transferee that is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor DIP Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 4.10 hereof.
SECTION 14. MISCELLANEOUS
14.1.
Power of Attorney. Each Borrower hereby irrevocably designates, makes, constitutes and appoints DIP Agent (and all Persons designated by DIP Agent) as such Borrower’s true and lawful attorney (and agent in fact) and DIP Agent, or DIP Agent’s designee, may, without notice to such Borrower and in either such Borrower’s or DIP Agent’s name, but at the cost and expense of Borrowers:
14.1.1. At such time or times as DIP Agent or said designee, in its sole discretion, may determine, endorse such Borrower’s name on any Payment Item or proceeds of the Collateral which come into the possession of DIP Agent or under DIP Agent’s control.
14.1.2. At any time that an Event of Default exists: (i) demand payment of the Accounts from the Account Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and generally exercise all of such Borrower’s rights and remedies with respect to the collection of the Accounts; (ii) settle, adjust, compromise, discharge or release any of the Accounts or other Collateral or any legal proceedings brought to collect any of the Accounts or other Collateral; (iii) sell or assign any of the Accounts and other Collateral upon such terms, for such amounts and at such time or times as DIP Agent deems advisable; (iv) take control, in any manner, of any Payment Item or proceeds relating to any Collateral; (v) prepare, file and sign such Borrower’s name to a proof of claim in any Insolvency Proceeding or similar document against any Account Debtor or to any notice of Lien, claim of a mechanic's Lien, assignment, release or satisfaction of any Lien or similar document in connection with any of the Collateral; (vi) receive, open and dispose of all mail addressed to such Borrower and to notify postal authorities to change the address for delivery thereof to such address as DIP Agent may designate; (vii) endorse the name of such Borrower upon any of the Payment Items or proceeds relating to any Collateral and deposit the same to the account of DIP Agent on account of the Obligations; (viii) endorse the name of such Borrower upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to any Accounts or Inventory of any Obligor and any other Collateral; (ix) use such Borrower’s
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stationery and sign the name of such Borrower to verifications of the Accounts and notices thereof to Account Debtors; (x) use the information recorded on or contained in any data processing equipment and computer hardware and software relating to the Accounts, Inventory, Equipment or any other Collateral; (xi) make and adjust claims under policies of insurance; (xii) take all action as may be necessary to obtain the payment of any letter of credit or banker’s acceptance of which such Borrower is a beneficiary; and (xiii) do all other acts and things necessary, in DIP Agent’s determination, to fulfill such Borrower’s obligations under this Agreement.
14.2.
General Indemnity. Each Borrower hereby agrees to indemnify and defend the DIP Indemnitees and to hold the DIP Indemnitees harmless from and against any third party Claim ever suffered or incurred by any of such DIP Indemnitees arising out of or related to this Agreement or any of the other DIP Loan Documents or the issuance of any Letter of Credit, the performance by DIP Agent or DIP Lenders or Letter of Credit Issuer of their duties or the exercise of any of their rights or remedies under this Agreement or any of the other DIP Loan Documents or in connection with the issuance of any Letter of Credit, or as a result of any Borrower’s failure to observe, perform or discharge any of its duties hereunder or under any other DIP Loan Document. Each Borrower shall also indemnify and defend the DIP Indemnitees against and save the DIP Indemnitees harmless from all Claims of any Person arising out of, related to or with respect to any transactions entered into pursuant to this Agreement or any other DIP Loan Document or DIP Agent’s Lien upon the Collateral. Without limiting the generality of the foregoing, this indemnity shall extend to any Claims asserted against or incurred by any of the DIP Indemnitees by any Person under any Environmental Laws or similar laws by reason of any Borrower’s or any other Person’s failure to comply with laws applicable to solid or hazardous waste materials or other toxic substances. Additionally, if any Taxes (excluding any Excluded Tax) shall be payable by DIP Agent or any Obligor on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the other DIP Loan Documents or the issuance of any Letter of Credit, or the creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly reimburse DIP Agent, Letter of Credit Issuer and DIP Lenders for the payment of) all such Taxes, including any interest and penalties thereon, and will indemnify and hold DIP Indemnitees harmless from and against all liability in connection therewith. The foregoing indemnities shall not apply to Claims incurred by any of the DIP Indemnitees as a direct and proximate result of their own gross negligence or willful misconduct or that arise out of any disputes arising solely out of the relationship between DIP Agent and any DIP Lender.
14.3.
Survival of All Indemnities. Notwithstanding anything to the contrary in this Agreement or any of the other DIP Loan Documents, the obligation of each Borrower and each DIP Lender with respect to each indemnity given by it in this Agreement, whether given by such Borrower to DIP Indemnitees or by any DIP Lender to any DIP Agent Indemnitees, shall survive the Full Payment of the Obligations and the termination of any of the Commitments.
14.4.
Modification of Agreement. This Agreement may not be modified, altered or amended, except by an agreement in writing signed by Borrowers and DIP Agent and DIP Lenders (or, where otherwise expressly allowed by Section 12 hereof, the Required DIP Lenders in lieu of DIP Agent and DIP Lenders); provided, however, that no consent, written or otherwise,
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of any Borrower shall be necessary or required in connection with any amendment of any of the provisions of Sections 1.2.8, 4.6 or 12 (other than Section 12.17) or any other provision of this Agreement that affects only the rights, duties and responsibilities of DIP Lenders and DIP Agent as among themselves so long as no such amendment imposes any additional obligations on Borrowers.
14.5.
Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement shall be prohibited by or invalid under Applicable Law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
14.6.
Cumulative Effect; Conflict of Terms. The provisions of the Other DIP Agreements and the DIP Security Documents are hereby made cumulative with the provisions of this Agreement. Without limiting the generality of the foregoing, the parties acknowledge that this Agreement and the other DIP Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters and that such limitations, tests and measures are cumulative and each must be performed, except as may be expressly stated to the contrary in this Agreement. Except as otherwise provided in any of the other DIP Loan Documents by specific reference to the applicable provision of this Agreement, if any provision contained in this Agreement is in direct conflict with, or inconsistent with, any provision in any of the other DIP Loan Documents, the provision contained in this Agreement shall govern and control.
14.7.
Execution in Counterparts. This Agreement and any amendments hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. Any electronic signature, contract formation on an electronic platform and electronic record-keeping shall have the same legal validity and enforceability as a manually executed signature or use of a paper-based recordkeeping system to the fullest extent permitted by Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the Georgia Uniform Electronic Transactions Act, or any similar state law based on the Uniform Electronic Transactions Act.
14.8.
Consent. Whenever DIP Agent’s, DIP Lenders’ or the Required DIP Lenders’ consent is required to be obtained under this Agreement or any of the other DIP Loan Documents as a condition to any action, inaction, condition or event, DIP Agent and each DIP Lender shall be authorized to give or withhold its consent in its sole and absolute discretion and to condition its consent upon the giving of additional collateral security for the Obligations, the payment of money, or any other matter.
14.9.
Notices and Communications.
14.9.1. Notice Address. Subject to Section 3.1.4, all notices and other communications by or to a party hereto shall be in writing and shall be given as follows:
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If to any Borrower:
The Standard Register Company
600 Albany Street
Dayton, Ohio 45417
Attention: Benjamin T. Cutting, Chief Financial Officer
Telecopier No.: (937) 221-1995
If to DIP Agent or Letter of Credit Issuer:
Bank of America, N.A.
300 Galleria Parkway, Suite 800
Atlanta, Georgia 30339
Attention: Andrew Doherty or current account manager
Telecopier No.: (404) 607-3277
If to any DIP Lender:
To the address set forth on Schedule 14.9 to the Pre-Petition ABL Loan Agreement (or in the case of a Person who becomes a DIP Lender after the Closing Date, at the address shown on its Assignment and Acceptance).
Each such notice or other communication shall be effective only (i) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (ii) if given by mail, three (3) Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (iii) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no notice to DIP Agent pursuant to Sections 1.2, 3.1 or 5.2.2 shall be effective until actually received by the individual to whose attention at DIP Agent such notice is required to be sent. Any written notice or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party. Any notice received by SRC shall be deemed received by all Borrowers.
14.9.2. Electronic Communications; Voice Mail. Electronic mail and internet websites may be used only for routine communications, such as financial statements, Borrowing Base Certificates and other information required by Section 9.1.4, administrative matters, distribution of DIP Loan Documents for execution, and matters permitted under Section 3.1.4. DIP Agent and DIP Lenders make no assurances as to the privacy and security of electronic communications. Electronic and voice mail may not be used as effective notice under the DIP Loan Documents.
14.9.3. Non-Conforming Communications. DIP Agent and DIP Lenders may rely upon any notices purportedly given by or on behalf of any Borrower even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation. Each Borrower shall indemnify and hold harmless each DIP Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic communication purportedly given by or on behalf of such Borrower.
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14.10.
Performance of Borrowers’ Obligations. If any Borrower shall fail to discharge any covenant, duty or obligation hereunder or under any of the other DIP Loan Documents, DIP Agent may, in its sole discretion at any time or from time to time, for Borrowers’ account and at Borrowers’ expense, pay any amount or do any act required of any Borrower hereunder or under any of the other DIP Loan Documents or otherwise lawfully requested by DIP Agent to enforce any of the DIP Loan Documents or Obligations, preserve, protect, insure or maintain any of the Collateral, or preserve, defend, protect or maintain the validity or priority of DIP Agent’s Liens in any of the Collateral, including the payment of any judgment against any Borrower, any insurance premium, any warehouse charge, any finishing or processing charge, any landlord claim, or any other Lien upon or with respect to any of the Collateral. All payments that DIP Agent may make under this Section and all out-of-pocket costs and expenses (including Extraordinary Expenses) that DIP Agent pays or incurs in connection with any action taken by it hereunder shall be reimbursed to DIP Agent by Borrowers on demand with interest from the date such payment is made or such costs or expenses are incurred to the date of payment thereof at the Default Rate. Any payment made or other action taken by DIP Agent under this Section shall be without prejudice to any right to assert, and without waiver of, an Event of Default hereunder and to proceed thereafter as provided herein or in any of the other DIP Loan Documents.
14.11.
Credit Inquiries. Each Borrower hereby authorizes and permits DIP Agent and DIP Lenders (but DIP Agent and DIP Lenders shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning such Borrower or any Subsidiaries.
14.12.
Time of Essence. Time is of the essence of this Agreement, the Other DIP Agreements and the DIP Security Documents.
14.13.
Indulgences Not Waivers. DIP Agent’s or any DIP Lender’s failure at any time or times hereafter, to require strict performance by any Borrower of any provision of this Agreement or any other DIP Loan Document shall not waive, affect or diminish any right of DIP Agent or any DIP Lender thereafter to demand strict compliance and performance therewith.
14.14.
Entire Agreement; Appendix A, Exhibits and Schedules. This Agreement and the other DIP Loan Documents, together with all other instruments, agreements and certificates executed at any time by the parties in connection therewith or with reference thereto, embody the entire understanding and agreement between the parties hereto and thereto with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings and inducements, whether express or implied, oral or written. Appendix A, each of the Exhibits and each of the Schedules attached hereto are incorporated into this Agreement and by this reference made a part hereof.
14.15.
Interpretation. No provision of this Agreement or any of the other DIP Loan Documents shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having, or being deemed to have, structured, drafted or dictated such provision.
14.16.
Obligations of DIP Lenders Several. The obligations of each DIP Lender hereunder are several, and neither DIP Agent nor any DIP Lender shall be responsible for the
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obligations or Commitment of any other DIP Lender. Nothing contained in this Agreement and no action taken by DIP Agent or any DIP Lender pursuant hereto shall be deemed to constitute DIP Agent and any of DIP Lenders to be a partnership, association, joint venture or any other kind of entity. The amounts payable at any time hereunder to each DIP Lender shall be a separate and independent debt, and each DIP Lender shall be entitled, to the extent not otherwise restricted hereunder, to protect and enforce its rights arising out of this Agreement and any of the other DIP Loan Documents, and it shall not be necessary for DIP Agent or any other DIP Lender to be joined as an additional party in any proceeding for such purpose.
14.17.
Confidentiality. DIP Agent and DIP Lenders each agrees to (i) keep any proprietary, nonpublic and/or confidential information that is delivered or made available by Borrowers to it (and that is either marked confidential or that a reasonable person at the time of disclosure would assume, under the circumstances to be confidential), including information made available to DIP Agent or any DIP Lender in connection with a visit or investigation by any Person contemplated in Section 9.1.1 hereof, confidential from any Person other than their respective Affiliates and individuals employed or retained by DIP Agent or such DIP Lender (including any of their respective legal counsel, auditors or other professional advisors, and any professional advisors retained by any of their respective legal counsel) who are engaged in evaluating, approving, structuring, administering or otherwise giving professional advice with respect to the Chapter 11 Cases and any proceeding therein, any of the Revolver Loans or Collateral or in connection with any other debt or securities offering or any financial accommodation for Borrowers or any of their Affiliates and (ii) use such proprietary, nonpublic and/or confidential information of Borrowers only for the purpose of evaluating, appraising, structuring, administering, enforcing or otherwise giving professional advice with respect to any of the Revolver Loans or Collateral or in connection with any other debt or securities offering or any financial accommodation for Borrowers or any of their Affiliates, and for no other purpose; provided, however, that nothing herein shall prevent DIP Agent or any DIP Lender from disclosing such confidential information (i) to any party to this Agreement from time to time or any Participant, (ii) pursuant to the order of any court or administrative agency, (iii) upon the request or demand of any regulatory agency or authority having jurisdiction over DIP Agent or such DIP Lender, (iv) which has been publicly disclosed other than by an act or omission of DIP Agent or any DIP Lender except as permitted herein, (v) to the extent reasonably required in connection with any litigation, including the Chapter 11 Cases and any contested matter or adversary proceeding commenced in any of the Chapter 11 Cases (with respect to any of the DIP Loan Documents or any of the transactions contemplated thereby) to which DIP Agent, any DIP Lender or their respective Affiliates may be a party, (vi) to the extent reasonably required to comply with any provisions of the Bankruptcy Code, the Bankruptcy Rules or the Local Court Rules, (vii) to the extent reasonably required in connection with the exercise of any remedies hereunder, (viii) to any actual or proposed Participant, Assignee or other Transferee of all or part of a DIP Lender’s rights hereunder so long as such Transferee has agreed in writing to be bound by the provisions of this Section, and (ix) to the National Association of Insurance Commissioners or any similar organization or to any nationally recognized rating agency that requires access to information about a Lender’s portfolio in connection with ratings issued with respect to such Lender. DIP Agent and DIP Lenders shall each be responsible for (i) any failure by any of its Affiliates and/or individuals employed or retained by it to treat any proprietary, nonpublic and/or confidential information of Borrowers confidentially and in accordance with this Agreement, and (ii) the use by any of its Affiliates and/or individuals employed or retained
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by it of any such proprietary, nonpublic and/or confidential information of Borrowers for any purpose other than the purposes permitted by this Section 14.17.
14.18.
Governing Law; Consent to Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia; provided, however, that if any of the Collateral shall be located in any jurisdiction other than Georgia, the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure of DIP Agent’s Lien upon such Collateral and the enforcement of DIP Agent’s other rights and remedies in respect of such Collateral to the extent that the laws of such jurisdiction are different from or inconsistent with the laws of the State of Georgia. As part of the consideration for new value received, and regardless of any present or future domicile or principal place of business of Borrowers, any DIP Lender or DIP Agent, each Borrower hereby consents and agrees that the state courts for the State of Georgia, or, at DIP Agent’s option, the United States District Court for the Northern District of Georgia, shall have jurisdiction to hear and determine any claims or disputes among any Borrower, DIP Agent and any DIP Lender pertaining to this Agreement or to any matter arising out of or related to this Agreement. Each Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and each Borrower hereby waives any objection that such Borrower may have based upon lack of personal jurisdiction, improper venue or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Each Borrower hereby waives personal service of the summons, complaint and other process issued in any such action or suit and agrees that service of such summons, complaint and other process may be made by certified mail addressed to such Borrower at the address set forth in this Agreement and that service so made shall be deemed completed upon the earlier of such Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mail, proper postage prepaid. Nothing in this Agreement shall be deemed or operate to affect the right of DIP Agent to serve legal process in any other manner permitted by law, or to preclude the enforcement by DIP Agent of any judgment or order obtained in such forum or the taking of any action under this Agreement to enforce same in any other appropriate forum or jurisdiction. Nothing herein shall limit the right of DIP Agent or any DIP Lender to bring proceedings against any Obligor in any other court, nor limit the right of any party to serve process in any other manner permitted by Applicable Law. Nothing in this Agreement shall be deemed to preclude enforcement by DIP Agent of any judgment or order obtained in any forum or jurisdiction.
14.19.
Waivers by Borrowers. To the fullest extent permitted by Applicable Law, each Borrower waives (i) the right to trial by jury (which DIP Agent and each DIP Lender hereby also waives) in any action, suit, proceeding or counterclaim of any kind arising out of or related to any of the DIP Loan Documents, the Obligations or the Collateral; (ii) presentment, demand and protest and notice of presentment, notice of protest, notice of default (except as expressly required by the DIP Loan Documents), and notices of non payment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by DIP Agent on which such Borrower may in any way be liable; (iii) notice prior to taking possession or control of the Collateral or any bond or security which might be required by any court prior to allowing DIP Agent to exercise any
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of DIP Agent’s remedies; (iv) the benefit of all valuation and appraisement laws; (v) any claim against DIP Agent or any DIP Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, DIP Loan Documents or transactions relating thereto; and (vi) notice of acceptance hereof. Each Borrower acknowledges that the foregoing waivers are a material inducement to DIP Agent’s and each DIP Lender’s entering into this Agreement and that DIP Agent and DIP Lenders are relying upon the foregoing waivers in their future dealings with Borrowers. Each Borrower warrants and represents that it has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
14.20.
Patriot Act Notice. DIP Agent and DIP Lenders hereby notify Borrowers that pursuant to the requirements of the Patriot Act, DIP Agent and DIP Lenders are required to obtain, verify and record information that identifies each Borrower, including its legal name, address, tax ID number and other information that will allow DIP Agent and DIP Lenders to identify such Borrower in accordance with the Patriot Act. DIP Agent and DIP Lenders will also require information regarding each personal guarantor, if any, and may require information regarding each Borrower's management and owners, such as legal name, address, social security number and date of birth. Each Borrower shall, promptly upon request, provide all documentation and other information as DIP Agent, Letter of Credit Issuer or any DIP Lender may request from time to time in order to comply with any obligations under any “know your customer,” anti-money laundering or other requirements of Applicable Law.
14.21.
Cumulative Effect; Conflict of Terms. The provisions of the DIP Loan Documents are cumulative. The parties acknowledge that the DIP Loan Documents may use several limitations, tests or measurements to regulate similar matters, and they agree that these are cumulative and that each must be performed as provided. Except as otherwise provided in another DIP Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another DIP Loan Document, the provision herein shall govern and control.
14.22.
No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated by any DIP Loan Document, each Borrower acknowledges and agrees that (a)(i) the DIP Facility and any related services by DIP Agent, any DIP Lender or any of their Affiliates are arm's-length commercial transactions between such Borrower and such Person; (ii) such Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate; and (iii) such Borrower is capable of evaluating and understanding, and does understand and accept, the terms, risks and conditions of the transactions contemplated by the DIP Loan Documents; (b) each of DIP Agent, DIP Lenders, and their respective Affiliates has been and is acting, and will continue to act, solely as a principal in connection with the DIP Facility, is not the financial advisor, agent or fiduciary for such Borrower, any of its Affiliates or any other Person, and has no obligation with respect to the transactions contemplated by the DIP Loan Documents except as expressly set forth therein; and (c) DIP Agent, DIP Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of such Borrower and its Affiliates, and
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have no obligation to disclose any of such interests to such Borrower or its Affiliates. To the fullest extent permitted by Applicable Law, each Borrower hereby waives and releases any claims that it may have against DIP Agent, DIP Lenders and any of their respective Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by a DIP Loan Document.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year specified at the beginning of this Agreement.
BORROWERS:
THE STANDARD REGISTER COMPANY
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER INTERNATIONAL, INC.
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER TECHNOLOGIES, INC.
By: ___________________________________
Name: ________________________________
Title: _________________________________
IMEDCONSENT, LLC
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER OF PUERTO RICO INC.
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER HOLDING COMPANY
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER TECHNOLOGIES CANADA ULC
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER MEXICO HOLDING COMPANY
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER HOLDINGS, S de R.L. de C.V.
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER de MEXICO, S de R.L. de C.V.
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER SERVICIOS, S de R.L. de C.V.
By: ___________________________________
Name: ________________________________
Title: _________________________________
DIP AGENT AND DIP LENDERS:
BANK OF AMERICA, N.A., as DIP Agent and DIP Lender
By: ______________________________________
Name: Andrew A. Doherty
Title: Senior Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION, as DIP Lender
By: ___________________________________
Name: John O'Leary Nocita
Title: Senior Vice President
APPENDIX A
GENERAL DEFINITIONS
When used in the Post-Petition Loan and Security Agreement dated March 12, 2015 (as at any time amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), by and among THE STANDARD REGISTER COMPANY, an Ohio corporation (“SRC”), STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”), STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”), IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”), and STANDARD REGISTER OF PUERTO RICO INC, f/k/a WorkflowOne of Puerto Rico, Inc., a Delaware corporation (“SRPR”); STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holding”); STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”); STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”); STANDARD REGISTER HOLDINGS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR MX Holdings”); STANDARD REGISTER de MEXICO, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Mexico”); STANDARD REGISTER SERVICIOS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Servicios”, and together with SRC, SRI, SRT, iMed, SRPR, SR Holding, SR MX Holdco, SR Canada, SR MX Holdings, and SR Mexico; each a “Borrower” and collectively, “Borrowers”), each financial institution listed on the signature pages attached thereto and its successors and assigns which become “DIP Lenders” as provided therein (such financial institutions and their respective successors and assigns referred to collectively herein as “DIP Lenders” and individually as a “DIP Lender”), and BANK OF AMERICA, N.A. (“DIP Agent”), in its capacity as collateral and administrative agent for itself and the Lenders, the following terms shall have the following meanings (terms defined in the singular to have the same meaning when used in the plural and vice versa):
ABL Priority Collateral – collectively, (i) the Pre-Petition ABL Priority Collateral and (ii) all "ABL Priority Collateral" as defined in the DIP ABL/Term Loan Intercreditor Agreement.
Acceptable Plan - a Chapter 11 Plan that provides for allowance of all Claims in favor of DIP Agent and DIP Lenders as fully secured Claims; Full Payment of all Pre-Petition ABL Obligations and Obligations on the effective date of such Chapter 11 Plan; an effective date no later than forty-five (45) days after the date of entry of the Confirmation Order with respect to such Chapter 11 Plan; and a full and complete release of any and all claims that each Borrower or its Estate might have or assert against DIP Agent or any DIP Lender (whether arising prior to or after the Petition Date), including all claims that arise under any provision in Chapter 5 of the Bankruptcy Code; or which is otherwise acceptable to DIP Agent and DIP Lenders in their sole and absolute discretion.
Accounts Formula Amount - on any date of determination thereof for the applicable calculation period, an amount equal to 85% of the Value of Eligible Billed Accounts on such date plus 85% of the Value of Eligible Unbilled Accounts; provided that (a) the Value of Eligible Unbilled Accounts in any calculation of the Borrowing Base shall not exceed the lesser of (i) $37,500,000 or (ii) 33.3% of the Value of the Eligible Billed Accounts included in the
Borrowing Base for the immediately preceding month (or other then applicable calculation period) and (b)(i) the Value of Eligible Billed Accounts consisting of Undocumented Invoice & Storage Accounts that are added to the Borrowing Base in any calendar month shall not exceed $6,000,000, (ii) the Value of Eligible Billed Accounts consisting of Undocumented Invoice & Storage Accounts that are added to the Borrowing Base at any one time shall not exceed $18,000,000 and (iii) all Undocumented Invoice & Storage Accounts added to the Borrowing Base in any prior calendar months having a Value in excess of $6,000,000 shall be removed from the Borrowing Base after a period of ninety (90) days following the inclusion thereof.
Acquisition - any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (i) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (ii) the acquisition of in excess of 50% of the Equity Interests of any Person, or otherwise causing any Person to become a Subsidiary or (iii) a merger or consolidation or any other combination with another Person (other than with a Person that is a Subsidiary); provided that a Borrower is the surviving entity.
Affiliate - a Person (other than a Subsidiary): (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, another Person; (ii) which beneficially owns or holds 10% or more of any class of the Equity Interests of a Person; or (iii) 10% or more of the Equity Interests with power to vote of which is beneficially owned or held by another Person or a Subsidiary of another Person. For purposes hereof, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of any Equity Interest, by contract or otherwise. Except that, with respect to SRC, the applicable percentage for determining this status shall be 20%, not 10%.
Agreement - the Post-Petition Loan and Security Agreement referred to in the first sentence of this Appendix A, all Exhibits and Schedules thereto and this Appendix A, including any amendments, modifications, restatements or supplements thereof or thereto.
Anti-Terrorism Laws – any laws relating to terrorism or money laundering, including the Patriot Act.
Applicable Law - all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, DIP Loan Document or Material Contract in question, including all applicable common law and equitable principles; all provisions of all applicable local, state, federal and foreign constitutions, statutes, codes, ordinances, rules, regulations, orders, decrees and judgments of Governmental Authorities; orders, judgments and decrees of all arbitrators; and all consent orders, judgments and decrees having the force of law.
Applicable Margin - a percentage equal to 1.25% with respect to Revolver Loans that are Base Rate Loans, 2.25% with respect to Revolver Loans that are LIBOR Loans, and 2.25% with respect to the Letter of Credit Fee Percentage.
Applicable Unused Commitment Margin – for any month, 0.50%.
Approved Insurer – any independent insurer with a minimum general policyholder rating of “A” and a minimum financial rating of “7” published in Best’s Key Rating Guide and/or
2
Best’s Insurance Reports issued by the A. M. Best Company or any successor nationally recognized rating organization.
Asset Disposition - a sale, lease, license, consignment, transfer or other disposition of Property of any Borrower, including a disposition of Property in connection with a sale-leaseback transaction or Synthetic Lease.
Assignment and Acceptance - an assignment and acceptance entered into by a DIP Lender and an Eligible Assignee and accepted by DIP Agent, in the form of Exhibit E or otherwise satisfactory to DIP Agent.
Availability - on any date, the amount that U.S. Borrowers are entitled to borrow as Revolver Loans on such date, such amount being the difference derived when the sum of the principal amount of Revolver Loans then outstanding (including any amounts that DIP Agent or DIP Lenders may have paid for the account of Borrowers pursuant to any of the DIP Loan Documents and that have not been reimbursed by Borrowers and any outstanding Settlement Loans) is subtracted from the Borrowing Base on such date. If the amount outstanding is equal to or greater than the Borrowing Base, Availability is zero.
Availability Reserve - on any date of determination thereof, an amount equal to the sum of the following (without duplication): (i) the Inventory Reserve; (ii) the Letter of Credit Reserve; (iii) the Bank Product Reserve; (iv) the Rent and Charges Reserve; (v) the Dilution Reserve; (vi) the Pre-Petition ABL Obligations Reserve; (vii) mandatory prepayments pursuant to Section 4.3 hereof; and (viii) such additional reserves as DIP Agent in its Permitted Discretion may elect to impose from time to time.
Average Revolver Loan Balance – for any month, the amount obtained by adding the aggregate of the unpaid balance of the Pre-Petition ABL Obligations, Revolver Loans and Letter of Credit Outstandings at the end of each day during such month and by dividing such sum by the number of days in such month.
Avoidance Actions - means Borrowers' claims and causes of action under Sections 502(d), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any other avoidance actions under the Bankruptcy Code and the proceeds thereof and property received thereby whether by judgment, settlement, or otherwise.
Bank Product - any of the following products, services or facilities extended after the Petition Date to any Borrower or Subsidiary by a DIP Lender or any of its Affiliates: (i) Cash Management Services; (ii) products under Hedge Agreements; (iii) commercial credit card and merchant card services; (iv) credit cards, debit cards and purchase cards; and (v) other banking products or services as may be requested by any Borrower or Subsidiary, other than Letters of Credit.
Bank Product Obligations - Debt, obligations and other liabilities with respect to Bank Products owing by a Borrower or Subsidiary to a Bank Product Provider; provided, that Bank Product Obligations of an Obligor shall not include its Excluded Swap Obligations.
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Bank Product Provider - (a) BofA or any of its Affiliates; and (b) any other DIP Lender or Affiliate of a DIP Lender that is providing a Bank Product, provided such provider delivers written notice to DIP Agent, in form and substance satisfactory to DIP Agent, within ten (10) days following the later of the Closing Date or creation of the Bank Product, (i) describing the Bank Product and setting forth the maximum amount to be secured by the Collateral and the methodology to be used in calculating such amount, and (ii) agreeing to be bound by Section 12.19 of the Agreement.
Bank Product Reserve - as of any date of determination, the aggregate amount of reserves established by DIP Agent from time to time in its discretion in respect of Bank Product Obligations.
Bankruptcy Code - title 11 of the United States Code.
Bankruptcy Rules – the Federal Rules of Bankruptcy Procedure.
Base Rate - on any day, a per annum rate equal to the greater of (i) the Prime Rate for such day; (ii) the Federal Funds Rate for such day, plus 0.50%; or (iii) the LIBOR Rate for a one month interest period as determined on such day, plus 1.00%.
Board of Governors - the Board of Governors of the Federal Reserve System.
BofA – Bank of America, N.A. and its successors and assigns.
BofA Indemnitees - BofA and its officers, directors, employees, Affiliates, agents and attorneys.
Borrower Materials – as defined in Section 9.1.4 of the Agreement.
Borrowers’ Knowledge – the actual knowledge of a Senior Officer of a Borrower, or knowledge that a Senior Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter to which such phrase relates.
Borrowing - a borrowing consisting of Revolver Loans of one Type made on the same day by DIP Lenders (or by BofA in the case of a Borrowing funded by Settlement Loans) or a conversion of a Revolver Loan or Loans of one Type from DIP Lenders on the same day.
Borrowing Base - on any date of determination thereof, an amount equal to the lesser of: (i) the aggregate amount of the Commitments on such date minus the sum of (x) the Pre-Petition ABL Obligations Reserve on such date and (y) the Letter of Credit Outstandings on such date, or (ii) an amount equal to (a) the sum of the Accounts Formula Amount on such date plus (b) the Inventory Formula Amount, minus in each of clauses (i) and (ii), the Availability Reserve on such date.
Borrowing Base Certificate - a certificate, in the form attached as Exhibit I, by which Borrowers shall certify to DIP Agent and DIP Lenders, with such frequency as set forth in
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Section 7.5, the amount of the Borrowing Base as of the date of the certificate and the calculation of such amount.
Business Day - any day excluding Saturday, Sunday and any other day that is a legal holiday under the laws of the State of Georgia or North Carolina or is a day on which banking institutions located in such state are closed; provided, however, that when used with reference to a LIBOR Loan (including the making, continuing, prepaying or repaying of any LIBOR Loan), the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits on the London interbank market.
Capitalized Lease Obligation - any Debt represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.
Carve-Out - shall have the meaning given to it in the Interim DIP Financing Order (or, when applicable, the Final DIP Financing Order).
Cash Collateral - cash or Cash Equivalents, and any interest or other income earned thereon, that constitutes Collateral or proceeds of Collateral or is delivered to DIP Agent to Cash Collateralize any Obligations and as security for the Obligations to the extent provided in the Agreement.
Cash Collateral Account - a demand deposit, money market or other account established by DIP Agent at such financial institution as DIP Agent may select in its discretion, which account shall be in DIP Agent’s name and subject to a Lien in favor of DIP Agent for the benefit of DIP Secured Parties.
Cash Collateralize, Cash Collateralized or Cash Collateralization - the delivery of cash to DIP Agent, as security for the payment of Obligations, in an amount equal to (i) with respect to Letter of Credit Outstandings, 105% of the aggregate Letter of Credit Outstandings, and (b) with respect to any inchoate, contingent or other Obligations (including Bank Product Obligations), 105% of DIP Agent’s good faith estimate of the amount due or to become due, including fees, expenses and indemnification hereunder.
Cash Equivalents - (i) marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government having maturities of not more than 12 months from the date of acquisition; (ii) domestic certificates of deposit and time deposits having maturities of not more than 12 months from the date of acquisition, bankers’ acceptances having maturities of not more than 12 months from the date of acquisition and overnight bank deposits, in each case issued by BofA or any commercial bank organized under the laws of the United States, any state thereof or the District of Columbia, which at the time of acquisition are rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and (unless issued by a DIP Lender) not subject to offset rights in favor of such bank arising from any banking relationship with such bank; (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (i) and (ii) entered into with any bank described in clause (ii) above; and (iv) commercial paper issued by BofA or having at the time of investment therein or a contractual commitment to invest
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therein a rating of A-1 (or better) by S&P or P-1 (or better) by Moody’s, and having a maturity within 9 months after the date of acquisition thereof.
Cash Management Order - a "first day order" presented to the Court at or about the time of the commencement of the Chapter 11 Cases that authorizes the continuation of Borrowers' Pre-Petition cash management relationship with DIP Agent, PNC Bank, Fifth Third Bank, First Citizens Bank, KeyBank and any other banks identified in such order (collectively, the "Cash Management Banks"), which order shall include, among other things, provisions authorizing each Cash Management Bank, in the Ordinary Course of Business, to set off against Deposit Accounts maintained by any Borrower with such Cash Management Bank all fees and expenses for cash management services provided to such Borrower by such Cash Management Bank, Bank Products, analysis charges and other fees and expenses arising or incurred in connection therewith, in each case whether the foregoing are incurred or arise before or after the Petition Date, and which order shall be in form and substance satisfactory to each such Cash Management Bank in its sole and absolute discretion.
Cash Management Services - any services provided from time to time by any DIP Lender or any of its Affiliates to any Borrower or Subsidiary in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.
CERCLA - the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. and its implementing regulations.
Change in Law - the occurrence, after the date hereof, of (a) the adoption, taking effect or phasing in of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof; or (c) the making, issuance or application of any request, guideline, requirement or directive (whether or not having the force of law) by any Governmental Authority; provided, however, that “Change in Law” shall include, regardless of the date enacted, adopted or issued, all requests, rules, guidelines, requirements or directives (i) under or relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or (ii) promulgated pursuant to Basel III by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any similar authority) or any other Governmental Authority.
Change of Control - the occurrence of any of the following events after the date of the Agreement: (a) any Person or group shall own beneficially (as defined in Rule 13d3 of the SEC under the Exchange Act or any successor provision thereto) more than 50% of the aggregate Voting Power of SRC (other than an ownership by any Person or group who beneficially own in excess of 30% of the aggregate Voting Power of SRC on the date hereof); (b) any “Change of Control,” “Change in Control” or similar event or circumstance, however defined or designated, under the Pre-Petition Term Loan Documents or under any other agreement or document governing any Debt with an aggregate principal amount in excess of $5,000,000 shall occur; (c) the first day on which a majority of the members of the Board of Directors of SRC are not Continuing Directors; or (d) the sale of all, or substantially all, the assets of Borrowers (on a consolidated basis) to any other Persons.
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Chapter 11 Cases - as defined in the recitals to the Agreement.
Chapter 11 Plan - a plan of reorganization or liquidation filed in any of the Chapter 11 Cases under Section 1121 of the Bankruptcy Code.
Claims - any and all claims, demands, liabilities, obligations, losses, damages, penalties, actions, interest, judgments, suits, awards, remedial response costs, expenses or disbursements of any kind or nature whatsoever (including reasonable attorneys’, accountants’, consultants’ or paralegals’ fees and expenses and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, replacement of DIP Agent or any DIP Lender, or the Petition Date) incurred by any DIP Indemnitee or asserted against any DIP Indemnitee by any Obligor or other Person, in any way relating to (a) any Revolver Loans, Letters of Credit, DIP Loan Documents, Borrower Materials, or the use thereof or transactions relating thereto, (b) any action taken or omitted in connection with any DIP Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any DIP Loan Documents or Applicable Law, (e) failure by any Obligor to perform or observe any terms of any DIP Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto, (f) any actual or alleged Environmental Release on or from any property owned or operated by any Borrower or any Subsidiary and any other liability arising under any Environmental Law relating to any Borrower or any Subsidiary and their respective Property, or (g) any of the Chapter 11 Cases.
Closing Date - the date on which all the conditions precedent set forth in Section 10 of the Agreement are satisfied or waived by the Required DIP Lenders in writing (which, in no event, shall be more than three (3) Business Days following the date the Court enters the Interim DIP Financing Order (or such later date as DIP Agent shall agree in its sole discretion)).
Code – the Internal Revenue Code of 1986.
Collateral – all of the Property and interests in Property in which a security interest is granted in Sections 6.1, 6.2, 6.3 and 6.4 of the Agreement and all Property described in any DIP Security Document as security for the payment or performance of any of the Obligations, and all other Property that now or hereafter secures (or is intended to secure) any Obligations, whether or not such Property or interest in Property was in existence on or was created, acquired or arose after the Petition Date; and all Property in which a Lien is granted in any of the DIP Financing Orders as security for the payment or performance of any of the Obligations, whether or not such Property or interest in Property was in existence on or acquired by a Borrower after the Petition Date, including the ABL Priority Collateral.
Commitment - at any date for any DIP Lender, the obligation of such DIP Lender to make Revolver Loans and to purchase participations in Letter of Credit Outstandings pursuant to the terms and conditions of this Agreement, which shall not exceed the principal amount set forth opposite such DIP Lender’s name under the heading “Commitment” on Schedule 1.1 hereto or the signature page of the Assignment and Acceptance by which it became a DIP Lender, as modified from time to time pursuant to the terms of this Agreement or to give effect to any applicable Assignment and Acceptance.
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Commitments - the aggregate principal amount of the Commitments of all DIP Lenders, the maximum amount of which shall be $125,000,000.
Commitment Termination Date - the date that is the soonest to occur of (i) the Revolver Maturity Date; (ii) thirty (30) days after the entry of the Interim DIP Financing Order if the Final DIP Financing Order has not been entered on or before such date; (iii) the date on which a Borrower terminates the Commitments pursuant to Section 5.2.1 of the Agreement; (iv) the date on which the Commitments are terminated pursuant to Section 11.2.2 of the Agreement; (v) the effective date of any confirmed Acceptable Plan or the date of entry of a Confirmation Order with respect to any other Chapter 11 Plan; (vi) the date of filing by any Borrower of a Chapter 11 Plan that is not an Acceptable Plan; (vii) the date of entry of a Confirmation Order with respect to a Chapter 11 Plan filed by a Person other than a Borrower if such Chapter 11 Plan is not an Acceptable Plan; (viii) the effective date of any sale of all or substantially all of the Collateral; (ix) the date on which DIP Agent is granted relief from the automatic stay (after giving effect to any notice required for DIP Agent to enforce its Liens as described in any DIP Financing Order); or (x) the date on which any of the Chapter 11 Cases are dismissed or converted by the Court.
Committee - an official committee of unsecured creditors appointed in any of the Chapter 11 Cases by the U.S. Trustee.
Commodity Exchange Act - the Commodity Exchange Act (7 U.S.C. §§ 1 et seq.), as amended from time to time, and any successor statute.
Compliance Certificate - a Compliance Certificate to be provided by Borrowers to DIP Agent in accordance with, and in the form annexed as Exhibit D to, the Agreement, and the supporting schedules to be annexed thereto.
Confirmation Order - an order entered by the Court confirming a Chapter 11 Plan in any of the Chapter 11 Cases.
Connection Income Taxes - Other Connection Taxes that are imposed on or measured by net income (however denominated), or are franchise or branch profits Taxes.
Consolidated - the consolidation in accordance with GAAP of the accounts or other items as to which such term applies.
Contingent Obligation - with respect to any Person, any obligation of such Person arising from any guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including (i) the direct or indirect guaranty, endorsement (other than for collection or deposit in the Ordinary Course of Business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (ii) the obligation to make take or pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, (iii) any obligation of such Person, whether or not contingent, (A) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (B) to advance or supply funds (1) for the purchase or payment of any such primary obligations or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the
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primary obligor, (C) to purchase Property, Securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (D) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith.
Continuing Director - at any date, an individual (a) who is a member of the Board of Directors of SRC on the date hereof, (b) who, as at such date, has been a member of such Board of Directors for at least the twelve preceding months, or (c) who has been nominated to be a member of such Board of Directors by a majority of the other Continuing Directors then in office.
Control or controlled by or under common control - possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of Voting Stock, by contract or otherwise, but not solely by being an officer or director of that Person); provided, however, that in any event any Person which beneficially owns, directly or indirectly, 10% or more (in number of votes) of the Equity Interests having ordinary Voting Power with respect to a corporation shall be conclusively presumed to control such corporation.
Copyrights - all copyrights, whether registered or unregistered and whether published or unpublished, in force under the laws of the United States, any other country or any political subdivision thereof, including all copyrights registered in the United States Copyright Office or in any office or agency of the United States of America, or any State thereof or any other country or any political subdivision thereof, or otherwise, and registrations and recordings thereof and all applications for registration thereof, whether pending or in preparation, and all copyright licenses.
Court - shall have the meaning ascribed to such term in the recitals of the Agreement.
CWA - the Clean Water Act, 33 U.S.C. §§ 1251 et seq.
Debt - as applied to a Person means, without duplication: (i) all items which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as of the date as of which Debt is to be determined, including Capitalized Lease Obligations; (ii) all Contingent Obligations of such Person; (iii) all reimbursement obligations in connection with letters of credit or letter of credit guaranties issued for the account of such Person; (iv) in the case of Borrowers (without duplication), the Obligations; (v) all reimbursement, payment or other obligations or liabilities of such Person created or arising under any conditional sale or title retention agreement with respect to property used or acquired by such Person; (vi) net obligations of such Person under any Hedge Agreement; (vii) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services (including
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all reimbursement, payment or other obligations or liabilities of such Person created or arising under any conditional sale or title retention agreement with respect to property used or acquired by such Person) (excluding trade accounts payable in the Ordinary Course of Business and not outstanding for more than 120 days after such payable was due unless, if such payable is outstanding more than 120 days after such payable was due, they are being contested in good faith and by appropriate proceedings promptly initiated and diligently conducted) of the date of purchase of such goods and services (including all reimbursement, payment or other obligations or liabilities of such Person created or arising under any conditional sale or title retention agreement with respect to Property used or acquired by such Person), and indebtedness secured by (or for which the holder of such debt has an existing right, contingent or otherwise, to be secured by) a Lien on property owned or being acquired by such Person (including debt arising under conditional sales or other title retention agreements), whether or not such debt shall have been assumed by such Person or is limited in recourse; (viii) obligations arising under Synthetic Leases; (ix) all Disqualified Equity Interests of such Person; and (x) all obligations referred to in clauses (i) through (ix) of this definition of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person. The Debt of a Person shall include any recourse Debt of any partnership or joint venture in which such Person is a general partner or joint venturer.
Default - an event or condition the occurrence of which would, with the lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - on any date, a fluctuating rate per annum which is equal to the Base Rate in effect for such date plus the Applicable Margin plus 2.0% with respect to the principal amount of the Obligations bearing interest as a Base Rate Loan and (ii) the applicable LIBOR Rate in effect on such date for each LIBOR Loan outstanding plus the Applicable Margin plus 2.0%.
Defaulting DIP Lender – any DIP Lender that (a) has failed to comply with its funding obligations hereunder, and such failure is not cured within two (2) Business Days; (b) has failed to pay to DIP Agent or any DIP Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due; (c) has notified DIP Agent or any Borrower that such DIP Lender does not intend to comply with its funding obligations hereunder or under any other credit facility, or has made a public statement to that effect; (d) has failed, within three (3) Business Days following request by DIP Agent or any Borrower, to confirm in a manner satisfactory to DIP Agent and Borrowers that such DIP Lender will comply with its funding obligations hereunder; or (e) has, or has a direct or indirect parent company that has, become the subject of an Insolvency Proceeding (including reorganization, liquidation, or appointment of a receiver, custodian, administrator or similar Person by the Federal Deposit Insurance Corporation or any other regulatory authority); provided, however, that a DIP Lender shall not be a Defaulting DIP Lender solely by virtue of a Governmental Authority’s ownership of an equity interest in such DIP Lender or parent company unless the ownership provides immunity for such DIP Lender from jurisdiction of courts within the United States or from enforcement of judgments or writs of attachment on its assets, or permits such DIP Lender or Governmental Authority to repudiate or otherwise to reject such DIP Lender’s agreements.
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Delayed Draw Term DIP Loan – one or more advances made by Term DIP Lenders from time to time to any Borrower in accordance with the Term DIP Loan Agreement, up to an aggregate amount of $30,000,000.
Designated Jurisdiction - any country or territory that is the subject of any Sanction.
Deposit Account – each of a Person’s demand, time, savings, passbook, money market or other depository accounts, and all certificates of deposit, maintained by such Person with any bank, savings and loan association, credit union or other depository institution.
Dilution Percent - the percent, determined for Borrowers’ most recent Fiscal Quarter, equal to (a) bad debt write-downs or write-offs, discounts, returns, promotions, credits, credit memos and other dilutive items with respect to Accounts, divided by (b) gross sales.
Dilution Reserve – on any date an amount equal to the outstanding amount of Eligible Accounts on such date multiplied by a percentage that is equal to each percentage point (or part thereof) that the Dilution Percent on such date exceeds 5% (for example, if the Dilution Percent on such date is 6.5%, then the applicable percentage of the multiplier in calculating the Dilution Reserve would be 1.5%).
DIP ABL/Term Loan Intercreditor Agreement - that certain ABL/TL DIP Intercreditor Agreement dated as of March 12, 2015, by and among DIP Agent, Term DIP Agent, certain Borrowers, and the other parties from time to time party thereto, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.
DIP Agent - as defined in the recitals to the Agreement, and includes any successor agent.
DIP Agent Indemnitees – DIP Agent in its capacity as collateral and administrative agent for DIP Lenders under the DIP Loan Documents and all of DIP Agent’s present and future Affiliates, officers, directors, employees, agents and attorneys.
DIP Agent Professionals - attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by DIP Agent in connection with any of the DIP Loan Documents, any of the transactions contemplated or effected thereunder, or any of the Chapter 11 Cases.
DIP Budget - as applicable, (a) an initial 13-week cash forecast and budget commencing with the week during which the Petition Date occurs, of Borrowers’ and their Subsidiaries’ consolidated projected (i) cash receipts and cash operating disbursements for such 13-week period, on a weekly basis, (which such forecasts of cash receipts and cash operating disbursements shall be in form and substance satisfactory to DIP Agent (after reasonable consultation with Required DIP Lenders)), (ii) operating cash flow for such 13-week period, and (iii) a statement of the actual amounts of each line item for the preceding two (2) weeks together with a variance analysis from the previously delivered DIP Budget, together with an explanation of any material variances or material prospective changes to such DIP Budget, (b) back up schedules and supporting information consistent with past practice, and (c) an updated DIP Budget for each successive 13-week period thereafter, which shall, in each case, include detailed
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line item receipts and expenditures, including the amount of Professional Fees and expenses for each Professional Person, together with appropriate supporting schedules and information. The DIP Budget (including, for the avoidance of doubt, the initial DIP Budget and any updated DIP Budget) shall be in form and substance acceptable to DIP Agent. The DIP Budget in effect on the Closing Date is attached to the Interim DIP Financing Order.
DIP Facility - the credit facility established by DIP Agent, DIP Lenders and Letter of Credit Issuer in favor of Borrowers in accordance with the Agreement and pursuant to which the Commitments are established.
DIP Financing Motion - the motion of Borrowers filed with the Court seeking approval of the DIP Facility and entry of the DIP Financing Orders.
DIP Financing Orders - collectively, the Interim DIP Financing Order and the Final DIP Financing Order.
DIP Indemnitees - DIP Agent Indemnitees, DIP Lender Indemnitees, and BofA Indemnitees.
DIP Lender Indemnitees – each DIP Lender, each Bank Product Provider and each of their respective officers, directors, employees, Affiliates, agents and attorneys.
DIP Lenders – the Persons defined as "DIP Lenders" in the preamble to the Agreement, BofA (whether in its capacity as a provider of Revolver Loans under Section 1 of the Agreement or as the provider of Settlement Loans under Section 3.1.3 of the Agreement), and any other Person who may from time to time become a “DIP Lender” under the Agreement, and their respective successors and permitted assigns.
DIP Loan Documents - the Agreement, any Other DIP Agreements, and any DIP Security Documents.
DIP Secured Parties - DIP Agent, DIP Lenders, Letter of Credit Issuer, and Bank Product Providers after the Petition Date.
DIP Security Documents - collectively, the Agreement as it relates to a security interest in the Collateral, and all other mortgage instruments, security agreements or similar instruments heretofore or hereafter executed by any Borrower or other Person and granting to DIP Agent, for the benefit of DIP Secured Parties, a Lien upon any Collateral to secure any of the Obligations.
Disbursements - for any period, the aggregate amount of all payments made by Borrower (and with respect to Professional Fees not yet paid pending approval of the Court, incurred by the Estate) during such period.
Disqualified Equity Interests - any Equity Interests which, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change in control or asset sale so long as any right of the holders thereof
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upon the occurrence of a change in control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are then accrued and payable), in each case, prior to the date that is ninety-one (91) days after the Commitment Termination Date, (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, prior to the date that is ninety-one (91) days after the Commitment Termination Date, except as a result of a change in control or an asset sale or the death, disability, retirement, severance or termination of employment or service of a holder who is an employee or director of a Borrower or a Subsidiary, in each case so long as any such right of the holder (1) is not effective during the continuance of an Event of Default and is not effective to the extent that such redemption would result in a Default or an Event of Default or (2) is subject to the prior repayment in full of the Revolver Loans and all other Obligations that are then accrued and payable, (c) requires the payment of any cash dividend or any other scheduled cash payment constituting a return of capital, in each case, prior to the date that is ninety-one (91) days after the Commitment Termination Date, or (d) is or becomes convertible into or exchangeable for Debt or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is ninety-one (91) days after the Commitment Termination Date; provided that if such Equity Interests are issued to any plan for the benefit of employees of any Borrower or its Subsidiary or by any such plan to such employees, such Equity Interests shall not constitute a Disqualified Equity Interests solely because they may be required to be repurchased by any Borrower or its Subsidiary in order to satisfy applicable statutory or regulatory obligations.
Distribution - in respect of any entity, (i) any declaration or payment of any dividends, interest or other distributions on Equity Interests of the entity (except distributions in such Equity Interests), (ii) any distribution, advance or repayment of Debt to a holder of Equity Interests, and (ii) any purchase, redemption or other acquisition or retirement for value of any Equity Interests of the entity or any Affiliate of the entity unless made contemporaneously from the net proceeds of the sale of Equity Interests.
Document - shall have the meaning given to “document” in the UCC to the extent such meaning relates to Inventory.
Documented Invoice & Storage Accounts - Invoice & Storage Accounts for which (a) a bill-and-hold agreement has been executed and delivered to DIP Agent by the applicable U.S. Borrower and the Account Debtor, in form and substance satisfactory to DIP Agent, or (b) the related underlying storage agreement between the applicable U.S. Borrower and the Account Debtor, in form and substance satisfactory to DIP Agent.
Dollars and the sign $ - lawful money of the United States of America.
Domestic Subsidiary - a Subsidiary of a Borrower (other than a Subsidiary that is a Borrower) that is incorporated under the laws of a state of the United States or the District of Columbia.
Dominion Account – a Deposit Account established by a Borrower at BofA or another bank acceptable to DIP Agent, into which the proceeds from any Collateral may be collected or
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concentrated from time to time and over which DIP Agent has exclusive control for withdrawal purposes.
Eligible Account - an Account which arises in the Ordinary Course of Business of a U.S. Borrower’s business from the sale of Inventory or rendition of services, is payable in Dollars, is subject to DIP Agent’s duly perfected Lien, and is deemed by DIP Agent, in its reasonable credit judgment, to be an Eligible Account. Without limiting the generality of the foregoing, no Account shall be an Eligible Account if: (i) it arises out of a sale made or services rendered by a U.S. Borrower to a Subsidiary or an Affiliate of any U.S. Borrower or to a Person controlled by an Affiliate of any U.S. Borrower; (ii) (A) for any Account, other than an Account of a Specified Account Debtor, it is due or unpaid more than ninety (90) days after the original invoice date, or (B) for any Account of a Specified Account Debtor, it is due or unpaid more than 120 days after the original invoice date; provided that all such Accounts of a Specified Account Debtor due or unpaid more than ninety (90) days but less than 120 days after the original invoice date shall not to exceed $4,000,000 at any time; (iii) 50% or more of the Accounts from the Account Debtor are not deemed Eligible Accounts hereunder; (iv) the total unpaid Accounts of the Account Debtor exceed 20% of the aggregate amount of all Eligible Accounts, in each case to the extent of such excess; (v) any covenant, representation or warranty contained in the Agreement has been breached; (vi) the Account Debtor is also a U.S. Borrower’s creditor (other than DIP Lenders) or supplier, or the Account Debtor has disputed liability with respect to such Account, or the Account Debtor has made any claim with respect to any other Account due from such Account Debtor to a U.S. Borrower, or the Account otherwise is or may become subject to any right of setoff, counterclaim, reserve or chargeback, provided that, the Accounts of any such U.S. Account Debtor shall be ineligible only to the extent of such offset, counterclaim, disputed amount, reserve or chargeback; (vii) an Insolvency Proceeding has been commenced by or against the Account Debtor or the Account Debtor has failed, suspended business or ceased to be Solvent, or is subject to Sanctions or any specially designated nationals list maintained by OFAC; or the U.S. Borrower is not able to bring suit or enforce remedies against the Account Debtor through judicial process; (viii) the invoice relating thereto is sent to a location outside the United States of America, Puerto Rico or Canada; (ix) it arises from a sale to the Account Debtor on a bill and hold, guaranteed sale, sale or return, sale on approval, consignment or any other repurchase or return basis (other than Invoice & Storage Accounts); (x) the Account Debtor is the United States of America or any department, agency or instrumentality thereof unless U.S. Borrowers have complied with all federal assignment of claims laws with respect thereto; (xi) the Account Debtor is located in any state which imposes conditions on the right of a creditor to collect accounts receivable unless such U.S. Borrower has either qualified to transact business in such state as a foreign entity or filed a Notice of Business Activities Report or other required report with the appropriate officials in such state for the then current year; (xii) the Account Debtor is located in a state in which such U.S. Borrower is deemed to be doing business under the laws of such state and which denies creditors access to its courts in the absence of qualification to transact business in such state or of the filing of any reports with such state, unless such U.S. Borrower has qualified as a foreign entity authorized to transact business in such state or has filed all required reports; (xiii) the Account is subject to a Lien other than a Permitted Lien; (xiv) the goods giving rise to such Account have not been delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been performed by such U.S. Borrower and accepted by the Account Debtor or the Account otherwise does not represent a final sale or a final rendition of services (other than Invoice & Storage
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Accounts); (xv) the Account is evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to judgment; (xvi) the Account represents a progress billing or a retainage (other than Invoice & Storage Accounts); (xvii) such U.S. Borrower has made any agreement with the Account Debtor for any deduction therefrom, except for discounts or allowances granted by any U.S. Borrower for prompt payment or otherwise made in the Ordinary Course of Business and which discounts or allowances are reflected in the calculation of the face value of each invoice related to such Account; (xviii) the Account is an Account acquired pursuant to an Acquisition unless DIP Agent has completed a field audit and examination with respect to such Account and has satisfied itself that such Account should be treated as an Eligible Account; (xix) a performance bond supports the obligations of a U.S. Borrower with respect to an Account (other than performance bonds supported by a Letter of Credit); or (xx) the Account represents, in whole or in part, a billing for interest, fees or late charges; provided that such Account shall be ineligible only to the extent of the amount of such billing.
Eligible Assignee - a Person that is (a) a DIP Lender or Affiliate of a DIP Lender; (b) a financial institution approved by DIP Agent in its discretion that extends revolving credit facilities of this type in its ordinary course of business; and (c) Silver Point Finance, LLC or its designee.
Eligible Billed Accounts – all Eligible Accounts other than Eligible Unbilled Accounts.
Eligible Inventory - Inventory owned by a U.S. Borrower that DIP Agent, in its reasonable credit judgment, deems to be Eligible Inventory. Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it (i) is finished goods or raw materials, and not work-in-process, packaging or shipping materials, shipping labels, samples, display items, bags, replacement parts or manufacturing supplies; (ii) is not held on consignment (other than consigned Inventory for which Required Consignee Documentation has been delivered to DIP Agent; provided that the amount of all such consigned Inventory that may be included as Eligible Inventory shall not exceed $500,000 in the aggregate at any time) nor subject to any deposit or downpayment; (iii) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (iv) is not slow-moving, perishable, obsolete or unmerchantable, and does not constitute returned or repossessed goods; (v) meets all standards imposed by any Governmental Authority, has not been acquired from an entity subject to Sanctions or any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials under any Environmental Law; (vi) conforms with the covenants and representations herein; (vii) is subject to DIP Agent’s duly perfected, first priority Lien, and no other Lien; (viii) is within the continental United States, Puerto Rico or Canada, is not in transit except between locations of Borrowers, and is not consigned to any Person; (ix) is not subject to any warehouse receipt or negotiable Document; (x) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver with respect to the Pre-Petition ABL Loan Agreement or an appropriate Rent and Charges Reserve has been established; (xi) to the extent the manufacture, sale, distribution or disposition of such Inventory is in any manner governed by or subject to a License Agreement, such License Agreement in full force and effect; and (xii) is not subject to any License Agreement or other arrangement that restricts DIP Agent’s right to manufacture, sell, distribute or otherwise dispose of such Inventory unless (A) the customer with respect to such Inventory is contractually obligated to purchase such Inventory or
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(B) the aggregate amount of Inventory that is subject to such License Agreement or other arrangement does not exceed $500,000 at any time.
Eligible Unbilled Accounts – Eligible Accounts which (i) have been earned by a U.S. Borrower’s shipment of goods to an Account Debtor and which are accrued on a U.S. Borrower’s books and records but which have not been billed by such U.S. Borrower (provided that such U.S. Borrower retains the right to bill the applicable Account Debtor at any time, to the extent it is permitted to do so pursuant to the underlying customer agreement), (ii) are evidenced by a purchase order from the Account Debtor, (iii) are reflected on such U.S. Borrower’s books and records in form reasonably satisfactory to DIP Agent, (iv) remain unbilled for no longer than the earlier of (a) thirty (30) days after the date on which such U.S. Borrower’s right to payment under such Eligible Accounts was earned or (b) thirty (30) days after the date on which such Eligible Accounts were first included in the Borrowing Base, and (v) DIP Agent determines to be Eligible Unbilled Accounts in its reasonable credit judgment.
Enforcement Action – any action to enforce any Obligations (other than Bank Product Obligations) or DIP Loan Documents or to exercise any rights or remedies relating to any Collateral (whether by judicial action, self-help, notification of Account Debtors, setoff or recoupment, credit bid, action in an Obligor’s Insolvency Proceeding, or otherwise).
Environmental Agreement - each agreement of any Borrower with respect to any Real Estate, pursuant to which such Borrower agrees to indemnify and hold harmless DIP Agent and DIP Lenders from liability under any Environmental Laws.
Environmental Laws - all Applicable Law, all programs, permits, guidance documents promulgated by regulatory agencies, and orders and consent decrees having the force of law, now or hereafter in effect and relating to human health and safety or the protection or pollution of the environment, including CERCLA, RCRA and CWA.
Environmental Notice - a notice (whether written or oral) from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.
Environmental Release - a release as defined in CERCLA or under any applicable Environmental Laws.
Equipment - all of each Borrower’s machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other than Inventory) of every kind and description, whether now owned or hereafter acquired by such Borrower and wherever located, and all parts, accessories and special tools therefor, all accessions thereto, and all substitutions and replacements thereof.
Equity Interest - the interest of (i) a shareholder in a corporation, (ii) a partner (whether general or limited) in a partnership (whether general, limited or limited liability), (iii) a member
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in a limited liability company, or (iv) any other Person having any other form of equity security or ownership interest.
ERISA - the Employee Retirement Income Security Act of 1974, and all rules and regulations from time to time promulgated thereunder.
ERISA Affiliate - any trade or business (whether or not incorporated) under common control with a Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
Estate - For each Borrower, the estate created in such Borrower's Chapter 11 Case pursuant to Section 541(a) of the Bankruptcy Code.
Event of Default - as defined in Section 11 of the Agreement.
Excluded Deposit Account – collectively, Deposit Accounts established solely for the purpose of funding payroll, payroll taxes and other compensation and benefits to employees.
Excluded Swap Obligation - with respect to an Obligor, each Swap Obligation as to which, and only to the extent that, such Obligor’s guaranty of or grant of a Lien as security for such Swap Obligation is or becomes illegal under the Commodity Exchange Act because the Obligor does not constitute an “eligible contract participant” as defined in the act (determined after giving effect to any keepwell, support or other agreement for the benefit of such Obligor and all guarantees of Swap Obligations by other Obligors) when such guaranty or grant of Lien becomes effective with respect to the Swap Obligation. If a Hedge Agreement governs more than one Swap Obligation, only the Swap Obligation(s) or portions thereof described in the foregoing sentence shall be Excluded Swap Obligation(s) for the applicable Obligor.
Excluded Tax - (a) Taxes imposed on or measured by a Recipient’s net income (however denominated), franchise Taxes and branch profits Taxes (i) as a result of such Recipient being organized under the laws of, or having its principal office or applicable Lending Office located in, the jurisdiction imposing such Tax, or (ii) constituting Other Connection Taxes; (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account of a DIP Lender with respect to its interest in a Loan or Commitment pursuant to a law in effect when such DIP Lender acquires such interest (except pursuant to an assignment request by SRC under Section 12.17) or changes its Lending Office, except to the extent that, pursuant to Section 4.9 of the Agreement, amounts with respect to such Taxes were payable to its assignor immediately prior to such assignment or to such DIP Lender immediately prior to its change in Lending Office; (c) Taxes attributable to a Recipient’s failure to comply with Section 4.10 of the Agreement; and (d) U.S. federal withholding Taxes imposed pursuant to FATCA.
Existing Letters of Credit - those Letters of Credit set forth on Schedule 1.2.1, each of which was in existence on the Petition Date.
Extraordinary Expenses - all costs, expenses, fees or advances that DIP Agent or any DIP Lender may suffer or incur, whether prior to or after the occurrence of an Event of Default, and whether prior to, after or during the pendency of the Chapter 11 Cases or any other Insolvency Proceeding of an Obligor, including those relating to, on account of or in connection with (i) the
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audit, inspection, repossession, storage, repair, appraisal, insuring, completion of the manufacture of, preparing for sale, advertising for sale, selling, collecting or otherwise preserving or realizing upon any Collateral; (ii) the defense of DIP Agent’s Lien upon any Collateral or the priority thereof or any adverse claim with respect to the Loans, the DIP Loan Documents or the Collateral asserted by any Obligor, any receiver or trustee for any Obligor or any creditor or representative of creditors of any Obligor; (iii) any action, arbitration or other proceeding (whether instituted by or against DIP Agent, any DIP Lender, any Borrower, any representative of creditors of any Borrower or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of DIP Agent's Liens with respect to any Collateral), the DIP Loan Documents, the Obligations, or other Claims; (iv) the settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral (whether or not such Liens are Permitted Liens); (v) the collection or enforcement of any of the Obligations; (vi) any Enforcement Action; (vii) the negotiation, documentation, and closing of any modification, waiver, workout, restructuring or forbearance agreement with respect to any DIP Loan Document or any Obligations; (viii) amounts advanced by DIP Agent pursuant to Sections 7.1.3 or 12.9.4 of the Agreement; (ix) the enforcement of any of the provisions of any of the DIP Loan Documents; and (x) any payment under a guaranty, indemnity or other payment agreement provided by DIP Agent or (with DIP Agent’s consent) any DIP Lender, which is reimbursable to DIP Agent or such DIP Lender by a Borrower pursuant to Section 2.4.2 of the Agreement. Such costs, expenses and advances may include transfer fees, field exam fees, taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any or all Borrowers or independent contractors in liquidating any Collateral, travel expenses, all other fees and expenses payable or reimbursable by Borrowers or any other Obligor under any of the DIP Loan Documents, and all other fees and expenses associated with the enforcement of rights or remedies under any of the DIP Loan Documents, but excluding compensation paid to employees (including inside legal counsel who are employees) of DIP Agent.
FATCA – the Foreign Account Tax Compliance Act, 26 U.S.C. §§ 1471 et seq.
Federal Funds Rate - (i) the weighted average of interest rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on the applicable Business Day (or on the preceding Business Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or (ii) if no such rate is published on the next Business Day, the average rate (rounded up, if necessary, to the nearest 1/8 of 1%) charged to BofA on the applicable day on such transactions, as determined by DIP Agent.
FEIN - with respect to any Person, the Federal Employer Identification Number of such Person.
Final DIP Financing Order - with respect to the Chapter 11 Cases, a Final Order in substantially the form of the Interim DIP Financing Order and otherwise in form and substance reasonably satisfactory to DIP Agent and the Required DIP Lenders, authorizing and approving on a final basis, among other things, the matters and provisions in the Interim DIP Financing Order, and providing that, in the event of a dismissal, conversion or substantive consolidation of
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any of the Chapter 11 Cases, (i) the Agreement and the other DIP Loan Documents shall remain valid and enforceable against all Obligors, (ii) the rights and remedies under the DIP Loan Documents, the DIP Financing Orders and Applicable Law shall not be adversely affected, and (iii) the Liens granted to any of Pre-Petition ABL Secured Parties and DIP Secured Parties under the DIP Loan Documents and the DIP Financing Orders shall remain valid and perfected and shall enjoy the same priority as such Liens enjoyed prior to such dismissal, conversion or substantive consolidation of such Chapter 11 Case.
Final Order - an order or judgment of the Court as entered on its docket that has not been reversed, stayed pursuant to any applicable Bankruptcy Rule or any other applicable rule of civil or appellate procedure, and as to which the time to appeal, petition for certiorari, or seek re-argument or rehearing has expired, or as to which any right to appeal, petition for certiorari or seek re-argument or rehearing has been waived in writing in a manner satisfactory to the parties in interest, or if a notice of appeal, petition for certiorari, or motion for re-argument or rehearing was timely filed, the order or judgment has been affirmed by the highest court to which the order or judgment was appealed or from which the re-argument or rehearing was sought, or a certiorari has been denied, and the time to file any further appeal or to petition for certiorari or to seek further re-argument has expired.
First Day Orders - all orders entered or to be entered by the Court granting the relief requested in the motions filed with the Court on the Petition Date or within five (5) Business Days after the Petition Date or based on motions filed on or about the Petition Date, which shall each be in form and substance reasonably satisfactory to DIP Agent and the Required DIP Lenders.
Fiscal Month - Borrowers’ fiscal month, as shown on Borrowers’ Fiscal Calendar attached as Exhibit I, subject to revisions as permitted in Section 9.2.4 of the Agreement.
Fiscal Quarter - Borrowers’ fiscal quarter, as shown on Borrowers’ Fiscal Calendar attached as Exhibit I, subject to the revisions as permitted in Section 9.2.4 of the Agreement.
Fiscal Year - Borrowers’ fiscal year as shown on Borrowers’ Fiscal Calendar attached as Exhibit I, subject to revisions as permitted in Section 9.2.4 of the Agreement.
FLSA - the Fair Labor Standards Act of 1938.
Foreign DIP Lender - any Lender that is not a U.S. Person.
Foreign Plan - any employee benefit plan or arrangement (a) maintained or contributed to by a Borrower or any Subsidiary that is not subject to the laws of the United States; or (b) mandated by a government other than the United States for employees of a Borrower or any Subsidiary.
Foreign Subsidiary - a Subsidiary that is a "controlled foreign corporation" under Section 957 of the Code, such that a guaranty by such Subsidiary of the Obligations or a Lien on the assets of such Subsidiary to secure the Obligations would result in material tax liability to a Borrower.
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Fronting Exposure - a Defaulting DIP Lender’s interest in Letter of Credit Outstandings, Settlement Loans and Protective Advances, except to the extent Cash Collateralized by the Defaulting DIP Lender or allocated to other DIP Lenders hereunder.
Full Payment - with respect to the Obligations and the Pre-Petition ABL Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing or incurred prior to or during the pendency of the Chapter 11 cases or any other Insolvency Proceeding (whether or not allowed in the proceeding); (b) if any such Pre-Petition ABL Lender Debt or Obligations are Letter of Credit Outstandings or inchoate or contingent in nature, Cash Collateralization thereof (or delivery of a standby letter of credit acceptable to DIP Agent in its discretion, in the amount of required Cash Collateral); (c) a release in form and substance satisfactory to DIP Agent of any Claims of each Borrower against DIP Agent and DIP Lenders, or Pre-Petition ABL Agent and Pre-Petition ABL Lenders, as applicable, arising on or before the payment date. No Revolver Loans shall be deemed to have been paid in full unless all Commitments related to such Revolver Loans have expired or been terminated; and (d) the expiration of the Challenge Deadline under (and as defined in) the DIP Financing Orders without any challenge having been timely asserted.
GAAP - generally accepted accounting principles in the United States of America in effect from time to time.
General Intangibles - the following general intangibles of a Borrower, whether now owned or hereafter created or acquired by a Borrower: (i) all choses in action and causes of action except to the extent relating exclusively to equipment, real estate or intellectual property of a Borrower, (ii) all company or other business records, licenses, franchises, customer lists, permits and operational manuals relating to Accounts and Inventory; (iii) tax refund claims except claims relating exclusively to equipment, real estate or intellectual property of a Borrower, (iv) insurance refunds and premium rebates relating exclusively to business interruption insurance and insurance on the Collateral; (v) all claims under guaranties, security interests or other security held by or granted to a Borrower to secure payment of any of a Borrower’s Accounts by an Account Debtor; (vi) all rights to indemnification relating to Inventory and Accounts; and (vii) all other intangible property of a Borrower of every kind and nature excluding such other intangible property relating to equipment or real estate of a Borrower and excluding all inventions, blueprints, designs, patents, patent applications, trademarks, trademark applications, trade names, trade secrets, service marks, goodwill, brand names, copyrights, and registrations.
Governmental Approvals - all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to all Governmental Authorities.
Governmental Authority - any federal, state, local, municipal, foreign or other governmental department, bureau, agency, tribunal, authority, body, commission, court, instrumentality, political subdivision, central bank, or other entity or officer exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions for or pertaining to any governmental, judicial, investigative, regulatory or self-regulatory authority, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity
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or government (including any supra-national bodies such as the European Union or European Central Bank).
Hedge Agreement - any and all agreements, or documents now existing or hereafter entered into by any Borrower that provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging any Borrower’s exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices.
Indemnified Amount - in the case of DIP Agent Indemnitees, the amount of any loss, cost, expenses or damages suffered or incurred by DIP Agent Indemnitees and against which DIP Lenders or any Obligor have agreed to indemnify DIP Agent Indemnitees pursuant to the terms of the Agreement or any of the other DIP Loan Documents; in the case of DIP Lender Indemnitees, the amount of any loss, cost, expenses or damages suffered or incurred by DIP Lender Indemnitees and against which DIP Lenders or any Obligor have agreed to indemnify DIP Lender Indemnitees pursuant to the terms of the Agreement or any of the other DIP Loan Documents.
Indemnified Taxes - (a) Taxes, other than Excluded Taxes, imposed on or relating to any payment of an Obligation; and (b) to the extent not otherwise described in clause (a), Other Taxes.
Initial Approved Form - with respect to any order of the Court, the form of such order that was filed with the Court or circulated to the DIP Lenders prior to any hearing at which the Court considered entry of such order; and with respect to the DIP Budget and the Professional Fees Budget, the forms of DIP Budget and the Professional Fees Budget that were attached to the DIP Financing Motion; in each case as and to the extent approved by the DIP Agent and the Required DIP Lenders.
Initial Transactions - collectively, (a) the making of the initial Revolver Loans and the issuance of any new Letters of Credit hereunder on or about the Closing Date and (b) the payment of the fees and expenses incurred by DIP Agent and DIP Lenders in connection with negotiating and documenting the DIP Facility, seeking and obtaining Court approval of the DIP Facility, preparing for the closing on the DIP Facility, and consummating the foregoing.
Insolvency Proceeding - any action, case or proceeding commenced under any state, federal or foreign law by or against a Person, or any agreement of such Person, for (i) the entry of an order for relief under any chapter of the Bankruptcy Code or other insolvency or debt adjustment law (whether state, federal or foreign), (ii) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property, (iii) an assignment or trust mortgage for the benefit of creditors of such Person, or (iv) the liquidation, dissolution or winding up of the affairs of such Person.
Intellectual Property - all intellectual and similar Property of a Person, including inventions, designs, patents, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all
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embodiments or fixations thereof and all related documentation, applications, registrations and franchises; and all licenses or other rights to use any of the foregoing.
Intellectual Property Claim - the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that a Borrower’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other Property violates of any ownership or other right to use any Intellectual Property of such Person.
Intercreditor Agreements – collectively, the Pre-Petition ABL/Term Loan Intercreditor Agreement and the DIP ABL/Term Loan Intercreditor Agreement.
Interest Period - shall have the meaning ascribed to it in Section 2.1.3 of the Agreement.
Interim DIP Financing Order - an interim order or orders of the Court entered in the Chapter 11 Cases authorizing and approving, among other things, on an interim basis, the Agreement, the other DIP Loan Documents, the DIP Facility, the Term DIP Facility, the Term DIP Loan Documents, the extensions of credit to Borrowers in accordance with the terms thereof, and the transactions contemplated thereby and granting Liens on the Collateral, with the applicable priority thereof, and the Superpriority Claims, each as described therein and in the DIP ABL/Term Loan Intercreditor Agreement, in favor of DIP Agent for the ratable benefit of DIP Secured Parties and in favor of Term DIP Agent for the ratable benefit of Term DIP Lenders, as such order or orders may be extended, amended, supplemented or modified in a manner satisfactory to the Required DIP Lenders in their sole discretion. The Interim DIP Financing Order shall, among other things, (i) limit borrowings under the DIP Facility and the Term DIP Facility to amounts set forth in the DIP Budget (subject to Permitted Variances) and so long as no Event of Default has occurred and is continuing; (ii) approve the payment by Borrowers of all the fees provided for in the Agreement, in the other DIP Loan Documents and under the DIP Facility, including, but not limited to, the fees and expenses of Pre-Petition ABL Agent under the Prepetition ABL Loan Documents and its advisors, (iii) find that DIP Lenders are extending credit to Borrowers in good faith within the meaning of Section 364(e) of the Bankruptcy Code, (iv) lift the automatic stay to permit each Borrower to perform its respective obligations, and DIP Agent and Term DIP Agent to exercise their respective remedies with respect to the DIP Facility and the Term DIP Facility, as applicable, (v) permit the use of loans under the Term DIP Facility and Revolver Loans under the DIP Facility solely to pay expenditures pursuant to the DIP Budget (subject to Permitted Variances) and otherwise on terms satisfactory to DIP Agent, (vi) provide that the Carve-Out shall apply solely to the Liens securing the Term Loan Priority Collateral and not to any Liens securing the ABL Priority Collateral, (vii) contain findings, subject to typical reservation of rights for non-debtor parties in bankruptcy court, that the Pre-Petition ABL Obligations are due and owing and not subject to any defense, counterclaim, or setoff, that the Liens securing the Pre-Petition ABL Obligations are valid and duly perfected, and that any challenge must be brought by (a) any party in interest with requisite standing, other than a statutory committee appointed in the Chapter 11 Cases (a “Committee”), within seventy-five (75) days after the Petition Date, (b) in the case of a Committee, sixty (60) days after the date on which notice of the appointment of such Committee is filed with the Court, (c) any such later date agreed to in writing by DIP Agent and the Term DIP Agent, or (d) any such later date ordered by the Court for cause shown after notice and an opportunity to be heard, or be forever barred; provided that in no event shall the Committee shall
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be permitted to expend no more than $25,000 to investigate or prosecute any such challenge; (viii) have such other findings, orders, and relief typical for financings of the type contemplated herein; and (ix) otherwise be in form and substance satisfactory to DIP Agent.
Interim Period - the period commencing on the date that the Interim DIP Financing Order is entered by the Court and ending on the sooner to occur of (a) the date that the Final DIP Financing Order is entered by the Court or (b) the date that is thirty (30) days after the date that the Interim DIP Financing Order is entered by the Court.
Inventory Appraisal – an appraisal, in form and substance satisfactory to DIP Agent, conducted by an appraisal company with qualifications and standing acceptable to DIP Agent pursuant to which such appraisal company determines the net orderly liquidation value of Inventory expected to be realized at an orderly, negotiated sale of Inventory held within a reasonable period of time, net of all liquidation expenses.
Inventory Formula Amount – on any date of determination, an amount equal to the least of (i) 65% of the Value of Eligible Inventory, (ii) 85% of the NOLV Percentage of the Value of Eligible Inventory, and (iii) $40,000,000.
Inventory Reserve – reserves established by DIP Agent to reflect factors that may negatively impact the Value of Inventory, including change in salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks.
Investment - any Acquisition; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance or capital contribution to or other investment in a Person.
Invoice & Storage Accounts – Accounts arising out of bill-and-hold transactions of the type customarily engaged in by U.S. Borrowers in the Ordinary Course of Business as of the date hereof in which the goods were sold pursuant to a specific purchase order, contract or other agreement and the applicable Account Debtor is contractually obligated to pay for such goods upon receipt of an invoice, and which otherwise constitute Eligible Billed Accounts.
Knowledge – with respect to any Person, including a Senior Officer, the actual knowledge of such Person, without special investigation or inquiry.
Letter of Credit – a commercial/documentary letter of credit, or standby letter of credit issued or, in the case of the Existing Letters of Credit, deemed issued pursuant to the Agreement.
Letter of Credit Documents - any and all agreements, instruments and documents required by Letter of Credit Issuer to be executed by any or all U.S. Borrowers or any other Person and delivered to Letter of Credit Issuer for the issuance of any Letter of Credit.
Letter of Credit Fee Percentage - a per annum percent equal to the Applicable Margin for LIBOR Rate Loans.
Letter of Credit Issuer – BofA or any Affiliate of BofA.
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Letter of Credit Outstandings - on any date of determination thereof, an amount equal to the sum of (i) all amounts then due and payable by any Borrower on such date by reason of any payment made on or before such date by Letter of Credit Issuer under any Letter of Credit, including any Existing Letter of Credit, plus (ii) the aggregate undrawn amount of all Letters of Credit then outstanding, including the Existing Letters of Credit, or to be issued by Letter of Credit Issuer under a letter of credit application theretofore submitted to Letter of Credit Issuer.
Letter of Credit Reserve - at any date, the aggregate of all Letter of Credit Outstandings on such date, other than Letter of Credit Outstandings that are fully Cash Collateralized.
LIBOR Lending Office - with respect to a DIP Lender, the office designated as a LIBOR Lending Office for such DIP Lender on Schedule 14.9 (or on any Assignment and Acceptance, in the case of an assignee) and such other office of such DIP Lender or any of its Affiliates that is hereafter designated by written notice to DIP Agent.
LIBOR Loan - a Revolver Loan, or portion thereof, during any period in which it bears interest at a rate based upon the applicable LIBOR Rate.
LIBOR Rate - for any Interest Period with respect to a LIBOR Loan, the per annum rate of interest (rounded up, if necessary, to the nearest 1/8th of 1%), determined by DIP Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to commencement of such Interest Period, for a term comparable to such Interest Period, equal to (i) the ICE Benchmark Administration London Interbank Offered Rate (the “ICE LIBOR”), as published by Reuters (or other commercially available source designated by DIP Agent); or (ii) if the ICE LIBOR is not available for any reason, the interest rate at which Dollar deposits in the approximate amount of the LIBOR Loan would be offered by Bank’s, London branch to major banks in the London interbank Eurodollar market. If the Board of Governors imposes a Reserve Percentage with respect to LIBOR deposits, then the LIBOR Rate shall be the foregoing rate, divided by 1 minus the Reserve Percentage.
License Agreement - any agreement between a Borrower and a Licensor pursuant to which such Borrower is authorized to use any Intellectual Property in connection with the manufacturing, marketing, sale or other distribution of any Collateral, any use of Property or any other conduct of business of such Borrower.
Licensor - any Person from whom a Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with such Borrower’s manufacture, marketing, sale or other distribution of any Collateral, any use of Property or any other conduct of business of such Borrower.
Lien - a Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including any lien, security interest, pledge, hypothecation, assignment, trust, reservation, encroachment, easement, right-of-way, covenant, condition, restriction, lease, or other title exception or encumbrance affecting Property.
Lien Waiver - an agreement, in form and substance satisfactory to DIP Agent, by which (i) for any material Collateral located on leased premises, the lessor waives or subordinates any
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Lien it may have on the Collateral, and agrees to permit DIP Agent to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (ii) for any Collateral held by a warehouseman, processor, shipper, customs broker or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents in its possession relating to the Collateral as agent for DIP Agent, and agrees to deliver the Collateral to DIP Agent upon request; (iii) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges DIP Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to DIP Agent upon request; and (iv) for any Collateral subject to a Licensor’s Intellectual Property rights, the Licensor grants to DIP Agent the right, vis-à-vis such Licensor, to enforce DIP Agent’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a default exists under any applicable License.
Loan - a Revolver Loan (and each Base Rate Loan and LIBOR Loan comprising such Loan).
Loan Account - the loan account or accounts established by DIP Agent on its books pursuant to Section 4.8 of the Agreement.
Local Court Rules – the rules of procedure adopted by the Court, as such rules may be modified or amended from time to time.
Margin Stock - shall have the meaning ascribed to it in Regulation U of the Board of Governors.
Material Adverse Effect - the effect of any event or condition which, alone or when taken together with other events or conditions occurring or existing concurrently therewith, (i) has a material adverse effect upon the business, operations, Properties or condition (financial or otherwise) of Borrowers and their Subsidiaries (taken as a whole), other than as a direct result of the commencement of a proceeding under Chapter 11 of the Bankruptcy Code and of the Chapter 11 Cases and the continuation and prosecution thereof; and (ii) (A) has or may be reasonably expected to have any material adverse effect upon the validity or enforceability of the Agreement or any of the other DIP Loan Documents; (B) has or may be reasonably expected to have a material adverse effect upon the value of the Collateral (considered as a whole) or on the Liens of DIP Agent with respect to the Collateral or the priority of any such Liens; (C) materially impairs or may be reasonably expected to materially impair the ability of Obligors (considered as a group) to perform their obligations under the Agreement or any of the other DIP Loan Documents, including repayment of the Obligations when due; or (D) materially impairs or may be reasonably expected to materially impair the ability of DIP Agent or any DIP Lender to enforce or collect the Obligations or realize upon any of the Collateral in accordance with the DIP Loan Documents and Applicable Law.
Material Contract - an agreement to which an Obligor is a party (other than the DIP Loan Documents) (i) which is deemed to be a material contract as provided in Regulation S-K promulgated by the SEC under the Securities Act of 1933 or (ii) for which breach, termination, cancellation, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect, in each case excluding any contract that is rejected, with the prior
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written consent of DIP Agent, by an Obligor in accordance with an order entered by the Court under Section 365 of the Bankruptcy Code.
Maximum Rate - the maximum non-usurious rate of interest permitted by Applicable Law that at any time, or from time to time, may be contracted for, taken, reserved, charged or received on the Debt in question or, to the extent that at any time Applicable Law may thereafter permit a higher maximum non-usurious rate of interest, then such higher rate. Notwithstanding any other provision hereof, the Maximum Rate shall be calculated on a daily basis (computed on the actual number of days elapsed over a year of 365 or 366 days, as the case may be).
Money Borrowed - as applied to any Person, (i) Debt arising from the lending of money by any other Person to such Person; (ii) Debt, whether or not in any such case arising from the lending of money by another Person to such Person, (A) which is represented by notes payable or drafts accepted that evidence extensions of credit, (B) which constitutes obligations evidenced by bonds, debentures, notes or similar instruments, or (C) upon which interest charges are customarily paid (other than accounts payable) or that was issued or assumed as full or partial payment for Property; (iii) Debt that constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations with respect to letters of credit or guaranties of letters of credit; and (v) Debt of such Person under any guaranty of obligations that would constitute Debt for Money Borrowed under clauses (i) through (iii) hereof, if owed directly by such Person.
Moody’s - Moody’s Investors Services, Inc., and its successors.
Mortgage - each mortgage, deed of trust or deed to secure debt pursuant to which a Borrower or other Obligor grants to DIP Agent Liens upon the Real Estate owned by such Borrower, as security for the Obligations.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of ERISA.
NOLV Percentage - the net orderly liquidation value of Inventory, expressed as a percentage, expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent Inventory Appraisal.
Notes - each Revolver Note and any other promissory note executed by any Borrower at the request of DIP Agent or any DIP Lender to evidence any of the Obligations.
Notice of Borrowing - as defined in Section 3.1.1(i) of the Agreement.
Obligations - in each case, whether now in existence or hereafter arising, (i) the principal of, and interest and premium, if any, on, the Revolver Loans; (ii) all Letter of Credit Outstandings and all other obligations of any Obligor to DIP Agent or Letter of Credit Issuer arising in connection with the issuance of any Letter of Credit; (iii) interest, expenses, fees, indemnification obligations, Extraordinary Expenses and other amounts payable by any Obligor under any of the DIP Loan Documents; (iv) all Bank Product Obligations; and (iv) all other Debts, covenants, duties and obligations (including Contingent Obligations) now or at any time or times hereafter owing by any Borrower to DIP Agent or any DIP Lender under or pursuant to the Agreement or any of the other DIP Loan Documents, whether evidenced by any note or other writing, whether arising from any extension of credit, opening of a letter of credit, acceptance,
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loan, guaranty, indemnification or otherwise, whether allowed in any of the Chapter 11 Cases or any other Insolvency Proceeding, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several, chargeable to any or all Obligors under the Agreement or under any of the other DIP Loan Documents; provided, that Obligations of an Obligor shall not include its Excluded Swap Obligations.
Obligor - each Borrower and any other Person that is at any time liable for the payment of the whole or any part of the Obligations or that has granted in favor of DIP Agent a Lien upon any of such Person’s Property to secure payment of any of the Obligations.
OFAC - Office of Foreign Assets Control of the U.S. Treasury Department.
Ordinary Course of Business - with respect to any transaction involving any Person, the ordinary course of such Person’s business, as conducted by such Person in accordance with past practices and undertaken by such Person in good faith and not for the purpose of evading any covenant or restriction in any DIP Loan Document or under Applicable Law.
Organization Documents - with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, operating agreement, members agreement, partnership agreement, voting trust, or similar agreement or instrument governing the formation or operation of such Person.
OSHA - the Occupational Safety and Hazard Act of 1970.
Other Connection Taxes - Taxes imposed on a Recipient due to a present or former connection between it and the taxing jurisdiction (other than connections arising from the Recipient having executed, delivered, become party to, performed obligations or received payments under, received or perfected a Lien or engaged in any other transaction pursuant to, enforced, or sold or assigned an interest in, any Revolver Loan or DIP Loan Document).
Other DIP Agreements - the Notes and any and all agreements, instruments and documents (other than the Agreement and any DIP Security Documents), heretofore, now or hereafter executed by any Borrower, any other Obligor or any other Person and delivered to DIP Agent or any DIP Lender in respect of or in connection with any transactions contemplated by or relating to the Agreement.
Other Taxes - all present or future stamp, court, documentary, intangible, recording, filing, excise, property or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a Lien under, or otherwise with respect to, any DIP Loan Document, except Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 12.17 of the Agreement).
Out of Formula Condition - as defined in Section 1.1.2 of the Agreement.
Out of Formula Loan - a Revolver Loan made when an Out of Formula Condition exists or the amount of any Revolver Loan which, when funded, results in an Out of Formula Condition.
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Participant - as defined in Section 13.2.1 of the Agreement.
Participating DIP Lender - as defined in Section 1.2.8(i) of the Agreement.
Patents - all United States and foreign patents and applications made for letters patent under the laws of the United States, any other country or any political subdivision thereof.
Patriot Act – the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).
Payment Account - an account maintained by DIP Agent to which all monies from time to time deposited to a Dominion Account shall be transferred and all other payments shall be sent in immediately available federal funds.
Payment Items - all checks, drafts, or other items of payment payable to a Borrower, including those constituting proceeds of any of the Collateral.
Permitted Contingent Obligations - Contingent Obligations (i) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (ii) arising from Hedge Agreements permitted hereunder; (iii) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (iv) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (v) arising under the DIP Loan Documents; or (vi) in an aggregate amount of $250,000 or less at any time.
Permitted Discretion – DIP Agent's reasonable (from the perspective of a secured asset based lender with advance rates based on current assets) credit judgment based upon its consideration of any factor which DIP Agent believes (a) will or could reasonably be expected to adversely affect in any respect the value of any ABL Priority Collateral, the enforceability or priority of any Liens in favor of DIP Agent or the amounts which DIP Agent and DIP Lenders would be likely to recover in the liquidation of such ABL Priority Collateral; (b) suggests that any collateral report, financial information or certificate delivered to DIP Agent by or on behalf of any Borrower with respect to any ABL Priority Collateral is incomplete, inaccurate or misleading in any material respect; or (c) creates or reasonably could be expected to create or result in a Default or Event of Default. In exercising such judgment, DIP Agent may consider factors already included or tested in determining Eligible Accounts and Eligible Inventory or in calculating the Borrowing Base or Availability, as well as any of the following: (i) changes in collection history and dilution with respect to the Accounts, (ii) changes in demand for, and pricing of, Inventory, (iii) changes in any concentration of risk with respect to the Accounts, (iv) changes in turnover statistics with respect to Inventory and/or Accounts, including actual versus historical and projected rates, and (v) any other factors, events, contingencies or circumstances that arise (or first become known to DIP Agent) after the Petition Date and that change the credit risk of lending to any Borrower on the security of the ABL Priority Collateral included in the Borrowing Base in any respect; provided, however, that (a) DIP Agent shall not increase the Availability Reserve solely in response to factors that already have been taken into account in excluding from the Borrowing Base calculation the whole or any part of any Accounts or
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Inventory; and (b) the amount of any addition made to the Availability Reserve pursuant to clause (viii) of the definition thereof shall bear a reasonable relationship to the impact of any such factors that DIP Agent seeks to mitigate.
Permitted Liens – has the meaning specified in Section 9.2.8 of the Agreement.
Permitted Senior Liens – (i) with respect to the Term Loan Priority Collateral, (x) those Pre-Petition and Post-Petition Liens in favor of Pre-Petition Term Agents or Term DIP Agent and (y) those Liens on Term Loan Priority Collateral that are Permitted Liens under (and as defined in) the Pre-Petition Term Loan Agreements, were in existence on the Petition Date, and, as of the Petition Date, had priority over the Liens of Pre-Petition Term Agents with respect to any Pre-Petition Term Priority Collateral (but only to the extent of such Pre-Petition Term Priority Collateral); and (ii) with respect to the ABL Priority Collateral, those Liens that are Permitted Liens under (and as defined in) the Pre-Petition ABL Loan Agreement, were in existence on the Petition Date, and, as of the Petition Date, had priority over the Liens of Pre-Petition Agent with respect to any Pre-Petition ABL Priority Collateral (but only to the extent of such Pre-Petition ABL Priority Collateral).
Permitted Variances - an unfavorable variance from the DIP Budget not exceeding (a) 10.0% for each line item (other than “payroll”, “health & benefits”, “postage” and “Audit Expense”), (b) 5.0% for payroll, (c) 5.0% for health & benefits, (d) 5.0% for postage, (e) 0.0% for Audit Expense, and (f) 5.0% with respect to cumulative net cash flows of Borrowers and their Subsidiaries (excluding amounts relating to payroll, health & benefits and postage), in each case for the period from the Petition Date through the measurement date at the end of each week. All variances shall be tested weekly on the Friday of such week, beginning with the four week period ending on April 3, 2015, and measured on a rolling four week basis thereafter.
Person - an individual, partnership, corporation, limited liability company, limited liability partnership, joint venture, joint stock company, land trust, business trust, association, or unincorporated organization, Governmental Authority, or other entity.
Petition Date – March 12, 2015.
Plan - an employee benefit plan now or hereafter maintained for employees of any or all Borrowers that is covered by Title IV of ERISA.
Post-Petition - any date or time after the date and time of the commencement of the Chapter 11 Cases.
Pre-Petition - any date or time prior to the date and time of the commencement of the Chapter 11 Cases.
Pre-Petition ABL Agent - shall have the meaning ascribed to such term in the recitals of the Agreement.
Pre-Petition ABL Collateral – the "Collateral" as such term is defined by the Pre-Petition ABL Loan Agreement, to the extent such collateral was in existence on the Petition Date.
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Pre-Petition ABL Copyright Security Agreement – the ABL Copyright Security Agreement dated as of August 9, 2013, among SRC, WorkflowOne and Pre-Petition ABL Agent, as at any time amended, modified, restated or supplemented.
Pre-Petition ABL Lenders - shall have the meaning ascribed to such term in the recitals of the Agreement.
Pre-Petition ABL Loan Agreement - shall have the meaning ascribed to such term in the recitals to the Agreement.
Pre-Petition ABL Loan Documents - the "Loan Documents" as such term is defined in the Pre-Petition ABL Loan Agreement.
Pre-Petition ABL Obligations - all of U.S. Borrowers' "Obligations" under (and as defined in) the Pre-Petition ABL Loan Agreement.
Pre-Petition ABL Obligations Reserve - on any date, the aggregate of all Pre-Petition ABL Obligations outstanding on such date.
Pre-Petition ABL Patent Security Agreement – the ABL Patent Security Agreement dated as of August 9, 2013, between SRC and Pre-Petition ABL Agent, as at any time amended, modified, restated or supplemented.
Pre-Petition ABL Priority Collateral – the "ABL Priority Collateral" as that term is defined in the Pre-Petition ABL/Term Loan Intercreditor Agreement to the extent such Collateral was in existence on the Petition Date, and all proceeds thereof whether created, acquired or arising on, before or after the Petition Date.
Pre-Petition ABL Secured Parties – the "Secured Parties" as defined in the Pre-Petition ABL Loan Agreement.
Pre-Petition ABL/Term Loan Intercreditor Agreement - that certain Intercreditor Agreement dated as of August 1, 2013, by and among Pre-Petition ABL Agent, Pre-Petition Term Agents, U.S. Borrowers, and the other parties from time to time party thereto, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.
Pre-Petition ABL Trademark Security Agreement – the ABL Trademark Security Agreement dated as of August 9, 2013, among SRC, WorkflowOne and Pre-Petition ABL Agent, as at any time amended, modified, restated or supplemented.
Pre-Petition First Lien Term Loan Obligations – the "Obligations" as such term is defined in the First Lien Credit Agreement dated as of August 1, 2013, among SRC, WorkflowOne, certain Subsidiary guarantors, financial institutions parties thereto from time to time, and Pre-Petition Term Agent, as at any time amended, modified, restated or supplemented.
Pre-Petition Term Agents - Silver Point Finance, LLC, and its successors and assigns, in its capacities as "Term Administrative Agents" as such term is defined in the ABL/Term Intercreditor Agreement.
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Pre-Petition Term Loan Agreements – has the meaning assigned to it in the Interim DIP Financing Order.
Pre-Petition Term Loan Documents - the "Term Loan Documents" as such term is defined in the Pre-Petition ABL/Term Loan Intercreditor Agreement.
Pre-Petition Term Loans - shall mean the term loans made pursuant to the Pre-Petition Term Loan Documents.
Pre-Petition Term Loan Obligations – "Term Loan Obligations" as such term is defined in the Pre-Petition ABL/Term Loan Intercreditor Agreement.
Prime Rate – the rate of interest announced by BofA from time to time as its prime rate. Such rate is set by BofA on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate. Any change in such rate publicly announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change.
Pro Rata - with respect to any DIP Lender, a percentage (rounded to the ninth decimal place) determined (a) by dividing the amount of such DIP Lender’s Revolver Commitment by the aggregate outstanding Revolver Commitments; or (b) following termination of the Revolver Commitments, by dividing the amount of such DIP Lender’s Revolver Loans and Letter of Credit Outstandings by the aggregate outstanding Revolver Loans and Letter of Credit Outstandings or, if all Revolver Loans and Letter of Credit Outstandings have been paid in full and/or Cash Collateralized, by dividing such DIP Lender’s and its Affiliates’ remaining Obligations by the aggregate remaining Obligations.
Professional Fees Budget - as defined in Section 9.1.4(viii) of the Agreement.
Professional Fees - the fees and reimbursable expenses of Professional Persons.
Professional Person - a Person who is an attorney, financial advisor, accountant, appraiser, auctioneer or other professional person and who is retained, with Court approval, by (a) a Borrower pursuant to Section 327 of the Bankruptcy Code or (b) a Committee pursuant to Section 1103(a) of the Bankruptcy Code.
Properly Contested - in the case of any Debt of an Obligor (including any Taxes) that is not paid as and when due or payable by reason of such Obligor’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Debt is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Obligor has established appropriate reserves as shall be required in conformity with GAAP, (iii) the non-payment of such Debt will not have a Material Adverse Effect and will not result in a forfeiture of any assets of such Obligor; (iv) no Lien is imposed upon any of such Obligor’s Property with respect to such Debt unless such Lien is at all times junior and subordinate in priority to the Liens in favor of DIP Agent (except only with respect to property Taxes that have priority as a matter of Applicable Law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if the Debt results from, or is
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determined by the entry, rendition or issuance against an Obligor or any of its Property of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Obligor, such Obligor forthwith pays such Debt and all penalties, interest and other amounts due in connection therewith.
Property - any interest in any kind of property or asset, whether real, personal or mixed and whether tangible or intangible.
Protective Advances – as defined in Section 12.9.4 of the Agreement.
Purchase Agreement - that certain Asset Purchase Agreement dated as of March 12, 2015, by and among Purchaser and Sellers, in form and substance satisfactory to DIP Agent and DIP Lenders, and, among other terms and conditions, providing for and assuring Full Payment of the Obligations and the Pre-Petition ABL Obligations, as amended, supplemented or otherwise modified at any time with the consent of DIP Agent and the Required DIP Lenders.
Purchaser – Standard Acquisition Holdings, LLC, and its successors and permitted assigns.
Purchase Money Debt - (i) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets; (ii) Debt (other than the Obligations) incurred within ninety (90) days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; (iii) Capitalized Lease Obligations; and (iv) any renewals, extensions or refinancings (but not increases) thereof.
Purchase Money Lien - a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a capital lease or a purchase money security interest under the UCC.
Qualified ECP - an Obligor with total assets exceeding $10,000,000, or that constitutes an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” under Section 1a(18)(A)(v)(II) of such Act.
Qualified Equity Interests - any Equity Interests that are not Disqualified Equity Interests.
RCRA - the Resource Conservation and Recovery Act. 42 U.S.C. §§ 6991-6991i.
Real Estate – all right, title and interest (whether as owner, lessor or lessee) of any Obligor in each parcel of real Property or any buildings, structures, parking areas or other improvements thereon and any fixtures relating thereto.
Recipient – DIP Agent, any Letter of Credit Issuer, any DIP Lender or any other recipient of proceeds of Collateral or a payment to be made by an Obligor on account of and for application to any Obligations.
Refinancing Conditions - the following conditions for Refinancing Debt: (i) it is in an aggregate principal amount that does not exceed the principal amount of the Debt being
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extended, renewed or refinanced plus the amount of premiums paid thereon and the fees and expenses incurred in connection therewith; (ii) it has a final maturity no sooner than, a weighted average life no less than, and an interest rate no greater than, the Debt being extended, renewed or refinanced; (iii) it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (iv) the representations, covenants and defaults applicable to it are more onerous or restrictive in any material respect for any Borrower, Subsidiary, or DIP Lenders than those applicable to the Debt being extended, renewed or refinanced; (v) no additional Lien is granted to secure it; (vi) no additional Person is obligated on such Debt; (vii) upon giving effect to it, no Default or Event of Default exists; and (viii) with respect to a refinancing of the Pre-Petition Term Loans, the representative(s) of the holders of such Debt shall have joined the Pre-Petition ABL/Term Loan Intercreditor Agreement in accordance with its terms or entered into an intercreditor agreement with DIP Agent on substantially similar terms as set forth in the Pre-Petition ABL/Term Loan Intercreditor Agreement.
Refinancing Debt - Money Borrowed that is the result of an extension, renewal or refinancing of Debt permitted under Section 9.2.9 of the Agreement; provided that each of the Refinancing Conditions has been satisfied.
Regulation D - Regulation D of the Board of Governors.
Rent and Charges Reserve - the aggregate of (i) all past due rent and other amounts owing by an Obligor to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker or other Person who possesses any Collateral or could assert a Lien on any Collateral; and (ii) a reserve of up to three months' rent and other charges that could be payable to any such Person as determined by DIP Agent, unless such Person has executed a Lien Waiver; provided that no reserve shall be established for any such rent or other charges payable by a Person who executed and delivered a Lien Waiver in connection with the Pre-Petition ABL Loan Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of ERISA, other than events for which the thirty (30) day notice period has been waived.
Required Consignee Documentation – with respect to any consignee, (i) a fully-executed copy of the current consignment agreement between the applicable Obligor and such consignee, (ii) a fully-executed consignment UCC filing authorization agreement in form and substance satisfactory to DIP Agent by and between the applicable Obligor and such consignee, (iii) satisfactory evidence that a UCC-1 financing statement naming such consignee as debtor, the applicable Obligor as secured party, and the Inventory subject to the respective consignment as the collateral, and in all respects satisfactory to DIP Agent in its discretion, has been filed in the proper filing office, (iv) evidence that a UCC-3 financing statement amendment has been filed with respect to the financing statement described in clause (iii) above, assigning the rights of the applicable Obligor, as secured party, to DIP Agent, (v) notice of the applicable Obligor’s interest, and DIP Agent’s security interest, in the consigned Inventory shall have been delivered to each Person with a perfected Lien in the Inventory of such consignee, and (vi) all other documents, instruments, certificates and agreements as DIP Agent may reasonably require with regard to such consignee.
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Required DIP Lenders – DIP Secured Parties holding more than 50% of (a) the aggregate outstanding Revolver Commitments; or (b) following termination of the Revolver Commitments, the aggregate outstanding Revolver Loans and Letter of Credit Outstandings or, if all Revolver Loans and Letter of Credit Outstandings have been Paid in Full, the aggregate remaining Obligations; provided, however, that (i) at any time there are two or more DIP Lenders, “Required DIP Lenders” must include at least two DIP Lenders (who are not Affiliates of one another) and (ii) Commitments, Revolver Loans and other Obligations held by a Defaulting DIP Lender and its Affiliates shall be disregarded in making such calculation, but any related Fronting Exposure shall be deemed held as a Revolver Loan or Letter of Credit Outstanding by such DIP Secured Party that funded the applicable Revolver Loan or issued the applicable Letter of Credit.
Restricted Investment - any Investment by a Borrower or Subsidiary, other than (i) Investments in Subsidiaries to the extent such Investments are in existence on the Closing Date and Investments in any Borrower or any Obligor; (ii) Cash Equivalents that are subject to DIP Agent’s Lien and control, pursuant to documentation in form and substance satisfactory to DIP Agent; (iii) loans and advances permitted under Section 9.2.11 of the Agreement; (iv) Investments in an aggregate amount not to exceed $500,000 in any Fiscal Year so long as both before and after giving effect to such Investment, no Default or Event of Default shall have occurred and be continuing; (v) Investments in wholly-owned Subsidiaries in an aggregate amount not to exceed $500,000 in any Fiscal Year so long as both before and after giving effect to such Investment, no Default or Event of Default shall have occurred and be continuing; and (vi) additional Investments in wholly-owned Subsidiaries consisting of obsolete, worn-out or surplus Equipment no longer used or usable in the business of any Borrower.
Restrictive Agreement - an agreement (other than any of the DIP Loan Documents) that, if and for so long as an Obligor or any Subsidiary of such Obligor is a party thereto, would prohibit, condition or restrict such Obligor’s or Subsidiary’s right to incur or repay Debt for Money Borrowed (including any of the Obligations); grant Liens upon any of such Obligor’s or Subsidiary’s assets (including Liens granted in favor of DIP Agent pursuant to the DIP Loan Documents); declare or make Distributions; amend, modify, extend or renew any agreement evidencing Debt for Money Borrowed (including any of the DIP Loan Documents); or repay any Debt owed to any Obligor.
Revolver Commitment - for any DIP Lender, its obligation to make Revolver Loans up to the maximum principal amount shown on Schedule 1.1 to the Agreement, or as hereafter determined pursuant to each Assignment and Acceptance to which it is a party.
Revolver Commitments - the aggregate amount of commitments of DIP Lenders hereunder.
Revolver Loan - a loan made by DIP Lenders (and each Base Rate Loan and LIBOR Loan comprising such Revolver Loan) as provided in Section 1.1 of the Agreement (including any Out of Formula Loan), a Protective Advance or a Settlement Loan funded solely by BofA.
Revolver Maturity Date – September 8, 2015, or such later date as DIP Agent and DIP Lenders may agree in writing in their discretion.
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Revolver Note - a note to be executed by Borrowers in favor of each DIP Lender in the form of Exhibit A attached hereto, which shall be in the face amount of such DIP Lender’s Revolver Commitment and which shall evidence all Revolver Loans made by such DIP Lender to Borrowers pursuant to the Agreement.
S&P - Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. and any successor thereto.
Sale – a sale of all or substantially all of Borrowers' assets pursuant to Section 363 of the Bankruptcy Code, pursuant to and in accordance with the Purchase Agreement and the Sale Order and upon terms and conditions satisfactory to DIP Agent, Pre-Petition ABL Agent, each DIP Lender and each Pre-Petition ABL Lender in their respective discretion, providing for and assuring payment of, among other terms, Full Payment of the Obligations and the Pre-Petition ABL Obligations.
Sale Benchmarks – shall mean each of the milestones or benchmarks set forth in subsections (i) through (iv) of Section 9.1.18 of the Agreement.
Sale Motion - a motion or motions filed by Borrowers with the Court under Section 363 of the Bankruptcy Code, in form and substance satisfactory to Borrowers, DIP Agent, Pre-Petition ABL Agent, each DIP Lender and each Pre-Petition ABL Lender in their respective discretion, seeking Court approval of the process for conducting the Sale and of the terms and conditions of the Sale.
Sale Order – as defined in Section 9.1.18(iii) of the Agreement.
Sale Procedures Order – as defined in Section 9.1.18(ii) of the Agreement.
Sanction - any international economic sanction administered or enforced by the United States Government (including OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority.
Schedule of Accounts - as defined in Section 7.2.1 of the Agreement.
SEC - Securities and Exchange Commission.
Security - shall have the same meaning as in Section 2(1) of the Securities Act of 1933.
Sellers – collectively, each of the Persons identified as a "Seller" in the Purchase Agreement.
Senior Officer - the chairman of the board of directors, the president, the chief executive officer, the chief financial officer, controller, or senior manager of treasury operations of, or in-house legal counsel to, a Borrower.
Settlement Date - as defined in Section 3.1.3(i) of the Agreement.
Settlement Loan - as defined in Section 3.1.3(ii) of the Agreement.
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Settlement Report - a report delivered by DIP Agent to DIP Lenders summarizing the amount of the outstanding Revolver Loans as of the Settlement Date and the calculation of the Borrowing Base as of such Settlement Date.
Solvent - as to any Person, such Person (i) owns Property whose fair saleable value is greater than the amount required to pay all of such Person’s Debts (including contingent Debts), (ii) is able to pay all of its Debts as such Debts mature, (iii) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage, (iv) such Person has not incurred and does not intend to incur, or believe that it will incur, debts including current obligations beyond its ability to pay such debts as they become due (whether at maturity or otherwise) and (v) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code.
Specified Account Debtor – each Account Debtor approved by DIP Agent and set forth on Schedule 2, provided that SRC may request in writing that Schedule 2 be supplemented to add an Account Debtor, and such Schedule shall be so updated upon the prior written consent of DIP Agent.
Specified Obligor - an Obligor that is not then an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 4.11 of the Agreement).
Subordinated Debt - Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to full payment of all Obligations, and is on terms (including maturity, interest, fees, repayment, covenants and subordination) satisfactory to DIP Agent.
Subsidiary - any Person in which more than 50% of its outstanding Voting Stock or more than 50% of all Equity Interests is owned directly or indirectly by a Borrower, by one or more other Subsidiaries of a Borrower, or by a Borrower and one or more other Subsidiaries.
Superpriority Claim - a claim against a Borrower in any of the Chapter 11 Cases which is an administrative expense claim having priority and right to payment over all other administrative expenses and unsecured claims against such Borrower of any kind or nature, whether now existing or hereafter arising, including all administrative expenses of the kind specified in or arising or ordered under Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 726, 1113 and 1114 of the Bankruptcy Code.
Swap Obligation - with respect to an Obligor, its obligations under a Hedge Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
Synthetic Lease - as applied to any Person, any lease (including leases that may be terminated by the lessee at any time) of any Property (a) that is not a capital lease in accordance with GAAP and (b) in respect of which the lessee retains or obtains ownership of the Property so leased for federal income tax purposes, other than any such lease under which that Person is the lessor.
Taxes - all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax, or penalties applicable thereto.
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Term DIP Agent - Silver Point Finance, LLC, and its successors and assigns.
Term DIP Facility - the credit facility established by Term DIP Agent and Term DIP Lenders in favor of SRC and Workflow in accordance with the Term DIP Loan Documents and pursuant to which the Delayed Draw Term DIP Loans are made available to Borrowers by Term DIP Lenders.
Term DIP Lenders - the financial institutions party to the Term DIP Loan Agreement from time to time as lenders and their respective successors and permitted assigns.
Term DIP Loan Agreement - that certain Super-Priority Priming Debtor In Possession Delayed Draw Term Loan Credit Agreement dated as of March 12, 2015, among Borrowers, Term DIP Agent and Term DIP Lenders, as at any time amended, modified, restated or supplemented.
Term DIP Loan Documents – the Term DIP Loan Agreement and any and all other agreements, instruments and documents heretofore, now or hereafter executed by any Borrower or any other Person and delivered to Term DIP Loan Agent or any Term DIP Loan Lender in respect of or in connection with the Term DIP Loan Agreement or with any transactions contemplated by or relating to the Term DIP Loan Agreement, as any of the foregoing may at any time or times be amended, modified, restated or supplemented.
Term DIP Obligations – the "Obligations" as such term is defined in the Term DIP Loan Agreement.
Term Loan Agents – the Pre-Petition Term Agents and the Term DIP Agent.
Term Loan Documents – means the Pre-Petition Term Loan Documents plus the Term DIP Loan Documents.
Term Loan Obligations – means the Pre-Petition Term Loan Obligations plus the Term DIP Obligations.
Term Loan Priority Collateral - as such term is defined in the Intercreditor Agreements.
Trademarks - all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos, or other source or business identifiers, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof.
Transferee - as defined in Section 13.3.3 of the Agreement.
Type - any type of a Revolver Loan determined with respect to the interest option applicable thereto, which shall be either a LIBOR Loan or a Base Rate Loan.
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UCC - the Uniform Commercial Code (or any successor statute) as adopted and in force in the State of Georgia or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code (or any successor statute) of such state.
Undocumented Invoice & Storage Accounts – all Invoice & Storage Accounts other than Documented Invoice & Storage Accounts.
Unused Commitments – on any date of calculation, the amount by which the Commitments exceed the Average Revolver Loan Balance for the applicable month.
Unused Commitments Fee Rate – a per annum rate equal to 0.50%.
Unused DIP Letter of Credit Subfacility – on any date, an amount equal to $10,000,000 minus the sum of (i) the aggregate undrawn amount of all outstanding Letters of Credit plus, without duplication, (ii) the aggregate unpaid reimbursement obligations oustanding on such date with respect to all Letters of Credit.
Upstream Payment - a Distribution by a Subsidiary of a Borrower to such Borrower or by any Borrower to SRC.
U.S. Borrowers – as defined in the Recitals.
U.S. Person - “United States Person” as defined in Section 7701(a)(30) of the Code.
U.S. Tax Compliance Certificate - as defined in Section 4.10.2(ii)(c) of the Agreement.
U.S. Trustee - the United States Trustee for the District of Delaware.
Value – (i) for Inventory, its value determined on the basis of the lower of cost or market, calculated on a first-in, first out basis, and excluding any portion of cost attributable to intercompany profit among U.S. Borrowers and their Affiliates; and (ii) for Accounts, the face amount of such Accounts, less any and all returns, rebates, discounts (which may, at DIP Agent’s option, be calculated on shortest terms), credits, allowances or Taxes (including sales, excise or other taxes) at any time issued, owing or claimed by Account Debtors, granted, outstanding or payable in connection with, or any interest accrued on the amount of, such Accounts at such date; provided, however, if any of such amounts reduced the amount of any Account in calculating its eligibility pursuant to the definition of “Eligible Accounts,” such amounts shall not be deducted again in determining the Value
Voting Power - with respect to any Person, the power ordinarily (without the occurrence of a contingency) to elect the members of the board of directors (or Persons performing similar functions) of such Person.
Voting Stock - Equity Interests of any class or classes of a corporation or other entity the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors or Persons performing similar functions.
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WorkflowOne – as defined in the recitals to the Agreement.
Accounting Terms. Unless otherwise specified herein, all terms of an accounting character used in the Agreement shall be interpreted, all accounting determinations under the Agreement shall be made, and all financial statements required to be delivered under the Agreement shall be prepared in accordance with GAAP, applied on a basis consistent with the most recent audited Consolidated financial statements of Borrowers and the Subsidiaries heretofore delivered to DIP Agent and DIP Lenders and using the same method for inventory valuation as used in such audited financial statements, except for any change required by GAAP or permitted under Section 9.2.4 of the Agreement.
Other Terms. All other terms contained in the Agreement shall have, when the context so indicates, the meanings provided for by the UCC to the extent the same are used or defined therein, including Account, Account Debtor, Chattel Paper, Electronic Chattel Paper, Commercial Tort Claim, Deposit Account, Document, General Intangible, Goods, Inventory, Equipment, Fixtures, Instrument, Investment Property, Letter-of-Credit Right, Supporting Obligation, and Proceeds.
Certain Matters of Construction. The terms “herein,” “hereof” and “hereunder” and other words of similar import refer to the Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.” The section titles, table of contents and list of exhibits appear as a matter of convenience only and shall not affect the interpretation of the Agreement. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations; to any of the DIP Loan Documents shall include any and all modifications thereto and any and all restatements, extensions or renewals thereof; to any Person shall mean and include the successors and permitted assigns of such Person; to “including” and “include” shall be understood to mean “including, without limitation” (and, for purposes of the Agreement and each other DIP Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters to matters similar to the matters specifically mentioned); or to the time of day shall mean the time of day on the day in question in Atlanta, Georgia, unless otherwise expressly provided in the Agreement. A Default or an Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing by DIP Agent pursuant to the Agreement or, in the case of a Default, is cured within any period of cure expressly provided in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by Required DIP Lenders. Whenever the phrase to the best of Borrowers’ Knowledge or words of similar import relating to the knowledge or awareness of Borrowers are used herein, such phrase shall mean and refer to Borrowers’ Knowledge as previously defined. The discretion of DIP Agent or any DIP Lender means the sole and absolute discretion of such Person. All calculations of Value, fundings of Revolver Loans, and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations made from time to time under the DIP Loan Documents shall be made in light of the circumstances existing at such time. Calculations used in preparing
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Borrowing Base Certificates shall be consistent with the methods of valuation and calculation employed in determining the Borrowing Base under (and as defined in) the Pre-Petition ABL Loan Agreement. Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by DIP Agent or any DIP Lender under any DIP Loan Document. No provision of any DIP Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.
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EXHIBIT A
FORM OF REVOLVER NOTE
U.S. $__________.__
_________ ___, 2015
FOR VALUE RECEIVED, each of the undersigned, THE STANDARD REGISTER COMPANY, an Ohio corporation (“SRC”), STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”), STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”), IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”), and STANDARD REGISTER OF PUERTO RICO INC., f/k/a WorkflowOne of Puerto Rico, Inc., a Delaware corporation (“SRPR”); STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holding”); STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”); STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”); STANDARD REGISTER HOLDINGS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR MX Holdings”); STANDARD REGISTER de MEXICO, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Mexico”); STANDARD REGISTER SERVICIOS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Servicios”, and together with SRC, SRI, SRT, iMed, SRPR, SR Holding, SR MX Holdco, SR Canada, SR MX Holdings, and SR Mexico, each a “Borrower” and collectively, “Borrowers”), hereby unconditionally promises to pay to _____________________ (herein, together with any registered assigns thereof, called the “Holder”) the principal sum of $_______________ or such lesser sum as may constitute Holder’s Pro Rata share of the outstanding principal amount of all Revolver Loans pursuant to the terms of the DIP Loan Agreement (as defined below) on the date on which such outstanding principal amounts become due and payable pursuant to Section 4.2 of the DIP Loan Agreement, in strict accordance with the terms thereof. Each Borrower likewise unconditionally promises to pay to Holder interest from and after the date hereof on Holders’ Pro Rata share of the outstanding principal amount of Revolver Loans at such interest rates, payable at such times, and computed in such manner as are specified in Sections 2.1 and 4.2 of the DIP Loan Agreement, in strict accordance with the terms thereof.
This Revolver Note (“Note”) is issued pursuant to, and is one of the “Revolver Notes” referred to in, the Post-Petition Loan and Security Agreement dated ______, 2015 (as the same may be amended from time to time, the “DIP Loan Agreement”), among Borrowers, Bank of America, N. A., as collateral and administrative agent (in such capacity, “DIP Agent”) for itself and the financial institutions from time to time parties thereto as lenders (“DIP Lenders”), and Holder is and shall be entitled to all benefits thereof and of all DIP Loan Documents executed and delivered in connection therewith. All capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to such terms in the DIP Loan Agreement.
The repayment of the principal balance of this Note is subject to the provisions of Section 4.2 of the DIP Loan Agreement. The entire unpaid principal balance and all accrued interest on this Note shall be due and payable immediately upon the termination of the Commitments as set forth in Section 5.2 of the DIP Loan Agreement.
All payments of principal and interest shall be made in Dollars in immediately available funds as specified in the DIP Loan Agreement.
Upon or after the occurrence of an Event of Default and for so long as such Event of Default exists, the principal balance and all accrued interest of this Note may be declared (or shall become) due and payable in the manner and with the effect provided in the DIP Loan Agreement, and the unpaid principal balance hereof shall bear interest at the Default Rate as and when provided in Section 2.1.5 of the DIP Loan Agreement. Each Borrower agrees to pay, and save Holder harmless against, any liability for the payment of, all costs and expenses, including, but not limited to, reasonable attorneys’ fees, if this Note is collected by or through an attorney-at-law.
All principal amounts of Revolver Loans made by Holder to U.S. Borrowers pursuant to the DIP Loan Agreement, and all accrued and unpaid interest thereon, shall be deemed outstanding under this Note and shall continue to be owing by Borrowers until paid in accordance with the terms of this Note and the DIP Loan Agreement.
In no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance or detention of money advanced hereunder exceed the highest lawful rate permissible under any law which a court of competent jurisdiction may deem applicable hereto; and, in the event of any such payment inadvertently paid by Borrowers or inadvertently received by Holder, such excess sum shall be, at Borrowers’ option, returned to Borrowers forthwith or credited as a payment of principal, but shall not be applied to the payment of interest. It is the intent hereof that Borrowers not pay or contract to pay, and that Holder not receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by Borrowers under Applicable Law.
Time is of the essence of this Note. To the fullest extent permitted by Applicable Law, each Borrower, for itself and its legal representatives, successors and assigns, expressly waives presentment, demand, protest, notice of dishonor, notice of non-payment, notice of maturity, notice of protest, presentment for the purpose of accelerating maturity, diligence in collection.
Wherever possible each provision of this Note shall be interpreted in such a manner as to be effective and valid under Applicable Law, but if any provision of this Note shall be prohibited or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or remaining provisions of this Note. No delay or failure on the part of Holder in the exercise of any right or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise by Holder of any right or remedy preclude any other right or remedy. Holder, at its option, may enforce its rights against any Collateral securing this Note without DIP Agent or Holder enforcing its rights against any Borrower, any Guarantor of the indebtedness evidenced hereby or any other property or indebtedness due or to become due to a Borrower. Each Borrower agrees that, without releasing or impairing such Borrower’s liability hereunder, Holder or DIP Agent may at any time release, surrender, substitute or exchange any Collateral securing this Note and may at any time release any party primarily or secondarily liable for the indebtedness evidenced by this Note.
The rights of Holder and obligations of Borrowers hereunder shall be construed in accordance with and governed by the laws (without giving effect to the conflict of law principles thereof) of the State of Georgia. This Note is intended to take effect as an instrument under seal under Georgia law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each Borrower has caused this Note to be executed under seal and delivered by its duly authorized officers on the date first above written.
BORROWERS:
THE STANDARD REGISTER COMPANY
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER INTERNATIONAL, INC.
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER TECHNOLOGIES, INC.
By: ___________________________________
Name: ________________________________
Title: _________________________________
IMEDCONSENT, LLC
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER OF PUERTO RICO INC., f/k/a WorkflowOne of Puerto Rico, Inc.
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER HOLDING COMPANY
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER TECHNOLOGIES CANADA ULC
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER MEXICO HOLDING COMPANY
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER HOLDINGS, S de R.L. de C.V.
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER de MEXICO, S de R.L. de C.V.
By: ___________________________________
Name: ________________________________
Title: _________________________________
STANDARD REGISTER SERVICIOS, S de R.L. de C.V.
By: ___________________________________
Name: ________________________________
Title: _________________________________
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date ______________, 2015
Bank of America, N.A., as Agent
___________________________
___________________________
Attention: __________________
Re:
Post-Petition Loan and Security Agreement dated _______, 2015, by and among THE STANDARD REGISTER COMPANY, an Ohio corporation (“SRC”), STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”), STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”), IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”), and STANDARD REGISTER OF PUERTO RICO INC., f/k/a WorkflowOne of Puerto Rico, Inc., a Delaware corporation (“SRPR”); STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holding”); STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”); STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”); STANDARD REGISTER HOLDINGS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR MX Holdings”); STANDARD REGISTER de MEXICO, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Mexico”); STANDARD REGISTER SERVICIOS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Servicios”, and together with SRC, SRI, SRT, iMed, SRPR, SR Holding, SR MX Holdco, SR Canada, SR MX Holdings, and SR Mexico, each a “Borrower” and collectively, “Borrowers”); Bank of America, N.A., as collateral and administrative agent for certain DIP Lenders from time to time parties thereto; and such DIP Lenders (as at any time amended, the “DIP Loan Agreement”)
Gentlemen:
This Notice of Conversion/Continuation is delivered to you pursuant to Section 2.1.2(ii) of the DIP Loan Agreement. Unless otherwise defined herein, capitalized terms used herein shall have the meanings attributable thereto in the DIP Loan Agreement. SRC, on behalf of U.S. Borrowers, hereby gives notice of its request as follows:
Check as applicable:
: A conversion of Revolver Loans from one Type to another, as follows:
(i)
The requested date of the proposed conversion is ______________, 2015 (the “Conversion Date”);
(ii)
The Type of Revolver Loans to be converted pursuant hereto are presently __________________ [select either LIBOR Loans or Base Rate Loans] in
the principal amount of $_____________ outstanding as of the Conversion Date;
(iii)
The portion of the aforesaid Revolver Loans to be converted on the Conversion Date is $_____________ (the “Conversion Amount”);
(iv)
The Conversion Amount is to be converted into a ____________ [select either a LIBOR Loan or a Base Rate Loan] (the “Converted Loan”) on the Conversion Date.
(v)
[In the event U.S. Borrower selects a LIBOR Loan:] U.S. Borrower hereby requests that the Interest Period for such Converted Loan be for a duration of _____ [insert length of Interest Period].
: A continuation of LIBOR Loans for new Interest Period, as follows:
(i)
The requested date of the proposed continuation is _______________, 2015 (the “Continuation Date”);
(ii)
The aggregate amount of the LIBOR Loans subject to such continuation is $__________________;
(iii)
The duration of the selected Interest Period for the LIBOR Loans which are the subject of such continuation is: _____________ [select duration of applicable Interest Period];
SRC, on behalf of itself and Borrowers, hereby ratifies and reaffirms all of its liabilities and obligations under the DIP Loan Documents and certifies that to Borrowers’ Knowledge no Default or Event of Default exists on the date hereof.
SRC, on behalf of itself and Borrowers, has caused this Notice of Conversion/Continuation to be executed and delivered by their duly authorized representative, this _______ day of ______________, 2015.
__________________________________
By: ___________________________________
Name: ________________________________
Title: _________________________________
EXHIBIT C
FORM OF NOTICE OF BORROWING
Date ______________, 2015
Bank of America, N.A., as Agent
____________________________
____________________________
Attention: ___________________
Re:
Post-Petition Loan and Security Agreement dated _______, 2015, by and among THE STANDARD REGISTER COMPANY, an Ohio corporation (“SRC”), STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”), STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”), IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”), and STANDARD REGISTER OF PUERTO RICO INC., f/k/a WorkflowOne of Puerto Rico, Inc., a Delaware corporation (“SRPR”); STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holding”); STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”); STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”); STANDARD REGISTER HOLDINGS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR MX Holdings”); STANDARD REGISTER de MEXICO, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Mexico”); STANDARD REGISTER SERVICIOS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Servicios”, and together with SRC, SRI, SRT, iMed, SRPR, SR Holding, SR MX Holdco, SR Canada, SR MX Holdings, and SR Mexico, each a “Borrower” and collectively, “Borrowers”); Bank of America, N.A., as collateral and administrative agent for certain DIP Lenders from time to time parties thereto; and such DIP Lenders (as at any time amended, the “DIP Loan Agreement”)
Gentlemen:
This Notice of Borrowing is delivered to you pursuant to Section 3.1.1(i) of the DIP Loan Agreement. Unless otherwise defined herein, capitalized terms used herein shall have the meanings attributable thereto in the DIP Loan Agreement. SRC, on behalf of itself and U.S. Borrowers, hereby requests a Revolver Loan in the aggregate principal amount of $______________, to be made on _____________, 2015.
Check as applicable:
: Base Rate Loans in the aggregate principal amount of $_____________
: LIBOR Loans in the aggregate principal amount of $___________, with Interest Periods as follows:
(i)
As to $_____________, an Interest Period of ______ month(s);
(ii)
As to $_____________, an Interest Period of ______ months;
(iii)
As to $_____________, an Interest Period of ______ months.
SRC, on behalf of itself and Borrowers, hereby (i) ratifies and reaffirms all of its liabilities and obligations under the DIP Loan Documents; (ii) certifies that all of the conditions applicable to the Revolver Loan requested herein as set forth in the DIP Loan Agreement have been satisfied as of the date hereof and will remain satisfied to the date of such Revolver Loan; (iii) represents that Borrowers are in compliance with the DIP Budget (with any Permitted Variances) and Borrowing Base and that the proceeds of such Revolver Loan shall be used solely pursuant to the DIP Budget and DIP Financing Orders (and not for any purpose prohibited under the DIP Loan Documents or the DIP Financing Orders), in each case, subject to any Permitted Variance; (iv) certifies that all representations and warranties of Borrowers in the DIP Loan Documents were true and correct in all material respects when made and continue to be true and correct in all material respects on the date hereof; (v) certifies that Borrowers are in compliance with all covenants under the DIP Loan Documents; and (vi) represents that there is no Default or Event of Default in existence at the time of, or after giving effect to the making of, the requested Revolver Loan.
SRC, on behalf of itself and Borrowers, has caused this Notice of Borrowing to be executed and delivered by their duly authorized representative, this ______ day of _____________, 2015.
THE STANDARD REGISTER COMPANY
By: __________________________________
Name: ________________________________
Title: _________________________________
EXHIBIT D
COMPLIANCE CERTIFICATE
[Letterhead of Borrower]
__________________, 2015
Bank of America, N.A., as Agent
_____________________________
_____________________________
Attention: ____________________
The undersigned, the chief financial officer of THE STANDARD REGISTER COMPANY, an Ohio corporation (“SRC”), gives this certificate to Bank of America, N.A. (“DIP Agent”) in accordance with the requirements of Section 9.1.4 of that certain Post-Petition Loan and Security Agreement dated _______, 2015, among SRC, STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”), STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”), IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”), and STANDARD REGISTER OF PUERTO RICO INC., f/k/a WorkflowOne of Puerto Rico, Inc., a Delaware corporation (“SRPR”); STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holding”); STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”); STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”); STANDARD REGISTER HOLDINGS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR MX Holdings”); STANDARD REGISTER de MEXICO, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Mexico”); STANDARD REGISTER SERVICIOS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Servicios”, and together with SRC, SRI, SRT, iMed, SRPR, SR Holding, SR MX Holdco, SR Canada, SR MX Holdings, and SR Mexico, each a “Borrower” and collectively, “Borrowers”); DIP Agent; and the DIP Lenders referenced therein (as at any time amended, the “DIP Loan Agreement”). Capitalized terms used in this Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the DIP Loan Agreement.
Based upon my review of the balance sheets and statements of income of SRC and its Subsidiaries for the [Fiscal Year] [Fiscal Quarter] [Fiscal Month] [quarterly period] ending __________________, 2015, copies of which are attached hereto, I hereby certify that, to Borrower’s Knowledge:
1.
No Default exists on the date hereof, other than: __________________ ________________________________________________ [if none, so state]; and
2.
No Event of Default exists on the date hereof, other than __________ ____________________________________________________ [if none, so state].
3.
Each Borrower is in compliance with the current DIP Budget, and all Revolver Loans have been and will be used solely in accordance with the DIP Budget, subject to Permitted Variances.
Very truly yours,
_______________________________
Chief Financial Officer
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated as of ______, 2015
Reference is made to the Post-Petition Loan and Security Agreement dated _______, 2015 (at any time amended, the “DIP Loan Agreement”), among THE STANDARD REGISTER COMPANY, an Ohio corporation (“SRC”), STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”), STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”), IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”), and STANDARD REGISTER OF PUERTO RICO INC., f/k/a WorkflowOne of Puerto Rico, Inc., a Delaware corporation (“SRPR”); STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holding”); STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”); STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”); STANDARD REGISTER HOLDINGS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR MX Holdings”); STANDARD REGISTER de MEXICO, S de R.L. de C.V. , a limited liability company organized under the laws of Mexico (“SR Mexico”); STANDARD REGISTER SERVICIOS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Servicios”, and together with SRC, SRI, SRT, iMed, SRPR, SR Holding, SR MX Holdco, SR Canada, SR MX Holdings, and SR Mexico, each a “Borrower” and collectively, “Borrowers”); BANK OF AMERICA, N.A., in its capacity as collateral and administrative agent (“DIP Agent”) for the financial institutions from time to time party to the DIP Loan Agreement (“DIP Lenders”); and such DIP Lenders. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the DIP Loan Agreement.
______________________________________ (“Assignor”) and ______________________________________ (“Assignee”) agree as follows:
1.
Assignor hereby irrevocably sells and assigns to Assignee and Assignee hereby irrevocably purchases and assumes from Assignor (a) a principal amount of $________ of Assignor’s outstanding Revolver Loans and $___________ of Assignor’s participations in Letter of Credit Outstandings and (b) the amount of $__________ of Assignor’s Revolver Commitment (which represents ____% of the total Revolver Commitments), together with (x) all of Assignor’s rights and obligations in its capacity as a DIP Lender under the DIP Loan Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified above of all of such outstanding rights and obligations of Assignor thereunder (including, without limitation, the Letters of Credit) and (y) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of Assignor (in its capacity as a DIP Lender) against any Person, whether known or unknown, arising under or in connection with the DIP Loan Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (x) above (all of the foregoing items
being, collectively, the “Assigned Interest”). This Assignment and Acceptance shall be effective as of the date (“Effective Date”) indicated in the corresponding Assignment Notice delivered to DIP Agent, provided such Assignment Notice is executed by Assignor, Assignee, DIP Agent and SRC, if applicable. From and after the Effective Date, Assignee hereby expressly assumes, and undertakes to perform, all of Assignor’s obligations in respect of the Assigned Interest, and all principal, interest, fees and other amounts which would otherwise be payable to or for Assignor’s account in respect of the Assigned Interest shall be payable to or for Assignee’s account, to the extent such amounts accrue on or after the Effective Date. Each such sale and assignment is without recourse to Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by Assignor.
2.
Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby; and (b) except as set forth herein, assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the DIP Loan Agreement or any other DIP Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the DIP Loan Documents or any collateral thereunder, (iii) the financial condition of any Borrower, any of their Subsidiaries or Affiliates or any other Person obligated in respect of any DIP Loan Document or (iv) the performance or observance by Borrowers, any of their Subsidiaries or Affiliates or any other Person of any of their respective obligations under any DIP Loan Document. [Assignor is attaching the Note[s] held by it and requests that DIP Agent exchange such Note[s] for new Notes payable to Assignee [and Assignor].]
3.
Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a DIP Lender under the DIP Loan Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the DIP Loan Agreement as a DIP Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a DIP Lender thereunder, (iii) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type; (b) confirms that it has received copies of the DIP Loan Agreement and such other DIP Loan Documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and purchase the Assigned Interest; (c) agrees that it has and shall, independently and without reliance upon Assignor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions to enter into this Assignment and Acceptance and purchase the Assigned Interest and in taking or not taking action under the DIP Loan Documents; (d) confirms that it is an Eligible Assignee; (e) appoints and authorizes DIP Agent to take such action as agent on its behalf and to exercise such powers under the DIP Loan Agreement as are delegated to DIP Agent by the terms thereof, together with such powers as are incidental thereto; (f) agrees that it will observe and perform all obligations that are required to be performed by it as a “DIP Lender” under the DIP Loan Documents; and
(g) represents and warrants that the assignment evidenced hereby will not result in a non-exempt “prohibited transaction” under Section 406 of ERISA.
4.
From and after the Effective Date, DIP Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
5.
This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be governed by the laws of the State of Georgia. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity, and the remaining provisions of this Assignment and Acceptance shall remain in full force and effect.
6.
Each notice or other communication hereunder shall be in writing, shall be sent by messenger, by telecopy or facsimile transmission or by first-class mail, shall be deemed given when sent and shall be sent as follows:
(a)
If to Assignee, to the following address (or to such other address as Assignee may designate from time to time):
__________________________
__________________________
__________________________
(b)
If to Assignor, to the following address (or to such other address as Assignor may designate from time to time):
__________________________
__________________________
__________________________
__________________________
Payments hereunder shall be made by wire transfer of immediately available Dollars as follows:
If to Assignee, to the following account (or to such other account as Assignee may designate from time to time):
__________________________
ABA No.___________________
__________________________
Account No.________________
Reference: ______________________
If to Assignor, to the following account (or to such other account as Assignor may designate from time to time):
__________________________
__________________________
__________________________
ABA No.___________________
For Account of:________________
Reference: ______________________
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed and delivered by their respective duly authorized officers, as of the date first above written.
___________________________
(“Assignor”)
By: ______________________________________
Title: ____________________________________
___________________________
(“Assignee”)
By: ______________________________________
Title: _____________________________________
EXHIBIT F
FORM OF NOTICE OF ASSIGNMENT
Reference is made to (i) the Post-Petition Loan and Security Agreement dated ________, 2015 (as at any time amended, the “DIP Loan Agreement”) among THE STANDARD REGISTER COMPANY, an Ohio corporation (“SRC”), STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”), STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”), IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”), and STANDARD REGISTER OF PUERTO RICO INC., f/k/a WorkflowOne of Puerto Rico, Inc., a Delaware corporation (“SRPR”); STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holding”); STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”); STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”); STANDARD REGISTER HOLDINGS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR MX Holdings”); STANDARD REGISTER de MEXICO, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Mexico”); STANDARD REGISTER SERVICIOS, S de R.L. de C.V., a limited liability company organized under the laws of Mexico (“SR Servicios”, and together with SRC, SRI, SRT, iMed, SRPR, SR Holding, SR MX Holdco, SR Canada, SR MX Holdings, and SR Mexico, each a “Borrower” and collectively, “Borrowers”); BANK OF AMERICA, N.A. in its capacity as collateral and administrative agent (“DIP Agent”) for the financial institutions from time to time party to the DIP Loan Agreement (“DIP Lenders”); and such DIP Lenders, and (ii) the Assignment and Acceptance dated as of ____________, 2015 (the “Assignment Agreement”) between __________________ (“Assignor”) and ____________________ (“Assignee”). Except as otherwise defined herein, capitalized terms used herein which are defined in the DIP Loan Agreement are used herein with the respective meanings specified therein.
Assignor hereby notifies Borrowers and DIP Agent of Assignor’s intent to assign to Assignee pursuant to the Assignment Agreement (a) a principal amount of $________ of Assignor’s outstanding Revolver Loans and $___________ of Assignor’s participations in Letter of Credit Outstandings, and (b) the amount of $__________ of Assignor’s Revolver Commitment (which represents ____% of the total Revolver Commitments) (the foregoing items being, collectively, the “Assigned Interest”), together with an interest in the DIP Loan Documents corresponding to the Assigned Interest. The Assignment Agreement shall be effective as of the date (“Effective Date”) indicated below, provided this Assignment Notice is executed by Assignor, Assignee, DIP Agent and SRC, if applicable. Pursuant to the Assignment Agreement, Assignee has expressly assumed all of Assignor’s obligations under the DIP Loan Agreement and the other DIP Loan Documents to the extent of the Assigned Interest, as of the Effective Date.
For purposes of the DIP Loan Agreement, DIP Agent shall deem Assignor’s share of the Revolver Commitment to be reduced by $_________ and $__________, respectively, and Assignee’s share of the Revolver Commitment to be increased by $_________.
The address of the Assignee to which notices, information and payments are to be sent under the terms of the DIP Loan Agreement is:
________________________
________________________
________________________
________________________
Assignee’s LIBOR Lending Office address is as follows:
________________________
________________________
________________________
________________________
This Notice is being delivered to Borrowers and DIP Agent pursuant to Section 13.3 of the DIP Loan Agreement. Please acknowledge your receipt of this Notice by executing and returning to Assignee and Assignor a copy of this Notice.
IN WITNESS WHEREOF, the undersigned have caused the execution of this Notice, as of _________________, 2015.
___________________________
(“Assignor”)
By: ______________________________________
Title: ____________________________________
___________________________
(“Assignee”)
By: ______________________________________
Title: ____________________________________
ACKNOWLEDGED AND AGREED TO
AS OF THE DATE SET FORTH ABOVE:
BORROWERS:*
THE STANDARD REGISTER COMPANY
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER INTERNATIONAL, INC.
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER TECHNOLOGIES, INC.
By: __________________________________
Name: _______________________________
Title: ________________________________
IMEDCONSENT, LLC
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER OF PUERTO RICO INC.,
f/k/a WorkflowOne of Puerto Rico, Inc.
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER HOLDING COMPANY
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER TECHNOLOGIES CANADA ULC
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER MEXICO HOLDING COMPANY
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER HOLDINGS, S de R.L. de C.V.
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER de MEXICO, S de R.L. de C.V.
By: __________________________________
Name: _______________________________
Title: ________________________________
STANDARD REGISTER SERVICIOS, S de R.L. de C.V.
By: __________________________________
Name: _______________________________
Title: ________________________________
* No signature required by a Borrower when a Default or an Event of Default exists.
BANK OF AMERICA, N.A.,as DIP Agent
By: __________________________________
Name: _______________________________
Title: ________________________________
EXHIBIT G
LETTER OF CREDIT APPLICATION FORM
EXHIBIT H
FISCAL CALENDAR
In 2015, each Borrower’s fiscal calendar began on Wednesday, December 28, 2014, with the closing of each fiscal month, quarter and year determined as follows:
A.
Fiscal Month - Each fiscal month of each Borrower consists of a four-week period, with each third month consisting of five weeks. Thus, March, June, September and December contain five weeks, while the remaining months contain four weeks. The closing of the fiscal month occurs on the last Sunday of each four-week or five-week period.
B.
Fiscal Quarter - Each fiscal quarter of each Borrower consists of a thirteen-week period. The closing of the fiscal quarter occurs on the last Sunday of each thirteen-week period.
C.
Fiscal Year – Each Borrower’s fiscal year consists of a 52-week period. The fiscal year of each Borrower closes on the last Sunday of the 52-week period. Every several years, the fiscal year will include fifty-three (53) weeks so the fiscal year-end remains within one week of the calendar year end. In such years, the fiscal months of November and December will both include five weeks.
See the attached “2015 Sales/Fiscal Calendar” for the corresponding dates included within each fiscal period of 2015.
EXHIBIT I
BORROWING BASE CERTIFICATE
Schedule 1.1
COMMITMENTS
AND APPLICABLE PERCENTAGES
Lender | Commitment | Applicable Commitment Percentage |
Bank of America, N.A. | $ 75,000,000.00 | 60.000000000% |
Wells Fargo Bank, National Association | $ 50,000,000.00 | 40.000000000% |
Total | $125,000,000.00 | 100.000000000% |
Schedule 1.2.1
EXISTING LETTERS OF CREDIT
Borrower | L/C No. | Face Amount | Expiration | Beneficiary |
SRC | xxx5736 | $2,240,000.00 | 08/01/15 | Liberty Mutual Insurance Company |
SRC | xxx9821 | $279,000.00 | 02/14/16 | Ohio Bureau of Workers |
SRC | xxx4946 | $500,000.00 | 07/01/15 | The Travelers Indemnity Company |
SRC | xxxx2868 | $165,072.00 | 08/31/15 | Deutsche Bank Mexico S.A. |
SRC | xxxx3773 | $386,437.50 | 12/31/15 | The Cincinnati Insurance Company |
Total: | $3,570,509.50 |
Schedule 7.1.1
Location of Inventory
[to be added]
Schedule 8.1.4
Capital Structure of Borrowers
[To be added]
Schedule 8.1.5
Corporate Names of Borrowers
[To be added]
Schedule 8.1.6
Chief Executive Office/Service of Process Agents
[To be added]
Schedule 8.1.12
Tax Identification Numbers of Borrowers and Subsidiaries
[To be added]
Schedule 8.1.21
Pension Plans
[To be added]
Schedule 8.1.23
Labor Contracts
[To be added]
Schedule 9.1.21
POST-CLOSING COVENANTS
At any time following the Closing, each of Borrowers shall, promptly upon the request of DIP Agent, do the following:
1.
With respect to any parcel of Real Estate of such Borrower:
(a)
Execute and deliver to DIP Agent, in form and substance satisfactory to DIP Agent, a new Mortgage or an amendment to an existing Mortgage, which mortgage or amendment shall be duly recorded, at Borrowers' expense, in each office where such recording is required to constitute a fully perfected Lien on the Real Estate covered thereby;
(b)
Assist and cooperate with DIP Agent in obtaining, in DIP Agent's discretion, a mortgagee’s title insurance policy or an endorsement to an existing policy in favor of DIP Agent for the benefit of DIP Secured Parties in an amount and in form and substance as shall be customary for similar properties, with respect to such Real Estate and, if any, other property purported to be covered by such Mortgage or amendment, insuring that title to such property is marketable and that the interests created by such Mortgage constitute valid Liens thereon free and clear of all defects and encumbrances (other than Liens in favor of Pre-Petition Term Agents and Term DIP Agent pursuant to the Pre-Petition Term Loan Documents and the Term DIP Loan Documents);
(c)
Provide opinions addressed to DIP Agent and all DIP Lenders from local real estate counsel to Borrowers in the jurisdictions where such Real Estate is located; and
(d)
Provide a life-of-loan flood hazard determination and, if such Real Estate is located in a special flood hazard area, an acknowledged notice to Borrowers and flood insurance by an insurer acceptable to DIP Agent.
2.
Seek to obtain duly executed Lien Waivers.
3.
Obtain a duly executed security agreement, in form and substance satisfactory to DIP Agent, from each of SR MX Holdings, SR Mexico, and SR Servicios, granting DIP Agent, for its benefit and the benefit of all DIP Secured Parties, Liens upon all of the assets of SR MX Holdings, SR Mexico, and SR Servicios.
4.
Assist and cooperate with DIP Agent in obtaining (i) a deposit account control agreement, in form and substance satisfactory to DIP Agent, with respect to each Deposit Account (including Dominion Accounts), other than Excluded Deposit Accounts, in which any Borrower deposits any proceeds of Collateral, duly executed by such Borrower and the applicable depositary bank, or (ii) in the case of each existing deposit account control agreement
in favor of Pre-Petition ABL Agent, an amendment thereto duly executed by the applicable Borrower and the applicable depositary bank, in form and substance satisfactory to Pre-Petition ABL Agent and DIP Agent.
Schedule 14.9
DIP LENDER ADDRESSES
Bank of America, N.A.
300 Galleria Parkway, Suite 800
Atlanta, GA 30339
Attention: Andrew Doherty or current account manger
Fax No.: (404) 607-3277
Wells Fargo Bank, National Association
2450 Colorado Ave., Suite 3000
West Santa Monica, CA 90404
Attention: Syndicated Finance Division Manager
Execution Version
SUPER-PRIORITY PRIMING DEBTOR IN POSSESSION DELAYED DRAW TERM LOAN CREDIT AGREEMENT,
dated as of March 12, 2015,
among
THE STANDARD REGISTER COMPANY,
STANDARD REGISTER INTERNATIONAL, INC.,
STANDARD REGISTER TECHNOLOGIES, INC.,
IMEDCONSENT, LLC,
STANDARD REGISTER OF PUERTO RICO INC.,
STANDARD REGISTER HOLDING COMPANY,STANDARD REGISTER TECHNOLOGIES CANADA ULC,
STANDARD REGISTER MEXICO HOLDING COMPANY,
STANDARD REGISTER HOLDING, S. de R.L. de C.V.
STANDARD REGISTER de MEXICO, S. de R.L. de C.V.
STANDARD REGISTER SERVICIOS, S. de R.L. de C.V.
as Borrowers,
THE SUBSIDIARY GUARANTORS FROM TIME TO TIME PARTIES HERETO,as the Subsidiary Guarantors,
VARIOUS FINANCIAL INSTITUTIONS AND OTHER PERSONS FROM TIME TO TIMEPARTIES HERETO,as the Lenders,
and
SILVER POINT FINANCE, LLC, as the Administrative Agent and the Collateral Agent.
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS
2
1.1
Defined Terms
2
1.2
Use of Defined Terms
32
1.3
Cross-References
32
1.4
Accounting and Financial Determinations
32
ARTICLE 2 LOANS, CLOSING RATE AND NOTES
32
2.1
Loans
32
2.2
Loan Rate
32
2.3
Continuation and Conversion Elections
33
2.4
Funding
33
2.5
Register; Notes
33
ARTICLE 3 REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
34
3.1
Repayments and Prepayments; Application
34
3.2
Interest Provisions
36
3.3
Fees
37
3.4
Nature of Obligations
38
ARTICLE 4 CERTAIN LIBO RATE AND OTHER PROVISIONS
39
4.1
LIBO Rate Lending Unlawful
39
4.2
Deposits Unavailable
39
4.3
Increased LIBO Rate Loan Costs, etc
40
4.4
Funding Losses
40
4.5
Increased Capital Costs
40
4.6
Taxes
41
4.7
Payments, Computations; Proceeds of Collateral, etc
44
4.8
Sharing of Payments
45
4.9
Setoff
45
4.10
Replacement of Lenders
46
4.11
Change in Lending Office
46
ARTICLE 5 CONDITIONS TO LOANS
47
5.1
Conditions to Close
47
5.2
Conditions to Each Loan
50
ARTICLE 6 REPRESENTATIONS AND WARRANTIES
52
6.1
Organization and Qualification
52
6.2
Power and Authority
52
6.3
Legally Enforceable Agreement
53
6.4
Capital Structure
53
6.5
Reserved
53
6.6
Business Locations; Agent for Process
53
6.7
Status of Obligations; Perfection and Priority of Security Interests
53
6.8
Financial Information
54
6.9
Brokers
54
6.10
Governmental Approvals
54
6.11
Compliance with Applicable Laws
54
6.12
Litigation
54
6.13
No Defaults
55
6.14
Investment Company Act
55
6.15
Margin Stock
55
6.16
Reserved
55
6.17
Use of Proceeds
55
ARTICLE 7 COVENANTS
56
7.1
Affirmative Covenants
56
7.2
Negative Covenants
64
ARTICLE 8 EVENTS OF DEFAULT
68
8.1
Listing of Events of Default
68
8.2
[Reserved]
73
8.3
Action if Event of Default
73
ARTICLE 9 THE ADMINISTRATIVE AGENT
73
9.1
Actions
73
9.2
Exculpation
74
9.3
Successor
76
9.4
Loans by the Administrative Agent
77
9.5
Credit Decisions
77
9.6
Copies, etc
77
9.7
Reliance by Administrative Agent
77
9.8
Defaults
78
9.9
Posting of Approved Electronic Communications
78
9.10
Proofs of Claim
79
9.11
Intercreditor Agreements
80
ARTICLE 10 MISCELLANEOUS PROVISIONS
80
10.1
Waivers, Amendments, etc
80
10.2
Notices; Time
81
10.3
Payment of Costs and Expenses
82
10.4
Indemnification
82
10.5
Survival
83
10.6
Severability
83
10.7
Headings
84
10.8
Execution in Counterparts, Effectiveness, etc
84
10.9
Governing Law; Entire Agreement
84
10.10
Successors and Assigns
84
10.11
Sale and Transfer of Loans; Participations in Loans; Notes
84
10.12
Other Transactions
87
10.13
Forum Selection and Consent to Jurisdiction
88
10.14
Waiver of Jury Trial
88
10.15
Confidentiality
88
10.16
Counsel Representation
90
10.17
Patriot Act
90
10.18
Authorization of Administrative Agent
90
10.19
Releases
90
10.20
Pre-Petition Term Loan Facility
91
ARTICLE 11 CERTAIN COLLATERAL ADMINISTRATION
92
11.1
Insurance of Collateral; Condemnation Proceeds
92
11.2
Protection of Collateral
93
11.3
Defense of Title to Collateral
93
SCHEDULE I
-
Disclosure Schedule
SCHEDULE II-
Percentages and Amounts; LIBOR Office; Domestic Office
SCHEDULE III-
Term Loan Commitments
SCHEDULE IV-
Post Closing Obligations
EXHIBIT A
-
Form of Note
EXHIBIT A-1
Closing Date Budget
EXHIBIT B
-
Form of Continuation/Conversion Notice
EXHIBIT C
-
Form of Lender Assignment Agreement
EXHIBIT D
-
Form of Compliance Certificate
EXHIBIT E
-
Reserved
EXHIBIT F
-
Form of Pledge and Security Agreement
EXHIBIT G
-
[Reserved]
EXHIBIT H
-
Form of Interim Financing Order
EXHIBIT I
-
[Reserved]
EXHIBIT J
-
Initial 13 Week Profession Fee Budget
SUPER-PRIORITY PRIMING DEBTOR IN POSSESSION DELAYED DRAW TERM LOAN
CREDIT AGREEMENT
THIS SUPER-PRIORITY PRIMING DEBTOR IN POSSESSION DELAYED DRAW TERM LOAN CREDIT AGREEMENT, dated as of March 12, 2015 (this “Agreement”), is by and among THE STANDARD REGISTER COMPANY, an Ohio corporation and a debtor and debtor-in-possession under chapter 11 of the Bankruptcy Code, with its chief executive office and principal place of business at 600 Albany Street, Dayton, Ohio 45417 (“Standard Register”), STANDARD REGISTER INTERNATIONAL, INC., an Ohio corporation (“SRI”), STANDARD REGISTER TECHNOLOGIES, INC., an Ohio corporation (“SRT”), IMEDCONSENT, LLC, a Delaware limited liability company (“iMed”), STANDARD REGISTER HOLDING COMPANY, an Ohio corporation (“SR Holdings”), STANDARD REGISTER OF PUERTO RICO INC., a Delaware corporation (“SR Puerto Rico”), STANDARD REGISTER MEXICO HOLDING COMPANY, an Ohio corporation (“SR MX Holdco”), STANDARD REGISTER TECHNOLOGIES CANADA ULC, an unlimited company organized under the laws of Nova Scotia (“SR Canada”), STANDARD REGISTER HOLDING, S. de R.L. de C.V., a sociedad de responsabilidad limitada de capital variable, incorporated under the laws of Mexico (“SR MX Holdings”), STANDARD REGISTER de MEXICO, S. de R.L. de C.V., a sociedad de responsabilidad limitada de capital variable, incorporated under the laws of Mexico (“SR Mexico”), STANDARD REGISTER SERVICIOS, S. de R.L. de C.V., a sociedad de responsabilidad limitada de capital variable, incorporated under the laws of Mexico (“SR Servicios”; each of the foregoing, a debtor and debtor-in-possession under chapter 11 of the Bankruptcy Code, a “Borrower” and collectively, jointly and severally, the “Borrowers”), together with any Subsidiaries of the Borrowers who become a party hereto as Subsidiary Guarantors (the “Subsidiary Guarantors”, and collectively with the Borrowers, the “Credit Parties”), the various financial institutions and other Persons from time to time parties hereto and listed on the signature pages hereto and their respective successors and assigns and permitted assigns which become “Lenders” as provided herein (the “Lenders”), and SILVER POINT FINANCE, LLC, as the administrative agent (in such capacity, the “Administrative Agent”), and as the collateral agent (in such capacity, the “Collateral Agent”), for the Lenders. Capitalized terms not otherwise defined are used as defined in Section 1.1 hereof.
W I T N E S S E T H:
WHEREAS, On March 12, 2015 (the “Petition Date”), the Borrowers filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (such court, together with any other court having competent jurisdiction over the Cases from time to time, the “Bankruptcy Court”) and commenced cases numbered [____], [___], [___], [___], [___], [___], [___], [___], [___] and [____] respectively (each, a “Case,” and, collectively, the “Cases”), and have continued in the possession and operation of their assets and in the management of their businesses pursuant to sections 1107 and 1108 of the Bankruptcy Code (in such capacities, collectively, the “Debtors”);
WHEREAS, the Debtors are parties to that certain Amended and Restated Loan and Security Agreement dated August 1, 2013 (as amended, supplemented or otherwise modified through the Closing Date, the “Prepetition ABL Credit Agreement”) by and among, inter alia, Standard Register, the subsidiary guarantors a party thereto, Bank of America, N.A., as
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administrative agent thereunder and the lenders thereunder (the “Prepetition Revolving Lenders”) pursuant to which the Prepetition Revolving Lenders provided Revolver Loans (as defined therein) and other financial accommodations to the Debtors;
WHEREAS, concurrently herewith on the Closing Date and in connection with the Cases, the Debtors are obtaining a senior secured super priority debtor in possession asset based revolving credit facility in the maximum committed amount of $125,000,000 (as more particularly described below, the “ABL DIP Facility”) from the Prepetition Revolving Lenders, the proceeds of which will be used by Borrowers (i) to fund working capital and other general corporate expenses (including the administration of the Cases) in accordance with the Budget (subject to Permitted Variances), and (ii) to refund and repay the outstanding Obligations under and as defined in the Prepetition ABL Credit Agreement upon entry by the Bankruptcy Court of the Final Financing Order;
WHEREAS, the Borrowers desire to obtain term loans from time to time during the term of this Agreement in order (i) to fund working capital and other general corporate expenses (including the administration of the Cases) in accordance with the Budget (subject to Permitted Variances) if and to the extent of insufficient availability under the ABL DIP Credit Facility, and (ii) to pay certain fees, administrative costs and expenses incurred in connection with the Cases and the debtor-in-possession financing contemplated hereunder (including those of the Administrative Agent and Lenders and their counsel and financial advisors (if any));
WHEREAS, the Borrowers have requested that the Lenders provide a term loan credit facility for the purposes described above, and the Lenders are willing to do so on the terms and conditions set forth herein;
WHEREAS, the parties are, concurrently herewith entering into the ABL-TL DIP Intercreditor Agreement which shall govern the relative rights and priority of Liens securing each of the ABL DIP Facility and this Facility;
WHEREAS, the Borrowers, are affiliated and engaged in interrelated businesses, and each Borrower will derive substantial direct and indirect benefit from extensions of credit pursuant to this Agreement;
NOW, THEREFORE, the parties hereto agree as follows.
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
1.1
Defined Terms. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):
“ABL Administrative Agent” means Bank of America, N.A., in its capacity as administrative agent under the ABL DIP Facility or such other administrative agent designated as such from time to time under the ABL DIP Credit Agreement.
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“ABL Availability” means on any date, the principal amount of Revolver Loans (as defined in the ABL DIP Credit Agreement) that the Borrowers and their Subsidiaries are entitled to borrow on such date under the ABL DIP Credit Agreement.
“ABL Bank Product Obligations” has the meaning ascribed to the term “Bank Product Obligations” (or such corresponding term) in the ABL DIP Credit Agreement.
“ABL DIP Credit Agreement” means that certain Post Petition Loan and Security Agreement dated as of the Closing Date by and among the Borrowers, the ABL Lenders party thereto and Bank of America, N.A., as administrative agent, as such agreement may, in accordance herewith and the ABL-TL DIP Intercreditor Agreement be amended, supplemented, waived or otherwise modified from time to time.
“ABL DIP Documents” has the meaning ascribed to the term “Loan Documents” (or such corresponding term) as defined in the ABL DIP Credit Agreement, as the same may be amended, restated, supplemented, waived, otherwise modified, extended, renewed, refinanced or replaced from time to time in accordance with the terms of the ABL-TL DIP Intercreditor Agreement and the Financing Orders.
“ABL DIP Facility” is defined in the recitals and means the collective reference to the ABL DIP Credit Agreement and the other ABL DIP Documents, and any amendments, supplements, modifications, extensions, renewals or restatements thereof (in each case, in accordance with the ABL-TL DIP Intercreditor Agreement and the Financing Orders), together with the ABL Revolving Loans and other financial accommodations made pursuant thereto or in connection therewith and the Liens created thereby and the other provisions contained therein.
“ABL Lender” has the meaning ascribed to the term “Lender” (or such corresponding term) as defined under the ABL DIP Credit Agreement.
“ABL Letters of Credit” has the meaning ascribed to the term “Letter of Credit” (or such corresponding term) as defined under the ABL DIP Credit Agreement.
“ABL Loans” means “Revolver Loans” as defined in the ABL DIP Credit Agreement.
“ABL Obligations” has the meaning ascribed to the term “Obligations” (or such corresponding term) as defined in the ABL DIP Credit Agreement.
“ABL Priority Collateral” has the meaning set forth in the ABL-TL DIP Intercreditor Agreement.
“ABL-TL DIP Intercreditor Agreement” means that certain Intercreditor Agreement, dated the date hereof, executed and delivered by the Administrative Agent, the Second Lien Administrative Agent, the ABL Administrative Agent and the Credit Parties, pursuant to the terms of this Agreement, as amended, restated, supplemented, amended and restated, replaced or otherwise modified from time to time.
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“Acquisition” means the acquisition by the Purchaser of all or substantially all of the Borrowers’ assets and properties pursuant to and in accordance with the Purchase Agreement and the Sale Order.
“Additional Mortgage” means each mortgage, deed of hypothec, debenture, pledge, deed of trust or agreement executed and delivered by any Credit Party in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the requirements of this Agreement in form and substance satisfactory to the Administrative Agent, under which a Lien is granted on the real property and fixtures described therein, in each case as amended, supplemented, amended and restated or otherwise modified from time to time.
“Adjusted Net Earnings” means, with respect to any fiscal period, the consolidated net income (or loss) for such fiscal period of the Borrowers, all as reflected on the financial statement of Standard Register supplied to the Lenders pursuant to Section 7.1.3 hereof, but excluding:
(i)
any income or loss arising from the sale of capital assets outside the Ordinary Course of Business;
(ii)
any income arising from any write-up of assets during such period;
(iii)
income or loss of any Subsidiary accrued prior to the date it became a Subsidiary;
(iv)
income or loss of any Person, substantially all the assets of which have been acquired in any manner by a Borrower, realized by such Person prior to the date of such acquisition;
(v)
income or loss of any entity (other than a Subsidiary Guarantor of a Borrower) in which such Borrower has an ownership interest unless such income has actually been received by such Borrower in the form of cash Distributions;
(vi)
any portion of the income of any Subsidiary which for any reason is unavailable for payment of Distributions to a Borrower or a Subsidiary Guarantor; and
(vii)
any income or loss arising from extraordinary items, all as determined in accordance with GAAP.
Notwithstanding the foregoing, for purposes of calculating Adjusted Net Earnings, Inventory shall be accounted for on a first in, first out basis.
“Administrative Agent” is defined in the preamble and includes each other Person appointed as the successor Administrative Agent pursuant to Section 9.3.
“Affected Lender” is defined in Section 4.10.
“Affiliate” of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person. “Control” of a Person means the power, directly or indirectly,
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(a)
to vote 10% or more of the Capital Securities (on a fully diluted basis) of such Person having ordinary voting power for the election of directors, managing members or general partners (as applicable); or
(b)
to direct or cause the direction of the management and policies of such Person (whether by contract or otherwise).
“Agreement” means, on any date, this Super-Priority Priming Debtor In Possession Delayed Draw Term Loan Credit Agreement as originally in effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified from time to time and in effect on such date.
“Alternate Base Rate” means, on any date and with respect to all Base Rate Loans, a fluctuating rate of interest per annum (rounded upward, if necessary, to the next highest 1/16 of 1%) equal to the higher of
(a)
the greater of (I) 1.50% per annum and (II) the greater of (x) the Base Rate in effect on such day and (y) the Federal Funds Rate in effect on such day plus ½ of 1%; and
(b)
the LIBO Rate (Reserve Adjusted) for an Interest Period of one (1) month plus 1.00%.
Changes in the rate of interest on that portion of any Loans maintained as Base Rate Loans will take effect simultaneously with each change in the Alternate Base Rate.
“Applicable Law” means, with respect to any Person, all laws (including, without limitation, the Bankruptcy Code, as applicable), rules, regulations and legally binding governmental guidelines applicable to the Person and its Property, conduct, transaction, agreement or matter in question, including all applicable statutory law and common law, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities (having the force of law) and such Person’s Organic Documents.
“Applicable Margin” means, with respect to (1) all Loans maintained as LIBO Rate Loans, 9.50% per annum, and (2) all Loans maintained as Base Rate Loans, 8.50% per annum.
“Approved Fund” means any Person (other than a natural Person) that (a) is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business, and (b) is administered or managed by a Lender, an Affiliate of a Lender or a Person or an Affiliate of a Person that administers or manages a Lender.
“Approved Insurer” means any independent insurer with a minimum general policyholder rating of “A” and a minimum financial rating of “7” published in Best’s Key Rating Guide and/or Best’s Insurance Reports issued by the A. M. Best Company or any successor nationally recognized rating organization.
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“Asset Sale Prepayment Event” means any sale of any business units, assets or other property of a Borrower or any of its Subsidiaries not in the Ordinary Course of Business (including any Disposition of any Capital Securities of any Subsidiary of a Borrower owned by such Borrower or a Subsidiary, including any sale of any Capital Securities of any Subsidiary) or to the extent otherwise expressly provided under the Financing Orders. Notwithstanding the foregoing, the term “Asset Sale Prepayment Event” shall not include any (a) transaction permitted by Section 7.2.2, or (b) the Disposition of ABL Priority Collateral (as defined in the ABL-TL DIP Intercreditor Agreement); provided, that this clause (b) shall only apply prior to a Discharge of ABL Obligations (as defined in the ABL-TL DIP Intercreditor Agreement).
“Assignee Lender” means each future Lender which signs a Lender Assignment Agreement pursuant to Section 10.11.
“Authorized Officer” means, relative to any Credit Party, those of its officers, general partners or managing members (as applicable) whose signatures and incumbency shall have been certified to the Administrative Agent pursuant to Section 5.1(b).
“Avoidance Actions” means the Credit Parties’ claims and causes of action under sections 502(d), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any other avoidance actions under the Bankruptcy Code and the proceeds thereof and property received thereby whether by judgment, settlement, or otherwise.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
“Base Rate” means, at any time, an annual rate equal to the rate of interest in effect for such day as publicly announced from time to time by JPMorgan Chase as its “prime rate” for Dollars loaned in the United States. The “prime rate” is a rate set by JPMorgan Chase based upon various factors including JPMorgan Chase’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.
“Base Rate Loan” means a Loan bearing interest at a fluctuating rate determined by reference to the Alternate Base Rate.
“Borrower” and “Borrowers” are defined in the preamble to this Agreement.
“Borrower’s Knowledge” means the knowledge of the Chief Financial Officer, Chief Executive Officer, Corporate Controller, or Senior Manager of Treasury Operations of the applicable Borrower or Borrowers.
“Budget” means, as applicable, (a) an initial 13-week cash forecast and budget commencing with the week during which the Petition Date occurs, of the Borrowers’ and their Subsidiaries’ consolidated projected (i) cash receipts and cash operating disbursements for such 13-week period, on a weekly basis, (which such forecasts of cash receipts and cash operating disbursements shall be in form and substance satisfactory to the Administrative Agent (after reasonable consultation with the Required Lenders)), (ii) operating cash flow for such 13-week period, and (iii) a statement of the actual amounts of each line item for the preceding two (2)
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weeks together with a variance analysis from the previously delivered Budget, together with an explanation of any material variances or material prospective changes to such Budget, (b) back up schedules and supporting information consistent with past practice, and (c) an updated Budget for each successive 13-week period thereafter, which shall, in each case, include detailed line item receipts and expenditures, including the amount of professional fees and expenses for each professional, together with appropriate supporting schedules and information. The Budget (including, for the avoidance of doubt, the initial Budget and any updated Budget) shall be in form and substance acceptable to the Administrative Agent. The Budget in effect on the Closing Date is attached hereto as Exhibit A-1.
“Business Day” means (a) any day which is neither a Saturday nor Sunday nor a legal holiday on which banks are authorized or required to be closed in New York, New York and (b) relative to the making, continuing, prepaying or repaying of any LIBO Rate Loans, any day which is a Business Day described in clause (a) above, and which is also a day on which dealings in Dollars are carried on in the London interbank Eurodollar market.
“Capital Expenditures” means, for any period, (a) the additions to property, plant and equipment and other capital expenditures of the Borrowers and their consolidated Subsidiaries that are (or should be) set forth in a consolidated statement of cash flows of the Borrowers for such period prepared in accordance with GAAP and (b) Capitalized Lease Liabilities or Synthetic Lease Obligations incurred by a Borrower and its consolidated Subsidiaries during such period.
“Capital Securities” means, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital (including all capital stock, partnership, membership or other equity interests in such Person), whether now outstanding or issued after the Closing Date and whether or not certificated.
“Capitalized Lease Liabilities” means, with respect to any Person, all monetary obligations of such Person and its Subsidiaries under any leasing or similar arrangement which have been (or, in accordance with GAAP, should be) classified as capitalized leases, and for purposes of each Loan Document the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a premium or a penalty.
“Carve Out” shall have the meaning given such term in the Interim Financing Order (or, when entered, the Final Financing Order).
“Cash Equivalent Investment” means, at any time: (i) marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government having maturities of not more than 12 months from the date of acquisition; (ii) domestic certificates of deposit and time deposits having maturities of not more than 12 months from the date of acquisition, bankers’ acceptances having maturities of not more than 12 months from the date of acquisition and overnight bank deposits, in each case issued by any commercial bank organized under the laws of the United States, any state thereof or the District of Columbia, which at the time of acquisition are rated A-1 (or better)
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by S&P or P-1 (or better) by Moody’s, and (unless issued by a Lender) not subject to offset rights in favor of such bank arising from any banking relationship with such bank; (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (i) and (ii) entered into with any financial institution meeting the qualifications specified in clause (ii) above; and (iv) commercial paper having at the time of investment therein or a contractual commitment to invest therein a rating of A-1 (or better) by S&P or P-1 (or better) by Moody’s, and having a maturity within 9 months after the date of acquisition thereof.
“Casualty Event” means, with respect to any Collateral, any loss of or damage to, or any condemnation or other taking by a Governmental Authority of property for which such Collateral for which a Borrower or any of its Subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation. Notwithstanding the foregoing, the term “Casualty Event” shall not include any transaction permitted by Section 7.2.2.
“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.
“Change in Control” means the occurrence of any of the following events after the date of this Agreement: (a) any Person or group (other than the Permitted Holders) shall own beneficially (as defined in Rule 13d3 of the SEC under the Exchange Act or any successor provision thereto) more than 50% of the aggregate Voting Power of Standard Register, (b) any “Change in Control” or similar event or circumstance, however defined or designated, under any Material Contract; (c) the first day on which a majority of the members of the Board of Directors of Standard Register are not Continuing Directors; or (d) the sale of all, or substantially all, the assets of the Borrowers (on a consolidated basis).
“Closing Date” means the date on which all the conditions precedent set forth in Section 5.1 hereof are satisfied or waived by the Required Lenders in writing (which, in no event, shall be more than three (3) Business Days following the date the Bankruptcy Court enters the Interim Financing Order (or such later date as the Administrative Agent shall agree in its sole discretion)).
“Closing Date Loan” means a Loan in the amount of $1,050,000 deemed made and funded on the Closing Date in order to pay the closing fee set forth in Section 3.3.1 hereof.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means all of the Property and interests in Property described in any of the Security Documents as security for the payment or performance of any of the Obligations, subject to the Intercreditor Agreements and the Financing Orders.
“Communications” is defined in clause (a) of Section 9.9.
“Compliance Certificate” means a certificate duly completed and executed by an Authorized Officer of Standard Register, substantially in the form of Exhibit D hereto, together with such changes thereto as the Administrative Agent may (acting at the written request of the
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Required Lenders) from time to time request for the purpose of monitoring the Borrowers’ compliance with the covenants contained herein.
“Contingent Liability” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Indebtedness (or, solely for purposes of the definition of Investment, other obligations) of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the Capital Securities of any other Person. The amount of any Person’s obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount of the debt, obligation or other liability guaranteed thereby.
“Continuation/Conversion Notice” means a notice of continuation or conversion and certificate duly executed by an Authorized Officer of Standard Register, substantially in the form of Exhibit B hereto.
“Continuing Director” means, at any date, an individual (a) who is a member of the Board of Directors of Standard Register on the date hereof, (b) who, as at such date, has been a member of such Board of Directors for at least the twelve preceding months, or (c) who has been nominated to be a member of such Board of Directors by a majority of the other Continuing Directors then in office.
“Controlled Group” means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with the Borrowers, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
“Covered Plans” is defined in the definition of “EBITDAP”.
“Copyright Security Agreement” means any Copyright Security Agreement executed and delivered by any Credit Party in substantially the form of Exhibit C to the Security Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time.
“Credit Parties” means the collective reference to the Borrowers and the Subsidiary Guarantors.
“Debt Incurrence Prepayment Event” means any issuance or incurrence by a Borrower or any of its Subsidiaries of any Indebtedness (but excluding any Indebtedness permitted to be issued or incurred under Section 7.2.9).
“Default” means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default.
“Deposit Accounts” means all of a Person’s demand, time, savings, passbook, money market or other depository accounts, and all certificates of deposit, maintained by such Person with any bank, savings and loan association, credit union or other depository institution.
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“Disclosure Schedule” means the Disclosure Schedule attached hereto as Schedule I, as it may be amended, supplemented, amended and restated or otherwise modified from time to time by the Borrowers with the written consent of the Required Lenders.
“Disposition” (or similar words such as “Dispose”) means any sale, transfer, lease, sale-leaseback, contribution or other conveyance (including by way of merger) of, or the granting of options, warrants or other rights to, any Borrower’s or its Subsidiaries’ assets (including accounts receivable and Capital Securities of Subsidiaries) to any other Person (other than to another Credit Party) in a single transaction or series of transactions.
“Disqualified Capital Securities” means any Capital Securities which, by its terms (or by the terms of any security or other Capital Securities into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change in control or asset sale so long as any right of the holders thereof upon the occurrence of a change in control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are then accrued and payable), in each case, prior to the date that is ninety-one (91) days after the Stated Maturity Date, (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, prior to the date that is ninety-one (91) days after the Stated Maturity Date, except as a result of a change in control or an asset sale or the death, disability, retirement, severance or termination of employment or service of a holder who is an employee or director of Holdings or a Subsidiary, in each case so long as any such right of the holder (1) is not effective during the continuance of an Event of Default and is not effective to the extent that such redemption would result in a Default or an Event of Default or (2) is subject to the prior repayment in full of the Loans and all other Obligations that are then accrued and payable, (c) requires the payment of any cash dividend or any other scheduled cash payment constituting a return of capital, in each case, prior to the date that is ninety-one (91) days after the Stated Maturity Date, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Capital Stock that would constitute Disqualified Capital Securities, in each case, prior to the date that is ninety-one (91) days after the Stated Maturity Date; provided that if such Capital Stock is issued to any plan for the benefit of employees of a Borrower or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute a Disqualified Capital Securities solely because it may be required to be repurchased by such Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.
“Distribution” means, in respect of any entity, (i) any payment of any dividends or other distributions on Capital Securities of the entity (except distributions in such Capital Securities) and (ii) any purchase, redemption or other acquisition or retirement for value of any Capital Securities of the entity or any Affiliate of the entity unless made contemporaneously from the net proceeds of the sale of Capital Securities.
“Dollar” and the sign “$” mean lawful money of the United States.
“Domestic Office” means the office of a Lender designated as its “Domestic Office” on Schedule II hereto or in a Lender Assignment Agreement, or such other office within the United
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States as may be designated from time to time by written notice from such Lender to the Administrative Agent and the Borrowers.
“EBITDAP” means, for any fiscal period of Standard Register, an amount equal to:
(a)
the sum for such fiscal period of:
(i)
Adjusted Net Earnings, plus
(ii)
provision for taxes based on income and franchise taxes to the extent deducted in the calculation of Adjusted Net Earnings, plus
(iii)
interest expense, to the extent deducted in the calculation of Adjusted Net Earnings, plus
(iv)
depreciation and amortization expense, to the extent deducted in the calculation of Adjusted Net Earnings, plus
(v)
the total “net periodic benefit costs” attributable to the qualified defined benefit plans of the Borrowers and their Subsidiaries as such plans are in effect at the Closing Date to the extent covering the U.S. employees of the Borrowers and their Subsidiaries as of the Closing Date (the “Covered Plans”), to the extent such costs are deducted in accordance with GAAP in the calculation of Adjusted Net Earnings of the Borrowers on a basis consistent with the Borrowers’ consolidated financial statements for the fiscal year ended December 31, 2012, plus
(vi)
[reserved], plus,
(vii)
non-recurring non-cash losses, to the extent deducted in the calculation of Adjusted Net Earnings, plus,
(viii)
Allowed Integration Costs, to the extent deducted in the calculation of Adjusted Net Earnings, not to exceed on a cumulative basis beginning with the 2014 Fiscal Year (i) $38,310,000 through the end of the 2014 Fiscal Year, (ii) $48,411,000 through the end of the 2015 Fiscal Year. (iii) $53,005,000 through the end of the 2016 Fiscal Year, (iv) $57,895,000 through the end of the 2017 Fiscal Year and (v) $59,895,000 through the end of the 2018 Fiscal Year, provided that, the aggregate annual Allowed Integration Costs added back pursuant to this clause (viii) shall not exceed $7,500,000 for any of the 2016, 2017 and 2018 Fiscal Years, plus,
(ix)
non-cash stock compensation expenses, to the extent deducted in the calculation of Adjusted Net Earnings, plus
(x)
professional fees paid by Borrowers in connection with the administration of the Cases in accordance with the Professional Fee Budget, subject to Permitted Variances,
minus
(b)
the sum for such fiscal period of:
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(i)
interest income (except to the extent deducted in determining interest expense);
(ii)
non-recurring income and gains, to the extent added in the calculation of Adjusted Net Earnings; and
(iii)
non-cash gains or income to the extent added in the calculation of Adjusted Net Earnings.
“Eligible Assignee” means any Person (other than an Ineligible Assignee).
“Employee Benefit Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA that is maintained for employees of the Borrowers or any member of the Borrowers’ Controlled Group.
“Environmental Laws” means all applicable foreign, federal, state, provincial or local statutes, laws, ordinances, codes, rules and regulations (including consent decrees and administrative orders), now or hereafter in effect and relating to public health and safety and protection of the environment, including CERCLA.
“Equipment” means all of a Credit Party’s machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other than Inventory) of every kind and description, whether now owned or hereafter acquired by a Credit Party and wherever located, and all parts, accessories and special tools therefor, all accessions thereto, and all substitutions and replacements thereof.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections thereto.
“Event of Default” is defined in Section 8.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Deposit Account” means any Deposit Account established solely for the purpose of funding payroll, payroll taxes and other compensation and benefits to employees.
“Excluded Taxes” means any of the following Taxes imposed, deducted or withheld with respect to any Secured Party on payments under this Agreement or any Loan Document: (i) net income and franchise Taxes imposed by any Governmental Authority under the laws of which such Secured Party is organized, in which it maintains its principal office or its applicable lending office, or in which it is engaged in business (other than as a result of having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to, or enforced, any Loan Document, or sold or assigned an interest in any Loan or Loan Document), (ii) any U.S. federal withholding tax imposed under FATCA, (iii) any branch profits Tax imposed by the United States or any comparable Tax imposed by any foreign jurisdiction, and (iv) any withholding Taxes imposed by the United States except to the extent that such withholding
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Taxes are imposed as a result of a change in any applicable statute, treaty, regulation or other Applicable Law or any official interpretation of any of the foregoing occurring after the Closing Date (or in the case of an Assignee Lender, after the date of the assignment, except to the extent that the applicable assigning Lender was entitled to receive additional amounts with respect to any such Tax).
“Exemption Certificate” is defined in clause (e) of Section 4.6.
“Facility” means the collective reference to this Agreement, the Loan Documents and any other notes, guarantees, collateral documents and account control agreements, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings hereof, together with the Loans, extensions of credit and other financial accommodations made pursuant thereto or in connection therewith and the Liens created thereunder and the other provisions contained herein and therein.
“Family Holders” means John Q. Sherman and William C. Sherman, and their descendants and trusts for their benefit.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to
(a)
the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York; or
(b)
if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.
“Filing Agent” is defined in Section 5.8.
“Filing Statements” is defined in Section 5.8.
“Final Financing Order” means, with respect to the Cases, a Final Order in substantially the form of the Interim Financing Order and otherwise in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders, authorizing and approving on a final basis, among other things, the matters and provisions in the Interim Financing Order and providing that this Agreement and the Loan Documents would remain valid and enforceable against the Credit Parties would survive any dismissal, conversion or substantive consolidation of any of the Cases and would not adversely affect the rights or remedies of any Lender under the Loan Documents and that the Liens securing the Obligations would remain valid and
13
perfected and enjoy the same priority as such Liens had prior to the dismissal, conversion or consolidation of such Case.
“Final Order” means an order of the Bankruptcy Court or any other court of competent jurisdiction (a) as to which the time to appeal shall have expired and as to which no appeal shall then be pending or (b) if a timely appeal shall have been filed or sought, either (i) no stay of the such order shall be in effect or (ii) no motion or application for a stay of such order shall be filed and pending or such motion or application shall have been denied or (iii) if such a stay shall have been granted, then (A) the stay shall have been dissolved or (B) a final order of the district court or circuit court having jurisdiction to hear such appeal shall have affirmed such order and the time allowed to appeal from such affirmance or to seek review or rehearing (other than a motion pursuant to Rule 60(b) of the Federal Rules of Civil Procedure) thereof shall have expired and the taking or granting of any further hearing, appeal or petition for certiorari shall not be permissible, and if a timely appeal of such district court or circuit court order or timely motion to seek review or rehearing of such order shall have been made, any appellate court having jurisdiction to hear such appeal or motion (or any subsequent appeal or motion to seek review or rehearing) shall have affirmed the district court’s (or lower appellate court’s) order upholding such order of the Bankruptcy Court and the time allowed to appeal from such affirmance or to seek review or rehearing thereof shall have expired and the taking or granting of any further hearing, appeal or petition for certiorari shall not be permissible.
“Financing Orders” means, collectively, the Interim Financing Order and the Final Financing Order.
“First Day Orders” means all orders entered or to be entered by the Bankruptcy Court granting the relief requested in the motions filed with the Bankruptcy Court on the Petition Date or within five (5) Business Days of the Petition Date or based on motions filed on or about the Petition Date, which shall each be in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders.
“First/Second Lien Intercreditor Agreement” means the Intercreditor Agreement, dated as of August 1, 2013, executed and delivered by the Prepetition First Lien Term Loan Agent, the Second Lien Administrative Agent and the Credit Parties, pursuant to the terms of the Prepetition Term Loan Facilities, as amended, supplemented or otherwise modified through the Closing Date.
“Fiscal Month” means any calendar month ending on the last day of such calendar month.
“Fiscal Quarter” means a quarter ending on the last day of March, June, September or December.
“Fiscal Year” means any period of twelve consecutive calendar months ending on December 31; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the “2015 Fiscal Year”) refer to the Fiscal Year ending on December 31 of such calendar year.
“FLSA” means the Fair Labor Standards Act of 1938.
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“Foreign Subsidiary” means any Subsidiary of a Borrower that is not a Subsidiary organized or incorporated under the laws of the United States, a state thereof or the District of Columbia.
“F.R.S. Board” means the Board of Governors of the Federal Reserve System or any successor thereto.
“GAAP” is defined in Section 1.4.
“Governmental Approvals” means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities.
“Governmental Authority” means the government of the United States, any other nation, or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other Person exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Granting Lender” is defined in clause (g) of Section 10.11.
“Hazardous Material” means
(a)
any “hazardous substance”, as defined by CERCLA;
(b)
any “hazardous waste”, as defined by the RCRA; or
(c)
any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance (including any petroleum product) within the meaning of any other applicable Environmental Law relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as amended.
“herein”, “hereof”, “hereto”, “hereunder” and similar terms contained in any Loan Document refer to such Loan Document as a whole and not to any particular Section, paragraph or provision of such Loan Document.
“including” and “include” means including without limiting the generality of any description preceding such term, and, for purposes of each Loan Document, the parties hereto agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned.
“Indebtedness” of any Person means:
(a)
all obligations of such Person for borrowed money or advances and all obligations of such Person evidenced by bonds, debentures, notes or similar instruments or upon which interest payments are customarily made;
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(b)
all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, banker’s acceptances, performance, surety or appeal bonds (or similar obligations) issued for the account of such Person;
(c)
all Capitalized Lease Liabilities of such Person;
(d)
all reimbursement, payment or other obligations or liabilities of such Person created or arising under any conditional sale or title retention agreement with respect to property used or acquired by such Person;
(e)
net hedging obligations of such Person;
(f)
whether or not so included as liabilities in accordance with GAAP, (i) all obligations of such Person to pay the deferred purchase price of property or services (including all reimbursement, payment or other obligations or liabilities of such Person created or arising under any conditional sale or title retention agreement with respect to property used or acquired by such Person) of the date of purchase of such goods and services (including all reimbursement, payment or other obligations or liabilities of such Person created or arising under any conditional sale or title retention agreement with respect to Property used or acquired by such Person), (ii) indebtedness secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien on property owned or being acquired by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse, and (iii) all trade accounts payable whether incurred in the Ordinary Course of Business or otherwise;
(g)
obligations arising under Synthetic Leases;
(h)
all Disqualified Capital Securities of such Person;
(i)
all Contingent Liabilities of such Person; and
(j)
all obligations referred to in clauses (a) through (i) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person.
The Indebtedness of any Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such Person, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Liabilities” is defined in Section 10.4.
“Indemnified Parties” is defined in Section 10.4.
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“Indemnified Taxes” means Taxes other than Excluded Taxes.
“Ineligible Assignee” means a natural Person, a Borrower, any Subsidiary of a Borrower and a Family Holder.
“Intellectual Property” has the meaning set forth in the Security Agreement.
“Intellectual Property Claim” means the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that a Credit Party’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other Property is violative of any ownership or other right to use any Intellectual Property of such Person.
“Intercreditor Agreements” means the (i) the First/Second Lien Intercreditor Agreement, (ii) the ABL-TL DIP Intercreditor Agreement and (iii) the Prepetition ABL/TL Intercreditor Agreement.
“Interest Period” means, relative to any LIBO Rate Loan, the period beginning on (and including) the date on which such LIBO Rate Loan is made or continued as, or converted into, a LIBO Rate Loan pursuant to Sections 2.2 or 2.3 and shall end on (but exclude) the day which numerically corresponds to such date one month thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month), in either case as the Borrowers may select in its relevant notice pursuant to Sections 2.2 or 2.3; provided, that,
(a)
the Borrowers shall not be permitted to select Interest Periods to be in effect at any one time which have expiration dates occurring on more than ten (10) different dates;
(b)
if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day (unless such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the Business Day next preceding such numerically corresponding day); and
(c)
no Interest Period for any Loan may end later than the Stated Maturity Date for such Loan.
“Interim Financing Order” means an interim order or orders of the Bankruptcy Court entered in the Cases (i) authorizing and approving, among other things, on an interim basis, this Agreement, the other Loan Documents (including any guarantees of the Obligations hereunder), the ABL DIP Facility, the ABL DIP Documents, the extension of credit to the Borrowers in accordance with the terms hereof and thereof, and the transactions contemplated hereby and thereby, (ii) granting Liens on the Collateral, with the applicable priority thereof, and the Superpriority Claims, each as described in Section 6.7 and in the ABL-TL DIP Intercreditor Agreement, in favor of the Collateral Agent for the ratable benefit of the Secured Parties, and (iii) finding that the Lenders are extending credit to the Borrowers in good faith within the meaning of Section 364(e) of the Bankruptcy Code, substantially in the form of Exhibit H hereto (and as more fully described in Section 5.1.16 hereof), as such order or orders may be extended,
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amended, supplemented or modified in a manner satisfactory to the Required Lenders in their sole discretion. The Interim Financing Order shall, among other things, (i) limit borrowings under the ABL DIP Facility to amounts set forth in the Budget (subject to Permitted Variances) and so long as no Event of Default has occurred and is continuing, an amount no greater than $140,000,000; (ii) approve the payment by the Borrowers of all the fees provided for herein, in the Loan Documents and under the ABL DIP Facility, including, but not limited to the fees and expenses of the administrative agents under the Prepetition First Lien Term Loan Agreement and under the Second Lien Credit Agreement and their advisors, (iii) lift the automatic stay to permit the Borrowers to perform their respective obligations, and the Administrative Agent and the ABL Agent to exercise their respective remedies with respect to the Facility and the ABL DIP Facility, as applicable, (iv) permit the use of cash collateral of the Facility and loans under the ABL DIP Facility solely to pay expenditures pursuant to the Budget (subject to Permitted Variances) and otherwise on terms satisfactory to the Administrative Agent, (v) contain findings, subject to typical reservation of rights for non-debtor parties in Bankruptcy Court, that the obligations arising under the Prepetition Term Loan Facilities are due and owing and not subject to any defense, counterclaim, or setoff, that the liens and security interests securing the obligations arising under the Prepetition Term Loan Facilities are valid and duly perfected, and that any challenge by (a) third parties must be made within 60 days after the Petition Date, (b) 75 days following entry of the Interim Financing Order, if no statutory committee is appointed in the Cases (a “Committee”), or be forever barred, (c) any such later date agreed to in writing by the Administrative Agent and the ABL Agent, provided that in no event shall the Committee shall be permitted to expend no more than $25,000 to investigate or prosecute any such challenge; (vi) have such other findings, orders, and relief typical for financings of the type contemplated herein; and (vii) and otherwise be in form and substance satisfactory to the Administrative Agent.
“Inventory” means as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in a Credit Party’s business (but excluding Equipment).
“Investment” means any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Capital Securities of a Person; any advance or capital contribution to or other investment in a Person.
“Junior Financing” is defined in Section 7.2.14.
“Knowledge” means the actual knowledge of an individual engaging in the business of the Credit Parties in the Ordinary Course of Business, without special investigation or inquiry.
“Lender Assignment Agreement” means an assignment agreement substantially in the form of Exhibit C hereto.
“Lenders” is defined in the preamble.
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“Lender’s Environmental Liability” means any and all losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, costs, judgments, suits, proceedings, damages, (including consequential damages), disbursements or expenses of any kind or nature whatsoever (including reasonable attorneys’ fees and expenses at trial and appellate levels and experts’ fees and disbursements and expenses incurred in investigating, defending against or prosecuting any litigation, claim or proceeding) which may at any time be imposed upon, incurred by or asserted or awarded against the Administrative Agent or any Lender or any of such Person’s Affiliates, shareholders, directors, officers, employees, and agents in connection with or arising from:
(a)
any Hazardous Material on, in, under or migrating from all or any portion of any Property of a Borrower or any of its Subsidiaries or the groundwater thereunder to the extent caused by Releases from a Borrower’s or any of its Subsidiaries’ or any of their respective predecessors’ properties;
(b)
any misrepresentation, inaccuracy or breach of any warranty, contained or referred to in Section 7.1.7 (as relates to Environmental Laws and Releases);
(c)
any violation or claim of violation by a Borrower or any of its Subsidiaries of any Environmental Laws; or
(d)
the imposition of any Lien for damages caused by, or the recovery of any costs with respect to, the cleanup, Release of Hazardous Material by a Borrower or any of its Subsidiaries, or in connection with any property owned by such Borrower or any of its Subsidiaries.
“LIBO Rate” means, relative to any Interest Period for LIBO Rate Loans, an annual rate equal to the greater of (i) 1.00% and (ii) the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two (2) Business Days prior to the beginning of the relevant Interest Period by reference to the ICE Benchmark Administration London Interbank Offered Rate for deposits in Dollars (as set forth by any service which has been nominated by the ICE Benchmark Administration as an authorized information vendor for the purpose of displaying such rates or any successor thereto or any other service selected by the Administrative Agent which has been nominated by the ICE Benchmark Administration as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this clause (ii), the interest rate determined in accordance with this clause (ii) shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two (2) Business Days prior to the beginning of such Interest Period.
“LIBO Rate Loan” means a Loan bearing interest, at all times during an Interest Period applicable to such Loan, at a rate of interest determined by reference to the LIBO Rate (Reserve Adjusted).
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“LIBO Rate (Reserve Adjusted)” means, relative to any Loan to be made, continued or maintained as, or converted into, a LIBO Rate Loan for any Interest Period, a rate per annum determined pursuant to the following formula:
LIBO Rate (Reserve Adjusted) | = | LIBO Rate |
1.00 - LIBOR Reserve Percentage |
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans will be determined by the Administrative Agent on the basis of the LIBOR Reserve Percentage in effect two Business Days before the first day of such Interest Period.
“LIBOR Office” means the office of a Lender designated as its “LIBOR Office” on Schedule II hereto or in a Lender Assignment Agreement, or such other office designated from time to time by written notice from such Lender to the Borrowers and the Administrative Agent, whether or not outside the United States, which shall be making or maintaining the LIBO Rate Loans of such Lender.
“LIBOR Reserve Percentage” means, relative to any Interest Period for LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the maximum aggregate reserve requirements (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) specified under regulations issued from time to time by the F.R.S. Board and then applicable to assets or liabilities consisting of or including “Eurocurrency Liabilities”, as currently defined in Regulation D of the F.R.S. Board, having a term approximately equal or comparable to such Interest Period.
“Lien” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or security interest in property, or other priority or preferential arrangement of any kind or nature whatsoever, including any conditional sale or title retention arrangement, any Capitalized Lease Liability and any assignment, deposit arrangement or financing lease intended as security.
“Loan Documents” means, collectively, this Agreement, the Notes, the Security Documents, each other agreement pursuant to which the Administrative Agent is granted a Lien to secure all or any part of the Obligations, each Subsidiary Guaranty, the Intercreditor Agreements and each other agreement, certificate, document or instrument delivered in connection with any Loan Document, whether or not specifically mentioned herein or therein.
“Loans” is defined in Section 2.1.
“Margin Stock” shall have the meaning ascribed to it in Regulation U of the Board of Governors of the Federal Reserve System.
“Material Adverse Effect” means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance or properties of the Borrowers and their Subsidiaries taken as a whole (other than as a direct result of the events leading up to and following commencement of a proceeding under chapter 11 of the Bankruptcy Code and the
20
Cases and the continuation and prosecution thereof), (b) the rights and remedies of any Secured Party under any Loan Document, (c) the ability of any Credit Party to perform its Obligations under any Loan Document, (d) the legality, validity or enforceability of this Agreement or any other Loan Document or (e) the validity, perfection or priority of Liens with respect to any material portion of the Collateral in favor of the Collateral Agent for the benefit of the Secured Parties (it being understood and agreed that a delisting of the publicly traded equity securities of Standard Register shall not, in and of itself, constitute a Material Adverse Effect).
“Material Contract” means an agreement to which a Credit Party is a party (other than the Loan Documents) (i) which is deemed to be a material contract as provided in Regulation S-K promulgated by the SEC under the Securities Act of 1933 or (ii) for which breach, termination, cancellation, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect, in each case excluding any contract that is rejected by a Credit Party in accordance with Section 365 of the Bankruptcy Code, with the Administrative Agent’s consent..
“Maturity Date” means the earliest of (i) the Stated Maturity Date; (ii) thirty days after the entry of the Interim DIP Financing Order if the Final DIP Financing Order has not been entered prior to or on such date; (iii) April 10, 2015, if the Sale Procedures Order has not been entered prior to or on such date; (iv) June 19, 2015, if the Sale Order has not been entered prior to or on such date; (v) sixty days after the entry of the Sale Order if the sale of the Borrowers’ assets pursuant to such order has not been closed for any reason other than (x) the issuance of a stay pending appeal from the Sale Order (in which case, the sixty-day period referred to in this clause (v) shall automatically be extended to the earlier of (A) the fifth business day following the day such stay ceases to be in effect or (B) the Stated Maturity Date, or (y) the winning bidder has failed to consummate the Acquisition, except as a result of a breach by Sellers of a representation or covenant in the Purchase Agreement; (vi) the “Termination Date” under and as defined in the Purchase Agreement occurs; (vii) the Sale Closing Date; (viii) the date that is 180 days after the date of the Purchase Agreement; (ix) the date that the substantial consummation (as defined in section 1101 of the Bankruptcy Code) of a plan of reorganization or liquidation is confirmed pursuant to an order entered by the Bankruptcy Court; and (x) the date the Stated Maturity Date is accelerated pursuant to Section 8.3 hereof.
“Money Borrowed” means, as applied to any Person, (i) Indebtedness arising from the lending of money by any other Person to such Person; (ii) Indebtedness, whether or not in any such case arising from the lending of money by another Person to such Person, (A) which is represented by notes payable or drafts accepted that evidence extensions of credit, (B) which constitutes obligations evidenced by bonds, debentures, notes or similar instruments, or (C) upon which interest charges are customarily paid (other than accounts payable) or that was issued or assumed as full or partial payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease Liability; (iv) reimbursement obligations with respect to letters of credit or guaranties of letters of credit and (v) Indebtedness of such Person under any guaranty of obligations that would constitute Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if owed directly by such Person.
“Moody’s” means Moody’s Investors Service, Inc.
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“Mortgage” means (a) each mortgage, deed of hypothec, debenture, pledge, deed of trust or agreement executed and delivered by any Credit Party in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the requirements of this Agreement in form and substance satisfactory to the Administrative Agent, under which a Lien is granted on the real property and fixtures described therein, in each case as amended, supplemented, amended and restated or otherwise modified from time to time, and (b) each Additional Mortgage delivered pursuant hereto.
“Multiemployer Plan” has the meaning set forth in Section 4001(a)(3) of ERISA.
“Net Cash Proceeds” means, with respect to any Prepayment Event, (a) the gross cash proceeds (including payments from time to time in respect of installment obligations, if applicable) received by or on behalf of a Borrower or any of its Subsidiaries in respect of such Prepayment Event or issuance, as the case may be, less (b) the sum of:
(i)
the amount, if any, of all taxes paid or estimated to be payable by such Borrower or any of its Subsidiaries in connection with such Prepayment Event,
(ii)
the amount of any reasonable reserve established in accordance with GAAP against any liabilities (other than any taxes deducted pursuant to clause (i) above) (x) associated with the assets that are the subject of such Prepayment Event and (y) retained by such Borrower or any of its Subsidiaries, provided that the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be Net Cash Proceeds of such a Prepayment Event occurring on the date of such reduction;
(iii)
the amount of any Indebtedness secured by a Lien on the assets that are the subject of such Prepayment Event to the extent that the instrument creating or evidencing such Indebtedness requires that such Indebtedness be repaid upon consummation of such Prepayment Event;
(iv)
[reserved]; and
(v)
reasonable and customary fees.
“Non-U.S. Lender” means any Lender that is not a “United States person”, as defined under Section 7701(a)(30) of the Code.
“Note” means a promissory note of the Borrowers payable to any Lender, in the form of Exhibit A hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrowers to such Lender resulting from outstanding Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof.
“Obligations” means all obligations (monetary or otherwise, whether absolute or contingent, matured or unmatured) of the Borrowers and each other Credit Party to the Secured Parties arising under or in connection with a Loan Document, including, but not limited to, the principal of and premium, if any, and interest (including interest accruing (or which would have
22
accrued) during the pendency of any insolvency or like proceeding under the Bankruptcy Code, whether or not allowed in such proceeding) on the Loans as well as all fees and expenses (including attorneys’ fees and expenses) and indemnity payable to the Secured Parties hereunder.
“Ordinary Course of Business” means, with respect to any transaction involving any Person, the ordinary course of such Person’s business, as conducted by such Person in accordance with past practices and undertaken by such Person in good faith and not for the purpose of evading any covenant or restriction in any Loan Document.
“Organic Document” means, relative to any Credit Party, as applicable, its certificate or articles of incorporation, articles and memorandum of association, by-laws, certificate of partnership, partnership agreement, certificate of formation, limited liability agreement, operating agreement and all shareholder agreements, voting trusts and similar arrangements applicable to any of such Credit Party’s Capital Securities.
“OSHA” means the Occupational Safety and Hazard Act of 1970.
“Other Taxes” means any and all present or future stamp, documentary or similar Taxes, or any other excise or property Taxes or similar levies that arise on account of any payment made or required to be made under any Loan Document or from the execution, delivery, registration, recording or enforcement of, or otherwise with respect to, any Loan Document, but excluding, for the avoidance of doubt, any such Taxes arising in connection with any transfer, assignment or participation of any rights or obligations under this Agreement, or any change in lending office by any Lender, except if such transfer, assignment, participation or change in lending office is done at the request of a Borrower.
“Participant” is defined in clause (d) of Section 10.11.
“Participant Register” is defined in clause (d) of Section 10.11.
“Patent Security Agreement” means any Patent Security Agreement executed and delivered by any Credit Party in substantially the form of Exhibit A to the Security Agreement, as amended, supplemented, amended and restated or otherwise modified.
“Patriot Act” means the USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended and supplemented from time to time.
“Payment Items” means all checks, drafts, or other items of payment payable to any Borrower, including proceeds of any of the Collateral.
“Pension Plan” means a “pension plan”, as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA, and to which a Borrower or any corporation, trade or business that is, along with such Borrower, a member of a Controlled Group, may have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.
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“Percentage” means, relative to any Lender, the percentage set forth opposite its name on Schedule II hereto or set forth in a Lender Assignment Agreement, as such percentage may be adjusted from time to time (x) in accordance with Section 4.8 or (y) pursuant to Lender Assignment Agreements executed by such Lender and its Assignee Lender and delivered pursuant to Section 10.11.
“Permitted Contingent Obligations” means Contingent Liabilities (i) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (ii) [reserved]; (iii) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (iv) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (v) [reserved]; (vi) arising under the Loan Documents; (vii) incurred by any Credit Party in respect of Indebtedness of any Credit Party otherwise permitted hereunder; provided that (A) no Contingent Liability of the ABL Obligations or the Prepetition Term Loan Facilities or any Subordinated Indebtedness shall be permitted unless such party providing such Contingent Liability shall have also provided a Contingent Liability of the Obligations on the terms set forth herein, and (B) if the Indebtedness benefitting from the Contingent Liability is subordinated to the Obligations, such Contingent Liability shall be subordinated to the Subsidiary Guaranty of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness; or (viii) in an aggregate amount of $250,000.
“Permitted ABL Agent Discretion” means the ABL Administrative Agent's reasonable (from the perspective of a secured asset based lender with advance rates based on current assets) credit judgment based upon its consideration of any factor which ABL Administrative Agent believes (a) will or could reasonably be expected to materially and adversely affect in any respect the value of any ABL Priority Collateral, the enforceability or priority of any Liens in favor of ABL Administrative Agent or the amounts which ABL Administrative Agent and ABL Lenders would be likely to recover in the liquidation of such ABL Priority Collateral; (b) suggests that any collateral report, financial information or certificate delivered to ABL Administrative Agent by or on behalf of any Borrower with respect to any ABL Priority Collateral is incomplete, inaccurate or misleading in any material and adverse respect; or (c) creates or reasonably could be expected to create or result in a Default or Event of Default under the ABL DIP Credit Agreement. In exercising such judgment, ABL Administrative Agent may consider factors already included or tested in determining Eligible Accounts and Eligible Inventory (each as defined in the ABL DIP Credit Agreement as of the date hereof) or in calculating the Borrowing Base or ABL Availability, as well as any of the following: (i) changes in collection history and dilution with respect to the Accounts (as defined in the ABL DIP Credit Agreement), (ii) changes in demand for, and pricing of, Inventory, (iii) changes in any concentration of risk with respect to the Accounts, (iv) changes in turnover statistics with respect to Inventory and/or Accounts, including actual versus historical and projected rates, and (v) any other factors, events, contingencies or circumstances that arise (or first become known to ABL Administrative Agent) after the Petition Date and that change the credit risk of lending to any Borrower on the security of the ABL Priority Collateral included in the Borrowing Base in any respect; provided, however, that (a) ABL Administrative Agent shall not increase the Availability Reserve (as defined in the ABL DIP Credit Agreement) solely in response to factors that already have been taken into account in excluding from the Borrowing Base calculation the
24
whole or any part of any Accounts or Inventory; and (b) the amount of any addition made to the Availability Reserve pursuant to clause (viii) of the definition thereof shall bear a reasonable relationship to the impact of any such factors that ABL Administrative Agent seeks to mitigate.
“Permitted Liens” means:
(a)
Liens existing on the date hereof and listed on Part 1.1 of the Disclosure Schedule, other than Liens referred to in clause (c) of this definition;
(b)
subject to the ABL-TL DIP Intercreditor Agreement,] Liens securing ABL Obligations (as defined in the ABL-TL DIP Intercreditor Agreement);
(c)
subject to the First/Second Lien Intercreditor Agreement, Liens securing Indebtedness of the type permitted under clause (a) and clause (c) of Section 7.2.9;
(d)
Capitalized Lease Liabilities in existence and in the amounts outstanding on the Closing Date, as such amounts are reduced in accordance with the Budget;
(e)
Liens for Taxes which accrued post-petition and are not yet due and payable or are being Properly Contested;
(f)
statutory Liens arising after the Petition Date (other than Liens for Taxes, imposed under ERISA or in favor of the Pension Benefit Guaranty Corporation) arising in the Ordinary Course of Business, but only if payment of the obligations secured thereby is not yet due or is being Properly Contested;
(g)
Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Indebtedness for borrowed money), statutory obligations and other similar obligations, or arising after the Petition Date as a result of progress payments under government contracts, as long as such Liens are at all times junior to Liens granted under the Security Documents;
(h)
Liens arising in the Ordinary Course of Business that are subject to Lien Waivers;
(i)
easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on real property, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;
(j)
bankers’ Liens with respect to depository account arrangements entered into in the Ordinary Course of Business securing obligations not past due; and
(k)
Liens in respect of the Carve Out or otherwise created pursuant to the Financing Orders.
“Permitted Variances” means an unfavorable variance from the Budget not exceeding (a) 10.0% for each line item (other than “payroll”, “health & benefits”, “postage” and “Audit
25
Expense”), (b) 5.0% for payroll, (c) 5.0% for health & benefits, (d) 5.0% for postage, (e) 0.0% for Audit Expense, and (f) 5.0% with respect to cumulative net cash flows of the Borrowers and their subsidiaries (excluding amounts relating to payroll, health & benefits and postage), in each case for the period from the Petition Date through the measurement date at the end of each week. All variances shall be tested weekly on the Friday of such week, beginning with the four week period ending on April 3, 2015, and measured on a rolling four week basis thereafter.
“Person” means any natural person, corporation, limited liability company, partnership, joint venture, association, trust or unincorporated organization, Governmental Authority or any other legal entity, whether acting in an individual, fiduciary or other capacity.
“Platform” is defined in Section 7.1.3.
“Prepayment Event” means any Asset Sale Prepayment Event, Casualty Event or Debt Incurrence Prepayment Event.
“Prepetition ABL Credit Agreement” is defined in the recitals to this Agreement.
“Prepetition ABL/TL Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of August 1, 2013, executed and delivered by Bank of America, N.A. as administrative agent under the Prepetition ABL Credit Facility, the Prepetition First Lien Term Loan Agent, the Second Lien Administrative Agent and the Credit Parties, pursuant to the terms of the Prepetition Term Loan Facilities, as amended, supplemented or otherwise modified through the Closing Date.
“Prepetition First Lien Term Loan Agent” means Silver Point Finance, LLC, as administrative agent under the Prepetition First Lien Term Loan Agreement.
“Prepetition First Lien Term Loan Agreement” means that certain First Lien Credit Agreement dated as of August 1, 2013 by and among Borrowers (as a Borrower or a Subsidiary Guarantor thereunder, as applicable), WorkflowOne LLC, the subsidiary guarantors party thereto, the lenders party thereto, and the Prepetition First Lien Term Loan Agent, as amended, restated, supplemented, or modified through the Closing Date.
“Prepetition Revolving Lenders” is defined in the recitals hereto.
“Prepetition Term Loan Facilities” means the documents governing, evidencing, securing or otherwise executed in connection with the Prepetition First Lien Term Loan Agreement and the Second Lien Credit Agreement together, in each case, with the loans, terms, agreements and Liens made, arising or existing in connection therewith.
“Professional Fee Budget” is defined in Section 7.1.3(k).
“Properly Contested” means in the case of any Indebtedness of a Credit Party (including any Taxes) that is not paid as and when due or payable by reason of such Credit Party’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Credit Party has established appropriate reserves as
26
shall be required in conformity with GAAP, (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in a forfeiture of any assets of such Credit Party; (iv) no Lien is imposed upon any of such Credit Party’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Collateral Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if the Indebtedness results from, or is determined by the entry, rendition or issuance against a Credit Party or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Credit Party, such Credit Party forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed and whether tangible or intangible.
“Public Lender” is defined in Section 7.1.3.
“Purchase Agreement” means that certain Asset Purchase Agreement dated on or about the date hereof by and among the Purchaser, the Debtors (as sellers) as amended, supplemented or otherwise modified with the consent of the Administrative Agent and the Required Lenders.
“Purchaser” means Standard Acquisition Holdings, LLC, a Delaware Limited Liability Company, and its designee, successors or assigns.
“Qualified Equity Interests” means any Capital Securities that are not a Disqualified Capital Securities.
“RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended.
“Register” is defined in clause (a) of Section 2.5.
“Release” means a “release”, as such term is defined in CERCLA or any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or property.
“Replacement Lender” is defined in Section 4.10.
“Replacement Notice” is defined in Section 4.10.
“Reportable Event” means any of the events set forth in Section 4043(b) of ERISA.
“Required Lenders” means, at any time, Lenders holding more than 50% of the aggregate principal amount of the then outstanding Loans.
27
“Restricted Investment” means any Investment by a Credit Party or Subsidiary, other than (i) Investments in the Borrowers or in any Subsidiary Guarantor formed or acquired after the Closing Date; (ii) Cash Equivalents that are pledged as Collateral; and (iii) loans and advances permitted under Section 7.2.11.
“Restrictive Agreement” means an agreement (other than any of the Loan Documents) that, if and for so long as a Credit Party or any Subsidiary of such Credit Party is a party thereto, would prohibit, condition or restrict such Credit Party’s or Subsidiary’s right to incur or repay Indebtedness for Money Borrowed (including any of the Obligations); grant Liens upon any of such Credit Party’s or Subsidiary’s assets (including Liens granted in favor of the Collateral Agent pursuant to the Loan Documents); declare or make Distributions; amend, modify, extend or renew any agreement evidencing Indebtedness for Money Borrowed (including any of the Loan Documents); or repay any Indebtedness owed to any Credit Party.
“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.
“Sale Closing Date” means the date the Acquisition is consummated.
“Sale Covenants” is defined in Section 7.1.20.
“Sale Motion” is defined in Section 5.1.19.
“Sale Order” means an order of the Bankruptcy Court approving the Sale Motion, the Purchase Agreement, and the Acquisition and providing for the payment in full in cash of the Obligations under the Facility on the Sale Closing Date.
“SEC” means the Securities and Exchange Commission.
“Second Lien Administrative Agent” means the “Administrative Agent” as defined in the Second Lien Credit Agreement (or such corresponding term in the event the Second Lien Credit Agreement is refinanced in accordance with the terms hereof).
“Second Lien Credit Agreement” means that certain Second Lien Credit Agreement, dated as of August 1, 2013, among Standard Register, the other Borrowers (as subsidiary guarantors thereunder), the various financial institutions and other Persons from time to time party thereto as lenders, the Second Lien Administrative Agent and the other Persons party thereto as agents, as amended, supplemented or otherwise modified through the Closing Date.
“Second Lien Loans” means the “Loans” as defined in the Second Lien Credit Agreement (or such corresponding term in the event the Second Lien Credit Agreement is refinanced in accordance with the terms hereof) and references herein to “Term A Second Lien Loan”, “Term B Second Lien Loan” and “Term C Second Lien Loan” shall mean “Term A Loan”, “Term B Loan” and “Term C Loan” as defined in the Second Lien Credit Agreement as of the date hereof.
“Secured Parties” means, collectively, the Lenders, the Administrative Agent and (in each case) each of their respective successors, transferees and assigns.
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“Security Agreement” means the Pledge and Security Agreement dated as of the date hereof executed and delivered by an Authorized Officer of each Borrower and its Subsidiaries, substantially in the form of Exhibit F hereto, as amended, supplemented, amended and restated or otherwise modified from time to time.
“Security Documents” means, collectively, (a) the Financing Orders, (b) the Subsidiary Guaranty, (c) the Security Agreement, (d) each Mortgage and Additional Mortgage, (e) the Copyright Security Agreement, (f) the Patent Security Agreement, (g) the Trademark Security Agreement and (h) each other security agreement or other interest or document executed and delivered pursuant to Section 7.1.7 or any of the Security Documents to secure any of the Obligations.
“Silver Point” means Silver Point Finance, LLC.
“SPC” is defined in clause (g) of Section 10.11.
“Stated Maturity Date” means September 8, 2015.
“Subordinated Indebtedness” means Indebtedness incurred by a Credit Party that (i) is expressly subordinate and junior in right of payment to full payment of all Obligations, (ii) has a stated maturity at least one year after the stated maturity date of the Second Lien Loans, (iii) does not provide for payment of interest in cash or otherwise than through the capitalization thereof, and (iv) is otherwise on terms satisfactory to the Administrative Agent.
“Subsidiary” means, with respect to any Person, any other Person of which more than 50% of the outstanding Voting Securities of such other Person (irrespective of whether at the time Capital Securities of any other class or classes of such other Person shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person. Unless the context otherwise specifically requires, the term “Subsidiary” shall be a reference to a Subsidiary of a Borrower.
“Subsidiary Guarantor” means each Subsidiary that has executed and delivered to the Administrative Agent the Subsidiary Guaranty (including by means of a delivery of a supplement thereto).
“Subsidiary Guaranty” means the subsidiary guaranty dated as of the date hereof executed and delivered by an Authorized Officer of each Subsidiary pursuant to the terms of this Agreement, in the form and substance acceptable to the Administrative Agent, as amended, supplemented, amended and restated or otherwise modified from time to time.
“Superpriority Claim” means a superpriority administrative expense claim with priority over any and all other obligations, liabilities and indebtedness, now existing or hereafter arising, of any kind whatsoever, including any and all administrative expenses or other claims of the kind specified in or arising under sections 105, 326, 328, 330, 331, 503(b), 506(c), 507, 546(c), 552(b), 726, 1113 or 1114 of the Bankruptcy Code.
29
“Synthetic Lease” means, as applied to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (a) that is not a capital lease in accordance with GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for federal income tax purposes, other than any such lease under which that Person is the lessor.
“Taxes” means any and all taxes, duties, levies, imposts, charges, assessments, fees, deductions or withholdings (including backup withholdings), now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, and all interest, penalties or similar liabilities with respect thereto.
“Term Loan Commitment” means mean the commitment of a Lender to make or otherwise fund Loans hereunder pursuant to Section 2.1, as the same may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.11; and “Term Loan Commitments” means such commitments of all such Lenders in the aggregate. The amount of each Lender’s Term Loan Commitment as of the Closing Date is set forth on Schedule III. The aggregate amount of the Term Loan Commitments as of the Closing Date is $30,000,000.
“Term Loan Priority Collateral” is defined in the ABL-TL DIP Intercreditor Agreement.
“Termination Date” means the date on which all Obligations have been indefeasibly paid in full in cash.
“Terrorism Laws” means any of the following (a) Executive Order 13224 issued by the President of the United States, (b) the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of Federal Regulations), (c) the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations), (d) the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations), (e) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (as it may be subsequently codified), (f) all other present and future legal requirements of any Governmental Authority addressing, relating to, or attempting to eliminate, terrorist acts and acts of war and (g) any regulations promulgated pursuant thereto or pursuant to any legal requirements of any Governmental Authority governing terrorist acts or acts of war.
“Trademark Security Agreement” means any Trademark Security Agreement dated as of the date hereof executed and delivered by any Credit Party substantially in the form of Exhibit B to the Security Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time.
“Transactions” means, collectively, the filing of the Sale Motion, the consummation of the Acquisition, the execution and delivery by the parties of the Purchase Agreement, the filing of the Cases, the filing of the First Day Motions, the execution and delivery of this Agreement and the other Loan Documents, the closing and effectiveness of the ABL DIP Facility and the making of any Revolver Loans thereunder on the Closing Date, the payment of the fees and
30
expenses incurred in connection with any of the foregoing transactions that are required to be paid on the Closing Date and all other transactions contemplated under any of the foregoing.
“Transaction Documents” means, collectively, this Agreement and the other Loan Documents, the Financing Orders, the Purchase Agreement, the ABL DIP Documents and each other document delivered in connection with any of the foregoing, whether or not specifically mentioned herein or therein, in each case as amended, supplemented, amended and restated or otherwise modified from time to time.
“type” means, relative to any Loan, the portion thereof, if any, being maintained as a Base Rate Loan or a LIBO Rate Loan.
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if, with respect to any Filing Statement or by reason of any provisions of law, the perfection or the effect of perfection or non-perfection of the security interests granted to the Administrative Agent pursuant to the applicable Loan Document is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of each Loan Document and any Filing Statement relating to such perfection or effect of perfection or non-perfection.
“United States” or “U.S.” means the United States of America, its fifty states and the District of Columbia.
“Upstream Payment” means a Distribution by a Subsidiary of a Credit Party to such Credit Party.
“Voting Power” means, with respect to any Person, the power ordinarily (without the occurrence of a contingency) to elect the members of the Board of Directors (or Persons performing similar functions) of such Person.
“Voting Securities” means, with respect to any Person, Capital Securities of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.
“wholly owned Subsidiary” means any Subsidiary all of the outstanding Capital Securities of which (other than any director’s qualifying shares or investments by foreign nationals mandated by Applicable Laws) is owned directly or indirectly by a Borrower.
“Wind Down Amount” means the sum of (i) allowed, accrued and unpaid professional fees in accordance with the Professional Fee Budget not to exceed $2,600,000 (if allowed prior to or after the consummation of the Purchase Agreement), plus (ii) $225,000, plus (iii) the amount of unpaid fees of Lazard Fréres & Co. LLC accrued as of the Sale Closing Date in connection with, and due upon the consummation of, the transactions contemplated by the Purchase Agreement, as approved by the Bankruptcy Court and accepted by the Administrative Agent in its sole discretion, plus (iv) the amount of unpaid valid sale and use taxes payable by a Borrower and incurred after the Petition Date, plus (v) the amount of management incentive plan
31
payments approved by the Bankruptcy Court and accepted by the Administrative Agent in its sole discretion.
“Wind Down Funding Loan” means a Loan in an amount equal to the Wind Down Amount, deemed requested by Borrowers and made by the Lenders on the Sale Closing Date immediately prior to the consummation of the Acquisition in accordance with Section 5.2 hereof.
1.2
Use of Defined Terms. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in each other Loan Document and the Disclosure Schedule.
1.3
Cross-References. Unless otherwise specified, references in a Loan Document to any Article or Section are references to such Article or Section of such Loan Document, and references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition.
1.4
Accounting and Financial Determinations. Unless otherwise specified, all accounting terms used in each Loan Document shall be interpreted, and all accounting determinations and computations thereunder (including under Section 7.2.17 and the definitions used in such calculations) shall be made, in accordance with those generally accepted accounting principles in effect in the United States (“GAAP”). Unless otherwise expressly provided, all financial covenants and defined financial terms shall be computed on a consolidated basis for the Borrowers and their Subsidiaries (and, to the extent applicable and unless otherwise specified, any predecessor company), in each case without duplication.
ARTICLE 2
LOANS, CLOSING RATE AND NOTES
2.1
Loans. On the terms and subject to the satisfaction (or waiver in writing by the Administrative Agent) of the conditions precedent set forth in Section 5.1 hereof and in reliance upon the representations and warranties set forth herein and in the other Loan Documents, each Lender having a Term Loan Commitment identified on Schedule III agrees, severally and not jointly, from time to time upon receipt of a written request from Standard Register (on behalf of the Borrowers) during the period commencing on the Closing Date and ending on the Maturity Date, to make a term loan (each a “Loan”) in Dollars to the Borrowers, in a principal amount that, together with all prior Loans made by such Lender will not result in such Lender exceeding its Term Loan Commitment; provided that the Borrowers may request no more than five (5) such Loans during each successive 30 day period. Amounts prepaid or repaid in respect of Loans may not be reborrowed. All Loans shall constitute a single class of Loans for all purposes hereunder. The Term Loan Commitment of each Lender shall automatically be reduced or terminate, as the case may be, by the amount of and after giving effect to the funding of each Loan made by such Lender. The outstanding principal amount of all Loans, together with accrued and unpaid interest thereon, shall be due and payable on the Maturity Date.
2.2
Loan Rate; Borrowing Procedures. All of the Loans shall be LIBO Rate Loans with an Interest Period of one (1) month. Each Loan shall be made pursuant to a written request by Standard Register on behalf of the Borrowers, delivered to Administrative Agent and received
32
by Administrative Agent no later than 11:00 a.m. on the Business Day that is three (3) Business Days prior to the requested funding date for such Loan, which request shall specify the requested amount of such Loan and the requested funding date (which shall be a Business Day).
2.3
Continuation and Conversion Elections. By delivering a Continuation / Conversion Notice to the Administrative Agent on or before 1:00 p.m., New York time, on a Business Day, the Borrowers may from time to time irrevocably elect, on not less than one (1) Business Days’ notice in the case of Base Rate Loans, or three (3) Business Days’ notice in the case of LIBO Rate Loans, and in either case not more than five (5) Business Days’ notice, that all, or any portion in an aggregate minimum amount of $1,000,000 and an integral multiple of $250,000 be, in the case of Base Rate Loans, converted into LIBO Rate Loans, or in the case of LIBO Rate Loans, converted into Base Rate Loans or continued as LIBO Rate Loans (in the absence of delivery of a Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three (3) Business Days (but not more than five (5) Business Days) before the last day of the then current Interest Period with respect thereto, such LIBO Rate Loan shall, on such last day, automatically convert to a Base Rate Loan); provided that, (i) each such conversion or continuation shall be pro rated among the applicable outstanding Loans of all Lenders that have made such Loans, and (ii) no portion of the outstanding principal amount of any Loans may be continued as, or be converted into, LIBO Rate Loans when any Default has occurred and is continuing. Each such irrevocable request may be made by telephone confirmed promptly by facsimile to the Administrative Agent of the applicable Continuation/Conversion Notice. The conversion of a Base Rate Loan into a LIBO Rate Loan or a LIBO Rate Loan into a Base Rate Loan shall not effect a novation of the Loan so converted.
2.4
Funding. Each Lender may, if it so elects, fulfill its obligation to continue or convert LIBO Rate Loans hereunder by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to make or maintain such LIBO Rate Loan; provided that, such LIBO Rate Loan shall nonetheless be deemed to have been made and to be held by such Lender, and the obligation of the Borrowers to repay such LIBO Rate Loan shall nevertheless be to such Lender for the account of such foreign branch, Affiliate or international banking facility. In addition, the Borrowers hereby consent and agree that, for purposes of any determination to be made for purposes of Sections 4.1, 4.2, 4.3 or 4.4, it shall be conclusively assumed that each Lender elected to fund all LIBO Rate Loans by purchasing Dollar deposits in its LIBOR Office’s interbank Eurodollar market.
2.5
Register; Notes. The Register shall be maintained on the following terms:
(a)
Each Borrower hereby designates the Administrative Agent to serve as such Borrower’s agent, solely for the purpose of this clause, to maintain a register (the “Register”) on which the Administrative Agent will record the Loans issued by the Borrowers hereunder and held by each Lender (and SPC), each repayment in respect of the principal amount of the Loans, and each assignment or transfer of an interest in any Loan made pursuant to Section 10.11, annexed to which the Administrative Agent shall retain a copy of each Lender Assignment Agreement delivered to the Administrative Agent pursuant to Section 10.11. Failure to make any recordation, or any error in such recordation, shall not affect any Credit Party’s Obligations. The entries in the Register shall be conclusive and binding in the absence of manifest error, and the Borrowers, the
33
Administrative Agent, and the Lenders (including any SPC) shall treat each Person in whose name a Loan is registered as the owner thereof for the purposes of all Loan Documents, notwithstanding notice or any provision herein to the contrary. Any assignment or transfer of the Loans made pursuant hereto shall be registered in the Register only upon delivery to the Administrative Agent of a Lender Assignment Agreement that has been executed by the requisite parties pursuant to Section 10.11. No assignment or transfer of a Lender’s (or SPC’s) Loans shall be effective unless such assignment or transfer shall have been recorded in the Register by the Administrative Agent as provided in this Section.
(b)
Upon the request of any Lender made through the Administrative Agent, the Borrowers shall execute and deliver to each Lender a Note evidencing the Loans held by, and payable to the order of, such Lender in a maximum principal amount equal to such Lender’s Percentage of the Loan. Each Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender’s Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal amount of, and the interest rate and Interest Period applicable to the Loans evidenced thereby. Such notations shall, to the extent not inconsistent with notations made by the Administrative Agent in the Register, be conclusive and binding on each Credit Party absent manifest error; provided that, the failure of any Lender to make any such notations shall not limit or otherwise affect any Obligations of any Credit Party.
ARTICLE 3
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1
Repayments and Prepayments; Application. The Borrowers agree that the Loans shall be repaid and prepaid pursuant to the following terms.
3.1.1
Repayments and Prepayments. The Borrowers shall repay in full the unpaid principal amount of each Loan on the Maturity Date. Prior thereto, payments and prepayments of the Loans shall or may be made as set forth below.
(a)
From time to time on any Business Day, the Borrowers may make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Loans; provided that, (i) all such voluntary prepayments shall require, in the case of Base Rate Loans at least the same Business Day’s prior notice (such notice to be delivered before noon New York time on such day), and in the case of LIBO Rate Loans at least three (3) Business Days’ prior notice (such notice to be delivered before noon New York time on such day), and in either case not more than five (5) Business Days’ prior irrevocable notice to the Administrative Agent (which notice may be telephonic so long as such notice is confirmed in writing within 24 hours thereafter and such notice to be delivered before noon New York time on such day); and (ii) all such voluntary partial prepayments shall be, in the case of LIBO Rate Loans, in an aggregate minimum amount of $100,000 and an integral multiple of $50,000 and, in the case of Base Rate Loans, in an aggregate minimum amount of $100,000 and an integral multiple of $50,000. Each notice of prepayment sent pursuant to this clause shall specify the prepayment date and the principal amount of each Loan (or portion thereof)
34
to be prepaid. Each such notice shall be irrevocable and shall commit the Borrowers to prepay such Loan (or portion thereof) by the amount stated therein on the date stated therein. All prepayments under this clause shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.
(b)
[Reserved].
(c)
On each occasion that a Prepayment Event occurs, the Borrowers shall, within one (1) Business Day after the occurrence of a Debt Incurrence Prepayment Event and within two (2) Business Days after the occurrence of any other Prepayment Event, prepay, in accordance with Section 3.1.2 below, the principal amount of Loans in an amount equal to 100% of the Net Cash Proceeds from such Prepayment Event. If all or substantially all of the Capital Securities of any Credit Party are sold or any Credit Party is sold as a going concern on any date, the sale proceeds shall be allocated as set forth in the applicable Intercreditor Agreements.
(d)
[Reserved].
(e)
Immediately upon the occurrence of the Maturity date, including any acceleration of the Stated Maturity Date of any Loans pursuant to Section 8.3, or otherwise, the Borrowers shall repay all the Loans, unless, pursuant to Section 8.3, only a portion of all the Loans is so accelerated (in which case the portion so accelerated shall be so repaid).
Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty, except as may be required by Section 4.4.
3.1.2
Application. Amounts prepaid pursuant to Section 3.1.1 shall be applied as set forth in this Section.
(a)
Subject to clause (b), each prepayment or repayment of the principal of the Loans shall be applied, to the extent of such prepayment or repayment, first, to the principal amount thereof being maintained as Base Rate Loans, and second, subject to the terms of Section 4.4, to the principal amount thereof being maintained as LIBO Rate Loans, in each case in a manner that minimizes the amount of any payments required to be made by the Borrowers pursuant to Section 4.4.
(b)
At any time that a payment or prepayment is made pursuant to Section 3.1.1 hereof, all payments remitted to Administrative Agent by the Credit Parties and all proceeds of Collateral received by the Collateral Agent shall be applied as follows:
first, to pay any fee and expenses (including cost or expense reimbursements) or indemnities then due to the Administrative Agent or the Collateral Agent from the Credit Parties under the Loan Documents, until paid in full,
second, to pay interest due in respect of all Loans until paid in full,
35
third, to pay the principal of all Loans until paid in full,
fourth, to pay any other Obligations owing to any Lender,
fifth, to Borrowers (to be wired to the applicable designated account) or such other Person entitled thereto under applicable law.
The Administrative Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive.
3.2
Interest Provisions. Interest on the outstanding principal amount of the Loans shall accrue and be payable in accordance with the terms set forth below.
3.2.1
Rates. Subject to Section 2.3, pursuant to an appropriately delivered Continuation/Conversion Notice, the Borrowers may elect that the Loans accrue interest at a rate per annum:
(a)
on that portion maintained from time to time as a Base Rate Loan, equal to the sum of the Alternate Base Rate, from time to time in effect plus the Applicable Margin; and
(b)
on that portion maintained as a LIBO Rate Loan, during each Interest Period applicable thereto, equal to the sum of the LIBO Rate (Reserve Adjusted) for such Interest Period plus the Applicable Margin.
All LIBO Rate Loans shall bear interest from and including the first day of the applicable Interest Period to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such LIBO Rate Loan.
3.2.2
Post-Default Rates.
(a)
If any amount of principal of any Loan is not paid when due (without regard to applicable grace periods), whether at stated maturity, by acceleration, or otherwise, then such amount shall bear interest (after as well as before judgment) at a rate per annum at all times equal to the rate of interest that otherwise would be applicable to such Loan plus 2% per annum, to the fullest extent permitted by law;
(b)
If any amount (other than principal of any Loan) payable by the Borrowers under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall bear interest (after as well as before judgment) at a rate per annum at all times equal to the Base Rate from time to time in effect, plus the Applicable Margin for Loans accruing interest at the Base Rate, plus a margin of 2% per annum, to the fullest extent permitted by law;
(c)
[Reserved]; and
36
(d)
After the date that any other Event of Default has occurred for any reason and be continuing, the Borrowers shall pay interest (after as well as before judgment) on all outstanding Obligations at a rate per annum equal to (a) in the case of principal on any Loan, the rate of interest that otherwise would be applicable to such Loan plus 2% per annum; and (b) in the case of overdue interest, fees, and other monetary Obligations, the Base Rate from time to time in effect, plus the Applicable Margin for Loans accruing interest at the Base Rate, plus a margin of 2% per annum, in each case, to the fullest extent permitted by law.
3.2.3
Payment Dates. Interest accrued on each Loan shall be payable, without duplication:
(a)
on the Maturity Date;
(b)
except as set forth in clause (c) below, on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Loan on the principal amount so paid or prepaid;
(c)
with respect to Base Rate Loans, on the last Business Day of each month occurring after the Closing Date;
(d)
with respect to LIBO Rate Loans, on the last day of each applicable Interest Period;
(e)
with respect to any Base Rate Loans converted into LIBO Rate Loans on a day when interest would not otherwise have been payable pursuant to clause (c), on the date of such conversion; and
(f)
on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such acceleration.
(g)
Interest accrued on Loans or other monetary Obligations after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand.
3.3
Fees. The Borrowers shall pay to the Administrative Agent,
3.3.1
for the ratable account of the Lenders, on the Closing Date, a closing fee in the amount of $1,050,000;
3.3.2
for the ratable account of the Lenders, a commitment fee in an amount equal to 1.00% per annum times the result of (i) the aggregate amount of the Term Loan Commitments hereunder, less (ii) the average aggregate outstanding principal balance of Loans during the immediately preceding month (or portion thereof), which commitment fee shall be due and payable on the first day of each month from and after the Closing Date up to the first day of the month prior to the date on which the Obligations are paid in full and on the date on which the Obligations are paid in full; and
37
3.3.3
for its own account, a collateral monitoring fee in the amount of $10,000, payable in advance on the Closing Date, and on the first Business Day of each month thereafter.
3.3.4
All such fees shall be non-refundable.
3.4
Nature of Obligations.
3.4.1
Joint and Several Nature. Each Borrower shall be liable for, on a joint and several basis, and hereby guarantees the timely payment by all other Borrowers of, all of the Loans and other Obligations, regardless of which Borrower actually may have received the proceeds of any Loan or other extensions of credit hereunder or the amount of such Loans received or the manner in which Administrative Agent or any Lender accounts for such Loans or other extensions of credit on its books and records, it being acknowledged and agreed that Loans to any Borrower inure to the mutual benefit of all Borrowers and that the Administrative Agent and Lenders are relying on the joint and several liability of Borrowers in extending the Loans and other financial accommodations hereunder. Each Borrower hereby unconditionally and irrevocably agrees that upon default in the payment when due (whether at stated maturity, by acceleration or otherwise) of any principal of, interest owed on, or other amount owing with respect to any of the Loans or other Obligations, such Borrower shall forthwith pay the same, without notice or demand.
3.4.2
Unconditional Nature of Liability. Each Borrower’s liability hereunder with respect to, and guaranty of the Obligations (as provided for in Section 3.4.1 above) shall be absolute, unconditional and irrevocable irrespective of (i) any lack of validity, legality or enforceability of any Loan Document, (ii) the failure of any Secured Party (A) to assert any claim or demand or to enforce any right or remedy against the Borrowers or any other Person (including a guarantor) under the provisions of any Loan Document or otherwise, or (B) to exercise any right or remedy against any other borrower (including the Borrowers) of, or collateral securing, any Obligations, (iii) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Obligations, or any other extension, compromise or renewal of any Obligation, (iv) any reduction, limitation, impairment or termination of any Obligations (except in the case of the occurrence of the Termination Date) for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Borrower hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations or otherwise, (v) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Loan Document, (vi) any addition, exchange or release of any collateral or of any Person that is (or will become) a borrower (including the Borrowers hereunder) of the Obligations, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Obligations; or (vii) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, the Borrowers, any surety or any guarantor.
3.4.3
Partial Release of Liability for Obligations. No payment or payments made by an Credit Party or received or collected by the Administrative Agent from the Borrowers or any other Person by virtue of any action or proceeding or any setoff or appropriation or application at
38
any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Borrowers for the balance of Obligations remaining due under this Agreement, and the Borrowers shall remain liable for the payment and performance of all Obligations until the Termination Date.
3.4.4
Postponement of Subrogation, Etc. Each Borrower agrees that it will not exercise any rights which it may acquire by way of rights of subrogation under any Loan Document to which it is a party, nor shall any Borrower seek or be entitled to seek any contribution or reimbursement from any Credit Party, in respect of any payment made under any Loan Document or otherwise, until following the Termination Date. Any amount paid to the Borrowers on account of any such subrogation rights prior to the Termination Date shall be held in trust for the benefit of the Secured Parties and shall immediately be paid and turned over to the Administrative Agent for the benefit of the Secured Parties in the exact form received by the applicable Borrower (duly endorsed in favor of the Administrative Agent, if required), to be credited and applied against the Obligations, whether matured or unmatured, in accordance with the terms of this Agreement; provided, however, that if a Borrower has made payment to the Secured Parties of all or any part of the Obligations and the Termination Date has occurred, then at the Borrowers’ written request, the Administrative Agent (on behalf of the Secured Parties) will, at the expense of the Borrowers, execute and deliver to the Borrowers appropriate documents (in form and substance satisfactory to the Administrative Agent and without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to the Borrowers of an interest in the Obligations resulting from such payment. In furtherance of the foregoing, at all times prior to the Termination Date, the Borrowers shall refrain from taking any action or commencing any proceeding against any Credit Party (or its successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in respect of payments made under Section 3.4.1 to any Secured Party.
ARTICLE 4
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1
LIBO Rate Lending Unlawful. If any Lender shall determine (which determination shall, upon notice thereof to the Borrowers and the Administrative Agent, be conclusive and binding on the Borrowers) that the introduction of or any change in or in the interpretation of any law makes it unlawful, or any Governmental Authority asserts that it is unlawful, for such Lender to make or continue any Loan as, or to convert any Loan into, a LIBO Rate Loan, the obligations of such Lender to make, continue or convert any such LIBO Rate Loan shall, upon such determination, forthwith be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist, and all outstanding LIBO Rate Loans payable to such Lender shall automatically convert into Base Rate Loans at the end of the then current Interest Periods with respect thereto or sooner, if required by such law or assertion.
4.2
Deposits Unavailable. If the Administrative Agent shall have determined that (a) Dollar deposits in the relevant amount and for the relevant Interest Period are not available to it in its relevant market; or (b) by reason of circumstances affecting its relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to LIBO Rate Loans; then, upon notice from the Administrative Agent to the Borrowers and the Lenders, the
39
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall forthwith be suspended until the Administrative Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist.
4.3
Increased LIBO Rate Loan Costs, etc. Each Borrower agrees, jointly and severally, to reimburse each Secured Party for any increase in the cost to such Secured Party of, or any reduction in the amount of any sum receivable by such Secured Party in respect of, such Secured Party’s Loans hereunder (including the making, continuing or maintaining (or of its obligation to make or continue) any Loans as, or of converting (or of its obligation to convert) any Loans into, LIBO Rate Loans) that arise in connection with any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase in after the Closing Date of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any Governmental Authority, except for such changes with respect to increased capital costs (which are governed by Section 4.5), any Indemnified Taxes or any Excluded Taxes. Each affected Secured Party shall promptly notify the Administrative Agent and the Borrowers in writing of the occurrence of any such event, stating the reasons therefor and the additional amount required fully to compensate such Secured Party for such increased cost or reduced amount. Such additional amounts shall be payable by the Borrowers directly to such Secured Party within five days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrowers.
4.4
Funding Losses. In the event any Lender shall incur any loss or expense (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make or continue any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a LIBO Rate Loan) as a result of:
(a)
any conversion or repayment or prepayment of the principal amount of any LIBO Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Article 3 or otherwise;
(b)
any Loans not being continued as, or converted into, LIBO Rate Loans in accordance with the Continuation/Conversion Notice therefor; or
(c)
any LIBO Rate Loans not being prepaid in accordance with any notice delivered pursuant to clause (a) of Section 3.1.1 (as a result of a revocation of such notice or as a result of such payment not being made);
but in each case other than due to such Lender’s failure to fulfill its obligations hereunder then, upon the written notice of such Lender to the Borrowers, the Borrowers shall, within ten (10) days of its receipt thereof, pay directly to such Lender such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice shall, in the absence of manifest error, be conclusive and binding on the Borrowers.
4.5
Increased Capital Costs. In the event that any Lender shall determine (which determination shall, absent demonstrable error, be final and conclusive and binding upon all
40
parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or the adoption, effectiveness, interpretation, reinterpretation or phase in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law), or change in the administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof (provided that, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “change in law” for the purposes of the foregoing, regardless of the date enacted, adopted or issued), or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other Governmental Authority (whether or not having the force of law): (i) affects or would affect the amount of capital required or expected to be maintained by any Lender or any Person controlling such Lender, and such Lender determines (in good faith but in its sole and absolute discretion) that the rate of return on its or such controlling Person’s capital as a consequence of the Loans held by such Lender is reduced to a level below that which such Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, (ii) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (iii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to LIBOR Rate Loans that are reflected in the definition of Adjusted LIBOR Rate); or (iv) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrower shall promptly pay to such Lender, within three (3) Business Days of receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender on an after tax basis for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 4.5, which statement shall be conclusive and binding upon all parties hereto absent demonstrable error. In determining such amount, such Lender may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable.
4.6
Taxes. Each Borrower covenants and agrees as follows with respect to Taxes.
41
(a)
Any and all payments by or on account of the Borrowers or any other Credit Party under any Loan Document shall be made without setoff, counterclaim or other defense, and free and clear of, and without deduction or withholding for or on account of, any Taxes except to the extent that deduction or withholding of such Taxes is required by Applicable Law. In the event that any such Taxes are required by Applicable Law to be deducted or withheld from any payment required to be made by or on behalf of the Borrowers or any other Credit Party under any Loan Document, then:
(i)
subject to clause (f), if such Taxes are Indemnified Taxes or Other Taxes, the Borrowers and each Credit Party shall increase the amount of such payment so that each Secured Party receives an amount equal to the amount it would have received had no such deduction or withholding been made; and
(ii)
the Borrowers or the Administrative Agent (as applicable) shall withhold the full amount of such Taxes from such payment (as increased pursuant to clause (a)(i)) and shall pay such amount to the Governmental Authority imposing such Taxes in accordance with Applicable Law.
(b)
In addition, the Borrowers shall pay all Other Taxes imposed to the relevant Governmental Authority imposing such Other Taxes in accordance with Applicable Law, or at the option of the Administrative Agent, timely reimburse it for the payment of Other Taxes.
(c)
The Borrowers shall furnish to the Administrative Agent, as promptly as reasonably practicable after any such payment is made, an official receipt (or a certified copy thereof) or other proof of payment satisfactory to the Administrative Agent, acting reasonably, evidencing the payment of such Taxes or Other Taxes. The Administrative Agent shall make copies thereof available to any Lender upon request therefor.
(d)
Subject to clause (f), the Borrowers, jointly and severally, shall indemnify each Secured Party for any Indemnified Taxes and Other Taxes (including Indemnified Taxes and Other Taxes imposed or asserted on, or attributable to, amounts payable under this Section 4.6) paid by such Secured Party, whether or not such Indemnified Taxes or Other Taxes were correctly or legally asserted by the relevant Governmental Authority. With respect to the indemnification provided in this Section 4.6(d), such indemnification shall be made within 10 days after the date such Secured Party makes written demand therefor.
(e)
Each Lender making Loans to the Borrowers, on or prior to the date on which such Lender becomes a Lender hereunder (and from time to time thereafter upon the request of the Borrowers or the Administrative Agent, but only to the extent that such Lender is legally entitled to do so), shall deliver to the Borrowers and the Administrative Agent either (i) in the case of a Non-U.S. Lender, two duly completed copies of either (x) Internal Revenue Service Form W-8BEN-E, W-8BEN or W-8IMY claiming eligibility of a Non-U.S. Lender for benefits of an income tax treaty to which the United States is a party or (y) Internal Revenue Service Form W-8ECI, or in either case an applicable successor form; (ii) in the case of a Non-U.S. Lender that is not legally entitled to deliver
42
either form listed in clause (e)(i), (x) a certificate to the effect that such Non-U.S. Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Standard Register within the meaning of Section 881(c)(3)(B) of the Code, or (C) a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code (referred to as an “Exemption Certificate”) and (y) two duly completed copies of Internal Revenue Service Form W-8BEN-E, W-8BEN or W-8IMY or applicable successor form, or (iii) in the case of a Lender that is not a Non-U.S. Lender, two duly completed copies of Internal Revenue Service form W-9 or applicable successor form, and (iv) in the case of any Lender, such documentation as is reasonably requested by the Borrowers or the Administrative Agent to comply with FATCA. The Administrative Agent shall deliver to the Borrowers such IRS forms as are required to ensure that payments made to the Administrative Agent are not subject to withholding, but only to the extent that the Administrative Agent is legally entitled to do so. Each Lender agrees to promptly notify the Borrowers and the Administrative Agent in writing of any change in circumstances which would modify or render invalid any claimed exemption or reduction. In addition, each Lender shall timely deliver to the Borrowers and the Administrative Agent two further copies of such Form W-8BEN-E, W-8BEN, W-8IMY, W-8ECI or W-9 or successor forms on or before the date that any previously executed form expires or becomes obsolete, or after the occurrence of any event requiring a change in the most recent form delivered by such Person to the Borrowers.
(f)
The Borrowers shall not be obligated to pay any additional amounts to any Secured Party pursuant to clause (a)(i), or to indemnify any Secured Party pursuant to clause (d), in respect of United States federal withholding Taxes to the extent imposed as a result of (i) the failure, inability or ineligibility of such Secured Party to deliver to the Borrowers the form or forms and/or an Exemption Certificate, as applicable to such Secured Party, pursuant to clause (e), (ii) such form or forms and/or Exemption Certificate not establishing a complete exemption from U.S. federal withholding Tax or the information or certifications made therein by the Secured Party being untrue or inaccurate on the date delivered in any material respect, or (iii) the Secured Party designating a successor lending office at which it maintains its Loans which has the effect of causing such Secured Party to become obligated for Tax payments in excess of those in effect immediately prior to such designation; provided that, the Borrowers shall be obligated to pay additional amounts to any such Secured Party pursuant to clause (a)(i), and to indemnify any such Secured Party pursuant to clause (d), in respect of United States federal withholding Taxes if (i) any such failure to deliver a form or forms or an Exemption Certificate or the failure of such form or forms or Exemption Certificate to establish a complete exemption from U.S. federal withholding Tax resulted from a change in any applicable statute, treaty, regulation or other Applicable Law or any official interpretation of any of the foregoing occurring after the Closing Date (or in the case of an Assignee Lender, after the date of the assignment, except to the extent that the applicable assigning lender was entitled to receive additional amounts with respect to such United States Federal withholding Taxes), which change rendered such Secured Party no longer legally entitled to deliver such form or forms or Exemption Certificate or otherwise ineligible for a complete exemption from U.S. federal withholding Tax, (ii) the redesignation of the Secured Party’s lending office was made at the request of a Borrower
43
or (iii) the obligation to pay any additional amounts to any such Secured Party pursuant to clause (a)(i) or to indemnify any such Secured Party pursuant to clause (d) is with respect to an Assignee Lender that becomes an Assignee Lender as a result of an assignment made at the request of a Borrower.
(g)
In the event that any Lender or the Administrative Agent determines in its sole discretion that it has received a refund in respect of Taxes or Other Taxes as to which it has been paid additional amounts by the Borrowers pursuant to clause (a) or indemnified by the Borrowers pursuant to clause (d) and such Lender or the Administrative Agent, as applicable, determines in its good faith judgment that such refund is attributable to such additional amounts or indemnification, then such Lender or Administrative Agent shall promptly notify the Administrative Agent and the Borrowers, and shall, within 30 Business Days of receipt of such refund remit to the Borrowers, net of all out-of-pocket expenses (including Taxes) and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrowers, upon request of the Lender or the Administrative Agent, shall repay to the Lender or the Administrative Agent the amount paid over pursuant to this clause (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that the Lender or the Administrative Agent is required to repay such refund to such Governmental Authority and, provided further, that in no event will the Lender or the Administrative Agent be required to pay any amount pursuant to this clause (g) the payment of which would place the Lender or Administrative Agent in a less favorable net after-Tax position than it would have been if the Indemnified Taxes or Other Taxes had not been imposed and the corresponding additional amounts or indemnification payment not been made. Neither the Lenders nor the Administrative Agent shall be obligated to disclose information regarding its tax affairs or computations, including their tax returns, to the Borrowers in connection with this clause (g) or any other provision of this Section that such Lender or the Administrative Agent deems confidential.
4.7
Payments, Computations; Proceeds of Collateral, etc. (a) Unless otherwise expressly provided in a Loan Document, all payments by the Borrowers pursuant to each Loan Document shall be made by the Borrowers to the Administrative Agent for the pro rata account of the Secured Parties entitled to receive such payment. All payments shall be made without setoff, deduction or counterclaim not later than 11:00 a.m. New York time on the date due in same day or immediately available funds to such account as the Administrative Agent shall specify from time to time by notice to the Borrowers. Funds received after that time shall be deemed to have been received by the Administrative Agent on the next succeeding Business Day. The Administrative Agent shall promptly remit in same day funds to each Secured Party its share, if any, of such payments received by the Administrative Agent for the account of such Secured Party. All interest (including interest on LIBO Rate Loans) and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days (or, in the case of interest on a Base Rate Loan (calculated at other than the Federal Funds Rate), 365 days or, if appropriate, 366 days). Payments due on other than a Business Day shall (except as otherwise required by clause (b) of the proviso in the definition of “Interest
44
Period”) be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees in connection with that payment.
(b)
After the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and upon written direction from the Required Lenders, shall (subject to the provisions of the Intercreditor Agreements), apply all amounts received under the Loan Documents (including from the proceeds of Collateral) or under Applicable Law shall be applied upon receipt to the Obligations as follows: (i) first, to the payment of all Obligations in respect of fees, expense reimbursements, indemnities and other amounts owing to the Administrative Agent, in its capacity as the Administrative Agent (including the fees and expenses of counsel to the Administrative Agent), (ii) second, after payment in full in cash of the amounts specified in clause (b)(i), to the ratable payment of all interest (including interest accruing (or which would accrue) after the commencement of a proceeding in bankruptcy, insolvency or similar law, whether or not permitted as a claim under such law) and fees owing under the Loan Documents, and all costs and expenses owing to the Secured Parties pursuant to the terms of the Loan Documents, until paid in full in cash, (iii) third, after payment in full in cash of the amounts specified in clauses (b)(i) and (b)(ii), to the ratable payment of the principal amount of the Loans then outstanding, (iv) fourth, after payment in full in cash of the amounts specified in clauses (b)(i) through (b)(iii), to the ratable payment of all other Obligations owing to the Secured Parties, and (v) fifth, after payment in full in cash of the amounts specified in clauses (b)(i) through (b)(iv), and following the Termination Date, to each applicable Credit Party or any other Person lawfully entitled to receive such surplus.
4.8
Sharing of Payments. If any Secured Party shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to the terms of Sections 4.3, 4.4, 4.5 or 4.6) in excess of its pro rata share of payments obtained by all Secured Parties, such Secured Party shall purchase for cash at face value from the other Secured Parties such participations in Loans held by them as shall be necessary to cause such purchasing Secured Party to share the excess payment or other recovery ratably (to the extent such other Secured Parties were entitled to receive a portion of such payment or recovery) with each of them; provided that, if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Secured Party, the purchase shall be rescinded and each Secured Party which has sold a participation to the purchasing Secured Party shall repay to the purchasing Secured Party the purchase price to the ratable extent of such recovery together with an amount equal to such selling Secured Party’s ratable share (according to the proportion of (a) the amount of such selling Secured Party’s required repayment to the purchasing Secured Party to (b) total amount so recovered from the purchasing Secured Party) of any interest or other amount paid or payable by the purchasing Secured Party in respect of the total amount so recovered. The Borrowers agree that any Secured Party purchasing a participation from another Secured Party pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 4.9) with respect to such participation as fully as if such Secured Party were the direct creditor of the Borrowers in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law any Secured Party receives a secured claim in lieu of a setoff to which this Section applies, such Secured Party shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Secured Parties entitled under this Section to share in the benefits of any recovery on such secured claim.
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4.9
Setoff. Each Secured Party shall, upon the occurrence and during the continuance of any Event of Default described in clauses (b) through (d) of Section 8.1.8 or, with the consent of the Required Lenders, upon the occurrence and during the continuance of any other Event of Default, have the right to appropriate and apply to the payment of the Obligations owing to it (whether or not then due), and (as security for such Obligations) each Borrower hereby grants to each Secured Party a continuing security interest in, any and all balances, credits, deposits, accounts or moneys of such Borrower then or thereafter maintained with such Secured Party; provided that, any such appropriation and application shall be subject to the provisions of Section 4.8 and to the Intercreditor Agreements. Each Secured Party agrees promptly to notify the Borrowers and the Administrative Agent in writing after any such appropriation and application made by such Secured Party; provided that, the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Secured Party under this Section are in addition to other rights and remedies (including other rights of setoff under Applicable Law or otherwise) which such Secured Party may have.
4.10
Replacement of Lenders. If any Lender (an “Affected Lender”) fails to consent to an election, consent, amendment, waiver or other modification to this Agreement or other Loan Document that requires the consent of a greater percentage of the Lenders than the Required Lenders and such election, consent, amendment, waiver or other modification is otherwise consented to by the Required Lenders, the Borrowers may, within 30 days of receipt by the Borrowers of such demand or notice, as the case may be, give notice (a “Replacement Notice”) in writing to the Administrative Agent and such Affected Lender of its intention to cause such Affected Lender to sell all or any portion of its Loans and/or Notes to an Eligible Assignee (a “Replacement Lender”) designated in such Replacement Notice; provided, however, that no Replacement Notice may be given by the Borrowers if (i) such replacement conflicts with any Applicable Law or regulation, or (ii) any Event of Default shall have occurred and be continuing at the time of such replacement. Within 30 days of its receipt of such Replacement Notice, the Affected Lender shall assign, in accordance with Section 10.11, the portion of its Loans, Notes (if any), and other rights and obligations under this Agreement and all other Loan Documents designated in the replacement notice to such Replacement Lender; provided, however, that (i) such assignment shall be without recourse, representation or warranty and shall be on terms and conditions reasonably satisfactory to such Affected Lender and such Replacement Lender, (ii) the purchase price paid by such Replacement Lender shall be in the amount of such Affected Lender’s Loans designated in the Replacement Notice, together with all accrued and unpaid interest and fees in respect thereof, plus all other amounts and including any call premiums, owing to such Affected Lender hereunder and (iii) the Borrowers shall pay to the Affected Lender and the Administrative Agent all reasonable out-of-pocket expenses incurred by the Affected Lender and the Administrative Agent in connection with such assignment and assumption (including the processing fees described in Section 10.11). Upon the effective date of an assignment described above, the Replacement Lender shall become a “Lender” for all purposes under the Loan Documents. Each assignment pursuant to this Section 4.10 shall be effective upon the satisfaction of the conditions specified in this Section 4.10 without further action on the part of the applicable Affected Lender.
4.11
Change in Lending Office. If any Lender makes a demand upon the Borrowers for (or if the Borrowers are otherwise required to pay) amounts pursuant to Section 4.3, 4.5 or 4.6, or gives notice pursuant to Section 4.1 requiring a conversion of such Lender’s LIBO Rate
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Loans to Base Rate Loans or suspending such Lender’s obligation to hold Loans as, or to convert Loans into, LIBO Rate Loans, then such Lender shall use reasonable efforts to designate a different lending office with respect to its rights and obligations hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (a) would eliminate the need for such notice or reduce amounts payable or to be withheld in the future, as applicable; and (b) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers shall pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
ARTICLE 5
CONDITIONS TO LOANS
5.1
Conditions to Close. This Agreement shall be effective upon the satisfaction of the following conditions precedent:
5.1.1
Resolutions, etc. The Administrative Agent shall have received from each Credit Party, (i) a copy of a good standing certificate, dated a date reasonably close to the Closing Date, for each such Person and (ii) a certificate, dated as of the Closing Date, duly executed and delivered by such Person’s Secretary or Assistant Secretary, managing member or general partner, as applicable, as to:
(a)
resolutions of each such Person’s Board of Directors (or other managing body, in the case of other than a corporation) then in full force and effect authorizing, to the extent relevant, all aspects of the Transactions applicable to such Person and the execution, delivery and performance of each Loan Document to be executed by such Person and the transactions contemplated hereby and thereby;
(b)
the incumbency and signatures of those of its officers, managing member or general partner, as applicable, authorized to act with respect to each Loan Document to be executed by such Person; and
(c)
the full force and validity of each Organic Document of such Person and copies thereof;
upon which certificates each Secured Party may conclusively rely until it shall have received a further certificate of the Secretary, Assistant Secretary, managing member or general partner, as applicable, of any such Person canceling or amending the prior certificate of such Person.
5.1.2
Delivery of Notes. The Administrative Agent shall have received, for the account of each Lender that has requested a Note, such Lender’s Note(s) duly executed and delivered by an Authorized Officer of each Borrower.
5.1.3
Reserved.
5.1.4
Security Agreements. The Administrative Agent shall have received executed counterparts of the Security Agreement, each dated as of the Closing Date, duly executed and delivered by the Borrowers and each Subsidiary, together with:
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(a)
to the extent not previously delivered to the Administrative Agent, certificates (in the case of Capital Securities that are securities (as defined in the UCC)) evidencing all of the issued and outstanding capital Securities owned by each Credit Party in its Subsidiaries directly owned by each Credit Party, which certificates in each case shall be accompanied by undated instruments of transfer duly executed in blank, or, if any Capital Securities (in the case of Capital Securities that are uncertificated securities (as defined in the UCC)), confirmation and evidence satisfactory to the Administrative Agent that the security interest therein has been transferred to and perfected by the Administrative Agent for the benefit of the Secured Parties in accordance with Articles 8 and 9 of the UCC and all laws otherwise applicable to the perfection of the pledge of such Capital Securities; and
(b)
Filing Statements suitable in form for naming each Borrower and each Subsidiary Guarantor as a debtor and the Administrative Agent as the secured party, or other similar instruments or documents to be filed under the UCC of all jurisdictions as may be necessary or as the Required Lenders may require to perfect the security interests of the Administrative Agent pursuant to such Security Agreement..
5.1.5
Mexican Collateral Documents. The Administrative Agent shall have received executed counterparts of that certain Non-Possessory Pledge Agreement dated as of the Closing Date, duly executed and delivered by each of SR MX Holdco, SR MX Holdings and SR Mexico.
5.1.6
Reserved.
5.1.7
Filing Agent, etc. All Uniform Commercial Code financing statements or other similar financing statements and Uniform Commercial Code (Form UCC-3) termination statements required pursuant to the Loan Documents (collectively, the “Filing Statements”), shall have been delivered to CT Corporation System or another similar filing service company acceptable to the Required Lenders (the “Filing Agent”).
5.1.8
Intercreditor Agreement. The Administrative Agent shall have received the ABL-TL DIP Intercreditor Agreement, fully executed by all parties thereto.
5.1.9
Patriot Act Disclosures. The Administrative Agent and each Lender shall have received all Patriot Act Disclosures requested by them prior to execution of this Agreement.
5.1.10
Compliance with Warranties, No Default, etc. The Administrative Agent shall have received a certificate of an Authorized Officer of Standard Register to the effect that both before and after giving effect to the consummation of the Transactions:
(a)
the representations and warranties set forth in each Loan Document shall, in each case, be true and correct in all material respects with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); and
(b)
no Default shall have then occurred and be continuing.
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5.1.11
Reserved.
5.1.12
Reserved.
5.1.13
Fees. The Administrative Agent shall have received the fees required to be paid at the Closing by the Borrowers hereunder.
5.1.14
No Litigation. Except for the Cases, there shall be no action, suit, investigation litigation or proceeding pending or threatened in any court or before any arbitrator or Governmental Authority that could reasonably be expected to materially and adversely affect the transactions contemplated by this Agreement and the other Loan Documents.
5.1.15
Closing Certificate. The Administrative Agent shall have received a certificate of an Authorized Officer of Standard Register certifying that each of the conditions precedent herein have been satisfied.
5.1.16
Interim Financing Order. The Administrative Agent shall have received a certified copy of the Interim Financing Order. The Interim Financing Order shall (i) have been entered with the consent or non-objection of a majority in dollar amount (as determined by the Administrative Agent) of the “Loans” as defined in and as outstanding under the Prepetition Term Loan Facilities, (ii) be in full force and effect and shall not have been stayed, reversed, vacated, rescinded, modified or amended in any respect, (iii) authorize the Loans and the extensions of credit under the ABL DIP Facility in amounts satisfactory to the Administrative Agent. The Interim Financing Order shall further provide that (a) the automatic stay under section 362(a) of the Bankruptcy Code shall be automatically vacated, terminated and modified (but solely with respect to the Facility), effective following five Business Days’ written notice to the Borrowers and the Initial Guarantors and any other applicable notice parties (the “Default Notice Period”) of the occurrence of an Event of Default, unless the Bankruptcy Court has determined that such Event of Default has not occurred and/or is not continuing, (b) any party in interest’s sole recourse with respect to opposing such modification of the automatic stay under section 362(a) of the Bankruptcy Code shall be to contest the occurrence and/or continuance of an Event of Default and be entitled to an emergency hearing before the Bankruptcy Court, with proper notice to the Lenders and the Administrative Agent, solely for the purpose of contesting whether an Event of Default has occurred and/or is continuing, (c) the rights and remedies of the Administrative Agent and the Lenders specified in the Interim Financing Order are cumulative and not exclusive of any rights or remedies that the Administrative Agent and Lenders may have hereunder or otherwise, and (d) the Credit Parties shall cooperate fully with the Lenders and the Administrative Agent in any permitted exercise of rights and remedies, whether against the Collateral or otherwise.
5.1.17
Compliance with Interim Financing Order; No Trustee. The Credit Parties shall be in compliance in all respects with the Interim Financing Order. No trustee or examiner shall have been appointed with respect to the Debtors or any of their respective properties.
5.1.18
First Day Motion/Financing Orders. All motions and orders submitted to the Bankruptcy Court on or about the Petition Date (or within five days thereof) shall be in form and substance satisfactory to the Administrative Agent, and the Administrative Agent shall be
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reasonably satisfied with any cash collateral arrangements applicable to any material pre-Petition Date secured obligations of the Credit Parties.
5.1.19
Sale Motion. A motion (the “Sale Motion”), in form and substance acceptable to the Administrative Agent, seeking Bankruptcy Court approval of the Purchase Agreement, subject only to higher and better offers, shall have been filed with the Bankruptcy Court.
5.1.20
Other Motions and Orders. All other motions filed or orders entered by the Bankruptcy Court in the Cases shall be in form and substance reasonably satisfactory to the Administrative Agent.
5.1.21
Initial Budget. The Administrative Agent shall have received and approved the initial Budget and the initial Professional Fee Budget.
5.1.22
No Defaults. No Default shall then exist.
5.1.23
Know Your Customer. Any information reasonably required by a Lender and any other Secured Party to enable it to meet its internal “know your customer” compliance requirements and normal operating procedures shall have been delivered.
5.1.24
Representations and Warranties. The representations and warranties of the Credit Parties contained in Article VI or any other Loan Document shall be true and correct in all material respects on and as of the Closing Date (except to the extent that any such representation and warranty (x) is qualified as to materiality, in which case such representation and warranty shall be true and correct in all respects on and as of the date of such Credit Extension, or (y) specifically refers to an earlier date, in which case such representation or warranty is true and correct as of such earlier date).
5.1.25
ABL DIP Facility. The ABL DIP Facility shall have been entered into (pursuant to ABL DIP Documents in form and substance acceptable to the Administrative Agent) and, but for the effectiveness of this Facility, be in full force and effect with a minimum ABL Availability thereunder on the Closing Date of not less than $12,500,000.
5.2
Conditions to Each Loan. The obligation of each Lender to make its Loans hereunder on any date (other than the Closing Date Loan, which shall be deemed made on the Closing Date upon the effectiveness of this Agreement irrespective of any conditions set forth in this Section 5.2 and the Wind Down Funding Loan, which shall be funded on or about the Sale Closing Date subject only to Section 5.2.9 below) is subject to satisfaction of the following conditions precedent:
5.2.1
The representations and warranties of the Credit Parties contained in Article VI or any other Loan Document shall be true and correct in all material respects on and as of the date of such Delayed Draw Loan (except to the extent that any such representation and warranty (x) is qualified as to materiality, in which case such representation and warranty shall be true and correct in all respects on and as of the date of such Delayed Draw Loan, or (y) specifically refers to an earlier date, in which case such representation or warranty is true and correct as of such earlier date);
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5.2.2
No Default shall exist, or would result from such proposed Loan or from the application of the proceeds thereof;
5.2.3
The Administrative Agent shall have received a written request for such Loan in accordance with the requirements hereof;
5.2.4
The Interim Financing Order (or Final Financing Order, as the case may be) shall be in full force and effect and shall not have been stayed, reversed, vacated, rescinded, modified or amended in any respect. If either the Interim Financing Order or the Final Financing Order is the subject of a pending appeal in any respect, none of the making of such Loan, the grant of Liens and Superpriority Claims hereunder or the performance by any Credit Party of any of its respective obligations under any of the Loan Documents shall be the subject of a then presently effective stay;
5.2.5
The Final DIP Financing Order shall have been entered within 30 days of entry of the Interim Financing Order substantially in the form of and containing, among other things, the provisions present in the Interim Financing Order (including, without limitation, the granting of Liens contemplated under the Security Documents). The Final Financing Order shall have been entered on such notice to such parties as may be reasonably satisfactory to the Administrative Agent and as required by the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, order of the Bankruptcy Court, and any applicable local bankruptcy rules. The Final Financing Order must otherwise be in full force and effect and, unless otherwise waived by the Administrative Agent, no appeal or petition for review, rehearing, or certiorari with respect to the Final Financing Order may be pending;
5.2.6
The Borrowers shall certify (a) that they are in compliance with (i) the Budget and that all Loans shall have been and will be used solely in accordance with the Budget, subject to Permitted Variances, and (ii) all covenants under the Loan Documents, and (b) as of the date such Loan is requested, ABL Availability under the ABL DIP Credit Agreement is expected to be zero on the requested date of funding the applicable Loan and Borrowers are expected to have insufficient cash on hand to pay the amounts set forth in the Budget with respect to which such Loan request is being made;
5.2.7
Standard Register’s existing directors' and officers' insurance coverage shall be acceptable to the Administrative Agent in its sole discretion, or Standard Register shall have obtained additional directors' and officers' insurance coverage, or modified its existing coverage, in either case so as to be acceptable to the Administrative Agent in its sole discretion; it being acknowledged by the Administrative Agent that that that certain "Extended Reporting period Elect (pre-paid)" endorsement to the Borrowers' directors' and officers' liability policies received by Administrative Agent on Tuesday, March 10, 2015 is acceptable;
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5.2.8
Each request for a Loan submitted by the Borrowers shall be deemed to be a representation and warranty that the conditions specified in Section 5.2 have been satisfied on and as of the date of the applicable Loan; and
5.2.9
With respect to the Wind Down Funding Loan only, all conditions precedent to closing (other than, for the avoidance of doubt, any condition that the Wind Down Amount be funded) under (i) Purchase Agreement, or (ii) to the extent applicable, an Alternative Transaction (as defined in the Purchase Agreement), have been fully satisfied or otherwise waived in writing by the Purchaser (with the consent of the Administrative Agent) and the Acquisition is otherwise ready to be consummated in accordance with the terms of the Purchase Agreement or the terms of a definitive agreement relating to an Alternative Transaction, as applicable.
Borrowers hereby request, authorize and direct Lenders to make the Closing Date Loan and the Wind Down Funding Loan on the Closing Date and on or about the Sale Closing Date, respectively. The Closing Date Loan and the Wind Down Funding Loan constitute Loans made pursuant to this Agreement for all purposes.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
In order to induce the Secured Parties to enter into this Agreement, each Borrower represents and warrants to each Secured Party on the Closing Date and on each date a Loan is made hereunder, as set forth in this Article.
6.1
Organization and Qualification. Each Borrower and each of its Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Borrower and each of its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign corporation in each state and jurisdiction in which the failure of any the Borrower or any of such Subsidiaries to be so qualified would have a Material Adverse Effect.
6.2
Power and Authority. Upon the entry of the Interim DIP Financing Order, each Borrower and each of its Subsidiaries is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and each of the other Loan Documents to which it is a party. The execution, delivery and performance of this Agreement and each of the other Loan Documents have been duly authorized by all necessary corporate, limited liability company or analogous action and do not and will not (i) require any consent or approval of any of the holders of the Capital Securities of any Borrower or any of its Subsidiaries; (ii) contravene the Organic Documents of any Borrower or any of its Subsidiaries; (iii) violate, or cause any Borrower or any of its Subsidiaries to be in default under, any provision of any Applicable Law, order, writ, judgment, injunction, decree, determination or award in effect having applicability to such Borrower or any of its Subsidiaries; (iv) result in a breach of or constitute a default under (a) any indenture or loan or credit agreement or (b) any other agreement, lease or instrument to which a Borrower or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected the consequence of which would constitute a Material Adverse Effect; or (v) result in, or
52
require, the creation or imposition of any Lien (other than Permitted Liens) upon or with respect to any of the Properties now owned or hereafter acquired by a Borrower or any of its Subsidiaries.
6.3
Legally Enforceable Agreement. Upon the entry of the Interim DIP Financing Order and thereafter upon the entry of the Final DIP Financing Order, this Agreement is and each of the other Loan Documents when delivered under this Agreement will be, a legal, valid and binding obligation of each Borrower and each of its Subsidiaries signatories thereto enforceable against them in accordance with the respective terms of such Loan Documents, except as the enforceability thereof may be limited by principles of equity affecting the enforcement of creditors’ rights.
6.4
Capital Structure. As of the date hereof, Part 6.4 of the Disclosure Schedule states (i) the correct name of each Subsidiary, its jurisdiction of incorporation and the percentage of its Capital Securities having voting powers owned by each Person, (ii) the name of each corporate Affiliate of each Credit Party and the nature of the affiliation and (iii) the number of authorized and issued Capital Securities (and treasury shares) of each Credit Party and each of its Subsidiaries as of the close of such Borrower’s most recently ended Fiscal Month. As of the date hereof, each Credit Party has good title to all of the shares it purports to own of the Capital Securities of each of its Subsidiaries, free and clear in each case of any Lien other than Permitted Liens. As of the date hereof: (x) all such Capital Securities have been duly issued and are fully paid and non-assessable; and (y) since December 30, 2014, no Credit Party has made, or obligated itself to make, any Distribution except as shown in Part 6.4 of the Disclosure Schedule. Except as shown in Part 6.4 of the Disclosure Schedule neither any Credit Party nor any Subsidiary holds, and no shares of the capital stock of any Credit Party or any Subsidiary are subject to, outstanding options to purchase, or any rights or warrants to subscribe for, or any commitments or agreements to issue or sell, or any Capital Securities or obligations convertible into, or any powers of attorney relating to such Capital Securities.
6.5
Reserved.
6.6
Business Locations; Agent for Process. Part 6.6 of the Disclosure Schedule contains a true and complete list of the following information, as of the date hereof: (i)the chief executive office of each Credit Party and each of its Subsidiaries including any other executive offices of each Credit Party and each of its Subsidiaries during the 5-year period preceding the date of this Agreement and (ii) the agent for service of process of each Borrower and each of its Subsidiaries in their respective states of organization. All of the plant facilities and warehouses of each Credit Party and its Subsidiaries effective as of the date hereof are listed in Part 6.6 of the Disclosure Schedule.
6.7
Status of Obligations; Perfection and Priority of Security Interests. Subject to the Interim Financing Order and the entry by the Bankruptcy Court of the Final Financing Order, the Security Documents are effective to create in favor of the Collateral Agent, for the benefit of the Lenders, legal, valid and enforceable Liens on, and security interests in, the Collateral described therein to the extent intended to be created thereby. The Interim Financing Order is (and the Final Financing Order when entered will be) effective to create in favor of the Collateral Agent legal, valid, enforceable and fully perfected security interests in and Liens on the Collateral with
53
the priorities set forth in Section 6.7 hereof and in the Interim Financing Order. The Obligations and the Liens securing the Obligations, subject to the ABL-TL DIP Intercreditor Agreement, are entitled to and have the priority set forth in the Financing Orders. The priorities set forth in the Financing Orders are subject, in each case, only to the Carve-Out and the Permitted Senior Liens (as defined therein). All of the Liens and security interests described in the Financing Orders shall be valid, effective, enforceable and perfected as of the date that the Bankruptcy Court enters the Interim Financing Order without the necessity of the execution of mortgages, security agreements, pledge agreements, financing statements or other agreements or documents and without further action by an Person. Each Credit Party shall execute and deliver to the Administrative Agent (for recordation or filing, as appropriate) such mortgages and pledges (and other security instruments), and be authorized pursuant to the Financing Orders to file such financing statements and other instruments and documents, as shall be advisable (as reasonably determined by Administrative Agent) to evidence and secure the Obligations.
6.8
Financial Information. Since January 31, 2015, there has been no change in the condition, financial or otherwise, of any Borrower (other than commencement of the Cases) that could reasonably be expected to have a Material Adverse Effect. No financial statement of operations of any Borrower and its Subsidiaries delivered to the Administrative Agent or any Lenders by Borrowers on or prior to the Closing Date contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Borrower has failed to disclose to the Administrative Agent in writing that could reasonably be expected to have a Material Adverse Effect.
6.9
Brokers. Except for fees disclosed in writing to the Administrative Agent and paid on the Closing Date in connection with the Transactions, there are no claims against the Borrowers for brokerage commissions, finder’s fees or investment banking fees in connection with the transactions contemplated by this Agreement or any of the other Loan Documents.
6.10
Governmental Approvals. Subject to the entry of the Interim Financing Order, each Borrower and each of its Subsidiaries has, and is in good standing with respect to, all Governmental Approvals necessary to utilize the Loans hereunder and to consummate the transactions contemplated hereby and the other Loan Documents, except for issues relating to licenses, certificates of occupancy and other matters that are not reasonably likely to have a Material Adverse Effect.
6.11
Compliance with Applicable Laws. Each Borrower and each of its Subsidiaries has duly complied with, and its Properties, business operations and leaseholds are in compliance in all material respects with, the provisions of all Applicable Law, including all Terrorism Laws, necessary to consummate the transactions contemplated hereby and the other Loan Documents and there have been no citations, notices or orders of noncompliance issued to the Borrowers or any of the Subsidiaries with respect to the transactions contemplated hereby and the other Loan Documents under any such law, rule or regulation that could be reasonably expected to have a Material Adverse Effect.
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6.12
Litigation. Except for the Cases and as set forth in Part 6.12 of the Disclosure Schedule, there are no actions, suits, proceedings or investigations pending or, to the Borrower’s Knowledge, threatened on the date hereof, against or affecting any Borrower or any of its Subsidiaries, or the business, operations, Properties, prospects, profits or condition of the Borrower or any of its Subsidiaries, (i) which relates to the transactions contemplated hereby and the other Loan Documents and (ii) which, if determined adversely to a Borrower or any of its Subsidiaries, could reasonably be expected to have a Material Adverse Effect.
6.13
No Defaults. No event has occurred and no condition exists which would, upon or immediately after the execution and delivery of this Agreement or any Credit Party’s performance hereunder, constitute a Default or an Event of Default, except for conditions that could not reasonably be expected to have a Material Adverse Effect.
6.14
Investment Company Act. Each Borrower is not an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940.
6.15
Margin Stock. Neither the Borrowers nor any of their Subsidiaries is engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock.
6.16
Reserved.
6.17
Use of Proceeds.
6.17.1
No Borrower nor any other Credit Party shall use the proceeds of any Loan for any purpose other than (i) to fund working capital and other corporate purposes of the Borrowers and their Subsidiaries (including to pay fees and expenses associated with the Facility) that are due and payable or will become due and payable within the two week period following the date of funding of the requested Loan and in strict accordance with the Budget, subject to Permitted Variances, and (ii) to fund the sale process described in Section 7.20 hereof. Loans shall be made hereunder and proceeds used by Borrowers only (i) except with respect to the Closing Date Loan and the Wind Down Funding Loan, when ABL Availability is expected to be zero on the requested date of funding the applicable Loan, and (ii) only in strict accordance with the most recent Budget approved by the Administrative Agent, subject to Permitted Variances and the Financing Orders. The Borrowers shall not use the proceeds of any Loan to make any payment in respect of the Prepetition ABL Obligations.
6.17.2
Proceeds of ABL Loans shall be used by the Credit Parties solely (i) to fund working capital and other corporate purposes of the Borrowers and their Subsidiaries in accordance with the Budget, subject to Permitted Variances, (ii) to fund the sale process described in Section 7.20 hereof, and (iii) for such other purposes as are consistent with the Budget (including to pay certain ABL Obligations as specified therein from time to time) or as expressly authorized in the Financing Orders.
6.17.3
Except as specifically set forth in Section 5.1.16 with respect to a challenge in connection with a Default Notice Period, none of the proceeds of the Loans or any ABL Loans shall be used in connection with (i) the initiation, prosecution or furtherance of any claims,
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causes of action, adversary proceedings or other litigation against the Administrative Agent, the Collateral Agent, any Lender or any of their respective Affiliates, (ii) any challenge to the validity or enforceability the Prepetition Term Loan Facilities or the Loan Documents or the validity, perfection, priority or enforceability of any Liens securing the Prepetition Term Loan Facility or the Obligations, (iii) any claim, counterclaim, action, contested matter, objection, defense or other proceeding, the purpose of which is to prevent, enjoin, hinder or otherwise delay the Administrative Agent's or Collateral Agent’s enforcement of any of the Loan Documents or any realization upon any Collateral (unless such enforcement or realization is in direct violation of an explicit provision in any of the Financing Orders); or (iv) any purpose prohibited by the Bankruptcy Code or inconsistent with the Financing Orders.
ARTICLE 7
COVENANTS
7.1
Affirmative Covenants. Each Borrower (for itself and its Subsidiaries) hereby covenants and agrees that, on the Closing Date and thereafter, until the Loans, together with interest, fees and all other Obligations incurred hereunder (other than contingent indemnification obligations for which no claim has been identified), are paid in full, unless the Required Lenders have otherwise consented in writing, the Borrowers will, and will cause their Subsidiaries to, perform or cause to be performed the obligations set forth below.
7.1.1
Visits and Inspections. The Borrowers will, and will cause each of their Subsidiaries to, permit representatives of the Administrative Agent, from time to time, as often as may be reasonably requested, but only during normal business hours and (except when a Default exists) upon reasonable prior notice to the Borrowers, to visit and inspect the Properties of the Borrowers and each of their Subsidiaries, inspect, audit, examine, conduct appraisals, and make extracts from such Borrower’s and each Subsidiary’s books and records, and discuss with its officers, its employees and its independent accountants, such Borrower’s and each Subsidiary’s business, financial condition, business prospects and results of operations. Up to two such visit prior to the Stated Maturity Date shall be at the Borrowers’ expense; except when a Default exists, in which case all such visits shall be at the Borrowers’ expense. Representatives of each Lender shall be authorized to accompany Administrative Agent on each such visit and inspection and to participate with Administrative Agent therein, but at their own expense, unless a Default exists. Neither Administrative Agent nor any Lender shall have any duty to make any such inspection and shall not incur any liability by reason of its failure to conduct or delay in conducting any such inspection.
7.1.2
Notices. Notify the Administrative Agent and the Lenders in writing, within five (5) days after the Borrower’s Knowledge thereof, (i) of the commencement of any litigation affecting any Credit Party or any of its Properties, whether or not the claims asserted in such litigation are considered by the Credit Parties to be covered by insurance, and of the institution of any administrative proceeding, to the extent that such litigation or administrative proceeding, if determined adversely to such Credit Party, would reasonably be expected to have a Material Adverse Effect; (ii) of any material labor dispute to which any Credit Party may become a party, any strikes or walkouts relating to any of its plants or other facilities; (iii) of any material default by any Credit Party under or termination of any material contract, or any note, indenture, loan agreement, mortgage, lease, deed, guaranty or other similar agreement relating to any
56
Indebtedness of such Credit Party exceeding $500,000; (iv) of the existence of any Default; (v) of any default by any Person under any note or other evidence of Indebtedness payable to a Credit Party in an amount exceeding $500,000; (vi) of any judgment against any Credit Party in an amount exceeding $500,000; (vii) of the assertion by any Person of any intellectual property claim, the adverse resolution of which could reasonably be expected to have a Material Adverse Effect; (viii) of any violation or asserted violation by any Credit Party of any Applicable Law (including ERISA, OSHA, FLSA or any Environmental Laws), the adverse resolution of which could reasonably be expected to have a Material Adverse Effect; (ix) of any Release by a Credit Party or on any Property owned or occupied by a Credit Party which could reasonably be expected to have a Material Adverse Effect; (x) of the discharge of the Borrowers’ independent accountants or any withdrawal of resignation by such independent accountants from their acting in such capacity; (xi) of the issuance or incurrence of any Indebtedness; (xii) of sale of any Equity Interests of a Borrower or any Subsidiary; (xiii) of any disposition of any assets or Property or any interest therein to or in favor of any Person; or (xiv) copies of all notices, requests and other documents (including amendments, waivers and other modifications) received by any Credit Party or any Subsidiary under or pursuant to any ABL DIP Document and, from time to time upon request by the Administrative Agent, such information and reports regarding the ABL Loans as the Administrative Agent may reasonably request. In addition, the Credit Parties shall give the Administrative Agent at least five (5) Business Days prior written notice of any Credit Party’s opening of any new chief executive office.
7.1.3
Financial and Other Reporting. Keep adequate records and books of account with respect to its business activities in which proper entries are made in accordance with GAAP reflecting all its financial transactions; and cause to be prepared and to be furnished to the Administrative Agent and the Lenders the following (all to be prepared in accordance with GAAP applied on a consistent basis, unless the Borrowers’ certified public accountants concur in any change therein, such change is disclosed to the Administrative Agent and is consistent with GAAP and, if required by the Required Lenders, the financial covenants set forth in Section 7.2.17 are amended in a manner requested by the Required Lenders to take into account the effects of such change):
(a)
if directed in writing by the Administrative Agent on or prior to March 20, 2015, Standard Register shall use commercially reasonable best efforts to obtain audited balance sheets of Standard Register and its Subsidiaries as of the end of its Fiscal Year ended December 31, 2014 and the related statements of income, shareholders’ equity and cash flow, on a consolidated basis, setting forth in each case in comparative form the corresponding consolidated figures for the preceding Fiscal Year and certified by the principal financial officer of Standard Register as prepared in accordance with GAAP and fairly presenting the consolidated financial position and results of operations of the Borrowers and their Subsidiaries for such Fiscal Year (subject only to changes from audit and year end adjustment and except that such statements need not contain notes), to be delivered to the Administrative Agent no later than May 1, 2015, the costs of which shall be incurred by the Borrowers in accordance with the Budget;
(b)
as soon as available, and in any event within 30 days after the end of each of the first 3 Fiscal Quarters in any Fiscal Year, excluding the last Fiscal Quarter of the Standard Register’s Fiscal Year, unaudited balance sheets of the Borrowers and their
57
Subsidiaries and the related unaudited consolidated statements of income and cash flow in each case for such Fiscal Quarter and for the portion of Standard Register’s Fiscal Year then elapsed, on a consolidated basis, setting forth in each case in comparative form, the corresponding figures for the preceding Fiscal Year and certified by the principal financial officer of Standard Register as prepared in accordance with GAAP and fairly presenting the consolidated financial position and results of operations of the Borrowers and their Subsidiaries for such Fiscal Quarter and period subject only to changes from audit and year-end adjustments and except that such statements need not contain notes;
(c)
as soon as available, and in any event within 30 days after the end of each Fiscal Month hereafter (except information for the last Fiscal Month of any Fiscal Quarter shall be due at the time specified in subparagraph (b) above and information for the last Fiscal Month of any Fiscal Year shall be due in preliminary form at the time specified in subparagraph (b) above and in final form at the time specified in subparagraph (a) above), unaudited balance sheets of Standard Register and its Subsidiaries and the related unaudited consolidated statements of income and cash flow in each case for such month and for the portion of Standard Register’s Fiscal Year then elapsed, on a consolidated basis, setting forth in each case in comparative form, the corresponding figures for the preceding Fiscal Year and certified by the principal financial officer of Standard Register as prepared in accordance with GAAP and fairly presenting the consolidated financial position and results of operations of the Borrowers and their Subsidiaries for such Fiscal Month and period subject only to changes from audit and year-end adjustments and except that such statements need not contain notes;
(d)
promptly following the mailing or receipt of any material notice or report delivered under any of the Prepetition Term Loan Facilities or under the ABL DIP Facility, copies of such notice or report;
(e)
(i) As soon as practicable in advance of filing with the Bankruptcy Court or delivering to the official creditors’ committee appointed in a Case, if any, or to the United States Trustee for the District of Delaware, as the case may be, the Final Financing Order, all other proposed orders and pleadings related to the Cases, the Facility and/or any sale contemplated in accordance with Section 7.1.20 hereof (all of which must be in form and substance satisfactory to the Administrative Agent), any plan of reorganization or liquidation and/or any disclosure statement related thereto and (ii) substantially simultaneously with the filing with the Bankruptcy Court or delivering to the Official Creditors’ Committee appointed in any Case, if any, or to the United States Trustee for the District of Delaware, as the case may be, all other notices, filings, motions, pleadings or other information concerning the financial condition of the Borrowers or other Indebtedness of the Credit Parties that may be filed with the Bankruptcy Court or delivered to the official creditors’ committee appointed in the Case, if any, or to the United States Trustee for the District of Delaware;
(f)
within 15 days after the end of each Fiscal Quarter, information reasonably satisfactory to the Administrative Agent supporting the information set forth in the certificate delivered pursuant to subsection (e) above;
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(g)
an updated Budget and an updated Professional Fee Budget every two weeks in form and substance acceptable to the Administrative Agent;
(h)
promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which Standard Register has made generally available to its shareholders and copies of any regular, periodic and special public reports or registration statements which Standard Register files with the SEC or any Governmental Authority which may be substituted therefor, or any national securities exchange;
(i)
within two (2) Business Days of the delivery thereof, copies of any Borrowing Base Certificate (as defined in ABL DIP Credit Agreement) delivered to the ABL Administrative Agent;
(j)
concurrently with the delivery of the financial information pursuant to clauses (b) and (c), a Compliance Certificate, executed by the chief financial or accounting officer of Standard Register, (i) stating that no Default has occurred and is continuing (or, if a Default has occurred, specifying the details of such Default and the action that Standard Register or a Credit Party has taken or proposes to take with respect thereto), (ii) stating that no Subsidiary has been formed or acquired since the delivery of the last Compliance Certificate (or, if a Subsidiary has been formed or acquired since the delivery of the last Compliance Certificate, a statement that such Subsidiary has complied with Section 7.1.17) and (iii) certifying that it is in compliance with the then current Budget and that all ABL Loans shall have been and will be used solely in accordance with the Budget, subject to Permitted Variances;
(k)
an initial 13 week professional fee budget and an updated professional fee budget for each successive 13-week period thereafter (the “Professional Fee Budget”) setting forth in reasonable detail and specificity the projected fees and reimbursable expenses of any and all professionals retained by or on behalf of the Debtors, the Committee, the ABL Lenders and the Lenders;
(l)
Borrowers shall provide to the Administrative Agent, at the time or times reasonably requested by the Administrative Agent, but in no event less than Friday of each week after the Closing Date, a report on the status of Borrowers’ efforts and progress with respect to the Sale Covenants and such other information regarding the same as the Administrative Agent may reasonably request; provided, however, that the Borrowers shall not be required to provide information to the Administrative Agent (or its advisors) if the Administrative Agent or any Affiliate thereof submits a bid or has a bid submitted on its behalf in connection with the sale contemplated under Section 7.1.20 hereof, for so long as such bid remains open, including any credit bid, if the Borrowers determine, in their reasonable business judgment, that providing such information or consulting with the Administrative Agent or such advisor regarding any issue, selection, or determination would be likely to have a chilling effect on potential bidding or otherwise be contrary to goal of maximizing value for the Debtors’ estates from the sale process; and
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(m)
such other reports and information (financial or otherwise) as the Administrative Agent may reasonably request from time to time in connection with the Cases, any Collateral or any Credit Party’s financial condition or business.
Promptly after the sending or filing thereof, the Borrowers shall also provide to the Administrative Agent copies of any annual report to be filed in accordance with ERISA in connection with each Pension Plan, any filing made with PBGC under section 4043 of ERISA, the annual funding notice issued under section 101(f) of ERISA, and such other data and information (financial and otherwise) as the Administrative Agent, from time to time, may reasonably request bearing upon or related to the Collateral or each Borrower’s and each of its Subsidiaries’ financial condition or results of operations.
Each Borrower hereby acknowledges that (i) the Administrative Agent will make available to the Lenders any Communications by posting the Communications on IntraLinks or another similar electronic system (“Platform”) and (ii) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrowers, the Credit Parties and/or their Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrowers hereby agree that (a) all Communications that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (b) by marking Communications “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Communications as not containing any material non-public information with respect to the Credit Parties or their securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Communications constitute any proprietary, nonpublic and/or confidential information, they shall be treated as set forth in Section 10.15); (c) all Communications marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (d) the Administrative Agent shall be entitled to treat any Communications that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”.
7.1.4
Landlord and Storage Agreements. Upon the reasonable request of the Administrative Agent, provide the Administrative Agent with copies of: (i) any of the existing agreements, and (ii) any future agreements, between any Credit Party and any landlord, warehouseman or bailee which owns any premises at which any Collateral may, from time to time, be kept.
7.1.5
Reserved.
7.1.6
Taxes. Pay and discharge all Taxes prior to the date on which such Taxes become delinquent or penalties attach thereto, except and to the extent only that such Taxes are being Properly Contested, or that such Taxes are in an aggregate amount of less than $500,000, and are filed and paid in good faith as to the Borrower’s Knowledge as such Taxes become due.
7.1.7
Compliance with Applicable Laws. Comply with all Applicable Law, including ERISA, all Environmental Laws, FLSA, OSHA, Terrorism Laws, and all laws, statutes,
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regulations and ordinances regarding the collection, payment and deposit of Taxes, and obtain and keep in force any and all Governmental Approvals necessary to the ownership of its Properties or to the conduct of its business, but only to the extent that any such failure to comply (other than failure to comply with Terrorism Laws), obtain or keep in force could be reasonably expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Release shall occur at or on any of the Properties of a Borrower or any of its Subsidiaries, the Borrowers shall, or shall cause the applicable Subsidiary to, act promptly and diligently to investigate the extent of, and to make appropriate action with respect to such Release, whether or not ordered or otherwise directed to do so by any Governmental Authority.
7.1.8
Insurance. In addition to the insurance required herein with respect to the Collateral, maintain, with any Approved Insurers, (i) insurance with respect to the Credit Parties’ Properties and business against such casualties and contingencies of such type (including product liability, workers’ compensation, or larceny, embezzlement or other criminal misappropriation insurance) and in such amounts as is customary in the business of such Borrower or such Subsidiary and (ii) business interruption insurance in an amount not less than $20,000,000.
7.1.9
Final Financing Order. The Final Financing Order shall be entered within 30 days of entry of the Interim Financing Order substantially in the form of and containing, among other things, the provisions present in the Interim Financing Order (including, without limitation, the granting of Liens contemplated under the Security Documents). The Final Financing Order shall have been entered on such notice to such parties as satisfactory to the Administrative Agent and as required by the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, order of the Bankruptcy Court, and any applicable local bankruptcy rules.
7.1.10
Payment of Obligations. Subject to the Financing Orders, pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (i) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets accruing, imposed or arising after the Petition Date, unless the same are being Properly Contested; and (ii) all lawful claims which, if unpaid, would by law become a Lien upon its property and perfection thereof is excepted by 11 USC §362.
7.1.11
Preservation of Existence, Etc. (i) Except as otherwise provided by the Financing Orders, preserve, renew and maintain in full force and effect its legal existence and good standing under the laws of the jurisdiction of its organization except in a transaction permitted by Section 7.2.1 or Section 7.2.2; (ii) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (iii) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation or non-renewal of which could reasonably be expected to have a Material Adverse Effect.
7.1.12
Maintenance of Properties. (i) Except as otherwise provided by the Financing Orders, maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (ii) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect;
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and (iii) use the standard of care typical in the industry in the operation and maintenance of its facilities.
7.1.13
Compliance with Terms of Leaseholds. Make all payments and otherwise perform all obligations in respect of all leases of real property to which a Borrower or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the Administrative Agent of any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so, except, in any case, (i) where the failure to do so, either individually or in the aggregate, could not be reasonably likely to have a Material Adverse Effect and (ii) with respect to any unexpired leases and executory contracts that were rejected by a Borrower pursuant to Section 365 of the Bankruptcy Code as consented to in writing by the Administrative Agent and as authorized by the Bankruptcy Court after notice and hearing.
7.1.14
Lien Searches. Promptly following receipt of the acknowledgment copy of any financing statements filed under the UCC in any jurisdiction by or on behalf of Lenders, deliver to Agent completed requests for information listing such financing statement and all other effective financing statements filed in such jurisdiction that name a Borrower as debtor, together with copies of such other financing statements.
7.1.15
Material Contracts. Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, enforce each such Material Contract in accordance with its terms, and cause each of its Subsidiaries to do so, except, in any case, (i) where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and (ii) with respect to unexpired leases and executory contracts that were rejected by a Borrower pursuant to Section 365 of the Bankruptcy Code, as consented to in writing by the Administrative Agent and as authorized by the Bankruptcy Court after notice and hearing.
7.1.16
Books and Records. Each Borrower will, and will cause each of its Subsidiaries to, maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP (or in the case of a Foreign Subsidiary, generally accepted accounting principles in the jurisdiction of organization of such Foreign Subsidiary) consistently applied shall be made of all financial transactions and matters involving the assets and business of such Borrower and such Subsidiaries.
7.1.17
Future Subsidiary Guarantors, Security, etc. Each Borrower will, and will cause each of its Subsidiaries to, execute any documents, Filing Statements, agreements and instruments, and take all further action (including filing Mortgages) that may be required under Applicable Law, or that the Administrative Agent (acting at the written direction of the Required Lenders) may reasonably request, in order to effectuate the transactions contemplated by the Loan Documents and in order to grant, preserve, protect and perfect the validity and first priority (subject to Permitted Liens) of the Liens created or intended to be created by the Loan Documents. Each Borrower will cause any subsequently acquired or organized Subsidiary to execute, within twenty (20) Business Days of its acquisition or organization (or such longer period as the Administrative Agent may agree in its sole discretion), a supplement to the
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Subsidiary Guaranty (in the form of Annex I thereto) and each other applicable Loan Document in favor of the Secured Parties. In addition, from time to time, the Borrowers will, at their sole cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected Liens with respect to such of its assets and properties as the Required Lenders shall designate, it being agreed that it is the intent of the parties that the Obligations shall be secured by, among other things, substantially all the assets of the Borrowers and their Subsidiaries (including real and personal property acquired subsequent to the Closing Date). Each Borrower shall deliver or cause to be delivered to the Administrative Agent all customary instruments and documents (including legal opinions, title insurance policies and lien searches) to evidence compliance with this Section.
7.1.18
Further Mortgages and Insurance. The Borrowers will, upon written request from the Administrative Agent, in respect of any owned real property, deliver to the Administrative Agent counterparts of each Additional Mortgage, duly executed and delivered by the applicable Credit Party, together with:
(a)
evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of each Additional Mortgage as may be necessary or desirable to create a valid, perfected first priority Lien against the properties purported to be covered thereby;
(b)
mortgagee’s title insurance policies in favor of the Collateral Agent for the benefit of the Secured Parties in amounts and in form and substance as shall be customary for similar properties, with respect to the real and, if any, other property purported to be covered by each Additional Mortgage, insuring that title to such property is marketable and that the interests created by each Additional Mortgage constitute valid first Liens thereon free and clear of all defects and encumbrances;
(c)
opinions addressed to the Administrative Agent and all Lenders from local real estate counsel to the Credit Parties in the jurisdictions where such real estate is located; and
(d)
a certificate of an Authorized Officer of Standard Register certifying as to compliance with Section 7.1.8,
provided, that the Borrowers shall be permitted 60 days following such written request from the Administrative Agent (or such longer period as the Administrative Agent shall agree) to comply with the provisions of this Section 7.1.18.
7.1.19. Consultants. The Borrowers will, upon written request from the Administrative Agent, provide the Administrative Agent with reasonable access to any consultant, turnaround management, broker or financial advisory firm retained by any Borrower in any of the Cases.
7.1.20
Covenants. The Borrowers will complete the tasks set forth below (the “Sale Covenants”), in each case within the time limits specified therein (unless such time period is extended in writing by the Administrative Agent in consultation with the Required Lenders):
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(a)
Not later than two Business Days after the parties execute the Purchase Agreement, Borrowers shall file and serve one or more motions, each in form and substance acceptable to the Required Lenders, seeking approval of the Sale Procedures Order and the Sale Order (each as defined below);
(b)
After the parties execute the Purchase Agreement, and in no event later than April 10, 2015, the Bankruptcy Court shall have entered an order, in form and substance satisfactory to the Required Lenders, approving the bid procedures (the “Sale Procedures Order”);
(c)
Not later than June 19, 2015, the Bankruptcy Court shall have entered an order, in form and substance satisfactory to the Purchaser, approving the Sale Motion and the Purchase Agreement pursuant to sections 363(f) and 363(m) of the Bankruptcy Code (the “Sale Order”);
(d)
The Acquisition shall be consummated not later than the earlier of (i) 60 days after the entry of the Sale Order if the Acquisition has not closed for any reason other than (i) the issuance of a stay pending appeal from the Sale Order (in which case, the sixty-day period referred to in this clause shall automatically be extended to the earlier of (A) the fifth business day following the day such stay ceases to be in effect or (B) the Termination Date (as defined in the Purchase Agreement), or (ii) the winning bidder has failed to consummate the Acquisition, except as a result of a breach by the Sellers (as defined in the Purchase Agreement) of a representation or covenant in the Purchase Agreement or (ii)180 days after the parties execute the Purchase Agreement; and
(e)
No later than March 31, 2015, the Sellers (as defined in the Purchase Agreement) shall deliver a draft operating and business plan to Borrowers and to Administrative Agent for comment and approval. No later than April 15, 2015, Sellers shall deliver to Buyers a final operating and business plan together with a copy to the Administrative Agent.
7.1.21
Post-Closing Condition. The Borrowers will execute and deliver the documents and complete the tasks set forth on Schedule IV, in each case within the time limits specified on such schedule (unless such time period is extended in writing by the Administrative Agent in its sole discretion).
7.2
Negative Covenants. Each Borrower (for itself and its Subsidiaries) hereby covenants and agrees that, on the Closing Date and thereafter, until the Loans, together with interest, fees and all other Obligations incurred hereunder (other than contingent indemnification obligations for which not claim has been identified), are paid in full, unless the Required Lenders have otherwise consented in writing, such Borrower shall not and shall not permit any of its Subsidiaries to:
7.2.1
Fundamental Changes. (i) Merge, reorganize, consolidate or amalgamate with any Person, or liquidate, wind up its affairs or dissolve itself, except for mergers or consolidations of any Credit Party into another Credit Party or any Subsidiary into a Credit Party
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(with such Credit Party being the survivor thereof); provided, however, that such Borrower shall be the survivor of any merger or consolidation involving such Borrower; (ii) change any Credit Party’s name or conduct business under any new fictitious name; or (iii) change any Credit Party’s Federal Employer Identification Number.
7.2.2
Disposition of Assets. Make any Asset Disposition, except (i) sales of Inventory in the Ordinary Course of Business; (ii) sales or other dispositions of items of Equipment which are obsolete, worn out or no longer useful in any Borrower's business; (iii) other dispositions of Collateral that are consented to in writing by DIP Agent and are authorized by the Court after notice and hearing; and (iv) the rejection pursuant to Section 365 of the Bankruptcy Code of unexpired leases and executory contracts that are consented to in writing by DIP Agent and are authorized by the Court after notice and hearing.
7.2.3
Tax Consolidation. File or consent to the filing of any consolidated income tax return with any Person other than the Borrowers and their Subsidiaries.
7.2.4
Accounting Changes. Subject to the terms of the paragraph identified as “Accounting Terms” in Section 1.4, make any significant change in accounting treatment or reporting practices, except as may be permitted or required by GAAP and/or applicable requirements of the SEC, or establish a fiscal year different from the Fiscal Year, unless the Borrowers have notified the Administrative Agent of any such change and complied with all disclosure and other requirements of Applicable Law.
7.2.5
Organizational Documents. Amend, modify or otherwise change any of the terms or provisions in (i) any of its Organization Documents as in effect on the date hereof or (ii) the Purchase Agreement, except for changes that do not affect in any way such the rights and obligations of the applicable Borrower or any of its Subsidiaries to enter into and perform the Loan Documents to which it is a party and to pay all of the Obligations and that do not otherwise have a Material Adverse Effect.
7.2.6
Restrictive Agreements. Enter into or become party to any Restrictive Agreement other than (i) a Restrictive Agreement relating to secured Indebtedness permitted hereunder, as long as the restrictions apply only to collateral for such Indebtedness; and (ii) a Restrictive Agreement constituting customary restrictions on assignment in leases and other contracts.
7.2.7
Conduct of Business. Engage in any business other than the business engaged in by it on the Closing Date and any business or activities which are substantially similar, related or incidental thereto or reasonably evolve therefrom.
7.2.8
Liens. Create or permit any Liens on any of the now owned or hereafter acquired Collateral except for Permitted Liens.
7.2.9
Indebtedness. Create, incur, guarantee or suffer to exist any Indebtedness, except:
(a)
the Obligations;
(b)
(i) ABL Obligations arising under the ABL DIP Facility (other than (x) ABL Bank Product Obligations consisting only of corporate credit cards and corporate
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cash management services and (y) fees owed by the Borrowers pursuant to the Prepetition ABL Credit Agreement in an amount not to exceed $1,000,000) and, subject to the Prepetition ABL/TL Intercreditor Agreement, the “Revolver Loans” and other “Obligations” as defined in and outstanding under the Prepetition ABL Credit Agreement on the Closing Date, in an aggregate principal amount under this clause (i) not to exceed $125,000,000 at any one time outstanding, and (ii) ABL Bank Product Obligations arising in the Ordinary Course of Business after the Petition Date (excluding, for the avoidance of doubt, any ABL Loans or ABL Letters of Credit);
(c)
(i) (I) Second Lien Loans in an aggregate principal amount not to exceed $96,719,023.07, plus (II) the payment of interest, fees and other amounts with respect to the Second Lien Loans in the form of additional Indebtedness;
(d)
obligations under and as defined in the Existing First Lien Loan Agreement in an aggregate principal amount not to exceed $113,594,130.19;
(e)
Indebtedness of a Borrower owing to another Borrower; provided that if such Indebtedness is owed by any of SR MX Holdco, SR MX Holdings, SR Mexico or SR Canada, such Indebtedness shall be evidenced by a promissory note, the sole original of which is pledged to the Collateral Agent as security for the Obligations;
(f)
Indebtedness outstanding on the date hereof and listed on Part 7.2.9 of the Disclosure Schedule, other than Indebtedness referred to in clauses (a), (b), (c) and (d) of this Section 7.2.9;
(g)
Permitted Contingent Liabilities arising after the Petition Date; and
(h)
trade accounts payable incurred by a Borrower in the Ordinary Course of Business after the Petition Date and not in contravention of the Bankruptcy Code, any order of the Bankruptcy Court, in an aggregate amount not to exceed $17,400,000 at any time.
7.2.10
Restricted Investments. Make any Restricted Investment.
7.2.11
Loans. Make any loans or other advances of money to any Person, except (i) advances to an officer or employee for salary, travel expenses, commissions or similar items, in each case in the Ordinary Course of Business, (ii) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; and (iii) deposits with financial institutions permitted hereunder.
7.2.12
Distributions; Upstream Payments.
(a)
Declare or make any Distributions, except Upstream Payments; or
(b)
Create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary to make any Upstream Payment.
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7.2.13
Affiliate Transactions. Enter into or be party to any transaction with an Affiliate, except (i) transactions contemplated by the Loan Documents and the Transaction Documents; (ii) payment of reasonable compensation to officers and employees for services actually rendered, and loans and advances permitted by Section 7.2.11; (iii) payment of customary directors’ fees and indemnities; (iv) transactions solely among Credit Parties and wholly owned Subsidiaries; and (v) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Part 7.2.13 of the Disclosure Schedule.
7.2.14
Restrictions on Payment of Indebtedness. Directly or indirectly, prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner (it being understood that payments of regularly scheduled principal and interest shall be permitted and cancellations of Indebtedness for no value shall be permitted) obligations under the Prepetition Term Loan Facilities or any other Indebtedness that is or is required to be subordinated, in right of payment or as to Collateral, to the Obligations pursuant to the terms of the Loan Documents or the Financing Orders (collectively, “Junior Financing”) or make any payment in violation of any subordination terms of any Junior Financing documentation or any other Indebtedness in existence prior to the Petition Date other than (i) the Pre-Petition ABL Obligations and the Pre-Petition Term Obligations in accordance with the Financing Orders, (ii) payments to critical vendors to the extent approved by the Final Order of the Court or any “Order Authorizing the Debtors to Pay Certain Prepetition Claims of Critical Vendors, Shippers and Freight Carriers” and otherwise reflected in the Budget, and (iii) payment of Indebtedness secured by a valid, perfected and unavoidable Lien on any Collateral, but only to the extent such Lien is senior in priority to Liens in favor of the Administrative Agent on Term Loan Priority Collateral and such payment is approved by Final Order of the Court.
7.2.15
Amendments to Certain Indebtedness. Amend, supplement or otherwise modify (a) any document, instrument or agreement relating to (i) the ABL DIP Facility that is in violation of the ABL-TL DIP Intercreditor Agreement or any Financing Order, or that otherwise limits, restricts, reduces or impairs ABL Availability in any material respect, or (ii) any Subordinated Indebtedness, or (b) the Budget without the prior written consent of Administrative Agent and the Required Lenders.
7.2.16
Sale-Leaseback and Pension Obligations. (a) Create, incur, assume or suffer to exist any obligations as lessee for the rental or hire of real or personal property in connection with any sale and leaseback transaction, or (b) make for any Fiscal Year more than the minimum required statutory pension contributions required to be made in respect of such Fiscal Year with respect to any Borrower’s qualified defined benefit cost covering the Borrower’s U.S. employees, as reflected in the most current approved Budget.
7.2.17
Financial Covenants. The Borrowers shall not permit any of the events set forth below in clauses (a) and (b) to occur:
(a)
Minimum EBITDAP. Permit EBITDAP for the twelve fiscal months ending as of the last day of any period set forth below to be less than the amount set forth under the column “EBITDAP Level” opposite such last day:
-
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-
Fiscal Month Ending | EBITDAP Level |
March 31, 2015 | $52,500,000 |
April 30, 2015 and each month end thereafter | $50,000,000 |
(b)
Maximum Capex. Make or commit to make any Capital Expenditure, except Capital Expenditures of the Borrowers and their Subsidiaries in the ordinary course of business not exceeding $1,000,000 in any fiscal month; provided that (i) if the aggregate amount of Capital Expenditures made in any fiscal month shall be less than the maximum amount of Capital Expenditures permitted under this Section 7.2.17(b) for such fiscal month (before giving effect to any carryover), then the entire amount of such shortfall may be added to the amount of Capital Expenditures permitted under this Section 7.2.17(b) for the immediately following month only, and (ii) in determining whether any amount is available for carryover, the amount expended in any fiscal month shall first be deemed to be from the applicable limitation for such month and then from the amount carried forward to the extent applicable.
7.2.18
Chapter 11 Claims. Iincur, create, assume, suffer to exist or permit any other Superpriority Claim or Lien which is (x) senior to (except, as set forth in the Financing Orders with respect to the ABL DIP Facility) or (y) pari passu with, the Obligations hereunder, in each case except for the Carve-Out.
7.2.19
Employee Plans. Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Petition Date.
7.2.20
Modifications to DIP Financing Orders. Seek or consent to any amendment, supplement or any other modification of any of the terms of the Financing Orders after such Financing Orders are entered by the Bankruptcy Court without the prior written consent of Administrative Agent (and with respect to any material change, the Required Lenders).
7.2.21
Filing of Motions and Applications. Without the prior written consent of the Administrative Agent (and with respect to any material change or modification, Required Lenders), apply to the Bankruptcy Court for, or join in or support any motion or application seeking, authority to (a) take any action that is prohibited by the terms of any of the Loan Documents or the Financing Orders, (b) refrain from taking any action that is required to be taken by the terms of any of the Loan Documents or the Financing Orders, or (c) permit any Indebtedness or claim to be pari passu with or senior to any of the Obligations, except as expressly stated in the Financing Orders.
ARTICLE 8
EVENTS OF DEFAULT
8.1
Listing of Events of Default. Each of the following events or occurrences described in this Article shall constitute an “Event of Default”.
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8.1.1
Non-Payment of Obligations. Borrowers shall default in the payment or prepayment when due of:
(a)
any principal of any Loan; or
(b)
any interest or fee described in Article 3 or any other monetary Obligation.
8.1.2
Misrepresentations. Any representation, warranty or other written statement to the Administrative Agent or any Lender that is made by any Credit Party in this Agreement or furnished in compliance with or in reference to any of the Loan Documents, proves to have been false or misleading in any material respect when made or furnished.
8.1.3
Non-Performance of Certain Covenants and Obligations. The Borrowers shall default in the due performance or observance of any of its obligations under Section 7.1.3, Section 7.1.11, Section 7.1.20 or Section 7.2.
8.1.4
Non-Performance of Other Covenants and Obligations. Any Credit Party shall default in the due performance and observance of any other agreement contained in any Loan Document executed by it, and such default shall continue unremedied for a period of 30 days after the earlier of (a) the date of the Borrower’s Knowledge of such default or (b) notice thereof given to the Borrowers by the Administrative Agent or any Lender.
8.1.5
Default on Other Indebtedness. (i) A default or breach occurs under any other agreement, document or instrument entered into either (x) prepetition and which is affirmed after the Petition Date or is not subject to the automatic stay provisions of Section 362 of the Bankruptcy Code, or (y) post-petition that is not cured within any applicable grace period therefor, and in each case, that results in any Indebtedness with a principal or stated amount, individually or in the aggregate in excess of $250,000 (“Material Indebtedness”) (including, without limitation, under the ABL DIP Facility, the Prepetition ABL DIP Facility, the ABL DIP Facility or the Prepetition Term Loan Facilities) becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, or (ii) a Credit Party or any Subsidiary thereof shall fail to pay any principal or interest, regardless of amount, due in respect of any Material Indebtedness when and as the same shall become due and payable (after giving effect to any applicable grace or cure period).
8.1.6
Judgments. Any judgment or order (i) for the payment of money individually or in the aggregate in excess of $500,000 (exclusive of any amounts fully covered by insurance (less any applicable deductible) and as to which the insurer has not denied or objected to its responsibility to cover such judgment or order) shall be rendered against a Borrower or any of its Subsidiaries after the Petition Date and, in each case, such judgment shall not have been vacated or discharged or stayed or bonded pending appeal within 45 days after the entry thereof or enforcement proceedings shall have been commenced by any creditor upon such judgment or order, or (ii) for any non-monetary judgment with respect to a post-petition event which causes or would reasonably be expected to cause a Material Adverse Effect.
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8.1.7
Change in Control. Any Change in Control shall occur.
8.1.8
Reserved.
8.1.9
Impairment of Security, etc. Any Loan Document shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any Credit Party party thereto (or any Credit Party shall so assert in writing); any Lien shall (except in accordance with the terms of any Loan Document), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any Credit Party subject thereto in respect of any material portion of the Collateral (as defined in the Security Agreement); any Credit Party or any other party shall contest in any manner such effectiveness, validity, binding nature or enforceability; or, except as permitted under any Loan Document, any Lien securing any Obligation shall, in whole or in part, cease to be a perfected first priority Lien with respect to any material portion of the Collateral.
8.1.10
ERISA. A Reportable Event shall occur which the Administrative Agent, in its reasonable discretion, shall determine constitutes grounds for the termination by the Pension Benefit Guaranty Corporation of any Pension Plan or for the appointment by the appropriate United States district court of a trustee for any Pension Plan, or if any Pension Plan or Covered Plan shall be terminated or any such trustee shall be requested or appointed, or if a Borrower or any Subsidiary is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from such Borrower’s or such Subsidiary’s complete or partial withdrawal from such Pension Plan.
8.1.11
Budget. The Borrowers, any Subsidiaries or any other Credit Party shall fail to comply with the then current Budget as approved by the Administrative Agent, subject to Permitted Variances or shall fail to obtain the approval of Administrative Agent with respect to any updated Budget.
8.1.12
Priming Liens. Except as expressly permitted in the Financing Orders or with respect to the Carve Out, an order of the Bankruptcy Court shall be entered granting (i) any Superpriority Claim in the Case that is pari passu with or senior to the claims of the Administrative Agent and the Lenders against the Borrowers or any Credit Party under the Loan Documents or (ii) any Lien or security interest on any of the Collateral that is pari passu with or senior to the Liens and security interests securing the Obligations.
8.1.13
Dismissal of Case; Inability to Credit Bid. (i) The Bankruptcy Court shall dismiss any of the Cases or convert any of the Cases to a case under chapter 7 of the Bankruptcy Code or any Credit Party shall file a motion or other pleading (or shall fail to oppose or otherwise acquiesce to such a pleading) seeking the dismissal of any Case under section 1112 of the Bankruptcy Code or otherwise, in each case without the consent of the Administrative Agent and the Required Lenders, or (ii) any order is entered or the Bankruptcy Court shall prohibit or otherwise unduly restrict the ability of the lenders under the Prepetition Term Loan Facilities to credit bid the loans outstanding thereunder.
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8.1.14
Appointment of Trustee, Etc. The Bankruptcy Court shall appoint in any of the Cases a trustee, a responsible officer or an examiner with enlarged powers relating to the operation of the business of any Credit Party (powers beyond those set forth in sections 1106(a)(3) and 1106(a)(4) of the Bankruptcy Code) under section 1106(b) of the Bankruptcy Code.
8.1.15
Payment of Prepetition Indebtedness. Except as expressly permitted by Financing Orders, and other than such payments expressly authorized by the Bankruptcy Court or as otherwise permitted by this Agreement or the Budget (including in connection with adequate protection payments), or as otherwise agreed to by the Administrative Agent (after reasonable consultation with the Required Lenders), if any Credit Party shall make any payment of prepetition Indebtedness other than (1) in accordance with “first day” or “second day” orders entered with the consent of (or non-objection by) the Administrative Agent (in each case after reasonable consultation with the Required Lenders) or other orders of the Bankruptcy Court entered with the consent of (or non-objection by) the Administrative Agent (in each case after reasonable consultation with the Required Lenders), (2) in connection with the assumption of executory contracts and unexpired leases with the consent of (or non-objection by) the Administrative Agent (after reasonable consultation with the Required Lenders), (3) in respect of accrued payroll and related expenses and employee benefits as of the Petition Date and (4) in respect of other payments of prepetition Indebtedness authorized by order of the Bankruptcy Court entered with the consent of (or non-objection by) the Administrative Agent (in each case after reasonable consultation with the Required Lenders) in an aggregate amount not to exceed $100,000.
8.1.16
Third Party Relief from Automatic Stay. If the Bankruptcy Court shall enter an order or orders (i) granting relief from the automatic stay applicable under Section 362 of the Bankruptcy Code to the holder or holders of any security interest to permit foreclosure or repossession (or the granting of a deed in lieu of foreclosure or the like) on any material assets of a Credit Party or permit other actions that would, in the aggregate, constitute a Material Adverse Effect or (ii) permitting a third party to commence or continue prepetition litigation against a Credit Party for any purpose other than liquidating the amount of a disputed prepetition general unsecured claim involving potential liability not covered by insurance, in excess of $100,000 in the aggregate.
8.1.17
Modification to Financing Orders, Etc.. If an order of the Bankruptcy Court shall be entered reversing, staying, vacating or otherwise amending, supplementing or modifying any of the Financing Orders (in each case without the written consent of the Administrative Agent and the Required Lenders in their sole discretion).
8.1.18
Sale Covenants. The Borrowers shall (i) fail to achieve, satisfy or otherwise comply with any of the Sale Covenants set forth in Section 7.1.20, (ii) breach of any provision of the Purchase Agreement or (iii) fail to comply with the Sale Order or take any action inconsistent with the Sale Order.
8.1.19
Sale of Assets; Etc.. (i) A Credit Party shall file any motion seeking authority to consummate a sale of assets of any Credit Party or any of its Subsidiaries (other than any such sale of assets that is permitted by the Loan Documents) having a value in excess of $100,000
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outside the ordinary course of business, or any sale of any part of the Collateral pursuant to Section 363 of the Bankruptcy Code, in each case without the Required Lenders’ consent or unless expressly provided for in the Budget, or (ii) the Borrowers shall file (or support or fail to oppose) a motion seeking, or the Bankruptcy Court shall enter, an order, authorizing the sale of all or substantially all of the Borrowers’ assets (unless such order contemplates payment in full in cash of the Obligations and all obligations then outstanding under the Prepetition First Lien Term Loan Agreement upon consummation of such sale, whether pursuant to a plan of reorganization or otherwise).
8.1.20
Use of Cash Collateral and Financing. Any Credit Party shall file any motion or other request with the Bankruptcy Court seeking the authority to, or the Bankruptcy Court shall enter any order authorizing any Credit Party to, (i) use any cash proceeds of any of the Collateral upon the liquidation or Disposition thereof, or (ii) obtain any financing under section 364 of the Bankruptcy Code other than the Loans or the ABL DIP Facility, in each case, without the prior written consent of the Administrative Agent and the Required Lenders.
8.1.21
Cessation of Operations. Any Credit Party shall cease all or any material part of its business operations material to the Credit Parties, taken as a whole.
8.1.22
Termination of Purchase Agreement. The Purchase Agreement is terminated (other than in connection with the consummation of the Acquisition or with the written consent of the Required Lenders) or the Seller thereunder is in default thereof.
8.1.24
Noncompliance with Financing Orders. Any Credit Party shall fail to comply with any terms of any Financing Order or any other order of the Bankruptcy Court.
8.1.25
Reorganization Plan. A plan of reorganization that is not an Acceptable Reorganization Plan shall be confirmed in any Case, or any Loan Party shall propose or support or fail to oppose any such plan or any motion or other pleading that seeks to extend the Maturity Date, or the Bankruptcy Court shall enter an order terminating the exclusive right of the Borrowers to file any plan of reorganization. For purposes of this Section, an Acceptable Reorganization Plan means a plan of reorganization that provides for the payment in full in cash of the Obligations (other than contingent indemnification obligations not yet due and payable) and all obligations then outstanding under the First Lien Prepetition Term Loan Agreement on the effective date of such plan of reorganization, contains release and indemnification provisions relating to the Administrative Agent and the Lenders that are reasonably acceptable to the Administrative Agent and does not contain any provisions that are materially inconsistent with such payment, release and indemnification provisions.
8.1.26
Venue Change. Unless otherwise approved by the Administrative Agent and the Required Lenders, an order of the Bankruptcy Court shall be entered providing for a change in venue with respect to any Case and such order shall not be reversed or vacated within 10 days.
8.1.27
Pleadings Contrary to the Facility. Any Credit Party shall file a motion or other pleading seeking relief that if granted could reasonably be expected to result in the occurrence of an Event of Default (unless such relief, if granted (or the relevant transaction) would result in payment in full in cash of the Obligations immediately upon consummation of the matter
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addressed by such motion or pleading, whether pursuant to a plan of reorganization or otherwise).
8.1.28
DIP Liquidity Defaults. An order shall be entered by the Bankruptcy Court avoiding or requiring disgorgement by the Administrative Agent or any Lender of any amounts received in respect of the Obligations, or Borrowers shall not have sufficient liquidity (including Loans available hereunder and ABL Availability) for a period of 30 consecutive days to pay, or shall otherwise fail to pay as and when due and payable, all costs and expenses of administration that are incurred by such Borrower in the Cases, other than fees and expenses covered by the Carve-Out.
8.2
[Reserved].
8.3
Action if Event of Default. Notwithstanding the provisions of Section 362 of the Bankruptcy Code, without any application, motion or notice to, hearing before, or order from, the Bankruptcy Court, if any Event of Default shall occur for any reason, whether voluntary or involuntary, and be continuing, the Administrative Agent may, and upon the written direction of the Required Lenders, shall, subject to giving 5 Business Days' written notice to Borrowers and any other applicable notice parties under the Financing Orders, declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment.
ARTICLE 9
THE ADMINISTRATIVE AGENT
9.1
Actions.
(a)
Each Lender hereby appoints Silver Point as its Administrative Agent under and for purposes of each Loan Document. Each Lender authorizes the Administrative Agent to act on behalf of such Lender under each Loan Document and to appoint other agents or sub-agents to assist in its actions under the Loan Documents and the Administrative Agent shall not be liable for the acts and omissions of such agents as long as they are appointed with due care and without gross negligence or willful misconduct. Each Lender further authorizes the Administrative Agent, in the absence of other written instructions from the Required Lenders received from time to time by the Administrative Agent (with respect to which the Administrative Agent agrees that it will comply, subject to the terms and conditions of Article 9), to exercise such powers hereunder and thereunder as are delegated to or required of the Administrative Agent by the terms hereof and thereof, together with such powers as may be incidental thereto (including the release of Liens on assets Disposed of in accordance with the terms of the Loan Documents).
(b)
The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties,
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regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders in accordance with the terms of this Agreement (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.1). Each Lender hereby indemnifies (which indemnity shall be payable within thirty (30) days of demand therefor, to the extent not reimbursed by the Borrowers or any other Credit Party, and without limiting the Borrowers’ and Credit Parties’ obligations under this Agreement and which indemnity shall survive any termination of this Agreement) the Administrative Agent and its officers, directors, employees and agents, pro rata according to the proportionate amount of Loans held by such Lender, from and against any and all liabilities, obligations, losses, damages, claims, penalties, judgments, costs, disbursements or expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against, the Administrative Agent in any way relating to or arising out of any Loan Document or any action taken or omitted to be taken by the Administrative Agent under the Loan Documents, (including reasonable attorneys’ fees and expenses), and as to which the Administrative Agent, is not reimbursed by the Borrowers; provided that, no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, claims, costs or expenses which are determined by a court of competent jurisdiction in a final proceeding to have resulted from the Administrative Agent’s gross negligence or willful misconduct. By executing a Lender Assignment Agreement, each future Lender (acting for itself and on behalf of each Affiliate thereof which becomes a Secured Party from time to time) shall be deemed to ratify the power of attorney granted to the Administrative Agent hereunder.
9.2
Exculpation. Neither the Administrative Agent nor any of its directors, officers, employees or agents shall be liable to any Secured Party for any action taken or omitted to be taken by it under any Loan Document, or in connection therewith, except for its own willful misconduct or gross negligence, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due execution of any Loan Document, nor for the creation, perfection or priority of any Liens purported to be created by any of the Loan Documents, or the validity, genuineness, enforceability, existence, value or sufficiency of any collateral security, nor to make any inquiry respecting the performance by any Credit Party of its Obligations. Any such inquiry which may be made by the Administrative Agent shall not obligate it to make any further inquiry or to take any action. The Administrative Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement or writing which the Administrative Agent believes to be genuine and to have been presented by a proper Person.
To the fullest extent permitted by Applicable Law, no Credit Party or Lender shall assert, and each Credit Party and Lender hereby waives, any claim against the Administrative Agent, its sub-agents and their respective Affiliates in respect of any actions taken or omitted to be taken by any of them, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated
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herby or thereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.
No provision of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby or the transactions contemplated hereby or thereby, shall require the Administrative Agent to: (i) expend or risk its own funds or provide indemnities in the performance of any of its duties hereunder or the exercise of any of its rights or power or (ii) otherwise incur any financial liability in the performance of its duties or the exercise of any of its rights or powers unless it is indemnified to its satisfaction and the Administrative Agent shall have no liability to any person for any loss occasioned by any delay in taking or failure to take any action while it is awaiting an indemnity satisfactory to it.
The Administrative Agent shall not be responsible for (i) perfecting, maintaining, monitoring, preserving or protecting the security interest or lien granted under this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, (ii) the filing, re-filing, recording, re-recording or continuing or any document, financing statement, mortgage, assignment, notice, instrument of further assurance or other instrument in any public office at any time or times or (iii) providing, maintaining, monitoring or preserving insurance on or the payment of taxes with respect to any of the Collateral. The actions described in items (i) through (iii) shall be the sole responsibility of the Credit Parties.
The Administrative Agent shall not be required to qualify in any jurisdiction in which it is not presently qualified to perform its obligations as Administrative Agent.
The Administrative Agent has accepted and is bound by the Loan Documents executed by the Administrative Agent as of the date of this Agreement and, as directed in writing by the Required Lenders, the Administrative Agent shall execute additional Loan Documents delivered to it after the date of this Agreement; provided, however, that such additional Loan Documents do not adversely affect the rights, privileges, benefits and immunities of the Administrative Agent. The Administrative Agent will not otherwise be bound by, or be held obligated by, the provisions of any credit agreement, indenture or other agreement governing the Obligations (other than this Agreement and the other Loan Documents to which the Administrative Agent is a party).
No written direction given to the Administrative Agent by the Required Lenders or the Borrowers that in the sole reasonable judgment of the Administrative Agent imposes, purports to impose or might reasonably be expected to impose upon the Administrative Agent any obligation or liability not set forth in or arising under this Agreement and the other Loan Documents will be binding upon the Administrative Agent unless the Administrative Agent elects, at its sole option, to accept such direction.
The Administrative Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement or the other Loan Documents arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics; riots; business interruptions; loss or malfunctions of utilities,
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computer (hardware or software) or communication services; accidents; labor disputes; acts of civil or military authority and governmental action.
The Administrative Agent shall not be under any obligation to exercise any of its rights or powers vested in it by this Agreement or the other Loan Documents, at the request, order or direction of the Required Lenders unless the same is given pursuant to the express provisions of this Agreement or the other Loan Documents and the Required Lenders shall have offered to the Administrative Agent security or indemnity reasonably satisfactory to the Administrative Agent against the costs, expenses and liabilities (including, without limitation, attorneys’ fees and expenses) which might be incurred therein or thereby.
Beyond the exercise of reasonable care in the custody of the Collateral in its possession, the Administrative Agent will have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto. The Administrative Agent will be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property, and the Administrative Agent will not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Administrative Agent in good faith without gross negligence or willful misconduct.
The Administrative Agent will not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens in any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of the Administrative Agent, as determined by a court of competent jurisdiction in a final, nonappealable order, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title of any grantor to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral. The Administrative Agent hereby disclaims any representation or warranty to the present and future Secured Parties concerning the perfection of the Liens granted hereunder or in the value of any of the Collateral.
In the event that the Administrative Agent is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in the Administrative Agent’s sole reasonable discretion may cause the Administrative Agent to be considered an “owner or operator” under any Environmental Laws or otherwise cause the Administrative Agent to incur, or be exposed to, any environmental liability or any liability under any other federal, state or local law, the Administrative Agent reserves the right, instead of taking such action, either to resign as Administrative Agent or to arrange for the transfer of the title or control of the asset to a court appointed receiver. The Administrative Agent will not be liable to any person for any environmental liability or any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Administrative Agent’s actions and conduct
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as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any Hazardous Material into the environment.
9.3
Successor. The Administrative Agent may resign as such at any time upon at least 30 days’ prior notice to the Borrowers and all Lenders. The Administrative Agent may be removed at any time upon the affirmative vote of the Required Lenders. If the Administrative Agent at any time shall resign or be removed, the Required Lenders may appoint another Lender as a successor Administrative Agent which shall thereupon become the Administrative Agent hereunder. In the case of the Administrative Agent’s resignation, if no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor as provided for above. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent and the payment of the reasonable fees and expenses (including attorney’s fees and expenses) of the resigning or removed Administrative Agent), such successor Administrative Agent shall be entitled to receive from the retiring or removed Administrative Agent such documents of transfer and assignment as such successor Administrative Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring or removed Administrative Agent. The retiring or removed Administrative Agent shall cooperate in all respects with the transition of the Administrative Agent role to the successor Administrative Agent and shall, following such transition, be discharged from its duties and obligations under the Loan Documents. After any retiring or removed Administrative Agent’s resignation or removal, as applicable, hereunder as the Administrative Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under the Loan Documents, and Section 9.1, Section 10.3 and Section 10.4 shall continue to inure to its benefit.
9.4
Loans by the Administrative Agent. The Administrative Agent shall have the same rights and powers with respect to (x) the Loans held by it or any of its Affiliates, and (y) the Notes held by it or any of its Affiliates as any other Lender and may exercise the same as if it were not the Administrative Agent. The Administrative Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrowers or any Subsidiary or Affiliate of the Borrowers as if the Administrative Agent were not the Administrative Agent hereunder.
9.5
Credit Decisions. Each Lender acknowledges that it has, independently of the Administrative Agent and each other Lender, and based on such Lender’s review of the financial information of the Borrowers, the Loan Documents (the terms and provisions of which being satisfactory to such Lender) and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend the Loans. Each Lender also acknowledges that it will, independently of the Administrative Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under the Loan Documents.
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9.6
Copies, etc. The Administrative Agent shall give prompt notice to each Lender of each notice or request required or permitted to be given to the Administrative Agent by the Borrowers pursuant to the terms of the Loan Documents (unless concurrently delivered to the Lenders by the Borrowers). The Administrative Agent will distribute to each Lender each document or instrument received (other than notices delivered pursuant to Articles 2 and 3) for its account and copies of all other communications received by the Administrative Agent from the Borrowers for distribution to the Lenders by the Administrative Agent in accordance with the terms of the Loan Documents.
9.7
Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telecopy, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Administrative Agent. As to any matters not expressly provided for by the Loan Documents, the Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, thereunder in accordance with instructions given by the Required Lenders or all of the Lenders as is required in such circumstance, and such instructions of such Lenders and any action taken or failure to act pursuant thereto shall be binding on all Secured Parties.
9.8
Defaults. The Administrative Agent shall not be deemed to have Knowledge or notice of the occurrence of a Default unless the Administrative Agent has received a written notice from a Lender or the Borrowers specifying such Default and stating that such notice is a “Notice of Default”. In the event that the Administrative Agent receives such a notice of the occurrence of a Default, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall (subject to the provisions of Section 10.1) take such action and exercise such remedies with respect to such Default as shall be directed by the Required Lenders pursuant to any of the Loan Documents; provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action (including, without limitation, credit bidding the Loans of all Lenders hereunder), or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Secured Parties except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Required Lenders.
9.9
Posting of Approved Electronic Communications.
(a)
Each Borrower hereby agrees, unless directed otherwise by the Administrative Agent or unless the electronic mail address referred to below has not been provided by the Administrative Agent to the Borrowers, that it will, or will cause its Subsidiaries to, provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents or to the Lenders under Section 7.1.3, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) is or relates to a Continuation/Conversion Notice, (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides
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notice of any Default under this Agreement or any other Loan Document or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Administrative Agent to an electronic mail address as directed by the Administrative Agent. In addition, each Borrower agrees, and agrees to cause its Subsidiaries, to continue to provide the Communications to the Administrative Agent or the Lenders, as the case may be, in the manner specified in the Loan Documents (including, for the avoidance of doubt, Section 7.1.3) but only to the extent requested by the Administrative Agent.
(b)
In accordance with Section 7.1.3, the Borrowers further agree that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on Intralinks or a substantially similar Platform.
(c)
THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE INDEMNIFIED PARTIES DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE INDEMNIFIED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE INDEMNIFIED PARTIES HAVE ANY LIABILITY TO ANY OBLIGOR, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY OBLIGOR’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY INDEMNIFIED PARTY IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(d)
The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents. Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.
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(e)
Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.
9.10
Proofs of Claim. The Lenders and the Borrowers hereby agree that after the occurrence of an Event of Default pursuant to Section 8.1.8, in case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any of the Credit Parties, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Administrative Agent shall have made any demand on any of the Credit Parties) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a)
to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Loans and any other Obligations that are owing and unpaid and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Lenders, the Administrative Agent and other agents appointed by the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Administrative Agent and such other agents and their agents and counsel and all other amounts due Lenders, Administrative Agent and such other agents hereunder) allowed in such judicial proceeding; and
(b)
to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Administrative Agent and its agents and counsel, and any other amounts due Administrative Agent and other agents hereunder. Nothing herein contained shall be deemed to authorize Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lenders or to authorize Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. Further, nothing contained in this Section shall affect or preclude the ability of any Lender to (i) file and prove such a claim in the event that the Administrative Agent has not acted within ten days prior to any applicable bar date and (ii) require an amendment of the proof of claim to accurately reflect such Lender’s outstanding Obligations.
9.11
Intercreditor Agreements. Each Lender (a) agrees to be bound by the provisions of each of the Intercreditor Agreements, and (b) authorizes and instructs Administrative Agent to enter into amendments, restatements, amendments and restatements of, or to supplement or otherwise modify either of the Intercreditor Agreements with the consent of the Required Lenders or enter into one or more other intercreditor agreements having terms reasonably satisfactory to Administrative Agent and either in form and substance substantially similar to the
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existing Intercreditor Agreements or reasonably satisfactory to the Required Lenders, from time to time, in connection with the incurrence of Refinancing Debt in respect of the Pre-Petition Term Loans (each as defined in the Intercreditor Agreements).
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1
Waivers, Amendments, etc. The provisions of each Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by the Borrowers and the Required Lenders; provided, that no such amendment, modification or waiver shall:
(a)
modify clause (b) of Section 4.7, Section 4.8 (as it relates to sharing of payments) or this Section, in each case, without the consent of all Lenders;
(b)
increase the aggregate amount of any Loans held by a Lender or extend the Stated Maturity Date for any Lender’s Loan, in each case without the consent of such Lender (it being agreed, however, that any vote to rescind any acceleration made pursuant to Section 8.2 and Section 8.3 of amounts owing with respect to the Loans and other Obligations shall only require the vote of the Required Lenders);
(c)
reduce (by way of forgiveness), the principal amount of or reduce the rate of interest on any Lender’s Loan, reduce any fees described in Article 3 payable to any Lender or extend the date on which interest or fees are payable in respect of such Lender’s Loans, in each case without the consent of such Lender (provided that, the vote of Required Lenders shall be sufficient to waive the payment, or reduce the increased portion, of interest accruing under Section 3.2.2);
(d)
make any change to the definition of “Required Lenders” or modify any requirement hereunder that any particular action be taken by all Lenders without the consent of all Lenders;
(e)
[reserved]; or
(f)
affect adversely the interests, rights or obligations of the Administrative Agent (in its capacity as the Administrative Agent) unless consented to by the Administrative Agent.
No failure or delay on the part of any Secured Party in exercising any power or right under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on any Credit Party in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by any Secured Party under any Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.
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10.2
Notices; Time. All notices and other communications provided under each Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted, if to the Borrowers, the Administrative Agent or a Lender, to the applicable Person at its address or facsimile number set forth on Schedule II hereto or set forth in the Lender Assignment Agreement, or at such other address or facsimile number as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is received by the transmitter. The parties hereto agree that delivery of an executed counterpart of a signature page to this Agreement and each other Loan Document by facsimile (or electronic transmission) shall be effective as delivery of an original executed counterpart of this Agreement or such other Loan Document. Unless otherwise indicated, all references to the time of a day in a Loan Document shall refer to New York time.
10.3
Payment of Costs and Expenses. Each Borrower agrees, jointly and severally, to pay promptly, and in any event within thirty (30) days after written demand therefor to the extent incurred after the Closing Date, (a) any consents, amendments, waivers or other modifications of this Agreement and the other Loan Documents; (b) the reasonable and documented fees, expenses and disbursements of counsel to the Administrative Agent in connection with the administration of this Agreement and the other Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters in connection therewith; (c) all the actual costs and expenses of creating and perfecting Liens in favor of the Collateral Agent, for the benefit of the Lenders pursuant hereto, including filing and recording fees, search fees, title insurance premiums and fees, expenses and disbursements of counsel to the Administrative Agent; (d) all the actual reasonable and documented costs and fees, expenses and disbursements of any auditors, accountants, consultants or appraisers whether internal or external; (e) all the actual reasonable costs and expenses (including the fees, expenses and disbursements of counsel and of any appraisers, consultants, advisors and agents in each case employed or retained by the Administrative Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (f) all other actual reasonable costs and expenses incurred by the Administrative Agent in connection with the any consents, amendments, waivers or other modifications of this Agreement and the other Loan Documents and the transactions contemplated thereby; and (g) after the occurrence of a Default or an Event of Default, all reasonable costs and expenses, including reasonable attorneys’ fees and expenses and costs of settlement, incurred by the Administrative Agent and the Required Lenders in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Loan Documents by reason of such Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of any Subsidiary Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work out” or pursuant to any insolvency or bankruptcy cases or proceedings.
10.4
Indemnification. In consideration of the execution and delivery of this Agreement by each Secured Party, each Borrower hereby, jointly and severally, indemnifies, exonerates and holds each Secured Party and each of their respective affiliates and their and their affiliates’ officers, directors, employees, advisors and agents (collectively, the “Indemnified Parties”) free and harmless from and against any and all losses, claims, demands, suits, actions, investigations,
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proceedings, liabilities, fines, costs, judgments, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (collectively, the “Indemnified Liabilities”) as a result of, or arising out of, or relating to:
(a)
the execution and delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of the Borrowers’ and the other Credit Parties’ compliance with the terms of the Loan Documents;
(b)
any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Party is a party thereto), or any act, omission, event, or circumstance in any manner related thereto;
(c)
any investigation, litigation or proceeding related to any acquisition or proposed acquisition by any Credit Party or any Subsidiary thereof of all or any portion of the Capital Securities or assets of any Person, whether or not an Indemnified Party is party thereto;
(d)
(i) the Release from any real property owned or operated by any Credit Party or any Subsidiary thereof of any Hazardous Material (including any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Environmental Law), or (ii) each Lender’s Environmental Liability (the indemnification herein shall survive repayment of the Obligations and any transfer of the property of any Credit Party or its Subsidiaries by foreclosure or by a deed in lieu of foreclosure for any Lender’s Environmental Liability); in each case of clauses (i) and (ii), other than any Release or Lender’s Environmental Liability first caused and first created after the Administrative Agent completes the sale and the transfer of the respective real property pursuant to a foreclosure or deed in lieu of foreclosure;
provided that the Borrowers shall not be required to indemnify any Indemnified Party to the extent the applicable Indemnified Liability arises by reason of such Indemnified Party’s gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Credit Party agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under Applicable Law. To the extent permitted by Applicable Law, the Borrowers and each other Credit Party shall not assert, and hereby waive, any claim against any Indemnified Party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, any Loan or the use of the proceeds thereof.
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10.5
Survival. The obligations of the Borrowers under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under Section 9.1, shall in each case survive any assignment from one Lender to another (in the case of Sections 10.3 and 10.4), the occurrence of the Termination Date and the resignation or removal of the Administrative Agent. The representations and warranties made by each Credit Party in each Loan Document shall survive the execution and delivery of such Loan Document.
10.6
Severability. Any provision of any Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction.
10.7
Headings. The various headings of each Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of such Loan Document or any provisions thereof.
10.8
Execution in Counterparts, Effectiveness, etc. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be an original (whether such counterpart is originally executed or an electronic copy of an original and each party hereto expressly waives its rights to receive originally executed documents other than with respect to any documents for which originals are required for any filing or perfection) and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrowers shall have been received by the Administrative Agent.
10.9
Governing Law; Entire Agreement. EACH LOAN DOCUMENT WILL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE. The Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter thereof and supersede any prior agreements, written or oral, with respect thereto.
10.10
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that, the Borrowers may not assign or transfer its rights or obligations hereunder without the consent of all Lenders.
10.11
Sale and Transfer of Loans; Participations in Loans; Notes. Each Lender may assign, or sell participations in, its Loans to one or more other Persons in accordance with the terms set forth below.
(a)
Any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Loans at the time owing to it); provided that:
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(i)
the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Lender Assignment Agreement with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000, unless (A) the Administrative Agent otherwise consents; (B) such assignment is an assignment of the entire remaining amount of the assigning Lender’s Loans at the time owing to it, (C) such assignment is an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender or (D) such assignment is to one or more Eligible Assignees managed by an Affiliate of such Eligible Assignee(s) and the aggregate amount of such assignments is not less than $1,000,000;
(ii)
each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans assigned; and
(iii)
the parties to each assignment shall (A) electronically execute and deliver to the Administrative Agent a Lender Assignment Agreement via an electronic settlement system acceptable to the Administrative Agent or (B) with the consent of the Administrative Agent, manually execute and deliver to the Administrative Agent a Lender Assignment Agreement, together with, in either case, a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent) and if the Eligible Assignee is not a Lender, administrative details information with respect to such Eligible Assignee and applicable tax forms.
(b)
Subject to acceptance and recording thereof by the Administrative Agent pursuant to clause (c), from and after the effective date specified in each Lender Assignment Agreement, (i) the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Lender Assignment Agreement, have the rights and obligations of a Lender under this Agreement, and (ii) the assigning Lender thereunder shall, to the extent of the interest assigned by such Lender Assignment Agreement, subject to Section 10.5, be released from its obligations under this Agreement (and, in the case of a Lender Assignment Agreement covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto, but shall continue to be entitled to the benefits of any provisions of this Agreement which by their terms survive the termination of this Agreement). If the consent of the Borrowers to an assignment or to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment thresholds specified in this Section), the Borrowers shall be deemed to have given their consent ten days after the date notice thereof has been delivered by the assigning Lender (through the Administrative Agent or ClearPar, LLC) unless such consent is expressly refused by the Borrowers prior to such tenth day.
(c)
The Administrative Agent shall record each assignment made in accordance with this Section in the Register pursuant to clause (a) of Section 2.5 and at the request of the Borrowers give the Borrowers notice of such assignments. The Register shall be available for inspection by the Borrowers and any Lender (in respect of
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its own position only), at any reasonable time and from time to time upon reasonable prior notice.
(d)
Any Lender may, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to one or more banks or other entities other than an Ineligible Assignee (a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver with respect to any of the items set forth in clauses (a) through (e) of Section 10.1, in each case except as otherwise specifically provided in a Loan Document. Subject to clause (e), the Borrowers agree that each Participant shall be entitled to the benefits of Sections 4.3, 4.4, 4.5, 4.6, 7.1.3, 10.3 and 10.4 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b), (it being understood that the documentation required under Section 4.6(e) shall be delivered to the participating Lender). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 4.9 as though it were a Lender, provided such Participant agrees to be subject to Sections 4.8 and 4.10 as though it were a Lender. Each Lender shall, as agent of the Borrowers solely for the purpose of this Section, record in book entries maintained by such Lender the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive and binding absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. If requested by the Administrative Agent or the Borrowers, such Lender shall make the Participant Register available to the Administrative Agent or to the Borrowers either (i) upon the exercise by a Participant of remedies hereunder or (ii) to the extent necessary to establish that the Participant’s interests in the obligations under the Agreement is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.
(e)
A Participant shall not be entitled to receive any greater payment under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, as of the time of the sale of such participation, than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers’ prior written consent. A Participant shall not be entitled to the benefits of Section 4.6 unless the Borrowers are notified of the participation sold to such Participant and such Participant agrees, for the benefit of the
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Borrowers, to comply with the requirements set forth in Section 4.6 as though it were a Lender that acquired its interest by assignment. In addition, if at the time of the sale of such participation, any greater Taxes subject to payment under Section 4.6 would apply to the Participant than applied to the applicable Lender, then such Participant shall not be entitled to any payment under Section 4.6 with respect to the portion of such Taxes as exceeds the Taxes applicable to the Lender at the time of the sale of the participation unless the Participant’s request for the Borrowers’ prior written consent for the Participation described in the first sentence of this clause states that such greater Taxes would be applicable to such Participant, it being understood that the Participant shall be entitled to additional payments under Section 4.6 to the extent such Lender selling the participation would be entitled to any payment resulting from a change in law occurring after the time the participation was sold.
(f)
Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(g)
Notwithstanding anything to the contrary contained herein, any Lender (“Granting Lender”) may grant to a special purpose funding vehicle (a “SPC”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrowers, the option to provide to the Borrowers all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (x) nothing herein shall constitute a commitment by any SPC to make any Loans and (y) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this clause, any SPC may (i) with notice to, but without the prior written consent of, the Borrowers or the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrowers) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section may not be amended without the written consent of the SPC. The Borrowers acknowledge and agree, subject to the next sentence, that, to the fullest extent
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permitted under Applicable Law, each SPC, for purposes of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a Lender (provided, in the case of Section 4.6, that the SPC complies with the requirements of such Section as if it were a Lender that acquired its interest by assignment). The Borrowers shall not be required to pay any amount under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 that is greater than the amount which it would have been required to pay had no grant been made by a Granting Lender to a SPC.
10.12
Other Transactions. Nothing contained herein shall preclude the Administrative Agent or any other Lender from engaging in any transaction, in addition to those contemplated by the Loan Documents, with a Borrower or any of its Affiliates in which such Borrower or such Affiliate is not restricted hereby from engaging with any other Person.
10.13
Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER IN CONNECTION HEREWITH OR THEREWITH MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT, ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT’S OPTION (ACTING AT THE WRITTEN DIRECTION OF THE REQUIRED LENDERS), IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR NOTICES SPECIFIED IN SECTION 10.2. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS.
10.14
Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
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COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, SUCH LENDER OR THE BORROWER IN CONNECTION THEREWITH. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND EACH LENDER ENTERING INTO THE LOAN DOCUMENTS.
10.15
Confidentiality.
(a)
Subject to the provisions of clause (b) of this Section, each Lender agrees that it will follow its customary procedures in an effort not to disclose without the prior consent of the Borrowers (other than to its employees, auditors, advisors or counsel, or to another Lender if the Lender or such Lender’s holding or parent company in its sole discretion determines that any such party should have access to such information, provided such Persons shall be subject to the provisions of this Section to the same extent as such Lender) any information which is now or in the future furnished pursuant to this Agreement or any other Loan Document, provided that any Lender may disclose any such information (i) as has become generally available to the public other than by virtue of a breach of this clause by the respective Lender or any other Person to whom such Lender has provided such information as permitted by this Section, (ii) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state, provincial or Federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors, (iii) as may be required or appropriate in respect to any summons or subpoena or in connection with any litigation, (iv) in order to comply with any law, order, regulation or ruling applicable to such Lender, (v) to the Administrative Agent, (vi) to any pledgee referred to in clause (f) of Section 10.11 or any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Notes or Loans or any interest therein by such Lender, provided that such prospective transferee agrees to be bound by the confidentiality provisions contained in this Section, (vii) to any direct or indirect contractual counterparty in swap agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section) and (viii) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender.
(b)
The Borrowers hereby acknowledge and agree that each Lender may share with any of its Affiliates, and such Affiliates may share with such Lender, any information related to the Borrowers or any of their Subsidiaries, provided such Persons shall be subject to the provisions of this Section to the same extent as such Lender.
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Notwithstanding the foregoing paragraphs of this Section, any party to this Agreement (and each Affiliate, director, officer, employee, agent or representative of the foregoing or such Affiliate) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment or tax structure. The foregoing language is not intended to waive any confidentiality obligations otherwise applicable under this Agreement except with respect to the information and materials specifically referenced in the preceding sentence. This authorization does not extend to disclosure of any other information, including (a) the identity of participants or potential participants in the transactions contemplated herein, (b) the existence or status of any negotiations, or (c) any financial, business, legal or personal information of or regarding a party or its affiliates, or of or regarding any participants or potential participants in the transactions contemplated herein (or any of their respective affiliates), in each case to the extent such other information is not related to the tax treatment or tax structure of the transactions contemplated herein.
10.16
Counsel Representation. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS BEEN REPRESENTED BY COMPETENT COUNSEL IN THE NEGOTIATION OF THIS AGREEMENT, AND THAT ANY RULE OR CONSTRUCTION OF LAW ENABLING THE BORROWER TO ASSERT THAT ANY AMBIGUITIES OR INCONSISTENCIES IN THE DRAFTING OR PREPARATION OF THE TERMS OF THIS AGREEMENT SHOULD DIMINISH ANY RIGHTS OR REMEDIES OF THE ADMINISTRATIVE AGENT OR THE OTHER SECURED PARTIES ARE HEREBY WAIVED BY THE BORROWER.
10.17
Patriot Act. Each Lender hereby notifies the Borrowers that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Lender to identify the Borrowers in accordance with the Patriot Act.
10.18
Authorization of Administrative Agent. Each Lender agrees that any action taken by the Administrative Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by the Administrative Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.
10.19
Releases. (a) Upon the entry of the Final Financing Order, in consideration of the agreements of the Administrative Agent and the Lenders contained herein and the making of any Loans by Lenders, Borrowers, pursuant to this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, on behalf of itself, its Subsidiaries and their respective successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges the Administrative Agent and each Lender and their respective successors and assigns, and their respective present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees and other representatives (all such parties being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and
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from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “Pre-Petition Released Claim” and collectively, “Pre-Petition Released Claims”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which a Borrower, or any of its successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any nature, cause or thing whatsoever which arises at any time on or prior to the day and date of this Agreement, including, without limitation, for or on account of, or in relation to, or in any way in connection with the this Agreement, as amended and supplemented through the date hereof, and the other Loan Documents.
(b)
Upon the earlier of (i) the entry of the Final Financing Order or (ii) the entry of an order of the Bankruptcy Court extending the term of the Interim Financing Order beyond thirty (30) calendar days after the date of the entry of the Interim Financing Order, the Borrowers, on behalf of themselves, their Subsidiaries and their respective successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Pre-Petition Released Claim released, remised and discharged by Borrowers pursuant to this Section 10.19. If a Borrower or any of its Subsidiaries violates the foregoing covenant, Borrowers agree to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys’ fees and costs incurred by any Releasee as a result of such violation.
(c)
Upon (i) the receipt by the Lenders, of payment in full of all Obligations in cash or other immediately available funds, plus cash collateral or other collateral security acceptable to Lenders to secure any Obligations that survive or continue beyond the termination of the Loan Documents, and (ii) the termination of the Loan Documents (the “Payment Date”), in consideration of the agreements of the Lenders contained herein and the making of any Loans by the Lenders, Borrowers and each of their Subsidiaries hereby covenants and agrees to execute and deliver in favor of each Lender (and the Administrative Agent) a valid and binding termination and release agreement, in form and substance satisfactory to such Lender (or Administrative Agent). If a Borrower or any of its Subsidiaries violates such covenant, Borrowers agree to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys’ fees and costs incurred by any Releasee as a result of such violation.
(d)
Each Borrower understands, acknowledges and agrees that the releases set forth above in Section 10.19(a) and Section 10.19 (b) hereof may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such releases. The Borrowers agree that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final and unconditional nature of the releases set forth in Section 10.19(a) hereof and, when made, Section 10.19(b) hereof.
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10.20
Pre-Petition Term Loan Facility.The Borrowers and each other Credit Party agrees and acknowledges that (i) this Agreement and the Loan Documents are separate and distinct from the Prepetition First Lien Term Loan Agreement, (ii) the Prepetition First Lien Term Loan Agreement continues in full force and effect, (iii) by entering into this Agreement and each other Loan Document, none of the Administration Agent, nor the Lenders waives, and each expressly reserves, any and all claims, causes of action, defenses, rights and remedies it has or may have pursuant to any or all of the Prepetition First Lien Term Loan Agreement, and any intercreditor or subordination agreement, the Bankruptcy Code, and/or under applicable law against or with respect to any Credit Party and any other Person or entity; (iv) the Obligations of the Credit Parties, and the rights, benefits, privileges, remedies, claims, Liens, security interests and priorities of the Administrative Agent and Lenders arising under or in connection with this Agreement, each other Loan Document and the Financing Orders, are in addition to, and are not intended as a waiver or substitution for, the rights, benefits, privileges, remedies, claims, liens, security interests and priorities granted to such parties under the Prepetition First Lien Term Loan Agreement and any intercreditor or subordination agreement, the Bankruptcy Code, and/or under applicable law, all of which are expressly reserved by the Administrative Agent and the Lenders.
ARTICLE 11
CERTAIN COLLATERAL ADMINISTRATION
11.1
Insurance of Collateral; Condemnation Proceeds. Each Credit Party shall maintain and pay for insurance upon all Collateral, wherever located, covering casualty, hazard, public liability, theft, malicious mischief and the other risks covered under the policies listed in Part 11.1 of the Disclosure Schedule, in the amounts and with the insurance companies listed in Part 11.1 of the Disclosure Schedule (which describes all insurance of the Credit Parties in effect on the date hereof with respect to Collateral) similar to those maintained by companies of similar size and similarly situated. The Credit Parties have the right to substitute valid and enforceable policies issued by any Approved Insurer so long as such policies insure the same risks and are in the same amounts or such other amounts reasonably determined by such Credit Party and consistent with past practices and in accordance with industry standards for companies in the same or similar industry and of the size and owning Properties comparable to the Credit Parties. All proceeds constituting Term Loan Priority Collateral payable under each such policy shall be applied in accordance with and subject to Section 3.1.1(c) to reduce the Loans. The Credit Parties shall deliver copies of such policies to the Administrative Agent. Each policy insuring the Collateral (except fidelity coverage against theft and malicious mischief) will (a) include a loss payee endorsement satisfactory to the Administrative Agent, naming the Administrative Agent and the ABL Administrative as sole loss payees and (b) additional insured as appropriate. Each such policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to the Administrative Agent in the event of cancellation of the policy for any reason whatsoever (except that in the case of cancellation for non-payment of the premium, the insurer shall give 10 days’ prior written notice to the Administrative Agent) and a clause specifying that the interest of the Administrative Agent shall not be impaired or invalidated by any act or neglect of any Credit Party or the owner of the property in which the Collateral is stored or by the occupation of the premises for purposes more hazardous than are permitted by said policy. If any Credit Party fails to provide and pay for such insurance, the Administrative Agent may, at its option, but shall not be required to, procure the same and
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charge each Credit Party therefor. Each Credit Party agrees to deliver to the Administrative Agent, promptly as rendered, true copies of all claims and reports relating to claims submitted to insurance companies issuing policies insuring the Term Loan Priority Collateral. For so long as no Event of Default exists, each Credit Party shall have the right to settle, adjust and compromise any claim with respect to any insurance maintained by each Credit Party with respect to the Term Loan Priority Collateral provided that all proceeds thereof are applied in the manner specified in this Agreement, and the Administrative Agent agrees promptly to provide any necessary endorsement to any checks or drafts issued in payment of any such claim. At any time that an Event of Default exists, only the Administrative Agent shall be authorized to settle, adjust and compromise such claims. The Administrative Agent shall have all rights and remedies with respect to such policies of insurance on the Collateral as are provided for in this Agreement and the other Loan Documents, and consistent with the applicable insurance policies.
11.2
Protection of Collateral. All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping any Collateral, all Taxes imposed under any Applicable Law on any of the Collateral or in respect of the sale thereof, and all other payments required to be made by the Administrative Agent to any Person to realize upon any Collateral shall be borne and paid by Credit Parties. The Administrative Agent shall not be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto (except for reasonable care in the custody thereof while any Collateral is in the Administrative Agent’s actual possession) or for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency, or other Person whomsoever, but the same shall be at the Credit Parties’ sole risk.
11.3
Defense of Title to Collateral. Each Credit Party shall at all times defend its title to the Collateral and the Collateral Agent’s Liens therein against all Persons and all claims and demands whatsoever other than Permitted Liens.
Balance of Page Intentionally Left Blank
Signature Pages Follow
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IN WITNESS WHEREOF, the parties hereto have caused this Super-Priority Priming Debtor In Possession Delayed Draw Term Loan Credit Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.
THE STANDARD REGISTER COMPANY
By:
________________________________
Name:
Title:
STANDARD REGISTER
INTERNATIONAL, INC.
By:
________________________________
Name:
Title:
STANDARD REGISTER
TECHNOLOGIES, INC.
By:
________________________________
Name:
Title:
IMEDCONSENT, LLC
By:
________________________________
Name:
Title:
STANDARD REGISTER OF PUERTO
RICO INC.
By:
________________________________
Name:
Title:
[Mexico Borrower Signature Blocks To Come]
SILVER POINT FINANCE, LLC,
as the Administrative Agent
By:
________________________________
Name:
Title:
SILVER POINT FINANCE, LLC,
as the Collateral Agent
By:
________________________________
Name:
Title:
Exhibit 99.1
Standard Register®
ADVANCING YOUR REPUTATION
600 Albany St. · Dayton, OH 45417
Investor and media contact:
937.221.1000 · 937.221.1205 (fax)
Carol Merry 614.383.1624
www.standardregister.com
carol.merry@fahlgren.com
Standard Register Commences Voluntary Chapter 11 Reorganization, Obtains Financing and Support for Sale Process from its Lenders
Dayton, OH (March 12, 2015) – The Standard Register Company (the “Company”) today announced that it and its subsidiaries have filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
The Company also announced that it is pursuing a sale process and has entered into an acquisition agreement with an affiliate of Silver Point Capital, L.P. The agreement was submitted to the Bankruptcy Court today. Under the proposed agreement, the Company’s assets will be sold for approximately $275 million plus the assumption of certain other liabilities. The sale agreement contemplates a Court-supervised auction process, which is designed to facilitate a competitive sale process. Subject to the results at auction, the closing of the transaction is subject to the satisfaction of usual and customary conditions, including obtaining Court approval and all necessary regulatory consents. The Company believes that this sale will right-size the business’ balance sheet by significantly reducing its outstanding indebtedness and other liabilities to better position the business for long-term growth and profitability in the hands of a capable buyer. Silver Point Capital is a private investment firm managing approximately $8.5 billion.
The Company is supported by its existing secured lenders, including Bank of America, N.A. and Silver Point, who have agreed to extend $155 million in financing in the form of a debtor-in-possession (DIP) credit facility. The DIP facility should provide the Company with ample liquidity to facilitate its sale process and to fund operations. The Company also has filed and expects to obtain approval for various customary motions seeking court authorization to continue to support its business operations during the sale process, including honoring employee wages and benefits in the ordinary course and honoring its customer programs. The Company intends to pay suppliers under normal terms for goods and services provided on or after the filing date of March 12, 2015. The Company appreciates the support of its customers and suppliers and expects to continue its relationships with them in the ordinary course of business.
“Standard Register has a fundamentally stable underlying business with a large, diverse customer base and a strong portfolio of solutions that include integrated communications, product marking and decoration (labels), document management, promotional marketing and technology/professional services, but our ability to invest in growth has been hampered by our debt structure and legacy liabilities,” said Joseph P. Morgan, Jr., president and chief executive officer.
“In response to the traditional print market decline, Standard Register repositioned itself as a market focused integrated communications provider where today, the majority of both revenue and profit are being derived.”
“The Board and management team have conducted a rigorous assessment of all of our strategic options and believe that this process represents the best possible solution for Standard Register. We are grateful for the support of our lenders and have sufficient financing to fund our operations as we complete a process that should result in greater flexibility for investment in the future,” concluded Mr. Morgan. “We are thankful to our dedicated employees who continue to work diligently to deliver value and a high level of customer service.”
As recently announced, Kevin Carmody, a Practice Leader with McKinsey Recovery & Transformation Services U.S., LLC, has been appointed Chief Restructuring Officer. The Company indicated that it expects to provide additional details with respect to the Chapter 11 filing as soon as they are available. More information, including access to court documents, can be accessed at http://cases.primeclerk.com/standardregister (court-appointed claims agent site) or wwwdeb.uscourts.gov, the official Bankruptcy Court website.
The Company’s shareholders are cautioned that trading in shares of the Company’s common stock during the pendency of the bankruptcy process will be highly speculative and will pose substantial risks. The Company believes it is probable there will be no recovery for any equity holder in the bankruptcy proceedings. Accordingly, the Company urges extreme caution with respect to existing and future investments in its common stock.
Additional information can also be found by visiting the Company’s website at www.standardregister.com and clicking on the link for Restructuring Information.
Standard Register’s legal advisor for the Chapter 11 proceedings is Gibson, Dunn & Crutcher LLP. Lazard Freres & Co. LLC serves as financial advisor to the Company.
About Standard Register
Standard Register is trusted by the world’s leading companies to advance their reputations and add value to their operations by aligning communications with corporate brand standards. Providing market-specific insights and a compelling portfolio of workflow, content and analytics solutions to address the changing business landscape in healthcare, financial services, manufacturing and retail markets, Standard Register is the recognized leader in the management and execution of critical communications. More information is available at www.standardregister.com.
Forward-Looking Statements
This press release contains forward-looking statements covered by the Private Securities Litigation Reform Act of 1995. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results could differ materially from the Company’s current expectations. Factors that could cause the Company’s results to differ materially from those expressed in forward-looking statements include, without limitation, our ability to successfully complete the bankruptcy and competitive sale process, future pension funding requirements and recognition of actuarial gains and losses, access to capital for expanding our portfolio of solutions, the pace at which digital technologies and electronic health records adoption erode the demand for certain products and services, the success of our plans to deal with the threats and opportunities brought by digital technology, results of cost containment strategies
and restructuring programs, our ability to attract and retain key personnel, variation in demand and acceptance of the Company’s products and services, frequency, magnitude and timing of paper and other raw material price changes, the timing of the completion and integration of acquisitions, general business and economic conditions beyond the Company’s control, and the consequences of competitive factors in the marketplace, including the ability to attract and retain customers. The Company undertakes no obligation to revise or update forward-looking statements as a result of new information, since these statements may no longer be accurate or timely. For more information, see the Company’s most recent Form 10-K and other filings with the Securities and Exchange Commission.