"MATERIAL
ADVERSE EFFECT" MEANS A MATERIAL ADVERSE EFFECT ON ANY OF (A) THE OPERATIONS,
BUSINESS, ASSETS, PROPERTIES, OR CONDITION (FINANCIAL OR OTHERWISE) OF BORROWER,
INDIVIDUALLY, OR THE LOAN PARTIES, COLLECTIVELY, (B) THE ABILITY OF A LOAN PARTY
TO PERFORM ANY OF ITS OBLIGATIONS UNDER ANY DEBT DOCUMENT TO WHICH IT IS A
PARTY, (C) THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY DEBT DOCUMENT,
(D) THE RIGHTS AND REMEDIES OF AGENT OR LENDERS UNDER ANY DEBT DOCUMENT OR
(E) THE VALIDITY, PERFECTION OR PRIORITY OF ANY LIEN IN FAVOR OF AGENT, ON
BEHALF OF ITSELF AND LENDERS, ON ANY OF THE COLLATERAL.
5.5.
FINANCIAL STATEMENTS.
ALL FINANCIAL STATEMENTS DELIVERED TO AGENT AND
LENDERS PURSUANT TO SECTION 6.3 HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP
(SUBJECT, IN THE CASE OF UNAUDITED FINANCIAL STATEMENTS, TO THE ABSENCE OF
FOOTNOTES AND NORMAL YEAR END AUDIT ADJUSTMENTS), AND SINCE THE DATE OF THE MOST
RECENT AUDITED FINANCIAL STATEMENT, NO EVENT HAS OCCURRED WHICH HAS HAD OR COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
THERE HAS BEEN NO
MATERIAL ADVERSE DEVIATION FROM THE MOST RECENT PROPOSED ANNUAL OPERATING BUDGET
OF BORROWER DELIVERED TO AGENT AND LENDERS IN ACCORDANCE WITH SECTION 6.3.
5.6.
USE OF PROCEEDS.
THE PROCEEDS OF THE TERM LOANS SHALL BE USED FOR
WORKING CAPITAL AND GENERAL CORPORATE PURPOSES.
5.7.
COLLATERAL.
EACH LOAN PARTY IS, AND WILL REMAIN, THE SOLE AND LAWFUL
OWNER, AND IN POSSESSION OF, THE COLLATERAL, AND HAS THE SOLE RIGHT AND LAWFUL
AUTHORITY TO GRANT THE SECURITY INTEREST DESCRIBED IN THIS AGREEMENT.
THE
COLLATERAL IS, AND WILL REMAIN, FREE AND CLEAR OF ALL LIENS, CLAIMS AND
ENCUMBRANCES OF ANY KIND WHATSOEVER, EXCEPT FOR (A) LIENS IN FAVOR OF AGENT, ON
BEHALF OF ITSELF AND LENDERS, TO SECURE THE OBLIGATIONS, (B) LIENS (I) WITH
RESPECT TO THE PAYMENT OF TAXES, ASSESSMENTS OR OTHER GOVERNMENTAL CHARGES OR
(II) OF SUPPLIERS, CARRIERS, MATERIALMEN, WAREHOUSEMEN, WORKMEN OR MECHANICS AND
OTHER SIMILAR LIENS, IN EACH CASE IMPOSED BY LAW AND ARISING IN THE ORDINARY
COURSE OF BUSINESS, AND SECURING AMOUNTS THAT ARE NOT YET DUE OR THAT ARE BEING
CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS DILIGENTLY CONDUCTED AND WITH
RESPECT TO WHICH ADEQUATE RESERVES OR OTHER APPROPRIATE PROVISIONS ARE
MAINTAINED ON THE BOOKS OF THE APPLICABLE LOAN PARTY IN ACCORDANCE WITH GAAP AND
WHICH DO NOT INVOLVE, IN THE JUDGMENT OF AGENT, ANY RISK OF THE SALE, FORFEITURE
OR LOSS OF ANY OF THE COLLATERAL (A "PERMITTED CONTEST"), (C) LIENS EXISTING ON
THE DATE HEREOF AND SET FORTH ON SCHEDULE B HERETO, (D) LIENS SECURING
INDEBTEDNESS (AS DEFINED IN SECTION 7.2 BELOW) PERMITTED UNDER
SECTION 7.2(C) BELOW, PROVIDED THAT (I) SUCH LIENS EXIST PRIOR TO THE
ACQUISITION OF, OR ATTACH SUBSTANTIALLY SIMULTANEOUS WITH, OR WITHIN 20
13
DAYS AFTER THE, ACQUISITION, REPAIR, IMPROVEMENT OR CONSTRUCTION OF, SUCH
PROPERTY FINANCED BY SUCH INDEBTEDNESS AND (II) SUCH LIENS DO NOT EXTEND TO ANY
PROPERTY OF A LOAN PARTY OTHER THAN THE PROPERTY (AND PROCEEDS THEREOF) ACQUIRED
OR BUILT, OR THE IMPROVEMENTS OR