EXHIBIT 10.38
AMENDED AND RESTATED CREDIT AGREEMENT
$105,000,000.00 REVOLVING CREDIT FACILITY
by and among
NEWTECH ELECTRONICS INDUSTRIES, INC.
(formerly known as NEW M-TECH CORPORATION),
a Florida corporation
NEWTECH (HONG KONG) LIMITED,
a Hong Kong limited liability company
DURABLE ELECTRONICS INDUSTRIES LIMITED,
a Hong Kong limited liability company
and
NEWTECH ELECTRONICS INDUSTRIES LIMITED
(formerly known as Pomillo Limited),
a Hong Kong limited liability company
[collectively, the BORROWERS and each a BORROWER]
and
THE LENDERS PARTY HERETO
[collectively, the LENDERS and each a LENDER]
and
NATIONAL BANK OF CANADA, As Agent
and
NATIONSBANK, N.A.,
As Collateral Agent and Administrative Agent
Dated as of June 8, 1998
1. CERTAIN DEFINITIONS..........................................................................2
1.1 Certain Definitions................................................................2
1.2 Construction......................................................................27
1.2.1 Number; Inclusion......................................................27
1.2.2 Determination..........................................................27
1.2.3 Agent's Discretion and Consent.........................................27
1.2.4 Documents Taken as a Whole.............................................27
1.2.5 Headings...............................................................27
1.2.6 Implied References to this Agreement...................................28
1.2.7 Persons................................................................28
1.2.8 Modifications to Documents.............................................28
1.2.9 From, To and Through...................................................28
1.2.10 Shall; Will...........................................................28
1.2.11 Neutral Interpretation................................................28
1.3 Accounting Principles.............................................................28
2. REVOLVING CREDIT FACILITY...................................................................29
2.1 Revolving Credit Commitments......................................................29
2.2 Nature of Lenders' Obligations with Respect to Revolving Credit Loans.............29
2.3 Commitment and Administration Fees................................................30
2.4 Revolving Credit Loan Requests....................................................30
2.5 Making Revolving Credit Loans.....................................................31
2.6 Revolving Credit Notes............................................................31
2.7 Use of Proceeds...................................................................31
2.8 Letters of Credit And Bankers' Acceptances Subfacilities..........................32
2.8.1 Letters of Credit Subfacility..........................................32
2.8.2 Bankers' Acceptance Subfacility........................................39
2.8.3 Indemnity..............................................................44
2.8.4 Liability for Acts and Omissions.......................................45
2.9 Borrowing Base Limitation.........................................................46
2.10 Repayment of Obligations.........................................................46
2.11 Collateral.......................................................................46
2.12 Reconciliation Dates.............................................................46
2.12.1 Agent Reconciliation..................................................46
2.12.2 Collateral Agent Reconciliation.......................................47
2.12.3 Payments on Reconciliation Dates......................................47
3. OVERADVANCE FACILITY........................................................................47
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3.1 Overadvance Facility.....................................................................47
4. INTEREST RATES.....................................................................................48
4.1 Interest Rate Options....................................................................48
4.1.1 Revolving Credit Interest Rate Options........................................48
4.1.2 Overadvance Facility Interest Rate............................................49
4.1.3 Rate Quotations...............................................................49
4.2 Interest Periods.........................................................................49
4.2.1 Ending Date and Business Day..................................................50
4.2.2 Amount of Borrowing Tranche...................................................50
4.2.3 Termination Before Expiration Date............................................50
4.2.4 Renewals......................................................................50
4.3 Interest After Default...................................................................50
4.3.1 Other Obligations.............................................................50
4.3.2 Acknowledgment................................................................51
4.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available...........51
4.4.1 Unascertainable...............................................................51
4.4.2 Illegality; Increased Costs; Deposits Not Available...........................51
4.4.3 Collateral Agent's and Lender's Rights........................................51
4.5 Selection of Interest Rate Options.......................................................52
5. PAYMENTS...........................................................................................52
5.1 Payments.................................................................................52
5.2 Pro Rata Treatment of Lenders............................................................53
5.3 Interest Payment Dates...................................................................53
5.4 Voluntary Prepayments....................................................................53
5.4.1 Right to Prepay...............................................................53
5.4.2 Replacement of a Lender.......................................................54
5.4.3 Change of Lending Office......................................................55
5.4.4 Debit of Accounts.............................................................55
5.5 Mandatory Prepayments....................................................................55
5.5.1 Application Among Interest Rate Options.......................................55
5.6 Additional Compensation in Certain Circumstances.........................................55
5.6.1 Increased Costs or Reduced Return Resulting from Taxes, Reserves, Capital
Adequacy Requirements, Expenses, Etc.....................................55
5.6.2 Indemnity.....................................................................56
5.7 Representations and Warranties...........................................................57
5.7.1 Organization and Qualification................................................57
5.7.2 Capitalization and Ownership..................................................57
5.7.3 Subsidiaries..................................................................57
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5.7.4 Power and Authority....................................................58
5.7.5 Validity and Binding Effect............................................58
5.7.6 No Conflict............................................................58
5.7.7 Litigation.............................................................59
5.7.8 Title to Properties....................................................59
5.7.9 Financial Statements...................................................59
5.7.10 Use of Proceeds; Margin Stock; Section 20 Subsidiaries................60
5.7.11 Full Disclosure.......................................................60
5.7.12 Taxes.................................................................61
5.7.13 Consents and Approvals................................................61
5.7.14 No Event of Default; Compliance with Instruments......................61
5.7.15 Patents, Trademarks, Copyrights, Licenses, Etc........................61
5.7.16 Security Interests....................................................62
5.7.17 Liens.................................................................62
5.7.18 Solvency..............................................................62
5.7.19 Insurance.............................................................63
5.7.20 Compliance with Laws..................................................63
5.7.21 Material Contracts; Burdensome Restrictions...........................63
5.7.22 Investment Companies; Regulated Entities..............................63
5.7.23 Plans and Benefit Arrangements........................................63
5.7.24 Employment Matters....................................................65
5.7.25 Environmental Matters.................................................65
5.7.26 Senior Debt Status....................................................66
5.8 Updates to Schedules..............................................................67
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT AND BANKERS' ACCEPTANCES............67
6.1 First Loans, Letters of Credit and Bankers' Acceptances...........................67
6.1.1 Officer's Certificate..................................................67
6.1.2 Secretary's Certificate................................................68
6.1.3 Delivery of Loan Documents.............................................68
6.1.4 Opinions of Counsel....................................................68
6.1.5 Payment of Fees........................................................69
6.1.6 Eligible Securities....................................................69
6.1.7 Solvency...............................................................69
6.1.8 Consents...............................................................70
6.1.9 Officer's Certificate Regarding MACs...................................70
6.1.10 No Violation of Laws..................................................70
6.1.11 No Actions or Proceedings.............................................70
6.1.12 Insurance Policies; Certificates of Insurance; Endorsements...........70
6.1.13 OMITTED...............................................................71
6.1.14 Filing Receipts.......................................................71
6.1.15 Landlord's Waivers....................................................71
6.1.16 Administrative Questionnaire..........................................71
6.2 Each Additional Loan, Letter of Credit or Bankers' Acceptance.....................71
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7. COVENANTS.........................................................................................72
7.1 Affirmative Covenants...................................................................72
7.1.1 Preservation of Existence, Etc...............................................72
7.1.2 Payment of Liabilities, Including Taxes, Etc.................................72
7.1.3 Maintenance of Insurance.....................................................72
7.1.4 Maintenance of Properties and Leases.........................................74
7.1.5 Maintenance of Patents, Trademarks, Etc......................................74
7.1.6 Visitation Rights............................................................74
7.1.7 Keeping of Records and Books of Account......................................74
7.1.8 Plans and Benefit Arrangements...............................................75
7.1.9 Compliance with Laws.........................................................75
7.1.10 Use of Proceeds.............................................................75
7.1.11 Further Assurances..........................................................75
7.1.12 Windmere Subordination......................................................75
7.1.13 Year 2000 Compliance........................................................75
7.1.14 Lockbox Accounts............................................................76
7.2 Negative Covenants......................................................................76
7.2.1 Indebtedness.................................................................76
7.2.2 Liens........................................................................76
7.2.3 Guaranties...................................................................77
7.2.4 Loans and Investments........................................................77
7.2.5 Dividends and Related Distributions..........................................77
7.2.6 Liquidations, Mergers, Consolidations, Acquisitions..........................77
7.2.7 Dispositions of Assets.......................................................77
7.2.8 Affiliate Transactions.......................................................78
7.2.9 Subsidiaries, Partnerships and Joint Ventures................................79
7.2.10 Continuation of or Change in Business.......................................79
7.2.11 Plans and Benefit Arrangements..............................................79
7.2.12 Fiscal Year.................................................................80
7.2.13 Issuance of Stock...........................................................81
7.2.14 Changes in Organizational Documents.........................................81
7.2.15 Capital Expenditures and Leases.............................................81
7.2.16 Consolidated Total Liabilities To Consolidated Tangible Net Worth Ratio.....81
7.2.17 Maximum Leverage Ratio......................................................81
7.2.18 Minimum Interest Coverage Ratio.............................................82
7.2.19 Minimum Tangible Net Worth..................................................82
7.2.20 Minimum Current Ratio.......................................................83
7.3 Reporting Requirements..................................................................83
7.3.1 Monthly Financial Statements.................................................83
7.3.2 Additional Materials.........................................................84
7.3.3 Annual Financial Statements..................................................84
7.3.4 Certificate of the Borrower..................................................85
7.3.5 Notice of Default............................................................85
7.3.6 Notice of Litigation.........................................................86
7.3.7 Certain Events...............................................................86
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7.3.8 Budgets, Forecasts, Other Reports and Information...........................86
7.3.9 Notices Regarding Plans and Benefit Arrangements............................87
8. DEFAULT..........................................................................................88
8.1 Events of Default......................................................................88
8.1.1 Payments Under Loan Documents...............................................88
8.1.2 Breach of Warranty..........................................................89
8.1.3 Breach of Covenants.........................................................89
8.1.4 Defaults in Other Agreements or Indebtedness................................89
8.1.5 Final Judgments or Orders...................................................89
8.1.6 Loan Document Unenforceable.................................................89
8.1.7 Uninsured Losses; Proceedings Against Assets................................90
8.1.8 Notice of Lien or Assessment................................................90
8.1.9 Insolvency..................................................................90
8.1.10 Events Relating to Plans and Benefit Arrangements..........................90
8.1.11 Cessation of Business......................................................91
8.1.12 Change of Control..........................................................91
8.1.13 Involuntary Proceedings....................................................91
8.1.14 Voluntary Proceedings......................................................91
8.1.15 Material Contracts.........................................................92
8.1.16 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings............................................................92
8.1.17 Bankruptcy, Insolvency or Reorganization Proceedings.......................92
8.1.18 Set-off....................................................................93
8.1.19 Suits, Actions, Proceedings................................................93
8.1.20 Application of Proceeds....................................................93
8.1.21 Other Rights and Remedies..................................................94
8.2 Notice of Sale.........................................................................94
9. THE AGENT AND COLLATERAL AGENT...................................................................95
9.1 Appointment............................................................................95
9.2 Delegation of Duties...................................................................95
9.3 Nature of Duties; Independent Credit Investigation.....................................95
9.4 Actions in Discretion of Agent and Collateral Agent; Instructions From the Lenders.....96
9.5 Reimbursement and Indemnification of Agent and Collateral Agent by the Borrowers.......97
9.6 Exculpatory Provisions; Limitation of Liability........................................97
9.7 Reimbursement and Indemnification of Agent and Collateral Agent by Lenders.............98
9.8 Reliance by Agent......................................................................99
9.9 Notice of Default......................................................................99
9.10 Notices...............................................................................99
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9.11 Lenders in Their Individual Capacities..................................................99
9.12 Holders of Notes.......................................................................100
9.13 Equalization of Lenders................................................................100
9.14 Successor Agent and Collateral Agent...................................................101
9.15 Allocation of Facility.................................................................101
9.16 Availability of Funds..................................................................102
9.17 Calculations...........................................................................102
9.18 Beneficiaries..........................................................................103
10. MISCELLANEOUS....................................................................................103
10.1 Modifications, Amendments or Waivers...................................................103
10.1.1 Increase of Commitment; Extension or Expiration Date........................103
10.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification
of Terms of Payment.....................................................103
10.1.3 Release of Collateral or Guarantor..........................................104
10.1.4 Miscellaneous...............................................................104
10.2 No Implied Waivers; Cumulative Remedies; Writing Required..............................104
10.3 Reimbursement and Indemnification of Lenders by the Borrowers; Taxes...................105
10.4 Holidays...............................................................................105
10.5 Funding by Branch, Subsidiary or Affiliate.............................................106
10.5.1 Notional Funding............................................................106
10.5.2 Actual Funding..............................................................106
10.6 Notices................................................................................106
10.7 Severability...........................................................................107
10.8 Governing Law..........................................................................107
10.9 Prior Understanding....................................................................107
10.10 Duration; Survival....................................................................108
10.11 Successors and Assigns................................................................108
10.12 Confidentiality.......................................................................109
10.12.1 General....................................................................109
10.12.2 Sharing Information With Affiliates of the Lenders.........................110
10.13 Counterparts..........................................................................110
10.14 Agent's or Lender's Consent...........................................................111
10.15 Exceptions............................................................................111
10.16 Joint and Several Liability of Borrowers..............................................111
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10.17 CONSENT TO FORUM; WAIVER OF JURY TRIAL..........................................112
10.18 Tax Withholding Clause..........................................................113
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CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of June 8, 1998
and is made by and among NEWTECH ELECTRONICS INDUSTRIES, INC. (formerly known as
New M-Tech Corporation), a Florida corporation (together with its predecessors,
"NEII"), NEWTECH (HONG KONG) LIMITED, a Hong Kong limited liability
company("NL"), DURABLE ELECTRONICS INDUSTRIES LIMITED, a Hong Kong limited
liability company( "DEIL") and NEWTECH ELECTRONICS INDUSTRIES LIMITED (formerly
known as Pomillo Limited), a Hong Kong limited liability company ("▇▇▇▇") (each
a "Borrower" and collectively and jointly and severally the "Borrowers"), the
Lenders (as hereinafter defined) and NATIONAL BANK OF CANADA, in its capacity as
syndication and documentation Agent for the Lenders under this Agreement
(hereinafter referred to in such capacity as the "Agent") and NATIONSBANK, N.A.,
in its capacity as Collateral Agent and Administrative Agent for the Lenders
under this Agreement (hereinafter referred to in such capacity as the
"Collateral Agent").
WITNESSETH:
WHEREAS, pursuant to a Credit Agreement dated as of July 23, 1997 among
Bank Leumi Le-Israel B.M., Comerica Bank and National Bank of Canada
(collectively, the "Banks") as Banks, NEII and NL (the "Original Borrowers") and
Bank Leumi Le-Israel B.M. as security agent for the Banks (the "(the "Original
Agent")"), as amended by (i) that certain Amendment to Credit Agreement dated as
of September 8, 1997, among the Banks, the Original Agent and the Original
Borrowers, (ii) that certain Amendment to Credit Agreement dated as of November
5, 1997, among the Banks, the Original Agent and the Original Borrowers, (iii)
that certain Amendment to Credit Agreement dated as of December 30, 1997 among
the Banks, the Original Agent and the Original Borrowers , and (iv) that certain
Amendment to Credit Agreement dated as of March 18, 1998 among the Banks, the
Original Agent, and the Borrowers (as amended, the "Original Credit Agreement"),
the Banks have made a revolving credit facility of up to an aggregate principal
amount of $37,000,000 (the " Facility") available to the Borrowers for the
purposes and upon and subject to the terms and conditions set out therein.
WHEREAS, as part of the security for the availability or continued
availability of the Facility and as a condition of the Original Credit
Agreement, various parties executed security agreements, financing statements, a
pledged collateral account agreement, a subordination agreement, certain
collateral assignments, debentures and other related documents in favor of the
Original Agent.
WHEREAS, the Banks, the Borrowers, and the Lenders defined herein have
agreed that the financial transactions contemplated by the Original Credit
Agreement be revised to the effect that (i) the Facility would be increased to
$105,000,000, (ii) the Lenders party hereto would replace Bank
Leumi Le-Israel B.M. as a Bank, continuing with National Bank of Canada and
Comerica Bank and adding NationsBank, N.A. and Mercantile Business Credit and to
make available the Facility as increased, amended and restated herein to the
Borrowers, (iii) National Bank of Canada would be appointed by the Lenders (as
hereinafter defined) to be their syndication and documentation agent and
NationsBank, N.A. would be appointed by the Lenders (as hereinafter defined) to
be their collateral and administrative agent.
WHEREAS, the revolving credit facility shall be used for the purposes
set forth herein; and
WHEREAS, the Lenders are willing to provide such credit upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS.
In addition to words and terms defined elsewhere in this
Agreement, the following words and terms shall have the following meanings,
respectively, unless the context hereof clearly requires otherwise:
AAAA WORLD SBLC means the standby letter of credit
no. 932890, dated March 30, 1998, issued by NationsBank, N.A. for the account of
AAAA World Import-Export, Inc. and for the benefit of NEII and NL, in the face
amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00), as amended.
ACCOUNT(S) shall mean any account, contract right,
general intangible, chattel paper, instrument or document representing any right
to payment for goods sold or services rendered, whether or not earned by
performance and whether or not evidenced by a contract, instrument or document,
which is now owned or hereafter acquired by any Borrower. All Accounts, whether
Eligible Accounts or not, shall be subject to the Prior Security Interest in
favor of the Collateral Agent for the benefit of the Collateral Agent, the Agent
and the Lenders.
AFFILIATE as to any Person shall mean any other
Person (i) which directly or indirectly controls, is controlled by, or is under
common control with such Person, (ii) which beneficially owns or holds 5% or
more of any class of the voting or other equity interests of such Person, or
(iii) 5% or more of any class of voting interests or other equity interests of
which is beneficially owned or held, directly or indirectly, by such Person.
Control, as used in this definition, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting
2
securities, by contract or otherwise, including the power to elect a majority of
the directors or trustees of a corporation or trust, as the case may be.
AGENT shall mean NATIONAL BANK OF CANADA, and its
successors and assigns.
AGENT RECONCILIATION DATE shall mean the fifth (5th)
Business Day immediately following the last day of each Agent's Reporting
Period, pursuant to Section 2.12.1 of this Agreement .
AGENT RECONCILIATION REPORT shall mean the report of
sums due from the Agent to the Lenders furnished by the Agent to the Lenders on
the Agent Reconciliation Date(s), setting forth the sums owed by the Agent to
each Lender in connection with Letters of Credit and Bankers' Acceptances issued
or created by the Agent during the preceding Agent Reporting Period, which
report, in the absence of manifest error, shall be conclusive as the statement
of the sums due from the Lenders to the Agent on such date.
AGENT REPORTING PERIOD shall mean a period commencing
on and including the first day of each month and ending on and including the
last day of each month.
AGREEMENT shall mean this Credit Agreement, as the
same may be supplemented or amended from time to time, including all schedules
and exhibits.
ANNUAL STATEMENTS shall have the meaning assigned to
that term in Section 5.7.9(i).
ASSIGNMENT AND ASSUMPTION AGREEMENT shall mean an
Assignment and Assumption Agreement by and among a Purchasing Lender, a
Transferor Lender, the Agent and the Collateral Agent, as Agent and Collateral
Agent, respectively, on behalf of the remaining Lenders, substantially in the
form of Exhibit "A".
AUTHORIZED OFFICER shall mean the individual or those
individuals, designated by written notice to the Collateral Agent from the
Borrowers, authorized to execute notices, reports and other documents on behalf
of the Borrowers required hereunder. The Borrowers may amend such list of
individuals from time to time by giving written notice of such amendment to the
Agent. Each notice, request or other communication of an Authorized Officer to
the Agent, Collateral Agent or any Lender shall be binding upon all Borrowers
and shall be deemed to have been given by each Borrower.
BANKERS' ACCEPTANCE means a Bankers' Acceptance
created by the Agent as a result of a drawing under a Trade Letter of Credit.
BANKERS' ACCEPTANCE BORROWING shall mean an extension
of credit resulting from a drawing under any Bankers' Acceptance which shall not
have been reimbursed
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on the date when made and shall not have been converted into a Revolving Credit
Loan under Section 2.8.2.
BANKERS' ACCEPTANCE DOCUMENTS shall mean such general
acceptance agreements, applications, certificates and other documents as Agent
may require in connection with the creation of Bankers' Acceptances.
BANKERS' ACCEPTANCE FEES shall mean the Bankers'
Acceptance Creation Fees, and the Agent's Bankers' Acceptance Fees as set forth
in Section 2.8.2.2
BANKERS' ACCEPTANCE OBLIGATIONS shall mean as of the
date of determination, the sum of the maximum aggregate amount which is, or at
any time thereafter may become, payable by Agent under all then outstanding
Bankers' Acceptances, plus the aggregate amount of all payments made by Agent
under Bankers' Acceptances and not theretofore reimbursed by Borrowers.
BANKERS' ACCEPTANCE TERMINATION DATE shall mean that
date which is one Business Day prior to the Expiration Date.
BANKING RELATIONSHIP shall mean obligations of any
Borrower relating to or arising out of (i) checking and operating account
relationships among any Borrower and any Lender (or any Affiliate of a Lender)
in the ordinary course of business and (ii) Interest Rate Protection Agreements.
BASE RATE shall mean the interest rate per annum
announced from time to time by the Collateral Agent at its Principal Office as
its then prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the Collateral Agent .
BASE RATE OPTION shall mean the Revolving Credit Base
Rate Option.
BENEFICIAL OWNER shall have the meaning ascribed to
such term in Rule 13d-3 of the General Rules and Regulations under the
Securities and Exchange Act of 1934, as in effect on the date hereof.
BENEFIT ARRANGEMENT shall mean at any time an
"employee benefit plan," within the meaning of Section 3(3) of ERISA, which is
neither a Plan nor a Multiemployer Plan and which is maintained, sponsored or
otherwise contributed to by any member of the ERISA Group.
BORROWING BASE means, at any time, the sum (without
duplication) of (i) 85% of the Eligible Accounts at that time which are Eligible
Domestic Accounts but are not Secured Eligible Domestic Accounts, plus (ii) the
lesser of (A) 40% of the Eligible Accounts at that time which are Eligible
Foreign Accounts but are not Secured Eligible Foreign Accounts or (B) Two
Million Dollars ($2,000,000.00), plus (iii) the lesser of (A) 85% of the
Eligible
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Accounts at that time which are Secured Eligible Foreign Accounts, or (B) the
amount then available under the letters of credit securing the Secured Eligible
Foreign Accounts, plus (iv) the lesser of (A) 90% of the Eligible Accounts at
that time which are Secured Eligible Domestic Accounts, or (B) the amount then
available under the letters of credit securing the Secured Eligible Domestic
Accounts, plus (v) 70% of the Eligible Letters of Credit Amount at that time,
plus (vi) 70% of the lesser of the cost or fair market value of the Eligible
In-Transit White-Westinghouse Inventory at that time, plus (vii) the lesser of
(A) 60% of the lesser of the cost or fair market value of the Eligible Inventory
(subject to a sublimit of Five Million Dollars ($5,000,000.00) as to advances
against Eligible In-Transit Inventory) attributable to finished goods Eligible
Inventory which is not Eligible In-Transit White-Westinghouse Inventory at that
time, or (B) Eighteen Million Dollars ($18,000,000.00) plus (viii) 95% of the
Eligible Securities Value at that time, all of the above being reduced by such
reserves as the Collateral Agent in its reasonable credit judgment may from time
to time establish. For purposes of this Agreement, an account is considered to
be "secured" by a particular letter of credit if the Borrower owning such
account may draw upon the letter of credit to obtain payment of such account.
BORROWING BASE CERTIFICATE means a certificate of an
authorized officer of each of the Borrowers substantially in the form of Exhibit
"B" attached hereto and made a part hereof.
BORROWING BASE LIMITATION shall mean the maximum
aggregate amount of Revolving Credit Loans, Bankers' Acceptance Obligations and
Letters of Credit Outstanding which may exist from time to time under this
Agreement, as determined using the Borrowing Base, subject to periodic increases
during the Overadvance Periods (in the aggregate the "Lender Outstandings").
BORROWING DATE shall mean, with respect to any Loan,
the date for the making thereof or the renewal or conversion thereof at or to
the same or a different Interest Rate Option, which shall be a Business Day.
BORROWING TRANCHE shall mean specified portions of
Loans outstanding as follows: (i) any Loans to which a Euro-Rate Option applies
which become subject to the same Interest Rate Option under the same Loan
Request by a Borrower and which have the same Interest Period shall constitute
one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies
shall constitute one Borrowing Tranche.
BUSINESS DAY shall mean any day other than a Saturday
or Sunday or a legal holiday on which commercial banks are authorized or
required to be closed for business in Miami, Florida, Atlanta, Georgia or New
York, New York and if the applicable Business Day relates to any Loan to which
the Euro-Rate Option applies, such day must also be a day on which dealings are
carried on in the London interbank market.
CASH COLLATERAL ACCOUNTS means the restricted,
non-interest bearing cash collateral accounts established by the Borrowers with
the Collateral Agent, one in the name of
5
NEII and the other in the name of NL and all contents therein from time to time,
including without limitation all cash and cash equivalents, checks, money orders
and deposits of any kind, into which accounts all collections shall be remitted
from the Lockbox Accounts and from all other accounts into which Borrowers'
account debtors remit payments. The Borrowers shall have no access to the Cash
Collateral Accounts or to any deposits in the Cash Collateral Accounts, which
accounts and deposits shall be assigned to and in the exclusive control of the
Collateral Agent, for the benefit of the Agent, the Collateral Agent and the
Lenders, and be Collateral for the Obligations of the Borrowers set forth in
this Agreement. All collections shall be applied against the Loan balance one
(1) Business Day after receipt of such collections in the Cash Collateral
Accounts.
CHANGE OF CONTROL means, from and after the
Transition Date (a) NEII ceasing to own, directly or indirectly, 100% (except
for directors' qualifying shares or as otherwise required by law) of such stock
or other interests of NL and ▇▇▇▇, or ▇▇▇▇ ceasing to own, directly or
indirectly, 100% of such stock or other interests of DEIL (b) within a period of
twelve (12) consecutive calendar months, individuals who were directors of NEII
on the first day of such period (the "Incumbent Board") shall cease to
constitute a majority of the board of directors of NEII, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the NEII shareholders, was approved by a vote of at
least a majority of the Incumbent Board (as opposed to an election or nomination
of an individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the directors
of NEII, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act of 1934, as amended) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board.
CHANGE OF MANAGEMENT means ▇▇▇▇ ▇▇▇▇▇▇ ceasing to be
the chief executive officer of NEII, his ceasing to be involved in senior
management of any Borrower or any other significant (in the Agent's or the
Required Lender's reasonable judgment) change in the senior management of any
Borrower.
CLOSING DATE shall mean the Business Day on which the
first Loan shall be made, which shall be the date hereof, at the offices of the
Agent, or at such other place as the parties agree.
COLLATERAL shall mean the Pledged Collateral, the UCC
Collateral, the Hong Kong Collateral, the Cash Collateral Accounts and the
Intellectual Property Collateral, all as described in the Security Documents.
COLLATERAL AGENT shall mean NATIONSBANK, N.A., in its
capacity as collateral agent and administrative agent and its successors and
assigns.
6
COLLATERAL AGENT RECONCILIATION DATE shall mean the
Business Day immediately following the last day of each Collateral Agent's
Reporting Period, pursuant to Section 2.12.2 of this Agreement.
COLLATERAL AGENT RECONCILIATION REPORT shall mean the
report of Net Sums Due furnished by the Collateral Agent to the Lenders on the
Collateral Agent Reconciliation Date(s), which report, in the absence of
manifest error, shall be conclusive as the statement of the Net Sums Due on such
date.
COLLATERAL AGENT REPORTING PERIOD shall mean a period
commencing on and including Wednesday of each week and ending on and including
the following Tuesday.
COMMITMENT FEE shall have the meaning assigned to
that term in Section 2.3(a).
CONSOLIDATED CASH FLOW FROM OPERATIONS for any period
of determination shall mean (i) the sum of net income, interest expense and
income tax expense minus (ii) non-cash credits to net income, in each case of
the Borrowers for such period determined and consolidated in accordance with
GAAP.
CONSOLIDATED TANGIBLE NET WORTH shall mean at any
time the consolidated shareholders' equity of the Borrowers, plus Subordinated
Debt, less Intangible Assets (to the extent included in determining such
consolidated shareholders' equity) and less any other amounts owing by
Affiliates (other than each other and excluding amounts collected by Windmere or
▇▇▇▇ on behalf of any Borrower) to any Borrower (to the extent included in
determining such consolidated shareholders' equity), in each case, as of such
time. For purposes of this definition, "Intangible Assets" means the amounts of
intangible assets (including, without limitation, goodwill licenses, patents,
trademarks, trademark licenses, trade names, copyrights and franchises)
determined in accordance with GAAP.
Consolidated Total Liabilities shall mean at any time
the consolidated total liabilities of the Borrowers, including without
limitation, all Indebtedness of the Borrowers and all other liabilities which
would appear on a balance sheet of a Borrower, all determined in accordance with
GAAP.
CONTRACT means an indenture, agreement (other than
this Agreement and any other Loan Document), other contractual restriction
lease, instrument (other than the Notes), certificate of incorporation or
charter, or bylaw.
DEBENTURE(S) means the Debentures dated as of July
23, 1997 (in relation to NL) and as of March 18, 1998 (in relation to ▇▇▇▇ and
▇▇▇▇), executed by NL, ▇▇▇▇ and DEIL, respectively, in favor of the Original
Agent, together with a Supplemental and Assignment Deed relating to Debentures
dated as of the Closing Date in the form of Exhibit "C" attached
7
hereto, executed by the Original Agent, NL, ▇▇▇▇ and ▇▇▇▇ in favor of the Agent
and the Collateral Agent, for the benefit of the Agent, the Collateral Agent and
the Lenders.
DEFAULT RATE shall have the meaning assigned to that
term in Section 4.3 hereof.
▇▇▇▇ DEBT has the meaning set forth in Section 7.2.4.
DOLLAR, DOLLARS, U.S. DOLLARS and the symbol $ shall
mean lawful money of the United States of America.
ELIGIBLE ACCOUNTS shall mean the net amount of
Accounts outstanding after eliminating from the aggregate amount of outstanding
Accounts: (i) all Accounts on which Collateral Agent does not have a valid first
priority perfected security interest; (ii) all payments, offsets and credits
applicable to Accounts; (iii) all Accounts which remain unpaid more than ninety
(90) days past the invoice date thereof, other than ▇▇▇▇ Department Stores, Inc.
("▇▇▇▇") or Wakenfern Food Corp. ("Wakenfern"), which Accounts may remain unpaid
up to one hundred twenty (120) days past the invoice date thereof; (iv) all
Accounts arising from sales or services to any Affiliate; (v) all Accounts
receivable from any one account debtor, other than ▇▇▇▇ or Wakenfern, where
twenty-five percent (25%) or more of all Accounts from any such account debtor
remain unpaid more than ninety (90) days past the invoice date thereof; (vi) all
Accounts receivable from ▇▇▇▇ or Wakenfern where twenty-five percent (25%) or
more of all Accounts from such account debtor remain unpaid more than one
hundred twenty (120) days past the invoice date thereof; (vii) all amounts due
on Accounts which are considered by Collateral Agent to be difficult to collect
or uncollectible by reason of return, rejection, repossession, loss or damage of
or to the merchandise giving rise thereto, insolvency of the account debtor, or
any other reason; (viii) all Accounts arising out of transactions with the
United States or any department, agency or instrumentality thereof, as to which
Borrowers have not taken all steps required by Collateral Agent and under the
Federal Assignment of Claims Act in order that all monies due or to become due
thereunder have been satisfactorily assigned to Lender; (ix) all Accounts
arising from sales or services to account debtors outside of the United States
of America and its territories and possessions and Canada, except for otherwise
Eligible Accounts arising from sales or services to account debtors outside of
the United States of America and its territories and possessions and Canada
which (A) remain unpaid up to ninety (90) days past the invoice date thereof and
(B) remain unpaid up to one hundred fifty (150) days past the invoice date
thereof and which are secured to the Agent's and Collateral Agent's satisfaction
by an irrevocable letter of credit in form acceptable to the Agent and the
Collateral Agent issued or confirmed by a prime bank acceptable to the Agent and
the Collateral Agent and payable in the United States of America and its
territories and possessions, or in Canada; all of the foregoing as determined by
the Agent and Collateral Agent in their reasonable discretion, which
determination shall be final and binding upon the Borrower; (x) all Accounts
which do not represent a complete bona fide transaction for goods sold and
delivered or services rendered or which require further act under any
circumstances on the part of the Borrowers to make such
8
Account payable by the account debtor; (xi) all Accounts which do not arise from
an arm's-length transaction in the ordinary course of the Borrowers' business
between any Borrower and an account debtor or which arise from an Affiliate of
any Borrower or an officer, shareholder or employee of any Borrower or any
Affiliate of any Borrower, or a member of the family of an officer, shareholder
or employee of any Borrower or any Affiliate of any Borrower; (xii) all accounts
the goods the sale of which gave rise to the Account were not shipped or
delivered or provided to the account debtor on an absolute sale basis or which
were shipped on a ▇▇▇▇ and hold sale basis, a consignment sale basis, a
guaranteed sale basis, a sale or return basis, or on the basis of any other
similar understanding; (xiii) all Accounts which are evidenced by chattel paper
or an instrument of any kind; (xiv) all Accounts the account debtor of which (a)
is insolvent, (b) is the subject of any bankruptcy or insolvency proceedings of
any kind or of any other proceeding or action, threatened or pending, which
might have a materially adverse effect on its business, and (c) is, in the
reasonable discretion of the Collateral Agent, deemed ineligible for credit for
other reasons (including, without limitation, unsatisfactory past experiences of
any Borrower or any of the Lenders with the account debtor or unsatisfactory
reputation of the account debtor); (xv) all Accounts which are not valid,
binding and legally enforceable obligations of the account debtor with respect
thereto or which are subject to any dispute, condition, contingency, offset,
recoupment, reduction, claim for credit, allowance, adjustment, counterclaim or
defense on the part of such account debtor, or facts exist which may provide a
basis for any of the foregoing in the present or future, to the extent of such
dispute; (xvi) all Accounts not evidenced by an invoice or other documentation
or which arises from a contract which is not in form and substance satisfactory
to the Collateral Agent; (xvii) all Accounts wherein a Borrower has failed to
observe and comply with all laws of the state or country in which the account
debtor or the Account is located which, if not observed and complied with, would
deny to the Borrowers access to the courts of such state or country; (xviii) all
Accounts which are subject to any provision prohibiting its assignment or
requiring notice of or consent to such assignment; (xix) all Accounts the goods
giving rise to which were, at the time of sale thereof, subject to any Lien or
encumbrance except the Collateral Agent's, on behalf of the Lenders; (xx) all
Accounts which are not payable in freely transferable United States Dollars;
(xxi) all Accounts which are disqualified for any other reason generally
accepted in the commercial finance business; (xxii) all Accounts to the extent
of any offset by a credit due and owing from a Borrower to the account debtor;
(xxiii) all Accounts which are due and owing from any creditor of a Borrower;
(xxiv) all Accounts representing finance or service charges due and owing to
Borrowers from an Account Debtor; (xxv) the portion of any Account which
represents a deposit already collected by a Borrower from the account debtor;
(xxvi) all Accounts representing a C.O.D. sale; (xxvii) all Accounts
representing sums due and owing for work and/or service currently being rendered
by Borrower but not yet completed by Borrower; (xxviii) all Accounts arising
from a progress billing for work not yet completed and delivered to the account
debtor; (xxix) all Accounts the Collateral Agent believes, in its reasonable
discretion, that collection of such Account is insecure or that it may not be
paid by reason of financial inability to pay or otherwise or that such Account
is not suitable for use as collateral hereunder; and (xxx) all Accounts
representing retainage due and owing to Borrower.
9
ELIGIBLE DOMESTIC ACCOUNT means an Eligible Account
(other than Secured Eligible Domestic Account) that is owed by an account debtor
whose principal place of business is in the United States or Canada and which is
payable in the United States.
ELIGIBLE FOREIGN ACCOUNT means an Eligible Account
(other than Secured Eligible Foreign Account) which is not an Eligible Domestic
Account.
ELIGIBLE INVENTORY means Inventory owned by any
Borrower which is salable in the ordinary course of such Borrower's business and
is not discontinued, slow moving or stale, which is brand new and not
refurbished, which the Collateral Agent determines is not obsolete, which is
located in a warehouse located in the State of Florida, the State of California,
the State of Arkansas or the State of Tennessee, as reflected in the Security
Agreements (and such other locations established from time to time upon not less
than ninety (90) days prior written notice from Borrowers to the Collateral
Agent and the execution by the Borrowers of any and all documents required by
the Agent or Collateral Agent in order to perfect a first priority security
interest in the Collateral to be located in such location, including without
limitation requisite UCC Financing Statements, amendments to security
agreements, landlords' waivers and warehouseman's waivers), for which waivers
have been obtained from each landlord and warehouseman in form and content
satisfactory to the Collateral Agent, which is subject to a valid, perfected,
first-priority security interest in favor of the Collateral Agent, as agent for
the Lenders, securing the Obligations, which is subject to no other liens, which
constitutes finished goods and not work in progress or raw materials and which
is otherwise acceptable to the Collateral Agent. In connection with advances
based on Borrowers' Inventory, the Collateral Agent shall determine, in its
reasonable discretion, which Inventory shall constitute Eligible Inventory.
ELIGIBLE IN-TRANSIT INVENTORY means Inventory owned
by any Borrower which is salable in Borrowers' ordinary course of business,
which does not bear the White-Westinghouse or Double W trademark or logo, which
is in transit to the United States, which a Borrower has paid for and is not the
subject of an open Trade Letter of Credit, which has not yet been converted into
an Eligible Account (or other accounts receivable), which is subject to no other
liens, which constitutes finished goods and not work in progress or raw
materials and in which (together with the documents covering which) the
Collateral Agent as agent for the Lenders has a valid, perfected,
purchase-money, first-priority security interest in favor of the Collateral
Agent, as agent for the Lenders, securing the Obligations. In connection with
advances based on Borrowers' Inventory, the Collateral Agent shall determine, in
its reasonable discretion, which Inventory shall constitute Eligible In-Transit
Inventory.
ELIGIBLE IN-TRANSIT WHITE-WESTINGHOUSE INVENTORY
means Inventory owned by any Borrower which is salable in Borrowers' ordinary
course of business, which bears the White-Westinghouse or Double W trademark or
logo, which is in transit to the United States, which a Borrower has paid for
and is not the subject of an open Trade Letter of Credit, which is earmarked to
be sold to Kmart Corporation pursuant to the Kmart Contract but has not yet been
10
converted into Eligible Kmart Accounts (or other accounts receivable), which is
subject to no other liens, which constitutes finished goods and not work in
progress or raw materials and in which (together with the documents covering
which) the Collateral Agent as agent for the Lenders has a valid, perfected,
purchase-money, first-priority security interest in favor of the Collateral
Agent as agent for the Lenders securing the Obligations. In connection with
advances based on Borrowers' Inventory, the Collateral Agent shall determine, in
its reasonable discretion, which Inventory shall constitute Eligible In-Transit
White-Westinghouse Inventory.
ELIGIBLE KMART ACCOUNTS means Eligible Accounts which
are owed to a Borrower by Kmart Corporation.
ELIGIBLE LETTERS OF CREDIT AMOUNT means, at any time,
the sum of the then aggregate undrawn amount of open Trade Letters of Credit
issued by Agent to finance a Borrower's purchase of goods in which (together
with the documents covering which) the Collateral Agent as agent for the Lenders
then has a valid, perfected, first-priority security interest securing the
Obligations.
ELIGIBLE SECURITIES means a U.S. Treasury ▇▇▇▇ or
note, a Federal National Mortgage Association note or a Federal Farm Credit Bank
note which in each case is owned by a Borrower and held in an account with
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated's office in Aventura, Florida
and in which in each case the Collateral Agent as agent for the Lenders has a
valid, perfected, first-priority security interest securing the Obligations.
ELIGIBLE SECURITIES VALUE means, at any time, the
aggregate fair market value (as reasonably determined by the Collateral Agent)
of the Eligible Securities at that time.
ENVIRONMENTAL COMPLAINT shall mean any written
complaint setting forth a cause of action for personal or property damage or
natural resource damage or equitable relief, order, notice of violation,
citation, request for information issued pursuant to any Environmental Laws by
an Official Body, subpoena or other written notice of any type relating to,
arising out of, or issued pursuant to, any of the Environmental Laws or any
Environmental Conditions, as the case may be.
ENVIRONMENTAL CONDITIONS shall mean any conditions of
the environment, including the workplace, the ocean, natural resources
(including flora or fauna), soil, surface water, groundwater, any actual or
potential drinking water supply sources, substrata or the ambient air, relating
to or arising out of, or caused by, the use, handling, storage, treatment,
recycling, generation, transportation, release, spilling, leaking, pumping,
emptying, discharging, injecting, escaping, leaching, disposal, dumping,
threatened release or other management or mismanagement of Regulated Substances
resulting from the use of, or operations on, any Property.
ENVIRONMENTAL LAWS shall mean all federal, state,
local and foreign Laws and regulations, including permits, licenses,
authorizations, bonds, orders, judgments, and
11
consent decrees issued, or entered into, pursuant thereto, relating to pollution
or protection of human health or the environment or employee safety in the
workplace.
ERISA shall mean the Employee Retirement Income
Security Act of 1974, (and as to the Borrowers which are Hong Kong Limited
Liability Companies, all comparable laws and statutes under Hong Kong law) as
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
ERISA GROUP shall mean, at any time, the Borrowers
and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control and all other
entities which, together with the Borrowers, are treated as a single employer
under Section 414 of the Internal Revenue Code.
EURO-RATE shall mean, with respect to the Loans
comprising any Borrowing Tranche to which the Euro-Rate Option applies for any
Interest Period, the interest rate per annum determined by the Collateral Agent
by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by the
Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the average of the London interbank
offered rates for U.S. Dollars quoted by the British Bankers' Association as set
forth on Dow ▇▇▇▇▇ Markets Service (formerly known as Telerate) display page
3750 (or appropriate successor or, if the British Bankers' Association or its
successor ceases to provide such quotes, a comparable replacement determined by
the Collateral Agent) two (2) Business Days prior to the first day of such
Interest Period for an amount comparable to such Borrowing Tranche and having a
borrowing date and a maturity comparable to such Interest Period by (ii) a
number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may
also be expressed by the following formula:
AVERAGE OF LONDON INTERBANK OFFERED RATES ON DOW
▇▇▇▇▇ MARKETS SERVICE DISPLAY PAGE 3750 AS QUOTED BY
Euro-Rate = BRITISH BANKERS' ASSOCIATION OR APPROPRIATE SUCCESSOR
-----------------------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option outstanding
on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Collateral Agent shall give prompt notice to the
Borrowers of the Euro-Rate as determined or adjusted in accordance herewith,
which determination shall be conclusive absent manifest error.
EURO-RATE OPTION shall mean the Revolving Credit
Euro-Rate Option.
EURO-RATE RESERVE PERCENTAGE shall mean the maximum
percentage (expressed as a decimal rounded upward to the nearest 1/100 of 1%) as
determined by the Collateral Agent which is in effect during any relevant
period, as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the reserve
12
requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities") of a member bank in such System.
EVENT OF DEFAULT shall mean any of the events
described in Section 8.1.1 through 8.1.15.
EXPIRATION DATE shall mean, with respect to the
Revolving Credit Commitments, three (3) years from the Closing Date, on which
date all principal, and accrued but unpaid interest and other fees and charges
hereunder shall be due and payable in full.
FEDERAL FUNDS EFFECTIVE RATE for any day shall mean
the rate per annum (based on a year of 360 days and actual days elapsed and
rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank
of New York (or any successor) on such day as being the weighted average of the
rates on overnight federal funds transactions arranged by federal funds brokers
on the previous trading day, as computed and announced by such Federal Reserve
Bank (or any successor) in substantially the same manner as such Federal Reserve
Bank computes and announces the weighted average it refers to as the "Federal
Funds Effective Rate" as of the date of this Agreement; PROVIDED, if such
Federal Reserve Bank (or its successor) does not announce such rate on any day,
the "Federal Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.
FINANCIAL PROJECTIONS shall have the meaning assigned
to that term in Section 5.7.9(ii).
GAAP shall mean generally accepted accounting
principles as are in effect from time to time and applied on a consistent basis
both as to classification of items and amounts.
GOVERNMENTAL ACTS shall have the meaning assigned to
that term in Section 2.8.3.
GUARANTY of any Person shall mean any obligation of
such Person guaranteeing or in effect guaranteeing any liability or obligation
of any other Person in any manner, whether directly or indirectly, including any
agreement to indemnify or hold harmless any other Person, any performance bond
or other suretyship arrangement and any other form of assurance against loss,
except endorsement of negotiable or other instruments for deposit or collection
in the ordinary course of business.
HISTORICAL STATEMENTS shall have the meaning assigned
to that term in Section 5.7.9(i).
13
HONG KONG COLLATERAL shall mean the Collateral which
is owned by a Borrower and located in Hong Kong and which is subject to the
Liens in the Debentures, the Security Agreements and the Subordination
Agreement.
INDEBTEDNESS shall mean, as to any Person at any
time, without duplication (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, (iv) capitalized lease
obligations of such Person, (v) all obligations of such Person to reimburse any
other Person in respect of amounts paid under a letter of credit, bankers'
acceptance or similar instrument, (vi) all obligations with respect to interest
rate and currency swaps, caps, collars or floor agreements or other interest
rate management devices and similar obligations obligating such Person to make
payments, whether periodically or upon the happening of a contingency, except
that if any agreement relating to such obligations provides for the netting of
amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligations shall be the net amount thereof,
(vii) all of the foregoing of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) a
Lien on any asset of such Person, whether or not such Indebtedness is assumed by
such Person, and (viii) all of the foregoing of others guaranteed by such
Person.
INDEMNITY shall mean a tax indemnity agreement to be
executed by the Borrowers in favor of the Lenders.
INELIGIBLE SECURITY shall mean any security which may
not be underwritten or dealt in by member banks of the Federal Reserve System
under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
INSOLVENCY PROCEEDING shall mean, with respect to any
Person, (a) a case, action or proceeding with respect to such Person (i) before
any court or any other Official Body under any bankruptcy, insolvency,
reorganization or other similar Law now or hereafter in effect, or (ii) for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of any Borrower or otherwise
relating to the liquidation, dissolution, winding-up or relief of such Person,
or (b) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of
such Person's creditors generally or any substantial portion of its creditors
undertaken under any Law (and any comparable proceeding under Hong Kong Law).
INTELLECTUAL PROPERTY COLLATERAL shall mean all of
the intellectual property described in the Security Documents.
INTEREST PERIOD shall have the meaning assigned to
such term in Section 4.2.
14
INTEREST RATE OPTION shall mean any Euro-Rate Option
or Base Rate Option.
INTEREST RATE PROTECTION AGREEMENT shall mean an
interest rate swap, cap or collar agreement or similar arrangement between a
Borrower and a Lender or Affiliate of a Lender, providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
INTERIM STATEMENTS shall have the meaning assigned to
that term in Section 5.7.9(i).
INTERNAL REVENUE CODE shall mean the Internal Revenue
Code of 1986, as the same may be amended or supplemented from time to time, and
any successor statute of similar import, and the rules and regulations
thereunder, as from time to time in effect.
INVENTORY shall mean any and all goods, merchandise
and other personal property, including, without limitation, goods in transit,
wheresoever located and whether now owned or hereafter acquired by the Borrowers
which are or may at any time be held as raw materials, finished goods,
work-in-process, supplies or materials used or consumed in the Borrowers'
business or held for sale or lease, including, without limitation, (a) all such
property the sale or other disposition of which has given rise to Accounts and
which has been returned to or repossessed or stopped in transit by the
Borrowers, and (b) all packing, shipping and advertising materials relating to
all or any such property. All Inventory, whether Eligible Inventory or not,
shall be subject to the Prior Security Interest in favor of the Collateral Agent
for the benefit of itself as Collateral Agent, the Agent and the Lenders.
INVESTMENT means any investment made by stock
purchase, capital contribution, loan, advance, acquisition of indebtedness,
guarantee or otherwise.
IRREVOCABLE ASSIGNMENT means that certain Irrevocable
Assignment of Loan Documents dated as of June 8, 1998, executed by the Original
Agent in favor of the Agent, Collateral Agent and Mercantile Business Credit,
Inc.
KMART CONTRACT means the Purchase, Distribution and
Marketing Agreement between New M-Tech (now known as NEII) and Kmart
Corporation, dated as of January 27, 1997, including all supplements and
amendments thereto.
LABOR CONTRACTS shall mean all employment agreements,
employment contracts, collective bargaining agreements and other agreements
among any Borrower and its employees.
LANDLORDS' WAIVERS shall mean the landlords' waivers
and the warehousemen's waivers required to be furnished by Borrowers to Lenders
for each leased facility and for each public warehouse facility in which any
Borrower conducts business or
15
maintains Inventory (except for Borrowers' Tennessee facility which Borrowers
will fully vacate on or before June 30, 1998).
LAW shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, opinion, release,
ruling, order, injunction, writ, decree or award of any Official Body.
LENDERS shall mean the financial institutions named
on Schedule 1.1(B) and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a Lender.
LENDER OUTSTANDINGS shall mean the aggregate sum of
all Revolving Credit Loans, Bankers' Acceptance Obligations, Letters of Credit
Outstanding and Overadvance Amounts which may exist from time to time under this
Agreement.
LETTER(S) OF CREDIT shall have the meaning assigned
to that term in Section 2.8.1 and shall include a Standby Letter of Credit and a
Trade Letter of Credit.
LETTER(S) OF CREDIT BORROWING(S) shall mean an
extension of credit resulting from a drawing under any Letter of Credit which
shall not have been reimbursed on the date when made and shall have been
converted into a Revolving Credit Loan under Section 2.4.
LETTER OF CREDIT FEES shall mean the Standby Letter
of Credit Issuance Fees, the Agent's Standby Letter of Credit Issuance Fees, the
Trade Letter of Credit Issuance Fees, the Agent's Trade Letter of Credit
Issuance Fees, the Trade Letter of Credit Negotiation Fees and the Agent's Trade
Letter of Credit Negotiation Fees as set forth in Section 2.8.1.2.
LETTERS OF CREDIT OUTSTANDING shall mean at any time
the sum of (i) the aggregate undrawn face amount of outstanding Letters of
Credit and (ii) the aggregate amount of all unpaid and outstanding Reimbursement
Obligations and Letter of Credit Borrowings.
LIEN shall mean any mortgage, deed of trust, pledge,
lien, security interest, charge or other encumbrance or security arrangement of
any nature whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
LLC INTERESTS shall have the meaning given to such
term in Section 5.7.3.
LOAN DOCUMENTS shall mean this Agreement, the
Security Documents, the Indemnity, the Subordination Agreement, the Pledge
Agreement, the Notes, the Security Agreement, and any other instruments,
certificates or documents delivered or contemplated to be delivered hereunder or
thereunder or in connection herewith or therewith, as the same may be
16
supplemented or amended from time to time in accordance herewith or therewith,
and LOAN DOCUMENT shall mean any of the Loan Documents.
LOAN REQUEST shall have the meaning given to such
term in Section 2.4.
LOANS shall mean collectively and LOAN shall mean
separately all Revolving Credit Loans or any Revolving Credit Loan.
LOCKBOX AGREEMENT shall mean the Special Deposit
Agreement in substantially the form attached hereto as Exhibit "D" executed and
delivered by the Borrowers to the Collateral Agent.
LOCKBOX ACCOUNTS shall have the definition assigned
to such term in Section 7.1.14, and shall include all contents therein from time
to time, including without limitation all cash and cash equivalents, checks,
money orders and deposits of any kind.
MATERIAL ADVERSE CHANGE shall mean any set of
circumstances or events which (a) has or could reasonably be expected to have
any material adverse change whatsoever upon the validity or enforceability of
this Agreement or any other Loan Document, (b) is or could reasonably be
expected to be material and adverse to the business, properties, assets,
financial condition, results of operations or prospects of the Borrowers taken
as a whole, (c) impairs materially or could reasonably be expected to impair
materially the ability of the Borrowers taken as a whole to duly and punctually
pay or perform Borrowers' Indebtedness, or (d) impairs materially or could
reasonably be expected to impair materially the ability of the Agent, Collateral
Agent or any of the Lenders, to the extent permitted, to enforce their legal
remedies pursuant to this Agreement or any other Loan Document.
MATERIAL CONTRACT means any contract or agreement to
which any Borrower is a party or in which any Borrower has a beneficial interest
that is or would be required to be disclosed in accordance with Item 10 of Item
601 of Regulation S-K promulgated under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended, and includes without
limitation the contracts described in Section 5.7.21 of this Agreement.
MONTH, with respect to an Interest Period under the
Euro-Rate Option, shall mean the interval between the days in consecutive
calendar months numerically corresponding to the first day of such Interest
Period. If any Euro-Rate Interest Period begins on a day of a calendar month for
which there is no numerically corresponding day in the month in which such
Interest Period is to end, the final month of such Interest Period shall be
deemed to end on the last Business Day of such final month.
MULTIEMPLOYER PLAN shall mean any employee benefit
plan which is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA and to which the Borrowers or any member of the ERISA Group is then making
or accruing an obligation to make
17
contributions or, within the preceding five Plan years, has made or had an
obligation to make such contributions.
MULTIPLE EMPLOYER PLAN shall mean a Plan which has
two or more contributing sponsors (including the Borrowers or any member of the
ERISA Group) at least two of whom are not under common control, as such a plan
is described in Sections 4063 and 4064 of ERISA.
NET SUMS DUE shall mean the net amounts due among the
Lenders and the Collateral Agent on the Collateral Agent Reconciliation Date(s),
after reconciling (i) the amounts due from Lenders to the Collateral Agent
representing the Ratable Share owed by each Lender to the Collateral Agent in
connection with advances made by the Collateral Agent to fund Revolving Credit
Loans to the Borrowers and Letter of Credit and Bankers' Acceptance
reimbursements due to the Agent for the preceding Collateral Agent Reporting
Period and (ii) the Ratable Share of collections, principal reductions and
payments of interest received by the Collateral Agent during the preceding
Collateral Agent Reporting Period which have not yet been remitted to the
Lenders and (iii) all fees and other sums due in accordance with this
Agreement..
NOTES shall mean the Revolving Credit Notes.
NOTICES shall have the meaning assigned to that term
in Section 10.6.
OBLIGATION(S) shall mean any obligation or liability
of any of the Borrowers, and any Borrower, to the Agent, Collateral Agent or any
of the Lenders, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to become
due, under or in connection with this Agreement, the Notes, the Letters of
Credit, the Bankers' Acceptances, the Banking Relationships or any other Loan
Document.
OFFICIAL BODY shall mean any national, federal,
state, local or other government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality of
either, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.
ORIGINAL CREDIT AGREEMENT shall have the meaning
assigned to such term in the Recitals to this Agreement.
ORIGINAL LOANS shall mean the credit facilities
extended by the Banks to the Borrowers as defined in and set forth in the
Original Credit Agreement.
OVERADVANCE FACILITY shall mean increased
availability under the Borrowing Base Limitation of Six Million Dollars
($6,000,000.00) from May 1 through June 30 of each year and from October 1
through October 31 of each year, and Nine Million Dollars
18
($9,000,000.00) from July 1 through September 30 of each year. The Overadvance
Facility shall terminate and all outstanding principal and interest due thereon
shall be due and payable immediately upon completion of the initial public
offering of common or preferred shares or any other equity interest of any
Borrower.
OVERADVANCE PERIOD(S) shall have the meaning set
forth in Section 3.1.
PARTNERSHIP INTERESTS shall have the meaning given to
such term in Section 5.7.3.
PBGC shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of ERISA or any
successor.
PERMITTED INVESTMENT MEANS ANY OF THE FOLLOWING:
(a) Investments, if any, existing on the Closing Date
and referred to in Schedule 1.1(C);
(b) Investments by any Borrower in any other
Borrower, provided that both at the time of and immediately after giving effect
of any such Investment, no Potential Default or Event of Default shall have
occurred and be continuing;
(c) Readily marketable obligations (having a maturity
not in excess of 12 months from the date of acquisition thereof) of, or fully
and unconditionally guaranteed (as to both principal and interest) by, (i) the
United States of America or any agency thereof or (ii) the national government
or an agency thereof of the jurisdiction under which the Borrower making such
Investment is incorporated, except that if NEII sells any of its shares of
common stock in an initial public offering, the proceeds of such offering may be
invested in such obligations having a maturity not in excess of 36 months from
the date of acquisition thereof;
(d) negotiable certificates of deposit (having a
maturity not in excess of 12 months from the date of acquisition thereof)
evidencing direct obligations of (i) any federally insured commercial bank or
trust company organized and operating in the United States of America having
capital and surplus and undivided profits of at least $100,000,000 and having
the highest or second highest rating available from ▇▇▇▇▇'▇ Investors Service,
Inc. ("Moody's"), Standard & Poor's Corporation ("S&P") or Fitch Investors
Service ("Fitch") or (ii) commercial banks incorporated under the laws of the
jurisdiction under which the Borrower making such Investment is incorporated,
each having a capital and surplus and undivided profits of not less than
$100,000,000, and having the highest or second highest rating available from
Moody's, S&P or Fitch or an equivalent rating from IBCA;
(e) commercial paper (having a maturity not in excess
of 270 days from the date of acquisition thereof) evidencing the direct
obligation of any corporation (i) organized and operating in the United States
of America and having the highest or second
19
highest rating available from Moody's, S&P or Fitch or (ii) organized under the
laws of the jurisdiction under which the Borrower making such Investment is
organized (which is other than a state of the United States) and having the
highest or second highest rating available from Moody's, S&P or Fitch, or if not
rated by the foregoing, the highest or second highest rating available from a
comparable rating service;
(f) readily marketable obligations for borrowed money
of, or fully and unconditionally guaranteed by, any corporation organized and
operating in the United States of America or any tax exempt obligations of any
state of the United States of America or any municipality of any such state, in
each case having a maturity not in excess of three years from the date of
acquisition thereof and having the highest rating available form Moody's or S&P;
and
(g) shares of so-called "money market funds"
registered under the Investment Company Act of 1940, as amended, organized and
operating in the United States of America having total net assets of $1,000,000
or more which invest only in the following instruments, in each case having a
maturity not in excess of 12 months from the date of acquisition thereof:
(i) certificates of deposit and bankers' acceptances
of the 16 largest banks in the United States;
(ii) commercial paper (A) other than that issued by
bank holding companies, consisting only of obligations (1) rated "Prime-1" by
Moody's or "A-1" by S&P, or (2) issued by any corporation organized and
operating in the United States of America which at the date of investment has an
outstanding debt issue which has the highest rating available from Moody's or
S&P, or (B) issued by bank holding companies of the 16 largest banks described
in clause (i) above;
(iii) obligations of the United States Government, or
any agency thereof, and obligations guaranteed by the United States Government;
and
(iv) repurchase agreements pertaining to the
securities referred to in clauses (i), (ii) and (iii) above.
PERMITTED LIENS shall mean certain Purchase Money
Liens in favor of ▇▇▇▇ on equipment purchased by DEIL from ▇▇▇▇ and on all DEIL
Inventory securing the ▇▇▇▇ Debt ( up to an amount not to exceed the lesser of
$6,700,000.00 or the principal balance outstanding thereon, as further reduced
from time to time), provided such Liens and Indebtedness are subordinated
pursuant to the Subordination Agreement, together with the following:
20
(i) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business and which are not yet due and
payable or which are being contested in good faith by appropriate proceedings
and as to which adequate reserves have been established;
(ii) Liens of mechanics, materialmen, warehousemen,
carriers, suppliers, vendors or other like Liens, securing obligations incurred
in the ordinary course of business that are not yet due and payable or which
have been bonded off to the satisfaction of the Collateral Agent, and Liens of
landlords (which have been subordinated to the Liens in favor of the Collateral
Agent for the benefit of the Agent, Collateral Agent and the Lenders) securing
obligations to pay lease payments that are not yet due and payable or in
default;
(iii) Attachment or judgment Liens not discharged
within thirty (30) days;
(iv) OMITTED;
(v) Workers or unemployment compensation Liens
arising in the ordinary course of business that are not yet due and payable;
(vi) Purchase money Liens (provided that such Liens
attach only to the assets so purchased and secure only Indebtedness incurred in
order to purchase such assets) and Liens securing rental payments under capital
lease arrangements, in each case only to the extent permitted under Section
7.2.15;
(vii) OMITTED; and
(viii) Any Lien in favor of the Agent, Collateral
Agent or the Lenders given to secure the Obligations.
PERSON shall mean any individual, corporation,
partnership, limited liability company, association, joint-stock company, trust,
unincorporated organization, joint venture, government or political subdivision
or agency thereof, or any other entity.
PLAN shall mean at any time an employee pension
benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan)
which is covered by Title IV of ERISA or is subject to the minimum funding
standards under Section 412 of the Internal Revenue Code and either (i) is
maintained by any member of the ERISA Group for employees of any member of the
ERISA Group or (ii) has at any time within the preceding five years been
maintained by any entity which was at such time a member of the ERISA Group for
employees of any entity which was at such time a member of the ERISA Group (and
as to the Borrowers which are Hong Kong Limited Liability Companies, all
comparable laws and statutes under Hong Kong law).
21
PLEDGE AGREEMENT shall mean the Pledged Collateral
Control Account Agreement in substantially the form of Exhibit "E" attached
hereto and made a part hereof, executed and delivered by NEII to the Collateral
Agent for the benefit of the Agent, Collateral Agent and the Lenders.
PLEDGED COLLATERAL shall mean the property of the
Borrowers in which security interests are to be granted under the Pledge
Agreement.
POTENTIAL DEFAULT shall mean any event or condition
which with notice, passage of time or a determination by the Agent, Collateral
Agent or the Required Lenders, or any combination of the foregoing, would
constitute an Event of Default.
PRC means the People's Republic of China.
PRINCIPAL OFFICE as to the Agent shall mean the main
banking office of the Agent at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇, and as to the Collateral Agent shall mean the main banking office of
the Agent at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
PRIOR SECURITY INTEREST shall mean a valid and
enforceable perfected first-priority security interest in the UCC Collateral,
the Pledged Collateral and the Hong Kong Collateral.
PROHIBITED TRANSACTION shall mean any prohibited
transaction as defined in Section 4975 of the Internal Revenue Code or Section
406 of ERISA for which neither an individual nor a class exemption has been
issued by the United States Department of Labor.
PROPERTY shall mean all real property, both owned and
leased, of any Borrower, but does not include any facility utilized for the
storage of Borrowers' Property that is a public warehouse.
PURCHASE MONEY LIENS shall mean Liens upon tangible
personal property securing loans to any Borrower or deferred payments by such
Borrower for the purchase price of such tangible personal property.
PURCHASING LENDER shall mean a Lender which becomes a
party to this Agreement by executing an Assignment and Assumption Agreement.
RATABLE SHARE shall mean the proportion that a
Lender's Commitment bears to the Commitments of all of the Lenders.
REGULATED SUBSTANCES shall mean any substance,
including any solid, liquid, semisolid, gaseous, thermal, thoriated or
radioactive material, refuse, garbage, wastes, chemicals, petroleum products,
by-products, coproducts, impurities, dust, scrap, heavy metals, defined as a
22
"hazardous substance," "pollutant," "pollution," "contaminant," "hazardous or
toxic substance," "extremely hazardous substance," "toxic chemical," "toxic
waste," "hazardous waste," "industrial waste," "residual waste," "solid waste,"
"municipal waste," "mixed waste," "infectious waste," "chemotherapeutic waste,"
"medical waste," or "regulated substance" or any related materials, substances
or wastes as now or hereafter defined pursuant to any Environmental Laws,
ordinances, rules, regulations or other directives of any Official Body, the
generation, manufacture, extraction, processing, distribution, treatment,
storage, disposal, transport, recycling, reclamation, use, reuse, spilling,
leaking, dumping, injection, pumping, leaching, emptying, discharge, escape,
release or other management or mismanagement of which is regulated by the
Environmental Laws.
REGULATION U shall mean Regulation U, T, G or X as
promulgated by the Board of Governors of the Federal Reserve System, as amended
from time to time.
REIMBURSEMENT OBLIGATION shall mean the Borrowers'
obligations to reimburse a draw or advance under a Letter of Credit or a
Bankers' Acceptance.
REPORTABLE EVENT shall mean a reportable event
described in Section 4043 of ERISA and regulations thereunder with respect to a
Plan or Multiemployer Plan.
REPORTING PERIOD(S) shall mean the Collateral Agent
Reporting Period and the Agent Reporting Period.
REQUIRED LENDERS shall mean
(i) if there are no Loans, Reimbursement
Obligations, Letter of Credit Borrowings, Letters of Credit Outstanding,
Bankers' Acceptance Obligations and Bankers' Acceptance Borrowings outstanding ,
Lenders whose Commitments aggregate at least 66-2/3% of the Commitments of all
of the Lenders, or
(ii) if there are Loans, Reimbursement
Obligations, Letter of Credit Borrowings, Letters of Credit Outstanding,
Bankers' Acceptance Obligations or Bankers' Acceptance Borrowings outstanding,
any Lender or group of Lenders if the sum of the Loans, Reimbursement
Obligations, Letter of Credit Borrowings, Bankers' Acceptance Obligations and
Bankers' Acceptance Borrowings of such Lenders then outstanding aggregates at
least 66-2/3% of the total principal amount of all of the Loans , Reimbursement
Obligations, Letter of Credit Borrowings, Letters of Credit Outstanding,
Bankers' Acceptance Obligations and Bankers' Acceptance Borrowings then
outstanding. All voting rights of each participating Lender which has failed to
make all participation advances in respect thereof, when due in accordance with
this Agreement, shall be in favor of the Agent or Collateral Agent (if the
Collateral Agent has funded such non-advancing Lender's share).
23
REVOLVING CREDIT BASE RATE OPTION shall mean the
option of the Borrowers to have Revolving Credit Loans bear interest at the rate
and under the terms and conditions set forth in Section 4.1.1.
REVOLVING CREDIT COMMITMENT shall mean, as to any
Lender at any time, the obligation of such Lender to make Loans, to purchase
participations in Bankers' Acceptances and to purchase participations in Letters
of Credit, such that the sum of the outstanding principal amount of its Loans
plus its participation in Reimbursement Obligations, Bankers' Acceptance
Obligations and Letters of Credit Outstanding does not exceed the amount
initially set forth opposite its name on Schedule 1.1(B) in the column labeled
"Amount of Commitment for Revolving Credit Loans," and thereafter on schedule I
to the most recent Assignment and Assumption Agreement, and Revolving Credit
Commitments shall mean the aggregate Revolving Credit Commitments of all of the
Lenders.
REVOLVING CREDIT EURO-RATE OPTION shall mean the
option of the Borrowers to have Revolving Credit Loans bear interest at the rate
and under the terms and conditions set forth in Section 4.1.1.
REVOLVING CREDIT LOANS shall mean collectively and
REVOLVING CREDIT LOAN shall mean separately all Revolving Credit Loans or any
Revolving Credit Loan made by the Lenders or one of the Lenders to the Borrowers
pursuant to Section 2.1.
REVOLVING CREDIT NOTES shall mean collectively and
REVOLVING CREDIT NOTE shall mean separately all the Revolving Credit Notes of
the Borrowers in the form of Exhibit "F" evidencing the Revolving Credit Loans
together with all amendments, extensions, renewals, replacements, refinancings
or refundings thereof in whole or in part.
SECTION 20 SUBSIDIARY shall mean the subsidiary of
the bank holding company controlling any Lender, which subsidiary has been
granted authority by the Federal Reserve Board to underwrite and deal in certain
Ineligible Securities.
SECURED ELIGIBLE DOMESTIC ACCOUNTS shall mean
Eligible Domestic Accounts which are outstanding up to one hundred fifty days
(150) from the date of invoice and are secured by an irrevocable letter of
credit in form and content acceptable to the Agent and the Collateral Agent,
which is issued or confirmed by a prime bank acceptable to the Agent and the
Collateral Agent and the proceeds of which are payable in the United States or
Canada.
SECURED ELIGIBLE FOREIGN ACCOUNTS shall mean Eligible
Foreign Accounts which are outstanding up to one hundred fifty days (150) from
the date of invoice and are secured by an irrevocable letter of credit in form
and content acceptable to the Agent and the Collateral Agent, which is issued or
confirmed by a prime bank acceptable to the Agent and the Collateral Agent and
the proceeds of which are payable in the United States or Canada.
24
SECURITY AGREEMENT(S) shall mean the Amended and
Restated Security Agreement(s) in substantially the form of Exhibit "G" ,
attached hereto and made a part hereof, executed and delivered by each of the
Borrowers in favor of or to the Agent and Collateral Agent for the benefit of
the Agent, Collateral Agent and the Lenders.
SECURITY DOCUMENTS shall mean the Security
Agreements, the Debentures, the Pledge Agreement, the UCC-1 Financing
Statements, UCC-3's, the Lockbox Agreements, the Subordination Agreement and all
other documents executed by the Borrowers or any other Person in connection
therewith.
SHARES shall have the meaning assigned to that term
in Section 5.7.2.
STANDARD & POOR'S shall mean Standard & Poor's
Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
STANDBY LETTER(S) OF CREDIT shall mean a Letter of
Credit issued to support obligations of one or more of the Borrowers, contingent
or otherwise, which finances the working capital and business needs of the
Borrowers incurred in the ordinary course of business.
SUBORDINATED DEBT shall mean all Indebtedness of the
Borrowers and any Borrower which is subordinate to the Indebtedness and other
obligations of the Borrowers or any Borrower to the Lenders or any Lender,
pursuant to subordination agreements or other agreements approved by the
Required Lenders.
SUBORDINATION AGREEMENT shall mean that certain
Amended and Restated Subordination Agreement executed by DURABLE ELECTRICAL
METAL FACTORY LIMITED, a Hong Kong Limited Liability Company in favor of the
Agent and Collateral Agent, for the benefit of the Agent, Collateral Agent and
the Lenders, in form and content satisfactory to the Agent and the Collateral
Agent.
SUBSIDIARY of any Person at any time shall mean (i)
any corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person's Subsidiaries, (ii) any partnership of which such Person is
a general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, (iii) any limited liability company of which such Person is a
member or of which 50% or more of the limited liability company interests is at
the time directly or indirectly owned by such Person or one or more of such
Person's Subsidiaries or (iv) any corporation, trust, partnership, limited
liability company or other entity which is controlled or capable of being
controlled by such Person or one or more of such Person's Subsidiaries.
25
TERMINATION DATE shall mean the earlier of the
Expiration Date or such earlier date the Revolving Credit Commitments are
terminated and the Obligations of Borrowers to Lenders hereunder become
immediately due and payable.
TRADE LETTER(S) OF CREDIT shall mean any Letter of
Credit which is a commercial letter of credit issued by the Agent in respect of
the purchase of goods or services by one or more of the Borrowers in the
ordinary course of their business.
TRANSFEROR LENDER shall mean the selling Lender
pursuant to an Assignment and Assumption Agreement.
TRANSITION shall mean the completion by the Borrowers
of all actions required to be taken in order to vest ownership of the Borrowers
in the post-Transition ownership described in Schedule 5.7.3, attached hereto
and made a part of this Agreement.
TRANSITION DATE shall mean the date on which the
Borrowers shall have completed the Transition as evidenced by a certificate of
same being delivered to the Agent together which such evidence of the Transition
as the Agent may reasonably request, but in any event, not later than June 30,
1998.
UCC COLLATERAL shall mean the Property of the
Borrowers in which security interests are to be granted under the Security
Agreement.
UNIFORM COMMERCIAL CODE shall have the meaning
assigned to that term in Section 5.7.16.
WCI LICENSE AGREEMENTS means, collectively, (i) that
certain Trademark License Agreement dated as of May 1, 1996 between NEII and
White Consolidated Industries, Inc. relating to the use of the
White-Westinghouse trademark in connection with the sale of certain audio, video
and telecommunications products, (ii) that certain Trademark License Agreement
dated as of September 15, 1997 between NEII and White Consolidated Industries,
Inc. relating to the use of the White-Westinghouse trademark in connection with
the sale of microwave ovens, and (iii) that certain Trademark License Agreement
dated as of September 15, 1997 between NEII and White Consolidated Industries,
Inc. relating to the use of the Philco trademark in connection with the sale of
microwave ovens.
WINDMERE means Windmere-Durable Holdings, Inc., a
Florida corporation.
WINDMERE INDEBTEDNESS means the June 1997 Two Million
Dollar ($2,000,000.00) working capital loan from Windmere to NEII and the August
1997 Three Million Dollar ($3,000,000.00) revolving loan from Windmere to NEII,
which loans shall be repaid in full with the proceeds of the Loans.
26
WINDMERE NOTES means, collectively, (i) that certain
promissory note of Windmere Corporation dated April 16, 1996 payable to the
order of NEII in the principal amount of $3,000,000, $2,500,000 of which has
been repaid and of which $500,000 remains outstanding, and (ii) that certain
promissory note of Windmere Corporation dated April 16, 1996 payable to the
order of NEII in the principal amount of $2,000,000.
1.2 CONSTRUCTION.
Unless the context of this Agreement otherwise clearly
requires, the following rules of construction shall apply to this Agreement and
each of the other Loan Documents:
1.2.1 NUMBER; INCLUSION.
References to the plural include the singular, the
plural, the part and the whole; "or" has the inclusive meaning represented by
the phrase "and/or," and "including" has the meaning represented by the phrase
"including without limitation";
1.2.2 DETERMINATION.
References to "determination" of or by the Agent,
Collateral Agent or the Lenders shall be deemed to include good-faith estimates
by the Agent, Collateral Agent, or the Lenders (in the case of quantitative
determinations) and good-faith beliefs by the Agent, Collateral Agent, or the
Lenders (in the case of qualitative determinations) and such determination shall
be conclusive absent manifest error;
1.2.3 AGENT'S DISCRETION AND CONSENT.
Whenever the Agent, Collateral Agent, or the Lenders
are granted the right herein to act in its or their sole discretion or to grant
or withhold consent, such right shall be exercised in good faith;
1.2.4 DOCUMENTS TAKEN AS A WHOLE.
The words "hereof," "herein," "hereunder," "hereto"
and similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document;
1.2.5 HEADINGS.
The section and other headings contained in this
Agreement or such other Loan Document and the Table of Contents (if any),
preceding this Agreement or such other Loan Document are for reference purposes
only and shall not control or affect the construction of this Agreement or such
other Loan Document or the interpretation thereof in any respect;
27
1.2.6 IMPLIED REFERENCES TO THIS AGREEMENT.
Article, section, subsection, clause, schedule and
exhibit references are to this Agreement or other Loan Document, as the case may
be, unless otherwise specified;
1.2.7 PERSONS.
Reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement or such other Loan Document, as the case may be,
and reference to a Person in a particular capacity excludes such Person in any
other capacity;
1.2.8 MODIFICATIONS TO DOCUMENTS.
Reference to any agreement (including this Agreement
and any other Loan Document together with the schedules and exhibits hereto or
thereto), document or instrument means such agreement, document or instrument as
amended, modified, replaced, substituted for, superseded or restated;
1.2.9 FROM, TO AND THROUGH.
Relative to the determination of any period of time,
"from" means "from and including," "to" means "to but excluding," and "through"
means "through and including";
1.2.10 SHALL; WILL.
References to "shall" and "will" are intended to have
the same meaning; and
1.2.11 NEUTRAL INTERPRETATION.
This Agreement and each other Loan Document has been
thoroughly reviewed by counsel for the Borrowers. No provision of this Agreement
or other Loan Document shall be construed less favorably to the Agent,
Collateral Agent, or the Lenders because it was drafted by the Agent's counsel.
1.3 ACCOUNTING PRINCIPLES.
Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall be made
and prepared in accordance with GAAP (including principles of consolidation
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by GAAP; PROVIDED, HOWEVER, that all accounting
terms used in this Agreement (and all defined terms used in the definition of
any accounting term used in this Agreement shall have the meaning given to such
terms (and defined terms) under GAAP as in effect on the date hereof applied on
a basis consistent with those used in preparing the Annual Statements
28
referred to in this Agreement. In the event of any change after the date hereof
in GAAP, and if such change would result in the inability to determine
compliance with the financial covenants set forth in this Agreementbased upon
the Borrowers' regularly prepared financial statements by reason of the
preceding sentence, then the parties hereto agree to endeavor, in good faith, to
agree upon an amendment to this Agreement that would adjust such financial
covenants in a manner that would not affect the substance thereof, but would
allow compliance therewith to be determined in accordance with the Borrowers'
financial statements at that time.
2. REVOLVING CREDIT FACILITY
2.1 REVOLVING CREDIT COMMITMENTS.
Subject to the terms and conditions hereof and relying upon
the representations and warranties herein set forth, each Lender severally
agrees to make Revolving Credit Loans to the Borrowers at any time and from time
to time on or after the date hereof to the Termination Date, provided that after
giving effect to such Loans the aggregate amount of Loans from such Lender when
added to such Lender's Ratable Share of all Reimbursement Obligations, Bankers'
Acceptance Obligations, Bankers' Acceptance Borrowings, Letters of Credit
Outstanding and Letter of Credit Borrowings, shall not exceed at any one time
such Lender's Revolving Credit Commitment and with the aggregate amount of all
Lender Outstandings being subject to the Borrowing Base Limitation. Within such
limits of time and amount and subject to the other provisions of this Agreement,
the Borrowers may borrow, repay and reborrow pursuant to this Section 2.1.
2.2 NATURE OF LENDERS' OBLIGATIONS WITH RESPECT TO REVOLVING
CREDIT LOANS.
Each Lender shall be obligated to participate in each request
for Revolving Credit Loans pursuant to Section 2.4 [Revolving Credit Loan
Requests] in accordance with its Ratable Share. The aggregate of each Lender's
Revolving Credit Loans outstanding hereunder to the Borrowers at any time shall
never exceed its Revolving Credit Commitment minus its Ratable Share of the
Reimbursement Obligations, Bankers' Acceptance Obligations, Bankers' Acceptance
Borrowings, Letters of Credit Outstanding and Letter of Credit Borrowings. The
obligations of each Lender hereunder are several. The failure of any Lender to
perform its obligations hereunder shall not affect the Obligations of the
Borrowers to any other party nor shall any other party be liable for the failure
of such Lender to perform its obligations hereunder. The Lenders shall have no
obligation to make Revolving Credit Loans hereunder on or after the Expiration
Date or any earlier date the Revolving Credit Commitments are terminated
pursuant to this Agreement. In no event shall (i) the Collateral Agent be
required to advance any Loans or the Agent be required to issue any Letters of
Credit or create any Bankers' Acceptances, or (ii) the Lenders be required to
make any advances to or on behalf of Borrowers, following a Potential Default or
an Event of Default hereunder, except that (i) the Collateral Agent shall be
required to advance Loans in accordance with Section 2.8.1 and Section 2.8.2
hereof for the purpose of reimbursing Agent for all principal, interest, fees
and other sums due in connection with all Letters of Credit and Bankers'
Acceptances which are issued, converted or created, or which mature or are
unpaid or unreimbursed at the time of or after such Potential Default or Event
of Default, and (ii) the Lenders shall make advances to the
29
Agent or Collateral Agent in amounts necessary to fund such Lender's Ratable
Share of all Loans advanced by the Collateral Agent on each Lender's behalf
pursuant to this Section 2.2, as well as Section 2.4 and Section 9.16 of this
Agreement and all Letters of Credit and Bankers' Acceptances which mature or are
unpaid or unreimbursed at the time of or after such Potential Default or Event
of Default, including all principal, interest, fees and other sums due thereon.
2.3 COMMITMENT AND ADMINISTRATION FEES.
(a) COMMITMENT FEES. The Borrowers agree to pay to the Agent
for the account of each Lender, as consideration for such Lender's Revolving
Credit Commitment hereunder, a nonrefundable commitment fee (the "Commitment
Fee") equal to thirty-five basis points (0.35%) of the amount of the Lenders'
Revolving Credit Commitments as the same may be constituted from time to time,
said Commitment Fee to be shared among the Lenders as set forth in Schedule
2.3(a) attached hereto and made a part hereof. The Commitment Fees shall be
payable in four quarterly installments commencing on the Closing Date and
continuing on the first Business Day of each calendar quarter thereafter until
paid in full.
(b) ADMINISTRATION FEE. The Borrowers agree to pay to the
Collateral Agent for its own account an Administration Fee equal to Fifty
Thousand Dollars ($50,000.00) per annum, payable in quarterly installments of
Twelve Thousand Five Hundred Dollars ($12,500.00), commencing on the Closing
Date and continuing on the first Business Day of each calendar quarter
thereafter, through and including the Expiration Date.
2.4 REVOLVING CREDIT LOAN REQUESTS.
(a) Except as otherwise provided herein, the Borrowers may
from time to time prior to the Expiration Date request the Lenders to make
Revolving Credit Loans, or renew or convert the Interest Rate Option applicable
to existing Revolving Credit Loans pursuant to Section 4.2 [Interest Periods],
by delivering to the Collateral Agent, not later than 10:00 a.m., New York, New
York time, (i) two (2) Business Days prior to the proposed Borrowing Date with
respect to the making of Revolving Credit Loans to which the Euro-Rate Option
applies or the conversion to or the renewal of the Euro-Rate Option for any
Loans; and (ii) one (1) Business Day prior to either the proposed Borrowing Date
with respect to the making of a Revolving Credit Loan to which the Base Rate
Option applies or the last day of the preceding Interest Period with respect to
the conversion to the Base Rate Option for any Loan, of a duly completed request
therefor substantially in the form of Exhibit "H", in writing by letter,
facsimile or telex in such form (each, a "Loan Request"). Each Loan Request
shall be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the
aggregate amount of the proposed Loans comprising each Borrowing Tranche, which
shall be not less than $1,000,000.00 for each Borrowing Tranche to which the
Euro-Rate Option applies; (iii) whether the Euro-Rate Option or Base Rate Option
shall apply to the proposed Loans comprising the applicable Borrowing Tranche;
and (iv) in the case of a Borrowing Tranche to which the Euro-Rate Option
applies, an appropriate Interest Period for the Loans comprising such Borrowing
Tranche. Subject to Section 6.2 [Each Additional Loan], the Collateral Agent
will fund
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such Revolving Credit Loans to the Borrowers in U.S. Dollars and immediately
available funds at the Principal Office of the Collateral Agent.
(b) Revolving Credit Loans will be made based on the most
recent Borrowing Base Certificate submitted by Borrowers to the Collateral
Agent. The Borrowing Base Certificate shall be submitted by Borrowers to the
Collateral Agent one time per month in each fiscal year of Borrowers, or more
frequently as reasonably required by the Collateral Agent.
(c) The Borrowers shall furnish to the Collateral Agent,
monthly on or before the twentieth (20) day of each month, a report of Eligible
Accounts, Eligible Inventory, Eligible In-Transit White-Westinghouse Inventory,
Eligible In-Transit Inventory and such other reports and documentation as shall
be reasonably required by the Collateral Agent.
2.5 MAKING REVOLVING CREDIT LOANS.
On each Collateral Agent Reconciliation Date, the Collateral
Agent shall furnish the Lenders with a Collateral Agent Reconciliation Report
for the immediately preceding Collateral Agent Reporting Period, specifying: (i)
the Borrowing Date and the time and method of disbursement of the Revolving
Credit Loans requested thereby; (ii) the amount and type of each such Revolving
Credit Loan and the applicable Interest Period (if any); and (iii) the
apportionment among the Lenders of such Revolving Credit Loans as determined by
the Collateral Agent in accordance with Section 2.2 [Nature of Lenders'
Obligations]. Each Lender shall remit to the Collateral Agent any Net Sums Due
from such Lender, on or before 2:00 p.m., New York, New York time on the
Collateral Agent Reconciliation Date, PROVIDED that, if any Lender fails to
remit such funds to the Collateral Agent in a timely manner, such Lender shall
be subject to the repayment obligation in Section 9.16 [Availability of Funds].
2.6 REVOLVING CREDIT NOTES.
The Obligations of the Borrowers to each Lender under the
Revolving Credit Commitments shall be evidenced by Revolving Credit Notes dated
the Closing Date payable to the order of each such Lender, substantially in the
form of Exhibit "F" attached hereto.
2.7 USE OF PROCEEDS.
The proceeds of the Revolving Credit Loans shall be used to
refinance the Original Loans, to facilitate Borrowers' trade finance activities,
to repay the Windmere Indebtedness and other indebtedness of the Borrowers to
▇▇▇▇ ▇▇▇▇▇▇ and to finance working capital needs of Borrowers.
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2.8 LETTERS OF CREDIT AND BANKERS' ACCEPTANCES SUBFACILITIES.
2.8.1 LETTERS OF CREDIT SUBFACILITY
2.8.1.1 CREATION. Subject to the terms and
conditions hereof, so long as no Potential Default or Event of Default exists
hereunder, the Agent, in reliance on the agreements of the Lenders set forth in
this Section 2.8.1.1, agrees to issue letters of credit ("LETTERS OF CREDIT")
for the account of the applicant Borrower on any Business Day, in such form as
may be approved from time to time by the Agent; provided that the Agent shall
have no obligation to issue any Standby Letter of Credit if, after giving effect
to such issuance the Standby Letter of Credit Outstandings would exceed at any
time Two Million Dollars ($2,000,000.00) or issue any Letter of Credit if, after
giving effect to such issuance the Letter of Credit would cause the Lender
Outstandings to exceed the lesser of the Borrowing Base Limitation or the
Revolving Credit Commitments. Each Letter of Credit shall (aa) be denominated in
Dollars and shall be a Standby Letter of Credit or a Trade Letter of Credit (bb)
as to Standby Letters of Credit expire no later than 180 days after issuance and
(cc) as to Trade Letters of Credit, expire within 90 days of issuance, but in
any event no later than the date which is one (1) Business Day prior to the
Expiration Date. Each Friday, the Agent shall furnish to the Lenders a written
report of all Letters of Credit outstanding.
Each Standby Letter of Credit shall be used
only to secure bid, tender, customs, surety, payment, performance or similar
bonds needed by a Borrower in the ordinary course of business, and, with the
consent of the Required Lenders, for other general corporate purposes.
Each Trade Letter of Credit shall (aa)
require presentation of either a sight draft or a time draft with a maturity no
later than 30 days after its date, a ▇▇▇▇ of lading and whatever other documents
the Agent considers necessary or desirable to give it control over and a
perfected security interest in the related goods, (bb) have an expiration date
no later than 90 days after the date of issuance of such Trade Letter of Credit,
(cc) be used only for the shipment or importation of Inventory of a Borrower and
the payment of the purchase price thereof (inclusive, at the election of the
Borrowers, of freight and insurance charges), (dd) shall indicate only the
Borrower requesting it as the account party (however the Borrowers shall be
jointly and severally liable for all obligations thereunder) on the face of the
Trade Letter of Credit and (ee) be otherwise reasonably acceptable to the Agent
in form and content.
2.8.1.2 LETTERS OF CREDIT AND BANKERS'
ACCEPTANCE FEES.
(a) STANDBY LETTERS OF CREDIT.
The Borrowers shall pay immediately upon the
issuance and renewal of each Standby Letter of Credit, (aa) to the Agent, for
the ratable account of the Lenders a nonrefundable fee (the "Standby Letter of
Credit Issuance Fees") equal to one and one-quarter percent (1.25%) per annum
(but not less than seventy-five dollars ($75.00 for each Letter of Credit), and
(bb) to the Agent for its own account a nonrefundable fronting fee equal to
one-quarter of one
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percent (.25%) per annum, (the fees due to Agent pursuant to (bb) above being
referred to as the "Agent's Standby Letter of Credit Issuance Fees"). The fees
required in (aa) and (bb) immediately above shall be based on a year of 360 days
and computed for the actual number of days to elapse in the initial term or
renewal term (as the case may be) of the applicable Standby Letter of Credit,
and shall, for each Standby Letter of Credit, be payable in full in advance on
the date such Standby Letter of Credit is issued or renewed (as the case may be)
based on the stated amount of such Standby Letter of Credit. The Agent shall
have no obligation to advance any portion of the Standby Letter of Credit Fees
to any Lender who has failed to remit to Agent or Collateral Agent (and Agent
may set off such Standby Letter of Credit Fees against) sums otherwise due Agent
or Collateral Agent from such Lender under this Agreement. The Agent shall be
entitled to assume that each Lender will fund its ratable share of all sums due
under this Agreement unless Agent receives prior written notice from the
Collateral Agent or such Lender to the contrary on or before the Business Day
prior to the requested funding date.
(b) TRADE LETTERS OF CREDIT.
The Borrowers shall pay (aa) to the Agent
for the ratable account of the Lenders upon issuance of Trade Letters of Credit
a non-refundable issuance fee (the "Trade Letter of Credit Issuance Fee") equal
to seven and one-half (7-1/2) basis points (.075%) (but not less than
seventy-five dollars ($75.00 for each Letter of Credit) and (bb) to the Agent
for its own account a nonrefundable fronting fee equal to five (5) basis points
(.05%), together with any additional charges imposed by Agent, all such fees
being computed on the stated amount of each Trade Letter of Credit (the fees due
to Agent pursuant to (bb) immediately above being referred to as the "Agent's
Trade Letter of Credit Issuance Fees). The Borrowers shall pay (aa) to the Agent
for the ratable account of the Lenders upon negotiation of Trade Letters of
Credit a non-refundable negotiation fee (the "Trade Letter of Credit Negotiation
Fees") equal to five (5) basis points (.05%) ( but not less than seventy-five
dollars ($75.00 for each Letter of Credit) and (bb) to the Agent for its own
account a nonrefundable fronting fee equal to seven and one-half (7-1/2) basis
points (.075%), together with any additional charges imposed by Agent, all such
fees being computed on the stated amount of each Trade Letter of Credit (the
fees due to Agent pursuant to (bb) above being referred to as the "Agents Trade
Letter of Credit Negotiation Fees"). The Agent shall have no obligation to
advance any portion of the Trade Letter of Credit Negotiation Fees or the Trade
Letter of Credit Issuance Fees to any Lender who has failed to remit to Agent or
Collateral Agent (and Agent may set off such Trade Letter of Credit Issuance
Fees against) sums otherwise due Agent or Collateral Agent from such Lender
under this Agreement. The Agent shall be entitled to assume that each Lender
will fund its ratable share of all sums due under this Agreement unless Agent
receives prior written notice from the Collateral Agent or such Lender to the
contrary on or before the Business Day prior to the requested funding date.
2.8.1.3 APPLICATION. The Borrowers may from
time to time request the issuance of a Letter of Credit by delivering to the
Collateral Agent at its Principal Office (or such other location designated by
Collateral Agent), an application or agreement therefor in form and substance
satisfactory to Agent and completed to the satisfaction of the Agent, and such
other certificates, documents, and other papers and information as Agent may
request (collectively, a "Letter of Credit Application"). Upon receipt of a
Letter of Credit Application, the Collateral Agent
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shall determine the availability of new Letters of Credit hereunder within such
period of time as shall, if such availability shall exist and if the Letter of
Credit Application has been delivered to the Collateral Agent prior to 10:00
a.m. New York, New York time on a Business Day, result in delivery by the
Collateral Agent to the Agent of the Letter of Credit Application and the
Collateral Agent's determination with respect thereto prior to 11:00 a.m. New
York, New York time on the same Business Day. If the Letter of Credit
Application has been delivered by a Borrower after 10:00 A.M., such
determination shall be made by the Collateral Agent within such time as shall
result in its determination and the Letter of Credit Application being delivered
to the Agent no later than 11:00 a.m. New York, New York time on the next
Business Day. Subject to the terms hereof and of the Letter of Credit
Application, if the Letter of Credit Application and the Collateral Agent's
favorable determination with respect thereto have been delivered to the Agent
prior to 11:00 a.m. New York, New York time on a Business Day, the Agent shall
use best efforts to issue the requested Letter of Credit on the Business Day
immediately following delivery by the Collateral Agent to the Agent of the
Letter of Credit Application and the Collateral Agent's favorable determination
with respect thereto, PROVIDED, HOWEVER, that if the Letter of Credit
Application and the favorable determination of the Collateral Agent is received
by the Agent after 11:00 a.m. New York, New York time, the Agent shall use best
efforts to issue such Letter of Credit on the second Business Day following
delivery by the Collateral Agent to the Agent of the Letter of Credit
Application and the Collateral Agent's favorable determination with respect
thereto. Subject to the terms hereof and of the Letter of Credit Application,
the Agent shall issue the Letter of Credit by issuing the original of such
Letter of Credit to the beneficiary thereof or as otherwise may be agreed by
Agent and Borrowers. Agent shall furnish a copy of such Letter of Credit to the
Borrowers promptly following the issuance thereof. Each Borrower agrees to be
bound by the terms of the Agent's application and agreement for letters of
credit and the Agent's written regulations and customary practices relating to
letters of credit. In the event of a conflict between such application or
agreement and this Agreement, this Agreement shall govern. It is understood and
agreed that the Agent shall not be liable for any error, negligence and/or
mistakes, whether of omission or commission, in following any Borrower's
instructions or those contained in the Letters of Credit or any modifications,
amendments or supplements thereto, except in the case of gross negligence or
willful misconduct (as found in a final, non-appealable judgment by a court of
competent jurisdiction). In determining whether to honor any request for drawing
under any Letter of Credit by the beneficiary thereof, the Agent shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they comply
on their face with the requirements of such Letter of Credit. Upon issuance by
the Agent of a Letter of Credit the Agent shall notify the Collateral Agent and
the Collateral Agent shall (to the extent the Borrowers' have failed to do so)
immediately reimburse the Agent the full amount of all Standby Letter of Credit
Issuance Fees, Agent's Standby Letter of Credit Issuance Fees, all Trade Letter
of Credit Issuance Fees and all Agent's Trade Letter of Credit Issuance Fees,
together with an amount sufficient to pay to the Agent any other sums due in
connection with the issuance of the Letter of Credit, by advancing a Revolving
Credit Loan in such amount directly into the applicant Borrowers' account
maintained with the Collateral Agent , for debit by the Agent so as to
immediately eliminate the liability of Borrowers to Agent pertaining to such
Letter of Credit. Upon the issuance of each Letter of Credit by the Agent, the
Agent shall be authorized and is hereby authorized and directed, to debit the
operating account maintained at the Collateral Agent by the applicant Borrower
or any other
34
account of any Borrower in an amount sufficient to pay to the Agent the fees and
charges due in connection with the Letter of Credit.
2.8.1.4 PURCHASE OF PARTICIPATIONS. The
Agent irrevocably agrees to grant and hereby grants to each other Lender, and,
to induce the Agent to issue Letters of Credit hereunder, each such other Lender
irrevocably agrees, immediately upon issuance of each Letter of Credit, and
without any further action required of the Agent or such Lender, to accept and
purchase and hereby accepts and purchases from the Agent, on the terms and
conditions herein stated, for such Lender's own account and risk, an undivided
interest equal to such Lender's Ratable Share in the Agent's obligations and
rights under each Letter of Credit issued hereunder, and the amount of each
draft paid by the Agent thereunder, except for the Agent's Standby Letter of
Credit Issuance Fees, Agent's Trade Letter of Credit Issuance Fees, and Agent's
Trade Letter of Credit Negotiation Fees. Upon payment by the Agent of a draft
under a Letter of Credit the Agent shall notify the Collateral Agent and the
Collateral Agent shall (to the extent the Borrowers have failed to do so)
immediately reimburse the Agent the full amount of such payment by the Agent,
together with an amount sufficient to pay to the Agent any other sums due in
connection with the issuance and payment of the Letter of Credit, including
without limitation, Trade Letter of Credit Negotiation Fees and Agent's Trade
Letter of Credit Negotiation Fees, by advancing a Revolving Credit Loan in such
amount directly into the requesting Borrower's account maintained with the
Collateral Agent, for debit by the Agent so as to immediately eliminate the
liability of Borrowers to Agent pertaining to such Letter of Credit. The Agent
shall be authorized and is hereby authorized and directed, to debit the
operating account maintained at the Collateral Agent by the applicant Borrower
or any other account of any Borrower in an amount sufficient to pay to the Agent
the principal amount paid, interest, fees and charges due in connection with the
Letter of Credit. Each Lender unconditionally and irrevocably agrees that, if a
draft is paid under any Letter of Credit for which the Agent is not reimbursed
in full by the Borrowers pursuant to this Agreement and the Letter of Credit
Application (including the amount paid by the Agent and any other sums due in
connection with the payment of the Letter of Credit), such Lender shall
immediately pay to the Collateral Agent, on the next Collateral Agent
Reconciliation Date at the Principal Office of Collateral Agent all sums due, or
any part thereof, which is not so reimbursed. Without limiting the scope and
nature of each Lender's participation in any Letter of Credit, to the extent
that Agent has not been immediately reimbursed by the Borrowers or by the
Collateral Agent (pursuant to an advance of a Revolving Credit Loan hereunder or
otherwise) for any payment made by Agent in connection with such Letter of
Credit (including the amount paid by the Agent and any other sums due in
connection with the payment of the Letter of Credit), each Lender shall, in
accordance with its Ratable Share, reimburse the Agent promptly on demand by
Agent for the amount of such payment (including the amount paid by the Agent and
the fees and charges due in connection with the payment of the Letter of
Credit). The obligation of each Lender to so reimburse Agent or Collateral Agent
shall be absolute and unconditional and shall not be affected by the occurrence
of an Event of Default or Potential Default or any other occurrence or event.
Any such reimbursement shall not relieve or otherwise impair the obligation of
Borrowers to reimburse Agent for the amount of any payment made by the Agent
under the Letter of Credit, together with interest at the rate provided in
Section 4 and the fees and charges due in connection with the payment of the
Letter of Credit. Borrowers hereby specifically acknowledge and agree that in
the event Borrowers fail to perform in
35
accordance with the terms of the Letters of Credit, the applications and
documents related thereto or this Agreement as it relates to such Letters of
Credit, each Lender shall have a claim against Borrowers, to the extent of such
Lender's Ratable Share of such Letter of Credit.
2.8.1.5 LENDERS' REIMBURSEMENT OF AGENT AND
COLLATERAL AGENT. If any amount required to be paid by any Lender to the Agent
or Collateral Agent pursuant to Section 2.8.1.4 above and Section 2.12 below in
respect to any portion of any payment made or reimbursed by the Agent or
Collateral Agent under any Letter of Credit is not paid to the Agent or
Collateral Agent on the date such payment is due, such Lender shall pay to the
Agent or Collateral Agent, as applicable, on demand an amount equal to the
product of such amount, times the daily average Federal Funds Rate during the
period from and including the date such payment is required to the date on which
such payment is immediately available to the Agent or Collateral Agent, as
applicable, times a fraction the numerator of which is the number of days that
elapse during such period and the denominator of which is 360. If any such
amount required to be paid by any Lender pursuant to Section 2.8.1.4 above or
Section 2.12 below, is not in fact made available to the Agent or Collateral
Agent, as applicable, by such Lender within three (3) Business Days after the
date such payment is due, the Agent or the Collateral Agent, as applicable,
shall be entitled to recover from such Lender, on demand, such amount with
interest thereon calculated from such due date at the rate per annum then
applicable to Base Rate Option Loans hereunder. A certificate of the Agent or
Collateral Agent submitted to any Lender with respect to any amounts owing under
this Section shall be conclusive in the absence of manifest error. Until such
time as Lenders fund their Ratable Shares of drafts, and any other sums due in
connection with the payment of any Letter of Credit paid under this Section, the
Agent or Collateral Agent, as applicable, shall (with respect to any unfunded
Lenders) keep for its own account all interest, fees and charges accrued on
advances made in connection therewith.
2.8.1.6 REDISTRIBUTION TO LENDERS. Whenever,
at any time after the Agent or Collateral Agent has made payment under any
Letter of Credit and has received from any Lender its Ratable Share of such
payment, fees and charges in accordance with Section 2.8.1.5 above, the Agent or
Collateral Agent receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise) or any payment of fees, charges or
interest on account thereof, the Agent or Collateral Agent, as applicable, will
promptly on the next Agent Reconciliation Date or Collateral Agent
Reconciliation Date, as applicable, distribute to such Lender its Ratable Share
thereof; provided, however, that in the event that any such payment received by
the Agent or Collateral Agent shall be required to be returned by the Agent or
Collateral Agent, such Lender shall immediately upon demand by the Agent or
Collateral Agent, as applicable, return to the Agent or Collateral Agent, as
applicable, the portion thereof previously distributed by the Agent or
Collateral Agent, as applicable.
2.8.1.7 PAYMENT. Borrowers agree, subject to
the provisions of this Section 2.8.1.7 set forth below, to reimburse and repay
the Agent immediately on the Business Day on which the Agent pays a draft
presented under any Letter of Credit, for the amount of such draft so paid
together with the fees and charges due in connection with the payment of the
Letter of Credit. Each such payment shall be made to the Agent at its Principal
Office immediately on the Business Day on which the Agent pays a draft presented
under any Letter of
36
Credit in Dollars and in immediately available funds. Interest shall be due and
payable on the amount so paid on such draft, until reimbursed in full, at the
rate set forth in, and in accordance with the provisions contained in Section 4.
To the extent Loans are available under the
Revolving Credit Commitments and to finance the Reimbursement Obligations of
Borrowers under this Section 2.8.1.7, Borrowers irrevocably authorize and direct
the Collateral Agent and the Lenders to treat each such advance by Agent in
payment of a draft under Letters of Credit as a request for a Revolving Credit
Loan in the amount of such advance, together with the fees and charges due in
connection with the payment of the Letter of Credit, to issue Revolving Credit
Loans simultaneously with any such advance in the aggregate amount of such
advance, together with the fees and charges due in connection with the payment
of the Letter of Credit, and to credit the proceeds of such Revolving Credit
Loans so as to immediately eliminate the liability of Borrowers to Agent
pertaining to such Letter of Credit and immediately eliminate the liability of
each other Lender to Agent with respect to its liability to Agent relating to
such Letter of Credit. Revolving Credit Loans advanced for this purpose shall
bear interest at the rate set forth in, and in accordance with the provisions
contained in, Section 4.1. The Collateral Agent will notify the Lenders of the
amount required to be advanced pursuant to the Letters of Credit before 10:00
a.m. New York, New York time on the Collateral Agent Reconciliation Date
immediately following the date of any advance the Agent or Collateral Agent is
required to make pursuant to the Letters of Credit. On the Collateral Agent
Reconciliation Date each Lender shall make available such Lender's Ratable Share
of such advance in immediately available funds to the Collateral Agent.
2.8.1.8 ICC PUBLICATION NO. 500. Each Letter
of Credit shall be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as amended or revised from time to time ("UCP 500") and, to the extent not
inconsistent therewith, the laws of the State of New York. The responsibility of
Agent to a Borrower in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation expressly provided
for in such Letter of Credit, be limited to those responsibilities set forth in
UCP 500.
2.8.1.9 CONDITIONS TO ISSUANCE. Agent shall
not be obligated to and shall not issue any Letter of Credit hereunder during
the existence of or which would result in an Event of Default or Potential
Default or if such issuance would conflict with, or cause Agent or any Lender to
exceed any limits imposed by, any applicable Law.
2.8.1.10 COSTS AND EXPENSES. In addition to
the Letter of Credit fees and Bankers' Acceptance Fees provided for herein, the
Borrowers shall pay or reimburse Agent (for Agent's own account) for such normal
and customary costs and expenses as are incurred or charged by Agent in issuing,
creating, effecting payment under, amending or otherwise administering any
Letter of Credit issued by Agent or any Bankers' Acceptance created or draft
paid in connection with any Bankers' Acceptance.
2.8.1.11 UNCONDITIONAL OBLIGATIONS,
LIMITATION ON LIABILITY. The Borrowers' obligations under Section 2.8.1 and each
Lender's obligations under
37
Section 2.8.1 shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrowers or any Lender may have or have had against the Agent
or any beneficiary of a Letter of Credit. As between any Borrower and the Agent,
such Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Agent shall not be
responsible for: (a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged (even if the Agent shall have been notified thereof); (b)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such 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 such Letter of Credit, or any other party to which such Letter of Credit may
be transferred, to comply fully with any conditions required in order to draw
upon such Letter of Credit or any other claim of any Borrower against any
beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among any Borrower and any beneficiary of any Letter of Credit or any
such transferee; (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 such 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 or any claims
whatsoever of any Borrower against any beneficiary of such Letter of Credit or
any such transferee; or (h) any consequences arising from causes beyond the
control of the Agent, including any Governmental Acts, and none of the above
shall affect or impair, or prevent the vesting of, any of the Agent's rights or
powers hereunder.
In furtherance and extension and not in
limitation of the specific provisions set forth above, the Borrowers and each
Lender agree that any action taken or omitted by Agent under or in connection
with any Letter of Credit or the related drafts or documents shall be binding on
the Borrowers and each Lender and shall not result in any liability of Agent to
Borrowers or any Lender, except in the case of Agent's gross negligence or
willful misconduct (as found in a final, non-appealable judgment by a court of
competent jurisdiction).
2.8.1.12 INCONSISTENCIES. To the extent that
any provision of any Letter of Credit Application related to any Letter of
Credit is irreconcilably inconsistent with the provisions of this Agreement, the
provisions of this Agreement shall control.
2.8.1.13 INSOLVENCY. If the Agent is
required at any time to pay or return to any Borrower, or to a trustee,
receiver, liquidator, custodian, or any official in any insolvency proceeding,
any portion of the payments made by any Borrower to the Agent pursuant to this
Section in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Lender shall, on demand of the Agent, forthwith
pay to the Agent the amount of its Ratable Share of any amounts so paid or
returned by the Agent plus interest thereon from the date
38
such demand is made to the date such amounts are returned by such Lender to the
Agent, at a rate per annum equal to the Federal Funds Rate in effect from time
to time.
2.8.2 BANKERS' ACCEPTANCE SUBFACILITY.
2.8.2.1 CREATION. Subject to the terms and
conditions hereof, so long as no Potential Default or Event of Default exists
hereunder, at any time and from time to time, the Borrowers may elect to convert
into a Bankers' Acceptance any drawing under a Trade Letter of Credit providing
for presentation of time drafts. The Agent, in reliance on the agreements of the
Lenders set forth in this Section 2.8.2, shall convert any drawing under a Trade
Letter of Credit into a Bankers' Acceptance as Borrowers may request by notice
to the Collateral Agent in accordance with the procedure set forth in Section
2.8.2.3; PROVIDED that, after giving effect to any such Bankers' Acceptance, the
aggregate amount of all Bankers' Acceptance Obligations shall not exceed Ten
Million Dollars ($10,000,000.00) (the "Bankers' Acceptance Sublimit" and the
Lender Outstandings shall not exceed the lesser of the Borrowing Base Limitation
or the Revolving Credit Commitments. The maturity of any Bankers' Acceptance
shall not extend beyond the Bankers' Acceptance Termination Date. Each Bankers'
Acceptance shall be executed on behalf of Borrowers and presented to the Agent
pursuant to such procedures as are provided for or required by Agent. The
creation and maturity date of each Bankers' Acceptance shall be Business Days.
Notwithstanding the foregoing, the Agent shall not create or discount any
Bankers' Acceptance (i) that is not "ELIGIBLE" pursuant to paragraph 7 of
Section 13 of the Federal Reserve Act (12 U.S.C. ss.372), as amended from time
to time, or (ii) if creation thereof would cause the Agent to exceed the maximum
amount of outstanding bankers' acceptances permitted by applicable law or under
the Bankers' Acceptance Sublimit, or (iii) if, in the reasonable opinion of the
Agent, general conditions in the public market for rediscounting bankers'
acceptances render it inadvisable to do so.
2.8.2.2 BANKERS' ACCEPTANCE FEES. Upon the
conversion of any drawing under a Trade Letter of Credit to a Bankers'
Acceptance, Borrowers shall pay (aa) to the Agent for the ratable account of the
Lenders a nonrefundable fee (the "Bankers' Acceptance Creation Fees") equal to
one and one-quarter percent (1.25%) per annum and (bb) to the Agent for its own
account a nonrefundable administrative fee equal to one-quarter of one percent
(.25%) per annum (the fees due to Agent pursuant to (bb) above being referred to
as the "Agent's Bankers' Acceptance Fees"). The fees required in (aa) and (bb)
immediately above, shall be computed on the face amount of each Bankers'
Acceptance, based upon a year of 360 days and computed for the actual number of
days from the creation of the relevant Bankers' Acceptance to and excluding the
stated maturity thereof. Agent shall have no obligation to advance any portion
of the Bankers' Acceptance Fees to any Lender who has failed to remit to Agent
(and Agent may set off such Bankers' Acceptance Fees against) sums otherwise due
Agent from such Lender under this Agreement. The Agent shall be entitled to
assume that each Lender will fund its ratable share of all sums due under this
Agreement unless Agent receives prior written notice from the Collateral Agent
or such Lender to the contrary on or before the Business Day prior to the
requested funding date.
2.8.2.3 APPLICATION. The Borrowers may from
time to time request the Collateral Agent to convert any drawing under a Trade
Letter of Credit into a Bankers' Acceptance, by indicating such election on the
Letter of Credit Applications submitted to
39
the Collateral Agent. Upon receipt by the Agent of any draft upon, or other
notice of drawing under, a Trade Letter of Credit, the Agent shall promptly give
the Collateral Agent and Borrowers written notice of the amount of such draft or
drawing, of the Trade Letter of Credit against which it is drawn and of the date
upon which the Agent proposes to honor such draft. Upon presentation to the
Agent of a Bankers' Acceptance for payment, the Agent shall notify the
Collateral Agent of such presentation. Upon each request by Borrowers for a
Trade Letter of Credit which will be converted into a Bankers' Acceptance, the
Collateral Agent shall determine the availability of new Bankers' Acceptances.
In no event will the Borrowers be entitled to request or the Agent be required
to issue any Trade Letter of Credit for which a Borrower has selected the
Bankers' Acceptance conversion option ( a "Trade LC With BA Option"), if when
added to the aggregate of all issued and outstanding or unreimbursed Trade LC's
With BA Options, and all outstanding or unreimbursed Bankers' Acceptances, such
sum would exceed the Bankers' Acceptance Sublimit or result in a Potential
Default or an Event of Default. Each Borrower agrees to be bound by the terms of
the Agent's written regulations and customary practices relating to Bankers'
Acceptances. In the event of a conflict between such regulations and customary
practices and this Agreement, this Agreement shall govern. It is understood and
agreed that the Agent shall not be liable for any error, negligence and/or
mistakes, whether of omission or commission, in following any Borrower's
instructions or those contained in the Bankers' Acceptances or any
modifications, amendments or supplements thereto, except in the case of Agent's
gross negligence or willful misconduct (as found in a final, non-appealable
judgment by a court of competent jurisdiction). In determining whether to
convert any drawing under a Trade Letter of Credit into a Bankers' Acceptance,
the Agent shall be responsible only to determine that the documents and
certificates required to be delivered under such Trade Letter of Credit or
Bankers' Acceptances have been delivered and that they comply on their face with
the requirements of such Trade Letter of Credit or Bankers' Acceptances. Upon
the issuance of or conversion to each Bankers' Acceptance by the Agent, the
Agent shall notify the Collateral Agent and the Collateral Agent shall (to the
extent the Borrowers' have failed to do so) immediately reimburse the Agent the
full amount of all Bankers' Acceptance Creation Fees and Agent's Bankers'
Acceptance Fees, together with an amount sufficient to pay to the Agent any
other sums due in connection with the issuance of the issuance of or conversion
to each Bankers' Acceptance, by advancing a Revolving Credit Loan in such amount
directly into the applicant Borrowers' account maintained with the Collateral
Agent , for debit by the Agent so as to immediately eliminate the liability of
Borrowers to Agent pertaining to such Bankers' Acceptance. Upon the issuance of
or conversion to each Bankers' Acceptance by the Agent the Agent shall be
authorized and is hereby authorized and directed, to debit the operating account
maintained at the Collateral Agent by the applicant Borrower, or any other
account of any Borrower, in an amount sufficient to pay to the Agent the fees
and charges due in connection with the Bankers' Acceptance.
2.8.2.4 PURCHASE OF PARTICIPATIONS. The
Agent irrevocably agrees to grant and hereby grants to each other Lender, and to
induce Agent to convert any drawing under a Trade Letter of Credit into a
Bankers' Acceptance and create Bankers' Acceptances hereunder, each such other
Lender irrevocably agrees immediately upon creation of each Bankers' Acceptance
and without any further action required of the Agent or such Lender, to accept
and purchase and hereby accepts and purchases from the Agent, on the terms and
conditions herein stated, for such Lender's own account and risk, an undivided
interest equal to such Lender's
40
Ratable Share in the Agent's obligations and rights under each Bankers'
Acceptance created hereunder, and the amount of each draft paid by the Agent
thereunder, except for the Agent's Bankers' Acceptance Fees. Upon payment by the
Agent of a draft under a Bankers' Acceptance the Agent shall notify the
Collateral Agent and the Collateral Agent shall (to the extent the Borrowers'
have failed to do so) immediately reimburse the Agent the full amount of such
payment by the Agent together with an amount sufficient to pay to the Agent any
other sums due in connection with the payment of the Bankers' Acceptance, by
advancing a Revolving Credit Loan in such amount directly into the applicant
Borrower's account maintained with the Collateral Agent, for debit by the Agent
so as to immediately eliminate the liability of Borrowers to Agent pertaining to
such Bankers' Acceptance. Upon the payment of each Bankers' Acceptance by the
Agent the Agent shall be authorized and is hereby authorized and directed, to
debit the operating account maintained at the Collateral Agent by the applicant
Borrower, or any other account of any Borrower, in an amount sufficient to pay
to the Agent the principal amount paid, interest, fees and charges due in
connection with the Bankers' Acceptance. Each Lender unconditionally and
irrevocably agrees that, if a draft is paid or an advance is made by Agent
pursuant to any Bankers' Acceptance for which the Agent is not reimbursed in
full by Borrowers pursuant to this Agreement (including the amount paid by the
Agent and any other sums due in connection with the payment of the draft), such
Lender shall immediately pay to the Collateral Agent on the next Collateral
Agent Reconciliation Date at the Principal Office of Collateral Agent all sums
due, or any part thereof, which is not so reimbursed. Without limiting the scope
and nature of each Lender's participation in any Bankers' Acceptance, to the
extent that Agent has not been immediately reimbursed by the Borrowers or the
Collateral Agent (pursuant to an advance of a Revolving Credit Loan hereunder or
otherwise) for any payment made by Agent in connection with such Bankers'
Acceptance or draft (including the amount paid by the Agent and any other sums
due in connection with the payment of the Bankers' Acceptance or draft), each
Lender shall, in accordance with its Ratable Share, reimburse the Agent promptly
on demand by Agent for the amount of such payment (including the amount paid by
the Agent and any other sums due in connection with the payment of the Bankers'
Acceptance or draft). The obligation of each Lender to so reimburse Agent or
Collateral Agent shall be absolute and unconditional and shall not be affected
by the occurrence of an Event of Default or Potential Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of Borrowers to reimburse Agent for the amount of any
payment made by the Agent under the Bankers' Acceptance, together with interest
at the rate provided in Section 4 hereof and any other sums due in connection
with the payment of the Bankers' Acceptance or draft. Borrowers hereby
specifically acknowledge and agree that in the event Borrowers fail to perform
in accordance with the terms of the Bankers' Acceptance, the documents related
thereto or this Agreement as it relates to such Bankers' Acceptance, each Lender
shall have a claim against Borrowers, to the extent of such Lender's Ratable
Share of such Bankers' Acceptance.
2.8.2.5 LENDERS' REIMBURSEMENT OF AGENT AND
COLLATERAL AGENT. If any amount required to be paid by any Lender to the Agent
or Collateral Agent pursuant to Section 2.8.2.4 above and Section 2.12 below in
respect to any portion of any payment made or reimbursed by the Agent or
Collateral Agent under any Bankers' Acceptance is not paid to the Agent or
Collateral Agent, as applicable, on the date such payment is due, such Lender
shall pay to the Agent or Collateral Agent on demand an amount equal to the
product of such amount, times
41
the daily average Federal Funds Rate during the period from and including the
date such payment is required to the date on which such payment is immediately
available to the Agent or Collateral Agent, as applicable, times a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any
Lender pursuant to Section 2.8.2.4 above or Section 2.12 below, is not in fact
made available to the Agent or Collateral Agent, as applicable, by such Lender
within three (3) Business Days after the date such payment is due, the Agent or
Collateral Agent , as applicable, shall be entitled to recover from such Lender,
on demand, such amount with interest thereon calculated from such due date at
the rate per annum then applicable to Base Rate Option Loans hereunder. A
certificate of the Agent or Collateral Agent submitted to any Lender with
respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error. Until such time as Lenders fund their Ratable Shares
of drafts and any other sums due in connection with any payment under this
Section, the Agent or Collateral Agent, as applicable, shall (with respect to
any unfunded Lenders) keep for its own account all interest and any other sums
accrued on advances made in connection therewith.
2.8.2.6 REDISTRIBUTION TO LENDERS. Whenever,
at any time after the Agent or Collateral Agent has made payment under any
Bankers' Acceptance and has received from any Lender its Ratable Share of such
payment, fees and charges in accordance with Section 2.8.2.5 above, the Agent or
Collateral Agent receives any payment related to such Bankers' Acceptance
(whether directly from the Borrowers or otherwise) or any payment of fees,
charges or interest on account thereof, the Agent or Collateral Agent, as
applicable, will promptly on the next Agent Reconciliation Date or Collateral
Agent Reconciliation Date, as applicable, distribute to such Lender its Ratable
Share thereof; PROVIDED, HOWEVER, that in the event that any such payment
received by the Agent or Collateral Agent shall be required to be returned by
the Agent or Collateral Agent, such Lender shall immediately upon demand by the
Agent or Collateral Agent, as applicable, return to the Agent or Collateral
Agent, as applicable, the portion thereof previously distributed by the Agent or
Collateral Agent, as applicable.
2.8.2.7 PAYMENT. Borrowers agree, subject to
the provisions of this Section 2.8.2.7 set forth below, to immediately reimburse
and repay the Agent for the ratable account of the Lenders the face amount of
each Bankers' Acceptance on the maturity date thereof, together with any other
sums due in connection with the payment of the Bankers' Acceptance. Each such
payment shall be made to the Agent at its Principal Office prior to 10:00 a.m.,
New York, New York time in Dollars and in immediately available funds. Interest
shall be due and payable on the amount so paid until reimbursed in full, at the
rate set forth in, and in accordance with the provisions contained in Section 4.
To the extent Loans are available under the Revolving
Credit Commitments, and to finance the Reimbursement Obligation of Borrowers
under this Section 2.8.2.7, Borrowers irrevocably authorize and direct
Collateral Agent and the Lenders to treat each such advance by Agent made in
honoring such Bankers' Acceptance as a request for a Revolving Credit Loan in
the amount of such advance, together with the fees and charges due in connection
with the payment of the Bankers' Acceptance, to issue Revolving Credit Loans
simultaneously with any such advance in the aggregate amount of such advance,
together with the fees and charges due in
42
connection with the payment of the Bankers' Acceptance, and to credit the
proceeds of such Revolving Credit Loan so as to immediately eliminate the
liability of Borrowers to Agent pertaining to such Bankers' Acceptance and
immediately eliminate the liability of each other Lender to Agent with respect
to its liability to Agent relating to such Bankers' Acceptance. Revolving Credit
Loans advanced for this purpose shall bear interest at the rate set forth in,
and in accordance with the provisions contained in Section 4.1. The Collateral
Agent will notify the Lenders of the amount required to be advanced pursuant to
the Bankers' Acceptances before 10:00 a.m. New York, New York time on the
Collateral Agent Reconciliation Date immediately following the date of any
advance the Agent or Collateral Agent is required to make pursuant to the
Bankers' Acceptances. On the Collateral Agent Reconciliation Date each Lender
shall make available such Lender's Ratable Share of such advance in immediately
available funds to the Collateral Agent.
2.8.2.8 CONDITIONS TO ISSUANCE. Agent shall
not be obligated to and shall not create any Bankers' Acceptances hereunder
during the existence of or which would result in an Event of Default or
Potential Default or if such issuance would conflict with, or cause Agent or any
Lender to exceed any limits imposed by, any applicable Law.
2.8.2.9 COSTS AND EXPENSES. In addition to
the Bankers' Acceptances fees provided for herein, the Borrowers shall pay or
reimburse Agent (for Agent's own account) for such normal and customary costs
and expenses as are incurred or charged by Agent in issuing, effecting payment
under, amending or otherwise administering any Bankers' Acceptances created.
2.8.2.10 UNCONDITIONAL OBLIGATIONS. The
Borrowers' obligations under Section 2.8.2 and each Lender's obligations under
Section 2.8.2 shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrowers or any Lender may have or have had against the Agent
or any beneficiary of a Bankers' Acceptance. The Borrowers and each Lender also
agree with Agent that Agent shall not be responsible for, and the Borrowers'
obligations and Lenders' obligations under 2.8.2 shall not be affected by, among
other things, the form, validity, sufficiency, accuracy, genuineness or legal
effect of documents or of any endorsements thereon, even though such documents
shall in fact prove to be invalid, fraudulent or forged, or any dispute between
or among any Borrower and any beneficiary of any Bankers' Acceptance or any
other party to which such Bankers' Acceptance may be transferred or any claims
whatsoever of any Borrower against any beneficiary of such Bankers' Acceptance
or any such transferee. Agent shall not be liable for any error, omission,
interruption, or delay in transmission, dispatch, or delivery of any message or
advice, however transmitted, in connection with any Bankers' Acceptance. The
Borrowers and each Lender agree that any action taken or omitted by Agent under
or in connection with any Bankers' Acceptance or the related drafts or
documents, shall be binding on the Borrowers and each Lender and shall not
result in any liability of Agent to Borrowers or any Lender, except in the case
of Agent's gross negligence or willful misconduct (as found in a final,
non-appealable judgment by a court of competent jurisdiction).
43
2.8.2.11 LIMITATION OF LIABILITY. Neither
Agent, any Lender, nor any of their respective directors, agents, officers or
employees shall be liable for any action taken or omitted under or in connection
with any Bankers' Acceptance, any draft to which a Bankers' Acceptance relates,
or any documents which in turn relate or pertain to any such draft, except in
the case of gross negligence or willful misconduct (as found in a final,
non-appealable judgment by a court of competent jurisdiction). When dealing with
any Bankers' Acceptance, draft or related documents, Agent shall be entitled to
act, and shall be fully protected against any claim of loss by the Borrowers
occasioned by the lack, or claimed lack, of authenticity or authority, in acting
upon any telephonic communications, telegram, telex, teletype, telecopy, bank
wire, cable, or radiogram or any written application, notice, report, statement,
certificate, resolution, request, order, consent, letter, or other instrument or
communication, any of the foregoing of which is reasonably believed by the Agent
to be genuine and correct and to have been signed or sent or made by an
Authorized Officer.
In furtherance and extension and not in limitation of
the specific provisions set forth above, any action taken or omitted by the
Agent under or in connection with the Bankers' Acceptances or any documents and
certificates delivered thereunder, if taken or omitted in good faith, shall not
put the Agent under any resulting liability to the Borrowers or any Lender. The
Borrowers and each Lender agree that any action taken or omitted by Agent under
or in connection with any Bankers' Acceptance or the related drafts or
documents, shall be binding on the Borrowers and each Lender and shall not
result in any liability of Agent to any Borrower or any Lender.
2.8.2.12 INCONSISTENCIES. To the extent that
any provision of any Bankers' Acceptance Documents related to any Bankers'
Acceptance is irreconcilably inconsistent with the provisions of Section 2.8,
the provisions of Section 2.8 shall control.
2.8.2.13 INSOLVENCY. If the Agent is
required at any time to pay or return to any Borrower, or to a trustee,
receiver, liquidator, custodian, or any official in any insolvency proceeding,
any portion of the payments made by any Borrower to the Agent pursuant to this
Section in reimbursement of a payment made under a Bankers' Acceptance or
interest or fee thereon, each Lender shall, on demand of the Agent, forthwith
pay to the Agent the amount of its Ratable Share of any amounts so paid or
returned by the Agent plus interest thereon from the date such demand is made to
the date such amounts are returned by such Lender to the Agent, at a rate per
annum equal to the Federal Funds Rate in effect from time to time.
2.8.3 INDEMNITY.
Except in the case of Agent's gross negligence or
willful misconduct (as found in a final, non-appealable judgment by a court of
competent jurisdiction),the Borrowers hereby agree to protect, indemnify, pay
and save harmless the Agent from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which the Agent may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of any Letter of Credit
44
or creation of any Bankers' Acceptance or (ii), the wrongful dishonor by the
Agent of a proper demand for payment made under any Letter of Credit or Bankers'
Acceptance, or (iii) the failure of the Agent to honor a drawing under any such
Letter of Credit or Bankers' Acceptance as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"Governmental Acts").
2.8.4 LIABILITY FOR ACTS AND OMISSIONS.
As between any Borrowers and the Agent, except in the
case of Agent's gross negligence or willful misconduct (as found in a final,
non-appealable judgment by a court of competent jurisdiction), each Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit or Bankers' Acceptances. In furtherance and not in limitation of the
foregoing, the Agent shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for issuance of any such Letter of
Credit or Bankers' Acceptance, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged (even if
the Agent shall have been notified thereof); (ii) the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof
or of any Bankers' Acceptance, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit or Bankers' Acceptance, or any other party to which
such Letter of Credit or Bankers' Acceptance may be transferred, to comply fully
with any conditions required in order to draw upon such Letter of Credit or
Bankers' Acceptance or any other claim of any Borrower against any beneficiary
of such Letter of Credit or Bankers' Acceptance, or any such transferee, or any
dispute between or among any Borrower and any beneficiary of any Letter of
Credit or Bankers' Acceptance or any such transferee; (iv) 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; (v)
errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or Bankers' Acceptance or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit or Bankers' Acceptance of the proceeds of any drawing under such Letter
of Credit or Bankers' Acceptance; or (viii) any consequences arising from causes
beyond the control of the Agent, including any Governmental Acts, and none of
the above shall affect or impair, or prevent the vesting of, any of the Agent's
rights or powers hereunder.
In furtherance and extension and not in
limitation of the specific provisions set forth above, any action taken or
omitted by the Agent under or in connection with the Letters of Credit or
Bankers' Acceptances issued by it or any documents and certificates delivered
thereunder, shall not put the Agent under any resulting liability to the
Borrowers or any Lender. The Borrowers and each Lender agree that any action
taken or omitted by Agent under or in connection with any Letter of Credit or
Bankers' Acceptance or the related drafts or documents shall be binding on the
Borrowers and each Lender and shall not result in any liability of Agent to
Borrowers or any
45
Lender, except in the case of Agent's gross negligence or willful misconduct (as
found in a final, non-appealable judgment by a court of competent jurisdiction).
2.9 BORROWING BASE LIMITATION.
Borrowers shall not be entitled to request and Lenders shall
not be obligated to advance, issue or create, any Loans, Letters of Credit or
Bankers' Acceptances hereunder if (a) the amount of any Revolving Credit Loan,
Letter of Credit or Bankers' Acceptances requested, when added to (b) the then
current Lender Outstandings, would cause the sum of (a) and (b) to exceed the
Borrowing Base Limitation. If at any time the Lender Outstandings exceed the
Borrowing Base Limitation, Borrowers shall immediately (without any grace or
cure period being applicable) upon demand by the Collateral Agent (and the
Collateral Agent shall make such demand upon the request of the Agent or
Required Lenders), reduce the principal balance outstanding under the Revolving
Credit Commitment to an amount which causes the Lender Outstandings to be equal
to or less than the Borrowing Base Limitation, with failure to do so
constituting an Event of Default under this Agreement.
2.10 REPAYMENT OF OBLIGATIONS.
The Lenders shall have no obligation to make Revolving Credit
Loans hereunder, or issue Letters of Credit or Bankers' Acceptances on or after
the Expiration Date or upon earlier termination of the Revolving Credit
Commitments pursuant this Agreement.
2.11 COLLATERAL.
In order to secure the full and timely payment or
reimbursement of the Loans, Letters of Credit and Bankers' Acceptances and all
other Obligations outstanding under the Revolving Credit Commitments, this
Agreement and the Loan Documents as well as any renewals, extensions or
modifications thereof, and to secure performance of all obligations of each
Borrower to the Agent, Collateral Agent and the Lenders, however and whenever
created, each Borrower shall and does hereby grant to the Agent and the
Collateral Agent, for the benefit of the Agent, the Collateral Agent and the
Lenders, a first priority perfected security interest subject to no other liens
or encumbrances except as may be described in the Security Documents or this
Agreement, in all of the Collateral described in the Security Documents,
together with the proceeds and products thereof.
2.12 RECONCILIATION DATES.
2.12.1 AGENT RECONCILIATION
On each Agent Reconciliation Date the Agent shall
remit to the Lenders, on or before 2:00 p.m., New York, New York time, all fees
and other sums due to the Lenders from the Agent as set forth in the Agent's
Reconciliation Report furnished to the Lenders on the Agent Reconciliation Date.
46
2.12.2 COLLATERAL AGENT RECONCILIATION.
On each Collateral Agent Reconciliation Date the
Lenders shall remit to the Collateral Agent and the Collateral Agent shall remit
to the Lenders, as appropriate, on or before 2:00 p.m., New York, New York time,
all Net Sums Due as set forth in the Collateral Agent's Reconciliation Report
furnished to the Lenders on the Collateral Agent Reconciliation Date.
2.12.3 PAYMENTS ON RECONCILIATION DATES.
(a) AGENT. All payments of fees or commissions
received by the Agent from the Borrowers during a particular Reporting Period
shall be distributed to the Lenders (after deduction of all fees and other
amounts then owing to the Agent) on the Agent's Reconciliation Date. Each such
payment by the Agent to a Lender shall be made by electronically transferring
the amount to be paid to such Lender at its lending office set forth in this
Agreement.
(b) COLLATERAL AGENT.All Net Sums Due shall be
distributed among the Lenders and the Collateral Agent (after deduction of all
other amounts then owing to the Collateral Agent) on the Collateral Agent's
Reconciliation Date. Each such payment shall be made by electronically
transferring the amount to be paid to such Lender or Collateral Agent at its
lending office set forth in this Agreement. In the event payments are not
distributed as required in this Section 2.12.3(b) on the next Collateral Agent
Reconciliation Date, the owing party shall pay the interest thereon at a rate
per annum equal to (i) the Federal Funds Effective Rate during the first three
(3) days after the due date thereof and (ii) at the Base Rate Option after the
end of such three-day period for each day until such amounts are paid. The
Collateral Agent's and each Lender's statement of account, ledger or other
relevant record shall, in the absence of manifest error, be conclusive as the
statement of the amount of principal of and interest on the Loans and other
amounts owing under this Agreement and shall be deemed an "account stated" and
in the event of any discrepancy between the records of the Collateral Agent and
the Lenders, the Collateral Agent's records shall, in the absence of manifest
error, control.
3. OVERADVANCE FACILITY
3.1 OVERADVANCE FACILITY.
So long as no Potential Default or Event of Default exists,
Borrowers shall be entitled to exceed the Borrowing Base Limitation, but not the
Revolving Credit Commitments, by Six Million Dollars ($6,000,000.00) from May 1
through June 30 of each year and from October 1 through October 31 of each year,
and by Nine Million Dollars ($9,000,000.00) from July 1 through September 30 of
each year (collectively, the "Overadvance Periods" and the amounts outstanding
the "Overadvance Amounts"). During the Overadvance Periods, Borrowers shall be
entitled to utilize the increased availability under the Borrowing Base in the
same manner and subject to the same
47
limitations set forth herein applicable to the Revolving Credit Commitments in
effect during the remainder of the year. The Overadvance Facility shall
terminate and all outstanding principal and interest due thereon shall terminate
immediately upon the closing of an initial public offering of common or
preferred shares or any other equity offering of any Borrower.
4. INTEREST RATES
4.1 INTEREST RATE OPTIONS.
The Borrowers shall pay interest in respect of the outstanding
unpaid principal amount of the Loans as selected by it from the Base Rate Option
or Euro-Rate Option set forth below applicable to the Loans, it being understood
that, subject to the provisions of this Agreement, the Borrowers may select
different Interest Rate Options and different Interest Periods to apply
simultaneously to the Loans comprising different Borrowing Tranches and may
convert to or renew one or more Interest Rate Options with respect to all or any
portion of the Loans comprising any Borrowing Tranche, PROVIDED that there shall
not be at any one time outstanding more than three (3) Borrowing Tranches in the
aggregate among all of the Loans. If at any time the designated rate applicable
to any Loan made by any Lender exceeds such Lender's highest lawful rate, the
rate of interest on such Lender's Loan shall be limited to such Lender's highest
lawful rate. Interest hereunder shall be charged only on the sums outstanding
and shall be computed from the date such indebtedness is incurred to the date of
repayment. In no event shall interest be due at a rate in excess of the highest
lawful rate in effect from time to time. It is not the intention of the parties
hereto to make any agreement which shall be violative of the laws of the State
of Florida, the State of New York or the United States of America relating to
usury. In no event shall Borrowers pay or Lenders accept or charge any interest
which, together with any other charges upon the principal or any portion
thereof, howsoever computed, shall exceed the maximum lawful rate of interest
allowable under the laws of the State of Florida, the State of New York or the
United States of America from time to time, whichever is higher or unlimited.
Should any provision of this Agreement, the Revolving Credit Notes or any
further notes, loan agreements or any other agreements between the parties be
construed to require the payment of interest which, together with any other
charges upon the principal or any portion thereof, shall exceed such maximum
lawful rate of interest, then any such excess shall be applied against the
remaining principal balance.
4.1.1 REVOLVING CREDIT INTEREST RATE OPTIONS.
The Borrowers shall have the right to select from the
following Interest Rate Options applicable to the Revolving Credit Loans:
4.1.1.1 So long as Borrowers' ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth is less than
2.0:1.0, determined quarterly at the end of each fiscal quarter, either:
(i) REVOLVING CREDIT BASE RATE OPTION: A
fluctuating rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) equal to the
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Base Rate, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Base Rate; or
(ii) REVOLVING CREDIT EURO-RATE OPTION: A
rate per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Euro-Rate plus two hundred fifteen basis points (2.15 %).
4.1.1.2 At any time Borrowers' ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth is greater
than or equal to 2.0:1.0, either:
(i) REVOLVING CREDIT BASE RATE OPTION: A
fluctuating rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) equal to the Base Rate, such interest rate to change
automatically from time to time effective as of the effective date of each
change in the Base Rate; or
(ii) REVOLVING CREDIT EURO-RATE OPTION: A
rate per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Euro-Rate plus two hundred forty basis points (2.40 %).
[The interest rate spreads set forth in Sections 4.1.1.1 and 4.1.1.2 above shall
be effective on the first day of the month immediately following Collateral
Agent's receipt of the fiscal quarter-end financial statements and continue in
effect until the first day of the month immediately following Collateral Agent's
receipt of the next fiscal quarter-end financial statements.]
4.1.2 OVERADVANCE FACILITY INTEREST RATE.
The principal balance outstanding under the
Overadvance Facility shall bear interest at a fluctuating rate per annum
(computed on the basis of a year of 360 days and actual days elapsed) equal to
the Base Rate plus twenty-five basis points (0.25%), such interest rate to
change automatically from time to time effective as of the effective date of
each change in the Base Rate (the "Overadvance Facility Interest Rate").
4.1.3 RATE QUOTATIONS.
The Borrowers may call the Collateral Agent on or
before the date on which a Loan Request is to be delivered to receive an
indication of the rates then in effect, but it is acknowledged that such
projection shall not be binding on the Collateral Agent or the Lenders nor
affect the rate of interest which thereafter is actually in effect when the
election is made.
4.2 INTEREST PERIODS.
At any time when the Borrowers shall select, convert to or
renew a Euro-Rate Option, the Borrowers shall notify the Agent thereof at least
two (2) Business Days prior to the effective date of such Euro-Rate Option by
delivering a Loan Request. The notice shall specify an
49
interest period (the "Interest Period") during which such Interest Rate Option
shall apply, such Interest Period to be thirty (30), sixty (60) or ninety (90)
days. Notwithstanding the preceding sentence, the following provisions shall
apply to any selection of, renewal of, or conversion to a Euro-Rate Option:
4.2.1 ENDING DATE AND BUSINESS DAY.
Any Interest Period which would otherwise end on a
date which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day;
4.2.2 AMOUNT OF BORROWING TRANCHE.
Each Borrowing Tranche of Euro-Rate Loans shall be in
integral multiples of $1,000,000.00 and not less than $1,000,000.00;
4.2.3 TERMINATION BEFORE EXPIRATION DATE.
The Borrowers shall not select, convert to or renew
an Interest Period for any portion of the Loans that would end after the
Expiration Date; and
4.2.4 RENEWALS.
In the case of the renewal of a Euro-Rate Option at
the end of an Interest Period, the first day of the new Interest Period shall be
the last day of the preceding Interest Period, without duplication in payment of
interest for such day.
4.3 INTEREST AFTER DEFAULT.
To the extent permitted by Law, upon the occurrence and during
the continuation of an Event of Default, any principal, interest, fee, or other
amount payable hereunder shall bear interest for each day thereafter until paid
in full (before and after judgment) at a rate per annum which is four percent
(4%) over the rate of interest then applicable to each Borrowing Tranche for the
duration of any pending Interest Periods (but not to exceed the maximum rate of
interest permitted by law) and, thereafter, at a fluctuating rate per annum
which is four percent (4%) in excess of the Base Rate Option or, in the case of
the Overadvance Facility, at a fluctuating rate per annum which is four percent
(4%) in excess of the Overadvance Facility Interest Rate (said increased rates
being hereinafter referred to as the "DEFAULT RATE").
4.3.1 OTHER OBLIGATIONS.
Each other Obligation hereunder if not paid when due shall
bear interest at a rate per annum equal to the Default Rate from the time such
Obligation becomes due and payable and until it is paid in full.
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4.3.2 ACKNOWLEDGMENT.
The Borrowers acknowledge that the increase in rates referred
to in Section 4.3 reflects, among other things, the fact that such Loans or
other amounts have become a substantially greater risk given their default
status and that the Lenders are entitled to additional compensation for such
risk and all such interest shall be payable by Borrowers upon demand by Agent.
4.4 EURO-RATE UNASCERTAINABLE; ILLEGALITY; INCREASED COSTS;
DEPOSITS NOT AVAILABLE.
4.4.1 UNASCERTAINABLE.
If on any date on which a Euro-Rate would otherwise
be determined, the Collateral Agent shall have reasonably determined that:
(i) adequate and reasonable means do not
exist for ascertaining such Euro-Rate, or
(ii) a contingency has occurred which
materially and adversely affects the London interbank eurodollar market relating
to the Euro-Rate, the Collateral Agent shall have the rights specified in
Section 4.4.3.
4.4.2 ILLEGALITY; INCREASED COSTS; DEPOSITS NOT
AVAILABLE.
If at any time any Lender shall have determined that:
(i) the making, maintenance or funding of
any Loan to which a Euro-Rate Option applies has been made impracticable or
unlawful by compliance by such Lender in good faith with any Law or any
interpretation or application thereof by any Official Body or with any request
or directive of any such Official Body (whether or not having the force of Law),
or
(ii) such Euro-Rate Option will not
adequately and fairly reflect the cost to such Lender of the establishment or
maintenance of any such Loan, or
after making all reasonable efforts, deposits of the relevant amount in Dollars
for the relevant Interest Period for a Loan to which a Euro-Rate Option applies,
respectively, are not available to such Lender with respect to such Loan, in the
London interbank market, then the Collateral Agent shall have the rights
specified in Section 4.4.3.
4.4.3 COLLATERAL AGENT'S AND LENDER'S RIGHTS.
In the case of any event specified in Section 4.4.1
above, the Collateral Agent shall promptly so notify the Lenders and the
Borrowers thereof, and in the case of an event specified in Section 4.4.2 above,
such Lender shall promptly so notify the Collateral Agent and endorse a
51
certificate to such notice as to the specific circumstances of such notice, and
the Collateral Agent shall promptly send copies of such notice and certificate
to the other Lenders and the Borrowers. Upon such date as shall be specified in
such notice (which shall not be earlier than the date such notice is given), the
obligation of (A) the Lenders, in the case of such notice given by the
Collateral Agent, or (B) such Lender, in the case of such notice given by such
Lender, to allow the Borrowers to select, convert to or renew a Euro-Rate Option
shall be suspended until the Collateral Agent shall have later notified the
Borrowers, or such Lender shall have later notified the Collateral Agent, of the
Collateral Agent's or such Lender's, as the case may be, determination that the
circumstances giving rise to such previous determination no longer exist. If at
any time the Collateral Agent makes a determination under Section 4.4.1 and the
Borrowers have previously notified the Collateral Agent of Borrowers' selection
of, conversion to or renewal of a Euro-Rate Option and such Interest Rate Option
has not yet gone into effect, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Base Rate Option otherwise
available with respect to such Loans. If any Lender notifies the Collateral
Agent of a determination under Section 4.4.2, the Borrowers shall, subject to
the Borrowers' indemnification obligations under Section 5.6.2 [Indemnity], as
to any Loan of the Lender to which a Euro-Rate Option applies, on the date
specified in such notice either convert such Loan to the Base Rate Option
otherwise available with respect to such Loan or prepay such Loan in accordance
with Section 5.4 [Voluntary Prepayments]. Absent due notice from the Borrowers
of conversion or prepayment, such Loan shall automatically be converted to the
Base Rate Option otherwise available with respect to such Loan upon such
specified date.
4.5 SELECTION OF INTEREST RATE OPTIONS.
If the Borrowers fail to select a new Interest Period to apply
to any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration
of an existing Interest Period applicable to such Borrowing Tranche in
accordance with the provisions of Section 4.2 [Interest Periods], the Borrowers
shall be deemed to have converted such Borrowing Tranche to the Revolving Credit
Base Rate Option, commencing upon the last day of the existing Interest Period.
5. PAYMENTS
5.1 PAYMENTS.
All payments and prepayments to be made in respect of
principal, interest, Commitment Fees, Letter of Credit Fees, Bankers' Acceptance
Fees, Administration Fees or other fees or amounts due from the Borrowers
hereunder shall be payable prior to 11:00 a.m., New York, New York time, on the
date when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrowers, and without set-off,
counterclaim or other deduction of any nature, and an action therefor shall
immediately accrue. Such payments shall be made to the Agent or Collateral
Agent, as applicable, at its Principal Office in U.S. Dollars and in immediately
available funds.
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5.2 PRO RATA TREATMENT OF LENDERS.
Each borrowing shall be allocated to each Lender according to
its Ratable Share, and each selection of, conversion to or renewal of any
Interest Rate Option and each payment or prepayment by the Borrowers with
respect to principal, interest, Commitment Fees, Letter of Credit Fees, Bankers'
Acceptance Fees or other fees (except for the Administration Fee or any fees due
to the Agent for its own account) or amounts due from the Borrowers hereunder to
the Lenders with respect to the Loans, shall (except as provided in Section
4.4.3 [Agent's and Lender's Rights] in the case of an event specified in Section
4.4 [Euro-Rate Unascertainable; Etc.], 5.4.2 [Replacement of a Lender] or 5.6
[Additional Compensation in Certain Circumstances]) be made in proportion to the
applicable Loans outstanding from each Lender and, if no such Loans are then
outstanding, in proportion to the Ratable Share of each Lender.
5.3 INTEREST PAYMENT DATES.
Interest on Loans to which the Base Rate Option applies shall
be due and payable in arrears on the first Business Day of each month and on the
Expiration Date or upon acceleration of the Notes. Interest on Loans to which
the Euro-Rate Option applies shall be due and payable on the last day of each
Interest Period for those Loans. Interest on mandatory prepayments of principal
under Section 5.5 [Mandatory Prepayments] shall be due on the date such
mandatory prepayment is due. Additionally, interest on the principal amount of
each Loan or other monetary Obligation shall be due and payable on demand after
such principal amount or other monetary Obligation becomes due and payable
(whether on the stated maturity date, upon acceleration or otherwise).
5.4 VOLUNTARY PREPAYMENTS.
5.4.1 RIGHT TO PREPAY.
The Borrowers shall have the right at their option
from time to time to prepay the Loans in whole or part without premium or
penalty (except as provided in Section 5.4.2 below or in Section 5.6 [Additional
Compensation in Certain Circumstances]):
(i) at any time with respect to any Loan to
which the Base Rate Option applies,
(ii) on the last day of the applicable
Interest Period with respect to Loans to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by
any Lender pursuant to Section 4.4 [Euro-Rate Unascertainable, Etc.] with
respect to any Loan to which a Euro-Rate Option applies.
53
Whenever the Borrowers desire to prepay any part of
the Loans, Borrowers shall provide a prepayment notice to the Collateral Agent
by 1:00 p.m. at least one (1) Business Day prior to the date of prepayment of
Loans setting forth the following information:
(x) the date, which shall be a Business Day, on which
the proposed prepayment is to be made;
(y) a statement indicating the application of the
prepayment between the Revolving Credit Loans.
All prepayment notices shall be irrevocable. The
principal amount of the Loans for which a prepayment notice is given, together
with interest on such principal amount except with respect to Loans to which the
Base Rate Option applies, shall be due and payable on the date specified in such
prepayment notice as the date on which the proposed prepayment is to be made.
Except as provided in Section 4.4.3 [Collateral Agent's and Lender's Rights], if
the Borrowers prepay a Loan, the prepayment shall be applied to Revolving Credit
Loans as set forth in Section 5.5.1 of this Agreement. Any prepayment hereunder
shall be subject to the Borrowers' Obligation to indemnify the Lenders under
Section 5.6.2 [Indemnity].
5.4.2 REPLACEMENT OF A LENDER.
In the event any Lender (i) gives notice under
Section 4.4 [Euro-Rate Unascertainable, Etc.] or Section 5.6.1 [Increased Costs,
Etc.], (ii) does not fund Revolving Credit Loans because the making of such
Loans would contravene any Law applicable to such Lender, (iii) OMITTED, or (iv)
becomes subject to the control of an Official Body (other than normal and
customary supervision), then the Borrowers shall have the right at Borrowers'
option, with the consent of the Agent (which consent will not be unreasonably
withheld), to prepay the Loans of such Lender in whole, together with all
interest accrued thereon, and terminate such Lender's Commitment within ninety
(90) days after (w) receipt of such Lender's notice under Section 4.4 [Euro-Rate
Unascertainable, Etc.] or 5.6.1 [Increased Costs, Etc.], (x) the date such
Lender has failed to fund Revolving Credit Loans because the making of such
Loans would contravene Law applicable to such Lender, (y) the date of obtaining
the consent which such Lender has not approved, or (z) the date such Lender
became subject to the control of an Official Body, as applicable; PROVIDED that
the Borrowers shall also pay to such Lender at the time of such prepayment any
amounts required under Section 5.6 [Additional Compensation in Certain
Circumstances] and any accrued interest due on such amount and any related fees;
PROVIDED, however, that the Commitment of such Lender shall be assumed and
provided by one or more of the remaining Lenders or a replacement lender
acceptable to the Agent; PROVIDED, further, the remaining Lenders shall have no
obligation hereunder to increase their Commitments. Notwithstanding the
foregoing, the Agent and the Collateral Agent may only be replaced subject to
the requirements of Section 9.14 [Successor Agent] and PROVIDED that all Letters
of Credit and Bankers' Acceptances have expired or been terminated or replaced.
The assumption by any successor Lender of the Commitment of any other
54
Lender shall not release the departing Lender from any liabilities arising prior
to the assignment and assumption.
5.4.3 CHANGE OF LENDING OFFICE.
Each Lender agrees that upon the occurrence of any
event giving rise to increased costs or other special payments under Section
4.4.2 [Illegality, Etc.] or 5.6.1 [Increased Costs, Etc.] with respect to such
Lender, it will if requested by the Borrowers, use reasonable efforts (subject
to overall policy considerations of such Lender) to designate another lending
office for any Loans or Letters of Credit affected by such event, PROVIDED that
such designation is made on such terms that such Lender and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section. Nothing is this Section 5.4.3 shall affect or postpone any of the
Obligations of the Borrowers or any Borrower or the rights of the Agent or any
Lender provided in this Agreement.
5.4.4 DEBIT OF ACCOUNTS.
Notwithstanding anything herein to the contrary, the
Collateral Agent is hereby irrevocably authorized and directed, on each Business
Day, to apply any funds in any and all Cash Collateral Accounts and Lockbox
Accounts maintained by Borrowers first to the prepayment of Loans to which the
Base Rate Option applies and thereafter to the prepayment of Loans to which the
Euro-Rate Option applies.
5.5 MANDATORY PREPAYMENTS.
5.5.1 APPLICATION AMONG INTEREST RATE OPTIONS.
All prepayments shall first be applied among the
Interest Rate Options to the principal amount of the Loans subject to the Base
Rate Option, then to Loans subject to a Euro-Rate Option. In accordance with
Section 5.6.2 [Indemnity], the Borrowers shall indemnify the Lenders for any
loss or expense, including loss of margin, incurred with respect to any such
prepayments applied against Loans subject to a Euro-Rate Option on any day other
than the last day of the applicable Interest Period.
5.6 ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.
5.6.1 INCREASED COSTS OR REDUCED RETURN RESULTING
FROM TAXES, RESERVES, CAPITAL ADEQUACY REQUIREMENTS,
EXPENSES, ETC.
If any Law, guideline or interpretation or any change
in any Law, guideline or interpretation or application thereof by any Official
Body charged with the interpretation or administration thereof or compliance
with any request or directive (whether or not having the force of Law) of any
central bank or other Official Body:
55
(i) subjects any Lender to any tax or
changes the basis of taxation with respect to this Agreement, the Notes, the
Loans the Letters of Credit, the Bankers' Acceptances or payments by the
Borrowers of principal, interest, Commitment Fees, or other amounts due from the
Borrowers hereunder or under the Notes (except for taxes on the overall net
income of such Lender),
(ii) imposes, modifies or deems applicable
any reserve, special deposit or similar requirement against credits or
commitments to extend credit extended by, or assets (funded or contingent) of,
deposits with or for the account of, or other acquisitions of funds by, any
Lender, or
(iii) imposes, modifies or deems applicable
any capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or letters of credit, other credits or commitments to extend
credit extended by, any Lender, or (B) otherwise applicable to the obligations
of any Lender under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Lender with respect to this Agreement, the Notes or the making, maintenance or
funding of any part of the Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Lender's capital, taking into consideration such Lender's customary policies
with respect to capital adequacy) by an amount which such Lender in its
reasonable discretion deems to be material, such Lender shall promptly from time
to time notify the Borrowers and the Collateral Agent of the amount determined
in good faith (using any averaging and attribution methods employed in good
faith) by such Lender to be necessary to compensate such Lender for such
increase in cost, reduction of income, additional expense or reduced rate of
return. Such notice shall set forth in reasonable detail the basis for such
determination and such amount shall be due and payable by the Borrowers
immediately upon receipt of such notice.
5.6.2 INDEMNITY.
In addition to the compensation required by Section
5.6.1 [Increased Costs, Etc.], the Borrowers shall indemnify the Agent,
Collateral Agent and each Lender against all liabilities, losses or expenses
(including loss of margin, any loss or expense incurred in liquidating or
employing deposits from third parties and any loss or expense incurred in
connection with funds acquired by a Lender to fund or maintain Loans subject to
a Euro-Rate Option) which such Lender sustains or incurs as a consequence of any
(i) payment, prepayment, conversion or
renewal of any Loan to which a Euro-Rate Option applies on a day other than the
last day of the corresponding Interest Period (whether or not such payment or
prepayment is mandatory, voluntary or automatic and whether or not such payment
or prepayment is then due),
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(ii) attempt by the Borrowers to revoke
(expressly, by later inconsistent notices or otherwise) in whole or part any
Loan Requests under Section 2.4 [Revolving Credit Loan Requests] or Section 4.2
[Interest Periods] or notice relating to prepayments under Section 5.4
[Voluntary Prepayments], or
(iii) default by the Borrowers in the
performance or observance of any covenant or condition contained in this
Agreement or any other Loan Document, including any failure of the Borrowers to
pay when due (by acceleration or otherwise) any principal, interest, Commitment
Fee or any other amount due hereunder.
If any Lender sustains or incurs any such loss or expense, it
shall promptly from time to time notify the Borrowers of the amount determined
in good faith by such Lender (which determination may include such assumptions,
allocations of costs and expenses and averaging or attribution methods as such
Lender shall deem reasonable) to be necessary to indemnify such Lender for such
loss or expense. Such notice shall set forth in reasonable detail the basis for
such determination and such amount shall be due and payable by the Borrowers
immediately upon receipt of such notice.
5.7 REPRESENTATIONS AND WARRANTIES.
The Borrowers, jointly and severally, represent and warrant to
the Agent and each of the Lenders as follows:
5.7.1 ORGANIZATION AND QUALIFICATION.
Each Borrower is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization. Each Borrower has the lawful power to own or
lease its properties and to engage in the business it presently conducts or
proposes to conduct. Each Borrower is duly licensed or qualified and in good
standing in each jurisdiction listed on Schedule 5.7.1 and in all other
jurisdictions where the property owned or leased by it or the nature of the
business transacted by it or both makes such licensing or qualification
necessary.
5.7.2 CAPITALIZATION AND OWNERSHIP.
The pre-Transition and post-Transition authorized
capital stock (the "Shares")of the Borrowers is as indicated on SCHEDULE 5.7.2.
All of the Shares have been validly issued and are fully paid and nonassessable.
There are no options, warrants or other rights outstanding to purchase any such
shares except as indicated on Schedule 5.7.2.
5.7.3 SUBSIDIARIES.
Schedule 5.7.3 states the name of each of the
Borrowers' Subsidiaries, its jurisdiction of incorporation, its authorized
capital stock, the issued and outstanding shares (referred to herein as the
"Subsidiary Shares") and the owners thereof if it is a corporation, its
outstanding
57
partnership interests (the "Partnership Interests") if it is a partnership and
its outstanding limited liability company interests, interests assigned to
managers thereof and the voting rights associated therewith (the "LLC
Interests") if it is a limited liability company. The Borrowers have good and
marketable title to all of the Subsidiary Shares, Partnership Interests and LLC
Interests it purports to own, free and clear in each case of any Lien. All
Subsidiary Shares, Partnership Interests and LLC Interests have been validly
issued, and all Subsidiary Shares are fully paid and nonassessable. All capital
contributions and other consideration required to be made or paid in connection
with the issuance of the Partnership Interests and LLC Interests have been made
or paid, as the case may be. There are no options, warrants or other rights
outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC
Interests except as indicated on Schedule 5.7.3.
5.7.4 POWER AND AUTHORITY.
Each Borrower has full power to enter into, execute,
deliver and carry out this Agreement and the other Loan Documents to which it is
a party, to incur the Indebtedness contemplated by the Loan Documents and to
perform its Obligations under the Loan Documents to which it is a party, and all
such actions have been duly authorized by all necessary proceedings on its part.
5.7.5 VALIDITY AND BINDING EFFECT.
This Agreement has been duly and validly executed and
delivered by each Borrower, and each other Loan Document which any Borrower is
required to execute and deliver on or after the date hereof will have been duly
executed and delivered by such Borrower on the required date of delivery of such
Loan Document. This Agreement and each other Loan Document constitutes, or will
constitute, legal, valid and binding obligations of each Borrower which is or
will be a party thereto on and after its date of delivery thereof, enforceable
against such Borrower in accordance with its terms, except to the extent that
enforceability of any of such Loan Document may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally or limiting the right of specific
performance.
5.7.6 NO CONFLICT.
Neither the execution and delivery of this Agreement
or the other Loan Documents by any Borrower nor the consummation of the
transactions herein or therein contemplated or compliance with the terms and
provisions hereof or thereof by any of them will conflict with, constitute a
default under or result in any breach of (i) the terms and conditions of the
certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents of any Borrower or (ii) any Law or
any material agreement or instrument or order, writ, judgment, injunction or
decree to which any Borrower is a party or by which it is bound or to which it
is subject, or result in the creation or enforcement of any Lien, charge or
encumbrance whatsoever upon any property (now or hereafter acquired) of any
Borrower (other than Liens granted under the Loan Documents).
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5.7.7 LITIGATION.
Except as described in Schedule 5.7.7 attached to
this Agreement, there are no actions, suits, proceedings or investigations
pending or, to the knowledge of any Borrower, threatened against such Borrower
at law or equity before any Official Body which individually or in the aggregate
may result in any Material Adverse Change. None of the Borrowers is in violation
of any order, writ, injunction or any decree of any Official Body which may
result in any Material Adverse Change.
5.7.8 TITLE TO PROPERTIES.
The real property owned or leased by each Borrower is
described on Schedule 5.7.8. Each Borrower has good and marketable title to or
valid leasehold interest in all properties, assets and other rights which it
purports to own or lease or which are reflected as owned or leased on its books
and records, free and clear of all Liens and encumbrances except Permitted
Liens, and subject to the terms and conditions of the applicable leases. All
leases of property are in full force and effect without the necessity for any
consent which has not previously been obtained upon consummation of the
transactions contemplated hereby.
5.7.9 FINANCIAL STATEMENTS.
(i) HISTORICAL STATEMENTS. The Borrowers
have delivered to the Collateral Agent copies of Borrowers' audited consolidated
year-end financial statements for the fiscal year ended December 31, 1997 (the
"Annual Statements"). In addition, the Borrowers have delivered to the Agent
copies of Borrowers' unaudited consolidated interim financial statements for the
fiscal year to date and as of the period ending March 31, 1998 (the "Interim
Statements") (the Annual and Interim Statements being collectively referred to
as the "Historical Statements"). The Historical Statements were compiled from
the books and records maintained by the Borrowers' management, are correct and
complete and fairly represent in all material respects the consolidated
financial condition of the Borrowers as of their dates and the results of
operations for the fiscal periods then ended and have been prepared in
accordance with GAAP consistently applied (with the exception that Interim
Statements do not include cash-flows or footnotes and are subject to normal
year-end audit adjustments).
(ii) FINANCIAL PROJECTIONS. The Borrowers
have delivered to the Collateral Agent financial projections of the Borrowers
for the period ending December 31, 1998 derived from various assumptions of the
Borrowers' management (the "Financial Projections"). The Financial Projections
represent a reasonable range of possible results in light of the history of the
business, present and foreseeable conditions and the intentions of the
Borrowers' management. The Financial Projections accurately reflect the
liabilities of the Borrowers upon consummation of the transactions contemplated
hereby as of the Closing Date. The Lenders recognize, however, that projections
as to future events are not to be viewed as facts and that actual results during
the period or periods covered by the Financial Projections may differ from
projected results.
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(iii) ACCURACY OF FINANCIAL STATEMENTS. None
of the Borrowers has any liabilities, contingent or otherwise, or forward or
long-term commitments that are not disclosed in the Historical Statements or in
the notes thereto, which are required under GAAP to be disclosed, or which have
otherwise been disclosed to Agent by Borrowers in writing, and except as
disclosed therein there are no unrealized or anticipated losses from any
commitments of the Borrowers which may cause a Material Adverse Change. Since
December 31, 1997, no Material Adverse Change has occurred.
5.7.10 USE OF PROCEEDS; MARGIN STOCK; SECTION 20
SUBSIDIARIES.
5.7.10.1 GENERAL. The Borrowers intend to
use the proceeds of the Loans in accordance with Sections 2.7.
5.7.10.2 MARGIN STOCK. None of the Borrowers
or any Subsidiaries of any Borrower engages or intends to engage principally, or
as one of its important activities, in the business of extending credit for the
purpose, immediately, incidentally or ultimately, of purchasing or carrying
margin stock (within the meaning of Regulation U). No part of the proceeds of
any Loan has been or will be used, immediately, incidentally or ultimately, to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or to refund Indebtedness originally
incurred for such purpose, or for any purpose which entails a violation of or
which is inconsistent with the provisions of the regulations of the Board of
Governors of the Federal Reserve System.
5.7.10.3 SECTION 20 SUBSIDIARIES. The
Borrowers do not intend to use and shall not use any portion of the proceeds of
the Loans, directly or indirectly (i) knowingly to purchase any Ineligible
Securities from a Section 20 Subsidiary during any period in which such Section
20 Subsidiary makes a market in such Ineligible Securities, (ii) knowingly to
purchase during the underwriting or placement period Ineligible Securities being
underwritten or privately placed by a Section 20 Subsidiary, or (iii) to make
payments of principal or interest on Ineligible Securities underwritten or
privately placed by a Section 20 Subsidiary and issued by or for the benefit of
any Borrower or any Affiliate of any Borrower.
5.7.11 FULL DISCLOSURE.
Neither this Agreement nor any other Loan Document,
nor any certificate, statement, agreement or other documents furnished to the
Agent or any Lender in connection herewith or therewith, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to any Borrower which materially adversely affects the business, property,
assets, financial condition, results of operations or prospects of any Borrower
which has not been set forth in this Agreement or in the certificates,
statements, agreements or other documents furnished in writing to the Agent and
the Lenders prior to or at the date hereof in connection with the transactions
contemplated hereby.
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5.7.12 TAXES.
All federal, state, local and other tax returns
required to have been filed with respect to each Borrower have been filed, and
payment or adequate provision has been made for the payment of all taxes, fees,
assessments and other governmental charges which have or may become due pursuant
to said returns or to assessments received, except to the extent that such
taxes, fees, assessments and other charges are being contested in good faith by
appropriate proceedings diligently conducted and for which such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made, or where the failure to so file or pay could not result in a Material
Adverse Change. There are no agreements or waivers extending the statutory
period of limitations applicable to any federal income tax return of any
Borrower for any period.
5.7.13 CONSENTS AND APPROVALS.
Except for the filing of financing statements in the
state and county filing offices, and the filing of requisite documents in Hong
Kong in connection with the Debentures, no consent, approval, exemption, order
or authorization of, or a registration or filing with, any Official Body or any
other Person is required by any Law or any agreement in connection with the
execution, delivery and carrying out of this Agreement and the other Loan
Documents by any Borrower, all of which shall have been obtained or made on or
prior to the Closing Date except as otherwise indicated on Schedule 5.7.13.
5.7.14 NO EVENT OF DEFAULT; COMPLIANCE WITH
INSTRUMENTS.
No event has occurred and is continuing and no
condition exists or will exist after giving effect to the borrowings or other
extensions of credit to be made on the Closing Date under or pursuant to the
Loan Documents which constitutes an Event of Default or Potential Default. None
of the Borrowers is in violation of (i) any term of its certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents or (ii) any material agreement or instrument to
which it is a party or by which it or any of its properties may be subject or
bound where such violation would constitute a Material Adverse Change.
5.7.15 PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES,
ETC.
Each Borrower owns or possesses or has the right to
use or has applied to register, all the patents, trademarks, service marks,
trade names, copyrights, licenses, registrations, franchises, permits and rights
necessary to own and operate its properties and to carry on its business as
presently conducted and planned to be conducted by such Borrower, without known
possible, alleged or actual conflict with the rights of others, except where the
failure to do so could not result in a Material Adverse Change. All patents,
trademarks, service marks, trade names, copyrights, licenses, registrations,
franchises and permits of each Borrower are listed and described on Schedule
5.7.15.
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5.7.16 SECURITY INTERESTS.
The Liens and security interests granted to the
Collateral Agent in the Collateral for the benefit of the Agent, Collateral
Agent and the Lenders pursuant to the Security Documents constitute and will
continue to constitute Prior Security Interests under the Uniform Commercial
Code as in effect in each applicable jurisdiction (the "Uniform Commercial
Code") or other applicable Law and are entitled to all the rights, benefits and
priorities provided by the Uniform Commercial Code or such Law. Upon the filing
of financing statements relating to said security interests in each office and
in each jurisdiction where required in order to perfect the security interests
described above, taking possession of any stock certificates or other
certificates evidencing the Collateral and recordation of the Patent, Trademark
and Copyright Assignment in the United States Patent and Trademark Office and
United States Copyright Office, as applicable, all such action as is necessary
or advisable to establish such rights of the Collateral Agent will have been
taken, and there will be upon execution and delivery of the Security Documents,
such filings and such taking of possession, no necessity for any further action
in order to preserve, protect and continue such rights, except the filing of
continuation statements with respect to such financing statements within six
months prior to each five-year anniversary of the filing of such financing
statements. All filing fees and other expenses in connection with each such
action have been or will be paid by the Borrowers.
5.7.17 LIENS.
The Liens granted to the Collateral Agent for the
benefit of the Agent, Collateral Agent and the Lenders constitute a valid first
priority Lien under applicable law. All such action as will be necessary or
advisable to establish such Lien of the Collateral Agent and its priority as
described in the preceding sentence will be taken at or prior to the time
required for such purpose.
5.7.18 SOLVENCY.
The Borrowers and each Borrower, individually, hereby
(i) acknowledges receipt of fair consideration and reasonably equivalent value
for the undertaking of its obligations hereunder, in each case for the benefit
of the Agent, the Collateral Agent and the Lenders, (ii) represents and warrants
that, after giving effect to the undertaking of such obligations and the
acquisition of the rights obtained hereunder, the present fair salable value of
the Borrowers' consolidated assets exceeds the Borrowers' consolidated
liabilities and, when each Borrower is given credit for "contribution rights" it
may have with respect to other Borrowers, the present fair salable value of each
Borrower's assets exceeds such Borrower's liabilities and that the Borrowers on
a consolidated basis, and each Borrower, when given credit for "contribution
rights" it may have with respect to other Borrowers, retain sufficient capital
to meet the reasonably anticipated needs and risks of its ongoing business, and
(iii) the Borrowers on a consolidated basis, and each Borrower, when given
credit for "contribution rights" it may have with respect to other Borrowers,
represent and warrant that, after giving effect to the undertaking of such
obligations and the acquisition of such rights, it has not incurred, nor is it
obligated for, debts beyond its ability to pay such debts as
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they mature, and that the present fair salable value of its assets is greater
than that needed to pay its probable existing debts as they become due.
5.7.19 INSURANCE.
Schedule 5.7.19 lists all insurance policies and
other bonds to which any Borrower is a party, all of which are valid and in full
force and effect. No notice has been given or claim made and no grounds exist to
cancel or avoid any of such policies or bonds or to reduce the coverage provided
thereby. Such policies and bonds provide adequate coverage from reputable and
financially sound insurers in accordance with the requirements of Section 7.1.3
and the Security Documents..
5.7.20 COMPLIANCE WITH LAWS.
The Borrowers are in compliance in all material
respects with all applicable Laws (other than Environmental Laws which are
specifically addressed in Section 5.7.25 [Environmental Matters]) in all
jurisdictions in which any Borrower is presently or will be doing business,
except where the failure thereof could not result in a Material Adverse Change.
5.7.21 MATERIAL CONTRACTS; BURDENSOME RESTRICTIONS.
Schedule 5.7.21 lists all Material Contracts relating
to the business operations of each Borrower, including all employee benefit
plans and Labor Contracts. All such material contracts are valid, binding and
enforceable upon such Borrower and each of the other parties thereto in
accordance with their respective terms, and there is no default thereunder, to
the Borrowers' knowledge, with respect to parties other than such Borrower. None
of the Borrowers is bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law which could
result in a Material Adverse Change.
5.7.22 INVESTMENT COMPANIES; REGULATED ENTITIES.
None of the Borrowers is an "investment company"
registered or required to be registered under the Investment Company Act of 1940
or under the "control" of an "investment company" as such terms are defined in
the Investment Company Act of 1940 and shall not become such an "investment
company" or under such "control." None of the Borrowers is subject to any other
federal or state statute or regulation limiting its ability to incur
Indebtedness for borrowed money.
5.7.23 PLANS AND BENEFIT ARRANGEMENTS.
Except as set forth on Schedule 5.7.23:
(i) The Borrowers and each other member of
the ERISA Group are in compliance in all material respects with any applicable
provisions of ERISA (and as to
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the Borrowers which are Hong Kong Limited Liability Companies, all comparable
laws and statutes under Hong Kong law) with respect to all Benefit Arrangements,
Plans and Multiemployer Plans. There has been no Prohibited Transaction with
respect to any Benefit Arrangement or any Plan or, to the best knowledge of the
Borrowers, with respect to any Multiemployer Plan or Multiple Employer Plan (and
as to the Borrowers which are Hong Kong Limited Liability Companies, all
comparable laws and statutes under Hong Kong law), which could result in any
material liability of the Borrowers or any other member of the ERISA Group. The
Borrowers and all other members of the ERISA Group have made when due any and
all payments required to be made under any agreement relating to a Multiemployer
Plan or a Multiple Employer Plan or any Law pertaining thereto(and as to the
Borrowers which are Hong Kong Limited Liability Companies, all comparable laws
and statutes under Hong Kong law). With respect to each Plan and Multiemployer
Plan (and as to the Borrowers which are Hong Kong Limited Liability Companies,
all comparable plans under Hong Kong law), the Borrowers and each other member
of the ERISA Group (i) have fulfilled in all material respects their obligations
under the minimum funding standards of ERISA, (ii) have not incurred any
liability to the PBGC, and (iii) have not had asserted against them any penalty
for failure to fulfill the minimum funding requirements of ERISA.
(ii) To the best of the Borrowers'
knowledge, each Multiemployer Plan and Multiple Employer Plan (and as to the
Borrowers which are Hong Kong Limited Liability Companies, all comparable plans
under Hong Kong law) is able to pay benefits thereunder when due.
(iii) Neither the Borrowers nor any other
member of the ERISA Group has instituted or intends to institute proceedings to
terminate any Plan (and as to the Borrowers which are Hong Kong Limited
Liability Companies, any comparable plan under Hong Kong law).
(iv) No event requiring notice to the PBGC
under Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to
occur with respect to any Plan, and no amendment with respect to which security
is required under Section 307 of ERISA has been made or is reasonably expected
to be made to any Plan (and as to the Borrowers which are Hong Kong Limited
Liability Companies, all comparable laws and statutes under Hong Kong law).
(v) The aggregate actuarial present value of
all benefit liabilities (whether or not vested) under each Plan (and as to the
Borrowers which are Hong Kong Limited Liability Companies, any comparable plan
under Hong Kong law), determined on a plan termination basis, as disclosed in,
and as of the date of, the most recent actuarial report for such Plan, does not
exceed the aggregate fair market value of the assets of such Plan.
(vi) Neither the Borrowers nor any other
member of the ERISA Group has incurred or reasonably expects to incur any
material withdrawal liability under ERISA (and as to the Borrowers which are
Hong Kong Limited Liability Companies, all comparable laws and statutes under
Hong Kong law) to any Multiemployer Plan or Multiple Employer Plan (and
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as to the Borrowers which are Hong Kong Limited Liability Companies, any
comparable plan under Hong Kong law). Neither the Borrowers nor any other member
of the ERISA Group has been notified by any Multiemployer Plan or Multiple
Employer Plan that such Multiemployer Plan or Multiple Employer Plan has been
terminated within the meaning of Title IV of ERISA and, to the best knowledge of
the Borrowers, no Multiemployer Plan or Multiple Employer Plan is reasonably
expected to be reorganized or terminated, within the meaning of Title IV of
ERISA.
(vii) To the extent that any Benefit
Arrangement (and as to the Borrowers which are Hong Kong Limited Liability
Companies, any comparable plan under Hong Kong law) is insured, the Borrowers
and all other members of the ERISA Group have paid when due all premiums
required to be paid for all periods through the Closing Date. To the extent that
any Benefit Arrangement (and as to the Borrowers which are Hong Kong Limited
Liability Companies, any comparable plan under Hong Kong law) is funded other
than with insurance, the Borrowers and all other members of the ERISA Group have
made when due all contributions required to be paid for all periods through the
Closing Date.
(viii) All Plans, Benefit Arrangements and
Multiemployer Plans (and as to the Borrowers which are Hong Kong Limited
Liability Companies, any comparable plans under Hong Kong law) have been
administered in accordance with their terms and applicable Law.
5.7.24 EMPLOYMENT MATTERS.
Each of the Borrowers is in compliance with the Labor Contracts and all
applicable federal, state and local labor and employment Laws including those
related to equal employment opportunity and affirmative action, labor relations,
minimum wage, overtime, child labor, medical insurance continuation, worker
adjustment and relocation notices, immigration controls and worker and
unemployment compensation, where the failure to comply would constitute a
Material Adverse Change. There are no outstanding grievances, arbitration awards
or appeals therefrom arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or slowdowns at
facilities of any of the Borrowers which in any case would constitute a Material
Adverse Change. The Borrowers have delivered to the Collateral Agent true and
correct copies of each of the Labor Contracts.
5.7.25 ENVIRONMENTAL MATTERS.
Except as disclosed on Schedule 5.7.25:
(i) None of the Borrowers has received any
Environmental Complaint from any Official Body or private Person alleging that
such Borrower or any prior or subsequent owner of any of the real property
("Property") owned by any Borrower is a potentially responsible party under the
Comprehensive Environmental Response, Cleanup and Liability Act, 42 U.S.C. ss.
9601, ET SEQ., and none of the Borrowers has any reason to believe that such an
Environmental Complaint might be received. There are no pending or, to any
Borrower's knowledge, threatened Environmental Complaints relating to any
Borrower, to any Borrower's
65
knowledge, any prior or subsequent owner of any of the Property pertaining to,
or arising out of, any Environmental Conditions.
(ii) There are no circumstances at, on or
under any of the Property that constitute a breach of or non-compliance with any
of the Environmental Laws, and there are no past or present Environmental
Conditions at, on or under any of the Property or, to any Borrower's knowledge,
at, on or under adjacent property, that prevent compliance with the
Environmental Laws at any of the Property.
(iii) Neither any of the Property nor any
structures, improvements, equipment, fixtures, activities or facilities thereon
or thereunder contain or use Regulated Substances except in compliance with
Environmental Laws. There are no processes, facilities, operations, equipment or
other activities at, on or under any of the Property, or, to any Borrower's
knowledge, at, on or under adjacent property, that currently result in the
release or threatened release of Regulated Substances onto any of the Property,
except to the extent that such releases or threatened releases are not a breach
of or otherwise not a violation of the Environmental Laws.
(iv) There are no aboveground storage tanks,
underground storage tanks or underground piping associated with such tanks, used
for the management of Regulated Substances at, on or under any of the Property
that (a) do not have, to the extent required by Environmental Laws, a full
operational secondary containment system in place, and (b) are not otherwise in
compliance with all Environmental Laws. There are no abandoned underground
storage tanks or underground piping associated with such tanks, previously used
for the management of Regulated Substances at, on or under any of the Property
that have not either been closed in place in accordance with Environmental Laws
or removed in compliance with all applicable Environmental Laws and no
contamination associated with the use of such tanks exists on any of the
Property that is not in compliance with Environmental Laws.
(v) Each Borrower has all material permits,
licenses, authorizations, plans and approvals necessary under the Environmental
Laws for the conduct of the business of such Borrower as presently conducted.
Each Borrower has submitted all material notices, reports and other filings
required by the Environmental Laws to be submitted to an Official Body which
pertain to past and current operations on any of the Property.
(vi) All past and present on-site
generation, storage, processing, treatment, recycling, reclamation, disposal or
other use or management of Regulated Substances at, on, or under any of the
Property and all off-site transportation, storage, processing, treatment,
recycling, reclamation, disposal or other use or management of Regulated
Substances have been done in accordance with the Environmental Laws.
5.7.26 SENIOR DEBT STATUS.
The Obligations of each Borrower under this
Agreement, the Notes and each of the other Loan Documents to which it is a party
do rank and will rank senior in priority of
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payment over all other Indebtedness of such Borrower. There is no Lien upon or
with respect to any of the properties or income of any Borrower which secures
indebtedness or other obligations of any Person except for Permitted Liens.
5.8 UPDATES TO SCHEDULES.
Should any of the information or disclosures provided
on any of the Schedules attached hereto become outdated or incorrect in any
material respect, the Borrowers shall promptly provide the Collateral Agent in
writing with such revisions or updates to such Schedule as may be necessary or
appropriate to update or correct same; PROVIDED, however, that no Schedule shall
be deemed to have been amended, modified or superseded by any such correction or
update, nor shall any breach of warranty or representation resulting from the
inaccuracy or incompleteness of any such Schedule be deemed to have been cured
thereby, unless and until the Required Lenders, in their sole and absolute
discretion, shall have accepted in writing such revisions or updates to such
Schedule.
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT AND
BANKERS' ACCEPTANCES
The obligation of each Lender to make Loans and of the Agent to issue
Letters of Credit and create Bankers' Acceptances hereunder is subject to the
performance by each of the Borrowers of its Obligations to be performed
hereunder at or prior to the making of any such Loans or issuance of such
Letters of Credit or creation of Bankers' Acceptances and to the satisfaction of
the following further conditions:
6.1 FIRST LOANS, LETTERS OF CREDIT AND BANKERS' ACCEPTANCES.
On the Closing Date:
6.1.1 OFFICER'S CERTIFICATE.
The representations and warranties of each of the
Borrowers contained in Section 5.7 and in each of the other Loan Documents shall
be true and accurate on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date
(except representations and warranties which relate solely to an earlier date or
time, which representations and warranties shall be true and correct on and as
of the specific dates or times referred to therein), and each of the Borrowers
shall have performed and complied with all covenants and conditions hereof and
thereof, no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; and there shall be delivered to the Agent and
Collateral Agent for the benefit of the Agent, Collateral Agent and the Lenders
a certificate of each of the Borrowers, dated the Closing Date and signed by the
Chief Executive Officer, President or Chief Financial Officer (and as to the
Borrowers which are Hong Kong Limited Liability Companies, a Director) of each
of the Borrowers, to each such effect.
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6.1.2 SECRETARY'S CERTIFICATE.
There shall be delivered to the Agent for the benefit
of the Agent, Collateral Agent and the Lenders a certificate dated the Closing
Date and signed by the Secretary or an Assistant Secretary (or as to the
Borrowers which are Hong Kong Limited Liability Companies, a Director) of each
of the Borrowers, certifying as appropriate as to:
(i) all action taken by each Borrower in
connection with this Agreement and the other Loan Documents;
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers and specifying the Authorized Officers
permitted to act on behalf of each Borrower for purposes of this Agreement and
the true signatures of such officers, on which the Agent and each Lender may
conclusively rely; and
(iii) copies of its organizational
documents, including its certificate of incorporation, bylaws, certificate of
limited partnership, partnership agreement, certificate of formation, and
limited liability company agreement as in effect on the Closing Date certified
by the appropriate state or other governmental official where such documents are
filed in a state or other governmental office together with certificates from
the appropriate state officials as to the continued existence and good standing
of each Borrower in each state or other jurisdiction where organized or
qualified to do business and as to NEII, a bring-down certificate by facsimile
dated the Closing Date.
6.1.3 DELIVERY OF LOAN DOCUMENTS.
The Loan Documents, including without limitation, the
Notes, the Security Documents, the Subordination Agreement, the Cash Collateral
Agreements and the Lockbox Agreements shall have been duly executed and
delivered to the Agent for the benefit of the Agent, Collateral Agent and the
Lenders, together with all appropriate financing statements and perfection
documents required under applicable U.S. and Hong Kong law.
6.1.4 OPINIONS OF COUNSEL.
There shall be delivered to the Agent for the benefit
of the Agent, Collateral Agent and the Lenders:
(i) a favorable written opinion (addressed
to the Agent and Collateral Agent and the Lenders) of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A., Miami, Florida, counsel for the Borrowers, dated
the Closing Date and covering such matters as the Agent or any Lender may
request; and
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(ii) a favorable written opinion (addressed
to the Agent and Collateral Agent and the Lenders) of Coudert Brothers, Hong
Kong, counsel for Agent and Collateral Agent and the Lenders, dated the Closing
Date and covering such matters as the Agent or Collateral Agent or any Lender
may request (including perfection of the Security Interests in Hong Kong
Collateral).
(iii) an appointment by each of the
Borrowers and ▇▇▇▇ ▇▇▇▇▇▇ of CT Corporation System, as agent to receive service
of process on his and its behalf in any State or Federal court located in the
State of New York and an acceptance by CT Corporation System of each such
appointment;
All legal details and proceedings in connection with
the transactions contemplated by this Agreement and the other Loan Documents
shall be in form and substance satisfactory to the Agent and the Collateral
Agent and counsel for the Agent and the Collateral Agent, and the Agent and
Collateral Agent shall have received all such other counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions, in form and substance satisfactory to the Agent and the
Collateral Agent and said counsel, as the Agent and the Collateral Agent or said
counsel may reasonably request.
6.1.5 PAYMENT OF FEES.
Each Borrower shall have paid or caused to be paid to
the Agent and the Collateral Agent, as applicable, for itself and for the
account of the Lenders to the extent not previously paid all commitment,
administration and other fees accrued through the Closing Date and the costs and
expenses for which the Agent, the Collateral Agent and the Lenders are entitled
to be reimbursed.
6.1.6 ELIGIBLE SECURITIES.
Borrowers shall have furnished to the Collateral
Agent a duly executed counterpart of whatever agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ the Collateral Agent requests to establish the Collateral
Agent's control over the account in which the Eligible Securities are contained
and confirmation that there exist Eligible Securities having an Eligible
Securities Value of at least $1,250,000.00.
6.1.7 SOLVENCY.
The Lenders shall have received evidence
satisfactory to them that, after giving effect to the indebtedness represented
by the Loans outstanding and to be incurred, and the transactions contemplated
by this Agreement, including the issuance of Letters of Credit and Bankers'
Acceptances, the Borrowers on a consolidated basis, and each Borrower, when
given credit for "contribution rights" it may have with respect to other
Borrowers are solvent, having assets of a fair salable value which exceed the
amount required to pay its debts as they become absolute and unmatured
(including contingent, subordinated, unmatured and unliquidated liabilities),
and that the
69
Borrowers on a consolidated basis, and each Borrower, when given credit for
"contribution rights" it may have with respect to other Borrowers are able to
and anticipates that it will be able to meet its debts as they mature and has
adequate capital to conduct the business in which it is or proposes to be
engaged. The Lenders shall have received an executed copy of the contribution
agreement among the Borrowers with respect to the Loan.
6.1.8 CONSENTS.
All consents required to effectuate the transactions
contemplated hereby as set forth on Schedule 5.7.13 shall have been obtained.
6.1.9 OFFICER'S CERTIFICATE REGARDING MACS.
Since December 31, 1997, no Material Adverse Change
shall have occurred; prior to the Closing Date, there shall have been no
material change in the management of any Borrower (except for the replacement of
Directors of the Hong Kong Limited Liability Companies, as set forth in Schedule
6.1.9 attached hereto and made a part hereof); and there shall have been
delivered to the Agent for the benefit of the Agent, Collateral Agent and the
Lenders a certificate dated the Closing Date and signed by the Chief Executive
Officer, President or Chief Financial Officer (or as to the Borrowers which are
Hong Kong Limited Liability Companies, a Director) of each Borrower to each such
effect.
6.1.10 NO VIOLATION OF LAWS.
The making of the Loans and the issuance of the
Letters of Credit shall not contravene any Law applicable to any Borrower or any
of the Lenders.
6.1.11 NO ACTIONS OR PROCEEDINGS.
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, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or which, in the
Agent's reasonable discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.
6.1.12 INSURANCE POLICIES; CERTIFICATES OF INSURANCE;
ENDORSEMENTS.
The Borrowers shall have delivered evidence
acceptable to the Collateral Agent that adequate insurance in compliance with
Section 7.1.3 [Maintenance of Insurance] is in full force and effect and that
all premiums then due thereon have been paid, together with a certified copy of
each Borrower's casualty insurance policy or policies evidencing such coverage
satisfactory to the Agent and the Collateral Agent, with additional insured,
mortgagee and lender loss payable special endorsements attached thereto in form
and substance satisfactory to the Agent and the
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Collateral Agent and its counsel naming the Agent and the Collateral Agent, for
the benefit of the Agent, Collateral Agent and the Lenders, as additional
insured, mortgagee and lender loss payee.
6.1.13 OMITTED.
6.1.14 FILING RECEIPTS.
The Collateral Agent shall have received (1) executed
originals of all documents required to be executed or filed, in proper form for
filing or recording, in order to perfect the Lien of the Lenders on the
Collateral or other satisfactory evidence of such recordation and filing and (2)
evidence in a form acceptable to the Collateral Agent that such Lien constitutes
a Prior Security Interest in favor of the Lenders and a valid and perfected
first priority Lien.
6.1.15 LANDLORD'S WAIVERS.
The Borrowers shall have delivered an executed
Landlord's Lien Waiver and Warehousemen's Lien Waiver in substantially the forms
of Exhibit "I" from the lessor for each leased Collateral location and from each
public warehouse as listed in the Security Documents.
6.1.16 ADMINISTRATIVE QUESTIONNAIRE.
Each of the Lenders and the Borrowers shall have
completed and delivered to the Collateral Agent the Collateral Agent's
administrative details reply form.
6.2 EACH ADDITIONAL LOAN, LETTER OF CREDIT OR BANKERS'
ACCEPTANCE.
At the time of making any Loans or issuing any Letters of
Credit or creating any Bankers' Acceptances, other than Loans made or Letters of
Credit issued or Bankers' Acceptances created on the Closing Date and after
giving effect to the proposed extensions of credit: the representations and
warranties of the Borrowers contained in Section 5.7 and in the other Loan
Documents shall be true on and as of the date of such additional Loan or Letter
of Credit or Bankers' Acceptances, with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier date
or time, which representations and warranties shall be true and correct on and
as of the specific dates or times referred to therein) and the Borrowers shall
have performed and complied with all covenants and conditions hereof; no Event
of Default or Potential Default shall have occurred and be continuing or shall
exist; the making of the Loans or issuance of such Letter of Credit or creation
of Bankers' Acceptances shall not contravene any Law applicable to any Borrower
or any of the Lenders; and the Borrowers shall have delivered to the Collateral
Agent a duly executed and completed Loan Request or application for a Letter of
Credit or Bankers' Acceptances as the case may be.
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7. COVENANTS
7.1 AFFIRMATIVE COVENANTS.
The Borrowers, jointly and severally, covenant and agree that
until payment in full of the Loans, Reimbursement Obligations, Letter of Credit
Outstandings and Bankers' Acceptance Obligations, and interest thereon,
expiration or termination of all Letters of Credit and Bankers' Acceptances,
satisfaction of all of the Borrowers' other Obligations under the Loan Documents
and termination of the Revolving Credit Commitments, the Borrowers shall comply
at all times with the following affirmative covenants:
7.1.1 PRESERVATION OF EXISTENCE, ETC.
Each Borrower shall maintain its legal existence as a
corporation, limited partnership or limited liability company and its license or
qualification and good standing in each jurisdiction in which its ownership or
lease of property or the nature of its business makes such license or
qualification necessary, except as otherwise expressly permitted in Section
7.2.6 [Liquidations, Mergers, Etc.].
7.1.2 PAYMENT OF LIABILITIES, INCLUDING TAXES, ETC.
Each Borrower shall duly pay and discharge all
liabilities to which it is subject or which are asserted against it, promptly as
and when the same shall become due and payable, including all taxes, assessments
and governmental charges upon it or any of its properties, assets, income or
profits, prior to the date on which penalties attach thereto, except to the
extent that such liabilities, including taxes, assessments or charges, are being
contested in good faith and by appropriate and lawful proceedings diligently
conducted and for which such reserve or other appropriate provisions, if any, as
shall be required by GAAP shall have been made, but only to the extent that
failure to discharge any such liabilities would not result in any additional
liability which would adversely affect to a material extent the financial
condition of any Borrower or which would affect the Collateral, PROVIDED that
the Borrowers will pay all such liabilities forthwith upon the commencement of
proceedings to foreclose any Lien which may have attached as security therefor.
7.1.3 MAINTENANCE OF INSURANCE.
Subject to the provisions below with respect to
DEIL's insurance, each Borrower shall insure its properties and assets against
loss or damage by fire and such other insurable hazards as such assets are
commonly insured (including fire, extended coverage, property damage, workers'
compensation, public liability and business interruption insurance) and against
other risks (including errors and omissions) in such amounts as similar
properties and assets are insured according to industry practices for companies
in similar circumstances carrying on similar businesses, and with reputable and
financially sound insurers, including self-insurance to the extent customary,
all as reasonably determined by the Collateral Agent. At the request of the
Collateral Agent, the Borrowers shall deliver to the Collateral Agent and each
of the Lenders (x) on the Closing Date and annually thereafter an original
certificate of insurance signed by the Borrowers'
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independent insurance broker describing and certifying as to the existence of
the insurance on the Collateral required to be maintained by this Agreement and
the other Loan Documents, together with a copy of the endorsement described in
the next sentence attached to such certificate and (y) from time to time a
summary schedule indicating all insurance then in force with respect to each of
the Borrowers. Such policies of insurance shall contain special endorsements, in
form and substance acceptable to the Collateral Agent, which shall (i) specify
the Agent and the Collateral Agent, for the benefit of the Agent, Collateral
Agent and the Lenders, as an additional insured, mortgagee and lender loss payee
as its interests may appear, with the understanding that any obligation imposed
upon the insured (including the liability to pay premiums) shall be the sole
obligation of the Borrowers and not that of the insured, (ii) provide that the
interest of the Agent and the Collateral Agent, for the benefit of the Agent,
Collateral Agent and the Lenders, shall be insured regardless of any breach or
violation by the applicable Borrowers of any warranties, declarations or
conditions contained in such policies or any action or inaction of the Borrowers
or others insured under such policies, (iii) provide a waiver of any right of
the insurers to set off or counterclaim or any other deduction, whether by
attachment or otherwise, (iv) provide that any and all rights of subrogation
which the insurers may have or acquire shall be, at all times and in all
respects, junior and subordinate to the prior payment in full of the
Indebtedness hereunder and that no insurer shall exercise or assert any right of
subrogation until such time as the Indebtedness hereunder has been paid in full
and the Revolving Credit Commitments have terminated, (v) provide, except in the
case of public liability insurance and workmen's compensation insurance, that
all insurance proceeds for losses of less than $25,000.00, in the aggregate
shall, so long as no Potential Default or Event of Default has occurred, be
adjusted with and payable to the Borrowers and that all insurance proceeds for
losses of $25,000.00 or more, in the aggregate shall be adjusted with and
payable to the Collateral Agent, (vi) include effective waivers by the insurer
of all claims for insurance premiums against the Agent and Collateral Agent,
(vii) provide that no cancellation of such policies for any reason (including
non-payment of premium) nor any change therein shall be effective until at least
thirty (30) days after receipt by the Collateral Agent of written notice of such
cancellation or change, (viii) be primary without right of contribution of any
other insurance carried by or on behalf of any additional insureds with respect
to their respective interests in the Collateral, and (ix) provide that inasmuch
as the policy covers more than one insured, all terms, conditions, insuring
agreements and endorsements (except limits of liability) shall operate as if
there were a separate policy covering each insured. The Borrowers shall notify
the Collateral Agent promptly of any occurrence causing a material loss or
decline in value of the Collateral and the estimated (or actual, if available)
amount of such loss or decline. Any monies received by the Collateral Agent
constituting insurance proceeds or condemnation proceeds may, at the option of
the Required Lenders, (i) be applied by the Collateral Agent to the payment of
the Loans in such manner as the Required Lenders may reasonably determine, or
(ii) be disbursed to the Borrowers on such terms as are deemed appropriate by
the Required Lenders for the repair, restoration and/or replacement of property
in respect of which such proceeds were received, provided that, so long as no
Potential Default or Event of Default has occurred, proceeds up to $25,000.00
may, at the Borrower's election, be used for the repair, restoration and/or
replacement of property in respect of which such proceeds were received.
Notwithstanding the preceding paragraph, DEIL shall
have until September 1, 1998, to fully comply with all of the insurance
requirements set forth herein and in the Security Documents, provided that,
until DEIL is in full compliance with such insurance requirements, DEIL
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shall keep in full force and effect its agreements with Windmere and ▇▇▇▇
relating to the insuring of DEIL's plant, equipment and Inventory and shall
cause ▇▇▇▇ and/or Windmere, as appropriate, to immediately pay over to the
Agent, any and all insurance proceeds received by ▇▇▇▇ or Windmere arising from
DEIL's plant, equipment and Inventory.
7.1.4 MAINTENANCE OF PROPERTIES AND LEASES.
Each Borrower shall maintain in good repair, working
order and condition (ordinary wear and tear excepted) in accordance with the
general practice of other businesses of similar character and size in the
Borrowers' industry, all of those properties useful or necessary to its
business, and from time to time, such Borrower will make or cause to be made all
appropriate repairs, renewals or replacements thereof.
7.1.5 MAINTENANCE OF PATENTS, TRADEMARKS, ETC.
Each Borrower shall maintain in full force and effect
all patents, trademarks, service marks, trade names, copyrights, licenses,
franchises, permits and other authorizations necessary for the ownership and
operation of its properties and business.
7.1.6 VISITATION RIGHTS.
Every four (4) months and from time to time as often
as may be reasonably requested by the Agent, Collateral Agent or any Lender, and
at any time and as often as Agent, Collateral Agent or any of the Lenders may
require following the occurrence of a Potential Default or Event of Default,
each Borrower shall permit representatives (whether or not officers or
employees) of the Collateral Agent, Agent or any of the Lenders , during normal
business hours, to (i) visit and inspect any properties of such Borrower, (ii)
inspect and make extracts from their books and records, including but not
limited to management letters prepared by such Borrower's independent
accountants, (iii) discuss with their principal officers and their independent
accountants their respective businesses, assets, liabilities, financial
conditions, results of operations and business prospects and (iv) inspect and
audit the Collateral and the premises upon which any of the Collateral is
located, and verify the amount, quality, quantity, value and condition of, or
any other matter relating to, the Collateral. In the event that any of the
Collateral is under the exclusive control of any third party, such Borrower
shall cause such parties to make such inspection rights available to the
Collateral Agent. In connection with each field audit of the Borrowers or the
Collateral, Borrowers shall pay the Collateral Agent a fee of Four Hundred
Dollars ($400.00) per day, plus all out of pocket expenses incurred in
connection therewith.
7.1.7 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
The Borrowers shall maintain and keep proper books of
record and account which enable the Borrowers to issue financial statements in
accordance with GAAP and as otherwise required by applicable Laws of any
Official Body having jurisdiction over the Borrowers, and in
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which full, true and correct entries shall be made in all material respects of
all its dealings and business and financial affairs.
7.1.8 PLANS AND BENEFIT ARRANGEMENTS.
The Borrowers shall, and shall cause each other
member of the ERISA Group to, comply in all material respects, with ERISA, the
Internal Revenue Code and other applicable Laws applicable to Plans and Benefit
Arrangements (and as to the Borrowers which are Hong Kong Limited Liability
Companies, all comparable laws and statutes under Hong Kong law). Without
limiting the generality of the foregoing, each Borrower shall cause all of its
Plans and all Plans maintained by any member of the ERISA Group to be funded in
accordance with the minimum funding requirements of ERISA and shall make, and
cause each member of the ERISA Group to make, in a timely manner, all
contributions due to Plans, Benefit Arrangements and Multiemployer Plans.
7.1.9 COMPLIANCE WITH LAWS.
Each Borrower shall comply with all applicable Laws,
including all Environmental Laws (and as to the Borrowers which are Hong Kong
Limited Liability Companies, all comparable laws and statutes under Hong Kong
law), in all respects.
7.1.10 USE OF PROCEEDS
The Borrowers will use the Letters of Credit,
Bankers' Acceptances and the proceeds of the Loans only in accordance with
Section 2.7 of this Agreement.
7.1.11 FURTHER ASSURANCES.
Each Borrower shall, from time to time, at its
expense, faithfully preserve and protect the Collateral Agent's Lien on and
Prior Security Interest in the Collateral as a continuing first priority
perfected Lien, subject only to Permitted Liens, and shall do such other acts
and things as the Agent in its sole discretion may deem necessary or advisable
from time to time in order to preserve, perfect and protect the Liens granted
under the Loan Documents and to exercise and enforce its rights and remedies
thereunder with respect to the Collateral.
7.1.12 WINDMERE SUBORDINATION.
Borrowers shall cause Windmere to enter into a
subordination and no offset agreement in form satisfactory to the Collateral
Agent, regarding Borrowers' Inventory in Arkansas.
7.1.13 YEAR 2000 COMPLIANCE.
The Borrowers shall conduct a comprehensive review
and assessment of their computer applications to evaluate the risk that their
computer applications will not be able to
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properly perform date-sensitive functions after December 31, 1999 (the "Y2K
Problem"). Borrowers shall use commercially reasonable best efforts to prevent
the Y2K Problem from resulting in a Material adverse change on Borrowers.
Borrowers will work diligently to develop a program to address on a timely
basis, the risk associated with the Y2K Problem, including the impact the Y2K
Problem could have on Borrowers' account debtors, vendors and suppliers. The
Borrowers will promptly notify the Collateral Agent in the event any Borrower
discovers or determines that any computer application (including those of
suppliers and vendors) that is material to its business and operations will have
a Y2K Problem, except to the extent such failure could not reasonably be
expected to result in a Material Adverse Change.
7.1.14 LOCKBOX ACCOUNTS.
NEII and NL shall establish lockbox accounts (the
"Lockbox Accounts") with the Collateral Agent and cause all receipts to be
deposited directly into the Lockbox Accounts, including all domestic and foreign
receipts, other than an amount (not to exceed $250,000 at any time) required
from time to time to operate Borrowers' Hong Kong office.
7.2 NEGATIVE COVENANTS.
The Borrowers, jointly and severally, covenant and agree that
until payment in full of the Loans, Reimbursement Obligations, Letters of Credit
Outstandings and Bankers' Acceptance Obligations and interest thereon,
expiration or termination of all Letters of Credit and Bankers' Acceptances,
satisfaction of all of the Borrowers' other Obligations hereunder and
termination of the Commitments, the Borrowers shall comply with the following
negative covenants:
7.2.1 INDEBTEDNESS.
No Borrower shall at any time create, incur, assume
or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Existing ▇▇▇▇ Debt as set forth on
Schedule 7.2.1, including any extensions or renewals thereof, and any increase
in the principal amount thereof as permitted in Section 7.2.4; and
(iii) Capitalized and operating leases as
and to the extent permitted under Section 7.2.15 [Capital Expenditures and
Leases].
7.2.2 LIENS.
No Borrower shall at any time create, incur, assume
or suffer to exist any Lien on any of its property or assets, tangible or
intangible, now owned or hereafter acquired, or agree or become liable to do so,
except Permitted Liens.
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7.2.3 GUARANTIES.
No Borrower shall at any time, directly or
indirectly, become or be liable in respect of any Guaranty, or assume,
guarantee, become surety for, endorse or otherwise agree, become or remain
directly or contingently liable upon or with respect to any obligation or
liability of any other Person, other than (i) NEII's guaranty of the ▇▇▇▇ Debt
and (ii) endorsements of items for deposit in the ordinary course of business.
7.2.4 LOANS AND INVESTMENTS.
No Borrower shall at any time make or suffer to
remain outstanding any loan or advance to, or purchase, acquire or own any
stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) or limited liability company interest in, or any other
investment or interest in, or make any capital contribution to, any other
Person, or agree, become or remain liable to do any of the foregoing, except for
(i) existing Indebtedness owed by ▇▇▇▇ and ▇▇▇▇ to DURABLE ELECTRICAL METAL
FACTORY LIMITED, a Hong Kong Limited Liability Company ("▇▇▇▇"), in an amount
not to exceed Ten Million Seven Hundred Thousand Dollars ($10,700,000.00) from
the Closing Date through the completion of the initial public offering (the
"IPO") of NEII, Nine Million Seven Hundred Thousand Dollars ($9,700,000.00) from
and after July 31, 1998 if the IPO has not yet occurred, and Eight Million Seven
Hundred Thousand Dollars ($8,700,000.00) from and after the IPO (the "▇▇▇▇
Debt");(ii) trade credit extended on usual and customary terms in the ordinary
course of business;(iii) advances to employees to meet expenses incurred by such
employees in the ordinary course of business; and (iv) Permitted Investments.
7.2.5 DIVIDENDS AND RELATED DISTRIBUTIONS.
Prior to the Transition Date, no Borrower shall make
or pay or agree to become or remain liable to make or pay, and subsequent to the
Transition Date, NEII shall not make or pay, or agree to become or remain liable
to make or pay, any dividend or other distribution of any nature (whether in
cash, property, securities or otherwise) on account of or in respect of its
shares of capital stock, partnership interests or limited liability company
interests on account of the purchase, redemption, retirement or acquisition of
its shares of capital stock (or warrants, options or rights therefor),
partnership interests or limited liability company interests.
7.2.6 LIQUIDATIONS, MERGERS, CONSOLIDATIONS,
ACQUISITIONS.
No Borrower shall dissolve, liquidate or wind-up its
affairs, or become a party to any merger or consolidation, or acquire by
purchase, lease or otherwise all or substantially all of the assets or capital
stock of any other Person.
7.2.7 DISPOSITIONS OF ASSETS.
No Borrower shall sell, convey, assign, lease,
abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any
of its properties or assets, tangible or intangible (including sale, assignment,
discount or other disposition of accounts, contract rights, chattel paper,
77
equipment or general intangibles with or without recourse or of capital stock,
shares of beneficial interest, partnership interests or limited liability
company interests of a Subsidiary of such Borrower), except:
(i) transactions involving the sale of
Inventory in the ordinary course of business;
(ii) any sale, transfer or lease of assets
in the ordinary course of business which are no longer necessary or required in
the conduct of such Borrower's business;
(iii) any sale, transfer or lease of assets
by any wholly owned Subsidiary of such Borrower to a Borrower;
(iv) any sale, transfer or lease of assets
in the ordinary course of business which are replaced by substitute assets
acquired or leased within the parameters of Section 7.2.15 [Capital Expenditures
and Leases], PROVIDED such substitute assets are subject to the Lenders' Prior
Security Interest; or
(v) any sale, transfer or lease of assets,
other than those specifically excepted pursuant to clauses (i) through (iv)
above, which is approved by the Required Lenders.
7.2.8 AFFILIATE TRANSACTIONS.
No Borrower shall enter into or carry out any transaction (including purchasing
property or services from or selling property or services to any Affiliate of
any Borrower or other Person) unless such transaction is expressly permitted by
this Agreement, is entered into in the ordinary course of business upon fair and
reasonable arm's-length terms and conditions which are fully disclosed to the
Collateral Agent and is in accordance with all applicable Law. Notwithstanding
the foregoing, the following shall be permitted:
(i) Borrowers shall be entitled to incur
administrative commitments with Windmere to an amount not to exceed Two Hundred
Fifty Thousand Dollars ($250,000.00) per annum;
(ii) the Windmere Notes;
(iii) the ▇▇▇▇ Debt and the security
interest in the fixed assets and inventory of DEIL granted to ▇▇▇▇ to secure
DEIL's obligations under the ▇▇▇▇ Debt;
(iv) NEII's guarantee of the ▇▇▇▇ Debt;
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(v) ▇▇▇▇'▇ agreement (a) not to compete in
the design, research, development or manufacture of music centers and video
compact disc players in the PRC prior to September 30, 2003 and (b) to make
available to ▇▇▇▇ without charge its general manufacturing software program
until October 31, 2003;
(vi) Windmere's provision to the Borrowers
of certain administrative services with respect to NEIL's PRC manufacturing
facility, including the payment by Windmere or its affiliates of certain
accounts payable and the collection by Windmere or its affiliates of certain
accounts receivable on behalf of the Borrowers.;
(vii) that certain Lease Agreement between
NEII and F Fifty Holdings, Inc. ("F Fifty") pursuant to which F Fifty leases an
aircraft (the "Aircraft") to NEII;
(viii) loans to ▇▇▇▇ ▇▇▇▇▇▇ in an amount not
to exceed $300,000.00 in the aggregate at any one time outstanding.
(ix) that certain Indemnification Agreement
among White Consolidated Industries, Inc., Kmart Corporation and Windmere; and
(x) employment agreements entered into from
time to time with ▇▇▇▇ ▇▇▇▇▇▇, so long as he remains an Affiliate of NEII.
7.2.9 SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES.
No Borrower shall own or create directly or
indirectly any Subsidiaries other than any Subsidiary which has joined this
Agreement as a Borrower on the Closing Date. No Borrower shall become or agree
to (i) become a general or limited partner in any general or limited
partnership, except that the Borrowers may be general or limited partners in
other Borrowers ;(ii) become a member or manager of, or hold a limited liability
company interest in, a limited liability company, except that the Borrowers may
be members or managers of, or hold limited liability company interests in, other
Borrowers; or (iii) become a joint venturer or hold a joint venture interest in
any joint venture.
7.2.10 CONTINUATION OF OR CHANGE IN BUSINESS.
No Borrower shall engage in any business other than
substantially as conducted and operated by such Borrower on the date hereof, and
no such Borrower shall permit any material change in such business.
7.2.11 PLANS AND BENEFIT ARRANGEMENTS.
No Borrower shall :
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(i) fail to satisfy the minimum funding
requirements of ERISA and the Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from
the Internal Revenue Service with respect to any Plan;
(iii) engage in a Prohibited Transaction
with any Plan, Benefit Arrangement or Multiemployer Plan which, alone or in
conjunction with any other circumstances or set of circumstances resulting in
liability under ERISA, would constitute a Material Adverse Change;
(iv) permit the aggregate actuarial present
value of all benefit liabilities (whether or not vested) under each Plan,
determined on a plan termination basis, as disclosed in the most recent
actuarial report completed with respect to such Plan, to exceed, as of any
actuarial valuation date, the fair market value of the assets of such Plan;
(v) fail to make when due any contribution
to any Multiemployer Plan that the Borrowers or any member of the ERISA Group
may be required to make under any agreement relating to such Multiemployer Plan,
or any Law pertaining thereto;
(vi) withdraw (completely or partially) from
any Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA
to withdraw) from any Multiple Employer Plan, where any such withdrawal is
likely to result in a material liability of the Borrowers or any member of the
ERISA Group;
(vii) terminate, or institute proceedings to
terminate, any Plan, where such termination is likely to result in a material
liability to the Borrowers or any member of the ERISA Group;
(viii) make any amendment to any Plan with
respect to which security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices and
make all disclosures and governmental filings required under ERISA or the
Internal Revenue Code, where such failure is likely to result in a Material
Adverse Change.
[As to Borrowers which are Hong Kong Limited Liability Companies, no Borrower
shall fail to comply with all comparable laws and statutes under Hong Kong law]
7.2.12 FISCAL YEAR.
DEIL shall not change its fiscal year from the
twelve-month period ending November 30, and the remaining Borrowers shall not
change their respective fiscal year from the twelve-month period ending December
31.
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7.2.13 ISSUANCE OF STOCK.
Except for the IPO, no Borrower shall issue any
additional shares of its capital stock or any options, warrants or other rights
in respect thereof.
7.2.14 CHANGES IN ORGANIZATIONAL DOCUMENTS.
No Borrower shall amend in any respect its
certificate of incorporation (including any provisions or resolutions relating
to capital stock), by-laws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents without providing at least thirty (30) calendar
days' prior written notice to the Collateral Agent and, in the event such change
would be adverse to the Lenders as determined by the Agent in its reasonable
discretion, obtaining the prior written consent of the Required Lenders.
7.2.15 CAPITAL EXPENDITURES AND LEASES.
The Borrowers shall not make any payments (net of
tooling expenses) exceeding $500,000.00 in the aggregate in fiscal year ending
December 31, 1998, nor exceeding $1,000,000.00 in the aggregate in fiscal years
ending December 31, 1999 and 2000, respectively, on account of the purchase or
lease of any assets which if purchased would constitute fixed assets or which if
leased would constitute a capitalized lease, or any payments exceeding
$500,000.00 in the aggregate in any fiscal year on account of the rental or
lease of real or personal property of any other Person which does not constitute
a capitalized lease, and all such capital expenditures and leases shall be made
under usual and customary terms and in the ordinary course of business.
7.2.16 CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED
TANGIBLE NET WORTH RATIO.
The Borrowers shall not permit the ratio of
Consolidated Total Liabilities of the Borrowers less Subordinated Debt to
Consolidated Tangible Net Worth to be more than 2.0 to 1.0 from December 1
through April 30 of each year nor more than 3.2 to 1.0, from May 1 through
November 30 of each year, calculated as of the end of each fiscal quarter.
7.2.17 MAXIMUM LEVERAGE RATIO.
The Borrowers shall not at any time permit the ratio
of Consolidated Total Liabilities of the Borrowers less Subordinated Debt, plus
the amount of Letters of Credit Outstanding and Bankers Acceptance Obligations
to Consolidated Tangible Net Worth to exceed 3.0 to 1.0 from December 1 through
April 30 of each year nor more than 4.7 to 1.0, from May 1 through November 30
of each year, calculated as of the end of each fiscal quarter.
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7.2.18 MINIMUM INTEREST COVERAGE RATIO.
The Borrowers shall not permit the ratio of
Consolidated Cash Flow from Operations to consolidated interest expense of the
Borrowers to be less than 3.0 to 1.0, determined at the end of each fiscal
quarter, on a rolling basis utilizing the quarterly financial reporting for the
immediately preceding four (4) fiscal quarters.
7.2.19 MINIMUM TANGIBLE NET WORTH.
The Borrowers shall not at any time permit
Consolidated Tangible Net Worth to be less than the following amounts as of the
periods indicated:
--------------------------------------------------------------------------------
PERIODS AMOUNTS
------- -------
From the Closing Date through June 29, 1998 $16,000,000.00
From June 30, 1998 through September 29, 1998 $19,000,000.00
From September 30, 1998 through December 30, 1998 $23,000,000.00
From December 31, 1998 through September 29, 1999 $25,000,000.00
From September 30, 1999 through December 30, 1999 $28,750,000.00
From December 31, 1999 through September 29, 2000 $32,500,000.00
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
From September 30, 2000 through December 30, 2000 $36,250,000.00
From December 31, 2000 through the Expiration Date $40,000,000.00
All of the above Minimum Consolidated Tangible Net
Worth Requirements shall be increased by an amount
equal to ninety percent (90%) of the aggregate net
proceeds of any Subordinated Debt or equity offering
of the Borrowers.
--------------------------------------------------------------------------------
7.2.20 MINIMUM CURRENT RATIO.
The Borrowers shall not at any time permit the ratio
of consolidated current assets of the Borrowers to consolidated current
liabilities of the Borrowers to be less than 1.0 to 1.0, calculated as of the
end of each fiscal quarter.
7.3 REPORTING REQUIREMENTS.
The Borrowers, jointly and severally, covenant and agree that
until payment in full of the Loans, Reimbursement Obligations, Letters of Credit
Outstandings and Bankers' Acceptance Obligations and interest thereon,
expiration or termination of all Letters of Credit and Bankers' Acceptances,
satisfaction of all of the Borrowers' other Obligations hereunder and under the
other Loan Documents and termination of the Commitments, the Borrowers will
furnish or cause to be furnished to the Agent, Collateral Agent and each of the
Lenders, as applicable, the following:
7.3.1 MONTHLY FINANCIAL STATEMENTS.
To the Collateral Agent, as soon as available and in
any event within thirty (30) calendar days after the end of each calendar month,
the financial statements of each Borrower and consolidated financial statements
for the Borrowers, consisting of a management prepared balance sheet as of the
end of such month and related individual statements of income, shareholders'
equity and retained earnings for the month then ended and the fiscal year
through that date, all in reasonable detail and certified (subject to normal
year-end adjustments) by the Chief Executive
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Officer, President or Chief Financial Officer of the Borrowers as having been
prepared in accordance with GAAP, consistently applied.
7.3.2 ADDITIONAL MATERIALS.
7.3.2.1 To the Collateral Agent, promptly
upon any Borrower becoming aware thereof, notice of each federal statutory Lien,
tax or other state or local government Lien or other Lien (other than the
Security Interests) filed against the property of any Borrower;
7.3.2.2 To the Collateral Agent, within
twenty (20) calendar days after the end of every month, a schedule of each
Borrower's Inventory certified by an authorized officer of the applicable
Borrower and indicating, with respect to any such Inventory, the location
thereof (whether in a warehouse specified in the schedule, or in transit);
7.3.2.3 To the Collateral Agent, within
twenty (20) calendar days after the end of every month, a report of each
Borrower's receivable agings and within thirty (30) calendar days after the end
of every month, a report of each Borrower's accounts payable agings, certified
in each case by an authorized officer of such Borrower;
7.3.2.4 To the Collateral Agent, within
twenty (20) calendar days after the end of each month (or, if the Collateral
Agent or the Required Lenders so request, on a more frequent basis) a Borrowing
Base Certificate;
7.3.2.5 To the Collateral Agent, promptly,
with the financial statements referred to in Section 7.3.3, consolidated
projections for Borrowers' balance sheet and profit and loss statement and cash
flows for the next fiscal year, with monthly details;
7.3.2.6 From time to time and within a
reasonable time after request of the Agent, Collateral Agent or any Lender, such
data, certificates, reports, statements, opinions of counsel, documents or
further information regarding this Agreement, any extension of credit or any
Loan Document or any transaction contemplated thereby, or the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Borrowers as the Agent, Collateral Agent or the Required Lenders may
reasonably request, in each case in form and substance and certified in a manner
reasonably satisfactory to the Required Lenders .
7.3.3 ANNUAL FINANCIAL STATEMENTS.
To the Collateral Agent, as soon as available and in
any event within one hundred twenty (120) days after the end of each fiscal year
of the Borrowers, financial statements of the Borrowers, consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal year,
and related consolidated and consolidating statements of income, shareholders'
equity, retained earnings and cash flows for the fiscal year then ended, all in
reasonable detail
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and setting forth in comparative form the financial statements as of the end of
and for the preceding fiscal year, and certified by independent certified public
accountants of nationally recognized standing satisfactory to the Agent,
provided, however, that the certificate or report of accountants shall not be
required to apply to consolidating statements of income shareholders' equity,
retained earnings and cash flows. The certificate or report of accountants shall
be free of qualifications (other than any consistency qualification that may
result from a change in the method used to prepare the financial statements as
to which such accountants concur) and shall not indicate the occurrence or
existence of any event, condition or contingency which would materially impair
the prospect of payment or performance of any covenant, agreement or duty of any
Borrower under any of the Loan Documents. The Borrowers shall deliver with such
financial statements and certification by their accountants a letter of such
accountants to the Collateral Agent and the Lenders substantially (i) to the
effect that, based upon their ordinary and customary examination of the affairs
of the Borrowers, performed in connection with the preparation of such
consolidated financial statements, and in accordance with generally accepted
auditing standards, they are not aware of the existence of any condition or
event which constitutes an Event of Default or Potential Default or, if they are
aware of such condition or event, stating the nature thereof and confirming the
Borrowers' calculations with respect to the certificate to be delivered pursuant
to Section 7.3.4 [Certificate of the Borrower] with respect to such financial
statements and (ii) to the effect that the Lenders are intended to rely upon
such accountant's certification of the annual financial statements and that such
accountants authorize the Borrowers to deliver such reports and certificate to
the Lenders on such accountants' behalf.
7.3.4 CERTIFICATE OF THE BORROWER.
Concurrently with the financial statements of the
Borrowers furnished to the Collateral Agent, pursuant to Section 7.3.1 [Monthly
Financial Statements] and Section 7.3.3 [Annual Financial Statements], a
certificate of each Borrower signed by the Chief Executive Officer, President or
Chief Financial Officer of the Borrower, in the form of Exhibit "J", to the
effect that, except as described pursuant to Section 7.3.5 [Notice of Default],
(i) the representations and warranties of the Borrower contained in Section 5.7
and in the other Loan Documents are true on and as of the date of such
certificate with the same effect as though such representations and warranties
had been made on and as of such date (except representations and warranties
which expressly relate solely to an earlier date or time) and the Borrowers have
performed and complied with all covenants and conditions hereof, (ii) no Event
of Default or Potential Default exists and is continuing on the date of such
certificate and (iii) containing calculations in sufficient detail to
demonstrate compliance as of the date of such financial statements with all
financial covenants contained in Section 7.2 [Negative Covenants].
7.3.5 NOTICE OF DEFAULT.
Promptly after any officer of any Borrower has
learned of the occurrence of an Event of Default or Potential Default, or a
default or termination of the Kmart Contract or the WCI License Agreements or
any other Material Contract, a certificate signed by the Chief
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Executive Officer, President or Chief Financial Officer of such Borrower (and as
to the Borrowers which are Hong Kong Limited Liability Companies from the
Directors) setting forth the details of such Event of Default or Potential
Default and the action which the such Borrower proposes to take with respect
thereto.
7.3.6 NOTICE OF LITIGATION.
Promptly after any Borrower becomes aware of the
commencement thereof, notice of all actions, suits, proceedings or
investigations before or by any Official Body or any other Person against any
Borrower which relate to the Collateral, involve a claim or series of claims in
excess of $100,000.00 or which if adversely determined would constitute a
Material Adverse Change.
7.3.7 CERTAIN EVENTS.
Written notice to the Collateral Agent:
(i) at least sixty (60) calendar days prior
thereto, with respect to any proposed sale or transfer of assets pursuant to
Section 7.2.7, other than pursuant to clause (i) thereof;
(ii) within the time limits set forth in
Section 7.2.14 [Changes in Organizational Documents], any amendment to the
organizational documents of any Borrower; and
(iii) at least thirty (30) calendar days
prior thereto, with respect to any change in any Borrower's locations from the
locations set forth in schedule A to the SecurityAgreements.
7.3.8 BUDGETS, FORECASTS, OTHER REPORTS AND
INFORMATION.
Promptly upon their becoming available to the
Borrowers, furnish to the Collateral Agent:
(i) Omitted;
(ii) any reports including management
letters submitted to the Borrowers by independent accountants in connection with
any annual, interim or special audit;
(iii) any reports, notices or proxy
statements generally distributed by NEII to its shareholders on a date no later
than the date supplied to such shareholders;
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(iv) regular or periodic reports, including
Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the
Borrowers with the Securities and Exchange Commission;
(v) a copy of any order in any proceeding to
which the Borrowers is a party issued by any Official Body; and
(vi) such other reports and information as
any of the Lenders may from time to time reasonably request. The Borrowers shall
also notify the Lenders promptly of the enactment or adoption of any Law which
may result in a Material Adverse Change.
7.3.9 NOTICES REGARDING PLANS AND BENEFIT
ARRANGEMENTS.
7.3.9.1 CERTAIN EVENTS. Promptly upon
becoming aware of the occurrence thereof, notice (including the nature of the
event and, when known, any action taken or threatened by the Internal Revenue
Service or the PBGC with respect thereto) to the Collateral Agent of:
(i) any Reportable Event with respect to the
Borrowers or any other member of the ERISA Group (regardless of whether the
obligation to report said Reportable Event to the PBGC has been waived),
(ii) any Prohibited Transaction which could
subject the Borrowers or any other member of the ERISA Group to a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Internal Revenue Code in connection with any Plan, any Benefit Arrangement
or any trust created thereunder,
(iii) any assertion of material withdrawal
liability with respect to any Multiemployer Plan,
(iv) any partial or complete withdrawal from
a Multiemployer Plan by the Borrowers or any other member of the ERISA Group
under Title IV of ERISA (or assertion thereof), where such withdrawal is likely
to result in material withdrawal liability,
(v) any cessation of operations (by any
Borrower or any other member of the ERISA Group) at a facility in the
circumstances described in Section 4062(e) of ERISA,
(vi) withdrawal by any Borrower or any other
member of the ERISA Group from a Multiple Employer Plan,
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(vii) a failure by any Borrower or any other
member of the ERISA Group to make a payment to a Plan required to avoid
imposition of a Lien under Section 302(f) of ERISA,
(viii) the adoption of an amendment to a
Plan requiring the provision of security to such Plan pursuant to Section 307 of
ERISA, or
(ix) any change in the actuarial assumptions
or funding methods used for any Plan, where the effect of such change is to
materially increase or materially reduce the unfunded benefit liability or
obligation to make periodic contributions.
7.3.9.2 NOTICES OF INVOLUNTARY TERMINATION
AND ANNUAL REPORTS. Promptly after receipt thereof, copies to the Collateral
Agent of (a) all notices received by the Borrowers or any other member of the
ERISA Group of the PBGC's intent to terminate any Plan administered or
maintained by the Borrowers or any member of the ERISA Group, or to have a
trustee appointed to administer any such Plan; and (b) at the request of the
Agent or any Lender each annual report (IRS Form 5500 series) and all
accompanying schedules, the most recent actuarial reports, the most recent
financial information concerning the financial status of each Plan administered
or maintained by the Borrowers or any other member of the ERISA Group, and
schedules showing the amounts contributed to each such Plan by or on behalf of
the Borrowers or any other member of the ERISA Group in which any of their
personnel participate or from which such personnel may derive a benefit, and
each schedule B (Actuarial Information) to the annual report filed by the
Borrowers or any other member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.
7.3.9.3 NOTICE OF VOLUNTARY TERMINATION.
Promptly upon the filing thereof, copies to the Collateral Agent of any Form
5310, or any successor or equivalent form to Form 5310, filed with the PBGC in
connection with the termination of any Plan.
8. DEFAULT
8.1 EVENTS OF DEFAULT.
An Event of Default shall mean the occurrence or existence of
any one or more of the following events or conditions (whatever the reason
therefor and whether voluntary, involuntary or effected by operation of Law), as
determined by the Agent in its sole discretion or by the Required Lenders:
8.1.1 PAYMENTS UNDER LOAN DOCUMENTS.
Any Borrower shall fail to pay any principal of any
Loan (including scheduled installments, prepayments or the payment due at
maturity), Reimbursement
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Obligation, Letter of Credit Borrowing, Bankers' Acceptance Obligation, Bankers'
Acceptance Borrowing or shall fail to pay any interest on any Loan, Bankers'
Acceptance Obligation, Bankers' Acceptance Borrowing, Reimbursement Obligation
or Letter of Credit Borrowing for a period of three (3) days following the date
such payment becomes due in accordance with the terms hereof or thereof; or any
Borrower shall fail to pay any other amount owing hereunder or under the other
Loan Documents for a period of five (5) days after such other amount becomes due
in accordance with the terms hereof or thereof;
8.1.2 BREACH OF WARRANTY.
Any representation or warranty made at any time by
any of the Borrowers herein or by any of the Borrowers in any other Loan
Document, or in any certificate, other instrument or statement furnished
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made or furnished or
deemed made or furnished;
8.1.3 BREACH OF COVENANTS.
Any of the Borrowers shall default in the observance
or performance of any covenant, condition or provision hereof or of any other
Loan Document;
8.1.4 DEFAULTS IN OTHER AGREEMENTS OR INDEBTEDNESS.
A default or event of default shall occur at any time
under the terms of any other agreement involving borrowed money or the extension
of credit or any other Indebtedness under which any Borrower may be obligated as
a borrower or guarantor in excess of $250,000.00 in the aggregate, and such
breach, default or event of default consists of the failure to pay (beyond any
period of grace permitted with respect thereto, whether waived or not) any
indebtedness when due (whether at stated maturity, by acceleration or otherwise)
or if such breach or default permits or causes the acceleration of any
indebtedness (whether or not such right shall have been waived) or the
termination of any commitment to lend;
8.1.5 FINAL JUDGMENTS OR ORDERS.
Any final judgments or orders for the payment of
money in excess of $250,000.00 in the aggregate shall be entered against the
Borrowers or any Borrower by a court having jurisdiction in the premises, which
judgment is not discharged, vacated, bonded or stayed pending appeal within a
period of thirty (30) days from the date of entry;
8.1.6 LOAN DOCUMENT UNENFORCEABLE.
Any of the Loan Documents shall cease to be legal,
valid and binding agreements enforceable against the party executing the same or
such party's successors and assigns (as permitted under the Loan Documents) in
accordance with the respective terms thereof
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or shall in any way be terminated (except in accordance with its terms) or
become or be declared ineffective or inoperative or shall in any way be
challenged or contested or cease to give or provide the respective Liens,
security interests, rights, titles, interests, remedies, powers or privileges
intended to be created thereby;
8.1.7 UNINSURED LOSSES; PROCEEDINGS AGAINST ASSETS.
There shall occur any material uninsured damage to or
loss, theft or destruction of any of the Collateral in excess of $150,000.00 or
the Collateral or any other of the Borrowers' assets are attached, seized,
levied upon or subjected to a writ or distress warrant; or such come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and the same is not cured within thirty (30) days thereafter;
8.1.8 NOTICE OF LIEN OR ASSESSMENT.
A notice of Lien or assessment which is not a
Permitted Lien is filed of record with respect to all or any part of any of the
Borrower's assets by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, including the PBGC, or any taxes or debts owing at any time
or times hereafter to any one of these becomes payable and the same is not paid
within thirty (30) days after the same becomes payable;
8.1.9 INSOLVENCY.
Any Borrower ceases to be solvent or admits in
writing its inability to pay its debts as they mature;
8.1.10 EVENTS RELATING TO PLANS AND BENEFIT
ARRANGEMENTS.
Any of the following occurs: (i) any Reportable
Event, which the Agent determines in good faith constitutes grounds for the
termination of any Plan by the PBGC or the appointment of a trustee to
administer or liquidate any Plan, shall have occurred and be continuing; (ii)
proceedings shall have been instituted or other action taken to terminate any
Plan, or a termination notice shall have been filed with respect to any Plan;
(iii) a trustee shall be appointed to administer or liquidate any Plan; (iv) the
PBGC shall give notice of its intent to institute proceedings to terminate any
Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and,
in the case of the occurrence of (i), (ii), (iii) or (iv) above, the Agent
determines in good faith that the amount of any Borrower's liability is likely
to exceed 10% of its Consolidated Tangible Net Worth; (v) any Borrower or any
member of the ERISA Group shall fail to make any contributions when due to a
Plan or a Multiemployer Plan; (vi) any Borrower or any other member of the ERISA
Group shall make any amendment to a Plan with respect to which security is
required under Section 307 of ERISA; (vii) any Borrower or any other member
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of the ERISA Group shall withdraw completely or partially from a Multiemployer
Plan; (viii) any Borrower or any other member of the ERISA Group shall withdraw
(or shall be deemed under Section 4062(e) of ERISA to withdraw) from a Multiple
Employer Plan; or (ix) any applicable Law is adopted, changed or interpreted by
any Official Body with respect to or otherwise affecting one or more Plans,
Multiemployer Plans or Benefit Arrangements and, with respect to any of the
events specified in (v), (vi), (vii), (viii) or (ix), the Agent determines in
good faith that any such occurrence would be reasonably likely to materially and
adversely affect the total enterprise represented by any Borrower and the other
members of the ERISA Group[as to Borrowers which are Hong Kong Limited Liability
Companies, if any Borrower fails to comply with all comparable laws and statutes
under Hong Kong law];
8.1.11 CESSATION OF BUSINESS.
Any Borrower ceases to conduct its business as
contemplated, except as expressly permitted under Section 7.2.6 [Liquidations,
Mergers, Etc.] or 7.2.7, or any Borrower is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of its
business;
8.1.12 CHANGE OF CONTROL.
After the Transition Date, any Change in Control or
Change in Management shall occur with respect to any Borrower, or the failure of
Borrowers to complete the Transition on or before June 30, 1998 (the "Transition
Date");
8.1.13 INVOLUNTARY PROCEEDINGS.
A proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or order for relief in
respect of any Borrower in an involuntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect, or
for the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of any Borrower or Subsidiary of
a Borrower for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of sixty (60) consecutive days or such court
shall enter a decree or order granting any of the relief sought in such
proceeding; or
8.1.14 VOLUNTARY PROCEEDINGS.
Any Borrower shall commence a voluntary case under
any applicable bankruptcy, insolvency, reorganization or other similar law now
or hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or other similar official) of itself or for any
substantial part of its property or shall make a general assignment for the
benefit of creditors, or shall fail generally
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to pay its debts as they become due, or shall take any action in furtherance of
any of the foregoing.
8.1.15 MATERIAL CONTRACTS.
The Kmart Contract or any WCI License Agreement or
any other Material Contract, or the Pledge Agreement or any appointment of
process agent required herein, shall fail or cease to be in full force and
effect, or a default or an event of default by any party shall exist thereunder,
or the Borrowers shall be prevented from using the White-Westinghouse or Double
W trademarks.
8.1.16 EVENTS OF DEFAULT OTHER THAN BANKRUPTCY,
INSOLVENCY OR REORGANIZATION PROCEEDINGS.
If an Event of Default specified under Sections 8.1.1
through 8.1.12 or Section 8.1.15 shall occur and be continuing, the Lenders and
the Agent and the Collateral Agent shall be under no further obligation to make
Loans or issue Letters of Credit or create Bankers' Acceptances, as the case may
be, the Agent may, and upon the request of the Required Lenders, shall (i) by
written notice to the Borrowers, declare the unpaid principal amount of the
Notes then outstanding and all interest accrued thereon, any unpaid fees and all
other Indebtedness of the Borrowers to the Lenders hereunder and thereunder to
be forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Collateral Agent for the benefit of the
Agent, Collateral Agent and the Lenders without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived, and (ii)
require the Borrowers to, and the Borrowers shall thereupon, deposit in an
interest-bearing account with the Collateral Agent, as cash collateral for
Borrowers' Obligations under the Loan Documents, an amount equal to the maximum
amount currently or at any time thereafter available to be drawn on all
outstanding Letters of Credit and Bankers' Acceptances, and the Borrowers hereby
pledge to the Collateral Agent and the Lenders, and grant to the Collateral
Agent and the Lenders a security interest in, all such cash as security for such
Obligations. Upon the curing of all existing Events of Default to the
satisfaction of the Agent or the Required Lenders, the Collateral Agent shall
return such cash collateral to the Borrowers; and
8.1.17 BANKRUPTCY, INSOLVENCY OR REORGANIZATION
PROCEEDINGS.
If an Event of Default specified under Section 8.1.13
[Involuntary Proceedings] or 8.1.14 [Voluntary Proceedings] shall occur, the
Lenders shall be under no further obligations to make Loans hereunder and the
unpaid principal amount of the Loans then outstanding and all interest accrued
thereon, any unpaid fees and all other Indebtedness of the Borrowers to the
Lenders hereunder and thereunder shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; and
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8.1.18 SET-OFF.
If a Potential Default or an Event of Default shall
occur and be continuing, any Lender to whom any Obligation is owed by any
Borrower hereunder or under any other Loan Document or any participant of such
Lender which has agreed in writing to be bound by the provisions of Section 9.13
[Equalization of Lenders] and any branch, Subsidiary or Affiliate of such Lender
or participant anywhere in the world shall have the right, in addition to all
other rights and remedies available to it, without notice to such Borrower, to
set-off against and apply to the then unpaid balance of all the Loans and all
other Obligations of any Borrower and the other Borrowers hereunder or under any
other Loan Document any debt owing to, and any other funds held in any manner
for the account of, any Borrower by such Lender or participant or by such
branch, Subsidiary or Affiliate, including all funds in all deposit accounts
(whether time or demand, general or special, provisionally credited or finally
credited, or otherwise) now or hereafter maintained by any Borrower for its own
account (but not including funds held in custodian or trust accounts) with such
Lender or participant or such branch, Subsidiary or Affiliate. Such right shall
exist following a Potential Default or an Event of Default whether or not any
Lender or the Agent shall have made any demand under this Agreement or any other
Loan Document, whether or not such debt owing to or funds held for the account
of any Borrower is or are matured or unmatured and regardless of the existence
or adequacy of any Collateral, Guaranty or any other security, right or remedy
available to the Agent, Collateral Agent or any Lender; and
8.1.19 SUITS, ACTIONS, PROCEEDINGS.
If an Event of Default shall occur and be continuing,
and whether or not the Agent or Collateral Agent shall have accelerated the
maturity of Loans pursuant to any of the foregoing provisions of Section 8, the
Agent or with the consent of the Agent or the Required Lenders, the Collateral
Agent or any Lender, if owed any amount with respect to the Loans, may proceed
to protect and enforce its rights by suit in equity, action at law and/or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement or the other Loan Documents, including as
permitted by applicable Law the obtaining of the EX PARTE appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Agent or Collateral Agent or such Lender; and
8.1.20 APPLICATION OF PROCEEDS.
From and after the date on which the Agent or
Collateral Agent has taken any action pursuant to Section 8 and until all
Obligations of the Borrowers have been paid in full, any and all proceeds
received by the Agent or Collateral Agent from any sale or other disposition
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of the Collateral, or any part thereof, or the exercise of any other remedy by
the Agent or Collateral Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the
Collateral Agent to pay principal, interest fees and other sums due which may
have been advanced by the Agent or the Collateral Agent and for which the Agent
or Collateral Agent, as applicable, has not been reimbursed by the Borrowers or
the Lenders;
(ii) second, to reimburse the Agent, the
Collateral Agent, and the Lenders for out-of-pocket costs, expenses and
disbursements, including reasonable attorneys' and paralegals' fees and legal
expenses, incurred by the Agent, the Collateral Agent or the Lenders in
connection with realizing on the Collateral or collection of any Obligations of
any of the Borrowers under any of the Loan Documents, including advances made by
the Lenders or any one of them or the Agent or the Collateral Agent for the
reasonable maintenance, preservation, protection or enforcement of, or
realization upon, the Collateral, including advances for taxes, insurance,
repairs and the like and reasonable expenses incurred to sell or otherwise
realize on, or prepare for sale or other realization on, any of the Collateral;
(iii) third, to the repayment of all
Indebtedness then due and unpaid of the Borrowers to the Lenders incurred under
this Agreement or any of the other Loan Documents, whether of principal,
interest, fees, expenses or otherwise, in such manner as the Agent may determine
in its discretion; and
(iv) the balance, if any, as required by
Law.
8.1.21 OTHER RIGHTS AND REMEDIES.
In addition to all of the rights and remedies
contained in this Agreement or in any of the other Loan Documents, the Agent and
Collateral Agent shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code or other applicable Law, all of which rights
and remedies shall be cumulative and non-exclusive, to the extent permitted by
Law. The Agent and the Collateral Agent may, as applicable, and upon the request
of the Required Lenders shall, exercise all post-default rights granted to the
Agent or Collateral Agent and the Lenders under the Loan Documents or applicable
Law.
8.2 NOTICE OF SALE.
Any notice required to be given by the Agent or Collateral
Agent of a sale, lease, or other disposition of the Collateral or any other
intended action by the Agent or Collateral
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Agent, if given ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrowers.
9. THE AGENT AND COLLATERAL AGENT
9.1 APPOINTMENT.
Each Lender hereby irrevocably, subject to the provisions of
Section 9.14, designates, appoints and authorizes NATIONAL BANK OF CANADA to act
as syndication and documentation Agent and NATIONSBANK, N.A. to act as
Collateral Agent and administrative agent for such Lender under this Agreement
and to execute and deliver or accept on behalf of each of the Lenders the other
Loan Documents. Each Lender hereby irrevocably authorizes, and each holder of
any Note by the acceptance of a Note shall be deemed irrevocably to authorize,
the Agent or the Collateral Agent, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and any other
instruments and agreements referred to herein, and to exercise such powers and
to perform such duties hereunder as are specifically delegated to or required of
the Agent or Collateral Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. NATIONAL BANK OF CANADA and NATIONSBANK, N.A.
agree to act as the Agent and Collateral Agent, respectively, on behalf of the
Lenders to the extent provided in this Agreement.
9.2 DELEGATION OF DUTIES.
The Agent and the Collateral Agent may perform any of their
respective duties hereunder by or through agents or employees (PROVIDED such
delegation does not constitute a relinquishment of its duties as Agent or
Collateral Agent) and, subject to Sections 9.5 [Reimbursement of Agent by
Borrowers, Etc.] and 9.6, shall be entitled to engage and pay for the advice or
services of any attorneys, accountants or other experts concerning all matters
pertaining to its duties hereunder and to rely upon any advice so obtained.
9.3 NATURE OF DUTIES; INDEPENDENT CREDIT INVESTIGATION.
The Agent and the Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and no
implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or otherwise exist. The duties
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of the Agent and the Collateral Agent shall be mechanical and administrative in
nature; the Agent and the Collateral Agent shall not have by reason of this
Agreement a fiduciary or trust relationship in respect of any Lender; and
nothing in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent or the Collateral Agent any obligations in
respect of this Agreement except as expressly set forth herein. Without limiting
the generality of the foregoing, the use of the term "agent" in this Agreement
with reference to the Agent and the Collateral Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Each Lender expressly
acknowledges (i) that neither the Agent nor the Collateral Agent have made any
representations or warranties to the Lenders and that no act by the Agent or the
Collateral Agent hereafter taken, including any review of the affairs of any of
the Borrowers, shall be deemed to constitute any representation or warranty by
the Agent or the Collateral Agent to any Lender; (ii) that it has made and will
continue to make, without reliance upon the Agent or the Collateral Agent, its
own independent investigation of the financial condition and affairs and its own
appraisal of the creditworthiness of each of the Borrowers in connection with
this Agreement and the making and continuance of the Loans hereunder; and (iii)
except as expressly provided herein, that neither the Agent nor the Collateral
Agent shall have any duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of any Loan or at
any time or times thereafter.
9.4 ACTIONS IN DISCRETION OF AGENT AND COLLATERAL AGENT;
INSTRUCTIONS FROM THE LENDERS.
The Agent and the Collateral Agent agree, upon the written
request of the Required Lenders, to take or refrain from taking any action of
the type specified as being within the rights, powers or discretion of the Agent
or the Collateral Agent herein, PROVIDED that the Agent and the Collateral Agent
shall not be required to take any action which exposes the Agent or the
Collateral Agent to personal liability or which is contrary to this Agreement or
any other Loan Document or applicable Law. In the absence of a request by the
Required Lenders, the Agent and the Collateral Agent shall have authority, in
their sole discretion, to take or not to take any such action, unless this
Agreement specifically requires the consent of the Required Lenders or all of
the Lenders. Any action taken or failure to act pursuant to such instructions or
discretion shall be binding on the Lenders, subject to Section 9.6 [Exculpatory
Provisions, Etc.]. Subject to the provisions of Section 9.6, no Lender shall
have any right of action whatsoever against the Agent or the Collateral Agent as
a result of the Agent or the Collateral Agent acting or refraining from acting
hereunder in accordance with the instructions of the Required Lenders, or in the
absence of such instructions, in the absolute discretion of the Agent and the
Collateral Agent.
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9.5 REIMBURSEMENT AND INDEMNIFICATION OF AGENT AND COLLATERAL
AGENT BY THE BORROWERS
The Borrowers unconditionally agree to pay or reimburse the
Agent and hold the Agent harmless against any and all liability for the payment
of all reasonable out-of-pocket costs, expenses and disbursements, including
fees and expenses of counsel (including the allocated costs of staff counsel),
appraisers and environmental consultants, incurred by the Agent (i) in
connection with the development, negotiation, preparation, printing, execution,
administration, syndication, interpretation and performance of this Agreement
and the other Loan Documents, and (ii) relating to any requested amendments,
waivers or consents pursuant to the provisions hereof. Additionally, the
Borrowers unconditionally agree to pay or reimburse the Agent and the Collateral
Agent and hold the Agent and Collateral Agent harmless against (a) any and all
liability for the payment of all reasonable out-of-pocket costs, expenses and
disbursements, including fees and expenses of counsel (including the allocated
costs of staff counsel), appraisers and environmental consultants, incurred by
the Agent or the Collateral Agent (i) in connection with the enforcement of this
Agreement or any other Loan Document or collection of amounts due hereunder or
thereunder or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (ii) in any workout or restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any other Loan Document or
in connection with any foreclosure, collection or bankruptcy proceedings, and
(b) all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including without limitation all documentary stamp taxes, intangible
taxes and recording fees and expenses and all interest and penalties thereon,
which may be imposed on, incurred by or asserted against the Agent or the
Collateral Agent, in its capacity as such, in any way relating to or arising out
of this Agreement or any other Loan Documents or, except in the case of Agent's
or Collateral Agent's gross negligence or willful misconduct (as found in a
final, non-appealable judgment by a court of competent jurisdiction) (however
the gross negligence or willful misconduct of the Agent shall not result in
liability to the Collateral Agent and vice versa), any action taken or omitted
by the Agent or the Collateral Agent hereunder. In addition, the Borrowers agree
to reimburse and pay all reasonable out-of-pocket expenses of the Agent and the
Collateral Agent and the Agent's and Collateral Agent's regular employees and
agents engaged periodically to perform audits of the Borrowers' books, records
and business properties.
9.6 EXCULPATORY PROVISIONS; LIMITATION OF LIABILITY.
Except in the case of Agent's or Collateral Agent's gross
negligence or willful misconduct (as found in a final, non-appealable judgment
by a court of competent jurisdiction) (however the gross negligence or willful
misconduct of the Agent shall not result in liability to the Collateral Agent
and vice versa) neither the Agent or the Collateral Agent nor any of their
respective directors, officers, employees, agents, attorneys or Affiliates shall
(a) be liable to any Lender for any action taken or omitted to be taken by it or
them hereunder, or in connection
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herewith including pursuant to any Loan Document, (b) be responsible in any
manner to any of the Lenders for the effectiveness, enforceability, genuineness,
validity or the due execution of this Agreement or any other Loan Documents or
for any recital, representation, warranty, document, certificate, report or
statement herein or made or furnished under or in connection with this Agreement
or any other Loan Documents, or (c) be under any obligation to any of the
Lenders to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions hereof or thereof on the part of the
Borrowers, or the financial condition of the Borrowers, or the existence or
possible existence of any Event of Default or Potential Default. No claim may be
made by any of the Borrowers, any Lender, the Agent or the Collateral Agent or
any of their respective Subsidiaries against the Agent or the Collateral Agent,
any Lender or any of their respective directors, officers, employees, agents,
attorneys or Affiliates, or any of them, for any special, indirect or
consequential damages or, to the fullest extent permitted by Law, for any
punitive damages in respect of any claim or cause of action (whether based on
contract, tort, statutory liability, or any other ground) based on, arising out
of or related to any Loan Document or the transactions contemplated hereby or
any act, omission or event occurring in connection therewith, including the
negotiation, documentation, administration or collection of the Loans, and each
of the Borrowers, the Agent and the Collateral Agent and each Lender hereby
waive, release and agree never to ▇▇▇ upon any claim for any such damages,
whether such claim now exists or hereafter arises and whether or not it is now
known or suspected to exist in its favor. Each Lender agrees that, except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent or the Collateral Agent hereunder or given to the Agent or
the Collateral Agent for the account of or with copies for the Lenders, the
Agent and the Collateral Agent and each of their respective directors, officers,
employees, agents, attorneys or Affiliates shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrowers which may come into
the possession of the Agent or the Collateral Agent or any of their respective
directors, officers, employees, agents, attorneys or Affiliates.
9.7 REIMBURSEMENT AND INDEMNIFICATION OF AGENT AND COLLATERAL
AGENT BY LENDERS.
Each Lender agrees to reimburse and indemnify the Agent and
the Collateral Agent (to the extent not reimbursed by the Borrowers and without
limiting the obligation of the Borrowers to do so) in proportion to its Ratable
Share from and against all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements, including
attorneys' fees and disbursements (including the allocated costs of staff
counsel), and costs of appraisers and environmental consultants, of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent or the Collateral Agent, in its capacity as such, in any way relating to
or arising out of this Agreement or any other Loan Documents or any action taken
or omitted by the Agent or the Collateral Agent hereunder or under any other
Loan Document, except in the case of Agent's or Collateral Agent's gross
negligence or willful misconduct (as found in a final, non-appealable judgment
by a court of competent jurisdiction)
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(however the gross negligence or willful misconduct of the Agent shall not
result in liability to the Collateral Agent and vice versa). In addition, each
Lender agrees promptly upon demand to reimburse the Agent and the Collateral
Agent (to the extent not reimbursed by the Borrowers and without limiting the
obligation of the Borrowers to do so) in proportion to its Ratable Share for all
amounts due and payable by the Borrowers to the Agent and the Collateral Agent
in connection with the Agent's and Collateral Agent's periodic audit of the
Borrowers' books, records and business properties.
9.8 RELIANCE BY AGENT.
The Agent and the Collateral Agent shall be entitled to rely
upon any writing, telegram, telex or teletype message, resolution, notice,
consent, certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons, and upon
the advice and opinions of counsel and other professional advisers selected by
the Agent or the Collateral Agent. The Agent and the Collateral Agent shall be
fully justified in failing or refusing to take any action hereunder unless it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
9.9 NOTICE OF DEFAULT.
The Agent and the Collateral Agent shall not be deemed to have
knowledge or notice of the occurrence of any Potential Default or Event of
Default unless the Agent or the Collateral Agent has received written notice
from a Lender or the Borrowers referring to this Agreement, describing such
Potential Default or Event of Default and stating that such notice is a "notice
of default."
9.10 NOTICES.
The Agent and the Collateral Agent shall promptly send to each
Lender a copy of all notices received from the Borrowers pursuant to the
provisions of this Agreement or the other Loan Documents promptly upon receipt
thereof. The Collateral Agent shall promptly notify the Borrowers and the other
Lenders of each change in the Base Rate and the effective date thereof.
9.11 LENDERS IN THEIR INDIVIDUAL CAPACITIES.
With respect to its Revolving Credit Commitment and the
Revolving Credit Loans made by it and any other rights and powers given to it as
a Lender hereunder or under any of the other Loan Documents, the Agent and the
Collateral Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not the Agent or the
Collateral Agent, and the term "Lenders" shall, unless the context otherwise
indicates, include the Agent and the Collateral Agent in their respective
individual capacities. NATIONAL BANK OF CANADA and NATIONSBANK, N.A. and their
respective Affiliates and each of the
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Lenders and their respective Affiliates may, without liability to account,
except as prohibited herein, make loans to, accept deposits from, discount
drafts for, act as trustee under indentures of, and generally engage in any kind
of banking or trust business with, the Borrowers, in the case of the Agent or
the Collateral Agent, as though it were not acting as Agent or the Collateral
Agent hereunder and in the case of each Lender, as though such Lender were not a
Lender hereunder. The Lenders acknowledge that, pursuant to such activities, the
Agent or the Collateral Agent or their respective Affiliates may (i) receive
information regarding the Borrowers (including information that may be subject
to confidentiality obligations in favor of the Borrowers) and acknowledge that
the Agent and the Collateral Agent shall be under no obligation to provide such
information to them, and (ii) accept fees and other consideration from the
Borrowers for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
9.12 HOLDERS OF NOTES.
The Agent and the Collateral Agent may deem and treat any
payee of any Note as the owner thereof for all purposes hereof unless and until
written notice of the assignment or transfer thereof shall have been filed with
the Agent and the Collateral Agent. 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 any 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.
9.13 EQUALIZATION OF LENDERS.
The Lenders and the holders of any participations in any Notes
agree among themselves that, with respect to all amounts received by any Lender
or any such holder for application on any Obligation hereunder or under any Note
or under any such participation, whether received by voluntary payment, by
realization upon security, by the exercise of the right of set-off or banker's
lien, by counterclaim or by any other non-pro rata source, equitable adjustment
will be made in the manner stated in the following sentence so that, in effect,
all such excess amounts will be shared ratably among the Lenders and such
holders in proportion to their interests in payments under the Notes, except as
otherwise provided with respect to fees due to the Agent for its own account in
connection with Letters of Credit and Bankers' Acceptances, and as set forth in
Section 4.4.3 [Agent's and Lender's Rights], 5.4.2 [Replacement of a Lender] or
5.6 [Additional Compensation in Certain Circumstances]. The Lenders or any such
holder receiving any such amount shall purchase for cash from each of the other
Lenders an interest in such Lender's Loans and its obligations under Letters of
Credit and Bankers' Acceptances in such amount as shall result in a ratable
participation by the Lenders and each such holder in the aggregate unpaid amount
under the Notes, Letters of Credit and Bankers' Acceptances, PROVIDED that if
all or any portion of such excess amount is thereafter recovered from the Lender
or the holder making such purchase, such purchase shall be rescinded and the
purchase price restored to
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the extent of such recovery, together with interest or other amounts, if any,
required by law (including court order) to be paid by the Lender or the holder
making such purchase.
9.14 SUCCESSOR AGENT AND COLLATERAL AGENT.
The Agent and the Collateral Agent (i) may resign as Agent and
Collateral Agent or (ii) shall resign if such resignation is required by Section
5.4.2 [Replacement of a Lender], in either case of (i) or (ii) by giving not
less than thirty (30) days' prior written notice to the Borrowers and the
Lenders. If the Agent or the Collateral Agent shall resign under this Agreement,
then either (a) the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, subject to the consent of the Borrowers, such
consent not to be unreasonably withheld and such consent not to be requested or
required if an Event of Default exists, or (b) if a successor agent shall not be
so appointed and approved within the thirty (30) day period following the
Agent's or the Collateral Agent's notice to the Lenders of its resignation, then
the Agent or the Collateral Agent , as applicable shall appoint, with the
consent of the Borrowers, such consent not to be unreasonably withheld, and such
consent not to be requested or required if an Event of Default exists, a
successor agent who shall serve as Agent or Collateral Agent until such time as
the Required Lenders appoint and the Borrowers consent to the appointment of a
successor agent. Upon its appointment pursuant to either clause (a) or (b)
above, such successor agent shall succeed to the rights, powers and duties of
the Agent or the Collateral Agent, and the term "Agent" or "Collateral Agent"
shall mean such successor agent, effective upon its appointment, and the former
Agent or Collateral Agent's rights, powers and duties as Agent or Collateral
Agent shall be terminated without any other or further act or deed on the part
of such former Agent or Collateral Agent or any of the parties to this
Agreement. After the resignation of any agent hereunder, the provisions of
Section 9 shall inure to the benefit of such former agent and such former agent
shall not by reason of such resignation be deemed to be released from liability
for any actions taken or not taken by it while it was Agent or Collateral Agent
under this Agreement.
9.15 ALLOCATION OF FACILITY.
As of the Closing Date each of the Lenders shall be deemed to
have purchased a risk participation equal to their respective Ratable Shares in
all loans, letters of credit ("Existing Letters of Credit") and bankers'
acceptances ("Existing BA's) which were created under the Facility, which remain
outstanding as of the Closing Date and which are assigned pursuant to the
Irrevocable Assignment. On the Closing Date the all sums which may be required
to be paid in order to reallocate the Facility, Existing Letters of Credit and
Existing BA's among the Lenders in accordance with their Ratable Shares shall be
allocated and paid among the Lenders in
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accordance with their Ratable Shares. Borrowers shall pay to Agent on the
Closing Date any additional fees and charges which may be due as of the Closing
Date in connection with the Existing Letters of Credit and Existing BA's. The
Existing Letters of Credit and Existing BA's which are assigned pursuant to the
Irrevocable Assignment shall, for all purposes under this Agreement, be treated
as Letters of Credit and Bankers' Acceptances created hereunder, and shall be
subject to sublimits, fees and charges due with respect to Letters of Credit and
Bankers' Acceptances created hereunder. Any and all documents held by the
Collateral Agent with respect to the Facility, including such Existing Letters
of Credit and Existing BA's shall be held by the Collateral Agent for the
ratable interest of each Lender. It is the intent of the parties that this
Agreement and the credit facilities set forth herein shall not constitute a
novation, but rather a continuation and amendment of the Facility which is being
assigned pursuant to the Irrevocable Assignment.
9.16 AVAILABILITY OF FUNDS.
The Collateral Agent may assume that each Lender has made or
will make the proceeds of a Loan available to the Collateral Agent unless the
Collateral Agent shall have been notified by such Lender on or before the close
of Business two (2) Business Days preceding the Borrowing Date with respect to
such Loan . The Collateral Agent may, in reliance upon such assumption (but
shall not be required to), make available to the Borrowers a corresponding
amount. If such corresponding amount is not in fact made available to the
Collateral Agent by such Lender, or if the Collateral Agent fails to timely
remit payments to another Lender, the Collateral Agent and the other Lenders, as
the case may be, shall be entitled to recover such amount on demand from such
Lender or the Collateral Agent, as the case may be together with interest
thereon, in respect of each day during the period commencing on the date such
amount was made available to the Borrowers and ending on the date the Collateral
Agent or Lender recovers such amount, at a rate per annum equal to (i) the
Federal Funds Effective Rate during the first three (3) days after such interest
shall begin to accrue and (ii) the applicable interest rate in respect of such
Loan after the end of such three-day period.
9.17 CALCULATIONS.
Neither the Agent nor the Collateral Agent shall be liable for
any error in computing the amount payable to any Lender whether in respect of
the Loans, fees or any other amounts due to the Lenders under this Agreement. In
the event an error in computing any amount payable to any Lender is made, the
Agent and the Collateral Agent, the Borrowers and each affected Lender shall,
forthwith upon discovery of such error, make such adjustments as shall be
required to correct such error, and any compensation therefor will be calculated
at the Federal Funds Effective Rate.
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9.18 BENEFICIARIES.
Except as expressly provided herein, the provisions of Section
9 are solely for the benefit of the Agent and the Collateral Agent and the
Lenders, and the Borrowers shall not have any rights to rely on or enforce any
of the provisions hereof. In performing its functions and duties under this
Agreement, the Agent and the Collateral Agent shall act solely as agent of the
Lenders and do not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any of the Borrowers.
10. MISCELLANEOUS
10.1 MODIFICATIONS, AMENDMENTS OR WAIVERS.
With the written consent of the Required Lenders, the Agent,
or at the direction of the Agent or Required Lenders, the Collateral Agent,
acting on behalf of all the Lenders, and the Borrowers, may from time to time
enter into written agreements amending or changing any provision of this
Agreement or any other Loan Document or the rights of the Lenders or the
Borrowers hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the Obligations of the Borrowers hereunder
or thereunder. Any such agreement, waiver or consent made with such written
consent shall be effective to bind all the Lenders and the Borrowers; PROVIDED,
that, without the written consent of ALL the Lenders, no such agreement, waiver
or consent may be made which will:
10.1.1 INCREASE OF COMMITMENT; EXTENSION OR
EXPIRATION DATE.
Increase the amount of the Revolving Credit
Commitment of any Lender hereunder or extend the Expiration Date;
10.1.2 EXTENSION OF PAYMENT; REDUCTION OF PRINCIPAL
INTEREST OR FEES; MODIFICATION OF TERMS OF PAYMENT.
Whether or not any Loans are outstanding, extend the
time for payment of principal or interest of any Loan (excluding the due date of
any mandatory prepayment of a Loan or any mandatory Commitment reduction in
connection with such a mandatory prepayment hereunder except for mandatory
reductions of the Commitments on the Expiration Date), the
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Commitment Fee or any other fee payable to any Lender, or reduce the principal
amount of or the rate of interest borne by any Loan or reduce the Commitment
Fee, or any other fee payable to any Lender, or otherwise affect the terms of
payment of the principal of or interest of any Loan, the Commitment Fee or any
other fee payable to any Lender;
10.1.3 RELEASE OF COLLATERAL OR GUARANTOR.
Except for sales of assets permitted by Section 7.2.7
[Disposition of Assets or Subsidiaries], release any Collateral consisting of
capital stock or other ownership interests of any Borrower or the assets of any
Borrower or any guarantor from its Obligations under any security for any of the
Borrowers' Obligations; or
10.1.4 MISCELLANEOUS
Amend Section 5.2 [Pro Rata Treatment of Lenders],
9.6 [Exculpatory Provisions, Etc.] or 9.13 [Equalization of Lenders] or this
Section 10.1 [Modifications, Amendments or Waivers], or change or waive any
default under any financial covenant, or alter any provision regarding the pro
rata treatment of the Lenders or the advance rates set forth in the Borrowing
Base, or change the definition of Required Lenders, or change any requirement
providing for the Lenders or the Required Lenders to authorize the taking of any
action hereunder;
PROVIDED, further, that no agreement, waiver or consent which would modify the
interests, rights or obligations of the Agent or the Collateral Agent in its
capacity as Agent or Collateral Agent or as the issuer of Letters of Credit or
Bankers' Acceptances shall be effective without the written consent of the Agent
and the Collateral Agent, as applicable.
10.2 NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING
REQUIRED.
No course of dealing and no delay or failure of the Agent or
the Collateral Agent or any Lender in exercising any right, power, remedy or
privilege under this Agreement or any other Loan Document shall affect any other
or future exercise thereof or operate as a waiver thereof, nor shall any single
or partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power, remedy or privilege preclude any further exercise
thereof or of any other right, power, remedy or privilege. The rights and
remedies of the Agent and the
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Collateral Agent and the Lenders under this Agreement and any other Loan
Documents are cumulative and not exclusive of any rights or remedies which they
would otherwise have. Any waiver, permit, consent or approval of any kind or
character on the part of any Lender of any breach or default under this
Agreement or any such waiver of any provision or condition of this Agreement
must be in writing and shall be effective only to the extent specifically set
forth in such writing.
10.3 REIMBURSEMENT AND INDEMNIFICATION OF LENDERS BY THE
BORROWERS; TAXES.
The Borrowers agree unconditionally to pay all stamp,
document, transfer, recording or filing taxes or fees and similar impositions
now or hereafter determined by the Agent or any Lender to be payable in
connection with this Agreement or any other Loan Document, and the Borrowers
agree unconditionally to save the Agent, the Collateral Agent and the Lenders
harmless from and against any and all present or future claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any such taxes, fees or impositions. All indemnifications in this Agreement of
the Borrowers in favor of the Agent, Collateral Agent and Lenders shall remain
in full force and effect and survive repayment of the Loans and termination of
the Revolving Credit Commitments.
10.4 HOLIDAYS.
Whenever payment of a Loan to be made or taken hereunder shall
be due on a day which is not a Business Day such payment shall be due on the
next Business Day and such extension of time shall be included in computing
interest and fees, except that the Loans shall be due on the Business Day
preceding the Expiration Date if the Expiration Date is not a Business Day.
Whenever any payment or action to be made or taken hereunder (other than payment
of the Loans) shall be stated to be due on a day which is not a Business Day,
such payment or action shall be made or taken on the next following Business Day
(except as provided in Section 4.2 [Interest Periods] with respect to Interest
Periods under the Euro-Rate Option), and such extension of time shall not be
included in computing interest or fees, if any, in connection with such payment
or action.
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10.5 FUNDING BY BRANCH, SUBSIDIARY OR AFFILIATE.
10.5.1 NOTIONAL FUNDING.
Each Lender shall have the right from time to time,
without notice to the Borrowers, to deem any branch, Subsidiary or Affiliate
(which for the purposes of this Section 10.5 shall mean any corporation or
association which is directly or indirectly controlled by or is under direct or
indirect common control with any corporation or association which directly or
indirectly controls such Lender) of such Lender to have made, maintained or
funded any Loan to which the Euro-Rate Option applies at any time, PROVIDED that
immediately following (on the assumption that a payment were then due from the
Borrowers to such other office), and as a result of such change, the Borrowers
would not be under any greater financial obligation pursuant to Section 5.6
[Additional Compensation in Certain Circumstances] than it would have been in
the absence of such change. Notional funding offices may be selected by each
Lender without regard to such Lender's actual methods of making, maintaining or
funding the Loans or any sources of funding actually used by or available to
such Lender.
10.5.2 ACTUAL FUNDING.
Each Lender shall have the right from time to time to
make or maintain any Loan by arranging for a branch, Subsidiary or Affiliate of
such Lender to make or maintain such Loan subject to the last sentence of this
Section 10.5.2. If any Lender causes a branch, Subsidiary or Affiliate to make
or maintain any part of the Loans hereunder, all terms and conditions of this
Agreement shall, except where the context clearly requires otherwise, be
applicable to such part of the Loans to the same extent as if such Loans were
made or maintained by such Lender, but in no event shall any Lender's use of
such a branch, Subsidiary or Affiliate to make or maintain any part of the Loans
hereunder cause such Lender or such branch, Subsidiary or Affiliate to incur any
cost or expenses payable by the Borrowers hereunder or require the Borrowers to
pay any other compensation to any Lender (including any expenses incurred or
payable pursuant to Section 5.6 [Additional Compensation in Certain
Circumstances]) which would otherwise not be incurred.
10.6 NOTICES.
All notices, requests, demands, directions and other
communications (as used in this Section 10.6, collectively referred to as
"notices") given to or made upon any party hereto
106
under the provisions of this Agreement shall be in writing (including telex or
facsimile communication) unless otherwise expressly permitted hereunder and
shall be delivered or sent by telex or facsimile to the respective parties at
the addresses and numbers set forth under their respective names on Schedule
1.1(B) hereof or in accordance with any subsequent unrevoked written direction
from any party to the others. All notices shall, except as otherwise expressly
herein provided, be effective (a) in the case of telex or facsimile, when
received, (b) in the case of hand-delivered notice, when hand-delivered, (c) if
given by mail, four (4) days after such communication is deposited in the mail
with first-class postage prepaid, return receipt requested, and (d) if given by
any other means (including by air courier), when delivered; PROVIDED, that
notices to the Agent or the Collateral Agent shall not be effective until
received. Any Lender giving any notice to any Borrower shall simultaneously send
a copy thereof to the Agent and Collateral Agent, and the Agent and Collateral
Agent shall promptly notify the other Lenders of the receipt by it of any such
notice.
10.7 SEVERABILITY.
The provisions of this Agreement are intended to be severable.
If any provision of this Agreement shall be held invalid or unenforceable in
whole or in part in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
10.8 GOVERNING LAW.
Each Letter of Credit and Section 2.8 [Letter of Credit
Subfacility] shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be revised or amended from time to time,
and to the extent not inconsistent therewith, the internal laws of the State of
New York without regard to its conflict of laws principles and the balance of
this Agreement shall be deemed to be a contract under the Laws of the State of
New York and for all purposes shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York without regard to its
conflict of laws principles
10.9 PRIOR UNDERSTANDING.
107
This Agreement and the other Loan Documents supersede all
prior understandings and agreements, whether written or oral, between the
parties hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.
10.10 DURATION; SURVIVAL.
All representations and warranties and indemnities of the
Borrowers contained herein or made in connection herewith shall survive the
making of Loans and issuance of Letters of Credit and creation of Bankers'
Acceptances, and the repayment of all Borrowers' Obligations thereunder and
shall not be waived by the execution and delivery of this Agreement, any
investigation by the Agent, Collateral Agent or the Lenders, the making of
Loans, issuance of Letters of Credit, creation of Bankers' Acceptances or
payment in full of the Loans, Letters of Credit and Bankers' Acceptances. All
covenants and agreements of the Borrowers contained in Sections 7.1 [Affirmative
Covenants], 7.2 [Negative Covenants] and 7.3 [Reporting Requirements] herein
shall continue in full force and effect from and after the date hereof so long
as the Borrowers may borrow or request Letters of Credit or Bankers' Acceptances
hereunder and until termination of the Commitments and payment in full of the
Loans and expiration or termination of all Letters of Credit and Bankers'
Acceptances. All covenants and agreements of the Borrowers contained herein
relating to the payment of principal, interest, premiums, additional
compensation or expenses and indemnification, including those set forth in the
Notes, Section 5 [Payments] and Sections 9.5 [Reimbursement of Agent by
Borrower, Etc.], 9.7 [Reimbursement of Agent by Lenders, Etc.] and 10.3
[Reimbursement of Lenders by Borrower; Etc.], shall survive payment in full of
the Loans, expiration or termination of the Letters of Credit and termination of
the Commitments.
10.11 SUCCESSORS AND ASSIGNS.
(i) This Agreement shall be binding upon and
shall inure to the benefit of the Lenders, the Agent, the Collateral Agent, the
Borrowers and their respective successors and assigns, except that none of the
Borrowers may assign or transfer any of its rights and Obligations hereunder or
any interest herein. Each Lender may, at its own cost, make assignments of or
sell participations in all or any part of its Commitments and the Loans made by
it to one or more banks or other entities, subject to the consent of the
Borrowers and the Agent with respect to any assignee, such consent not to be
unreasonably withheld, PROVIDED that (1) no consent of the Borrowers shall be
required (A) if an Event of Default exists and is continuing, or (B) in the case
of an assignment by a Lender to an Affiliate of such Lender, and (2) no
assignment by a Lender to a Person other than an Affiliate of such Lender may be
made
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in amounts less than the lesser of $5,000,000.00 or the amount of the assigning
Lender's Commitment. In the case of an assignment, upon receipt by the Agent of
the Assignment and Assumption Agreement, the assignee shall have, to the extent
of such assignment (unless otherwise provided therein), the same rights,
benefits and obligations as it would have if it had been a signatory Lender
hereunder, the Commitments shall be adjusted accordingly, and upon surrender of
any Note subject to such assignment, the Borrowers shall execute and deliver a
new Note to the assignee in an amount equal to the amount of the Revolving
Credit assumed by it and a new Revolving Credit Note to the assigning Lender in
an amount equal to the Revolving Credit Commitment retained by it hereunder. Any
Lender which assigns any or all of its Commitment or Loans to a Person other
than an Affiliate of such Lender shall pay to the Collateral Agent a service fee
in the amount of $3,500.00 for each assignment. In the case of a participation,
the participant shall only have the rights specified in Section 8.1.18 [Set-off]
(the participant's rights against such Lender in respect of such participation
to be those set forth in the agreement executed by such Lender in favor of the
participant relating thereto and not to include any voting rights except with
respect to changes of the type referenced in Sections 10.1.1) [Increase of
Commitment, Etc.], 10.1.2 [Extension of Payment, Etc.], or 10.1.3 [Release of
Collateral or Guarantor], all of such Lender's obligations under this Agreement
or any other Loan Document shall remain unchanged, and all amounts payable by
any Borrower hereunder or thereunder shall be determined as if such Lender had
not sold such participation.
(ii) Any assignee or participant which is
not incorporated under the Laws of the United States of America or a state
thereof shall deliver to the Borrowers and the Agent the form of certificate
described in Section 10.18 [Tax Withholding Clause] relating to federal income
tax withholding. Each Lender may furnish any publicly available information
concerning any Borrower and any other information concerning any Borrower in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees or participants), PROVIDED that such assignees
and participants agree to be bound by the provisions of Section 10.12
[Confidentiality].
(iii) Notwithstanding any other provision in
this Agreement, any Lender may at any time pledge or grant a security interest
in all or any portion of its rights under this Agreement, its Note and the other
Loan Documents to any Federal Reserve Lender in accordance with Regulation A of
the FRB or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or
consent of the Borrowers or the Agent. No such pledge or grant of a security
interest shall release the transferor Lender of its obligations hereunder or
under any other Loan Document.
10.12 CONFIDENTIALITY.
10.12.1 GENERAL.
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The Agent, the Collateral Agent and the Lenders each
agree to keep confidential all information obtained from any Borrower which is
nonpublic and confidential or proprietary in nature (including any information
the Borrowers specifically designate as confidential), except as provided below,
and to use such information only in connection with their respective capacities
under this Agreement and for the purposes contemplated hereby. The Agent, the
Collateral Agent and the Lenders shall be permitted to disclose such information
(i) to outside legal counsel, accountants and other professional advisors who
need to know such information in connection with the administration and
enforcement of this Agreement, subject to agreement of such Persons to maintain
the confidentiality, (ii) to assignees and participants as contemplated by
Section 10.11, (iii) to the extent requested by any bank regulatory authority
or, with notice to the Borrowers, as otherwise required by applicable Law or by
any subpoena or similar legal process, or in connection with any investigation
or proceeding arising out of the transactions contemplated by this Agreement,
(iv) if it becomes publicly available other than as a result of a breach of this
Agreement or becomes available from a source not known to be subject to
confidentiality restrictions, or (v) if the Borrowers shall have consented to
such disclosure.
10.12.2 SHARING INFORMATION WITH AFFILIATES OF THE
LENDERS.
Each Borrower acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to the Borrowers or one or more of any Borrower's Affiliates (in
connection with this Agreement or otherwise) by any Lender or by one or more
Subsidiaries or Affiliates of such Lender and each of the Borrowers hereby
authorizes each Lender to share any information delivered to such Lender by such
Borrower pursuant to this Agreement, or in connection with the decision of such
Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such
Lender, it being understood that any such Subsidiary or affiliate of any Lender
receiving such information shall be bound by the provisions of Section 10.12.1
as if it were a Lender hereunder. Such authorization shall survive the repayment
of the Loans and other Obligations and the termination of the Commitments.
10.13 COUNTERPARTS.
This Agreement may be executed by different parties hereto on
any number of separate counterparts, each of which, when so executed and
delivered, shall be an original, and all such counterparts shall together
constitute one and the same instrument.
110
10.14 AGENT'S OR LENDER'S CONSENT.
Whenever the Agent's or the Collateral Agent's or any Lender's
consent is required to be obtained under this Agreement or any of the other Loan
Documents as a condition to any action, inaction, condition or event, the Agent,
the Collateral Agent and each Lender shall be authorized to give or withhold
such consent in its sole and absolute discretion and to condition its consent
upon the giving of additional collateral, the payment of money or any other
matter.
10.15 EXCEPTIONS.
The representations, warranties and covenants contained herein
shall be independent of each other, and no exception to any representation,
warranty or covenant shall be deemed to be an exception to any other
representation, warranty or covenant contained herein unless expressly provided,
nor shall any such exceptions be deemed to permit any action or omission that
would be in contravention of applicable Law.
10.16 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(i) Each of the Borrowers is accepting joint
and several liability hereunder and under the other Loan Documents in
consideration of the financial accommodations to be provided by the Lenders
under this Agreement, for the mutual benefit, directly and indirectly, of each
of the Borrowers and in consideration of the undertakings of each Borrower to
accept joint and several liability for the Obligations.
(ii) Each Borrower, jointly and severally,
hereby irrevocably and unconditionally accepts, not merely as a surety but also
as a co-debtor, joint and several liability with the other Borrowers with
respect to the payment and performance of all the Obligations, it being the
intention of the parties hereto that all of the Obligations shall be joint and
several Obligations of the Borrowers without preferences or distinction among
them.
(iii) If and to the extent that any Borrower
shall fail to make any payment with respect to any of the Obligations as and
when due or to perform any of the Obligations in accordance with the terms
thereof, then in each such event the other Borrowers will make such payment with
respect to, or perform, such Obligation.
(iv) The Obligations of each of the
Borrowers hereunder and under the other Loan Documents constitute full recourse
Obligations of such Borrower enforceable against it to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(v) Except as otherwise expressly provided
in this Agreement, each of the Borrowers hereby waives notice of acceptance of
its joint and several liability, notice of any extensions of credit made under
this Agreement, notice of any action at any
111
time taken or omitted by the Agent, the Collateral Agent or the Lenders under or
in respect of any of the Obligations, and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in
connection with this Agreement. Each of the Borrowers hereby assents to, and
waives notice of any extension or postponement of the time for the payment of
any of the Obligations, the acceptance of any payment of any of the Obligations,
the acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by the Lenders at any time or times in respect of any
default by any of the Borrowers in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by the Lenders in respect of any of the Obligations, and
the taking, addition, substitution or release, in whole or in part, at any time
or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any of the Borrowers. Without
limiting the generality of the foregoing, each of the Borrowers assents to any
other action or delay in acting or failure to act on the part of the Lenders
with respect to the failure by any of the Borrowers to comply with any of its
respective Obligations including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply with any
applicable law which might, but for the provisions of this Section, afford
grounds for terminating, discharging or relieving any Borrower, in whole or in
part, from any of its Obligations, it being the intent of each Borrower that so
long as any of its Obligations remain unsatisfied, the Obligations of such
Borrower shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each of the Borrowers shall not
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, re-construction or similar proceeding with respect to
any of the Borrowers or the Lenders. The joint and several liability of the
Borrowers hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any of the Borrowers or the
Lenders.
(vi) The provisions of this Section are made
for the benefit of the Agent, Collateral Agent and the Lenders and their
successors and assigns, and may be enforced in good faith by them (or by the
Agent or the Collateral Agent on their behalf) from time to time against each
Borrower as often as the occasion therefor may arise and without requirement on
the part of the Lenders first to ▇▇▇▇▇▇▇▇ any of their claims or to exercise any
of their rights against the other Borrower or to exhaust any remedies available
to them against any other Borrower or to resort to any other source or means of
obtaining payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this Section shall remain in effect until all of the
If at any time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by the
Lenders upon insolvency, bankruptcy or reorganization of any of the Borrowers,
or otherwise, the provisions of this Section will forthwith be reinstated in
effect, as though such payment had not been made.
10.17 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH BORROWER AND LENDER HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
112
OF NEW YORK, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED
MAIL DIRECTED TO SUCH BORROWER OR LENDER AT THE ADDRESSES PROVIDED FOR IN THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL
RECEIPT THEREOF. EACH BORROWER AND LENDER WAIVES ANY OBJECTION TO JURISDICTION
AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT
TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. EACH BORROWER, THE
COLLATERAL AGENT, THE AGENT AND THE LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT
PERMITTED BY LAW.
10.18 TAX WITHHOLDING CLAUSE.
Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the United States of America or a state thereof agrees that it
will deliver to each of the Borrowers and the Collateral Agent two (2) duly
completed copies of the following: (i) Internal Revenue Service Form W-9, 4224
or 1001, or other applicable form prescribed by the Internal Revenue Service,
certifying that such Lender, assignee or participant is entitled to receive
payments under this Agreement and the other Loan Documents without deduction or
withholding of any United States federal income taxes, or is subject to such tax
at a reduced rate under an applicable tax treaty, or (ii) Internal Revenue
Service Form W-8 or other applicable form or a certificate of such Lender,
assignee or participant indicating that no such exemption or reduced rate is
allowable with respect to such payments. Each Lender, assignee or participant
required to deliver to the Borrowers and the Agent a form or certificate
pursuant to the preceding
113
sentence shall deliver such form or certificate as follows: (A) each Lender
which is a party hereto on the Closing Date shall deliver such form or
certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by the Borrowers hereunder for the account of such
Lender; (B) each assignee or participant shall deliver such form or certificate
at least five (5) Business Days before the effective date of such assignment or
participation (unless the Collateral Agent in its sole discretion shall permit
such assignee or participant to deliver such form or certificate less than five
(5) Business Days before such date in which case it shall be due on the date
specified by the Collateral Agent). Each Lender, assignee or participant which
so delivers a Form W-8, W-9, 4224 or 1001 further undertakes to deliver to each
of the Borrowers and the Collateral Agent two (2) additional copies of such form
(or a successor form) on or before the date that such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by a Borrower or the Agent,
either certifying that such Lender, assignee or participant is entitled to
receive payments under this Agreement and the other Loan Documents without
deduction or withholding of any United States federal income taxes or is subject
to such tax at a reduced rate under an applicable tax treaty or stating that no
such exemption or reduced rate is allowable. The Collateral Agent shall be
entitled to withhold United States federal income taxes at the full withholding
rate unless the Lender, assignee or participant establishes an exemption or that
it is subject to a reduced rate as established pursuant to the above provisions.
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first above
written.
[BORROWERS]
NEWTECH ELECTRONICS
INDUSTRIES, INC., (formerly known as
NEW M-TECH CORPORATION), a
Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President,
Finance and Chief Financial Officer
114
NEWTECH (HONG KONG)
LIMITED, a Hong Kong limited liability
company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
DURABLE ELECTRONICS INDUSTRIES
LIMITED, a Hong Kong limited liability
company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
NEWTECH ELECTRONICS
INDUSTRIES LIMITED, (formerly known
as Pomillo Limited),a Hong Kong limited
liability company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
115
[AGENT]
NATIONAL BANK OF CANADA,
individually as a Lender and as Agent
By: /s/ [Illegible]
-----------------------------------
Title:________________________________
[COLLATERAL AGENT]
NATIONSBANK, N. A., individually as a
Lender and as Collateral Agent
By: /s/ [Illegible]
------------------------------------
Title:________________________________
[OTHER LENDERS]
COMERICA BANK
By: /s/ [Illegible]
------------------------------------
Title:________________________________
MERCANTILE BUSINESS CREDIT, INC.
By: /s/ [Illegible]
------------------------------------
Title:________________________________
116