CONFORMED COPY
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FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
among
AUDIOVOX CORPORATION,
as Borrower,
the Lenders Party Hereto
and
JPMORGAN CHASE BANK,
as Administrative Agent
Dated as of July 15, 2004
===================================================================================================================
Exhibit 99.1
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS..........................................................................................1
1.1 Defined Terms......................................................................................1
1.2 Other Definitional Provisions.....................................................................22
1.3 Exchange Rates....................................................................................22
SECTION 2. AMOUNT AND TERMS OF LOANS...........................................................................23
2.1 Commitments.......................................................................................23
2.2 Repayment of Loans; Notes.........................................................................23
2.3 Procedure for Revolving Credit Borrowing..........................................................24
2.4 Increase of Commitments...........................................................................24
SECTION 3. [Intentionally omitted].............................................................................25
SECTION 4. AMOUNT AND TERMS OF LETTERS OF CREDIT...............................................................25
4.1 Letters of Credit.................................................................................25
4.2 Procedure for Issuance, Extension or Amendment of Letters of Credit...............................27
4.3 Fees, Commissions and Other Charges...............................................................27
4.4 L/C Participations................................................................................28
4.5 Obligations Absolute..............................................................................29
4.6 Letter of Credit Payments.........................................................................30
4.7 Application.......................................................................................30
SECTION 5. AMOUNT AND TERMS OF ACCEPTANCES.....................................................................30
5.1 Acceptances.......................................................................................30
5.2 Procedure for Creation of Acceptances.............................................................31
5.3 Acceptance Participations.........................................................................31
5.4 Discount of Acceptances...........................................................................33
5.5 Mandatory Prepayment..............................................................................33
5.6 Obligations Absolute..............................................................................34
5.7 Supply of Drafts..................................................................................34
5.8 Delivery of Certain Documentation.................................................................34
5.9 Notice............................................................................................35
5.10 Use of Proceeds..................................................................................35
SECTION 6. GENERAL PROVISIONS APPLICABLE TO THE LOANS, LETTERS OF CREDIT AND ACCEPTANCES.......................35
6.1 Termination or Reduction of Commitments...........................................................35
6.2 Optional Prepayments..............................................................................35
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6.3 Mandatory Prepayments.............................................................................35
6.4 Certain Fees......................................................................................36
6.5 Reimbursement Obligations of the Borrower.........................................................37
6.6 Interest Rates and Payment Dates..................................................................38
6.7 Computation of Interest and Fees..................................................................38
6.8 Conversion and Continuation Options...............................................................38
6.9 Minimum Amounts of Tranches.......................................................................39
6.10 Inability to Determine Interest Rate.............................................................39
6.11 Pro Rata Treatment and Payments..................................................................40
6.12 Illegality.......................................................................................41
6.13 Indemnity........................................................................................41
6.14 Requirements of Law..............................................................................41
6.15 Taxes............................................................................................42
6.16 Foreign Exchange Contracts.......................................................................44
SECTION 7. REPRESENTATIONS AND WARRANTIES......................................................................44
7.1 Financial Condition...............................................................................44
7.2 No Change.........................................................................................45
7.3 Corporate Existence; Compliance with Law..........................................................45
7.4 Corporate Power; Authorization; Enforceable Obligations...........................................45
7.5 No Legal Bar......................................................................................46
7.6 No Material Litigation............................................................................46
7.7 No Default........................................................................................46
7.8 Ownership of Property; Liens......................................................................46
7.9 Intellectual Property.............................................................................47
7.10 No Burdensome Restrictions.......................................................................47
7.11 Taxes............................................................................................47
7.12 Federal Regulations..............................................................................47
7.13 ERISA............................................................................................47
7.14 Investment Company Act; Other Regulations........................................................48
7.15 Subsidiaries and Joint Ventures..................................................................48
7.16 Purpose of Loans.................................................................................48
7.17 Environmental Matters............................................................................48
7.18 Security Documents...............................................................................49
7.19 Insurance........................................................................................49
7.20 No Change in Credit Criteria or Collection Policies..............................................49
7.21 Government Contracts.............................................................................50
7.22 Existing Extensions of Credit....................................................................50
7.23 Licensing........................................................................................50
SECTION 8. CONDITIONS..........................................................................................50
8.1 Conditions to Effectiveness of Agreement..........................................................50
8.2 Conditions to Each Loan, Letter of Credit and Acceptance..........................................53
SECTION 9. AFFIRMATIVE COVENANTS...............................................................................53
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9.1 Financial Statements..............................................................................53
9.2 Certificates; Other Information...................................................................54
9.3 Payment of Obligations............................................................................55
9.4 Conduct of Business and Maintenance of Existence..................................................56
9.5 Maintenance of Property; Insurance................................................................56
9.6 Inspection of Property; Books and Records; Discussions; Audits....................................56
9.7 Additional Collateral.............................................................................56
9.8 Consignment of Title Documents....................................................................57
9.9 Notices...........................................................................................57
9.10 Environmental Laws...............................................................................58
9.11 Further Assurances...............................................................................59
SECTION 10. NEGATIVE COVENANTS.................................................................................59
10.1 Financial Condition Covenants....................................................................59
10.2 Limitation on Indebtedness.......................................................................60
10.3 Limitation on Liens..............................................................................61
10.4 Limitation on Guarantee Obligations..............................................................62
10.5 Limitations on Fundamental Changes...............................................................63
10.6 Limitation on Sale of Assets.....................................................................63
10.7 Limitation on Dividends; Stock Repurchases.......................................................64
10.8 Limitation on Capital Expenditures...............................................................64
10.9 Limitation on Investments, Loans and Advances....................................................64
10.10 Limitation on Payments on Subordinated Indebtedness.............................................65
10.11 Limitation on Subordinated Indebtedness.........................................................65
10.12 Transactions with Affiliates....................................................................65
10.13 Sale and Leaseback..............................................................................66
10.14 Fiscal Year.....................................................................................66
10.15 Limitation on Negative Pledge Clauses...........................................................66
10.16 Compromise of Receivables.......................................................................66
10.17 Accounting Policies and Procedures..............................................................66
10.18 Consignment of Title Documents..................................................................66
10.19 Limitation on Restrictions on Intercompany Payments.............................................66
10.20 Limitation on Foreign Exchange Contracts and Interest Rate Agreement............................67
SECTION 11. EVENTS OF DEFAULT..................................................................................67
SECTION 12. THE ADMINISTRATIVE AGENT...........................................................................70
12.1 Appointment......................................................................................70
12.2 Delegation of Duties.............................................................................70
12.3 Exculpatory Provisions...........................................................................70
12.4 Reliance by Administrative Agent.................................................................71
12.5 Notice of Default................................................................................71
12.6 Non-Reliance on Administrative Agent and Other Lenders...........................................71
12.7 Indemnification..................................................................................72
12.8 Administrative Agent in Its Individual Capacity..................................................72
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12.9 Successor Administrative Agent...................................................................72
12.10 Issuing Bank and Accepting Bank.................................................................73
SECTION 13. MISCELLANEOUS......................................................................................73
13.1 Amendments and Waivers...........................................................................73
13.2 Notices..........................................................................................74
13.3 No Waiver; Cumulative Remedies...................................................................74
13.4 Survival of Representations and Warranties.......................................................75
13.5 Payment of Expenses and Taxes....................................................................75
13.6 Successors and Assigns; Participations; Purchasing Lenders.......................................76
13.7 Adjustments; Set-off.............................................................................79
13.8 Confidentiality..................................................................................80
13.9 Counterparts.....................................................................................80
13.10 Severability....................................................................................80
13.11 Integration.....................................................................................80
13.12 GOVERNING LAW...................................................................................80
13.13 Submission To Jurisdiction; Waivers.............................................................81
13.14 Acknowledgments.................................................................................81
13.15 WAIVERS OF JURY TRIAL...........................................................................81
13.16 [Intentionally omitted].........................................................................81
13.17 [Intentionally omitted].........................................................................82
13.18 USA PATRIOT Act.................................................................................82
13.19 Special Provisions..............................................................................82
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Schedules
Schedule 1.1(a) Commitments
Schedule 7.1 Changes of Events
Schedule 7.2 Stock Repurchases
Schedule 7.6 Litigation
Schedule 7.8 Leases and Warehouse Contracts
Schedule 7.13 ERISA Matters
Schedule 7.15 Subsidiaries and Joint Ventures
Schedule 7.17 Environmental Matters
Schedule 7.21 Government Contracts
Schedule 10.9(e) Investments in Joint Ventures and Foreign Subsidiaries
Schedule 10.12 Transactions with Affiliates
Schedule 10.17 Changes in Accounting Policies and Procedures
Schedule 13.2 Addresses of Banks and Subsidiaries
Exhibits
Exhibit A Form of Note
Exhibit B Form of Borrowing Certificate
Exhibit C-1 Form of Borrowing Base Certificate
Exhibit C-2 Form of Borrowing Base Notice
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Acceptance Request
Exhibit F Form of Draft
Exhibit G-1 Form of Opinion of Counsel to the Borrower and the
Subsidiaries
Exhibit G-2 Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Exhibit H Form of Landlord's Consent
Exhibit I Form of Guarantee and Collateral Agreement
Exhibit J Form of Exemption Certificate
v
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 15, 2004,
among AUDIOVOX CORPORATION, a Delaware corporation (the "Borrower"), the several
banks and other financial institutions from time to time parties to this
Agreement (collectively, the "Lenders"; individually, a "Lender"), and JPMORGAN
CHASE BANK, a New York banking corporation, as administrative agent for the
Lenders hereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties
to the Fourth Amended and Restated Credit Agreement, dated as of July 28, 1999
(as amended prior to the date hereof, the "Existing Credit Agreement");
WHEREAS, pursuant to the Existing Credit Agreement, certain of the Lenders
have over time made loans to, and have issued letters of credit, steamship
guarantees and airway releases and created bankers' acceptances for or for the
account of, the Borrower (collectively, the "Existing Extensions of Credit")
which are secured pursuant to the Security Documents (as defined in the Existing
Credit Agreement);
WHEREAS, the Borrower has requested that the Existing Credit Agreement be
amended and restated in the manner provided for herein; and
WHEREAS, the security interests granted and guarantees issued pursuant to
the Guarantee and Collateral Agreement (as hereinafter defined) will provide
collateral security for the obligations of the Borrower under this Agreement:
ACCORDINGLY, the parties hereto hereby agree that, upon the satisfaction of
the conditions set forth in subsections 8.1 and 8.2 of this Agreement, the
Existing Credit Agreement is hereby amended and restated as follows:
SECTION 1. ...... DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Acceptance Obligations": at any time, an amount equal to the sum of
(a) the aggregate face amount of unmatured Acceptances (including Existing
Acceptances) at such time and (b) the aggregate amount of all unpaid
Acceptance Reimbursement Obligations at such time.
"Acceptance Participants": with respect to each Acceptance (including
each Existing Acceptance), collectively, all the Lenders other than the
Accepting Bank.
"Acceptance Rate": the rate per annum equal to the Applicable Margin
then in effect for Eurodollar Loans plus the discount rate, as determined
from time to time by the Accepting Bank, in its sole and absolute
discretion, as generally available as the discount rate to other customers
of the Accepting Bank for bankers' acceptances for up to and including
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90-day tenor.
"Acceptance Reimbursement Obligations": the obligation of the Borrower
to reimburse the Accepting Bank pursuant to subsection 5.5(b) for the face
amount of Acceptances (including any Existing Acceptances).
"Acceptance Request": an Acceptance Request, substantially in the form
of Exhibit E hereto, with appropriate insertions, or in such other form as
the Accepting Bank shall reasonably request, including any such Acceptance
Request issued in connection with any Existing Acceptance.
"Acceptances": as defined in subsection 5.1(a).
"Accepting Bank": JPMorgan Chase, or its successor pursuant to
subsections 12.9 and 12.10, in its capacity as creator of Acceptances
pursuant to subsection 5.1(a).
"Account Debtor": as to any Account, any Person who is or may become
obligated to any other Person under, with respect to, or on account of,
such Account.
"Accounts": as defined in the UCC.
"Acquisition": as to any Person, the acquisition by such Person of (a)
all of the Capital Stock of any other Person, (b) all or substantially all
of the assets of any other Person or (c) all or substantially all of the
assets constituting a business unit or division of any other Person.
"Adjustment Date": the second Business Day following receipt by the
Administrative Agent of both (i) the financial statements required to be
delivered pursuant to subsection 9.1(a) or 9.1(b), as the case may be, for
the most recently completed fiscal period and (ii) the compliance
certificate required to be delivered pursuant to subsection 9.2(b) with
respect to such fiscal period.
"Affiliate": as to any Person, (a) any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person, including, without
limitation, any Joint Venture of such Person, or (b) any Person who is a
director, officer, shareholder or partner (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in the preceding
clause (a). For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (i) vote 10% or more of the
securities having ordinary voting power for the election of directors of
such Person or (ii) direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"AG Holdings": Audiovox German Holdings GmbH, a subsidiary of the
Borrower formed in connection with the effectuation of the Recoton
Acquisition.
"Aggregate Outstanding Direct Extensions of Credit": as to any Lender
at any time, an amount equal to the sum of (a) the aggregate principal
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amount of all Loans made by such Lender then outstanding, and (b) such
Lender's Commitment Percentage of the Acceptance Obligations then
outstanding.
"Aggregate Outstanding Extensions of Credit": as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of
all Loans made by such Lender then outstanding, (b) such Lender's
Commitment Percentage of the L/C Obligations then outstanding and (c) such
Lender's Commitment Percentage of the Acceptance Obligations then
outstanding.
"Agreement": this Fifth Amended and Restated Credit Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"Airway Release": as defined in subsection 4.1(b).
"Applicable Commitment Fee Rate": 0.375 %
"Applicable Margin": means (a) prior to August 31, 2004 (i) 0.75%,
with respect to any Base Rate Loan, and (ii) 2.25%, with respect to any
Eurodollar Loan and (b) on and after August 31, 2004 the Applicable Margin
for Base Rate Loans and Eurodollar Loans shall be adjusted as necessary on
each Adjustment Date (with the first such Adjustment Date to occur
following the delivery of the financial statements with respect to the
period ended on August 31, 2004) to be equal to the Applicable Margin set
forth below opposite the range of Consolidated Pre-Tax Income within which
the Consolidated Pre-Tax Income for the period of four consecutive fiscal
quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date falls:
========================================== =========================== ===========================
Applicable Margin for Applicable Margin for Base
Consolidated Pre-Tax Income Range Eurodollar Loans Rate Loans
------------------------------------------ --------------------------- ---------------------------
<$10,000,000 2.50% 0.75%
------------------------------------------ --------------------------- ---------------------------
>=$10,000,000 but 2.25% 0.75%
<$20,000,000
------------------------------------------ --------------------------- ---------------------------
>=$20,000,000 but 2.00% 0.50%
<$30,000,000
------------------------------------------ --------------------------- ---------------------------
>=$30,000,000 1.75% 0.50%
========================================== =========================== ===========================
provided, however, that (a) if, on any Adjustment Date, an Event of Default
shall have occurred and be continuing, no adjustment of the Applicable
Margin shall be made on such Adjustment Date which decreases the Applicable
Margin then in effect and any such decrease shall not be effective unless
and until such Event of Default is cured or waived on or prior to the next
succeeding Adjustment Date and (b) in the event that the financial
statements required to be delivered pursuant to subsection 9.1(a) or
9.1(b), as applicable, and the related compliance certificate required
pursuant to subsection 9.2(b), are not delivered when due, then if such
4
financial statements are delivered after the date such financial statements
were required to be delivered and the Applicable Margin increases from that
previously in effect as a result of the delivery of such financial
statements, then the Applicable Margin during the period from the date upon
which such financial statements were required to be delivered until two
Business Days following the date upon which they actually are delivered
shall be the Applicable Margin as so increased.
"Application": an application, in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to open a Letter of
Credit, including any such application issued in connection with any
Existing Letter of Credit.
"Available Commitment": as to any Lender at any time, an amount equal
to the excess, if any, of (a) the amount of such Lender's Commitment over
(b) the aggregate principal amount of the Aggregate Outstanding Extensions
of Credit of such Lender then outstanding.
"Base Rate": the rate of interest per annum publicly announced by
JPMorgan Chase as its prime rate in effect at its principal office in New
York, New York. The prime rate is not intended to be the lowest rate of
interest charged by JPMorgan Chase in connection with extensions of credit
to debtors.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Borrowing Base": on any date of determination thereof, the sum of (a)
75% of the aggregate amount of Eligible Accounts of the Borrower and its
consolidated Domestic and Canadian Subsidiaries on such date of
determination and (b) the lesser of (i) 30% of the aggregate amount of
Eligible Inventory of the Borrower and its consolidated Domestic and
Canadian Subsidiaries on such date of determination and (ii) $25,000,000.
The Borrowing Base shall be reduced from time to time by an amount equal to
the Foreign Exchange Liabilities of the Borrower as most recently
determined prior to such time by the Administrative Agent pursuant to
subsection 6.16. The Borrowing Base shall be determined by the
Administrative Agent in its sole discretion exercising reasonable judgment
from time to time by reference to the most recent monthly Borrowing Base
Certificate delivered to the Administrative Agent pursuant to subsection
9.2(g). The Administrative Agent shall determine the Borrowing Base in
effect on the first Business Day of each month during the Commitment Period
and shall send a Borrowing Base Notice on such Business Day of the Borrower
and each Lender setting forth the Borrowing Base as so determined. The
Administrative Agent shall also send a Borrowing Base Notice to the
Borrower and each Lender on each Business Day on which the Borrowing Base
is changed other than pursuant to the immediately preceding sentence
setting forth the Borrowing Base as so changed. Notwithstanding the
foregoing, the Borrowing Base shall be reduced by the amount of any
outstanding Indebtedness guaranteed pursuant to subsection 10.4(g).
"Borrowing Base Certificate": a certificate, substantially in the form
of Exhibit C-1, or in such other form as the Administrative Agent shall
5
from time to time request.
"Borrowing Base Notice": a notice, substantially in the form of
Exhibit C-2, or in such other form as the Administrative Agent shall from
time to time specify.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.3 or 3.2 as a date on which the Borrower requests the Lenders
to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"Calculation Date": the last Business Day of each calendar month and
such other Business Days during such calendar month as may be specified by
the Administrative Agent.
"Canadian Subsidiaries": Audiovox Canada Limited, an Ontario
corporation and Audiovox Communications Canadian Co., a Nova Scotia
corporation.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than 180 days from
the date of acquisition, (ii) time deposits and certificates of deposit
having maturities of not more than 180 days from the date of acquisition of
any Lender or of any domestic commercial bank the long-term debt of which
is rated at least A-2 or the equivalent thereof by Standard & Poor's
Corporation or a-2 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service,
Inc. and having capital and surplus in excess of $500,000,000, (iii)
repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and (ii)
entered into with any bank meeting the qualifications specified in clause
(ii) above, (iv) commercial paper rated at least A-2 or the equivalent
thereof by Standard & Poor's Corporation or a-2 or the equivalent thereof
by ▇▇▇▇▇'▇ Investors Service, Inc. and in either case maturing within 180
days after the date of acquisition, (v) securities issued by any
municipality in the United States rated at least A-2 or the equivalent
thereof by Standard & Poor's Corporation or a-2 or the equivalent thereof
by ▇▇▇▇▇'▇ Investors Service, Inc. and in either case maturing within 180
days after the date of acquisition or (vi) any other investment approved by
the Administrative Agent in its sole discretion.
"CellStar": CellStar Corporation, a Delaware corporation.
"Cellular Inventory": at a particular date, all cellular telephones
and other cellular Inventory of the Borrower and its Subsidiaries on hand
at such date.
"Closing Date": the date on which all the conditions set forth in
Section 8 shall first have been satisfied.
6
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all property of the Borrower and its Subsidiaries, now
owned or hereafter acquired, upon which a Lien is purported to be created
by any Security Document.
"Commitment": as to any Lender at any time, the obligation of such
Lender to make or participate in Loans and/or issue or participate in
Letters of Credit issued on behalf of the Borrower and/or create or
participate in Acceptances created for the Borrower in an aggregate
principal amount and/or face amount at any one time outstanding not to
exceed the amount set forth opposite such Lender's name on Schedule 1.1(a)
hereto, as the same may be changed from time to time in accordance with the
terms of this Agreement; collectively as to all the Lenders, the
"Commitments".
"Commitment Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate amount of such Lender's
Aggregate Outstanding Extensions of Credit then outstanding constitutes of
the aggregate amount of the Aggregate Outstanding Extensions of Credit of
all Lenders then outstanding).
"Commitment Period": the period from and including the date hereof to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Consolidated Current Assets": at a particular date, all amounts which
would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such
date.
"Consolidated Current Liabilities": at a particular date, all amounts
which would, in conformity with GAAP, be included under current liabilities
on a consolidated balance sheet of the Borrower and its Subsidiaries as at
such date.
"Consolidated Net Income": for any period, the consolidated net income
of the Borrower and its Subsidiaries for such period (taken as a cumulative
whole), determined in conformity with GAAP (but excluding gains or losses
from sale of securities of any Person (other than a Subsidiary)). If
Consolidated Net Income is less than zero for any period, it is referred to
herein as a "Consolidated Net Loss".
"Consolidated Net Worth": at a particular date, all amounts which
would, in conformity with GAAP, be included under stockholders' equity on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such
date, excluding any treasury stock and any Foreign Translation Adjustments.
7
"Consolidated Pre-Tax Income": for any period, the amount which would
appear opposite the caption "Income (loss) before provision for (recovery
of) income taxes, minority interest, extraordinary item and cumulative
effect of a change in accounting for negative goodwill", on a consolidated
statement of operations of the Borrower and its Subsidiaries in accordance
with GAAP, adjusted (a) to reflect (either by adding or subtracting)
"minority interest" as determined in accordance with GAAP and set forth on
such consolidated statement of operations and (b) to reflect (by
subtracting) extraordinary charges or expenses of the Borrower and its
Subsidiaries as determined on a consolidated basis in accordance with GAAP.
If Consolidated Pre-Tax Income is less than zero for any period, it is
referred to herein as a "Consolidated Pre-Tax Loss". For purposes of this
Agreement, Consolidated Pre-Tax Income shall not include (i) any
extraordinary gains and (ii) any Consolidated Pre-Tax Income or
Consolidated Pre-Tax Loss attributable to the operations of RG Holdings and
its Subsidiaries (including their share of allocated corporate expenses).
"Consolidated Total Liabilities": at a particular date, all amounts
which would, in conformity with GAAP, be included under liabilities on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such
date, and including in any event the Aggregate Outstanding Direct
Extensions of Credit of the Lenders on such date.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in Section 11, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollar Equivalent": at any time as to any amount denominated in any
relevant currency (other than Dollars), the equivalent amount in Dollars as
determined by the Administrative Agent at such time on the basis of the
Exchange Rate for the purchase of Dollars with such other relevant currency
on the most recent Calculation Date for such relevant currency.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary incorporated under the laws of
the United States of America or a State thereof.
"Draft": a draft, substantially in the form of Exhibit F hereto, or in
such other form as the Accepting Bank shall reasonably request.
"Eligible Accounts": as to any Person, at a particular date, the total
outstanding balance of Accounts of such Person:
(a) which are bona fide, valid and legally enforceable obligations of
the Account Debtor in respect thereof and arise from the actual sale and
8
delivery of goods or rendition and acceptance of services in the ordinary
course of business to such Account Debtor;
(b) which do not contravene, or arise from sales which contravene, any
Requirement of Law applicable thereto;
(c) which are payable in full not later than 60 days after the date of
the creation of original invoices related thereto unless the payment of
such Accounts are supported by letters of credit issued by a bank, and on
terms, reasonably acceptable to the Administrative Agent, provided that,
notwithstanding the foregoing, Eligible Accounts of the Borrower and its
Domestic and Canadian Subsidiaries may include up to $5,000,000 in Accounts
which are payable in full not later than 90 days (and not earlier than 60
days) after the creation of the original invoices related thereto
("Ninety-Day Accounts");
(d) which are not subject to any offset, net-out, set-off, deduction,
dispute, counterclaim or defense (other than co-operative advertising
credits), and with respect to which no return, rejection or repossession
has occurred;
(e) which do not represent a consignment sale, guaranteed sale, sale
or return or other similar arrangement;
(f) which are not Accounts relating to sales to employees or
representatives;
(g) which are reduced by any amounts then owing by such Person to the
Account Debtor or obligor in respect of such Accounts, including, without
limitation, any amounts credited or charged back to such Accounts;
(h) which have been invoiced by such Person and which have not been
past due for more than 60 days (or, in the case of Ninety-Day Accounts (as
defined above), 30 days) after the payment dates specified in the invoices
related to such Accounts;
(i) with respect to which, the Administrative Agent is, and continues
to be, reasonably satisfied with the credit standing of the Account Debtor
or obligor;
(j) which are not owed by an Account Debtor or obligor which is an
Affiliate or Subsidiary of such Person;
(k) which are not owed by an Account Debtor or obligor which has taken
any of the actions or suffered any of the events of the kind described in
paragraph (g) of Section 11, except to the extent any such Accounts are
entitled to an administrative expense priority under the Bankruptcy Code;
(l) with respect to which, together with its Affiliates, more than 50%
of the aggregate amount of Accounts owed by any Account Debtor or obligor
to such Person are not more than 60 days (or, in the case of Ninety-Day
9
Accounts (as defined above), 30 days) past due after the payment dates
specified in the invoices related to such Accounts;
(m) which are (i) with respect to Accounts owed to the Borrower or any
Domestic Subsidiary, denominated in Dollars and payable only in Dollars and
only in the United States of America or denominated in any other currency
which is covered by a Foreign Exchange Contract and is otherwise acceptable
to the Administrative Agent and (ii) with respect to Accounts owed to the
Canadian Subsidiaries, are denominated in Dollars or Canadian dollars and
payable only in Dollars or Canadian dollars and only in the United States
of America or Canada;
(n) which are owned solely by such Person free and clear of all Liens
or other rights or claims of any other Person (except in favor of the
Administrative Agent for the benefit of the Lenders) and arise from sales
in respect of which all sales, excise or similar taxes have been paid in
full;
(o) which are subject to a perfected first priority security interest
in favor of the Administrative Agent for the benefit of the Lenders
pursuant to the Guarantee and Collateral Agreement;
(p) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority, required to be obtained, effected or given in connection with
the execution, delivery and performance of such Accounts have been duly
obtained, effected or given, and are in full force and effect;
(q) which are not Accounts owed by any Governmental Authority other
than such Accounts as to which all required filings to perfect the security
interest in such Accounts in favor of the Administrative Agent for the
benefit of the Lenders pursuant to the Guarantee and Collateral Agreement,
have been made, including, without limitation, any filings and/or
assignments required under the Assignment of Claims Act of 1940, as
amended;
(r) which, with respect to Accounts owed to the Canadian Subsidiaries,
may be reduced by an amount, as determined by the Administrative Agent in
its reasonable discretion, equal to any costs, taxes or other amounts that
might be payable in the event the security interest in such Accounts in
favor of the Administrative Agent for the benefit of the Lenders was to be
enforced;
(s) other than with respect to Accounts owed to Canadian Subsidiaries,
which constitute "accounts" within the meaning of the Uniform Commercial
Code of the state under the laws of which such Person is organized;
(t) which are owed by Account Debtors (i) which are organized under
the laws of the United States of America or a State thereof or under the
laws of Canada or a Province thereof, (ii) the Capital Stock of which is
traded on the New York Stock Exchange, the NASDAQ or any other american
exchange and which has a market capitalization of at least $1,000,000,000,
(iii) at least 20% of the outstanding Capital Stock of which is owned by
10
one or more of the ▇▇▇▇ operating companies or by any other Person the
Capital Stock of which is traded on the New York Stock Exchange, the NASDAQ
or any other american exchange and which has a market capitalization of at
least $1,000,000,000 or (iv) which are otherwise acceptable to the
Administrative Agent, provided that the aggregate amount of Eligible
Accounts of Account Debtors described in clause (ii) and (iii) above (and
which do not qualify pursuant to clause (i) above) shall not exceed
$30,000,000 at any time; and
(u) which conform in all other respects to the representations and
warranties contained in the Guarantee and Collateral Agreement.
Standards of eligibility may be fixed and revised from time to time solely by
the Administrative Agent in the Administrative Agent's reasonable judgment,
provided that the Administrative Agent shall not revise the standards of
eligibility in a manner which would increase the outstanding balance of Eligible
Accounts at the time of such revision without the prior written consent of the
Required Lenders. Unless a Default or Event of Default has occurred and is
continuing, the Administrative Agent shall give five days prior written notice
to the Borrower of any change in the standards of eligibility set forth above,
except for changes relating to the credit standing of the Account Debtor or
obligor on any Account. To the extent that the aggregate amount of co-operative
advertising credits exceeds $10,000,000 at any time, the aggregate amount of
Eligible Accounts shall be reduced by an amount equal to such excess.
"Eligible Inventory": as to any Person, at a particular date, the
aggregate amount of Inventory of such Person:
(a)which is owned solely by such Person free and clear of all
Liens or other rights or claims of any other Person (except in favor
of the Administrative Agent for the benefit of the Lenders);
(b) which (i) is subject to a perfected first priority security
interest in favor of the Administrative Agent for the benefit of the
Lenders pursuant to the Guarantee and Collateral Agreement, and (A) is
located at a storage, manufacturing or public facility owned or leased
by such Person in the United States of America or, with respect to the
Inventory of the Canadian Subsidiaries, in Canada, or (B) is in
transit from one such location in the United States of America (or in
the case of Canadian Subsidiaries, in Canada) to another such location
in the United States of America (or in the case of Canadian
Subsidiaries, Canada), and, in either case, as to which, if such
storage, manufacturing or public facility is leased, a Landlord's
Consent has been received by the Administrative Agent, provided that
the aggregate amount of Inventory in transit pursuant to clause (i)(B)
which may be Eligible Inventory shall not exceed $2,000,000, or (ii)
is being shipped to the United States of America or Canada if, upon
arrival of such Inventory in the United States of America or Canada,
such Inventory will immediately be subject to a first priority
security interest in favor of the Administrative Agent for the benefit
of the Lenders pursuant to the Guarantee and Collateral Agreement,
11
provided that, (x) if such Inventory is being shipped under a Letter
of Credit which is not denominated in Dollars, the value of such
Inventory shall be reduced from time to time to account for currency
fluctuations and (y) the aggregate amount of Inventory which may be
included in the determination of Eligible Inventory as a result of
this clause (ii) and which is not being shipped under a Letter of
Credit issued, or Acceptance created, under this Agreement shall not
exceed $15,000,000;
(c) which is readily marketable for sale;
(d) which is not damaged;
(e) which has not been returned or rejected by any prospective
buyer thereof, unless, if such Inventory is returned, such Inventory
is readily marketable for sale upon return;
(f) which are not display goods;
(g) which is not in the form of books or other literature;
(h) which, in the case of Cellular Inventory, is expected to be
sold within six months based upon the turnover applicable to such
Cellular Inventory and, in the case of other Inventory, is expected to
be sold within nine months based upon the turnover applicable to such
Inventory provided that no Inventory in respect of new products shall
be subject to the requirements of this paragraph (h) until such
Inventory has been available for sale by such Person, in the case of
Cellular Inventory, for a period of at least six months, and, in the
case of all other Inventory, for a period of at least nine months;
(i) which is not owned by an Affiliate or Subsidiary of such
Person;
(j) with respect to which, no Account has been created;
(k) which, with respect to Inventory located at (or in transit
to) a storage, manufacturing or public facility in Canada, may be
reduced by an amount, as determined by the Administrative Agent in its
sole discretion, equal to any costs, taxes or other amounts that would
be payable in the event the security interest in favor of the
Administrative Agent was to be enforced;
(l) which is not work in progress, raw materials, supplies or
capitalized fees (it being understood that parts that are held for
resale in the automotive business of the Borrower shall not be
excluded pursuant to this paragraph (l) so long as the aggregate
amount thereof does not exceed $2,000,000); and
(m) which conforms in all other respects to the representations
and warranties contained in the Guarantee and Collateral Agreement.
12
Eligible Inventory shall be increased by an amount equal to
the undrawn face amount of any Letter of Credit against which goods are
to be shipped to the Borrower or any of its Subsidiaries, provided that
if any such Letter of Credit is not denominated in Dollars, the amount
by which Eligible Inventory is increased pursuant to this sentence
shall be adjusted from time to time by the Administrative Agent to
account for currency fluctuations. Standards of eligibility may be
fixed and revised from time to time solely by the Administrative Agent
in the Administrative Agent's reasonable judgment, provided that the
Administrative Agent shall not revise the standards of eligibility in a
manner which would increase the outstanding amount of Eligible
Inventory at the time of such revision without the prior written
consent of the Required Lenders. Unless a Default or Event of Default
has occurred and is continuing, the Administrative Agent shall give
five days prior written notice to the Borrower of any change in the
standards of eligibility set forth above.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding maintained by a member bank of such System or any
London branch of any Lender.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period. In
the event that such rate does not appear on Page 3750 of the Telerate
screen (or otherwise on such screen), the "Eurodollar Base Rate" shall be
determined by reference to such other comparable publicly available service
for displaying eurodollar rates as may be selected by the Administrative
Agent or, in the absence of such availability, by reference to the rate at
which the Administrative Agent is offered Dollar deposits at or about 11:00
A.M., New York City time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.
13
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
_________Eurodollar Base Rate_______
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
whose Interest Periods each begin on the same day and end on the same other
day.
"Event of Default": any of the events specified in Section 11,
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Exchange Rate": on any day, with respect to any currency, the rate at
which such currency may be exchanged into Dollars (and, for purposes of any
provision of this Agreement requiring or permitting the conversion of
amounts in Foreign Currencies to Dollars, the rate at which Dollars may be
exchanged into the applicable Foreign Currency), as set forth at
approximately 11:00 a.m., London time, on such date on the Reuters World
Currency Page for such currency. In the event that such rate does not
appear on any Reuters World Currency Page, the Exchange Rate shall be
determined by reference to such other publicly available service for
displaying exchange rates as may be agreed upon by the Administrative Agent
or the Issuing Bank) and the Borrower, or, in the absence of such
agreement, such Exchange Rate shall instead be the arithmetic average of
the spot rates of exchange of the Issuing Bank in the market where its
foreign currency exchange operations in respect of such currency are then
being conducted, at or about 10:00 a.m., local time, on such date for the
purchase of Dollars (or such Foreign Currency, as the case may be) for
delivery two Business Days later, provided that if at the time of any such
determination, for any reason, no such spot rate is being quoted, the
Issuing Bank after consultation with the Administrative Agent and the
Borrower, may use any reasonable method it deems appropriate to determine
such rate, and such determination shall be presumed correct absent manifest
error.
"Excluded Foreign Subsidiary": any Foreign Subsidiary that is not a
Wholly Owned Foreign Subsidiary.
"Existing Acceptances": such bankers' acceptances as are part of the
Existing Extensions of Credit and are outstanding and/or unreimbursed on
the Closing Date.
"Existing Credit Agreement": as defined in the recitals to this
Agreement.
"Existing Extensions of Credit": as defined in the recitals to this
Agreement.
14
"Existing Letters of Credit": such letters of credit, steamship
guarantees and airway releases as are part of the Existing Extensions of
Credit and are outstanding and/or unreimbursed on the Closing Date.
"Exiting Lenders": as defined in subsection 8.1(n).
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Currency": any currency other than Dollars.
"Foreign Currency Letter of Credit": any Letter of Credit issued in a
Foreign Currency.
"Foreign Exchange Contracts": as defined in subsection 6.16.
"Foreign Exchange Liabilities": as defined in subsection 6.16.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"Foreign Translation Adjustment": as defined under GAAP.
"Funding Office": (a) with respect to borrowings, conversions or
continuations of Loans, the office of the Administrative Agent located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other office as
the Administrative Agent shall designate in writing to the Borrower and the
Lenders from time to time, (b) with respect to the issuance of Letters of
Credit hereunder, the office of the Issuing Bank located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other office as the Issuing
Bank shall designate in writing to the Borrower, the Administrative Agent
and the Lenders from time to time and (c) with respect to the creation of
Acceptances hereunder, the office of the Accepting Bank located at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other office as the
Accepting Bank shall designate in writing to the Borrower, the
Administrative Agent and the Lenders from time to time.
"Funding Time": 2:00 P.M., New York City time.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Government Contracts": as defined in subsection 7.21.
15
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by the Borrower and each Subsidiary
Guarantor, substantially in the form of Exhibit I.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit or
bankers' acceptance) to induce the creation of which the guaranteeing
person has issued a reimbursement, counter indemnity or similar obligation,
in either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of any
other third Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor if such purchase of property is primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation, (ii) to advance
or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Required
Lenders in good faith.
"ICC Rules" as defined in subsection 4.1(c)
"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities, accrued
expenses and documentary acceptances incurred in the ordinary course of
business and payable in accordance with customary practices) or which is
evidenced by a note, bond, debenture or similar instrument, (b) all
obligations of such Person under Financing Leases, (c) all obligations of
such Person in respect of letters of credit or bankers' acceptances issued
or created for or for the account of such Person, (d) all obligations of
such Person under Foreign Exchange Contracts, (e) all liabilities secured
by any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof and (f)
for the purposes of Section 11(f) only, all obligations of such
16
Person in respect of any agreement (other than Foreign Exchange Contracts)
of the type described in subsection 10.20.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": with respect to any Loan, the last day of
each month to occur while such Loan is outstanding, provided that (a) with
respect to any Base Rate Loan, the date upon which such Loan is converted
to another Type of Loan shall also be an Interest Payment Date for such
Loan and (b) with respect to any Eurodollar, the last day of the Interest
Period with respect to such Loan shall also be an Interest Payment Date for
such Loan.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) no Interest Period shall extend beyond the Scheduled
Termination Date;
(iii) if the Borrower shall fail to give notice as provided above
in respect of any Eurodollar Loan, the Borrower shall be deemed to
have selected a Base Rate Loan to replace such Eurodollar Loan; and
(iv) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding
17
day in the calendar month at the end of such Interest Period) shall
end on the last Business Day of a calendar month.
"Inventory": as defined in the UCC and including, without limitation,
all Cellular Inventory.
"Issuing Bank": JPMorgan Chase, or its successor pursuant to
subsections 12.9 and 12.10, in its capacity as issuer of Letters of Credit
pursuant to subsection 4.1(a).
"Joint Venture": as to any Person, a corporation, partnership or other
entity (other than a Subsidiary) of which 50% or less (but more than 10%)
of the shares of stock or other ownership interests are at the time owned,
directly or indirectly, through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a "Joint Venture
" or "Joint Ventures" in this Agreement shall refer to a Joint Venture or
Joint Ventures of the Borrower, including, without limitation, the entities
listed in Schedule 7.15 under the heading "Joint Ventures".
"JPMorgan Chase": JPMorgan Chase Bank, a New York banking corporation.
"Landlord's Consent": a consent substantially in the form of Exhibit H
hereto.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit issued in Dollars (including any such Existing Letters of
Credit), (b) the aggregate Dollar Equivalents of the then undrawn and
unexpired amount of the then outstanding Foreign Currency Letters of Credit
(including any such Existing Letters of Credit), (c) the aggregate amount
of unpaid L/C Reimbursement Obligations in respect of Letters of Credit
issued in Dollars at such time and (d) the aggregate Dollar Equivalents of
the amount of unpaid L/C Reimbursement Obligations in respect of Foreign
Currency Letters of Credit at such time (including any such Existing
Letters of Credit).
"L/C Reimbursement Obligations": the obligation of the Borrower to
reimburse the Issuing Bank pursuant to subsection 6.5(a) for amounts drawn
under Letters of Credit (including Existing Letters of Credit).
"L/C Participants": with respect to each Letter of Credit (including
each Existing Letter of Credit), collectively, all the Lenders other than
the Issuing Bank.
"Letters of Credit": as defined in subsection 4.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Financing Lease having
substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing).
18
"Loan Documents": this Agreement, the Notes, the Security Documents,
any Application, any Acceptance Request, and all other documents executed
and delivered in connection herewith or therewith, including any
amendments, supplements or other modifications to any of the foregoing.
"Loans": as defined in subsection 2.1.
"London Banking Day": any day on which banks in London, England, are
open for general banking business, including dealings in foreign currency
and exchange.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property or financial condition of the Borrower and
its Subsidiaries taken as a whole, (b) the ability of the Borrower to
perform its obligations under this Agreement, the Notes or any of the other
Loan Documents, or (c) the validity or enforceability of this Agreement,
the Notes or any of the other Loan Documents or the rights or remedies of
the Administrative Agent or the Lenders hereunder or thereunder.
"Material Foreign Subsidiary": any Subsidiary, other than a Domestic
Subsidiary, which (a) has total assets of $5,000,000 (or the equivalent
thereof in any Foreign Currency) or greater or (b) has net income in
Dollars (or the equivalent thereof in any Foreign Currency) in any year
equal to or in excess of an amount equal to 10% of Consolidated Net Income
for such year, in either such case as determined in accordance with GAAP or
the comparable principles of any foreign country used in the preparation of
the financial statements of such Subsidiary.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": in connection with any issuance or sale of
Capital Stock, the cash proceeds received from such issuance or sale, net
of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith.
"Net Worth Base Amount": (a) $300,000,000 plus (b), at any time after
the delivery of the financial statements pursuant to subsection 9.1 in
respect of the fiscal year ended on November 30, 2004, 50% of Consolidated
Net Income, if any, for such fiscal year.
"Non-Excluded Taxes": as defined in subsection 6.15.
"Non-U.S. Lender": as defined in Section 6.15(b).
19
"Note": the collective reference to the promissory notes,
substantially in the form of Exhibit A hereto, issued pursuant to this
Agreement, including, without limitation, the promissory notes issued
pursuant to subsection 2.2.
"Participant": as defined in subsection 13.6(b).
"Participating Interest": with respect to each Letter of Credit
(including each Existing Letter of Credit) or Acceptance (including each
Existing Acceptance), (i) in the case of the Issuing Bank or the Accepting
Bank, as the case may be, its interest (a) in such Letter of Credit and any
Application relating thereto or (b) in such Acceptance and any Acceptance
Request relating thereto, as the case may be, in either case after giving
effect to the granting of any participating interests therein pursuant to
this Agreement and (ii) in the case of each Participating Lender, its
undivided participating interest (a) in such Letter of Credit and any
Application relating thereto or (b) in such Acceptance and any Acceptance
Request relating thereto, as the case may be.
"Participating Lender": any Lender (other than the Issuing Bank or the
Accepting Bank, as the case may be) with respect to its Participating
Interest in each Letter of Credit (including each Existing Letter of
Credit) and Acceptance (including each Existing Acceptance).
"Payment Office": (a) with respect to any payments to the Issuing Bank
hereunder in respect of Letters of Credit issued hereunder, the office of
the Issuing Bank located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or such other office as the Issuing Bank shall designate in writing
to the Borrower, the Administrative Agent and the Lenders from time to
time, (b) with respect to any payments to the Accepting Bank hereunder in
respect of Acceptances created hereunder, the office of the Accepting Bank
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other
office as the Accepting Bank shall designate in writing to the Borrower,
the Administrative Agent and the Lenders from time to time, and (c) with
respect to all other payments under this Agreement, the office of the
Administrative Agent located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or such other office as the Administrative Agent shall designate in
writing to the Borrower, the Administrative Agent and the Lenders from time
to time.
"Payment Time": 12:00 P.M. (Noon), New York City time.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business trust,
joint stock company, limited liability company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
20
"Proceeds": as defined in the UCC.
"Purchasing Lenders": as defined in subsection 13.6(c).
"Recoton": Recoton Corporation, a New York corporation.
"Recoton Acquisition": the acquisition transaction contemplated by the
Recoton Purchase Agreement.
"Recoton Purchase Agreement": the Stock and Asset Purchase Agreement,
dated as of May 23, 2003, among Recoton Audio Corporation, Recoton Home
Audio, Inc., Recoton Mobile Electronics, Inc., Recoton International
Holdings, Inc., Recoton Corporation, Recoton Canada LTD. and Jax Assets
Corp.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System.
"Reimbursement Obligations": the collective reference to Acceptance
Reimbursement Obligations and L/C Reimbursement Obligations.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC
Reg.ss.4043.
"Required Lenders": at any time, Lenders the Commitment Percentages of
which then aggregate at least 51%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its material property is subject.
"Reset Date": as defined in Section 1.3.
"Responsible Officer": the chief executive officer, the president or
the chief financial officer of the Borrower.
"RG Holdings": Recoton German Holdings GmbH, the subsidiary of Recoton
acquired by the Borrower pursuant to the Recoton Purchase Agreement.
"Scheduled Termination Date": the date that is 364 days after the
Closing Date.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement and all other security documents hereafter delivered
to the Administrative Agent granting a Lien on any property of any Person
to secure the obligations and liabilities of the Borrower or any of its
Subsidiaries under any Loan Document.
21
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Standby Foreign Currency Letter of Credit": any Standby Letter of
Credit issued in a Foreign Currency.
"Standby L/C Commitment": $15,000,000.
"Standby Letters of Credit": as defined in subsection 4.1(b).
"Standby L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Standby Letters of Credit issued in Dollars, (b) the aggregate Dollar
Equivalents of the then undrawn and unexpired amount of the then
outstanding Standby Foreign Currency Letters of Credit, (c) the aggregate
amount of unpaid Standby L/C Reimbursement Obligations in respect of
Letters of Credit issued in Dollars at such time and (d) the aggregate
Dollar Equivalents of the amount of unpaid L/C Reimbursement Obligations in
respect of Standby Foreign Currency Letters of Credit at such time.
"Steamship Guarantee": as defined in subsection 4.1(b).
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which more than 50% of the shares of stock, or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity, are at the time
owned, directly or indirectly, through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or "Subsidiaries" shall refer to a Subsidiary or Subsidiaries
of the Borrower and shall include, without limitation, the corporations
listed in Schedule 7.15 under the headings "Domestic Subsidiaries",
"Canadian Subsidiaries" and "Material Foreign Subsidiaries".
"Subsidiary Guarantor": any Subsidiary of the Borrower other than any
Excluded Foreign Subsidiary.
"Termination Date": the earlier of (i) the Scheduled Termination Date
and (ii) the date of consummation of (x) the sale of substantially all the
assets of Audiovox Communications Corp. to UTStarcom, Inc. pursuant to the
UTStarcom Purchase Agreement and/or (y) the purchase by the Borrower of
Toshiba Corporation's interest in Audiovox Communications Corp. and the
repayment by Audiovox Communications Corp. of the Toshiba Note pursuant to
the Toshiba Agreement.
"Toshiba Agreement": the Stock Purchase Agreement, dated as of June
10, 2004, by and among Toshiba Corporation, Audiovox Communications Corp.
and the Borrower, as in effect on such date, and without any amendments,
modifications or waivers thereof.
"Toshiba Note": the subordinated convertible promissory note issued by
Audiovox Communications Corp. to Toshiba Corporation on May 31, 2002.
22
"Trade Letters of Credit": as defined in subsection 4.1(b).
"Transferee": as defined in subsection 13.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"UCC": the Uniform Commercial Code as from time to time in effect in
the State of New York.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"UTStarcom Purchase Agreement": the Asset Purchase Agreement, dated as
of June 11, 2004, by and among Audiovox Communications Corp., Quintex
Mobile Communications Corporation, Audiovox Communications Canada Co.,
UTStarcom, UTStarcom Canada Company and the Borrower, as in effect on such
date, and without any amendments, modifications or waivers thereof.
"Wholly Owned Foreign Subsidiary": as to any Person, any Material
Foreign Subsidiary of such Person of which such Person owns, directly or
indirectly, all of the Capital Stock of such Material Foreign Subsidiary
other than directors qualifying shares or shares held by nominees.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the Notes or any certificate or other document made or delivered pursuant
hereto.
(b) As used herein and in the Notes, and any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Borrower and
its Subsidiaries not defined in subsection 1.1 and accounting terms partly
defined in subsection 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
1.3 Exchange Rates. (a) Not later than 1:00 p.m., New York City time, on
each Calculation Date, the Issuing Bank shall (i) determine the Exchange Rate as
of such Calculation Date with respect to each Foreign Currency in which any
undrawn Letter of Credit may be denominated and (ii) give notice thereof to the
Lenders and the Borrower. The Issuing Bank shall immediately notify the
Administrative Agent of any Exchange Rates so determined. The Exchange Rates so
determined shall become effective on the first Business Day immediately
following the relevant Calculation Date (a "Reset Date"), shall remain effective
23
until the next succeeding Reset Date, and shall for all purposes of this
Agreement (other than subsection 6.5, or any other provision expressly requiring
the use of a current Exchange Rate) be the Exchange Rates employed in converting
any amounts between Dollars and Foreign Currencies.
(b) Not later than 5:00 p.m., New York City time, on each Reset Date, each
date on which the Borrower requests the issuance of a Letter of Credit, the
Administrative Agent shall (i) determine the aggregate amount of the Dollar
Equivalents of the principal amounts of the Foreign Currency Letters of Credit
then outstanding (after giving effect to any Foreign Currency Letters of Credit
made, issued, repaid or canceled on such date) and (ii) notify the Lenders and
the Borrower of the results of such determination.
SECTION 2. AMOUNT AND TERMS OF LOANS
2.1 Commitments. (a) Subject to the terms and conditions hereof, each
Lender severally agrees to make revolving credit loans ("Loans") to the Borrower
from time to time during the Commitment Period in an aggregate principal amount
at any one time outstanding, when added to such Lender's Commitment Percentage
of the sum of the then outstanding L/C Obligations and Acceptance Obligations
not to exceed the lesser of (i) the amount of such Lender's Commitment and (ii)
such Lender's Commitment Percentage of the Borrowing Base then in effect. During
the Commitment Period, the Borrower may use the Commitments by borrowing,
prepaying and reborrowing the Loans, in whole or in part, all in accordance with
the terms and conditions hereof.
(b) The Loans may from time to time be (i) Eurodollar Loans, (ii) Base Rate
Loans or (iii) a combination thereof, as determined by the Borrower and notified
to the Administrative Agent in accordance with subsections 2.3 and 6.8, provided
that no Dollar Loan shall be made or continued as or converted to a Eurodollar
Loan after the day that is one month prior to the Scheduled Termination Date.
2.2 Repayment of Loans; Notes. (a) The Borrower hereby unconditionally
promises to pay to the Administrative Agent at the Payment Office for the
account of the Lenders the then unpaid principal amount of each Dollar Loan of
such Lender on the Termination Date (or such earlier date on which the Loans
become due and payable pursuant to Section II). The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date hereof until payment in full thereof at the rates
per annum, and on the dates, set forth in Section 6.6.
(b) The Loans made by each Lender shall be evidenced by a Note,
substantially in the form of Exhibit A hereto, with appropriate insertions as to
payee, date and principal amount, payable to the order of such Lender and in a
principal amount equal to the lesser of (a) the amount set forth opposite such
Lender's name on Schedule 1.1(a) hereto under the heading "Commitment" and (b)
the aggregate unpaid principal amount of all Loans made by such Lender. Each
Lender is hereby authorized to record the date, Type and amount of each Dollar
Loan made by such Lender, each continuation thereof, each conversion of all or a
portion thereof to another Type, the date and amount of each payment or
prepayment of principal thereof and, in the case of Eurodollar Loans, the
Eurodollar Rate and the length of each Interest Period with respect thereto, on
the schedule annexed to and constituting a part of its Note, and any such
24
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure by any Lender to make any
such recordation on its Note (or any error therein) shall not affect any of the
obligations of the Borrower under such Note or this Agreement. Each Note shall
(x) be dated the Closing Date, (y) be stated to mature on the Termination Date
and (z) provide for the payment of interest in accordance with subsection 6.6.
2.3 Procedure for Revolving Credit Borrowing. The Borrower may borrow under
the Commitments during the Commitment Period on any Business Day, provided that
the Borrower shall give the Administrative Agent irrevocable notice (which
notice must be received by the Administrative Agent at the Funding Office prior
to 11:30 A.M., New York City time, (a) three Business Days prior to the
requested Borrowing Date, if all or any part of the requested Loans are to be
initially Eurodollar Loans or (b) on the requested Borrowing Date, otherwise),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, Base Rate Loans or a
combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the amount of such Eurodollar Loans and the respective lengths
of the initial Interest Periods therefor. Each borrowing of Loans under the
Commitments shall be in an amount equal to (x) in the case of Base Rate Loans,
$100,000 or a whole multiple of $100,000 in excess thereof (or, if the then
Available Commitments are less than $100,000, such lesser amount) and (y) in the
case of Eurodollar Loans, an amount equal to $1,500,000 or a whole multiple of
$500,000 in excess thereof. Upon receipt of any such notice from the Borrower,
the Administrative Agent shall (a) in the case of a notice requesting a
borrowing of Eurodollar Loans, promptly notify each Lender thereof and (b) in
the case of a notice requesting a borrowing of Base Rate Loans, notify each
Lender thereof prior to 1:00 P.M. on the requested Borrowing Date. Each Lender
will make the amount of its pro rata share of each borrowing of Loans available
to the Administrative Agent for the account of the Borrower at the Funding
Office prior to the Funding Time on the Borrowing Date requested by the Borrower
in funds immediately available to the Administrative Agent. Such borrowing in
Dollars will then be made available to the Borrower by the Administrative Agent
crediting the account of the Borrower on the books of such Funding Office with
the aggregate of the amounts made available to the Administrative Agent by the
Lenders and in like funds as received by the Administrative Agent.
2.4 Increase of Commitments. . The Borrower may from time to time, by
notice to the Administrative Agent (which shall promptly deliver a copy to each
of the Lenders), request that the aggregate Commitments be increased by an
amount that is not less than $5,000,000 and will not result in the Commitments
exceeding $175,000,000. Each such notice shall set forth the requested amount of
the increase in the aggregate Commitments and the date on which such increase is
to become effective (which shall be not fewer than twenty Business Days after
the date of such notice), and shall offer each Lender the opportunity to
increase its Commitment by its ratable share, based on its Commitment Percentage
(determined on the date of such notice), of the requested increase in the
aggregate amount of the Commitments. Each Lender shall, by notice to the
Borrower and the Administrative Agent given not more than ten Business Days
after the date of the Borrower's notice, either agree to increase its Commitment
by all or a portion of the offered amount or decline to increase its Commitment
(and any Lender that does not deliver such a notice within such period of ten
Business Days shall be deemed to have declined to increase its Commitment). In
the event that, on the tenth Business Day after the Borrower shall have
delivered a notice pursuant to the first sentence of this paragraph, the Lenders
25
shall have agreed pursuant to the preceding sentence to increase their
respective Commitments by an aggregate amount less than the increase in the
Commitments requested by the Borrower, the Borrower shall have the right to
arrange for one or more banks or other financial institutions (any such bank or
other financial institution being called an "Augmenting Lender"), which may
include any Lender, to extend a Commitment or increase their existing Commitment
in an aggregate amount equal to the unsubscribed amount, provided that each
Augmenting Lender, if not already a Lender hereunder, shall be subject to the
approval of the Administrative Agent (which approval shall not be unreasonably
withheld or delayed) and shall execute all such documentation as the
Administrative Agent shall specify to evidence its status as a Lender hereunder.
If (and only if) Lenders (including Augmenting Lenders) shall have agreed to
increase their respective Commitments or to extend a new Commitment in an
aggregate amount not less than $5,000,000, such increases and such new
Commitment shall become effective on the date specified in the notice delivered
by the Borrower pursuant to the first sentence of this Section. On the effective
date of any increase in the Commitments pursuant this Section, the Borrower
shall be deemed to have repaid and reborrowed all outstanding Loans, as the case
may be, as of the date of any increase in the relevant Commitments (with such
reborrowing to consist of the Types of Loans, with related Interest Periods if
applicable, specified in a notice delivered by the Company in accordance with
the requirements of Section 2.3). The deemed payments made pursuant to the
immediately preceding sentence in respect of each Eurodollar Loan shall be
subject to indemnification by the Borrower pursuant to the provisions of Section
6.13 if the deemed payment occurs other than on the last day of the related
Interest Periods.
SECTION 3. [Intentionally omitted]
SECTION 4. AMOUNT AND TERMS OF LETTERS OF CREDIT
4.1 Letters of Credit.(a) Subject to the terms and conditions hereof, the
Issuing Bank, in reliance on the agreements of the other Lenders set forth in
subsection 4.4(a), agrees to issue letters of credit, steamship guarantees and
airway releases (collectively, "Letters of Credit") for the account of the
Borrower on any Business Day during the Commitment Period in such form as may be
approved from time to time by the Issuing Bank; provided that the Issuing Bank
shall not issue any Letter of Credit if, after giving effect to such issuance,
the Aggregate Outstanding Extensions of Credit of the Lenders would exceed the
lesser of (i) the Commitments and (ii) the Borrowing Base then in effect; and
provided, further, that the Issuing Bank shall not issue any Standby Letter of
Credit if, after giving effect to such issuance, the Standby L/C Obligations
would exceed the Standby L/C Commitment. On the Closing Date, the Existing
Letters of Credit outstanding on the Closing Date shall be deemed to be Letters
of Credit issued and outstanding under this Agreement.
(b) Each Letter of Credit shall (i) (A) be denominated in Dollars, Japanese
Yen or any other currency reasonably acceptable to the Issuing Bank and shall be
either (x) a documentary letter of credit in respect of the purchase of goods or
services by the Borrower or any of its Subsidiaries in the ordinary course of
business (a "Trade Letter of Credit") or (y) a standby letter of credit issued
26
to support obligations of the Borrower, contingent or otherwise, in favor of
such beneficiaries as the Borrower may specify from time to time (which shall be
reasonably satisfactory to the Issuing Bank) (a "Standby Letter of Credit"), (B)
subject to the subsection 4.1(e) hereof, expire no later than, in the case of
Trade Letters of Credit, 90 days after the date of issuance (or if earlier five
Business Days prior to the Scheduled Termination Date) and, in the case of
Standby Letters of Credit, no later than five Business Days prior to the
Scheduled Termination Date and (C) be payable at sight or (ii) be a steamship
guarantee (a "Steamship Guarantee") or airway release (an "Airway Release")
denominated in Dollars and issued in a form satisfactory to the Issuing Bank for
the benefit of a shipper of goods the purchase of which has been financed
through the issuance of a Trade Letter of Credit.
(c) Each Letter of Credit shall be subject to the Uniform Customs (except
to the extent that any Existing Letter of Credit continues to be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (and, after January 1,
1999, the ICC Rules on International Standby Practices (ISP 98)) ("ICC Rules"),
in accordance with its terms), and, to the extent not inconsistent therewith,
the laws of the State of New York.
(d) The Issuing Bank shall not at any time issue any Letter of Credit
hereunder if such issuance would conflict with, or cause the Issuing Bank or any
L/C Participant to exceed any limits imposed by, any applicable Requirement of
Law.
(e) Subject to the terms and conditions hereof, the Borrower may request
the extension or amendment of any Trade Letter of Credit (including any Existing
Letter of Credit which is a Trade Letter of Credit) issued hereunder by giving
written notice to the Issuing Bank at its Funding Office with respect thereto at
least five Business Days prior to the then current expiration date of such
Letter of Credit, and the Issuing Bank may, in its discretion, grant such
extension or amendment and, if such extension or amendment is granted, shall
furnish the Administrative Agent with a copy of such extended or amended Trade
Letter of Credit, provided that no extension or amendment of any Trade Letter of
Credit (including any Existing Letter of Credit which is a Trade Letter of
Credit) shall be granted if (i) such extension or amendment would be for a
period of more than 90 days, (ii) prior to such extension or amendment, such
Trade Letter of Credit shall have been extended or amended five times, (iii)
after giving effect to such extension or amendment, such Letter of Credit would
expire later than five Business Days prior to the Scheduled Termination Date,
(iv) after giving effect to such extension or amendment, the Aggregate
Outstanding Extensions of Credit of the Lenders would exceed the lesser of (A)
the Commitments or (B) the Borrowing Base then in effect or (v) any Default or
Event of Default has occurred and is continuing; provided, further, that (i) if
such amendment (A) increases the face amount of the affected Trade Letter of
Credit, the Borrower shall pay to the Administrative Agent, for the account of
the Issuing Bank and the L/C Participants, a letter of credit commission or fee
on the amount of such increase in the face amount of such Letter of Credit
determined in accordance with subsection 4.3 as if the affected Trade Letter of
Credit was issued on the date of such increase to be shared ratably among the
Issuing Bank and the L/C Participants in accordance with their respective
Commitment Percentages or (B) extends the maturity of the affected Trade Letter
of Credit, the Borrower shall pay to the Administrative Agent, for the account
of the Issuing Bank and the L/C Participants, a letter of credit commission or
fee on the face amount of such Letter of Credit determined in accordance with
subsection 4.3 as if the affected Trade Letter of Credit was issued on the date
26
such extension becomes effective to be shared ratably among the Issuing Bank and
the L/C Participants in accordance with their respective Commitment Percentages.
It is understood and agreed that the Issuing Bank shall be under no obligation
to issue any extension or amendment of a Letter of Credit.
(f) The Issuing Bank shall notify each Lender on a monthly basis of the
issuance, extension or amendment of Letters of Credit, and any drawings or other
payments under Letters of Credit, during such month, provided that the failure
to give such notice shall not affect such Lender's obligations in respect of
such Letter of Credit.
4.2 Procedure for Issuance, Extension or Amendment of Letters of Credit.
The Borrower may from time to time request that the Issuing Bank issue a Letter
of Credit by delivering to the Issuing Bank at the Funding Office an Application
therefor, including by electronic transmission, completed to the reasonable
satisfaction of the Issuing Bank, and such other certificates, documents and
other papers and information as the Issuing Bank may reasonably request. Upon
receipt of any Application, the Issuing Bank will process such Application and
the certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Bank be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Bank and the Borrower. The Borrower may
request the extension or amendment of a Trade Letter of Credit in accordance
with the provisions of subsection 4.1(e). If the Borrower requests such an
extension or amendment, the Issuing Bank shall promptly notify the Borrower as
to whether such extension or amendment will be granted (but in no event shall
the Issuing Bank be required to give such notice to the Borrower earlier than
two Business Days after its receipt of a request therefor). If such extension or
amendment is granted, the Issuing Bank shall promptly issue such extension or
amendment (but in no event shall the Issuing Bank be required to issue such
extension or amendment earlier than three Business Days after its receipt of a
request therefor) by issuing the original of such extended or amended Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Bank and the Borrower.
4.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the
Administrative Agent at the Payment Office, for the account of the Issuing Bank
and the L/C Participants, a letter of credit commission with respect to each
Trade Letter of Credit in an amount equal to 0.25% of the face amount of such
Trade Letter of Credit to be shared ratably among the Issuing Bank and the L/C
Participants in accordance with their respective Commitment Percentages. Such
commission shall be payable in advance on the date of issuance of each Trade
Letter of Credit and shall be nonrefundable.
(b) The Borrower shall pay to the Administrative Agent at the Payment
Office, for the account of the Issuing Bank and the L/C Participants, a letter
of credit fee with respect to each Standby Letter of Credit, computed for the
period from the date of issuance to the date of expiration at the rate per annum
equal to the Applicable Margin in respect of Eurodollar Loans from time to time
in effect (or as otherwise agreed from time to time among the Borrower and the
Lenders), calculated on the basis of a 360 day year, of the aggregate amount
available to be drawn under such Standby Letter of Credit on the date of
27
issuance to be shared ratably among the Issuing Bank and the L/C Participants in
accordance with their respective Commitment Percentages. Such commissions shall
be payable in advance on the date of issuance of each Standby Letter of Credit,
on each Interest Payment Date to occur after the issuance thereof and on the
Termination Date (or such earlier date as the Commitments shall terminate as
provided herein) and shall be nonrefundable.
(c) The Borrower shall pay to the Issuing Bank at the Payment Office, for
its own account, on the date of issuance of a Steamship Guarantee or Airway
Release such processing fees as shall customarily be charged by the Issuing Bank
in connection with issuance of a Steamship Guarantee or Airway Release.
(d) In addition to the foregoing commissions, the Borrower shall pay or
reimburse the Issuing Bank for such normal and customary costs and expenses as
are incurred or charged by the Issuing Bank in issuing, effecting payment under,
amending or otherwise administering any Letter of Credit.
(e) The Administrative Agent shall, at the end of each month, distribute to
the Issuing Bank and the L/C Participants all commissions received by the
Administrative Agent for their respective accounts pursuant to this subsection.
(f) No fees or other commissions shall be payable by any Issuing Bank to
any L/C Participant with respect to any Existing Letter of Credit.
4.4 L/C Participations. (a) The Issuing Bank irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce the Issuing Bank to
issue Letters of Credit (including Existing Letters of Credit) hereunder, each
L/C Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Bank, on the terms and conditions hereinafter stated,
for such L/C Participant's own account and risk, an undivided interest equal to
such L/C Participant's Commitment Percentage in the Issuing Bank's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid or other payment made by the Issuing Bank thereunder. Each L/C
Participant unconditionally and irrevocably agrees with the Issuing Bank that,
if a draft is paid or any payment is otherwise made under any Letter of Credit
(including any Existing Letter of Credit) for which the Issuing Bank is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement or the Application, as the case may be, such L/C Participant shall pay
to the Issuing Bank upon demand at the Payment Office an amount equal to such
L/C Participant's Commitment Percentage of the amount of such draft or payment,
or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the Issuing
Bank pursuant to subsection 4.4(a) in respect of any unreimbursed portion of any
payment made by the Issuing Bank under any Letter of Credit (including any
Existing Letter of Credit) is paid to the Issuing Bank within three Business
Days after the date such payment is due, such L/C Participant shall pay to the
Issuing Bank on demand an amount equal to the greater of (i) the product of (1)
such amount, times (2) the daily average Federal funds rate, as quoted by the
Issuing Bank, during the period from and including the date such payment is
required to the date on which such payment is made available to the Issuing
29
Bank, times (3) a fraction the numerator of which is the number of days that
elapse during such period and the denominator of which is 360 and (ii) a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation, for the period until such L/C Participant makes such
amount immediately available to the Issuing Bank. If any such amount required to
be paid by any L/C Participant pursuant to subsection 4.4(a) is not in fact made
available to the Issuing Bank by such L/C Participant within three Business Days
after the date such payment is due, the Issuing Bank shall be entitled to
recover from such L/C Participant, on demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Base Rate
Loans which are not overdue hereunder. A certificate of the Issuing Bank
submitted to any L/C Participant with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment under any
Letter of Credit (including any Existing Letter of Credit) and has received from
any L/C Participant its pro rata share of such payment in accordance with
subsection 4.4(a), the Issuing Bank receives any payment related to such Letter
of Credit (whether directly from the Borrower or otherwise, including proceeds
of collateral applied thereto by the Issuing Bank), or any payment of interest
on account thereof, the Issuing Bank will, within three Business Days after
receipt thereof, distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Bank shall be required to be returned by the Issuing Bank, such L/C
Participant shall, within three Business Days, return to the Issuing Bank the
portion thereof previously distributed by the Issuing Bank to it. If any amount
payable under this paragraph is paid within three Business Days after such
payment is due, the Lender which owes such amount shall pay to the Lender to
which such amount is owed on demand an amount equal to the greater of (i) the
product of (1) such amount, times (2) the daily average Federal funds rate, as
quoted by such Lender, during the period from and including the date such
payment is required to the date on which such payment is made available to such
Lender, times (3) a fraction the numerator of which is the number of days that
elapse during such period and the denominator of which is 360 and (ii) a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation, for the period until such Lender makes such amount
immediately available to the other Lender. If any amount required to be paid
under this paragraph is not in fact made available to the Lender to which such
amount is owed within three Business Days after the date such payment is due,
such Lender shall be entitled to recover from the Lender which owes such amount,
on demand, such amount with interest thereon calculated from such due date at
the rate per annum applicable to Base Rate Loans which are not overdue
hereunder.
4.5 Obligations Absolute. The Borrower's obligations under this Section 4
and subsection 6.5(a) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Bank or any
beneficiary of a Letter of Credit (including any Existing Letter of Credit). The
Borrower also agrees with the Issuing Bank that the Issuing Bank shall not be
responsible for, and the Borrower's L/C Reimbursement Obligations under
subsection 6.5(a) shall not be affected by, among other things, the validity or
genuineness 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 the Borrower and any beneficiary of any Letter of
Credit (including any Existing Letter of Credit) or any other party to which
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such Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Bank 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 Letter of Credit (including
any Existing Letter of Credit), except for errors or omissions caused by the
Issuing Bank's gross negligence or willful misconduct. The Borrower agrees that
any action taken or omitted by the Issuing Bank under or in connection with any
Letter of Credit (including any Existing Letter of Credit) or the related drafts
or documents, if done in the absence of gross negligence or willful misconduct
and in accordance with the standards of care specified in the Uniform Customs or
ICC Rules, as applicable (and, to the extent not inconsistent therewith, the
UCC), shall be binding on the Borrower and shall not result in any liability of
the Issuing Bank to the Borrower.
4.6 Letter of Credit Payments. If any draft shall be presented for payment
or any payment is otherwise demanded under any Letter of Credit (including any
Existing Letter of Credit), the Issuing Bank shall promptly notify the Borrower
of the date and amount thereof. The responsibility of the Issuing Bank to the
Borrower in connection with any draft presented for payment or other payment
demanded under any Letter of Credit (including any Existing Letter of Credit)
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
4.7 Application. To the extent that any provision of any Application
related to any Letter of Credit (including any Existing Letter of Credit) is
inconsistent with any provisions of this Agreement, such provisions of this
Agreement shall apply. The Borrower acknowledges and agrees that all rights of
the Issuing Bank under any Application shall inure to the benefit of each
Participating Bank to the extent of its Commitment Percentage as fully as if
such Participating Bank was a party to such Application.
SECTION 5. AMOUNT AND TERMS OF ACCEPTANCES
5.1 Acceptances. (a) Subject to the terms and conditions hereof, the
Accepting Bank, in reliance on the agreements of the other Lenders set forth in
subsection 5.3(a), agrees to create acceptances ("Acceptances") in respect of
Drafts in Dollars drawn on the Accepting Bank by the Borrower and discounted by
the Accepting Bank for the account of the Borrower on any Business Day during
the Commitment Period; provided that the Accepting Bank shall not create any
Acceptance, if after giving effect to such creation, the Aggregate Outstanding
Extensions of Credit of the Lenders would exceed the lesser of (x) the
Commitments and (y) the Borrowing Base then in effect; provided, further, that
concurrently therewith, the Borrower requests that such Bank discount such Draft
pursuant to subsection 5.4. On the Closing Date, the Existing Acceptances
outstanding on the Closing Date shall be deemed to be Acceptances created and
outstanding under this Agreement.
(b) The Accepting Bank shall not at any time create an Acceptance hereunder
if such creation would conflict with, or cause the Accepting Bank or any
Acceptance Participant to exceed any limits imposed by, any applicable
Requirement of Law or if, for reasons beyond the control of the Accepting Bank,
such Acceptance does not comply with applicable requirements of Section 13 of
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the Federal Reserve Act or the regulations of the Board of Governors of the
Federal Reserve System of the United States of America governing the creation
and discounting of, and the maintenance of reserves with respect to, bankers'
acceptances.
(c) The Accepting Bank shall notify each Lender on a monthly basis of the
creation of Acceptances during such month, provided that the failure to give
such notice shall not affect such Lender's obligations in respect of such
Acceptance.
5.2 Procedure for Creation of Acceptances. (a) The Borrower may from time
to time request the creation of Acceptances hereunder by delivering to the
Accepting Bank at the Funding Office on the date a draft presented under any
Letter of Credit is paid, (i) an Acceptance Request, completed to the reasonable
satisfaction of the Accepting Bank and specifying, among other things, the date
(which must be a Business Day), maturity and amount of the Draft to be accepted,
(ii) to the extent not theretofore supplied to the Accepting Bank in accordance
with subsection 5.7, a Draft to be drawn on the Accepting Bank, appropriately
completed in accordance with this subsection 5.2 and (iii) such other
certificates, documents and other papers and information as the Accepting Bank
may reasonably request.
(b) Each Draft submitted by the Borrower for acceptance hereunder shall be
denominated in Dollars, shall be dated the date specified in the Acceptance
Request with respect thereto and shall be stated to mature on a Business Day
which is 30, 60 or 90 days after the date thereof and, in any event, not more
than 90 days after the anticipated date of shipment specified in the relevant
Acceptance Request. No Acceptance created hereunder shall (i) be created more
than 30 days after the date of any shipments of goods to which such Acceptance
relates, (ii) have a tenor in excess of the period of time which is usual and
reasonably necessary to finance transactions of a similar character, (iii) be in
a face amount of less than $250,000 or (iv) be in a face amount which, when
taken together with all other Acceptances and other financings relating to the
shipment of goods to which such Acceptance relates, exceeds the fair market
value of such shipment.
(c) Subject to subsection 5.2(d), not later than the close of business at
its address for notices specified herein on the Business Day specified in an
Acceptance Request, and upon fulfillment of the applicable conditions set forth
in Section 8, the Accepting Bank shall, in accordance with such Acceptance
Request, (i) complete the date, amount and maturity of each Draft presented for
acceptance (to the extent not completed by the Borrower), (ii) accept such
Drafts and (iii) upon such acceptance, discount such Acceptances in accordance
with subsection 5.4.
(d) The acceptance and discounting of Drafts by the Accepting Bank
hereunder shall at all times be in the discretion of the Accepting Bank.
5.3 Acceptance Participations. (a) The Accepting Bank irrevocably agrees to
grant and hereby grants to each Acceptance Participant, and, to induce the
Accepting Bank to create Acceptances (including Existing Acceptances) hereunder,
each Acceptance Participant irrevocably agrees to accept and purchase and hereby
accepts and purchases from the Accepting Bank, on the terms and conditions
hereinafter stated, for such Acceptance Participant's own account and risk, an
undivided interest equal to such Acceptance Participant's Commitment Percentage
32
in the Accepting Bank's obligations and rights under each Acceptance created
hereunder and the face amount of each Acceptance created by the Accepting Bank.
Each Acceptance Participant unconditionally and irrevocably agrees with the
Accepting Bank that, if the Accepting Bank is not reimbursed in full by the
Borrower for the face amount of any Acceptance in accordance with the terms of
this Agreement, such Acceptance Participant shall pay to the Accepting Bank upon
demand at the Payment Office an amount equal to such Acceptance Participant's
Commitment Percentage of the face amount of such Acceptance, or any part
thereof, which is not so reimbursed.
(b) If any amount required to be paid by any Acceptance Participant to the
Accepting Bank pursuant to subsection 5.3(a) in respect of any unreimbursed
portion of any payment made by the Accepting Bank under any Acceptance is paid
to the Accepting Bank within three Business Days after the date such payment is
due, such Acceptance Participant shall pay to the Accepting Bank on demand an
amount equal to the greater of (i) the product of (1) such amount, times (2) the
daily average Federal funds rate, as quoted by the Accepting Bank, during the
period from and including the date such payment is required to the date on which
such payment is immediately available to the Accepting Bank, times (3) a
fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360 and (ii) a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation, for the period until such Lender makes such amount immediately
available to the Accepting Bank. If any such amount required to be paid by any
Acceptance Participant pursuant to subsection 5.3(a) is not in fact made
available to the Accepting Bank by such Acceptance Participant within three
Business Days after the date such payment is due, the Accepting Bank shall be
entitled to recover from such Acceptance Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans which are not overdue hereunder. A certificate of
the Accepting Bank submitted to any Acceptance Participant with respect to any
amounts owing under this subsection shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Accepting Bank has made payment under
any Acceptance and has received from any Acceptance Participant its pro rata
share of such payment in accordance with subsection 5.3(a), the Accepting Bank
receives any payment related to such Acceptance (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Accepting Bank), or any payment of interest on account thereof, the Accepting
Bank will, within three Business Days after receipt thereof, distribute to such
Acceptance Participant its pro rata share thereof; provided, however, that in
the event that any such payment received by the Accepting Bank shall be required
to be returned by the Accepting Bank, such Acceptance Participant shall, within
three Business Days, return to the Accepting Bank the portion thereof previously
distributed by the Accepting Bank to it. If any amount payable under this
paragraph is paid within three Business Days after such payment is due, the
Lender which owes such amount shall pay to the Lender to which such amount is
owed on demand an amount equal to the greater of (i) product of (1) such amount,
times (2) the daily average Federal funds rate, as quoted by such Lender, during
the period from and including the date such payment is required to the date on
which such payment is made available to such Lender, times (3) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360 and (ii) a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation, for
the period until such Lender makes such amount immediately available to the
33
other Lender. If any amount required to be paid under this paragraph is not in
fact made available to the Lender to which such amount is owed within three
Business Days after the date such payment is due, such Lender shall be entitled
to recover from the Lender which owes such amount, on demand, such amount with
interest thereon calculated from such due date at the rate per annum applicable
to Base Rate Loans which are not overdue hereunder.
5.4 Discount of Acceptances. (a) The Accepting Bank agrees, on the terms
and conditions of this Agreement, that on any date on which it creates an
Acceptance hereunder, the Accepting Bank will discount such Acceptance at the
Acceptance Rate, by making available to the Borrower an amount in immediately
available funds equal to the face amount of each Acceptance created by the
Accepting Bank on such date less such discount and notify the Administrative
Agent that such Draft has been accepted and discounted by the Accepting Bank.
The Accepting Bank will then pay to the Administrative Agent for the account of
the Borrower an amount equal to the proceeds of such discount.
(b) On the date that any Acceptance is discounted pursuant to subsection
5.4(a), the Accepting Bank shall pay to each Acceptance Participant an amount
equal to a percentage of such Acceptance Participant's Commitment Percentage of
the face amount of such Acceptance, which percentage shall be equal to the
Applicable Margin for Eurodollar Loans used to calculate the Acceptance Rate
with respect to such Acceptance.
5.5 Mandatory Prepayment. (a) In the event that (i) there is a
determination made by any regulatory body or instrumentality thereof (including,
without limitation, any Federal Reserve Bank or any bank examiner), or there is
a change in, or change in interpretation of, any applicable law, rule or
regulation (such determination or such change, a "Reserve Determination"), in
either case to the effect that any bankers' acceptance created hereunder or in
connection with a substantially similar facility (whether or not the Borrower or
any Bank is directly involved as a party) will be ineligible for reserve-free
treatment (or, if already discounted, should have been ineligible for
reserve-free treatment) under Section 13 of the Federal Reserve Act or any other
regulation or rule of the Board of Governors of the Federal Reserve System of
the United States of America, and as a result any Lender is required to
maintain, or determines as a matter of prudent banking practice that it is
appropriate for it to maintain, additional reserves, or (ii) any restriction is
imposed on any Lender (including, without limitation, any change in acceptance
limits imposed on any Lender) which would prevent such Lender from creating or
participating in bankers' acceptances or otherwise performing its obligations in
respect of the Acceptances, then, with the consent of the Required Lenders, the
Administrative Agent may, or upon the direction of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower in accordance with
subsection 13.2, demand prepayment of all outstanding Acceptances (if such
prepayment is required), and the Accepting Bank shall have no further obligation
to accept or discount Drafts hereunder. The Borrower agrees that it shall,
within two Business Days of its receipt of a notice of mandatory prepayment of
the Acceptances, prepay all Acceptance Obligations in accordance with the
provisions of subsection 5.5(b) hereof.
(b) Any prepayment of any Acceptance Obligation made pursuant hereto shall
be made to the Accepting Bank and shall be in an amount equal to the face amount
34
of such Acceptance minus a prepayment discount calculated by the Accepting Bank
in accordance with its customary practice for similar Acceptances and
communicated to the Borrower; provided that, in the event that the Borrower
fails to make such prepayment as provided in this subsection 5.5(b), such
Acceptance Obligation shall be automatically converted into Base Rate Loans in
the amount of such prepayment. The Borrowing Date with respect to such borrowing
shall be the date of such prepayment.
(c) Except as otherwise provided herein, Acceptances may not be prepaid
prior to maturity.
5.6 Obligations Absolute. The Borrower's obligations under this Section 5
and subsection 6.5(b) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Accepting Bank. The
Borrower also agrees with the Accepting Bank that the Accepting Bank shall not
be responsible for, and the Borrower's Acceptance Reimbursement Obligations
under subsection 6.5(b) shall not be affected by, among other things, the
validity or genuineness 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 the Borrower or any other party to which such
Acceptance may be transferred or any claims whatsoever of the Borrower or any
such transferee. The Borrower agrees that any action taken or omitted by the
Accepting Bank under or in connection with any Acceptance or the related drafts
or documents, if done in the absence of gross negligence or willful misconduct
and in accordance with the standards of care specified in the Uniform Customs or
ICC Rules, as applicable (and, to the extent not inconsistent therewith, the
UCC), shall be binding on the Borrower and shall not result in any liability of
the Accepting Bank to the Borrower.
5.7 Supply of Drafts. To enable the Accepting Bank to create Acceptances in
the manner specified in this Section 5, the Borrower may provide to the
Accepting Bank, on the Closing Date and thereafter from time to time upon
request of the Administrative Agent or the Accepting Bank, such number of blank
Drafts conforming to the requirements hereof as the Administrative Agent or the
Accepting Bank may reasonably request, each duly executed on behalf of the
Borrower, and the Accepting Bank shall hold any such documents in safekeeping.
The Borrower and the Accepting Bank hereby agree that in the event that any
authorized signatory of the Borrower whose signature shall appear on any Draft
shall cease to have such authority at the time that an Acceptance is to be
created with respect thereto, such signature shall nevertheless be valid and
sufficient for all purposes as if such authority had remained in full force and
effect at the time of such creation.
5.8 Delivery of Certain Documentation. Upon request by the Administrative
Agent or the Accepting Bank, the Borrower shall furnish to the Administrative
Agent or the Accepting Bank (a) a copy of the contract of sale or any ▇▇▇▇ of
lading, warehouse receipt, policy or certificate of insurance or other document
covering or otherwise relating to each shipment of goods specified in the
Acceptance Request relating to such Acceptance and (b) such other documents or
information as the Accepting Bank or the Administrative Agent shall reasonably
request with respect to the creation of such Acceptance.
35
5.9 Notice. The Administrative Agent shall notify the Federal Reserve Bank
of New York of the terms under which Acceptances may be made if requested or
required to do so by such institution.
5.10 Use of Proceeds. The proceeds of the Acceptances shall be used solely
to finance the payment of an L/C Obligation with respect to any Letter of Credit
which relates to the purchase of Inventory of the Borrower in transactions which
fulfill the requirements of Section 13 of the Federal Reserve Act or the
regulations of the Board of Governors of the Federal Reserve System of the
United States of America governing the creation and discounting of, and the
maintenance of reserves with respect to, bankers' acceptances.
SECTION 6. GENERAL PROVISIONS APPLICABLE TO THE
LOANS, LETTERS OF CREDIT AND ACCEPTANCES.
6.1 Termination or Reduction of Commitments. (a) The Borrower shall have
the right, upon not less than five Business Days' notice to the Administrative
Agent, to terminate the Commitments or, from time to time, reduce the amount of
the Commitments to an amount not less than the sum of (i) the aggregate
principal amount of the Loans then outstanding after giving effect to any
contemporaneous prepayment thereof, and (ii) the then outstanding L/C
Obligations and Acceptance Obligations. Any termination of the Commitments shall
be accompanied by the prepayment in full of the Loans, together with accrued
interest thereon to the date of such prepayment, the collateralization of the
then outstanding L/C Obligations and Acceptance Obligations in accordance with
subsection 6.3(a), and the payment of any unpaid commitment fee and any other
fees and commissions then accrued hereunder with respect to the Commitments and
any other amounts payable hereunder. Any such reduction shall be in an amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce
permanently pro rata in accordance with subsection 6.11 the amount of the
Commitments then in effect.
6.2 Optional Prepayments. The Borrower may on the last day of any Interest
Period with respect thereto, in the case of Eurodollar Loans, and at any time
and from time to time, in the case of Base Rate Loans, prepay the Loans, in
whole or in part, without premium or penalty, upon in the case of Loans, at
least four Business Days' irrevocable notice to the Administrative Agent at its
payment Office, specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, Base Rate Loans or a combination thereof,
and, if of a combination thereof, the amount allocable to each. Upon receipt of
any such notice in respect of Loans, the Administrative Agent shall promptly
notify each Lender thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with any amounts payable pursuant to subsection 6.13. Partial prepayments shall
be, in the case of Eurodollar Loans, in an aggregate principal amount of
$1,000,000 or a whole multiple thereof, and in the case of Base Rate Loans, in
an aggregate principal amount of $100,000 or a whole multiple of $100,000 in
excess thereof. All repayments shall be made to the Payment Office specified
herein.
6.3 Mandatory Prepayments. (a) The Borrower, without notice or demand,
shall immediately prepay the Loans to the extent, if any, that at any time the
Aggregate Outstanding Extensions of Credit at such time exceeds the Commitments
36
of all the Lenders then in effect. To the extent that after giving effect to any
prepayment of the Loans required by the immediately preceding sentence, the
Aggregate Outstanding Extensions of Credit of the Lenders exceed the Commitments
of all the Lenders then in effect, the Borrower shall, without notice or demand,
immediately deposit in a cash collateral account with the Administrative Agent,
having terms and conditions satisfactory in form and substance to the
Administrative Agent, as cash collateral security for the liability of the
Issuing Bank (whether direct or contingent) under any Letters of Credit
(including any Existing Letters of Credit) then outstanding or of the Accepting
Bank (whether direct or contingent) under any Acceptances (including any
Existing Acceptances) then outstanding, an aggregate amount equal to the amount
by which the Aggregate Outstanding Extensions of Credit of the Lenders exceed
the Commitments of all the Lenders then in effect.
(b) If, at any time during the Commitment Period, the Aggregate Outstanding
Extensions of Credit of the Lenders exceed the Borrowing Base then in effect,
the Borrower shall, without notice or demand, immediately prepay the Loans in an
aggregate principal amount equal to such excess, together with commitment fees,
fronting fees and letter of credit fees accrued to the date of such payment or
prepayment. To the extent that after giving effect to any prepayment of the
Loans required by the immediately preceding sentence, the Aggregate Outstanding
Extensions of Credit of the Lenders exceed the Borrowing Base then in effect,
the Borrower shall, without notice or demand, immediately deposit in a cash
collateral account with the Administrative Agent, having terms and conditions
satisfactory in form and substance to the Administrative Agent, as cash
collateral security for the liability of the Issuing Bank (whether direct or
contingent) under any Letters of Credit (including any Existing Letters of
Credit) then outstanding or of the Accepting Bank (whether direct or contingent)
under any Acceptances (including any Existing Acceptances) then outstanding, an
aggregate amount equal to the amount by which the Aggregate Outstanding
Extensions of Credit of the Lenders exceed the Borrowing Base then in effect.
(c) [Intentionally omitted]
(d) [Intentionally omitted].
(e) Interest accrued on any Loans prepaid pursuant to this subsection 6.3
to and including the date of such prepayment shall be payable on the next
succeeding Interest Payment Date following the date on which such prepayment is
made. All prepayments pursuant to this subsection 6.3 shall be subject to the
provisions of subsection 6.13 and shall be made to the Payment Offices specified
herein.
6.4 Certain Fees. (a) The Borrower agrees to pay to the Administrative
Agent at the Payment Office for the account of the Lenders a non-refundable
commitment fee for the period from and including the first day of the Commitment
Period to and including the Termination Date or such earlier date as the
Commitments shall terminate as provided herein, computed at a rate per annum on
the daily average amount of the Available Commitments during the period for
which payment is made equal to the Applicable Commitment Fee Rate. Such
commitment fees shall be payable quarterly in arrears on the last day of each
February, May, August and November and on the Termination Date or such earlier
date as the Commitments shall terminate as provided herein, commencing on the
first of such dates to occur after the date hereof.
37
(b) The Borrower agrees to pay to the Administrative Agent at the Payment
Office for the account of the Lenders the fees required to be paid pursuant to
the Fee Letter, dated as of June 23, 2004, between the Borrower and the
Administrative Agent.
(c) The Borrower agrees to pay to the Administrative Agent at the Payment
Office during the period from the first day of the Commitment Period to the
Termination Date or such earlier date as the Commitments shall terminate as
provided herein, as compensation for its services as Administrative Agent
hereunder, an administrative fee in an amount separately agreed by the Borrower
and the Administrative Agent, payable in advance on the Closing Date and on each
anniversary of the Closing Date.
6.5 Reimbursement Obligations of the Borrower. (a) The Borrower agrees to
reimburse the Issuing Bank at the Payment Office on demand on each date on which
the Issuing Bank notifies the Borrower of the date and amount of a draft
presented or other payment demanded under any Letter of Credit (including any
Existing Letter of Credit) and paid by the Issuing Bank for the amount of (i)
such draft so paid or payment so made and (ii) any taxes, reasonable fees,
charges or other costs or expenses incurred by the Issuing Bank in connection
with such payment. Each such payment shall be made to the Issuing Bank at its
address for notices specified herein in the relevant currency and in immediately
available funds. If the Borrower fails to make such payment when due in respect
of a Foreign Currency Letter of Credit then, upon notice from the Issuing Bank
to the Borrower and the Administrative Agent, the amount payable shall without
further action be converted into an obligation denominated in Dollars at the
applicable Exchange Rate on the date of such conversion, as determined by the
Issuing Bank in accordance with the terms hereof, and the Issuing Bank shall
notify the Administrative Agent and each Lender of the applicable L/C
Reimbursement Obligation, the payment then due from the Borrower in respect
thereof and such Lender's Commitment Percentage thereof. Each drawing or other
payment under any Letter of Credit issued in Dollars shall constitute a request
by the Borrower to the Administrative Agent for a borrowing pursuant to
subsection 2.1 of a Base Rate Loan in the amount of such drawing or payment. The
Borrowing Date with respect to such borrowing shall be the date of such drawing
or other payment if such drawing or payment is made prior to 10:00 A.M. on such
date and otherwise the first Business Day following the date of such drawing or
payment.
(b) The Borrower shall be obligated, and hereby unconditionally agrees to
reimburse the Accepting Bank on demand at the Payment Office on the maturity
date thereof or on such earlier date as the Acceptance Obligations shall become
or shall have been declared due and payable in an amount equal to the face
amount of each Acceptance created by the Accepting Bank hereunder (including
each Existing Acceptance). Each such payment shall be made to the Accepting Bank
at the Payment Office in Dollars and in immediately available funds. Each
payment under any Acceptance shall constitute a request by the Borrower to the
Administrative Agent for a borrowing pursuant to subsection 2.1 of a Base Rate
Loan in the amount of such payment. The Borrowing Date with respect to such
borrowing shall be the date of such payment if such payment is made prior to
10:00 A.M. on such date and otherwise on the first Business Day following the
date of such payment.
(c) To the extent that a drawing or payment is not reimbursed pursuant to
this subsection on the date such drawing or payment is made, interest shall be
38
payable on such amounts for the Business Day for which such amounts remain
unpaid at the rate applicable to Base Rate Loans hereunder. Interest shall be
payable on any and all amounts remaining unpaid by the Borrower under this
subsection from the date such amounts become payable until payment in full at
the rate which would be payable on any outstanding Base Rate Loans which were
then overdue.
6.6 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin.
(c) [Intentionally omitted]
(d) [Intentionally omitted]
(e) If all or a portion of (i) any of the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of overdue interest, commitment fee or
other amount, the rate described in paragraph (b) of this subsection plus 2%, in
the case of amounts owing that are denominated in Dollars, from the date of such
non-payment until such overdue principal, interest, commitment fee or other
amount is paid in full (as well after as before judgment).
(f) Interest shall be payable in arrears on each Interest Payment Date and
on the Termination Date, provided that interest accruing pursuant to paragraph
(e) of this subsection shall be payable from time to time on demand.
6.7 Computation of Interest and Fees. (a) Interest on Loans, commitment
fees and letter of credit fees shall be calculated on the basis of a 360 day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirement shall become
effective as of the opening of business on the day on which such change in the
Base Rate or the Eurocurrency Reserve Requirement becomes effective. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error.
6.8 Conversion and Continuation Options. (a) The Borrower may elect from
time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
39
such election at the Funding Office, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert Base Rate
Loans to Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election at the Funding Office.
Any such notice of conversion to Eurodollar Loans shall specify the length of
the initial Interest Period or Interest Periods therefor. Upon receipt of any
such notice the Administrative Agent shall promptly notify each Lender thereof.
All or any part of outstanding Eurodollar Loans and Base Rate Loans may be
converted as provided herein, provided that (i) no Dollar Loan may be converted
into a Eurodollar Loan when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Required Lenders have determined that
such a conversion is not appropriate, (ii) partial conversions to Base Rate
Loans (except pursuant to paragraph (b) of this subsection) shall be in an
aggregate principal amount of $1,000,000 or a whole multiple of $100,000 in
excess thereof and partial conversions to Eurodollar Loans shall be in an amount
equal to $1,500,000 or a whole multiple of $500,000 in excess thereof and (iii)
no Dollar Loan may be converted into a Eurodollar Loan after the date that is
one month prior to the Scheduled Termination Date.
(b) Any Eurodollar Loans may be continued as such in the same currency upon
the expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent at the Funding Office, in
accordance with the applicable provisions contained in the definition of the
term "Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that (i) no Eurodollar
Loan may be continued as such when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined that such a continuation is not appropriate and (ii) no Eurodollar
Loan may be continued as such after the date that is one month prior to the
Scheduled Termination Date and provided, further, that if the Borrower shall
fail to give any required notice as described above in this paragraph in respect
of any Eurodollar Loan or if such continuation is not permitted in respect of
any Eurodollar Loan pursuant to the preceding proviso such Eurodollar Loans
shall be automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period.
6.9 Minimum Amounts of Tranches. All borrowings, conversions, payments,
prepayments and selection of Interest Periods hereunder in respect of the Loans
shall be in such amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of any one Eurodollar
Tranche shall not be less than $1,500,000.
6.10 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period with respect to (i) Loans that the Borrower has requested be
made as Eurodollar Loans, (ii) Eurodollar Loans that will result from the
requested conversion of Base Rate Loans into Eurodollar Loans or (iii) the
continuation of Eurodollar Loans beyond the expiration of the then current
Interest Period with respect thereto:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the interbank eurodollar market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for
any requested Interest Period; or
40
(b) the Administrative Agent shall have received notice prior to the
first day of such Interest Period from Lenders constituting the Required
Lenders that the interest rate determined pursuant to subsection 6.6 for
such Interest Period does not accurately reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period;
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given in respect of Eurodollar Loans (v) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made as Base Rate Loans,
any Loans that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be continued as Base Rate Loans and (x) any
outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Base Rate Loans to
Eurodollar Loans.
6.11 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower of
Loans from the Lenders hereunder, each conversion or continuation of a Dollar
Loan, each payment by the Borrower on account of any commitment fee and letter
of credit or participation fees hereunder and any reduction of the Commitments
of the Lenders shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Loans shall be made pro
rata according to the respective outstanding principal amounts of the Loans then
held by the Lenders, except as otherwise provided in subsection 8.1(l). All
payments (including prepayments) to be made by the Borrower hereunder and under
the Notes, whether on account of principal, interest, fees or otherwise, shall
be made without set-off or counterclaim and shall be made, except as otherwise
set forth herein, prior to the Payment Time, on the due date thereof to the
Payment Office, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments in accordance with the terms
hereof to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
(b) Unless the Administrative Agent shall have been notified in writing by
any Lender at least two days prior to a Borrowing Date that such Lender will not
make the amount that would constitute its Commitment Percentage of any borrowing
in Dollars on such date available to the Administrative Agent, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on such Borrowing Date, and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is made available to the Administrative
Agent on a date after such Borrowing Date, such Lender shall pay to the
Administrative Agent on demand an amount equal to the greater of (i) the product
of (1) the daily average Federal funds rate during such period as quoted by the
Administrative Agent, times (2) the amount of such Lender's Commitment
Percentage of such borrowing, times (3) a fraction the numerator of which is the
number of days that elapse from and including such Borrowing Date to the date on
which such Lender's Commitment Percentage of such borrowing shall have become
41
immediately available to the Administrative Agent and the denominator of which
is 360 and (ii) a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation, for the period until such
Lender makes such amount immediately available to the Administrative Agent. A
certificate of the Administrative Agent submitted to any Lender with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's Commitment Percentage of such borrowing is not
in fact made available to the Administrative Agent by such Lender within three
Business Days of such Borrowing Date, the Administrative Agent shall be entitled
to recover from the Borrower, on demand, such amount with interest thereon at
the rate per annum applicable to Base Rate Loans which are not overdue
hereunder.
6.12 Illegality. Notwithstanding any other provisions herein, if any
Requirement of Law or any change therein or in the interpretation or application
thereof shall make it unlawful for any Lender to make, maintain or participate
in Eurodollar Loans as contemplated by this Agreement, (a) the commitment of
such Lender hereunder to make Eurodollar Loans or to convert Base Rate Loans to
Eurodollar Loans shall forthwith be canceled and (b) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to
Base Rate Loans on the respective last days of the then current Interest Periods
for such Loans or within such earlier period as required by law. If any such
prepayment or conversion of a Eurodollar Loan occurs on a day which is not the
last day of the current Interest Period with respect thereto, the Borrower shall
pay to such Lender such amounts, if any, as may be required pursuant to
subsection 6.13. During any such period of illegality any Eurodollar Loans that,
but for the application of the preceding sentence would have been maintained as
Eurodollar Loans, shall be made and maintained by the affected Lender as Base
Rate Loans.
6.13 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in payment when due of the
principal amount of or interest on any Eurodollar Loans of such Lender, (b)
default by the Borrower in making a borrowing or conversion after the Borrower
has given a notice of borrowing or a notice of conversion in accordance with
provisions of this Agreement, (c) default by the Borrower in making any
prepayment after the Borrower has given a notice in accordance with provisions
of this Agreement or (d) the making of a prepayment of a Eurodollar Loan on a
day which is not the last day of an Interest Period with respect thereto,
including, without limitation, in each case, any such loss or expense arising
from the reemployment of funds obtained by it to maintain its Eurodollar Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained. This covenant shall survive termination of this Agreement,
payment of the outstanding Notes and all other amounts payable hereunder.
6.14 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
42
(except for Non-Excluded Taxes covered by subsection 6.15 and changes in
the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender which is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing, maintaining or participating in Eurodollar Loans or issuing or
participating in Letters of Credit or creating or participating in Acceptances
or to reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly notify the
Borrower, through the Administrative Agent, of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender, through the Administrative
Agent, to the Borrower shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof does or shall have the effect of reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have
achieved but for such change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefore, the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction.
6.15 Taxes. (a) All payments made by the Borrower under this Agreement and
the Notes shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
43
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or the Notes). If any such non-excluded
taxes, levies, imposts, duties, charges, fees deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Administrative Agent or any Lender hereunder or under the Notes, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
Notes, provided, however, that the Borrower shall not be required to increase
any such amounts payable to any Lender that is not organized under the laws of
the United States of America or a state thereof if such Lender fails to comply
with the requirements of paragraph (b) of this subsection. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this subsection shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
(b) Each Lender that is not a "U.S. Person" as defined in Section
7701(a)(30) of the Code (a "Non-U.S. Lender") shall:
(i) deliver to the Borrower and the Administrative Agent (A) two
duly completed copies of United States Internal Revenue Service Form
W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming
exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a
statement substantially in the form of Exhibit J and a Form W-8BEN, or
any subsequent versions thereof or successors thereto, properly
completed and duly executed by such Non-U.S. Lender claiming complete
exemption from U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents;
(ii) deliver to the Borrower and the Administrative Agent two
further copies of any such form or certification on or before the date
that any such form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower
or the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
44
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Each Person that shall become a Lender or a Participant
pursuant to subsection 13.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
6.16 Foreign Exchange Contracts. The Borrower may enter into foreign
exchange contracts ("Foreign Exchange Contracts") which are acceptable in form
and substance to the Administrative Agent and which are designed to limit the
risk and/or exposure of the Borrower to fluctuations in currency exchange rates
in the ordinary course of business; provided that the Borrower may only enter
into Foreign Exchange Contracts with a Lender or an Affiliate of any Lender; and
provided, further, that (a) the Borrower may not in any event enter into Foreign
Exchange Contracts for speculative purposes; and (b) the aggregate face or
notional amount of all such Foreign Exchange Contracts shall at no time exceed
$50,000,000 and the Borrower shall at no time be obligated or have the right to
(i) purchase an aggregate amount of the relevant foreign currency greater than
the relevant foreign currency equivalent of $50,000,000 or (ii) receive payments
with respect to fluctuations in the relevant foreign currency to Dollar exchange
rate in respect of an aggregate Dollar amount in excess of $50,000,000. The
Borrower and the relevant Lender each agrees to promptly provide to the
Administrative Agent a copy of any Foreign Exchange Contract to which it may be
a party. The Administrative Agent shall determine the liabilities (the "Foreign
Exchange Liabilities") of the Borrower under all outstanding Foreign Exchange
Contracts on a "▇▇▇▇ to market" basis at least once during each month and at
such other times as the Administrative Agent shall determine in its discretion.
The Administrative Agent shall upon request notify the Borrower and the Lenders
of any determination made by it pursuant to the immediately preceding sentence.
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make or
participate in the Loans, to issue or participate in the Letters of Credit
(including Existing Letters of Credit) and to create or participate in the
Acceptances (including Existing Acceptances), the Borrower hereby represents and
warrants to the Administrative Agent and each Lender that:
7.1 Financial Condition. The audited consolidated balance sheets of the
Borrower and its Subsidiaries as at November 30, 2002 and November 30, 2003 and
the related audited consolidated statements of operations, stockholders' equity
and cash flows for the fiscal year ended on such date, reported on by KPMG Peat
Marwick and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, respectively, copies of which have heretofore
been furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition and results of operations of the Borrower and
its Subsidiaries as at such dates and for the fiscal years which ended on such
dates. The unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at May 31, 2004 and the related unaudited consolidated
statements of operations, stockholders' equity and cash flows for the six month
period ended on such date, certified by a Responsible Officer, copies of which
have heretofore been furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition and results of operations of
the Borrower and its Subsidiaries as at such date and for the six month period
ended on such date. All such financial statements, including the related
45
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein). Other than the Foreign Exchange Contracts set forth in Schedule 7.1,
neither the Borrower nor any of its Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the foregoing statements or in the notes thereto. Except as set forth in
Schedule 7.1, during the period from November 30, 2003 to and including the date
hereof there has been no sale, transfer or other disposition by the Borrower or
any of its Subsidiaries of any material part of its business or property and no
purchase or other acquisition of any business or property (including any capital
stock of any other Person) material in relation to the consolidated financial
condition of the Borrower and its Subsidiaries at November 30, 2003.
7.2 No Change. Except as set forth in Schedule 7.2 or as set forth in the
financial statements referred to in subsection 7.1, since November 30, 2003 (a)
there has been no development or event which has had or could reasonably be
expected to have a Material Adverse Effect and (b) no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Borrower nor has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by the Borrower or any of its
Subsidiaries, except as permitted under this Agreement or the Existing Credit
Agreement.
7.3 Corporate Existence; Compliance with Law. Each of the Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged, (c) is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification except to the extent that
the failure to be so qualified could not, in the aggregate, have a Material
Adverse Effect and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
have a Material Adverse Effect.
7.4 Corporate Power; Authorization; Enforceable Obligations. The Borrower
has the corporate power and authority to make, deliver and perform this
Agreement, the Notes, the Security Documents to which it is a party, any
Application and any Acceptance Request and to borrow hereunder and has taken all
necessary corporate action to authorize the borrowings on the terms and
conditions of this Agreement and the Notes and to authorize the execution,
delivery and performance of this Agreement, the Notes, the Security Documents to
which it is a party, any Application and any Acceptance Request. Each Guarantor
has the corporate power and authority, and the legal right to make, deliver and
perform the Security Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Security Documents to which it is a party. No consent or authorization
of, filing with or other act by or in respect of, any Governmental Authority or
any other Person is or will be required in respect of the Borrower or any
Guarantor in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Agreement, the Notes,
46
the Security Documents, the other Loan Documents, any Application or any
Acceptance Request. This Agreement has been, each Note will be, and each
Security Document to which it is a party has been or will be, duly executed and
delivered on behalf of the Borrower. The Security Documents have been or will be
duly executed and delivered on behalf of each Guarantor that is a party thereto.
This Agreement constitutes, each Note to which it is a party when executed and
delivered, will constitute, and each Security Document to which it is a party
constitutes or, when executed and delivered, will constitute, legal, valid and
binding obligations of the Borrower, and the Security Documents constitute or,
when executed and delivered, will constitute, legal, valid and binding
obligations of each Guarantor that is a party thereto, in each case enforceable
against the Borrower or such Guarantor, as the case may be, in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
7.5 No Legal Bar. The execution, delivery and performance of this
Agreement, the Notes, the Security Documents, the other Loan Documents, any
Application and any Acceptance Request, the borrowings hereunder and the use of
the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries that is a party to any
such document and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
7.6 No Material Litigation. Except as set forth in Schedule 7.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to this
Agreement, the Notes, the Security Documents or any of the other Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
7.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
7.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries
has good record and marketable title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to all its other property,
and none of such property is subject to any Lien except as permitted by
subsection 10.3. Schedule 7.8 (as the same may be updated pursuant to subsection
9.2(g)) sets forth a true and complete list of all leases and warehouse
contracts relating to real property upon which any Inventory of the Borrower or
any of its Subsidiaries is kept or to which the Borrower or any of its
Subsidiaries is a party, in each case identifying the lessor or warehouseman, as
the case may be, describing the location of the real property, the size of the
real property, the rent and the expiration of such lease or warehouse contract,
as the case may be. Schedule 7.8 (as the same may be updated pursuant to
subsection 9.2(g)) also sets forth a true and complete list of all leases with
Affiliates.
47
7.9 Intellectual Property. The Borrower and each of its Subsidiaries owns,
or is licensed to use, all trademarks, tradenames, copyrights and patents
necessary for the conduct of its business as currently conducted except for
those the failure to own or license which could not have a Material Adverse
Effect (the "Intellectual Property"). No claim has been asserted and is pending
by any Person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such Intellectual Property, nor
does the Borrower know of any valid basis for any such claim. The use of such
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, do not have a Material Adverse Effect.
7.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries has a Material Adverse
Effect.
7.11 Taxes. Each of the Borrower and its Subsidiaries has filed or caused
to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
7.12 Federal Regulations. No part of the proceeds of any Loans, Letters of
Credit or Acceptances will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect or for any purpose which violates the
provisions of the Regulations of such Board of Governors. If requested by any
Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U.
7.13 ERISA. Except as set forth in Schedule 7.13, neither a Reportable
Event nor an "accumulated funding deficiency" (within the meaning of Section 412
of the Code or Section 302 of ERISA) has occurred during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Plan, and each Plan has complied in all material respects with
the applicable provisions of ERISA and the Code. No termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period with respect to which any liability or
encumbrance remains outstanding or in effect. The present value of all accrued
benefits under each Single Employer Plan, if any, (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued benefits. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, and to the best knowledge of the
Borrower, neither the Borrower nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
48
the valuation date most closely preceding the date on which this representation
is made or deemed made. To the best knowledge of the Borrower, no such
Multiemployer Plan is in Reorganization or Insolvent. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the Borrower and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, as of the valuation date most closely preceding the date on which this
representation is made or deemed made, in the aggregate, exceed the value of the
assets of all such Plans allocable to such benefits.
7.14 Investment Company Act; Other Regulations. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
7.15 Subsidiaries and Joint Ventures. Schedule 7.15 sets forth a true and
complete list of all Subsidiaries of the Borrower and the Joint Ventures of the
Borrower, in each case setting forth the nature and percentage of the capital
stock or other ownership interests which is directly or indirectly owned by the
Borrower, the respective jurisdictions of organization of such Subsidiaries and
Joint Ventures and whether such Subsidiary is a Material Foreign Subsidiary.
7.16 Purpose of Loans. The proceeds of the Loans, Letters of Credit and
Acceptances shall be used by the Borrower for working capital purposes in the
ordinary course of business and to pay fees and expenses incurred in connection
with transactions contemplated under this Agreement and the other Loan
Documents.
7.17 Environmental Matters. Except as set forth in Schedule 7.17:
(a) None of the properties of the Borrower or any of its
Subsidiaries contain, and have not previously contained, any Materials
of Environmental Concern in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could reasonably
give rise to liability under, Environmental Laws.
(b) The properties of the Borrower and its Subsidiaries and all
operations at such properties are in compliance, and have in the last
5 years been in compliance, with all applicable Environmental Laws,
and there is no contamination at, under or about such properties, or
violation of any Environmental Law with respect to such properties
which could interfere with the continued operation of such properties
or impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received
any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of their respective
properties or businesses, nor does the Borrower have knowledge or
reason to believe that any such notice will be received or is being
threatened.
49
(d) Materials of Environmental Concern have not been transported
or disposed of from any property of the Borrower or any of its
Subsidiaries in violation of, or in a manner or to a location which
could reasonably give rise to liability under, Environmental Laws, nor
have any Materials of Environmental Concern been generated, treated,
stored or disposed of at, on or under any of such properties in
violation of, or in a manner that could reasonably give rise to
liability under, any applicable Environmental Laws.
(e) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which the Borrower is or will be named
as a party with respect to any of the properties of the Borrower or
any of its Subsidiaries nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Law with respect to such properties.
(f) There has been no release or threat of release of Materials
of Environmental Concern at or from any of the properties of the
Borrower or any of its Subsidiaries, or arising from or related to the
operations of the Borrower in connection with such properties, in
violation of or in amounts or in a manner that could reasonably give
rise to liability under Environmental Laws.
7.18 Security Documents. The Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, the
Guarantee and Collateral Agreement shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the Borrower and the
Subsidiary Guarantors in such Collateral and the proceeds thereof, as security
for the Obligations (as defined in the Guarantee and Collateral Agreement), in
each case prior and superior in right to any other Person (except, in the case
of Collateral other than Pledged Stock, Liens permitted by Section 10.3).
7.19 Insurance. The Borrower and its Subsidiaries maintain insurance with
financially sound and reputable insurance companies on all their properties in
such amounts and against such risks (but, including in any event, public
liability and product liability) as are usually insured against by companies
engaged in the same or a similar business.
7.20 No Change in Credit Criteria or Collection Policies. There has been no
material relaxation in credit criteria or collection policies concerning
accounts receivable of the Borrower or any of its Subsidiaries since November
30, 1991. All Accounts from time to time designated as Eligible Accounts of the
Borrower and its Subsidiaries satisfy (for so long as such Accounts continue to
be designated as Eligible Accounts) all the eligibility criteria set forth in
the definition of Eligible Accounts and are not subject to any claims, defenses
or set-offs. All Accounts of the Borrower and its Subsidiaries are valid,
binding and enforceable obligations of the Account Debtors or obligors on such
Accounts, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
50
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
7.21 Government Contracts. Schedule 7.21 (as the same may be updated
pursuant to subsection 9.2(l)) sets forth a true and complete list of all
contracts (the "Government Contracts") between the Borrower or any of its
Subsidiaries and any Governmental Authority or other government agency.
7.22 Existing Extensions of Credit. The Borrower hereby acknowledges,
confirms and agrees that the Existing Extensions of Credit (a) constitute legal,
valid, binding and enforceable obligations of the Borrower, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) and (b) are subject to
no defense, offset or counterclaim of any kind whatsoever.
7.23 Licensing. All export and import licenses and exchange control and
other approvals required under applicable laws and regulations with respect to
the importation of goods or Inventory by the Borrower and its Subsidiaries and
the payment of the purchase price and costs related thereto have been obtained
and are in full force and effect, except to the extent that the failure to so
obtain could not, in the aggregate, have a Material Adverse Effect.
SECTION 8. CONDITIONS
8.1 Conditions to Effectiveness of Agreement. The effectiveness of this
Agreement is subject to the satisfaction on or prior to the Closing Date, of the
following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received
(i) this Agreement duly executed and delivered by a Responsible
Officer of the Borrower with a counterpart for each Lender, (ii) for
the account of each Lender, a Note conforming to the requirements
hereof and executed by a Responsible Officer of the Borrower (iii) the
Guarantee and Collateral Agreement duly executed and delivered by the
Borrower and each Subsidiary Guarantor and (iv) an Acknowledgement and
Consent in the form attached to the Guarantee and Collateral
Agreement, executed and delivered by each Issuer (as defined therein),
if any, that is not a party to the Guarantee and Collateral Agreement.
(b) Corporate Proceedings of the Borrower and each Subsidiary.
The Administrative Agent shall have received, with a counterpart for
each Lender, a copy of the resolutions, in form and substance
satisfactory to the Administrative Agent, of the Board of Directors of
the Borrower and each Subsidiary that is a party to any Loan Document
authorizing (i) in the case of the Borrower, (A) the execution,
delivery and performance of this Agreement, the Notes, the Security
Documents to which it is a party, any Application, any Acceptance
Request and any other Loan Document to which it is a party, and (B)
the borrowings contemplated hereunder, and (ii) in the case of each
such Subsidiary, the execution, delivery and performance of the
51
Security Documents and any other Loan Document to which it is a party,
in each case certified by the Secretary or an Assistant Secretary of
the Borrower or such Subsidiary, as the case may be, as of the Closing
Date, which certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded and
shall be in form and substance satisfactory to the Administrative
Agent.
(c) Borrowing Certificate. The Administrative Agent shall have
received, with an executed counterpart for each Lender, a Borrowing
Certificate of the Borrower dated the Closing Date, substantially in
the form of Exhibit B hereto, executed by a Responsible Officer of the
Borrower.
(d) Incumbency Certificate. The Administrative Agent shall have
received, with an executed counterpart for each Lender, a certificate
of the Secretary or an Assistant Secretary of the Borrower and each
Subsidiary that is a party to any Loan Document, dated the Closing
Date, as to the incumbency and signatures of the officers thereof
executing the Loan Documents to which it is a party including, in the
case of the Borrower, this Agreement and the Notes, together with
evidence of the incumbency of such Secretary or Assistant Secretary.
(e) Corporate Documents. The Administrative Agent shall have
received, (i) with an executed counterpart for each Lender, true and
complete copies of the certificate of incorporation and by-laws of the
Borrower and each Subsidiary that is a party to any Loan Document,
certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of the Borrower or
such Subsidiary, as the case may be, and (ii) good standing
certificates for the Borrower and each of its Subsidiaries that is a
party to any Loan Document from their respective jurisdictions of
organization.
(f) No Violation. The consummation of the transactions
contemplated hereby shall not contravene, violate or conflict in any
material respect with, nor involve the Administrative Agent or any
Lender in any violation of, any Requirement of Law.
(g) [Intentionally omitted].
(h) Filings, Registrations and Recordings. Any documents
(including, without limitation, financing statements and filings under
the Assignment of Claims Act of 1940) required to be filed, and any
other actions required to be taken, under or in connection with any of
the Security Documents in order to create or confirm, in favor of the
Administrative Agent for the benefit of the Lenders, a perfected
security interest in the collateral thereunder shall have been
properly filed or taken, as the case may be, and the Administrative
Agent shall have received evidence satisfactory to it of each such
filing, registration, recordation or other action and satisfactory
evidence of the payment of any necessary fee, tax or expense relating
thereto.
(i) Fees. The Administrative Agent shall have received the fees
to be received on the Closing Date referred to in subsection 6.4,
together with any other fees and the reimbursement of expenses which
52
are due and payable on the Closing Date.
(j) Legal Opinions. The Administrative Agent shall have received,
with a counterpart for each Lender, the executed legal opinion of (i)
Levy, Stopol & ▇▇▇▇▇▇, LLP, special counsel to the Borrower and
certain of its Subsidiaries, substantially in the form of Exhibit G-1
hereto and (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel to the
Administrative Agent and the Lenders, substantially in the form of
Exhibit G-2 hereto. Such legal opinion shall cover such other matters
incident to the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require.
(k) Borrowing Base Certificate. The Administrative Agent shall
have received a Borrowing Base Certificate dated the Closing Date
executed and delivered by a Responsible Officer of the Borrower
setting forth the Borrowing Base as of June 30, 2004.
(l) Adjustment of Outstanding Extensions of Credit. On the
Closing Date, (i) the Lenders shall make such payments to each other
(and, in the case of clause (i)(B) below, each Exiting Lender) as may
be specified by the Administrative Agent such that (A) each Lender's
share of the Aggregate Outstanding Extensions of Credit on the Closing
Date corresponds with such Lender's Commitment Percentage hereunder
and (B) the Administrative Agent shall receive amounts sufficient to
make the payment contemplated by subsection 8.1(n)(iii) in respect of
the principal of each Exiting Lender's Loans (as defined in the
Existing Credit Agreement) and (ii) the Lenders' Participating
Interests in all Letters of Credit and Acceptances outstanding
hereunder shall be based upon their Commitments in effect on and after
the Closing Date.
(m) Required Lenders under Existing Credit Agreement. The
Administrative Agent shall have received written consents from Lenders
(as defined in the Existing Credit Agreement) which constitute
Required Lenders (as defined in the Existing Credit Agreement) under
the Existing Credit Agreement to the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
(it being agreed that the execution of this Agreement by a Lender
shall constitute such written consent).
(n) Exiting Lenders; Repayment of Loans under Existing Credit
Agreement. The Administrative Agent shall have received evidence
reasonably satisfactory to it that (i) all outstanding Foreign
Currency Loans (as defined in the Existing Credit Agreement)
outstanding under the Existing Credit Agreement shall have been or
shall concurrently be repaid in full, together with any accrued
interest thereon and any accrued fees payable under the Existing
Credit Agreement to but excluding the Closing Date, (ii) the Lenders
(as defined in the Existing Credit Agreement) which will not become
parties hereto (and will not have a Commitment hereunder) (the
"Exiting Lenders") shall have been or shall concurrently be relieved
of all obligations in respect of their Commitments (as defined in the
Existing Credit Agreement), (iii) each Exiting Lender's Loans (as
defined in the Existing Credit Agreement) outstanding under the
Existing Credit Agreement shall have been or shall concurrently be
repaid in full, together with any accrued interest thereon and any
accrued fees payable under the Existing Credit Agreement to but
excluding the Closing Date, and (iv) the Administrative Agent shall
have received, on behalf of each Lender under the Existing Credit
Agreement, all accrued interest and fees (including the commitment fee
required to be paid pursuant to Section 6.4) in favor of such Lender
53
pursuant to the Existing Credit Agreement to but excluding the Closing
Date.
(o) Pledged Stock; Stock Powers; Pledged Notes. To the extent
required and not already in its possession, the Administrative Agent
shall have received the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor thereof.
8.2 Conditions to Each Loan, Letter of Credit and Acceptance. The agreement
of each Lender to make any Loan requested to be made by it, the agreement of the
Issuing Bank to issue any Letter of Credit and the agreement of the Accepting
Lender to create any Acceptance, on any date is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the representations
and warranties made by the Borrower or its Subsidiaries in or pursuant
to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date,
except for representations and warranties expressly stated to relate
to a specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans and/or Letters of Credit and/or Acceptances requested to be
made, issued or created, as the case may be, on such date.
(c) Borrowing Base. After giving effect to the Loans and/or
Letters of Credit and/or Acceptances requested to be made, issued or
created, as the case may be, on such date, the Aggregate Outstanding
Extensions of Credit of the Lenders shall not exceed the Borrowing
Base then in effect.
Each borrowing by, Letter of Credit issued on behalf of, and Acceptance created
by or on behalf of, the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such borrowing, of the issuance of
such Letter of Credit or of the creation of such Acceptance that the conditions
contained in this subsection 8.2 have been satisfied.
SECTION 9. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Loan, Letter of Credit (including any Existing Letter of Credit) or
Acceptance (including any Existing Acceptance) remains outstanding and unpaid or
any other amount is owing to any Lender or the Administrative Agent hereunder,
the Borrower shall and shall cause each of its Subsidiaries to:
9.1 Financial Statements. Furnish to the Administrative Agent and each
Lender:
(a) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its Subsidiaries as at
54
the end of such year and the related consolidated statements of
operations, stockholders' equity and cash flows for such year, setting
forth in each case in comparative form the figures for the previous
year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or other independent certified public accountants
of nationally recognized standing acceptable to the Required Lenders;
and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet
of the Borrower and its Subsidiaries as at the end of such quarter and
the related unaudited consolidated statements of operations,
stockholders' equity and cash flows of the Borrower and its
Subsidiaries for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
when considered in relation to the consolidated financial statements
of the Borrower and its Subsidiaries;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods.
9.2 Certificates; Other Information. Furnish to the Administrative Agent
and each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 9.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default under subsection 10.1
hereof, except as specified in such certificate;
(b) concurrently with the delivery of (i) the financial
statements referred to in subsections 9.1(a) and 9.1(b), a certificate
of a Responsible Officer (A) stating that, to the best of such
Responsible Officer's knowledge, the Borrower and each of its
Subsidiaries during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition,
contained in this Agreement and in the Notes and the other Loan
Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate and (B) showing in detail calculations supporting
such statement in respect of subsections 10.1, 10.8, 10.9 and 10.10
and (ii) the financial statements referred to in subsection 9.1(a), a
certificate of a Responsible Officer showing in detail the
calculations required to determine if any Subsidiary is a Material
Foreign Subsidiary;
(c) not later than 45 days after the end of each fiscal year of
the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its
Subsidiaries for the next fiscal year;
55
(d) within ten days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its
stockholders, and within five days after the same are filed, copies of
all financial statements and reports which the Borrower may make to,
or file with, the Securities and Exchange Commission or any successor
or analogous Governmental Authority;
(e) [Intentionally omitted];
(f) at any time at the request of the Administrative Agent and at
the Borrower's expense, an audit of the Accounts, Inventory and books
and records of the Borrower and its Subsidiaries by the Administrative
Agent, in form and substance satisfactory to the Administrative Agent;
(g) within 15 days after the last day of each calendar month, a
Borrowing Base Certificate setting forth the Borrowing Base as of such
last day, which shall contain among other things a list of any lease
or warehouse contract entered into by the Borrower or any of its
Subsidiaries and a list of each contract entered into by the Borrower
or any of its Subsidiaries with any Governmental Authority or other
government agency after the date hereof and in each case still in
effect at such time; Schedule 7.8 and Schedule 7.21 shall be deemed to
be amended to include any such lease, warehouse contract or government
contract on the date such list is provided;
(h) within 15 days after the last day of each month, monthly
schedules, in form and substance satisfactory to the Administrative
Agent, current as of the close of business on the last Business Day of
such month, certified by a Responsible Officer, (i) of all Accounts of
the Borrower and its Subsidiaries, showing separately those which are
more than 30 days, 60 days, 90 days and 120 days old together with a
reconciliation of such Accounts and (ii) setting forth such
information as to accounts payable as the Administrative Agent shall
request;
(i) [Intentionally omitted];
(j) promptly after receipt thereof, a copy of all management
letters from the Borrower's independent certified public accountants;
(k) [Intentionally omitted]; and
(l) promptly, such additional financial and other information and
copies of such documents and instruments as the Administrative Agent
or any Lender may from time to time reasonably request, including,
without limitation, a copy of any material debt instrument, security
agreement or other material contract to which the Borrower or any
Subsidiary may be a party.
9.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith, including by appropriate
56
proceedings, if any are required in the good faith judgment of the Borrower, and
reserves in conformity with GAAP with respect thereto have been provided on the
books of the Borrower or its Subsidiaries, as the case may be.
9.4 Conduct of Business and Maintenance of Existence. Continue to engage in
business of the same general type as now conducted by it and preserve, renew and
keep in full force and effect its corporate existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business except as otherwise permitted pursuant to
subsection 10.5; and comply with all Contractual Obligations and Requirements of
Law except to the extent that failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
9.5 Maintenance of Property; Insurance. Keep all material property useful
and necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in such amounts and against such risks (but including in any event
public liability and product liability) as are usually insured against in the
same general area by companies engaged in the same or a similar business; and
furnish to each Lender, upon written request, full information as to the
insurance carried.
9.6 Inspection of Property; Books and Records; Discussions; Audits. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made in all material
respects of all dealings and transactions in relation to its business and
activities; permit representatives of the Administrative Agent and any Lender to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time and as often as may reasonably
be required, including, without limitation, any such visit, inspection or
examination by the Administrative Agent and any Lender in connection with any
audit conducted by the Administrative Agent, and at which a representative of
any Lender may be present, of the Accounts, Inventory and books and records of
the Borrower and its Subsidiaries from time to time at the Administrative
Agent's discretion, and to discuss the business, operations, properties and
financial and other condition of the Borrower and its Subsidiaries with officers
and employees of the Borrower and its Subsidiaries and with its independent
certified public accountants. Without limiting the Administrative Agent's rights
under this subsection and without creating any obligations on the part of the
Administrative Agent, the Administrative Agent currently intends that audits of
the Borrower will be conducted on an approximately yearly basis.
9.7 Additional Collateral.
(a) With respect to any property of the type that would constitute
Collateral acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than property of the type that would constitute Collateral
acquired by any Excluded Foreign Subsidiary) as to which the Administrative
Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement or such other documents as the Administrative
Agent deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a security interest in such property and (ii) take all
actions necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in such
57
property, including the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be required by the Guarantee and Collateral
Agreement or by law or as may be requested by the Administrative Agent.
(b) With respect to any new Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date by the Borrower or any of
its Subsidiaries (which, for the purposes of this paragraph (b), shall include
any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary),
promptly (i) cause such new Subsidiary (A) to become a party to the Guarantee
and Collateral Agreement, (B) to take such actions necessary or advisable to
grant to the Administrative Agent for the benefit of the Lenders a perfected
first priority security interest in the Collateral described in the Guarantee
and Collateral Agreement with respect to such new Subsidiary, including the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by the Guarantee and Collateral Agreement or by law or as may be
requested by the Administrative Agent and (C) to deliver to the Administrative
Agent a certificate of such Subsidiary, substantially in the form of Exhibit B,
with appropriate insertions and attachments, provided that in the case of any
Wholly Owned Foreign Subsidiary, the Borrower or the relevant Subsidiary may, in
lieu of causing such Wholly Owned Foreign Subsidiary to take the actions
required by (A), (B) and (C) above, (x) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Wholly Owned Foreign
Subsidiary and (y) pledge the stock of such new Wholly Owned Foreign Subsidiary
by delivering to the Administrative Agent the certificates (if any) representing
such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the Borrower or the relevant
Subsidiary and (ii) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent. Schedule 7.15 shall be deemed to be
amended to include any Subsidiary created after the date hereof, provided that
the terms and provisions of this subsection 9.7, subsection 10.9 and any other
applicable subsections of this Agreement are complied with in connection with
the creation of any such Subsidiary.
9.8 Consignment of Title Documents. At any time at the request of the
Administrative Agent or the Required Lenders, deliver or cause to be delivered
to the Administrative Agent for the benefit of the Lenders any title or similar
documents (including, without limitation, warehouse receipts) in respect of
goods covered or originally covered by a Letter of Credit (including any
Existing Letter of Credit) or Acceptance (including any Existing Acceptance) or
goods which are otherwise included in the determination of Eligible Inventory.
9.9 Notices. Promptly give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
58
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely
determined, as the case may be, could have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of
its Subsidiaries in which the amount involved is $1,000,000 or more
and which is not covered by insurance or in which injunctive or
similar relief is sought which, if granted, could have a Material
Adverse Effect;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, or any withdrawal from, or the termination,
Reorganization or Insolvency of any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
(e) [Intentionally omitted]; and
(f) the occurrence of a development or event which has had or
could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or any of its Subsidiaries proposes to take
with respect thereto.
9.10 Environmental Laws. (a) Comply with, and ensure compliance by all
tenants and subtenants of any real property owned or leased by the Borrower, if
any, with, all applicable Environmental Laws and obtain and comply with and
maintain, and ensure that all such tenants and subtenants obtain and comply with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws except to the extent that
failure to do so could not be reasonably expected to have a Material Adverse
Effect.
(b) Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions required under Environmental Laws
and promptly comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the pendency of
such proceedings could not be reasonably expected to have a Material Adverse
Effect.
(c) Defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective parents, subsidiaries, affiliates, employees,
agents, officers and directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the operations or properties of the Borrower or
any of its Subsidiaries, or any orders, requirements or demands of Governmental
59
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
arise out of the gross negligence or willful misconduct of the party seeking
indemnification therefor. If any claim, action or other proceeding is brought
against the Administrative Agent or any Lender or their respective parents,
subsidiaries, affiliates, employees, agents, officers or directors with respect
to which the Administrative Agent or such Lender would be entitled to seek
indemnification under this paragraph, the Borrower shall be entitled to assume
the defense thereof with counsel satisfactory to the Administrative Agent or
such Lender, as the case may be. The Administrative Agent or such Lender, as the
case may be, shall be entitled, at the Borrower's expense, to retain counsel in
connection with any such claim, action or other proceeding, provided, that the
Administrative Agent and the Lenders shall agree upon and retain one counsel to
represent them in connection with any single claim, action or other proceeding
unless, the retention of one counsel would be prejudicial to the interests of
the Administrative Agent or any Lender in their sole discretion. The Borrower
shall not without the prior written consent of the Administrative Agent or any
affected Lender effect any settlement of any pending or threatened proceeding,
claim or action against the Administrative Agent or such Lender in respect of
which the Administrative Agent or such Lender or their respective parents,
subsidiaries, affiliates, employees, agents, officers or directors is a party or
would be entitled to seek indemnification under this paragraph, unless such
settlement includes an unconditional release of the Administrative Agent or such
Lender and their respective parents, subsidiaries, affiliates, employees,
agents, officers or directors from all liability on claims that are the subject
matter of such claim, action or other proceeding and is otherwise acceptable to
the Administrative Agent or such Lender and their respective counsel, in their
sole discretion. This indemnity shall continue in full force and effect and
survive the termination of this Agreement.
9.11 Further Assurances. Execute any and all further documents, and take
all further action which the Required Lenders or the Administrative Agent may
reasonably request in order to effectuate the transactions contemplated by the
Loan Documents. Without limiting the generality of the foregoing, such further
documents and actions shall include the execution of agreements and instruments,
and filing Uniform Commercial Code financing statements, in order to effectuate
the transactions contemplated by this Agreement and in order to grant, preserve,
protect and perfect the validity and priority of the security interests created
or intended to be created by the Security Documents.
SECTION 10. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Loan, Letter of Credit (including any Existing Letter of Credit) or
Acceptance (including any Existing Acceptance) remains outstanding and unpaid or
any other amount is owing to any Lender or the Administrative Agent hereunder or
under any other Loan Document, the Borrower shall not, and shall not permit any
Subsidiary to, directly or indirectly:
10.1 Financial Condition Covenants.
(a) Maintenance of Pre-Tax Income. Permit (i) Consolidated
Pre-Tax Income for (A) the first and second fiscal quarters (taken as
60
a single period) of its fiscal year to be less than $1,500,000 in the
aggregate, (B) the third and fourth fiscal quarters (taken as a single
period) of its fiscal year to be less than $2,500,000 in the aggregate
(C) the fiscal year ending on November 30, 2004, to be less than
$4,000,000, (ii) a Consolidated Pre-Tax Loss to occur in any two
consecutive fiscal quarters or (iii) a Consolidated Pre-Tax Loss in
excess of $1,000,000 to occur in any fiscal quarter.
(b) Maintenance of Consolidated Net Worth. Permit Consolidated
Net Worth at any time to be less than (i) the Net Worth Base Amount at
such time minus (ii) the aggregate purchase price of all Capital Stock
of the Borrower purchased pursuant to subsection 10.7.
(c) Total Liabilities to Consolidated Net Worth Ratio. Permit the
ratio of Consolidated Total Liabilities to Consolidated Net Worth at
the end of any fiscal quarter to be greater than 1.25 to 1.
10.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes, the Letters
of Credit (including Existing Letters of Credit), the Acceptances
(including Existing Acceptances) and other obligations of the Borrower
under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary and any
Domestic Subsidiary to the Borrower or any other Subsidiary;
(c) Indebtedness of any Subsidiary (other than a Domestic
Subsidiary) to finance the working capital requirements of such
Subsidiary not to exceed, taken together with all Indebtedness of all
other Subsidiaries (other than Domestic Subsidiaries) outstanding
under this paragraph, $20,000,000 in the aggregate at any time;
(d) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition of fixed or capital assets (whether pursuant
to a loan, a Financing Lease or otherwise) permitted under subsection
10.8;
(e) [Intentionally omitted];
(f) Indebtedness of the Borrower in respect of Foreign Exchange
Contracts permitted under subsection 6.16;
(g) Indebtedness of the Borrower which is subordinated and junior
in right of payment to the Obligations on terms and conditions
satisfactory to the Administrative Agent and the Required Lenders
(including, without limitation, Indebtedness of Audiovox
Communications Corp. under the Toshiba Note);
(h) [Intentionally omitted];
(i) other Indebtedness in an aggregate principal amount not to
exceed $2,000,000 at any one time outstanding, provided that such
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Indebtedness shall not represent Indebtedness for money borrowed but
shall only represent liabilities, other than Indebtedness for money
borrowed secured by a Lien on the property of the Borrower or any of
its Subsidiaries permitted under subsection 10.3(j);
(j) (x) Indebtedness of AG Holdings and/or RG Holdings incurred
to finance the purchase of RG Holdings pursuant to the Recoton
Purchase Agreement, provided that the aggregate initial principal
amount of such Indebtedness shall not exceed (euro)15,000,000 and (y)
Non-recourse Indebtedness of the Borrower or any of its Subsidiaries
arising out of any Lien on the stock of AG Holdings and/or RG Holdings
permitted under subsection 10.3(k); and
(k) existing Indebtedness of RG Holdings assumed in an aggregate
principal amount not exceeding (euro)5,000,000 in connection with the
Recoton Acquisition.
10.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets (including, without limitation, the capital
stock of any Subsidiary) or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, if any are required in the good
faith judgment of the Borrower, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP (or, in the
case of Subsidiaries organized under the laws of a foreign country,
generally accepted accounting principles in effect from time to time
in their respective jurisdictions of organization);
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, are not substantial in amount
and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(f) Liens securing Indebtedness of the Borrower and its
Subsidiaries permitted by subsection 10.2(d) incurred to finance the
acquisition of fixed or capital assets, provided that (i) such Liens
shall be created substantially simultaneously with the acquisition of
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such fixed or capital assets, (ii) such Liens do not at any time
encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased at any time and (iv) the principal amount of Indebtedness
secured by any such Lien shall at no time exceed 100% of the original
purchase price of such property at the time it was acquired;
(g) Liens in favor of the Administrative Agent for the benefit of
the Lenders created pursuant to the Security Documents and any liens
created pursuant to subsection 9.7;
(h) [Intentionally omitted];
(i) [Intentionally omitted];
(j) Liens securing any Indebtedness permitted under subsection
10.2(i), provided that any such Liens shall not cover any Accounts or
Inventory of the Borrower or any of its Subsidiaries; and
(k) Liens on the stock and the assets of AG Holdings and/or RG
Holdings securing Indebtedness of AG Holdings and/or RG Holdings
permitted by subsection 10.2(j)(x).
In no event shall the Borrower create, incur, assume or suffer to exist any Lien
upon the Capital Stock of Audiovox Communications Corp. now owned or hereafter
acquired by the Borrower, other than Liens in favor of the Administrative Agent
for the benefit of the Lenders created pursuant to clause (g) above.
10.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer
to exist any Guarantee Obligation except:
(a) Guarantee Obligations under the Subsidiaries Guarantee;
(b) any Guarantee Obligations created pursuant to subsection 9.7;
(c) any Guarantee Obligations (other than in respect of Indebtedness)
of Audiovox Communications Corp. in the ordinary course of business;
(d) Guarantee Obligations of the Borrower in respect of obligations of
any wholly-owned Guarantor in an aggregate amount not to exceed $5,000,000
at any time;
(e) [Intentionally omitted];
(f) [Intentionally omitted]; and
(g) Guarantee Obligations of the Borrower in respect of the
Indebtedness of AG Holdings and/or RG Holdings permitted under subsection
10.2(j) in an aggregate amount not to exceed (euro)3,000,000.
63
10.5 Limitations on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that (i) the Borrower shall be the
continuing or surviving corporation and (ii) the security interests created
under the Security Documents in favor of the Administrative Agent, and the
rights and remedies under such Security Documents, are not otherwise
adversely affected) or with or into any one or more Domestic Subsidiaries
(provided that (i) a Domestic Subsidiary shall be the continuing or
surviving corporation and (ii) the security interests created under the
Security Documents in favor of the Administrative Agent, and the rights and
remedies under such Security Documents, are not otherwise adversely
affected); and
(b) any Domestic Subsidiary of the Borrower may sell or distribute all
or substantially all of its assets to the Borrower or any other Domestic
Subsidiary.
10.6 Limitation on Sale of Assets. Except as permitted hereunder, convey,
sell, lease, assign, transfer or otherwise dispose of any of its property,
business or assets (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person (other than the Borrower or any Guarantor or, if such Subsidiary is not a
Guarantor, the Borrower or any Subsidiary), except:
(a) obsolete or worn out property disposed of in the ordinary course of business
or other items of property (other than Accounts or Inventory) disposed of in the
ordinary course of business which, individually or in the aggregate, are of
nonmaterial economic value to the Borrower or any of its Subsidiaries disposing
of such item of property;
(b) (i) the sale of Inventory in the ordinary course of business and (ii) the
sale in an aggregate amount not exceeding $5,000,000 after the date hereof of
Inventory or Accounts receivable outside the ordinary course of business;
(c) the liquidation of investments in Cash Equivalents permitted under
subsection 10.9(b);
(d) the transfer of the stock or other ownership interests in any Joint Venture
by the Borrower or any of its Subsidiaries to Audiovox Holding Corp., provided
that (x) Audiovox Holding Corp. (i) does not engage in any business other than
the ownership of such stock or other ownership interests, (ii) does not incur
any indebtedness for borrowed money or issue any Guarantee Obligation (other
than under the Subsidiaries Guarantee)or (iii) does not acquire or own any
assets other than such stock or other ownership interests and (y) if any Capital
Stock of Audiovox Communications Corp. is transferred to Audiovox Holding Corp.,
such Capital Stock shall be pledged as collateral security pursuant to the
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Guarantee and Collateral Agreement pursuant to documentation in form and
substance satisfactory to the Administrative Agent;
(e) the sale of any CellStar stock owned by the Borrower or Audiovox
Holding Corp.;
(f) the sale of assets (other than Accounts or Inventory) in an
aggregate amount not exceeding $1,000,000 in the aggregate after the date
hereof;
(g) [Intentionally omitted];
(h) as permitted by subsection 10.5;
(i) [Intentionally omitted];
(j) [Intentionally omitted];
(k) the sale of Accounts receivable by RG Holdings or its Subsidiaries
pursuant to factoring arrangements in the ordinary course of business; and
(l) the sale of Accounts payable by (i) AutoZone, Inc. (which do not
constitute Eligible Accounts) pursuant to an ongoing arrangement with a
financial institution providing for the purchase thereof by such financial
institution or its affiliates or (ii) Spiegel Inc. or its Subsidiaries (in
each case which do not constitute Eligible Accounts) in an aggregate amount
of up to $125,000 as a result of the bankruptcy filing by Spiegel Inc. or
such Subsidiaries.
10.7 Limitation on Dividends; Stock Repurchases. Declare or pay any
dividend (other than dividends payable solely in common stock of the Borrower)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of Capital Stock of the Borrower,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary, except that the Borrower may (i)
declare or pay any dividend (other than dividends payable solely in common stock
of the Borrower) on any shares of any class of its Capital Stock and (ii)
repurchase shares of its Capital Stock, provided that the aggregate amount of
all such dividends or stock repurchases subsequent to the date hereof shall not
exceed $10,000,000.
10.8 Limitation on Capital Expenditures. Make or commit to make (by way of
the acquisition of securities of a Person or otherwise) any expenditure in
respect of the purchase or other acquisition of fixed or capital assets except
for expenditures not exceeding, in the aggregate for the Borrower and its
Subsidiaries, $7,500,000 during the term of this Agreement.
10.9 Limitation on Investments, Loans and Advances. Make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in, any Person (an "Investment"), except:
65
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Acquisitions by the Borrower and its Domestic Subsidiaries,
provided that the aggregate amount of all such Acquisitions since the
Closing Date (including assumed Indebtedness) shall not exceed $10,000,000,
provided that, to the extent any such Acquisition results in the creation
or acquisition of a Subsidiary, the Borrower and such Subsidiary comply
with the requirements of subsection 9.7;
(d) Investments arising as a result of the compromise or settlement of
Accounts (other than Eligible Accounts) in the ordinary course of business
as generally conducted over a period of time;
(e) Investments in (i) Domestic Subsidiaries and (ii) Joint Ventures
and Subsidiaries (other than Domestic Subsidiaries) outstanding on the date
hereof and described in Schedule 10.9(e), provided that the Borrower and
its Subsidiaries shall be in compliance with their obligations under
subsection 9.7; and
(f) (i) Investments by the Borrower and its Subsidiaries in (A) any
newly formed Joint Venture or Subsidiary (other than a Domestic Subsidiary)
and (B) any existing Joint Venture or Subsidiary (other than a Domestic
Subsidiary) made after the date hereof, not to exceed $10,000,000 with
respect to any single such investment and (ii) Acquisitions, provided that
(w) the aggregate amount of all such Investments and Acquisitions after the
date hereof shall not exceed $10,000,000 in the aggregate, (x) to the
extent that any such Subsidiary in which an Investment is made is or
becomes a Wholly Owned Foreign Subsidiary, the Borrower and such Wholly
Owned Foreign Subsidiary comply with the provisions of subsection 9.7 and
(y) to the extent that any Acquisition pursuant to clause (ii) above
results in the acquisition or creation of a Subsidiary, the Borrower and
such Subsidiary comply with the provisions of subsection 9.7.
10.10 Limitation on Payments on Subordinated Indebtedness. Make any
optional prepayment, optional redemption, optional defeasance or optional
purchase of the principal of any Indebtedness permitted under subsection
10.2(g).
10.11 Limitation on Subordinated Indebtedness. Amend, modify or waive any
provision of any Indebtedness permitted under Section 10.2(g).
10.12 Transactions with Affiliates. Except as set forth on Schedule 10.12,
enter into any transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate, unless such transaction is in the ordinary course of, and pursuant to
the reasonable requirements of, the Borrower's or such Subsidiary's business, is
in good faith and is upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate and, with
respect to a transaction between the Borrower or any Subsidiary, on the one
hand, and a Joint Venture, on the other hand, is upon such terms that are (a)
commercially reasonable based upon the volume of business transacted between the
66
Borrower or such Subsidiary, on the one hand, and such Joint Venture, on the
other hand, and (b) with respect to transfers of Inventory, at a price not less
than the lowest price charged to the Borrower's other Joint Ventures and in no
event less than the price for a sale of such Inventory in effect with such Joint
Venture on the Closing Date. Accounts owed by any Joint Venture to the Borrower
or any Subsidiary shall be promptly invoiced (and, in any event, shall be
invoiced within five days after the shipment of goods relating thereto), shall
be payable not later than 90 days after the date of creation of original
invoices related thereto, and the time for payment on any such Account shall not
be extended, nor shall any such Account be compromised, compounded or settled
for less than the full amount thereof.
10.13 Sale and Leaseback. Enter into any arrangement with any Person
providing for the leasing by the Borrower or any Subsidiary of real or personal
property which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary.
10.14 Fiscal Year. Permit the fiscal year of the Borrower or any of its
Subsidiaries to end on a day other than November 30.
10.15 Limitation on Negative Pledge Clauses. Enter into any agreement or
Financing Leases permitted by this Agreement (in which cases, any prohibition or
limitation shall only be effective against the assets financed thereby), with
any Person other than the Lenders pursuant hereto which prohibits or limits the
ability of the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired.
10.16 Compromise of Receivables. Except other than in the ordinary course
of business as generally conducted over a period of time, grant any extension of
the time of payment of any of the Accounts, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partially, any
Person liable for the payment thereof, or allow any credit or discount
whatsoever thereon.
10.17 Accounting Policies and Procedures. Except as set forth in Schedule
10.17, permit any material change in the accounting policies or procedures of
the Borrower or any of its subsidiaries, other than as required by GAAP (or, in
the case of Subsidiaries organized under the laws of a foreign country,
generally accepted accounting principles in effect from time to time in their
respective jurisdictions of organization), without the prior written consent of
the Administrative Agent.
10.18 Consignment of Title Documents. Deliver any title or other similar
documents in respect of Inventory as collateral security to any Person other
than the Administrative Agent.
10.19 Limitation on Restrictions on Intercompany Payments. Enter into any
agreement which restricts in any way, or has the effect of restricting, the
payment of dividends, distributions or other amounts to the Borrower by any
Subsidiary or amend the terms of any existing agreement so as to impose or
67
increase any restrictions on the payment of dividends, distributions or other
amounts to the Borrower by any Subsidiary or Joint Venture in a manner that is
more onerous than any such restrictions in effect on the Closing Date.
10.20 Limitation on Foreign Exchange Contracts and Interest Rate Agreement.
(a) Enter into a Foreign Exchange Contract except in the ordinary course of
business for non-speculative purposes and so long as the aggregate amount of
Foreign Exchange Liabilities of the Borrower at such time, as most recently
determined prior to such time by the Administrative Agent pursuant to this
subsection 6.16 and after giving effect to such Foreign Exchange Contract, does
not exceed $10,000,000 and (b) enter into any interest rate swap agreement,
option, collar or other similar or derivative agreement, except in the ordinary
course of business for non-speculative purposes.
SECTION 11. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of or interest on any
Loan or any L/C Obligation or Acceptance Obligation or any fee or other
amount payable hereunder when due in accordance with the terms thereof or
hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
herein, in any Security Document or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished at any time under or in connection with this Agreement or any
Security Document or other Loan Document shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of any
agreement contained in subsections 9.2(g), 9.4 or Section 10 of this
Agreement, or Sections 5.5 and 5.7(b) of the Guarantee and Collateral
Agreement; or
(d) The Borrower shall default in the observance or performance of any
other agreement contained in this Agreement, any Security Document or any
of the other Loan Documents (other than as provided in paragraphs (a)
through (c) of this Section), and such default shall continue unremedied
(i) in the case of the agreements contained in subsection 9.1, for a period
of 14 days and (ii) in the case of all other agreements, for a period of 30
days; or
(e) [Intentionally omitted]; or
(f) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest on any Indebtedness, or in the payment
of any Guarantee Obligation (provided that the principal amount of such
Indebtedness or Guarantee Obligation exceeds, individually, or in the
aggregate, $500,000), provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created; or (ii) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or Guarantee Obligation (provided that the
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principal amount of such Indebtedness or Guarantee Obligation exceeds,
individually, or in the aggregate, $500,000) or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or
(g) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan or (vi) any other event or condition shall occur or
exist, with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could, in the reasonable judgment of the Borrower or
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the Required Lenders, subject the Borrower or any Commonly Controlled
Entity to any tax, penalty or other liabilities that in the aggregate could
reasonably be expected to have a Material Adverse Effect; or
(i) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $500,000 or more and (i) all
such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof or (ii) the
judgement creditors with respect to such judgments or their successors or
assigns shall have commenced enforcement proceedings, which enforcement
proceedings shall have remained unstayed for 10 consecutive days; or
(j) Any Security Document shall cease for any reason to be in full
force and effect, or the Borrower shall so assert or the security interests
created by any such Security Document shall cease for any reason, other
than a release by the Lenders, to be enforceable and of the same effect and
priority purported to be created thereby;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder and all amounts of Acceptance
Obligations, whether or not the Acceptances related thereto have matured) and
the Notes shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii) with the consent
of the Required Lenders, the Administrative Agent may, or upon the request of
the Required Lenders, the Administrative Agent shall, by notice of default to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder and all amounts of Acceptance Obligations, whether or not the
Acceptances related thereto have matured) and the Notes to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit (including Existing Letters of
Credit) with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to the preceding paragraph, the Borrower
shall at such time deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash collateral account
shall be applied by the Administrative Agent to the payment of drafts drawn
under such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon and, if any, shall
be applied to repay other Obligations of the Borrower hereunder and under the
Notes. After all such Letters of Credit shall have expired or been fully drawn
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upon, all L/C Obligations shall have been satisfied and all other Obligations of
the Borrower hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower.
Except as expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
SECTION 12. THE ADMINISTRATIVE AGENT
12.1 Appointment. Each Lender hereby irrevocably designates and appoints
JPMorgan Chase as the Administrative Agent of such Lender under this Agreement,
the Security Documents and the other Loan Documents, and each such Lender
irrevocably authorizes JPMorgan Chase, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this
Agreement, the Security Documents and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement, the Security Documents and
the other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement, the Security Documents or any other Loan Document or otherwise exist
against the Administrative Agent.
12.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement, the Security Documents and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
12.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement, the Security
Documents or any other Loan Document (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Borrower or any officer thereof contained in this Agreement, the Security
Documents or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement, the Security Documents or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Notes, the Security
Documents or any other Loan Document or for any failure of the Borrower to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, the Security Documents or any other Loan Document, or to
inspect the properties, books or records of the Borrower.
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12.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement, the Security
Documents or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or 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. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement, the
Notes, the Security Documents and the other Loan Documents in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
12.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders, including any action under the Security
Documents; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders. Any knowledge of any Default or Event of Default which
the Administrative Agent has or acquires in its capacity as a Lender shall be
deemed to be notice to the Administrative Agent of such Default or Event of
Default.
12.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of the Borrower,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
and/or issue or participate in Letters of Credit (including Existing Letters of
Credit) and/or create or participate in Acceptances (including Existing
Acceptances) hereunder and enter into this Agreement. Each Lender also
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represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent 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 Borrower which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their original Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Administrative Agent in its
capacity as such in any way relating to or arising out of this Agreement, the
Security Documents, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Notes and all other amounts payable
hereunder.
12.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the Administrative
Agent were not the Administrative Agent hereunder, the Security Documents and
the other Loan Documents. With respect to Loans made or renewed by it and any
Note issued to it and with respect to any Letter of Credit issued or
participated in by it or any Acceptance created or participated in by it, the
Administrative Agent shall have the same rights and powers under this Agreement,
the Security Documents and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
12.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days' notice to the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Agreement then the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent shall be approved by the Borrower, whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon its appointment, and the former Administrative
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Agent's rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Notes. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this subsection shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
12.10 Issuing Bank and Accepting Bank. The provisions of this Section 12
shall apply mutatis mutandis to the Issuing Bank and the Accepting Bank in their
respective capacities as such to the same extent that such provisions apply to
the Administrative Agent.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. Neither this Agreement, any Note, Security
Document or other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. With the prior written consent of the Required Lenders, the
Administrative Agent and the Borrower may, from time to time, enter into written
amendments, supplements or modifications hereto and to the Notes, the Security
Documents and the other Loan Documents for the purpose of adding any provisions
to this Agreement, the Notes, the Security Documents or the other Loan Documents
or changing in any manner the rights of the Lenders or of the Borrower hereunder
or thereunder or waiving, on such terms and conditions as the Administrative
Agent may specify in such instrument, any of the requirements of this Agreement,
the Notes, the Security Documents or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (a) increase the
Commitments, reduce the amount or extend the maturity of any Loan or any
installment thereof, or extend the maturity of any Letter of Credit or
Acceptance to a date later than the Scheduled Termination Date, or reduce the
rate or extend the time of payment of interest thereon, or reduce the amount, or
extend the time of payment, of any fee payable to any Lender hereunder, or
change the amount of any Lender's Commitment, in each case without the consent
of all the Lenders affected directly or indirectly thereby, or (b) amend, modify
or waive any provision of this subsection or reduce the percentage specified in
the definition of Required Lenders, or increase the advance rates specified in
the definition of Borrowing Base, or consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement or the
other Loan Documents or consent to the release of all or a substantial part of
the Collateral upon which Liens have been created pursuant to the Security
Documents or consent to the release of any Guarantee Obligations under the
Security Documents, in each case without the prior written consent of all the
Lenders, or (c) amend, modify or waive any provision of Section 4 without the
prior written consent of the Issuing Bank, or (d) amend, modify or waive any
provision of Section 5 without the prior written consent of the Accepting Bank,
or (e) amend, modify or waive any provision of Section 12 without the prior
written consent of the then Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Borrower, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the outstanding Notes and any other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
74
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
13.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy or
nationally recognized courier service), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or, in the case of telecopy notice, when received, or, in the case of a
nationally recognized courier service, one Business Day after delivery to such
courier service, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in Schedule 13.2 in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:
The Borrower: Audiovox Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Levy, Stopol & ▇▇▇▇▇▇, LLP
East Tower, 14th Floor,
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
The Administrative Agent
(and JPMorgan Chase, in its
capacity as Issuing Bank and
Accepting Bank):
JPMorgan Chase Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: JPMorgan Chase Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.3, 5.1, 5.3 or 5.8 shall not be
effective until received.
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
75
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All representations and
warranties made hereunder or under any other Loan Document and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes.
13.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent and each Lender for all its out-of-pocket
costs and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement,
the Notes, the Security Documents and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the Notes, the Security
Documents, the other Loan Documents and any such other documents, including,
without limitation, fees and disbursements of counsel to the Administrative
Agent and to the several Lenders, (c) to pay, indemnify, and hold each Lender
and the Administrative Agent and their respective parents, subsidiaries,
affiliates, employees, agents, officers and directors harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the Notes, the Security
Documents, the other Loan Documents and any such other documents, and (d) to
pay, indemnify, and hold each Lender and the Administrative Agent and their
respective parents, subsidiaries, affiliates, employees, agents, officers and
directors harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
Notes, the Security Documents, the other Loan Documents, and any such other
documents including, without limitation, any costs and expenses relating to the
conversion of amounts owing in any currency under this Agreement to another
currency (all the foregoing, collectively, the "indemnified liabilities"),
provided, that the Borrower shall have no obligation hereunder to the
Administrative Agent or any Lender, as the case may be, with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Administrative Agent or any such Lender, as the case may be,
(ii) legal proceedings commenced against the Administrative Agent or any such
Lender by any security holder or creditor thereof arising out of and based upon
rights afforded any such security holder or creditor solely in its capacity as
such, or (iii) legal proceedings commenced against the Administrative Agent or
any such Lender by any other Lender or by any Transferee (as defined in
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subsection 13.6). The agreements in this subsection shall survive repayment of
the Notes and all other amounts payable hereunder.
13.6 Successors and Assigns; Participations; Purchasing Lenders.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit), except that (i) the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section.
(b) Any Lender may, without the consent of the Borrower or the
Administrative Agent, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or
more banks or other entities ("Participants") participating interests in
any Loan owing to such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender hereunder and under the
other Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Note for all
purposes under this Agreement and the other Loan Documents, and the
Borrower, the Administrative Agent, the Issuing Bank and the other Lenders
shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and the
other Loan Documents. Any agreement pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement, provided that such agreement may provide that such
Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that (1) requires the consent of each
Lender directly affected thereby pursuant to the proviso to the second
sentence of Section 13.1 and (2) directly affects such Participant. The
Borrower agrees that if amounts outstanding under this Agreement and the
Notes are due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement and any Note
to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement or any Note, provided
that such Participant shall only be entitled to such right of set-off if it
shall have agreed in the agreement pursuant to which it shall have acquired
its participating interest to share with the Lenders the proceeds thereof
as provided in subsection 13.7. The Borrower also agrees that each
Participant shall be entitled to the benefits of subsections 6.12, 6.13,
6.14, 6.15 and 13.5 with respect to its participation in the Commitments
and the Loans outstanding from time to time; provided, that no Participant
shall be entitled to receive any greater amount pursuant to such
subsections than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer occurred, unless
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the sale of the participation to such Participant is made with the
Borrower's prior written consent.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, with the prior written
consent of (i) the Borrower (such consent not to be unreasonably withheld),
provided that no consent of the Borrower shall be required for an
assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as
defined below) or, if an Event of Default has occurred and is continuing,
any other Person, (ii) the Administrative Agent or (iii) the Issuing Bank,
assign to one or more additional banks or financial institutions
("Purchasing Lenders") all or any part of its rights and obligations under
this Agreement and the Notes pursuant to an Assignment and Acceptance
substantially in the form of Exhibit D, executed by such Purchasing Lender,
such transferor Lender (and, in the case of a Purchasing Lender that is not
then a Lender, an Affiliate of a Lender or an Approved Fund, by the
Borrower and the Administrative Agent) and delivered to the Administrative
Agent for its acceptance and recording in the Register (as defined in
subsection 13.6(d)); provided that (i) in the case of a Purchasing Lender
that is not then a Lender, an Affiliate of a Lender or an Approved Fund, no
such sale to a Purchasing Lender shall be in an aggregate principal amount
of less than $5,000,000 (other than in the case of a sale of all of a
transferor Lender's interests under this Agreement), unless otherwise
agreed by the Borrower and the Administrative Agent and (ii) except in the
case of a sale of all of a transferor Lender's interests under this
Agreement, the Commitment of the transferor Lender (determined after giving
effect to such sale) shall not be less than $5,000,000, unless otherwise
agreed by the Borrower and the Administrative Agent; provided further that
(1) if an Event of Default has occurred and is continuing, the consent or
approval of the Borrower shall not be required in connection with any sale
or the amount of any sale by a Lender under this paragraph and (2) such
amounts shall be aggregated in respect of Lender and its Affiliates or
Approved Funds, if any. Upon such execution, delivery, acceptance and
recording, from and after the Effective Date determined pursuant to such
Assignment and Acceptance, (x) the Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment as
set forth therein, and (y) the transferor Lender thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of a transferor Lender's
rights and obligations under this Agreement, such transferor Lender shall
cease to be a party hereto). Such Assignment and Acceptance shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment
of Commitment Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Notes. On or prior to the Transfer
Effective Date determined pursuant to such Assignment and Acceptance, the
Borrower, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note a new Note to the
order of such Purchasing Lender in an amount equal to the Commitment
assumed by it pursuant to such Assignment and Acceptance and, if the
transferor Lender has retained a Commitment hereunder, a new Note to the
order of the transferor Lender in an amount equal to the Commitment
78
retained by it hereunder. Such new Notes shall be dated the Closing Date
and shall otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Lender shall be returned by the
Administrative Agent to the Borrower marked "cancelled".
For the purposes of this Section 13.6, "Approved Fund" means any
Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a)
a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.
(d) The Administrative Agent shall maintain at its address referred to
in subsection 13.2 a copy of each Assignment and Acceptance delivered to it
and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent, the
Issuing Bank and the Lenders may treat each Person whose name is recorded
in the Register as the owner of the Loan recorded therein for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrower, the Issuing Bank and any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by a
transferor Lender and Purchasing Lender (and, in the case of a Purchasing
Lender that is not then a Lender or an affiliate thereof, by the Borrower
and the Administrative Agent) together with payment to the Administrative
Agent of a registration and processing fee of $5,000, the Administrative
Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on
the Effective Date determined pursuant thereto record the information
contained therein in the Register and give notice of such acceptance and
recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant
or Purchasing Lender (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning
the Borrower and its affiliates which has been delivered to such Lender by
or on behalf of the Borrower pursuant to this Agreement or which has been
delivered to such Lender by or on behalf of the Borrower in connection with
such Lender's credit evaluation of the Borrower and its affiliates prior to
becoming a party to this Agreement, provided that any prospective
Transferee shall have agreed to be bound by subsection 13.8 or shall have
executed a confidentiality agreement to substantially the same effect.
(g) If, pursuant to this subsection, any interest in this Agreement or
any Note is transferred to any Transferee which is organized under the laws
of any jurisdiction other than the United States of America or any state
thereof, the transferor Lender shall cause such Transferee, concurrently
with the effectiveness of such transfer, (i) to represent to the transferor
Lender (for the benefit of the transferor Lender, the Administrative Agent
and the Borrower) that under applicable law and treaties no taxes will be
required to be withheld by the Administrative Agent, the Borrower or the
79
transferor Lender with respect to any payments to be made to such
Transferee in respect of the Loans, (ii) to furnish to the transferor
Lender (and, in the case of any Purchasing Lender registered in the
Register, the Administrative Agent and the Borrower) either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder) and (iii) to
agree (for the benefit of the transferor Lender, the Administrative Agent
and the Borrower) to provide the transferor Lender (and, in the case of any
Purchasing Lender registered in the Register, the Administrative Agent and
the Borrower) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable laws of the United States of America and
regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Lender in accordance with
applicable law.
13.7 Adjustments; Set-off.
(a) If any Lender (a "benefitted Lender") shall at any time receive
any payment of all or part of its Loans or the Reimbursement Obligations
owing to it, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 11(g), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's
Loans, or interest thereon, such benefitted Lender shall purchase for cash
from the other Lenders such portion of each such other Lender's Loan, or
shall provide such other Lenders with the benefits of any such collateral,
or the proceeds thereof, as shall be necessary to cause such benefitted
Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all
or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest. The Borrower agrees that each Lender so purchasing a
portion of another Lender's Loan may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the
extent permitted by applicable law, upon any amount becoming due and
payable by the Borrower hereunder or under the Notes (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit
80
or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and
application made by such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
13.8 Confidentiality. Each of the Administrative Agent and each Lender
agrees to keep confidential all non-public information provided to it by the
Borrower, any Subsidiary, the Administrative Agent or any Lender pursuant to or
in connection with this Agreement that is designated by the provider thereof as
confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate thereof, (b) subject to
an agreement to comply with the provisions of this Section, to any actual or
prospective Participant or Purchasing Lender, (c) to its employees, directors,
agents, attorneys, accountants and other professional advisors or those of any
of its affiliates, (d) upon the request or demand of any Governmental Authority,
(e) in response to any order of any court or other Governmental Authority or as
may otherwise be required pursuant to any Requirement of Law, (f) if requested
or required to do so in connection with any litigation or similar proceeding,
(g) that has been publicly disclosed, (h) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender, or (i)
in connection with the exercise of any remedy hereunder or under any other Loan
Document.
13.9 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
13.10 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13.11 Integration. This Agreement represents the agreement of the Borrower,
the Administrative Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Administrative Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
13.12 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
81
13.13 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 13.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection any special, exemplary, punitive or consequential
damages.
13.14 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Notes and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship to the Borrower, and the relationship between Agent and
Lenders, on one hand, and the Borrower, on the other hand, is solely that
of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the Borrower
and the Lenders.
13.15 WAIVERS OF JURY TRIAL. THE BORROWER THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
13.16 [Intentionally omitted]
82
13.17 [Intentionally omitted]
13.18 USA PATRIOT Act. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Act"), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act. The
Borrower shall promptly provide such information upon request by any Lender. In
connection therewith, each Lender hereby agrees that the confidentiality
provisions set forth in Section 13.8 shall apply to any non-public information
provided to it by the Borrower and its Subsidiaries pursuant to this Section
13.18.
13.19 Special Provisions. (a) From and after the Closing Date, (i) each
Exiting Lender shall cease to be a party to this Agreement, (ii) no Exiting
Lender shall have any obligations or liabilities under this Agreement with
respect to the period from and after the Closing Date and, without limiting the
foregoing, no Exiting Lender shall have a Commitment under this Agreement and
(iii) no Exiting Lender shall have any rights under the Existing Credit
Agreement, this Agreement or any other Loan Document (other than rights under
the Existing Credit Agreement expressly stated to survive the termination of the
Existing Credit Agreement and the repayment of amounts outstanding thereunder).
(b) On the Closing Date, each Lender that is not party to the Existing
Credit Agreement and each Lender whose Commitment exceeds its commitment under
the Existing Credit Agreement shall be deemed to have purchased the Commitment
of each Exiting Lender and each Lender whose Commitment is less than its
commitment under the Existing Credit Agreement such that the Commitment of each
relevant Lender will be as set forth on Schedule 1.1(a) hereto. Each such Lender
agrees that the provisions of Section 2 of the form of Assignment and
Acceptance, attached hereto as Exhibit D, shall apply to it mutatis mutandis.
(c) The Lenders (which are Lenders under the Existing Credit Agreement)
hereby waive any requirements for notice of prepayment, commitment terminations,
minimum amounts of prepayments of Loans (as defined in the Existing Credit
Agreement), ratable reductions of Commitments (as defined in the Existing Credit
Agreement) and ratable payments on account of the principal or interest of any
Loan (as defined in the Existing Credit Agreement) under the Existing Credit
Agreement to the extent such prepayment, reductions or payments are required
pursuant to subsection 8.1(n) or (l).
(d) The Borrower hereby releases, effective as of the making of the initial
Loans, in full the Exiting Lenders from their obligations in respect of the
Commitments (as defined in the Existing Credit Agreement) and, effective as of
the Closing Date, the Lenders hereby assume such obligations, it being
understood that such assumption is reflected in the Commitments of the Lenders
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
AUDIOVOX CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President/ CFO
Address: c/o Audiovox Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Taxpayer ID: ▇▇-▇▇▇▇▇▇▇
JPMORGAN CHASE BANK,
as Administrative Agent and as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
FLEET NATIONAL BANK, a Bank of America
Company, as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President, Team Leader
CITIBANK, N.A., as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
GE COMMERCIAL DISTRIBUTION FINANCE
CORPORATION, as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President - Operations
ISRAEL DISCOUNT BANK OF NEW YORK,
as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: First Vice President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: First Vice President
PNC BUSINESS CREDIT INC., as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
WASHINGTON MUTUAL BANK, FA, as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
BANK LEUMI USA, as a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Schedule 1.1(a)
COMMITMENTS
Commitment
Lender Commitment Percentage
JPMorgan Chase Bank $ 25,000,000 16.67%
The CIT Group/Business Credit, Inc. $ 22,500,000 15.00%
GE Commercial Distribution Finance Corporation $ 22,500,000 15.00%
Citibank, N.A $ 20,000,000 13.33%
Fleet National Bank $ 20,000,000 13.33%
PNC Business Credit Inc. $ 12,500,000 8.33%
Israel Discount Bank of New York $ 10,000,000 6.67%
Washington Mutual Bank, FA $ 10,000,000 6.67%
Bank Leumi USA $7,5000,000 5.00%
------------ --------
TOTAL $150,000,000
SCHEDULE 7.1
TO THE CREDIT AGREEMENT
CHANGES OF EVENTS
NONE
SCHEDULE 7.2
TO THE CREDIT AGREEMENT
STOCK REPURCHASES
NONE
SCHEDULE 7.6
TO THE CREDIT AGREEMENT
LITIGATION
o Audiovox has, from time to time, received letters on behalf of alleged
holders of United States patents asserting that products sold by Audiovox
may or are infringing those patents. In each case, either Audiovox notifies
the manufacturer of its receipt of such letter or the letter has been
forwarded to the manufacturer of the product involved with the request that
they determine if there is an infringement and, if so, arrange for a
license agreement.
o In re Wireless Telephone Radio Frequency Emissions Products Liability
Litigation: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D., et al. v. Nokia, Inc., et al., United
States District Court for the District of Maryland, Civil Action No.
CCB-01-1456; (summons and complaint served on registered agent) ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ v. Nokia, Inc., et al., United States District Court for the Eastern
District of Pennsylvania, Civil Action No. 01-CV-2477; (summons and
complaint served on registered agent) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ v. Nokia Mobile
Phones, Inc., et al., United States District Court for the Eastern District
of Louisiana, Civil Action No. 00-2023; (summons and complaint served on
registered agent) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇ v. Nokia, Inc., et al.,
United States District Court for the Southern District of New York, Civil
Action ▇▇. ▇▇ ▇▇ ▇▇▇▇ (▇▇▇); (summons and complaint served on registered
agent) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ v. Nokia, Inc., et al., Superior Court of ▇▇▇▇▇▇
County, State of Georgia, Civil Action No. 2001CV38932; (summons and
complaint served on registered agent) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ v. Audiovox
Communications Corp., et al., Superior Court of the District of Columbia,
Civil Division, Civil Action No. 02ca007884, (summons and complaint served
on registered agent) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ et al. v. Audiovox Corporation, et
al, United States District Court for the District of Columbia, Civil Action
No. 02-0607 (TPJ); (summons and complaint served on registered agent)
o In re Wireless 911 Emergency Litigation: MDL Docket No. 1521 ▇▇▇▇▇▇▇ ▇▇▇▇
and Wireless Consumers Alliance v. LG Electronics, Inc., Audiovox
Corporation, Audiovox Communications Corp. et al., Superior Court of the
State of California, County of Alameda, Case No. 2002072578; (summons and
complaint served on registered agent) ▇▇▇ ▇▇▇▇▇▇, on behalf of himself and
all others similarly situated v. Toshiba Corporation, Audiovox Corporation
and Audiovox Communications Corp., United States District Court, Western
District of Texas, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇; (summons and
complaint served on registered agent).
o During the second quarter of fiscal 2004, the Company, its subsidiary,
Audiovox Electronics Corporation ("AEC") and one of its distributors of car
security products, were named as defendants in a lawsuit brought by
Magnadyne Corporation in the United States District Court, Central District
of California alleging patent infringement and seeking damages and
injunctive relief. The Company has answered the amended complaint, asserted
various affirmative defenses and interposed counterclaims alleging
non-infringement, invalidity and non-enforceability. AEC is due to respond
to the amended complaint by July 20, 2004 and intends to answer, assert
affirmative defenses and interpose counterclaims as well. To date, there
has been no discovery. The Company and AEC intend to vigorously defend this
matter. However, no assurances regarding the outcome of this matter can be
given at this point in the litigation.
SCHEDULE 7.8
TO THE CREDIT AGREEMENT
LEASES, WAREHOUSE CONTRACTS AND LEASES WITH AFFILIATES
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
ADDRESS OF PROPERTY LANDLORD SQ. FOOTAGE MONTHLY RENT EXPIRATION
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇▇▇▇, ▇▇ Audiovox Corp. 70,000 $45,984.89 9/30/2006
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. Realty LLC $45,491.67 11/30/2008
Hauppauge, NY
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
65 Engineers Drive Rechler Equity Partners 23,000 $8,804.78 6/30/2009
Hauppauge, NY
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇ Assoc. 28,336 $26,006.64 3/31/2009
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ MIH Communications 5,185 $5,185.00 6/30/2005
Mississauga, Ontario
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
Coliseum Crossing Coliseum Crossing Associates 900 $1632.75 10/31/2006
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ LLP
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇. Broad Creed PH. I, LLC 1,492 $2175.83 1/31/2007
Norfolk, VA
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ Northgate Associates LLC 2,500 $2203.64 Month-to-Month
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Investment Co., LLC 126,000 $43,219.00 9/30/2009
Elkhart, IN
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
4430. Miraloma Ave. Etchandy Commerce Center LLC 3,050 $3,007.00 4/30/2006
Anahiem, CA
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Realty Limited 1,325 $1,396.37 12/31/2006
Cincinnati, OH Partnership
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇▇ ▇.▇. Realty Income & $2,250.00 9/30/2004
Aventura, FL Growth Fund
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
Cherry Hill Office Park ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,320 $3,190 8/31/2005
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ d/b/a The ▇▇▇▇▇▇▇ Co.
Beverly, MA
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
ADDRESS OF PROPERTY LANDLORD SQ. FOOTAGE MONTHLY RENT EXPIRATION
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. JD Properties Inc. $8,156.50 11/30/2005
Troy, MI
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
37 Skyline Drive Suntech I Orlando LP 8,100 $6,319.69 6/31/2006
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ Investments 22,086 $13,166.08 5/31/2008
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,700 $4,375.00 12/31/2005
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 6,000 $4,600.00 8/31/2005
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ M.D. ▇▇▇▇▇ 1,200 $1,600.00 9/10/2004
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Properties $1,407.61 11/30/2005
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------- ------------------------------ ------------------- ------------------- --------------------
SCHEDULE 7.13
TO THE CREDIT AGREEMENT
ERISA MATTERS
NONE
SCHEDULE 7.15
TO THE CREDIT AGREEMENT
SUBSIDIARIES AND JOINT VENTURES
Jurisdiction of % of
Domestic Subsidiaries Incorporation Ownership*
Quintex Mobile Communications Corp.** Delaware 100%
American Radio Corp. Georgia 100%
Audiovox International Corp. Delaware 100%
Audiovox Holding Corp. New York 100%
Audiovox Asia Inc. Delaware 100%
Audiovox Latin America Ltd. Delaware 100%
Audiovox Communications Corp. Delaware 80%
Audiovox Electronics Corporation Delaware 100%
Code Systems, Inc. Delaware 100%
Joint Ventures
Audiovox Specialized Applications LLC Delaware 50%
Protector Corporation Delaware 50%
Bliss-Tel Thailand 20%
Canadian Subsidiaries
Audiovox Canada Limited *** Ontario 100%
Audiovox Communications Canada Co. Nova Scotia 100%
Foreign Subsidiaries
Audiovox Communications (Malaysia)
Sdn.Bhd.*** Malaysia 80%
Audiovox Singapore PTE. LTD.*** Singapore 100%
*Audiovox Corporation is parent unless otherwise indicated.
**Audiovox Communications Corp. is the parent.
***None of these subsidiaries is a Material Foreign Subsidiary.
SCHEDULE 7.17
TO THE CREDIT AGREEMENT
ENVIRONMENTAL MATTERS
NONE
SCHEDULE 7.21
TO THE CREDIT AGREEMENT
GOVERNMENT CONTRACTS
NONE
SCHEDULE 10.9(e)
TO THE CREDIT AGREEMENT
INVESTMENTS IN JOINT VENTURES AND FOREIGN SUBSIDIARIES
Audiovox Corporation Schedule (in thousands)
Equity Investments % of Book Bal
Ownership at 05/31/04
Bliss-Tel 20% 1,839
Protector 50% 0
ASA 50% 10,609
GLM 50% 0
Majority Owned Subs @ 06/30/04 % of
Ownership
Audiovox Communications Corp. 80%
Audiovox Electronics Corp. 100%
Quintex Mobile Communications Corp. 95%
American Radio Corp. 100%
Audiovox Holding Corp. 100%
Audiovox Communications Canada Co. 100%
Audiovox Communications (Malaysia) Sdn. Bhd. 72%
Audiovox Holdings (m) Sdn. Bhd. 80%
Audiovox Venezuela C.A. 80%
Audiovox Europe Holdings GmbH 100%
Code Systems Inc. 100%
Investment Securities Value
@ 07/09/04
CellStar Common Stock $2,188
Investment in Subs. (eliminated in Consolidation)
Book Bal
at 05/31/04
Audiovox Holding Corp. 18,080.0
Audiovox Malaysia 320.0
Audiovox Venezuela 2,461.0
Audiovox Holding (Malaysia) Sdn. Bhd. 16.7
Audiovox Mobile Electronics 1.0
Audiovox Manufacturing 0.1
Audiovox Management Corp. 10.0
SCHEDULE 10.12
TO THE CREDIT AGREEMENT
TRANSACTIONS WITH AFFILIATES
We lease some of our equipment, office, warehouse and distribution
facilities from entities in which our executive officers own controlling
interests. The following table identifies leases that result in payments in
excess of $60,000 to any of the related entities.
Real Property Location Expiration Date Owner of Property Rent Paid During
Fiscal Year 2003
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. November 30, 2008 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. Realty LLC (1) $538,144
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Ave. March 31, 2009 Marquardt Associates (2) $306,206
Cerritos, CA
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. September 3, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. Realty LLC (3) $570,684
Hauppauge, NY
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. Terminated ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. Realty LLC (4) $211,874
Hauppauge, NY November 30, 2003
Equipment Lease
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. March 31, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. Realty LLC (3) $410,640
Hauppauge, NY
(1) Property owned by ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. Realty, LLC, a New York limited
liability company, of which ▇▇▇▇ ▇. ▇▇▇▇▇▇ owns 99% and ▇▇. ▇▇▇▇▇▇'▇ three
sons own the remaining 1%.
(2) Property owned by ▇▇▇▇▇▇▇▇▇ Associates, a California partnership, owned 60%
by ▇▇▇▇ ▇. ▇▇▇▇▇▇ and 40% by Ardama Capital LLC, a New York limited
liability company owned by ▇▇. ▇▇▇▇▇▇'▇ three sons.
(3) Property owned or leased by Wireless Blvd. Realty, LLC, a New York limited
liability company, owned 98% by the ▇▇▇▇▇▇ Long Term Trust, 1% by ▇▇▇▇ ▇.
▇▇▇▇▇▇ and 1% by ▇▇. ▇▇▇▇▇▇'▇ three sons. The ▇▇▇▇▇▇ Long Term Trust is a
grantor trust of which ▇▇. ▇▇▇▇▇▇ is the Grantor and his three sons are the
beneficiaries.
(4) Property owned by ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. Realty, LLC, a New York limited
liability company, of which ▇▇▇▇ ▇. ▇▇▇▇▇▇ owns 1% and ▇▇. ▇▇▇▇▇▇'▇ three
sons own the remaining 99%.
We believe that the terms of each of the leases are no less favorable to us than
those that could have been obtained from unaffiliated third parties. To the
extent that conflicts of interest arise between us and such persons in the
future, such conflicts will be resolved by a committee of disinterested
directors.
SCHEDULE 10.17
TO THE CREDIT AGREEMENT
CHANGES IN ACCOUNTING POLICIES AND PROCEDURES
NONE
SCHEDULE 13.2
TO THE CREDIT AGREEMENT
BANK WILL PROVIDE THIS SCHEDULE
