1
Exhibit 4(a)
AMENDED AND RESTATED
CREDIT AGREEMENT
among
ZENITH ELECTRONICS CORPORATION, as Borrower,
THE LENDERS SIGNATORY HERETO,
CITIBANK, N.A. as Issuing Bank
and
CITICORP NORTH AMERICA, INC., as Agent for the Issuing Bank and
the Lenders
June 29, 1998
2
AMENDED AND RESTATED
CREDIT AGREEMENT
among
ZENITH ELECTRONICS CORPORATION, as Borrower,
THE LENDERS SIGNATORY HERETO,
CITIBANK, N.A. as Issuing Bank
and
CITICORP NORTH AMERICA, INC., As Agent
For the Foregoing Lenders
Index
PAGE
----
ARTICLE 1 DEFINITIONS.........................................................2
ARTICLE 2 THE LOANS AND THE LETTERS OF CREDIT................................33
Section 2.1 Extension of Credit........................................33
Section 2.2 Manner of Borrowing and Disbursement of Loans..............35
Section 2.3 Interest...................................................39
Section 2.4 Fees.......................................................41
Section 2.5 Prepayment/Reduction of Commitment.........................42
Section 2.6 Repayment..................................................43
Section 2.7 Notes; Loan Accounts.......................................44
Section 2.8 Manner of Payment..........................................44
Section 2.9 Reimbursement..............................................46
Section 2.10 Pro Rata Treatment.........................................47
Section 2.11 Application of Payments....................................48
Section 2.12 Use of Proceeds............................................49
Section 2.13 All Obligations to Constitute One Obligation..............49
Section 2.14 Maximum Rate of Interest...................................49
Section 2.15 Letters of Credit..........................................50
ARTICLE 3 CONDITIONS PRECEDENT...............................................55
Section 3.1 Conditions Precedent to Initial Advance....................55
Section 3.2 Conditions Precedent to Each Advance.......................58
Section 3.3 Conditions Precedent to Each Letter of Credit..............59
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.....................................60
Section 4.1 General Representations and Warranties.....................60
Section 4.4 Survival of Representations and Warranties, etc............72
ARTICLE 5 GENERAL COVENANTS..................................................72
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Section 5.1 Preservation of Existence and Similar Matters..............72
Section 5.2 Compliance with Applicable Law.............................72
Section 5.3 Maintenance of Properties..................................73
Section 5.4 Accounting Methods and Financial Records...................73
Section 5.5 Insurance..................................................73
Section 5.6 Payment of Taxes and Claims................................74
Section 5.7 Visits and Inspections.....................................74
Section 5.8 Conduct of Business........................................74
Section 5.9 ERISA......................................................75
Section 5.10 Lien Perfection............................................75
Section 5.11 Location of Collateral; Consignment of Inventory...........75
Section 5.12 Protection of Collateral...................................76
Section 5.13 Assignments and Records of Accounts........................77
Section 5.14 Administration of Accounts.................................77
Section 5.15 The Blocked Account........................................78
Section 5.16 Further Assurances.........................................79
Section 5.17 Broker's Claims............................................80
Section 5.18 Indemnity..................................................80
Section 5.19 Environmental Matters......................................80
Section 5.20 Warehouse Arrangement......................................81
Section 5.22 Post Closing Deliveries....................................81
ARTICLE 6 INFORMATION COVENANTS..............................................82
Section 6.1 Monthly Financial Statements and
Section 6.2 Intentionally Omitted......................................82
Section 6.3 Performance Certificates...................................82
Section 6.4 Access to Accountants......................................83
Section 6.5 Additional Reports.........................................83
Section 6.6 Notice of Litigation and Other Matters.....................84
ARTICLE 7 NEGATIVE COVENANTS.................................................86
Section 7.1 Indebtedness...............................................87
Section 7.2 Guaranties.................................................87
Section 7.3 Liens......................................................88
Section 7.4 Restricted Payments and Purchases..........................88
Section 7.5 Investments................................................88
Section 7.6 Affiliate Transactions.....................................89
Section 7.7 Liquidation; Change in Ownership, Name, or Year;
Disposition or Acquisition of Assets; Etc..................90
Section 7.8 Intentionally Omitted......................................91
Section 7.9 Intentionally Omitted......................................92
Section 7.10 Intentionally Omitted......................................92
Section 7.11 Intentionally Omitted......................................92
Section 7.12 Intentionally Omitted......................................92
Section 7.13 Intentionally Omitted......................................92
Section 7.14 Tuning Patent Royalties; LGE Payable.......................92
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Section 7.15 Sales and Leasebacks.......................................92
Section 7.16 Amendment and Waiver.......................................92
Section 7.17 ERISA Liability............................................92
Section 7.18 Prepayments................................................93
Section 7.19 Negative Pledge............................................93
ARTICLE 8 DEFAULT............................................................93
Section 8.1 Events of Default..........................................93
Section 8.2 Remedies...................................................98
ARTICLE 9 THE AGENT.........................................................100
Section 9.1 Appointment and Authorization.............................100
Section 9.2 Interest Holders..........................................100
Section 9.3 Consultation with Counsel.................................100
Section 9.4 Documents.................................................100
Section 9.5 Agent and Affiliates......................................100
Section 9.6 Responsibility of the Agent...............................101
Section 9.7 Action by Agent...........................................101
Section 9.8 Notice of Default or Event of Default.....................101
Section 9.9 Responsibility Disclaimed.................................102
Section 9.10 Indemnification...........................................102
Section 9.11 Credit Decision...........................................103
Section 9.12 Successor Agent...........................................103
Section 9.13 Agent May File Proofs of Claim............................104
Section 9.14 Collateral................................................104
Section 9.15 Release of Collateral.....................................104
ARTICLE 10 MISCELLANEOUS.....................................................105
Section 10.1 Notices...................................................105
Section 10.2 Expenses..................................................106
Section 10.3 Waivers...................................................107
Section 10.4 Set-Off...................................................108
Section 10.5 Assignment................................................108
Section 10.6 Counterparts..............................................111
Section 10.7 Governing Law.............................................111
Section 10.8 Severability..............................................111
Section 10.9 Headings..................................................111
Section 10.10 Source of Funds...........................................111
Section 10.11 Entire Agreement..........................................111
Section 10.12 Amendments and Waivers....................................111
Section 10.13 Other Relationships.......................................112
Section 10.14 Pronouns..................................................112
Section 10.15 Disclosure................................................112
Section 10.16 Replacement of Lender.....................................113
ARTICLE 11 YIELD PROTECTION..................................................113
Section 11.1 Eurodollar Rate Basis Determination.......................113
Section 11.2 Illegality................................................113
Section 11.3 Increased Costs...........................................114
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Section 11.4 Effect On Other Advances..................................116
Section 11.5 Capital Adequacy..........................................116
ARTICLE 12 JURISDICTION, VENUE AND WAIVER OF JURY TRIAL......................117
Section 12.1 Jurisdiction and Service of Process.......................117
Section 12.2 Consent to Venue..........................................117
Section 12.3 Waiver of Jury Trial......................................118
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EXHIBITS
Exhibit A - Form of Assignment and Assumption Agreement
Exhibit B - Form of Blocked Account Letter
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Note
Exhibit E - Form of Request for Advance
Exhibit F - Form of Request for Issuance of Letter of Credit
Exhibit G - Copy of Security Agreement and First Amendment
Exhibit H - Form of Loan Certificate
Exhibit I - Form of Performance Certificate
Exhibit J - Form of Subsidiary Guaranty
Exhibit K - Form of Subsidiary Security Agreement
SCHEDULES
Schedule A-1 - Additional Unsecured Debt
Schedule C-1 - Commitment Ratios
Schedule P-1 - Liens
Schedule S-1 - Salomon Lease Transaction
Schedule 4.1(c)-1 - Subsidiaries
Schedule 4.1(c)-2 - Partnerships/Joint Ventures
Schedule 4.1(d) - Outstanding Capital Stock Ownership
Schedule 4.1(h) - Material Contracts; Collective Bargaining
Schedule 4.1(l) - Investments/Guaranties as of the Agreement Date
Schedule 4.1(m) - Litigation
Schedule 4.1(o) - Intellectual Property
Schedule 4.1(u) - Insurance
Schedule 4.1(w)-1 - Leased Real Property
Schedule 4.1(w)-2 - Owned Real Property
Schedule 4.1(x) - Environmental Matters
Schedule 4.2 - Accounts
Schedule 5.11 - Location of Collateral
Schedule 5.15(d) - Bank Accounts
Schedule 7.6 - Affiliate Transactions
Annex 1 - Agenda of Closing Documents
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AMENDED AND RESTATED
CREDIT AGREEMENT
among
ZENITH ELECTRONICS CORPORATION, as Borrower,
THE LENDERS SIGNATORY HERETO,
Citibank, N.A. as Issuing Bank
and
CITICORP NORTH AMERICA, INC., As Agent
For the Foregoing Lenders,
dated as
of the 29th day of June, 1998:
W I T N E S S E T H:
WHEREAS, the Borrower, the Issuing Bank, the Agent, and the other financial
institutions (the "Previous Banks") listed on the signature pages of that
certain Credit Agreement, dated as of March 31, 1997 (as amended, the "Original
Credit Agreement") were parties to the Original Credit Agreement; and
WHEREAS, the Borrower has decided to terminate the Receivables
Securitization and the sale of its Accounts under the Receivables Purchase
Agreement; and
WHEREAS, at the request of the Borrower, the Agent, the Issuing Bank and
the Lenders have agreed to increase the Commitment to $125,000,000, to make
Loans against certain assets of the Borrower, including the Borrower's
Accounts, and to otherwise amend and restate the Original Credit Agreement in
its entirety as set forth herein; and
WHEREAS, the Borrower acknowledges and agrees that the Liens granted to
the Lenders, the Issuing Bank, the Agent, and the Previous Banks pursuant to
the Original Credit Agreement or otherwise, shall remain outstanding and in
full force and effect in accordance with the terms of the Original Credit
Agreement, as renewed, amended or restated pursuant to the Loan Documents (as
defined herein) and shall continue to secure the Obligations (as defined
herein); and
WHEREAS, the Borrower acknowledges and agrees that (i) the Obligations (as
defined herein) represent, among other things, the amendment, restatement, and
modification of the Obligations (as defined in the Original Loan Agreement)
arising in connection with the Original Credit Agreement and the other Loan
Documents (as defined in the Original Credit Agreement) executed in
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connection therewith; (ii) the parties hereto intend that the Original Credit
Agreement and the other Loan Documents (as defined in the Original Credit
Agreement) executed in connection therewith and the Collateral pledged
thereunder shall secure, without interruption or impairment of any kind, all
existing Obligations under the Original Credit Agreement and the other Loan
Documents (as defined in the Original Credit Agreement) executed in connection
therewith as so amended, restated, and modified hereunder, together with all
other Obligations hereunder; (iii) all Liens evidenced by the Original Credit
Agreement and the other Loan Documents (as defined in the Original Credit
Agreement) executed in connection therewith are hereby ratified, confirmed and
continued; (iv) the Loan Documents (as defined herein) are intended to restate,
renew, amend and modify the Original Credit Agreement and the other Loan
Documents (as defined in the Original Credit Agreement) executed in connection
therewith; and (v) this Agreement shall not constitute a novation and shall in
no way adversely affect or impair the priority of the Liens granted by the
Original Credit Agreement and the other Loan Documents (as defined in the
Original Credit Agreement); and
WHEREAS, the parties hereto intend that the provisions of the Original
Credit Agreement and the other Loan Documents (as defined in the Original
Credit Agreement) executed in connection therewith, to the extent restated,
amended and modified hereby, are hereby superseded and replaced by the
provisions hereof and of the Loan Documents (as defined herein);
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto agree that the Original Credit
Agreement is amended and restated to read in its entirety as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement:
"Account Debtor" shall mean any Person who is obligated under an Account.
"Accounts" shall mean all accounts, contract rights, chattel paper,
instruments, drafts, acceptances and documents of the Borrower or any of the
Borrower's Subsidiaries arising from the sale or lease of goods or the
provision of services or the
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license of Intellectual Property by the Borrower or any of the Borrower's
Subsidiaries in the ordinary course of its business, whether secured or
unsecured, and whether now existing or hereafter created or arising, and
"Account" shall mean any one of the foregoing.
"Additional Unsecured Debt" shall mean the unsecured Funded Debt
consisting of revolving credit lines made available to be borrowed by the
Borrower, which are provided to the Borrower by one or more lenders, in an
aggregate principal amount not exceeding $160 million, and on terms and
conditions substantially similar to those set forth on Schedule A-1 attached
hereto, and evidenced by documentation in form and substance, acceptable to the
Agent in its sole discretion. As of the Agreement Date, all Additional
Unsecured Debt of the Borrower is listed on Schedule A-1.
"Advance" or "Advances" shall mean amounts of the Loans advanced by the
Lenders to the Borrower pursuant to Section 2.2 hereof on the occasion of any
borrowing.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under common control with the Borrower, and any Person who is
a director, officer, or partner of the Borrower. For purposes of this
definition, "control", when used with respect to any Person, includes, without
limitation, the direct or indirect beneficial ownership of ten percent (10%) or
more of the outstanding voting securities or voting equity of such Person or
the power to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agent" shall mean Citicorp North America, Inc., a Delaware corporation,
acting as Agent for the Lenders and the Issuing Banks, and any successor agent
appointed pursuant to Section 9.12.
"Agent's Office" shall mean the office of the Agent located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other office as may be
designated pursuant to the provisions of Section 10.1 of this Agreement.
"Aggregate Credit Obligations" shall mean, as of any particular time, the
sum of (a) the aggregate principal amount of all Revolving Loans then
outstanding, plus (b) the aggregate amount of all Letter of Credit Obligations
then outstanding, plus (c) the aggregate amount of all Swing Loans then
outstanding.
"Agreement" shall mean this Agreement.
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"Agreement Date" shall mean the date as of which this Agreement is dated.
"Applicable Law" shall mean, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations, and orders of governmental bodies
or regulatory agencies applicable to such Person, and all final orders and
decrees of all courts and arbitrators in proceedings or actions to which the
Person in question is a party or by which it is bound.
"Assignment and Assumption Agreement" shall mean that certain form of
Assignment and Assumption Agreement attached hereto as Exhibit A, pursuant to
which each Lender may, as further provided in Section 10.5 hereof, sell or
participate a portion of its Loans or Commitment.
"Assignment of Notes" shall mean that certain Assignment of Notes dated
March 31, 1997, executed by the Borrower and Microcircuits, pursuant to which
the Borrower and Microcircuits each pledge to the Agent, for its benefit and
the benefit of the Issuing Banks and the Lenders, all of their respective
right, title and interest in and to the Finance Corp. Subordinated Notes and
certain other promissory notes held by the Borrower, as the same may be amended
or modified from time to time.
"Authorized Signatory" shall mean such senior personnel of the Borrower as
may be duly authorized and designated in writing by the Borrower to execute
documents, agreements, and instruments on behalf of the Borrower.
"Available Letter of Credit Amount" shall mean, as of any particular time,
an amount equal to the lesser of (a) $25,000,000, and (b) the Available
Commitment.
"Available Commitment" shall mean, as of any particular time, (a) the
amount of the Commitment minus (b) the Aggregate Credit Obligations then
outstanding.
"Bankruptcy Code" shall mean the United States Bankruptcy Code (11 U.S.C.
Section 101 et seq.), as now or hereafter amended, and any successor statute.
"Base Rate" shall mean, at any time, a fluctuating and floating rate per
annum equal to the higher of:
(i) the highest rate of interest announced publicly by Citibank in
New York, New York from time to time, as Citibank's base rate; and
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(ii) the sum (adjusted to the nearest one-quarter of one percent
(0.25%) or, if there is no nearest one-quarter of one percent (0.25%), to
the next higher one-quarter of one percent (0.25%) of (A) one-half of one
percent (0.50%) per annum plus (B) the rate per annum obtained by dividing
(I) the latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates of deposit
of major United States money market banks, such three-week moving average
(adjusted to the basis of a year of 360 days) being determined weekly on
each Monday (or, if such day is not a Business Day, on the next succeeding
Business Day) for the three-week period ending on the previous Friday (or,
if such day is not a Business Day, on the next preceding Business Day) by
Citibank on the basis of such rates reported by certificate of deposit
dealers to, and published by, the Federal Reserve Bank of New York, or, if
such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three (3) New York
certificate of deposit dealers of recognized standing selected by Citibank,
by (II) a percentage equal to one hundred percent (100%) minus the average
of the daily percentages specified during such three-week period by the
Federal Reserve Board (or any successor) for determining the maximum
reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for Citibank in respect
of liabilities which consist of or which include (among other liabilities)
three-month nonpersonal U.S. Dollar time deposits in the United States Plus
(C) the average during such three-week period of the daily net annual
assessment rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring deposits of Citibank in the
United States; and
(iii) for any day one-half of one percent (1/2%) per annum above the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such
rate is not so published for any day which is a Business Day, the average
of the quotation for such day on such transactions received by Citibank
from three Federal funds brokers of recognized standing selected by it;
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12
but in no event higher than the maximum rate permitted by Applicable Law. Each
change in the Base Rate shall take effect simultaneously with the corresponding
change in the applicable rate described in clause (i), (ii) or (iii).
"Base Rate Advance" shall mean an Advance which the Borrower requests to
be made as a Base Rate Advance or which is reborrowed as a Base Rate Advance,
in accordance with the provisions of Section 2.2 hereof.
"Blocked Account" shall have the meaning set forth in Section 5.15 hereof.
"Blocked Account Letter" shall mean any letter agreement executed by a
Blocked Account depository bank and the Agent and acknowledged and agreed to by
the Borrower, in the form of Exhibit B hereto, as such letter agreements may be
amended, supplemented or otherwise modified from time to time.
"Borrower" shall mean Zenith Electronics Corporation, a Delaware
corporation.
"Borrowing Base" shall mean, at any particular time, the sum of:
(a) up to 75% of the remainder of Eligible Accounts less the
Warranty/Advertising Reserve; plus
(b) up to 60% of the Value of Eligible Finished Goods VCR Inventory;
plus
(c) up to 50% of the Value of Eligible Finished Goods TV and Other
Inventory; plus
(d) up to 35% of the Value of Eligible Picture Tube Inventory; plus
(e) (i) the lesser of (x) 65% of the value of the Tuning Patents, and
(y) $34,000,000 (provided, however, commencing September 30,
1998, and on the last day of each calendar quarter thereafter,
such $34,000,000 advance amount shall be reduced by $2,250,000),
minus (ii) the Funai Reserve; plus
(f) the amount of $25,000,000 in connection with the Other Assets;
provided, however, (i) the Agent reserves the right to reduce
such advance amount against the Other Assets if, in its
reasonable determination, there is a material reduction in
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the value of the Other Assets, and (ii) such advance amount shall
be permanently reduced by the Net Cash Proceeds received in
connection with the sale of the Glenview property, as set forth
in Section 7.7; minus
(g) the amount of reserves which the Agent shall have established, in
its reasonable discretion, for such purposes as the Agent shall
have deemed necessary, including, without limitation, reserves
for (i) price adjustments and damages; (ii) obsolescence of
Inventory; (iii) special order goods and deferred shipment sales;
(iv) accrued but unpaid ad valorem and personal property tax
liability; and(v) market value declines.
"Borrowing Base Certificate" shall mean a certificate of an Authorized
Signatory of the Borrower substantially in the form of Exhibit C attached
hereto.
"Borrowing Base Deficiencies" shall mean any condition wherein the
Aggregate Credit Obligations exceed the Borrowing Base as set forth on the most
recent Borrowing Base Certificate delivered to the Agent and the Lenders or as
otherwise determined by the Agent.
"Business Day" shall mean any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Illinois or the State
of New York or is a day on which banking institutions located in either of such
states are closed; provided, however, that when used with reference to a
Eurodollar Advance (including the making, continuing, prepaying or repaying of
any Eurodollar Advance), the term "Business Day" shall also exclude any day in
which banks are not open for dealings in deposits of United States dollars on
the London interbank market.
"Capital Expenditures" shall mean, for any period, on a consolidated basis
for the Borrower and the Borrower's Subsidiaries, the aggregate of all
expenditures made by the Borrower or any of the Borrower's Subsidiaries during
such period that, in conformity with GAAP, are required to be included in or
reflected on the consolidated balance sheet as a capital asset of the Borrower
or any of the Borrower's Subsidiaries, including Capitalized Lease Obligations.
"Capital Stock" shall mean, as applied to any Person, any capital stock of
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or
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exchange rights, voting rights, calls or claims of any character with respect
thereto.
"Capitalized Lease Obligation" shall mean that portion of any obligation
of a Person as lessee under a lease which at the time would be required to be
capitalized on the balance sheet of such lessee in accordance with GAAP.
"Change of Control" shall mean any change in the ownership of the
Borrower's Capital Stock that results in less than a majority of the Borrower's
outstanding Voting Stock being owned beneficially by the LGE Group.
"Citibank" shall mean Citibank, N.A., a national banking association.
"Clearing Account" shall mean Account No. 4072-6121 (or such other account
number established by the Agent for purposes of Section 5.15 hereof) maintained
by the Agent at Citibank, N.A. pursuant to Section 5.15 of this Agreement, and
over which the Agent has the sole and exclusive access and control for
withdrawal purposes pursuant to Section 5.15 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean all property pledged as collateral security for
the Obligations pursuant to the Security Documents or otherwise, and all other
property of the Borrower or any Material Subsidiary that is now or hereafter in
the possession or control of the Agent, the Issuing Banks or any Lender or on
which the Agent, the Issuing Banks or any Lender has been granted a Lien.
"Commercial Letter of Credit" shall mean a documentary letter of credit
issued in respect of the purchase of goods or services by the Borrower in the
ordinary course of its business.
"Commitment" shall mean the several obligations of the Lenders to advance
as Revolving Loans the aggregate amount of up to $125,000,000 to the Borrower
on or after the Agreement Date, in accordance with their respective Commitment
Ratios, pursuant to the terms hereof, and as such amount may be reduced from
time to time, pursuant to the terms hereof.
"Commitment Ratios" shall mean the percentage in which the Lenders are
severally bound to make Advances of Revolving Loans to the Borrower under the
Commitment, which, as of the Agreement
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Date, are set forth (together with dollar amounts thereof) on Schedule C-1
attached hereto.
"Current Assets" shall mean, with respect to the Borrower and the
Borrower's Subsidiaries taken on a consolidated basis, the aggregate amount of
all assets which would, in accordance with GAAP, properly be classified as
current assets; provided, however, such method of determination shall be
modified where in conflict with the following: Current Assets will include only
those assets which may, in the ordinary course of business, be reasonably
converted into cash within a period of one (1) year from the date as of which
such computation is being made, and Current Assets will exclude (a) loans and
advances to or receivables due from employees or officers of the Borrower, and
(b) all deferred assets, other than prepaid items such as insurance, taxes,
interest, commissions, rents, royalties, and similar items.
"Current Liabilities" shall mean, with respect to the Borrower and the
Borrower's Subsidiaries, taken on a consolidated basis, the aggregate amount of
all current obligations, as determined in accordance with GAAP, but in any
event shall include the total amount of the LGE Payable and the total amount of
the Loans, each in the amount outstanding on the date as of which such
computation is being made, and all obligations except those having a maturity
date which is more than one (1) year from the date as of which such computation
is being made.
"Customer Disputes" shall mean all instances in which a customer of the
Borrower has affirmatively asserted grounds for nonpayment of an Account,
including, without limitation, any rejection of goods by an Account Debtor, any
repossession of goods by the Borrower, any return of goods to the Borrower by
any Account Debtor, or any claim by an Account Debtor of non-conformity of
goods, total or partial failure of delivery, set off, counterclaim, or breach
of warranty or any other claim which is inconsistent with the Borrower's
warranties in regard to the Accounts set forth in Section 4.2 of this
Agreement.
"Date of Issue" shall mean the date on which an Issuing Bank issues a
Letter of Credit pursuant to Section 2.15 hereof.
"Default" shall mean any Event of Default, and any of the events specified
in Section 8.1 hereof regardless of whether there shall have occurred any
passage of time or giving of notice (or both) that would be necessary in order
to constitute such event an Event of Default.
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"Default Rate" shall mean a simple per annum interest rate equal to, (a)
with respect to outstanding principal, the sum of (i) the applicable Interest
Rate Basis, plus (ii) the applicable Interest Rate Margin plus (iii) two
percent (2%), and (b) with respect to all other Obligations, the sum of (i) the
Base Rate, plus (ii) the applicable Interest Rate Margin with respect to Base
Rate Advances, plus (iii) two percent (2%).
"Dividends" shall mean, any direct or indirect distribution, dividend, or
payment to any Person on account of any Capital Stock of the Borrower or any of
the Borrower's Subsidiaries.
"Eligible Accounts" shall mean, at any particular date, the Accounts of
the Borrower:
(a) which are not unpaid for more than sixty (60) days from the
original due date shown on the invoice for the same, and (ii) which are not
unpaid for more than one hundred fifty (150) days from the date on which the
Borrower first transmitted such invoice to the Account Debtor thereunder;
(b) as to which the applicable Account Debtor has been sent an
invoice within ten (10) days after such Accounts have been entered on the
financial records of the Borrower;
(c) which are not owed by an Account Debtor with respect to whom more
than fifty percent (50%) of the Accounts of such Account Debtor are more than
sixty (60) days past due;
(d) which are not owed by an Account Debtor who is an Affiliate or an
employee of the Borrower;
(e) which are not owed by an Account Debtor who has disputed its
liability with respect to such Accounts (to the extent of such disputed amount);
(f) which arise at the time that title to the goods is transferred to
the Account Debtor (FOB warehouse);
(g) which are not subject to any other Customer Disputes;
(h) which are not owed by an Account Debtor which is a federal, state
or local governmental entity or agency, unless all required procedures for the
effective collateral assignment of the Account under the Assignment of Claims
Act of 1940 shall have been complied with, to the satisfaction of the Agent;
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(i) which are not owed by an Account Debtor located outside the
United States of America, unless the Account is supported by a letter of credit
which is issued or confirmed by a United States bank or other financial
institution the publicly traded unsecured long term indebtedness of which is
rated "A2" or better by Moody's Investor's Service, Inc. or "A" or better by
Standard & Poor's or by a bank or other financial institution which is otherwise
acceptable to the Agent in the Agent's reasonable discretion or insured by the
Federal Deposit Credit Insurance Association;
(j) which are not owed by an Account Debtor: (i) which has commenced
a voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended; (ii) which has made an assignment for the benefit of
creditors; (iii) as to which a decree or order for relief has been entered by a
court having jurisdiction in the premises in an involuntary case under the
federal bankruptcy laws, as now constituted or hereafter amended; (iv) as to
which any other petition or other application for relief under the federal
bankruptcy laws has been filed; (v) which has failed, suspended business, ceased
to be solvent; or (vi) which has consented to or suffered the appointment of a
receiver, trustee, liquidator or custodian for it or for all or a significant
portion of its assets or affairs;
(k) which are not owed by any Account Debtor which is located in the
State of New Jersey, the State of West Virginia, or the State of Minnesota,
unless the Borrower has qualified as a foreign corporation authorized to
transact business in such state or has filed all required reports, including,
without limitation, a "notice of business activities report," with the
appropriate officials in the respective State for the then current year or is
otherwise exempt from such filings pursuant to applicable state law;
(l) which are not owed by an Account Debtor which, in the Agent's
reasonable credit judgment, does not have a satisfactory credit standing in
relation to the amount of credit extended to such Account Debtor;
(m) which are bona fide, valid and enforceable obligations of the
Account Debtor thereunder;
(n) as to which the Borrower has performed all of its obligations
then required to have been performed, including, without limitation, the
delivery of merchandise or rendition of services applicable to such Account;
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(o) which are not owed by an Account Debtor with whom the Borrower
has an agreement or understanding for any deduction from the Account, except for
discounts or allowances which are made in the ordinary course of business for
prompt payment and which discounts or allowances are reflected in the
calculation of the face value of each invoice related to such Account and except
for cooperating advertising allowances which are included in the
Warranty/Advertising Reserve;
(p) which are not evidenced by any promissory note, chattel paper or
instrument, except such notes, chattel paper or instruments which shall have
been delivered by the Borrower to the Agent;
(q) which are subject to a valid and continuing first priority Lien
in favor of the Agent and the Lenders pursuant to the Loan Documents as to which
all action necessary or desirable to perfect such security interest shall have
been taken, and to which the Borrower has good and marketable title, free and
clear of any Liens (other than Liens in favor of the Agent and the Lenders);
(r) to the extent any such Account owing by (i) Sears or Circuit
City, together with all other Accounts owing by such Person, does not exceed in
the aggregate twenty percent(20%) of all Accounts of the Borrower, and (ii) any
other Account Debtor, together with all other Accounts owing by such Account
Debtor, does not exceed in the aggregate ten percent (10%) of all Accounts of
the Borrower; and
(s) each Account otherwise satisfying the requirements of
subparagraphs (a) through (r) above will be reduced by any contra account
balances for amounts then due to the applicable Account Debtor from the
Borrower.
"Eligible Finished Goods TV and Other Inventory" shall mean, as of any
particular time, the portion of the Inventory which constitutes finished goods
and which: (a) is a television or any other Inventory (except a video cassette
recorder) manufactured or purchased by the Borrower; (b) in the opinion of the
Agent, is not obsolete, slow-moving, unmerchantable, and is readily salable in
its current form; (c) is new and does not constitute any finished goods that
were returned to the Borrower due to defect or damage; (d) fulfills each and
every one of the Inventory Eligibility Requirements; and (e) is not Eligible
Picture Tube Inventory or Eligible Finished Goods VCR Inventory.
"Eligible Finished Goods VCR Inventory" shall mean, as of any particular
time, the portion of the Inventory which
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constitutes finished goods and which: (a) is a video cassette recorder
manufactured or purchased by the Borrower; (b) in the opinion of the Agent, is
not obsolete, slow-moving, unmerchantable, and is readily salable in its current
form; (c) is new and does not constitute any finished goods that were returned
to the Borrower due to defect or damage; (d) fulfills each and every one of the
Inventory Eligibility Requirements; and (e) is not Eligible Picture Tube
Inventory or Eligible Finished Goods TV and Other Inventory.
"Eligible Inventory" shall mean Eligible Picture Tube Inventory, Eligible
Finished Goods TV and Other Inventory and Eligible Finished Goods VCR
Inventory.
"Eligible Picture Tube Inventory" shall mean, as of any particular time,
the portion of the Inventory of the Borrower which constitutes color television
picture tubes and which: (a) was manufactured or purchased by the Borrower; (b)
in the opinion of the Agent, is not obsolete, slow-moving, unmerchantable, and
is readily salable in its current form; (c) is new and does not constitute any
finished goods that were returned to the Borrower due to defect or damage; (d)
fulfills each and every one of the Inventory Eligibility Requirements; and (e)
is not Eligible Finished Goods VCR Inventory or Eligible Finished Goods TV and
Other Inventory.
"Environmental Laws" shall mean any and all applicable federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority regulating,
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including without limitation, Hazardous
Materials, as now or may at any time during the term hereof be in effect.
"Equipment" shall mean all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal property (other
than Inventory) of every kind and description used in the Borrower's operations
or owned by the Borrower or in which the Borrower has an interest, whether now
owned or hereafter acquired by the Borrower and wherever located, and all
parts, accessories and special tools and all increases and accessions thereto
and substitutions and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
in effect on the Agreement Date and as such Act may be amended thereafter from
time to time.
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"ERISA Affiliate" shall mean any "affiliate" of the Borrower within the
meaning of Section 414 of the Code.
"Eurodollar Advance" shall mean an Advance which the Borrower requests to
be made as a Eurodollar Advance or which is reborrowed as a Eurodollar Advance,
in accordance with the provisions of Section 2.2 hereof.
"Eurodollar Advance Period" shall mean, for each Eurodollar Advance, each
one, two, three or six month period, as selected by the Borrower pursuant to
Section 2.2 hereof, during which the applicable Eurodollar Rate (but not the
applicable Interest Rate Margin) shall remain unchanged. Notwithstanding the
foregoing, however: (i) any applicable Eurodollar Advance Period which would
otherwise end on a day which is not a Business Day shall be extended to the
next succeeding Business Day, unless such Business Day falls in another
calendar month, in which case such Eurodollar Advance Period shall end on the
next preceding Business Day; (ii) any applicable Eurodollar Advance Period
which begins on a day for which there is no numerically corresponding day in
the calendar month during which such Eurodollar Advance Period is to end shall
(subject to clause (i) above) end on the last day of such calendar month; and
(iii) no Eurodollar Advance Period shall extend beyond the Maturity Date or
such earlier date as would interfere with the repayment obligations of the
Borrower under Section 2.6 hereof. Interest shall be due and payable with
respect to any Advance as provided in Section 2.3 hereof.
"Eurodollar Basis" shall mean a simple per annum interest rate equal to
the quotient of (i) the Eurodollar Rate divided by (ii) one minus the
Eurodollar Reserve Percentage, stated as a decimal. The Eurodollar Basis shall
be rounded upward to the nearest one sixteenth of one percent (1/16%) and, once
determined, shall remain unchanged during the applicable Eurodollar Advance
Period, except for changes to reflect adjustments in the Eurodollar Reserve
Percentage.
"Eurodollar Rate" shall mean, for any Eurodollar Advance Period, the
average (rounded upward to the nearest one sixteenth of one percent (1/16%)) of
the interest rates per annum at which deposits in United States dollars for
such Eurodollar Advance Period are offered by the principal office of Citibank
in London, England to prime banks in the London interbank market at
approximately 11:00 a.m. (New York time) two (2) Business Days before the first
day of such Eurodollar Advance Period, in an amount approximately equal to the
principal amount of, and for a length of time approximately equal to the
Eurodollar Advance Period for, the Eurodollar Advance sought by the Borrower.
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"Eurodollar Reserve Percentage" shall mean the percentage which is in
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), whether or not any
Lender has any Eurocurrency Liabilities subject to such reserve requirement at
that time. The Eurodollar Basis for any Eurodollar Advance shall be adjusted
as of the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" shall mean any of the events specified in Section 8.1
hereof, provided that any requirement for notice or lapse of time, or both, has
been satisfied.
"Fee Letter" shall mean that certain fee letter of even date herewith
executed by the Borrower and addressed to the Agent.
"Finance Corp." shall mean Zenith Finance Corporation, a Delaware
corporation and a Subsidiary of the Borrower.
"Finance Corp. Subordinated Note" shall mean those certain subordinated
promissory notes dated March 31, 1997 issued by Finance Corp. in favor of the
Borrower and Microcircuits, respectively, pursuant to the Receivables
Securitization.
"Foreign Exchange Agreement" shall mean a foreign currency exchange
hedging product agreement providing foreign currency exchange protection, and
arising at any time between the Borrower, on the one hand, and the Agent (or an
Affiliate of the Agent), or one or more of the Lenders (or an Affiliate of a
Lender), on the other hand, as such agreement may be modified, supplemented or
amended, and in effect from time to time.
"Funai Litigation" shall mean Case No. Cv 98-4809-ER, pending in the
United States District Court, Central District of California, styled as Funai
Electric Co., Ltd. Vs. Zenith Electronics Corporation, or any successor case or
conversion thereof and shall include any appeal thereof.
"Funai Reserve" shall mean a reserve in the amount of $4,500,000;
provided, however, such reserve shall be reduced to zero upon the entry of an
order denying the request of the plaintiff in the Funai Litigation to deposit
into escrow all royalties which are subject of such litigation and shall remain
at zero thereafter until the entry of any order, settlement, or consent decree
requiring such an escrow arrangement.
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"Funded Debt" shall mean, with respect to the Borrower or any of the
Borrower's Subsidiaries on a consolidated basis, all obligations, liabilities
and indebtedness of the types described in subsections (a) through (e) of the
definition of Indebtedness set forth herein, including, but not limited to, the
LGE Debt, the Additional Unsecured Debt, and all obligations under the Loan
Documents and the Subordinated Debentures.
"GAAP" shall mean, as in effect from time to time, United States generally
accepted accounting principles consistently applied.
"Glenview Property" shall mean that certain real property owned by the
Borrower consisting of approximately 39,821 acres, including the building and
improvements located thereon, and located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
"Governmental Authority" shall mean 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
government.
"Guaranty" or "guaranteed," as applied to an obligation (each a "primary
obligation"), shall mean and include (a) any guaranty, direct or indirect, in
any manner, of any part or all of such primary obligation, and (b) any
agreement, direct or indirect, contingent or otherwise, the practical effect of
which is to assure in any way the payment or performance (or payment of damages
in the event of non-performance) of any part or all of such primary obligation,
including, without limiting the foregoing, any reimbursement obligations as to
amounts drawn down by beneficiaries of outstanding letters of credit, and any
obligation of any Person, whether or not contingent, (i) to purchase any such
primary obligation or any property or asset constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase or
payment of such primary obligation or (2) to maintain working capital, equity
capital or the net worth, cash flow, solvency or other balance sheet or income
statement condition of any other Person, (iii) to purchase property, assets,
securities or services primarily for the purpose of assuring the owner or
holder of any primary obligation of the ability of the primary obligor with
respect to such primary obligation to make payment thereof or (iv) otherwise to
assure or hold harmless the owner or holder of such primary obligation against
loss in respect thereof.
"Hazardous Materials" shall mean any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic
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substances, petroleum products (including crude oil or any fraction thereof),
friable asbestos containing materials defined or regulated as such in or under
any Environmental Law.
"HDTV Patents" shall mean all of the Borrower's United States patents and
patent applications for VSB technology or relating to and used in connection
with the high definition television technology of the Borrower.
"Immaterial Subsidiary" shall mean any domestic or foreign Subsidiary of
the Borrower, now existing or hereafter created, which owns assets (including
stock but excluding intercompany receivables) having an aggregate book value
not exceeding $750,000, and which is not material to the conduct of the
Borrower's business operations.
"Indebtedness" shall mean, with respect to the Borrower and the Borrower's
Subsidiaries, (a) any obligation for borrowed money; (b) any obligation
evidenced by bonds, debentures, notes or other similar instruments; (c) any
obligation to pay the deferred purchase price of property or for services
(other than in the ordinary course of business); (d) any Capitalized Lease
Obligation; (e) any obligation or liability of others secured by a Lien on
property owned by the Borrower or such Subsidiary, whether or not such
obligation or liability is assumed; (f) any obligation under any Interest Hedge
Agreement or Foreign Exchange Agreement; (g) any Guaranty (except items of
shareholders' equity or Capital Stock or surplus or general contingency or
deferred tax reserves); (h) any letter of credit issued for the account of the
Borrower or such Subsidiary; and (i) any other obligation or liability which is
required by GAAP to be shown as a liability on a consolidated balance sheet of
the Borrower and its Subsidiaries (other than reserves required under GAAP).
"Intellectual Property" means, with respect to any Person, collectively,
such Person's Patent Property and Trademark Property.
"Intellectual Property Security Agreements" shall mean, collectively, that
(a) certain Patent Collateral Assignment and Security Agreement dated March 31,
1997 between the Borrower and the Agent, pursuant to which the Borrower grants
to the Agent, on its behalf and on behalf of the Issuing Banks and the Lenders,
a security interest in all of the Borrower's right, title, and interest in and
to the Tuning Patents, all License Agreements, all Tuning Patent Royalties and
proceeds thereof, (b) certain Patent Collateral Assignment and Security
Agreement dated March 31, 1998 between the Borrower and the Agent, pursuant to
which the Borrower grants to the Agent on its behalf and on behalf of
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the Issuing Banks and the Lenders, a security interest on all of the Borrower's
right, title and interest in and to the HDTV Patents and proceeds thereof, and
(c) certain Trademark Collateral Security Agreement dated March 31, 1997 between
the Borrower and the Agent, pursuant to which the Borrower grants to the Agent,
on its behalf and on behalf of the Issuing Banks and the Lenders, a security
interest in all of the Borrower's right, title, and interest in and to its
Trademark Property, and shall include any supplement to any of the foregoing.
"Interest Hedge Agreements" shall mean the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements.
"Interest Rate Basis" shall mean the Base Rate or the Eurodollar Basis, as
appropriate.
"Interest Rate Margin" shall mean, (i) with respect to Base Rate Advances,
two percent (2%), and (ii) with respect to Eurodollar Advances, three and
one-quarter percent(3.25%).
"Inventory" shall mean all goods, merchandise and other personal property
owned and held for sale, and all raw materials, work or goods in process,
materials and supplies of every nature which contribute to the finished
products of the Borrower and any of the Borrower's Subsidiaries in the ordinary
course of its business, whether now owned or hereafter acquired by the Borrower
and any of the Borrower's Subsidiaries.
"Inventory Eligibility Requirements" shall mean that the Inventory:
(a) is owned solely by the Borrower;
(b) conforms to all of the warranties and representations regarding the
same which are set forth in this Agreement or any of the other Loan Documents;
(c) is located in the continental United States either (i) on real
property owned by the Borrower, or (ii) on leased premises in regard to which
the landlord, warehouseman or bailee thereof shall have executed and delivered
to the Agent an
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agreement, which shall be in form and substance acceptable to the Agent, waiving
any lien rights such landlord, warehouseman or bailee may hold in regard to the
Borrower's property in favor of the Lenders;
(d) is not subject to any claim of reclamation, or Lien, adverse claim,
interest or right of any other Person;
(e) consists of finished goods (which may include color television picture
tubes) purchased or manufactured by the Borrower in the ordinary course of its
business and does not consist of Inventory in transit, work in process or raw
materials;
(f) has not been consigned to or by any Person;
(g) is in good condition and meets all standards imposed by any Person
having regulatory authority over such goods, its use and/or sale, is not
obsolete, and is currently saleable in the normal course of the Borrower's
business;
(h) does not include any Inventory scheduled for return to vendors, excess
Inventory, slow-moving or obsolete Inventory, clearance Inventory, damaged
goods, display items, packaging materials, labels, name plates or similar
supplies, cash discounts, sample Inventory or shrinkage;
(i) is not located at any vendor/trade show;
(j) is not in the possession of LGE;
(k) has not been removed from regular stock for quality rework or other
corporate engineering matters;
(l) is personal property in which the Borrower has granted a valid and
continuing first Lien in favor of the Agent and the Lenders pursuant to the
Security Documents, and as to which all action necessary to perfect such
security interest shall have been taken; and
(m) is not covered, in whole or in part, by any security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement which is on file or of record in any public office, except such as may
have been filed in favor of the Agent and the Lenders pursuant to the Security
Documents.
"Issuing Banks" shall mean Citibank, N.A., and any other Person who
hereafter may be designated as an Issuing Bank
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pursuant to an Assignment and Assumption Agreement or otherwise; and "Issuing
Bank" shall mean any one of the foregoing.
"Lenders" shall mean those lenders whose names are set forth on the
signature pages hereof under the heading "Lenders" and any assignees of the
Lenders who hereafter become parties hereto pursuant to and in accordance with
Section 10.5 hereof; and "Lender" shall mean any one of the foregoing Lenders.
"Letter of Credit Commitment" shall mean the several obligations of the
Issuing Banks to issue Letters of Credit in an aggregate face amount from time
to time not to exceed $25,000,000.
"Letter of Credit Obligations" shall mean, at any time, the sum of (a) an
amount equal to the aggregate undrawn and unexpired amount (including the
amount to which any such Letter of Credit can be reinstated pursuant to the
terms hereof) of the then outstanding Letters of Credit and (b) an amount equal
to the aggregate drawn, but unreimbursed drawings of any Letters of Credit.
"Letter of Credit Reserve Account" shall mean any account maintained by
the Agent for the benefit of any Issuing Bank, the proceeds of which shall be
applied as provided in Section 8.2(d) hereof.
"Letters of Credit" shall mean either Standby Letters of Credit or
Commercial Letters of Credit issued by Issuing Banks on behalf of the Borrower
from time to time in accordance with Section 2.15 hereof.
"LGE" shall mean LG Electronics Inc., a corporation organized under the
laws of the Republic of Korea.
"LGE Debt" shall mean the Funded Debt consisting of (a) a $45 million
credit line made available to be advanced to the Borrower by LGE, evidenced by
that certain promissory note dated as of March 31, 1998, and (b) an additional
credit line made available to be advanced to the Borrower by LGE after the
Agreement Date in an aggregate principal amount not exceeding $60 million, and
on terms and conditions, and evidenced by documentation (including, without
limitation, an amendment to the Subordination Agreement) in form and substance,
acceptable to the Agent in its sole discretion.
"LGE Group" shall mean LGE and any other Person that, directly or
indirectly, is controlled by LGE. For purposes of this definition,
"controlled" with respect to LGE means the
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possession, direct or indirect, of the power either (a) to vote more than 50% of
the Voting Stock of such Person or (b) to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by contract or otherwise.
"LGE Obligations" shall mean all indebtedness of the Borrower to LGE in
connection with the LGE Debt, the Reimbursement Agreement, and the Subrogation
Obligations, and any document or instrument securing or evidencing the same.
"LGE Payable" shall mean, at any time, the aggregate outstanding account
payable of the Borrower to LGE arising from the Borrower's purchases from LGE
in the ordinary course of the Borrower's business.
"License Agreements" shall mean all agreements, whether now or hereafter
in existence, between the Borrower, as licensor, and any other Person, as
licensee, pursuant to which the Borrower grants to such Person any license or
other right in connection with any Tuning Patent.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, negative pledge agreement, assignment, charge, security interest, title
retention agreement, levy, execution, seizure, attachment, garnishment, or
other encumbrance of any kind in respect of such property, whether or not
▇▇▇▇▇▇, vested, or perfected.
"Loan Account" shall have the meaning set forth in Section 2.7 hereof.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents, the Blocked Account Letters, the Set-Off Waiver Letter, the Fee
Letter, all reimbursement agreements relating to Letters of Credit issued
hereunder, all landlord, warehouseman or bailee waiver agreements in favor of
the Agent, all legal opinions or reliance letters issued by counsel to the
Borrower in connection herewith, all Requests for Advance, all Requests for
Issuance of Letters of Credit, all Borrowing Base Certificates, Interest Hedge
Agreements between the Borrower, on the one hand, and the Agent (or an
affiliate of the Agent) or one or more of the Lenders (or an affiliate of a
Lender), on the other hand, Foreign Exchange Agreements and all other
documents, instruments, certificates, and agreements executed or delivered in
connection with or contemplated by this Agreement, including, without
limitation, any security agreements or guaranty agreements from the Borrower's
Subsidiaries to the Agent, the Lenders and the Issuing Banks.
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"Loans" shall mean, collectively, the amounts advanced by the Lenders to
the Borrower under the Commitment, not to exceed the amount of the Commitment,
and evidenced by the Notes, and shall include the Revolving Loans and the Swing
Loans.
"Majority Lenders" shall mean Lenders (whose voting rights hereunder have
not been restricted pursuant to Section 2.2(e) hereof) the total of whose
Commitment Ratios equals or exceeds fifty-one percent (51%) of the Commitment
Ratios of all Lenders entitled to vote hereunder.
"Material Subsidiaries" shall mean Zenith Electronics Corporation of
Texas, a Texas corporation, Zenith Video Tech Corporation-Florida, a Delaware
corporation, Zenith Video Tech Corporation, a Delaware corporation, and any
other domestic Subsidiary of the Borrower, now or hereafter created, which owns
assets (including stock but excluding intercompany receivables) having an
aggregate book value in excess of $750,000; and "Material Subsidiary" shall
include any one of the foregoing, provided, however, Zenith Electronics
Corporation of Arizona shall not be deemed to be a "Material Subsidiary" unless
it owns assets (including stock but excluding intercompany receivables) having
an aggregate book value in excess of $1,500,000.
"Materially Adverse Effect" shall mean any materially adverse effect (a)
upon the business, assets, liabilities, condition (financial or otherwise), or
results of operations of the Borrower, or (b) upon the ability of the Borrower
to perform under this Agreement or any other Loan Document by the Borrower, or
(c) upon the rights, benefits or interests of the Agent, the Lenders or the
Issuing Banks in or to this Agreement, any other Loan Document or the
Collateral, in each case, resulting from any act, omission, situation, status,
event, or undertaking, either singly or taken together.
"Maturity Date" shall mean December 31, 1998, or such earlier date as
payment of the Loans shall be due (whether by acceleration or otherwise).
"Mexican Subsidiaries" shall mean Cable Productos de Chihuahua, S.A. de
C.V., Electro Partes ▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇. de C.V., Partes de Television ▇▇
▇▇▇▇▇▇▇, ▇.▇. de C.V., Radio Componentes de Mexico, S.A. de C.V., and Zenco de
Chihuahua, S.A. de C.V., and "Mexican Subsidiary" shall mean any one of the
foregoing.
"Microcircuits" shall mean Zenith Microcircuits Corporation, a Delaware
corporation that was merged with and into the Borrower
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on or about December 31, 1997, with the Borrower being the surviving entity.
"Mortgage" shall mean, collectively, that certain Mortgage, Deed of Trust,
Fixture Financing Statement, Assignment of Leases and Rents and Financing
Statement dated December 5, 1997, by and among the Borrower, Zenith Electronics
Corporation of Texas, the Agent, the Issuing Bank and a trustee, and recorded
in ▇▇▇▇ County, Illinois and ▇▇▇▇▇▇▇ County, Texas, as modified by that certain
First Modification to Mortgage, Deed of Trust, Fixture Financing Statement,
Assignment of Leases and Rents and Financing Statement of even date herewith,
and any other similar document executed by the Borrower or any Material
Subsidiary after the Agreement Date.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Necessary Authorizations" shall mean all material authorizations,
consents, permits, approvals, licenses, and exemptions from, and all filings
and registrations with, and all reports to, any Governmental Authority whether
federal, state, local, and all agencies thereof, which are required for the
conduct of the businesses and the ownership (or lease) of the properties and
assets of the Borrower.
"Net Cash Proceeds" shall mean, with respect to any sale, lease, transfer
or other disposition of assets by the Borrower or any issuance by the Borrower
of any Capital Stock or the incurrence by the Borrower of any Funded Debt
(other than the Obligations), the aggregate amount of cash received for such
assets or Capital Stock, or as a result of such Funded Debt, net of reasonable
and customary transaction costs properly attributable to such transaction and
payable by the Borrower in connection with such sale, lease, transfer or other
disposition of assets or the issuance of any Capital Stock or the incurrence of
any Funded Debt, including without limitation, sales commissions and
underwriting discounts.
"Net Income" shall mean, for any period, the consolidated net income (or
deficit) of the Borrower and the Borrower's Subsidiaries for such period,
determined in accordance with GAAP.
"Notes" shall mean those certain revolving promissory notes of even date
in the aggregate principal amount of $125,000,000, issued by the Borrower to
each of the Lenders and substantially in the form of Exhibit D attached hereto,
and any extensions, renewals or amendments to, or replacements of, the
foregoing.
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"Obligations" shall mean (a) all payment and performance obligations of
the Borrower to the Lenders, the Issuing Banks, and the Agent under this
Agreement and the other Loan Documents (including all Letter of Credit
Obligations and including any interest, fees and expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), as they may be amended
from time to time, or as a result of making the Loans or issuing the Letters of
Credit, (b) the obligation to pay an amount equal to the amount of any and all
damages which the Issuing Banks, the Lenders and the Agent, or any of them, may
suffer by reason of a breach by the Borrower of any obligation, covenant, or
undertaking with respect to this Agreement or any other Loan Document, and (c)
any obligations of the Borrower to the Agent (or an affiliate of the Agent) or
any Lender (or an affiliate of a Lender) under any Interest Hedge Agreement or
Foreign Exchange Agreement permitted hereunder.
"Old Notes" shall mean the "Notes," as defined in the Original Credit
Agreement.
"Original Credit Agreement" shall have the meaning set forth in the
recitals hereto.
"Other Assets" shall mean, collectively, the HDTV Patents, and all
Equipment and real property owned by the Borrower and located in the United
States, provided the Agent has a perfected first priority security interest in
and lien on such asset.
"Patent Property" shall mean, with respect to any Person:
(i) all of such Person's patents (including, with respect to the
Borrower, the Tuning Patents and HDTV Patents), patent applications
(including, without limitation, all patents and patent applications in
preparation for filing) and patent disclosures throughout the world,
including without limitation, with respect to the Borrower, each patent and
patent application referred to in Part A-1 of Schedule 4.1(o);
(ii) all reissues, divisions, continuations, continuations-in-part,
revisions, extensions, renewals and reexaminations of any of the items
described in clause (a) of this definition; and
(iii) all patent licenses of such Person(whether as licensee or
licensor), including, with respect to the Borrower, each patent license
referred to in Part A-2 of Schedule 4.1(o).
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"Payment Date" shall mean the last day of each Eurodollar Advance Period
for a Eurodollar Advance.
"Permitted Amount" shall have the meaning set forth in Section 7.11.
"Permitted Liens" shall mean, as applied to any Person:
(a) Any Lien in favor of the Agent, the Issuing Banks or the Lenders given
to secure the Obligations;
(b) (i) Liens on real estate for real estate taxes not yet delinquent and
(ii) Liens for taxes, assessments, judgments, governmental charges or levies, or
claims not yet delinquent or the non-payment of which is being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves have been set aside on such Person's books;
(c) Liens of carriers, warehousemen, mechanics, laborers, suppliers,
workers and materialmen incurred in the ordinary course of business for sums not
yet due or being diligently contested in good faith, if such reserve or
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor;
(d) Liens incurred in the ordinary course of business in connection with
worker's compensation and unemployment insurance or other types of social
security benefits;
(e) Easements, rights-of-way, restrictions, and other similar encumbrances
on the use of real property which do not interfere with the ordinary conduct of
the business of such Person;
(f) Purchase money security interests provided that such Lien attaches
only to the asset so purchased by the Borrower and secures only Indebtedness
incurred by the Borrower in order to purchase such asset, but only to the extent
permitted by Section 7.1(d) hereof;
(g) Deposits to secure the performance of bids, trade contracts, tenders,
sales, leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(h) Liens on assets of the Borrower on the Agreement Date as more fully
set forth on Schedule P-1, attached hereto; and
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(i) Liens in favor of LGE on the Capital Stock of the Borrower's domestic
Subsidiaries and on the HDTV Patents, Trademark Property, real estate and
Equipment located in the United States of the Borrower and its Material
Subsidiaries securing the LGE Debt and the Reimbursement Agreement; provided
such Liens are at all times fully subordinated to the prior Liens of the Agent
(for its benefit and the benefit of the Lenders) on such assets pursuant to the
Subordination Agreement.
"Person" shall mean an individual, corporation, partnership, trust, joint
stock company, limited liability company, unincorporated organization, or a
government or any agency or political subdivision thereof.
"Plan" shall mean an employee benefit plan within the meaning of Section
3(3) of ERISA or any other plan maintained for employees of any Person or any
Affiliate of such Person.
"Pledge Agreement" shall mean that certain Pledge Agreement dated March
31, 1997 executed by the Borrower in favor of the Agent, pursuant to which the
Borrower pledged to the Agent, for its benefit and for the benefit of the
Issuing Banks and the Lenders, all of the Borrower's right, title and interest
in and to the Capital Stock of its domestic Subsidiaries, and including any
supplement thereto executed in accordance with Section 7.7(g) hereof, as the
same may be amended, supplemented or modified from time to time.
"Pooling and Servicing Agreement" shall mean that Pooling and Servicing
Agreement dated March 31, 1997 executed by and among the Borrower, Finance
Corp., and the Receivables Trustee, together with the Series 1997-1 Supplement
thereto, as amended, supplemented or otherwise modified.
"Previous Banks" shall have the meaning set forth in the recitals hereto.
"Property" shall mean any real property or personal property, plant,
building, facility, structure, underground storage tank or unit, equipment,
Inventory or other asset owned, leased or operated by the Borrower or any of
the Borrower's Subsidiaries (including, without limitation, any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).
"Receivables Purchase Agreements" shall mean the Receivables Purchase
Agreement, dated March 31, 1997, between the Borrower and Finance Corp. and the
Receivables Purchase Agreement, dated March 31, 1997, between Microcircuits and
Finance Corp.
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"Receivables Sales Agreement" shall mean that certain Receivables
Assignment Agreement of even date herewith, executed by the Receivables
Trustee, and Finance Corp., and transferring to the Borrower their interest in
the Receivables and Transferor Receivables (as such terms are defined in the
Pooling and Servicing Agreement).
"Receivables Securitization" shall mean the transactions described and
contemplated in the Securitization Documents.
"Receivables Trustee" shall mean Bankers Trust Company, or any other
Person serving as trustee under the Zenith Trade Receivables Master Trust 1997.
"Reimbursement Agreement" shall mean that certain Reimbursement Agreement
by and between the Borrower and LGE dated as of November 3, 1997, as amended by
that certain First Amendment to Reimbursement Agreement dated as of January 27,
1998.
"Reimbursement Obligations" shall mean the payment obligations of the
Borrower under Section 2.15(d) hereof.
"Replacement Event" shall have the meaning ascribed thereto in Section
10.16 hereof.
"Reportable Event" shall have the meaning set forth in Section 4043(c) of
ERISA and the regulations thereunder, but shall not include any event which is
not subject to the thirty (30) day notice requirement of such regulations other
than 29 Code of Federal Regulations Sections 2615.11, 2615.12 and 2615.19.
"Request for Advance" shall mean any certificate signed by an Authorized
Signatory requesting an Advance hereunder which will increase the aggregate
amount of the Loans outstanding, which certificate shall be denominated a
"Request for Advance," and shall be in substantially the form of Exhibit E
attached hereto. Each Request for Advance shall, among other things, specify
the date of the Advance, which shall be a Business Day, the amount of the
Advance, and the type of Advance.
"Request for Issuance of Letter of Credit" shall mean any certificate
signed by an Authorized Signatory requesting that an Issuing Bank issue a
Letter of Credit hereunder, which certificate shall be in substantially the
form of Exhibit F attached hereto, and shall, among other things, (a) specify
that the requested Letter of Credit is either a Commercial Letter of Credit or
a Standby Letter of Credit, (b) the stated amount of
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the Letter of Credit (which shall be in United States Dollars), (c) the
effective date (which shall be a Business Day) for the issuance of such Letter
of Credit, (d) the date on which such Letter of Credit is to expire (which shall
be a Business Day and which shall be subject to Section 2.15(a) hereof), (e) the
Person for whose benefit such Letter of Credit is to be issued, (f) other
relevant terms of such Letter of Credit, and (g) the Available Letter of Credit
Amount as of the scheduled date of issuance of such Letter of Credit.
"Restricted Payment" shall mean (a) Dividends and (b) any payment of any
management, consulting or similar fees payable by the Borrower or any of the
Borrower's Subsidiaries to any Affiliate.
"Restricted Purchase" shall mean any payment on account of the purchase,
redemption, or other acquisition or retirement of any shares of Capital Stock
of the Borrower or any Subsidiary of the Borrower.
"Revolving Loans" shall mean, collectively, the amounts advanced from time
to time by the Lenders to the Borrower under the Commitment, not to exceed the
amount of the Commitment, and evidenced by the Notes.
"Salomon Lease Transaction" shall mean those certain leveraged lease
financings of certain of the Borrower's and Zenith Electronics Corporation of
Texas's manufacturing equipment used in the production of color television
picture tubes, computer display tubes and color projection television tubes,
and of certain plastic molding equipment, arranged for the Borrower and Zenith
Electronic Corporation of Texas by Salomon Brothers and consummated on March
31, 1997, as more fully described on Schedule S-1 hereto.
"Securitization Documents" shall mean the Receivables Purchase Agreements,
the Pooling and Servicing Agreement, the Finance Corp. Subordinated Notes, and
any other agreement, document or instrument entered into by the Borrower,
Microcircuits, Finance Corp. or the Agent in connection with the Receivables
Securitization.
"Security Agreement" shall mean that certain Security Agreement dated
March 31, 1997 between the Borrower and the Agent, on its behalf and on behalf
of the Issuing Banks and the Lenders, as amended by that certain First
Amendment to Security Agreement dated as of December 5, 1997, copies of which
are attached as Exhibit G hereto, as the same may be amended or modified from
time to time hereafter.
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"Security Documents" shall mean, collectively, the Security Agreement, the
Pledge Agreement, the Assignment of Notes, the Intellectual Property Security
Agreements, the Subsidiary Guaranty, the Subsidiary Security Agreement, the
Mortgage, the Subordination Agreement, all UCC-1 financing statements and any
other document, instrument or agreement granting Collateral for the
Obligations, as the same may be amended or modified from time to time.
"Set-Off Waiver Letter" shall mean that certain letter agreement dated
March 31, 1997 executed by LGE in favor of the Agent and pursuant to which LGE
waives all rights to set-off against amounts owed to the Borrower, in form and
substance satisfactory to the Agent.
"Settlement Date" shall have the meaning set forth in Section 2.2(f).
"Standby Letter of Credit" shall mean a Letter of Credit issued to support
obligations of the Borrower incurred in the ordinary course of its business,
and which is not a Commercial Letter of Credit.
"Subordinated Debentures" shall mean those certain 6.25% Convertible
Subordinated Debentures issued by the Borrower, due April 1, 2011 in an
aggregate principal amount not exceeding $115,000,000, and governed by that
certain Indenture dated as of April 1, 1986, between the Borrower and The First
National Bank of Boston, as trustee (as amended prior to the Agreement Date).
"Subordination Agreement" shall mean, collectively, (a) that certain
Subordination Agreement dated as of November 5, 1997, by and among the
Borrower, the Agent and LGE, as amended by that certain First Amendment to
Subordination Agreement dated as of March 31, 1998, and as further amended by
that certain Second Amendment to Subordination Agreement of even date herewith,
and (b) that certain Subordination Agreement date as of November 5, 1997, by
and among the Agent, LGE, Microcircuits, and the Material Subsidiaries, as
amended by that certain First Amendment to Subordination Agreement dated as of
March 31, 1998, and as further amended by that certain Second Amendment to
Subordination Agreement of even date herewith.
"Subrogation Obligations" shall mean all obligations of the Borrower to
LGE arising from LGE's payment of all sums due by the Borrower in connection
with the Salomon Lease Transaction, pursuant to LGE's guaranty of the Salomon
Lease Transaction.
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"Subsidiary" shall mean, as applied to any Person, (a) any corporation of
which fifty percent (50%) or more of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which fifty percent (50%) or more of the outstanding partnership
interests is at the time owned by such Person, or by one or more Subsidiaries of
such Person, or by such Person and one or more Subsidiaries of such Person, and
(b) any other entity which is controlled or capable of being controlled by such
Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person.
"Subsidiary Guaranty" shall mean that certain Guaranty Agreement executed
by each Material Subsidiary dated March 31, 1997, a copy of which is attached
hereto as Exhibit J, and shall include any supplement to the Guaranty Agreement
executed in accordance with Section 7.7(g) hereof, as the same may be modified,
amended or supplemented from time to time.
"Subsidiary Security Agreement" shall mean that certain Subsidiary
Security Agreement executed by and among Microcircuits, each Material
Subsidiary and the Agent dated March 31, 1997, as amended by that certain First
Amendment to Subsidiary Security Agreement dated as of December 5, 1997, copies
of which are attached hereto as Exhibit K, and shall include any supplement
thereto executed in accordance with Section 7.7(g) hereof, as the same may be
supplemented, modified or amended from time to time.
"Super-Majority Lenders" shall mean Lenders (whose voting rights hereunder
have not been restricted pursuant to Section 2.2(e) hereof) the total of whose
Commitment Ratios equals or exceeds eighty-seven percent (87%) of the
Commitment Ratios of all Lenders entitled to vote hereunder.
"Swing Bank" shall mean Citicorp USA, Inc., a Delaware corporation, or any
other Lender who shall agree with the Agent to act as Swing Bank.
"Swing Loans" shall mean any Loans made to the Borrower by the Swing Bank
from time to time, in accordance with Section 2.2(f) hereof.
"Trademark" shall have the meaning ascribed to that term in the definition
of Trademark Property.
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"Trademark Property" shall mean, with respect to any Person:
(a) all of such Person's trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, certification marks, collective marks, logos, trade dress
other source of business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of a
like nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the world or
hereafter adopted or acquired, whether currently in use or not, whether or
not registered, all registrations and recordings thereof and all
applications in connection therewith, whether pending or in preparation for
filing, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any office or agency of the United
States of America or any State thereof or any foreign country, including,
with respect to the Borrower, those referred to in Part B-1 of Schedule
4.1(o);
(b) all reissues, extensions, renewals, translations, adaptations,
derivations and combinations of any of the items described in clause (a) of
this definition;
(c) all Trademark licenses and other agreements providing such Person
with the right to use any of the types of items referred to in clauses (a)
and (b) of this definition, including, with respect to the Borrower, each
Trademark license referred to in Part B-2 of Schedule 4.1(o);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clauses (a) and (b) of this
definition;
(e) the right to ▇▇▇ third parties for past, present and future
infringements of any Trademark property described in clauses (a) or (b) of
this definition and, to the extent applicable in clause (c) of this
definition; and
(f) all proceeds of, and rights associated with, the foregoing,
including any claim by such Person against third parties for past, present
or future infringement or dilution of any Trademark, Trademark registration
or (to the extent applicable and if permitted by Applicable Law) Trademark
license, referred to in clause (c) of this definition, or for any injury to
the goodwill associated with the use of any such Trademark or for breach or
enforcement of any
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Trademark license, and all rights corresponding thereto throughout the
world.
"Tuning Patent Royalties" shall mean all amounts to be paid by any licensee
to the Borrower in connection with the license of any Tuning Patent under any
License Agreement.
"Tuning Patents" shall mean, collectively, U.S. Patent No. 4,002,986, U.S.
Patent No. 4,317,227, U.S. Patent No. 4,516,170, and U.S. Patent No. 4,598,425,
together with all applications, reissues, divisions, continuations,
continuations-in-part, revisions, extensions, renewals and reexaminations
relating thereto; and "Tuning Patent" shall mean any of the foregoing.
"Uniform Customs" shall mean 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.
"Value" shall mean, at any particular date: (a) the lower of the fair
market value of the Eligible Inventory and its cost, valued in accordance with
the "First-In, First-Out" method of accounting, minus (b) an amount which is
equal to the amount of reserves which, under FASB No. 48, "Revenue recognition
when the right of return exists," the Borrower shall be required to take in
regard to the amount identified in subparagraph (a) hereof.
"Voting Stock" shall mean the Capital Stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even if the right so
to vote has been suspended by the happening of such a contingency.
"Warranty/Advertising Reserve" shall mean the amount of reserves which the
Agent shall have established, in its reasonable discretion, in connection with
the Borrower's warranty expenses and cooperative advertising.
"Wholly-Owned Subsidiary" shall mean any direct or indirect Subsidiary of a
Person where such Person's ownership of such Subsidiary is through ownership of
100% of all issued and
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outstanding Capital Stock (or other ownership interests, but excluding any
directors qualifying shares) and warrants, options or rights to purchase Capital
Stock (or other ownership interests) at all levels.
"Woodridge Property" shall mean that certain real property owned by the
Borrower consisting of approximately 69.94 acres of undeveloped industrial
property located in the Village of Woodridge, Will County, Illinois.
Each definition of a Loan Document in this Article 1 shall include such
instrument or agreement as modified, amended, or supplemented from time to time
with, if required, the prior written consent of the Majority Lenders, except as
provided in Section 10.12 hereof, and except where the context otherwise
requires, definitions imparting the singular shall include the plural and vice
versa. Except where otherwise specifically restricted, reference to a party to
a Loan Document includes that party and its successors and assigns. An Event
of Default shall "exist", "continue" or be "continuing" until such Event of
Default has been waived in writing in accordance with Section 10.12 hereof.
All terms used herein which are defined in Article 9 of the Uniform Commercial
Code in effect in the State of New York on the date hereof and which are not
otherwise defined herein shall have the same meanings herein as set forth
therein. All accounting terms used herein without definition shall be used as
defined under GAAP. All financial calculations hereunder shall, unless
otherwise stated, be determined for the Borrower on a consolidated basis with
its Subsidiaries.
ARTICLE 2
THE LOANS AND THE LETTERS OF CREDIT
Section 2.1 Extension of Credit. Subject to the terms and conditions of,
and in reliance upon the representations and warranties made in, this Agreement
and the other Loan Documents, the Lenders have extended and agree, severally in
accordance with their respective Commitment Ratios and not jointly, to extend
credit in an aggregate principal amount not to exceed ONE HUNDRED TWENTY-FIVE
MILLION DOLLARS ($125,000,000) to the Borrower, as hereinafter provided.
(a) The Revolving Loans. The Lenders agree, severally in accordance with
their respective Commitment Ratios relating to the Commitment and not jointly,
upon the terms and subject to the conditions of this Agreement, to lend and
relend to the Borrower, prior to the Maturity Date, amounts which in the
aggregate at any
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one time outstanding do not exceed the lesser of (i) the Borrowing Base and (ii)
the Commitment. Subject to the terms and conditions hereof and prior to the
Maturity Date, Advances under the Commitment may be repaid and reborrowed from
time to time on a revolving basis.
(b) INTENTIONALLY OMITTED
(c) The Letters of Credit. Subject to the terms and conditions hereof
each Issuing Bank agrees, severally in accordance with their respective Letter
of Credit Commitments and not jointly, to issue Letters of Credit for the
account of the Borrower pursuant to Section 2.15 hereof in an aggregate
outstanding face amount (i) for all Issuing Banks, not to exceed the Letter of
Credit Commitment at any time, and (ii) for any individual Issuing Bank, not to
exceed such Issuing Bank's Letter of Credit Commitment.
(d) The Swing Loans. Subject to the terms and conditions hereof, the
Swing Bank, in its sole discretion, may from time to time after the Agreement
Date but prior to the Maturity Date, make Swing Loans to the Borrower in an
aggregate principal amount not to exceed at any time outstanding the least of
(i) the Swing Bank's pro rata share (in accordance with its Commitment Ratio) of
the Available Commitment, (ii) the excess of (x) the Swing Bank's pro rata share
(in accordance with its Commitment Ratio) of the Commitment over (y) the sum of
the aggregate outstanding principal amount of Swing Loans and Revolving Loans
made by it and the Swing Bank's pro rata share (in accordance with its
Commitment Ratio) of the outstanding Letter of Credit Obligations, and (iii)
$11,000,000.
(e) Overadvances; Borrowing Base Deficiencies. If at any time the
Aggregate Credit Obligations exceed the Borrowing Base, the Commitment or any
other applicable limitation set forth in this Agreement, such Aggregate Credit
Obligations shall nevertheless constitute Obligations that are secured by the
Collateral and are entitled to all benefits thereof. In no event, however,
shall the Borrower have the right whatsoever to (i) receive any Revolving Loan,
(ii) receive any Swing Loan, or (iii) request the issuance of any Letter of
Credit if, before or after giving effect thereto, there shall exist a Default or
a Borrowing Base Deficiency. In the event that (1) the Lenders, in their sole
and absolute discretion, shall make any Revolving Loans, or (2) any Issuing Bank
shall, in its sole and absolute discretion (subject to the terms and conditions
set forth in this Agreement), agree to the issuance of any Letter of Credit, or
(3) the Swing Bank, in its sole and absolute discretion (subject to the terms
and conditions set forth in this Agreement), shall make any Swing Loan, which in
any such case gives rise to a
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Borrowing Base Deficiency, the Borrower shall make, on demand, a payment on
the Obligations to be applied to the Revolving Loans, the Swing Loans and the
Letter of Credit Reserve Account, as appropriate, in an aggregate principal
amount equal to such Borrowing Base Deficiency. Additionally, in no event
shall the Borrower have the right to receive any Advance of a Revolving Loan in
an amount which exceeds the lesser of (i) the Borrowing Base and (ii) the
Available Commitment.
Section 2.2 Manner of Borrowing and Disbursement of Loans.
(a) Choice of Interest Rate, etc. Any Advance shall, at the option of the
Borrower, be made either as a Base Rate Advance or as a Eurodollar Advance
(except any initial Advance made on the Agreement Date or on the first two (2)
Business Days after the Agreement Date shall be made as Base Rate Advance);
provided, however, that (i) if the Borrower fails to give the Agent written
notice specifying whether an Advance is to be repaid or reborrowed on a Payment
Date, such Advance shall be repaid and then reborrowed as a Base Rate Advance
on the Payment Date, and (ii) the Borrower may not select a Eurodollar Advance
(A) with respect to the Swing Loans, (B) with respect to an Advance, the
proceeds of which are to reimburse an Issuing Bank pursuant to Section 2.15
hereof, or (C) if, at the time of such Advance, a Default or an Event of
Default has occurred and is continuing. Any notice given to the Agent in
connection with a requested Advance hereunder shall be given to the Agent prior
to 11:00 a.m. (New York time) in order for such Business Day to count toward
the minimum number of Business Days required. The Agent shall, upon reasonable
request of the Borrower from time to time, provide to the Borrower such
information with regard to the Eurodollar Rate Basis as may be so requested.
(b) Base Rate Advances.
(i) Initial and Subsequent Advances. The Borrower shall give the
Agent in the case of Base Rate Advances not later than 11:00 a.m.
(New York time) on the Business Day of a proposed Advance, irrevocable
prior notice by telephone or telecopy and shall confirm any such telephone
notice with a written Request for Advance; provided, however, that the
failure by the Borrower to confirm any notice by telephone or telecopy
with a Request for Advance shall not invalidate any notice so given.
(ii) Repayments and Reborrowings. The Borrower may repay or prepay a
Base Rate Advance and (a) at any time reborrow all or a portion of the
principal amount thereof as
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one or more Base Rate Advances, (b) upon at least two (2) Business Days'
irrevocable prior written notice to the Agent, reborrow all or a portion
of the principal thereof as one or more Eurodollar Advances, or (c) not
reborrow all or any portion of such Base Rate Advance. Upon the date
indicated by the Borrower, such Base Rate Advance shall be so repaid and,
as applicable, reborrowed.
(iii) Miscellaneous. Notwithstanding any other provision of this
Agreement which may be construed to the contrary, each Base Rate Advance
shall be in a principal amount of no less than $1,000,000 and in an
integral multiple of $100,000 in excess thereof; provided, however, each
Base Rate Advance that is a Swing Loan shall be in a principal amount of
not less than $100,000 unless a lower amount is permitted by the Swing
Bank in its sole discretion from time to time.
(c) Eurodollar Advances.
(i) Initial and Subsequent Advances. The Borrower shall give the
Agent in the case of Eurodollar Advances at least two (2) Business Days'
irrevocable prior notice by telephone or telecopy and shall immediately
confirm any such telephone notice with a written Request for Advance;
provided, however, that the failure by the Borrower to confirm any notice
by telephone or telecopy with a Request for Advance shall not invalidate
any notice so given. The Agent, whose determination shall be conclusive,
shall determine the available Eurodollar Bases as of the second (2nd)
Business Day prior to the date of the requested Advance and shall promptly
notify the Borrower of the same and the Borrower shall promptly confirm in
writing receipt of such notification. The Eurodollar Advance Period for
each Eurodollar Advance shall in all events be either one, two, three or
six months. Failure by the Borrower to confirm any telephonic notice in
writing shall not invalidate any notice so given. Upon receipt of such
notice from the Borrower, the Agent shall promptly notify each Lender by
telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. At least two (2) Business Days
prior to each Payment Date for a Eurodollar Advance, the Borrower shall
give the Agent written notice specifying whether all or a portion of any
Eurodollar Advance outstanding on the Payment Date (a) is to be repaid and
then reborrowed in whole or in part as a new Eurodollar Advance, in which
case such notice shall also specify the Eurodollar Advance Period which
the Borrower shall have
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selected for such new Eurodollar Advance, (b) is to be repaid and then
reborrowed in whole or in part as a Base Rate Advance, or (c) is to be
repaid and not reborrowed. Upon such Payment Date such Eurodollar Advance
will, subject to the provisions hereof, be so repaid and, as applicable,
reborrowed.
(iii) Miscellaneous. Notwithstanding any term or provision of this
Agreement which may be construed to the contrary, each Eurodollar Advance
shall be in a principal amount of no less than $5,000,000 and in an
integral multiple of $1,000,000 in excess thereof, and at no time shall
the aggregate number of all Eurodollar Advances then outstanding exceed
four (4).
(d) Notification of Lenders. Upon receipt of a (i) Request for Advance or
a telephone or telecopy request for Advance, (ii) notification from an Issuing
Bank that a draw has been made under any Letter of Credit, or (iii) notice from
the Borrower with respect to any outstanding Advance prior to the Payment Date
for such Advance, the Agent shall promptly notify each Lender by telephone or
telecopy of the contents thereof and the amount of each Lender's portion of any
such Advance. Each Lender shall, not later than 2:00 p.m. (New York time) on
the date specified for such Advance in such notice, make available to the Agent
at the Agent's office, or at such account as the Agent shall designate, the
amount of such Lender's portion of the Advance in immediately available funds.
(e) Disbursement. Prior to 3:00 p.m. (New York time) on the date of an
Advance hereunder, the Agent shall, subject to the satisfaction of the
conditions set forth in Article 3 hereof, disburse the amounts made available
to the Agent by the Lenders in like funds by transferring the amounts so made
available by deposit into the Borrower's account maintained with Citibank or by
wire transfer pursuant to the Borrower's instructions. Unless the Agent shall
have received notice from a Lender prior to 12:30 p.m. (New York time) on the
date of any Advance that such Lender will not make available to the Agent such
Lender's ratable portion of such Advance, the Agent may assume that such Lender
has made or will make such portion available to the Agent on the date of such
Advance and the Agent may, in its sole discretion and in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent such Lender shall not have so made such ratable portion
available to the Agent, such Lender agrees to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to
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the Agent, (x) for the first two Business Days, at the rate on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day by the Federal Reserve Bank
of New York, and (y) thereafter, at the Base Rate. If such Lender shall repay
to the Agent such corresponding amount, such amount so repaid shall constitute
such Lender's portion of the applicable Advance for purposes of this Agreement
and if both such Lender and the Borrower shall pay and repay such corresponding
amount, the Agent shall promptly relend to the Borrower such corresponding
amount. If such Lender does not repay such corresponding amount immediately
upon the Agent's demand therefor, the Agent shall notify the Borrower and the
Borrower shall immediately pay such corresponding amount to the Agent. The
failure of any Lender to fund its portion of any Advance shall not relieve any
other Lender of its obligation, if any, hereunder to fund its respective
portion of the Advance on the date of such borrowing, but no Lender shall be
responsible for any such failure of any other Lender. In the event that a
Lender for any reason fails or refuses to fund its portion of an Advance in
violation of this Agreement, then, until such time as such Lender has funded
its portion of such Advance, or all other Lenders have received payment in full
(whether by repayment or prepayment) of the principal and interest due in
respect of such Advance, such non-funding Lender shall (i) have no right to
vote regarding any issue on which voting is required or advisable under this
Agreement or any other Loan Document, and (ii) shall not be entitled to receive
any payments of principal, interest or fees from the Agent (or the other
Lenders) in respect of its Loans.
(f) Special Provisions Pertaining to Swing Loans.
(i) The Borrower shall give the Agent written notice in the form of a
Request for Advance, or notice by telephone or telecopy no later than
11:00 a.m. (New York time) on the date on which the Borrower wishes
to receive an Advance of any Swing Loan followed immediately by a Request
for Advance; provided, however, that the failure by the Borrower to
confirm any notice by telephone or telecopy with a Request for Advance
shall not invalidate any notice so given. If the Swing Bank, in its sole
discretion, elects to make the requested Swing Loan, the Advance shall be
made on the date specified in the notice or the Request for Advance and
such notice or Request for Advance shall specify (i) the amount of the
requested Advance, and (ii) instructions for the disbursement of the
proceeds of the requested Advance. The Swing Bank shall have no duty or
obligation to make any Swing Loans hereunder and the Swing Bank shall not
make any Swing Loans unless, on the date of the requested Advance
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thereof, the Borrower satisfies each of the conditions precedent to an
Advance set forth in Section 3.2 hereof. In the event the Swing Bank in
its sole and absolute discretion elects to make any requested Swing Loan,
the Swing Bank shall make the proceeds of such Swing Loan available to the
Borrower by deposit of U.S. dollars in same day funds by wire transfer in
accordance with the applicable notice or Request for Advance.
(ii) The Agent shall notify each Lender no less frequently than weekly,
as determined by the Agent, of the principal amount of Swing Loans
outstanding as of 3:00 p.m. (New York City time) as of such date and each
Lender's pro rata share thereof. Each Lender shall before 2:00 p.m. (New
York City time) on the next Business Day (the "Settlement Date") make
available to the Agent, in immediate available funds, the amount of its
pro rata share of such principal amount of Swing Loans outstanding. Upon
such payment by a Lender, such Lender shall be deemed to have made a
Revolving Loan to the Borrower, notwithstanding any failure of the
Borrower to satisfy the conditions in Section 3.2. The Agent shall use
such funds to repay the principal amount of Swing Loans to the Swing Bank.
All interest due on the Swing Loans prior to the Settlement Date shall be
payable to the Swing Bank. Additionally, If at any time any Swing Loans
are outstanding, any of the events described in clauses (g) or (h) of
Section 8.1 hereof shall have occurred, then each Lender shall
automatically upon the occurrence of such event and without any action on
the part of the Swing Bank, the Borrower, the Agent or the Lenders be
deemed to have purchased an undivided participation in the principal and
interest of all Swing Loans then outstanding in an amount equal to such
Lender's Commitment Ratio and each Lender shall, notwithstanding such
Event of Default, immediately pay to the Agent for the account of the
Swing Bank in immediately available funds, the amount of such Lender's
participation (and upon receipt thereof, the Swing Bank shall deliver to
such Lender a loan participation certificate dated the date of receipt of
such funds in such amount). The disbursement of funds in connection with
the settlement of Swing Loans hereunder shall be subject to the terms and
conditions of Section 2.2(e) hereof.
Section 2.3 Interest.
(a) On Loans. Interest on the Loans, subject to Section 2.3(b) hereof,
shall be payable as follows:
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(i) On Base Rate Advances. Interest on each Base Rate Advance shall
be computed for the actual number of days elapsed on the basis of a
hypothetical year of 360 days and shall be payable monthly in arrears on
the first day of each calendar month, commencing on July 1, 1998.
Interest on Base Rate Advances then outstanding shall also be due and
payable on the Maturity Date. Interest shall accrue and be payable on
each Base Rate Advance made with respect to the Revolving Loans at the
simple per annum interest rate equal to the sum of (A) the Base Rate, and
(B) the applicable Interest Rate Margin in effect for Base Rate Advances.
(ii) On Eurodollar Advances. Interest on each Eurodollar Advance
shall be computed on the basis of a hypothetical 360-day year for the
actual number of days elapsed and shall be payable in arrears on (x) the
Payment Date for such Advance, and (y) if the Eurodollar Advance Period
for such Advance is greater than three (3) months, on each three month
anniversary of such Advance. Interest on Eurodollar Advances then
outstanding shall also be due and payable on the Maturity Date. Interest
shall accrue and be payable on each Eurodollar Advance made with respect
to the Revolving Loans at a rate per annum equal to the sum of (A) the
Eurodollar Basis applicable to such Eurodollar Advance, and (B) the
applicable Interest Rate Margin in effect for Eurodollar Advances.
(b) Upon Default. Upon the occurrence of an Event of Default and at the
election of the Majority Lenders, interest on the outstanding Obligations shall
accrue at the Default Rate from the date of such Event of Default. Interest
accruing at the Default Rate shall be payable on demand and in any event on the
Maturity Date and shall accrue until the earliest to occur of (i) waiver of the
applicable Event of Default in accordance with Section 10.12 hereof, (ii)
agreement by the Majority Lenders to rescind the charging of interest at the
Default Rate, or (iii) payment in full of the Obligations. The Lenders shall
not be required to (i) accelerate the maturity of the Loans, (ii) terminate the
Commitment, or (iii) exercise any other rights or remedies under the Loan
Documents in order to charge interest hereunder at the Default Rate.
(c) Computation of Interest. In computing interest on any Advance, the
date of making the Advance shall be included and the date of payment shall
be excluded; provided, however, that if an Advance is repaid on the date that
it is made, one (1) day's interest shall be due with respect to such Advance.
Section 2.4 Fees.
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(a) Fee Letter. The Borrower agrees to pay to the Agent, for its benefit
and the benefit of the Lenders, such fees as are set forth in the Fee Letter.
(b) Unused Line Fee. The Borrower agrees to pay to the Lenders, in
accordance with the Lenders' Commitment Ratios, an unused line fee on the
Available Commitment for each day from the Agreement Date through the Maturity
Date (or the date of any earlier prepayment in full of the Obligations), at a
rate of one-half of one percent (.50%) per annum. Such unused line fee shall
be computed on the basis of a hypothetical year of 360 days for the actual
number of days elapsed, shall be payable quarterly in arrears for each quarter
on the first day of the immediately succeeding calendar quarter, commencing on
July 1, 1998, and if then unpaid, on the Maturity Date (or the date of any
earlier prepayment in full of the Obligations), and shall be fully earned when
due and non-refundable when paid.
(c) Letter of Credit Fees.
(i) The Borrower shall pay to the Lenders, in accordance with the
Lenders' respective Commitment Ratios, a fee on the stated amount of any
outstanding Letters of Credit for each day from the Date of Issue through
the Maturity Date (or the date of any earlier prepayment in full of the
Obligations) at a rate of three percent (3.0%) per annum on the amount of
the Letter of Credit Obligations. Such Letter of Credit fee shall be
computed on the basis of a hypothetical year of 360 days for the actual
number of days elapsed, shall be payable monthly in arrears for each month
on the first day of the succeeding calendar month, commencing on July 1,
1998, and if then unpaid, on the Maturity Date (or the date of any earlier
prepayment in full of the Obligations), and shall be fully earned when due
and non-refundable when paid.
(ii) The Borrower shall also pay to each Issuing Bank, (A) a fee on the
stated amount of each Letter of Credit issued by such Issuing Bank for
each day from the Date of Issue through the expiration date of each
such Letter of Credit (or any earlier prepayment in full of the
Obligations) at a rate of one-quarter of one percent (.25%) per annum,
which fee shall be computed on the basis of a hypothetical year of 360
days for the actual number of days elapsed, shall be payable monthly in
arrears for each month on the first day of the next succeeding month,
commencing on July 1, 1998, and, if unpaid on the Maturity Date (or any
earlier prepayment in full of the Obligations), and (B) a
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fee in the amount of $125.00 for issuing, amending and renewing any Letter
of Credit, which fee shall be due and payable on the date of each
issuance, amendment or renewal of any Letter of Credit. Each of the
foregoing fees shall be fully earned when due, and non-refundable when
paid.
Section 2.5 Prepayment/Reduction of Commitment.
(a) The principal amount of any Base Rate Advance may be prepaid in full
or in part at any time upon written notice to the Agent not later than 11:00
a.m. (New York time) on the Business Day of such prepayment, without penalty;
and the principal amount of any Eurodollar Advance may be prepaid prior to the
applicable Payment Date, upon two (2) Business Days' prior written notice to
the Agent, provided that the Borrower shall reimburse the Lenders and the
Agent, on the earlier of demand or the Maturity Date, for any loss or
out-of-pocket expense incurred by the Lenders or the Agent in connection with
such prepayment, as set forth in Section 2.9 hereof. Each notice of prepayment
shall be irrevocable. Upon receipt of any notice of prepayment, the Agent
shall promptly notify each Lender of the contents thereof by telephone or
telecopy and of such Lender's portion of the prepayment. Notwithstanding the
foregoing, the Borrower shall not make any prepayment of the Revolving Loans
unless and until the balance of the Swing Loans then outstanding is zero. Other
than with respect to the Swing Loans and amounts required to be applied to the
Loans pursuant to Section 5.15 hereof, prepayments of principal hereunder (a)
with respect to Base Rate Advances, shall be in minimum amounts of $1,000,000
and integral multiples of $100,000 in excess thereof, and (b) with respect to
Eurodollar Rate Advances shall be in minimum amounts of $5,000,000 and integral
multiples of $1,000,000 in excess thereof.
(b) The Borrower shall have the right, at any time and from time to time
after the Agreement Date and prior to the Maturity Date, upon at least three
(3) Business Days' prior written notice to the Agent, without premium or
penalty, to cancel or reduce permanently all or a portion of the Commitment on
a pro rata basis among the Lenders in accordance with the Commitment Ratios,
provided that any such partial reduction shall be made in an amount not less
than $5,000,000 and in integral multiples of $1,000,000 in excess thereof. As
of the date of cancellation or reduction set forth in such notice, the
Commitment shall be permanently reduced to the amount stated in the Borrower's
notice for all purposes herein, and the Borrower shall pay to the Agent for the
account of the Lenders the amount necessary to reduce the principal amount of
the Revolving Loans then outstanding to not more than the amount of the
Commitment as so reduced, together with accrued interest on the amount so
prepaid and the unused
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line fee set forth in Section 2.4(b) accrued through the date of the reduction
with respect to the amount reduced, and shall reimburse the Agent and the
Lenders for any loss or out-of-pocket expense incurred by any of them in
connection with such payment as set forth in Section 2.9.
Section 2.6 Repayment.
(a) The Revolving Loans. The principal balance of all Revolving Loans then
outstanding shall be due and payable in full on the Maturity Date and as may be
required by Section 2.6(c) hereof. Notwithstanding the foregoing, however, in
the event that at any time and for any reason there shall exist a Borrowing
Base Deficiency, the Borrower shall immediately pay to the Agent an amount
equal to the Borrowing Base Deficiency, which payment shall constitute a
mandatory payment of the Revolving Loans hereunder.
(b) INTENTIONALLY OMITTED
(c) Other Mandatory Repayments.
(i) In the event that after the Agreement Date, the Borrower shall
issue any Capital Stock (other than in connection with the exercise
of employee or LGE stock options), shall sell any of its assets (other
than sales of Inventory in the ordinary course of its business and other
than the sales of the Woodridge Property and the Glenview Property to the
extent, but only to the extent, the Borrower is permitted to retain the
Net Cash Proceeds from such sales pursuant to Section 7.7(b)) or shall
incur any Funded Debt(other than the Obligations, the LGE Obligations and
the Additional Unsecured Debt), one hundred percent (100%) of the Net Cash
Proceeds received by the Borrower from such issuance, sale or incurrence
shall be paid on the date of receipt of the proceeds thereof by the
Borrower to the Lenders as a mandatory payment of the Revolving Loans.
The Commitment shall be permanently reduced by the amount of the payment
of the Revolving Loans due hereunder (except for any payment in connection
with the sale of the Woodridge Property or the Glenview Property, as more
fully set forth in Section 7.7(b)), whether or not such payment is made.
Nothing in this Section shall authorize the Borrower to issue any Capital
Stock, sell any assets or incur any Funded Debt except as expressly
permitted by this Agreement.
(ii) INTENTIONALLY OMITTED.
(iii) INTENTIONALLY OMITTED.
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Section 2.7 Notes; Loan Accounts.
(a) The Loans shall be repayable in accordance with the terms and
provisions set forth herein, and shall be evidenced by the Notes. One
each of the Notes shall be payable to the order of each Lender in accordance
with the respective Commitment Ratio of such Lender. The Notes shall be issued
by the Borrower to the Lenders and shall be duly executed and delivered by
Authorized Signatories. The Notes amend, renew, extend, replace, are
substituted for and supersede in their entirety, but do not extinguish, the Old
Notes issued to the Lenders. Contemporaneously with the execution of this
Agreement, such Old Notes will be marked "AMENDED, RENEWED, RESTATED, EXTENDED,
REPLACED AND SUPERSEDED" and shall be held by the Agent solely for collateral
realization purposes and in no event shall such Old Notes be subject to
collection by the Agent or by any other Person.
(b) The Agent may open and maintain on its books in the name of the
Borrower a loan account with respect to the Loans and interest thereon (the
"Loan Account"). The Agent shall debit such Loan Account for the principal
amount of each Advance made by it on behalf of the Lenders, accrued interest
thereon, and all other amounts which shall become due from the Borrower
pursuant to this Agreement and shall credit Loan Account for each payment which
the Borrower shall make in respect to the Obligations. The records of the
Agent with respect to such Loan Account shall be conclusive evidence of the
Loans and accrued interest thereon, absent manifest error.
Section 2.8 Manner of Payment.
(a) When Payments Due.
(i) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loans, fees, and any other
amount owed to the Lenders or the Agent under this Agreement, the Notes,
or the other Loan Documents shall be made not later than 12:00 noon (New
York time) on the date specified for payment under this Agreement or any
other Loan Document to the Agent at the Agent's Office, for the account of
the Lenders or the Agent, as the case may be, in lawful money of the
United States of America in immediately available funds. Any payment
received by the Agent after 12:00 noon (New York time) shall be deemed
received on the next Business Day. In the case of a payment for the
account of a Lender, the Agent will promptly thereafter distribute the
amount so received in like funds
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to such Lender. If the Agent shall not have received any payment from
the Borrower as and when due, the Agent will promptly notify the Lenders
accordingly.
(ii) If any payment under this Agreement or any of the Notes shall be
specified to be made upon a day which is not a Business Day, it shall be
made on the next succeeding day which is a Business Day, and such
extension of time shall in such case be included in computing interest and
fees, if any, in connection with such payment.
(b) No Deduction.
(i) The Borrower agrees to pay principal, interest, fees, and all
other amounts due hereunder or under the Notes without set-off or
counterclaim or any deduction whatsoever. If the Borrower shall hereafter
be required by law to deduct any taxes from or in respect of any sum
payable hereunder or under any Note to any Lender, any Issuing Bank or the
Agent, (A) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.8(b)), such Lender, Issuing
Bank or the Agent (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (B) the Borrower
shall make such deductions and (C) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with Applicable Law.
(ii) Each Lender agrees to deliver to the Borrower and the Agent from
time to time, a true and correct certificate executed in duplicate by a
duly authorized officer of such Lender before or promptly upon the
occurrence of any event requiring a change in the most recent certificate
previously delivered by it to the Borrower and the Agent pursuant to this
Section 2.8(b). The execution and delivery hereof by a Lender shall be
deemed to be a certification that such Lender falls within subsection (A)
below, and no further certificates need to be delivered by such Lender
until the occurrence of one of the events set forth in the preceding
sentence. Each certificate required to be delivered pursuant to this
Section 2.8(b) shall certify as to one of the following:
(A) that such Lender shall continue to receive payments
hereunder without deduction or withholding of United States federal
income tax;
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(B) that such Lender cannot continue to receive payments
hereunder without deduction or withholding of United States federal
income tax as specified therein but does not require additional
payments because it is entitled to recover the full amount of any such
deduction or withholding from a source other than the Borrower or from
a tax credit or exemption; or
(C) that such Lender is no longer capable of receiving
payments hereunder without deduction or withholding of United
States federal income tax as specified therein by reason of a change
in law (including the Code or applicable tax treaty) after the later
of the Agreement Date or the date on which a Lender became a Lender
pursuant to Section 10.5 hereof and that it is not capable of
recovering the full amount of the same from a source other than the
Borrower or from a tax credit or exemption.
(c) Inadequate Payments. If on the date on which any amount shall be due
and payable by the Borrower in regard to the Obligations, the amount
received by the Agent from the Borrower or withdrawn by the Agent from the
Clearing Account pursuant to Section 5.15(c) hereof shall not be adequate to
pay the amount which shall be so due and payable, then the Agent shall be
authorized, but shall not be obligated, to make a Base Rate Advance on behalf
of the Lenders to the Borrower by crediting the amount of such Base Rate
Advance to the Loan Account hereof pursuant to the provisions of Section 2.7(b)
hereof, whereupon the Agent shall debit the Loan Account hereof in a like
amount in payment of the part of the Obligations which shall then be due and
payable. No further authorization, direction or approval by the Borrower shall
be required to be given by the Borrower for the Agent to take the action
described in this Section 2.8(c).
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur any
losses or out-of-pocket expenses in connection with (i) failure by the Borrower
to borrow or reborrow any Eurodollar Advance, or reborrow any Advance as a
Eurodollar Advance, in each case, after having given notice of its intention to
borrow in accordance with Section 2.2 hereof (whether by reason of the election
of the Borrower not to proceed or the non-fulfillment of any of the conditions
set forth in Article 3), or (ii) prepayment of any Eurodollar Advance in whole
or in part, the Borrower agrees to pay to such Lender, upon the earlier of such
Lender's demand or the Maturity Date, an amount sufficient to compensate such
Lender for all such losses and-out-of-pocket expenses. Such Lender's good
faith determination of the amount
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of such losses and out-of-pocket expenses, absent manifest error, shall be
binding and conclusive. Losses subject to reimbursement hereunder shall
include, without limiting the generality of the foregoing, expenses incurred by
any Lender or any participant of such Lender permitted hereunder in connection
with the re-employment of funds prepaid, repaid, not borrowed, or paid, as the
case may be, and any lost profit of such Lender or any participant of such
Lender over the remainder of the Eurodollar Advance Period for such prepaid
Advance.
Section 2.10 Pro Rata Treatment.
(a) Advances. Each Advance with respect to the Revolving Loans from the
Lenders under this Agreement shall be made pro rata on the basis of their
respective Commitment Ratios.
(b) Payments. Each payment and prepayment of the principal of the
Revolving Loans and each payment of interest on the Revolving Loans
received from the Borrower shall be made by the Agent to the Lenders pro rata
on the basis of their respective unpaid principal amounts outstanding
immediately prior to such payment or prepayment (except in cases when a
Lender's right to receive payments is restricted pursuant to Section 2.2(e)
hereof). If any Lender shall obtain any payment (whether involuntary, through
the exercise of any right of set-off, or otherwise) on account of the Revolving
Loans in excess of its ratable share of the Loans under its Commitment Ratio
(or in violation of any restriction set forth in Section 2.2(e) hereof), such
Lender shall forthwith purchase from the other Lenders such participation in
the Loans made by them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery without interest thereon unless the Lender obligated to repay
such amount is required to pay interest. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section
2.10(b) may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.
Section 2.11 Application of Payments.
(a) Payments Prior to Acceleration. Prior to the acceleration of the
Obligations under Section 8.2 hereof, and
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other than with respect to payments required to be made pursuant to Section
2.6(c) hereof (which shall be applied as set forth in Section 2.6(c) hereof),
if some but less than all amounts due from the Borrower are received by the
Agent, the Agent shall distribute such amounts in the following order of
priority: FIRST, to the payment of interest then due and payable on the Swing
Loans and the Revolving Loans; SECOND, to the payment of principal then due and
payable on the Swing Loans, THIRD, to the payment of principal then due and
payable on the Revolving Loans; FOURTH, to the payment of any fees then due and
payable to the Agent hereunder or under any other Loan Document; FIFTH, to the
payment of any fees then due and payable to the Lenders and the Issuing Banks
hereunder or under any other Loan Documents; SIXTH, to the extent of any Letter
of Credit Obligations then outstanding, to the Letter of Credit Reserve
Account; SEVENTH, to the payment of all other Obligations not otherwise
referred to in this Section 2.11(a) then due and payable hereunder or under the
other Loan Documents; and EIGHTH, to the costs and expenses (including
attorneys' fees and expenses), if any, incurred by the Agent in the collection
of such amounts under this Agreement or any of the other Loan Documents.
(b) Payments Subsequent to Acceleration. Subsequent to the acceleration of
the Obligations under Section 8.2 hereof, payments and prepayments with respect
to the Obligations made to the Agent, the Lenders, the Issuing Banks or
otherwise received by the Agent, any Lender, any Issuing Bank (from realization
on Collateral or otherwise) shall be distributed in the following order of
priority (subject, as applicable, to Section 2.10 hereof): FIRST, to the costs
and expenses (including attorneys' fees and expenses), if any, incurred by the
Agent, any Lender, any Issuing Bank in the collection of such amounts under
this Agreement or of the Loan Documents, including, without limitation, any
costs incurred in connection with the sale or disposition of any Collateral;
SECOND, to the payment of interest then due and payable on the Swing Loans;
THIRD, to the payment of the principal of any Swing Loans then outstanding;
FOURTH, to any fees then due and payable to the Agent under this Agreement or
any other Loan Document; FIFTH, to any fees then due and payable to the Lenders
and the Issuing Banks under this Agreement or any other Loan Document; SIXTH,
to the payment of interest then due and payable on the Revolving Loans;
SEVENTH, to the payment of principal of the Revolving Loans then outstanding;
EIGHTH, to the extent of any Letter of Credit Obligations then outstanding, to
the Letter of Credit Reserve Account; NINTH, to the payment of any obligation
under any Interest Hedge Agreement and any Foreign Exchange Agreement between
the Borrower, on the one hand, and the Agent (or an affiliate of the Agent) or
one or more Lenders (or an affiliate of a Lender), on the other hand; TENTH, to
any other
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Obligations not otherwise referred to in this Section 2.11(b); ELEVENTH, to
damages incurred by the Agent or any Lender by reason of any breach hereof or
of any other Loan Document; and TWELFTH, upon satisfaction in full of all
Obligations to the Borrower or as otherwise required by the Subordination
Agreement or law.
Section 2.12 Use of Proceeds. The proceeds of the Loan shall be used by the
Borrower as follows:
(a) The proceeds of the initial Advance of Revolving Loans hereunder shall
be used on the Agreement Date to refinance existing Indebtedness under the
Original Credit Agreement and the Receivable Securitization and to fund
transaction costs, and for other general corporate purposes.
(b) The balance of the proceeds of the Loans shall be used to fund capital
expenditures and for the Borrower's general operating capital needs and other
general corporate purposes to the extent not inconsistent with the provisions
of this Agreement.
Section 2.13 All Obligations to Constitute One Obligation. All Obligations
shall constitute one general obligation of the Borrower and shall be secured by
the Agent's security interest (on behalf of the Lenders and the Issuing Banks)
and Lien upon all of the Collateral, and by all other security interests and
Liens heretofore, now or at any time hereafter granted by the Borrower to the
Agent and the Lenders, to the extent provided in the Security Documents under
which such Lien arises.
Section 2.14 Maximum Rate of Interest. In no contingency or event
whatsoever shall the aggregate of all amounts deemed interest on the Loans
and charged or collected pursuant to the terms of this Agreement or pursuant to
the Notes exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable
thereto. In the event that such a court determines that the Lenders have
charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the
maximum rate permitted by Applicable Law and the Lenders shall promptly refund
to the Borrower any interest received by them in excess of the maximum lawful
rate or, if so requested by the Borrower, shall apply such excess to the
principal balance of the Obligations. It is the intent hereof that the
Borrower not pay or contract to pay, and that the Lenders not receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by the Borrower under Applicable Law.
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Section 2.15 Letters of Credit.
(a) Subject to the terms and conditions hereof, each Issuing Bank, on
behalf of the Lenders, and in reliance on the agreements of the Lenders set
forth in subsection (c) below, hereby agrees to issue one or more Letters of
Credit up to an aggregate face amount equal to such Issuing Bank's pro rata
share of the Letter of Credit Commitment; provided, however, that the Issuing
Banks shall not issue any Letter of Credit unless the conditions precedent to
the issuance thereof set forth in Section 3.3 hereof have been satisfied, and
shall not issue any Letter of Credit if any Default then exists or would be
caused thereby or if, after giving effect to such issuance, the Available
Commitment would be less than zero or there would exist a Borrowing Base
Deficiency; and provided further, however, that at no time shall the total
Letter of Credit Obligations outstanding hereunder exceed the Letter of Credit
Commitment. Each Letter of Credit shall (1) be denominated in U.S. dollars,
and (2) expire no later than the earlier to occur of (A) the Maturity Date, and
(B) 180 days after its date of issuance. Each Letter of Credit shall be
subject to the Uniform Customs and, to the extent not inconsistent therewith,
the laws of the State of New York. The Issuing Banks shall not at any time be
obligated to issue, or cause to be issued, any Letter of Credit if such
issuance would conflict with, or cause such Issuing Bank to exceed any limits
imposed by, any Applicable Law.
(b) The Borrower may from time to time request that an Issuing Bank issue a
Letter of Credit. The Borrower shall execute and deliver to the Agent and
applicable Issuing Bank a Request for Issuance of Letter of Credit for each
Letter of Credit to be issued by such Issuing Bank, not later than 12:00 noon
(New York time) on the fifth (5th) Business Day preceding the date on which the
requested Letter of Credit is to be issued, or such shorter notice as may be
acceptable to the Issuing Bank and the Agent. Upon receipt of any such Request
for Issuance of Letter of Credit, subject to satisfaction of all conditions
precedent thereto as set forth in Section 3.3 hereof, the Issuing Bank shall
process such Request for Issuance of Letter of Credit 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. The Issuing Bank shall furnish a copy
of such Letter of Credit to the Borrower and the Agent following the issuance
thereof. The Borrower shall pay or reimburse the Issuing Bank for normal and
customary costs and expenses incurred by such Issuing Bank in issuing,
effecting payment under, amending or otherwise administering the Letters of
Credit.
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(c) Immediately upon the issuance by an Issuing Bank of a Letter of
Credit and in accordance with the terms and conditions of this Agreement,
such Issuing Bank shall be deemed to have sold and transferred to each Lender,
and each Lender shall be deemed irrevocably and unconditionally to have
purchased and received from such Issuing Bank, without recourse or warranty, an
undivided interest and participation, to the extent of such Lender's Commitment
Ratio, in such Letter of Credit and the obligations of the Borrower with
respect thereto (including, without limitation, all Letter of Credit
Obligations with respect thereto). At such time as the Agent shall be notified
by the Issuing Bank that the beneficiary under any Letter of Credit has drawn
on the same, the Agent shall promptly notify the Borrower and each Lender, by
telephone or telecopy, of the amount of the draw and, in the case of each
Lender, such Lender's portion of such draw amount as calculated in accordance
with its Commitment Ratio.
(d) The Borrower hereby agrees to immediately reimburse an Issuing Bank for
amounts paid by such Issuing Bank in respect of draws under a Letter of Credit.
In order to facilitate such repayment, the Borrower hereby irrevocably
requests the Lenders, and the Lenders hereby severally agree, on the terms and
conditions of this Agreement (other than as provided in Article 2 hereof with
respect to the amounts of, the timing of requests for, and the repayment of
Advances hereunder and in Article 3 hereof with respect to conditions precedent
to Advances hereunder), with respect to any drawing under a Letter of Credit,
to make a Base Rate Advance on each day on which a draw is made under any
Letter of Credit and in the amount of such draw, and to pay the proceeds of
such Advance directly to the Issuing Bank to reimburse the Issuing Bank for the
amount paid by it upon such draw. Each Lender shall pay its share of such Base
Rate Advance by paying its portion of such Advance to the Agent in accordance
with Section 2.2(e) hereof and its Commitment Ratio, without reduction for any
set-off or counterclaim of any nature whatsoever and regardless of whether any
Default or Event of Default then exists or would be caused thereby. The
disbursement of funds in connection with a draw under a Letter of Credit
pursuant to this Section hereunder shall be subject to the terms and conditions
of Section 2.2(e) hereof. The obligation of each Lender to make payments to
the Agent, for the account of the Issuing Bank, in accordance with this Section
2.15 shall be absolute and unconditional and no Lender shall be relieved of its
obligations to make such payments by reason of noncompliance by any other
Person with the terms of the Letter of Credit or for any other reason (other
than the gross negligence of the Issuing Bank in paying such Letter of Credit,
as determined by a final
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non-appealable judgment of a court of competent jurisdiction). The Agent shall
promptly remit to the Issuing Bank the amounts so received from the other
Lenders. Any overdue amounts payable by the Lenders to the Issuing Bank in
respect of a draw under any Letter of Credit shall bear interest, payable on
demand, (x) for the first two Business Days, at the rate on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day by the Federal Reserve Bank of
New York, and (y) thereafter, at the Base Rate.
(e) The Borrower agrees that each Advance by the Lenders to reimburse the
Issuing Bank for draws under any Letter of Credit, shall, for all purposes
hereunder, be deemed to be a Base Rate Advance under the Commitment and shall
be payable and bear interest in accordance with all other Base Rate Advances of
Revolving Loans.
(f) Borrower agrees that any action taken or omitted to be taken by an
Issuing Bank in connection with any Letter of Credit, except for such actions
or omissions as shall constitute gross negligence or willful misconduct on the
part of such Issuing Bank as determined by a final non-appealable judgment of a
court of competent jurisdiction, shall be binding on the Borrower as between
the Borrower and the Issuing Bank, and shall not result in any liability of the
Issuing Bank to the Borrower. The obligation of the Borrower to reimburse an
Issuing Bank for a drawing under any Letter of Credit or the Lenders for
Advances made by them to Issuing Banks on account of draws made under the
Letters of Credit shall be absolute, unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including, without limitation, the following
circumstances:
(i) Any lack of validity or enforceability of any Loan Document;
(ii) Any amendment or waiver of or consent to any departure from any
or all of the Loan Documents;
(iii) Any improper use which may be made of any Letter of Credit or any
improper acts or omissions of any beneficiary or transferee of any Letter
of Credit in connection therewith;
(iv) The existence of any claim, set-off, defense or any right which
the Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or Persons for whom any such
beneficiary or any such
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transferee may be acting), any Lender or any other Person, whether in
connection with any Letter of Credit, any transaction contemplated by any
Letter of Credit, this Agreement, or any other Loan Document, or any
unrelated transaction;
(v) Any statement or any other documents presented under any
Letter of Credit proving to be insufficient, forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate
in any respect whatsoever;
(vi) The insolvency of any Person issuing any documents in connection
with any Letter of Credit;
(vii) Any breach of any agreement between the Borrower and any
beneficiary or transferee of any Letter of Credit;
(viii) Any irregularity in the transaction with respect to which any
Letter of Credit is issued, including any fraud by the beneficiary or any
transferee of such Letter of Credit;
(ix) Any errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, wireless or
otherwise, whether or not they are in code;
(x) Any act, error, neglect or default, omission, insolvency or
failure of business of any of the correspondents of the Issuing Bank;
(xi) Any other circumstances arising from causes beyond the control
of the Issuing Bank;
(xii) Payment by the Issuing Bank under any Letter of Credit against
presentation of a sight draft or a certificate which does not comply with
the terms of such Letter of Credit, provided that such payment shall not
have constituted gross negligence or willful misconduct of the Issuing
Bank as determined by a final non-appealable judgment of a court of
competent jurisdiction; and
(xiii) Any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(g) If any change in Applicable Law, any change in the interpretation or
administration thereof, or any change in compliance with Applicable Law by the
Issuing Bank as a result of any request or directive of any Governmental
Authority, central
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bank or comparable agency (whether or not having the force of law) after
the Agreement Date shall (i) impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, capital adequacy, assessment or other
requirements or conditions against letters of credit issued by the Issuing Bank
or (ii) impose on the Issuing Bank any other condition regarding this Agreement
or any Letter of Credit or any participation therein, and the result of any of
the foregoing in the determination of the Issuing Bank is to increase the cost
to the Issuing Bank of issuing or maintaining any Letter of Credit or
purchasing or maintaining any participation therein, then, on the earlier of
the Maturity Date or a date not more than five (5) days after demand by the
Issuing Bank, the Borrower agrees to pay to the Issuing Bank, from time to time
as specified by the Issuing Bank, such additional amount or amounts as the
Issuing Bank determines will compensate it for such increased costs, from the
date such change or action is effective, together with interest on each such
amount from the Maturity Date or the date demanded, as applicable, until
payment in full thereof at the Base Rate. A certificate as to such increased
cost incurred by the Issuing Bank as a result of any event referred to in this
paragraph submitted by the Issuing Bank to the Borrower shall be conclusive,
absent manifest error, as to the amount thereof.
(h) The Borrower will indemnify and hold harmless the Agent, each Issuing
Bank and each other Lender and each of their respective employees,
representatives, officers and directors from and against any and all claims,
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
(including reasonable attorneys' fees) which may be imposed on, incurred by or
asserted against the Agent, such Issuing Bank or any such other Lender in any
way relating to or arising out of the issuance of a Letter of Credit, except
that the Borrower shall not be liable to the Agent, any Issuing Bank or any
such Lender for any portion of such claims, liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the gross negligence or willful misconduct of the
Agent, such Issuing Bank or such Lender, as the case may be, as determined by a
final non-appealable judgment of a court of competent jurisdiction. This
Section 2.15(h) shall survive termination of this Agreement.
(i) Each Lender shall be responsible (to the extent the Issuing Bank is not
reimbursed by the Borrower) for its pro rata share (based on such Lender's
Commitment Ratio) of any and all reasonable out-of-pocket costs, expenses
(including reasonable legal fees) and disbursements which may be incurred or
made by
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the Issuing Bank in connection with the collection of any amounts due under,
the administration of, or the presentation or enforcement of any rights
conferred by any Letter of Credit, the Borrower's or any guarantor's
obligations to reimburse draws thereunder or otherwise. In the event the
Borrower shall fail to pay such expenses of the Issuing Bank within fifteen
(15) days of demand for payment by the Issuing Bank, each Lender shall
thereupon pay to the Issuing Bank its pro rata share (based on such Lender's
Commitment Ratio) of such expenses within ten (10) days from the date of the
Issuing Bank's notice to the Lenders of the Borrower's failure to pay;
provided, however, that if the Borrower shall thereafter pay such expenses, the
Issuing Bank will repay to each Lender the amounts received from such Lender
hereunder.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Initial Advance. The obligations of
the Lenders to undertake the Commitment and to make the initial Advance
hereunder, and the obligation of the Issuing Banks to issue the initial Letter
of Credit hereunder, are subject to the prior fulfillment of each of the
following conditions:
(a) The Agent or the Lenders, as appropriate, shall have received each of
the following, in form and substance satisfactory to the Agent and the Lenders:
(i) This duly executed Agreement;
(ii) A duly executed Note to the order of each Lender in the amount
of such Lender's pro rata share of the Commitment;
(iii) Such duly executed amendments to the other Loan Documents (as
defined in the Original Loan Agreement), as determined by the Agent to
be necessary or appropriate, including, but not limited to, the Mortgage
and the Subordination Agreement;
(iv) A ratification of the Subsidiary Guaranty and Subsidiary Security
Agreement duly executed by the Material Subsidiaries;
(v) The opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, as counsel to the Borrower
and the Material Subsidiaries, addressed to
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each Lender, the Issuing Bank and the Agent and satisfactory to them,
dated the Agreement Date;
(vi) The opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as general counsel to the
Borrower and the Material Subsidiaries, addressed to each Lender, the
Issuing Bank and the Agent and satisfactory to them, dated the Agreement
Date;
(vii) The duly executed Request for Advance for the initial Advance
of the Loans;
(viii) A duly executed Borrowing Base Certificate dated as of the
Agreement Date;
(ix) A loan certificate signed by an Authorized Signatory of the
Borrower in substantially the form of Exhibit H attached hereto,
including a certificate of incumbency with respect to each Authorized
Signatory of the Borrower, together with appropriate attachments which
shall include, without limitation, the following: (A) a copy of the
Certificate of Incorporation of the Borrower certified to be true,
complete and correct by the Secretary of State for the State of Delaware,
(B) a true, complete and correct copy of the By-Laws of the Borrower, (C)
a true, complete and correct copy of the resolutions of the Borrower
authorizing the borrowing hereunder and the execution, delivery and
performance by the Borrower of the Loan Documents, and (D) certificates of
good standing from each jurisdiction in which the Borrower does business;
(x) A loan certificate from each Material Subsidiary signed by an
Authorized Signatory of such Material Subsidiary in substantially the form
of Exhibit H attached hereto, including a certificate of incumbency with
respect to each Authorized Signatory of such Material Subsidiary, together
with appropriate attachments which shall include, without limitation, the
following: (A) a copy of the Certificate of Incorporation of such
Material Subsidiary certified to be true, complete and correct by the
Secretary of State for the jurisdiction of its incorporation, (B) a true,
complete and correct copy of the By-Laws of such Material Subsidiary, (C)
a true, complete and correct copy of the resolutions of such Material
Subsidiary authorizing the execution, delivery and performance of each
Loan Document to which it is a party, and (D) certificates of good
standing from each jurisdiction in which such Material Subsidiary is
qualified to do business;
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(xi) A duly executed General Release, releasing the Agent, the
Issuing Bank and the Previous Banks from all claims, liability and
causes of action arising in connection with the Original Credit Agreement
prior to the Agreement Date;
(xii) Audited financial statements for the Borrower for its 1997
fiscal year, unaudited financial statements for the Borrower for the
month ending April 30, 1998, and pro-forma financial statements for the
Borrower's 1998 fiscal year on a month by month basis;
(xiii) Copies of certificates of insurance and the related insurance
policies covering the assets of the Borrower and otherwise meeting the
requirements of Section 5.5 hereof;
(xiv) Copies of any pay-off letters, termination statements, canceled
mortgages and the like required by the Agent in connection with the
removal of any Liens (other than Permitted Liens) against the assets of
the Borrower or any Material Subsidiary;
(xv) Lien search results with respect to the Borrower and all
Material Subsidiaries from all appropriate jurisdictions and filing
offices (including search results from the United States Patent and
Trademark Office regarding the Tuning Patents);
(xvi) Evidence satisfactory to the Agent that the Liens granted
pursuant to the Security Documents will be first priority perfected
Liens on the Collateral (subject only to Permitted Liens);
(xvii) Except as previously disclosed to the Agent and the Lenders
in writing (including in information delivered to the Agent and the
Lenders pursuant to Section 6.5(c)), no change in the business, assets,
management, operations, financial condition or prospects of the Borrower
shall have occurred since April 30, 1998, which change, in the judgment of
the Agent and the Lenders, will have a Materially Adverse Effect;
(xviii) Payment of all fees and expenses payable to the Agent, the
affiliates of the Agent and the Lenders in connection with the execution
and delivery of this Agreement, including, without limitation, fees and
expenses of counsel to the Agent;
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(xix) The duly executed Receivables Sale Agreement and such other
evidence satisfactory to the Agent and the Lenders that the Receivables
Securitization and all other transactions contemplated by the
Securitization Documents have been terminated, and that the Borrower (in
its own capacity and as successor to Microcircuits) and Finance Corp. have
been released from all obligations thereunder;
(xx) Evidence reasonably satisfactory to the Agent and the Lenders
that no Default or Event of Default exists under the Subordinated
Debentures, [the Reimbursement Agreement, or the LGE Debt] or will be
caused by the Borrower's execution of this Agreement or the Loan
Documents; and
(xxi) All such other documents listed on the Agenda of Closing
Documents attached hereto as Annex 1, and such other documents and
evidence as the Agent may reasonably request, certified by an appropriate
governmental official or an Authorized Signatory if so requested.
(b) The Agent shall be satisfied with the Borrower's cash management system
and shall have received duly executed Blocked Account Letters as required by
Section 5.15.
(c) The Agent and the Lenders shall have received evidence reasonably
satisfactory to the Majority Lenders that all Necessary Authorizations are in
full force and effect and are not subject to any pending or threatened reversal
or cancellation, and the Agent and the Lenders shall have received a
certificate of an Authorized Signatory so stating.
(d) All of the representations and warranties of the Borrower under this
Agreement shall be true and correct, both before and after giving effect to the
application of the proceeds of the initial Advance.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
Lenders to make each Advance, including the initial Advance, hereunder (but
excluding Advances, the proceeds of which are to reimburse (i) the Swing Bank
for Swing Loans or (ii) an Issuing Bank for amounts drawn under a Letter of
Credit), is subject to the fulfillment of each of the following conditions
immediately prior to or contemporaneously with such Advance:
(a) All of the representations and warranties of the Borrower under this
Agreement, which, pursuant to Section 4.4 hereof, are made at and as of the
time of such Advance, shall be true and correct at such time, both before and
after giving effect to the application of the proceeds of the Advance, and the
Agent shall have received a certificate (which may be a Request
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for Advance) to that effect signed by an Authorized Signatory of the Borrower
and dated the date of such Advance;
(b) The incumbency of the Authorized Signatories shall be as stated in the
certificate of incumbency contained in the certificate of the Borrower
delivered pursuant to Section 3.1(a) or as subsequently modified and reflected
in a certificate of incumbency delivered to the Agent and the Lenders;
(c) The most recent Borrowing Base Certificate which shall have been
delivered to the Agent pursuant to Section 6.5(a) hereof shall
demonstrate that, after giving effect to the making of such Advance, no
Borrowing Base Deficiency shall exist;
(d) There shall not exist on the date of such Advance and after giving
effect thereto, a Default or an Event of Default hereunder; and
(e) The Agent and the Lenders shall have received all such other
certificates, reports, statements, opinions of counsel, or other documents as
the Agent or Lenders may reasonably request and all other conditions to the
making of such Advance which are set forth in this Agreement shall have been
fulfilled.
The Borrower hereby agrees that the delivery of any Request for Advance
hereunder shall be deemed to be the certification of the Authorized Signatory
thereof that there does not exist, on the date of the making of the Advance and
after giving effect thereto, a Default or an Event of Default hereunder.
Section 3.3 Conditions Precedent to Each Letter of Credit. The obligation
of the Issuing Banks to issue each Letter of Credit (including the initial
Letter of Credit) hereunder is subject to the fulfillment of each of the
following conditions immediately prior to or contemporaneously with the
issuance of such Letter of Credit:
(a) All of the representations and warranties of the Borrower under this
Agreement, which, pursuant to Section 4.4 hereof, are made at and as of the
time of the issuance of such Letter of Credit, shall be true and correct at
such time, both before and after giving effect to the issuance of the Letter of
Credit, and the Agent shall have received a certificate (which may be a Request
for Issuance of Letter of Credit) to that effect signed by an Authorized
signatory of the Borrower and dated the date of the issuance of such Letter of
Credit;
(b) The incumbency of the Authorized Signatories shall be as stated in the
certificate of incumbency contained in the
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certificate of the Borrower delivered pursuant to Section 3.1(a) or as
subsequently modified and reflected in a certificate of incumbency delivered to
the Agent and the Lenders;
(c) The most recent Borrowing Base Certificate which shall have been
delivered to the Agent pursuant to Section 6.5(a) hereof shall
demonstrate that, after giving effect to the making of such Letter of Credit,
no Borrowing Base Deficiency shall exist;
(d) There shall not exist on the date of issuance of such Letter of Credit,
and after giving effect thereto, a Default or an Event of Default; and
(e) The Agent and the Issuing Bank shall have received all such other
certificates, reports, statements, opinions of counsel, or other documents as
the Agent or Issuing Bank may reasonably request and all other conditions to
the issuance of such Letter of Credit which are set forth in this Agreement
shall have been fulfilled.
The Borrower hereby agrees that the delivery of any Request for Issuance of a
Letter of Credit hereunder shall be deemed to be the certification of the
Authorized Signatory thereof that there does not exist, on the date of issuance
of the Letter of Credit and after giving effect thereto, a Default or an Event
of Default hereunder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 General Representations and Warranties. In order to induce the
Agent, the Lenders and the Issuing Banks to enter into this Agreement and to
extend the Loans and issue the Letters of Credit to the Borrower, the Borrower
hereby agrees, represents, and warrants that:
(a) Organization; Power; Qualification. Each of the Borrower and the
Borrower's Subsidiaries is a corporation duly organized, validly existing, and
in good standing under the laws of their respective states of incorporation,
has the corporate power and authority to own or lease and operate its
properties and to carry on its business as now being and hereafter proposed to
be conducted, and is duly qualified and is in good standing as a foreign
corporation, and authorized to do business, in each jurisdiction in which the
character of its properties or the
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nature of its business requires such qualification or authorization.
(b) Authorization; Enforceability. The Borrower and each of the Borrower's
Material Subsidiaries has the power and has taken all necessary corporate
action to authorize it to execute, deliver, and perform this Agreement and each
of the other Loan Documents to which it is a party in accordance with the terms
thereof and to consummate the transactions contemplated hereby and thereby.
This Agreement and each of the other Loan Documents to which the Borrower is a
party has been duly executed and delivered by the Borrower, and is, and each of
the other Loan Documents to which the Borrower is a party is, a legal, valid
and binding obligation of the Borrower, enforceable in accordance with its
terms.
(c) Partnerships; Joint Ventures; Subsidiaries. Neither Borrower nor any
of its Subsidiaries is a partner or joint venturer in any partnership or joint
venture other than (i) the Borrower's Subsidiaries listed on Schedule 4.1(c)-1
and (ii) the partnerships and joint ventures listed on Schedule 4.1(c)-2.
Schedule 4.1(c)-2 sets forth, for each partnership or joint venture that is not
a Subsidiary of Borrower, a complete and accurate statement of (a) the
percentage ownership of each such partnership or joint venture by Borrower or
any of its Subsidiaries, (b) the state or other jurisdiction of formation or
incorporation, as appropriate, of each such partnership or joint venture, (c)
each state in which each such partnership or joint venture is qualified to do
business on the date of this Agreement and (d) all of each such partnership's
or joint venture's trade names, trade styles or doing business forms on the
date of this Agreement. Except as set forth on Schedule 4.1(c)-1 attached
hereto, the Borrower has no Subsidiaries.
(d) Capital Stock and Related Matters. The authorized Capital Stock of
Borrower consists of one hundred million (100,000,000) shares of common stock,
$1.00 par value per share, of which sixty-seven million five hundred
twenty-five thousand four hundred forty seven (67,525,447) shares were issued
and outstanding as of March 18, 1998, and are fully paid and non-assessable. As
of the Agreement Date, all holders of five percent (5%) or more of such Capital
Stock, together with a description of such Capital Stock held by such Person,
are listed on Schedule 4.1(d). Except as described on Schedule 4.1(d) attached
hereto, the Borrower has outstanding no stock or securities convertible into or
exchangeable for any shares of its Capital Stock, nor are there any preemptive
or similar rights to subscribe for or to purchase, or any other rights to
subscribe for or to purchase, or any options for the purchase of, or any
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agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments, or claims of any character relating to, any Capital Stock
or any stock or securities convertible into or exchangeable for any Capital
Stock. The Borrower is not subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of its Capital Stock or
to register any shares of its Capital Stock, and there are no agreements
restricting the transfer of any shares of the Borrower's Capital Stock.
(e) Compliance with laws, etc., of Agreement, Other Loan Documents, and
Contemplated Transactions. The execution, delivery, and performance of this
Agreement and each of the other Loan Documents in accordance with the terms
thereof and the consummation of the transactions contemplated hereby and
thereby do not and will not (i) violate any Applicable Law, (ii) conflict with,
result in a breach of, or constitute a default under the certificate of
incorporation or by-laws of the Borrower or any Material Subsidiary or under
any indenture, agreement, or other instrument to which the Borrower or any
Material Subsidiary is a party or by which the Borrower or any Material
Subsidiary or any of their respective properties may be bound, or (iii) result
in or require the creation or imposition of any Lien upon or with respect to
any property now owned or hereafter acquired by the Borrower or any Material
Subsidiary except Permitted Liens.
(f) Necessary Authorizations. The Borrower and each Material Subsidiary
have obtained all Necessary Authorizations, and all such Necessary
Authorizations are in full force and effect. None of said Necessary
Authorizations is the subject of any pending or, to the best of the Borrower's
knowledge, threatened attack or revocation, by the grantor of the Necessary
Authorization. Neither the Borrower nor any Material Subsidiary is required to
obtain any additional Necessary Authorizations in connection with the
execution, delivery, and performance, in accordance with the terms of this
Agreement or any other Loan Document, and the borrowing hereunder.
(g) Title to Properties. The Borrower and each of the Borrower's
Subsidiaries has good, marketable, and legal title to, or a valid leasehold
interest in, all of its properties and assets (including, without limitation,
the Accounts), and none of such properties or assets is subject to any Liens
(other than Permitted Liens) which detract from the value of such properties or
assets or interferes with the business or operations of the Borrower and the
Borrower's Subsidiaries as presently conducted or proposed to be conducted.
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(h) Material Contracts; Labor Matters. Schedule 4.1(h) contains a complete
list, as of the date of this Agreement, of each contract or agreement to which
Borrower or any Material Subsidiary is a party which is material to its
respective business, financial condition, operations, prospects or property
and, upon the request of the Agent or any Lender, the Borrower will provide the
Agent or such Lender, as applicable, with a copy of any such contract or
agreement. Except as disclosed on Schedule 4.1(h): (a) no labor contract to
which Borrower or any Material Subsidiary is a party or is otherwise subject is
scheduled to expire prior to the Maturity Date; (b) neither Borrower nor any
Material Subsidiary has, within the two-year period preceding the date of this
Agreement, taken any action which would have constituted or resulted in a
"plant closing" or "mass layoff" within the meaning of the Federal Worker
Adjustment and Retraining Notification Act of 1988 or any similar applicable
federal, state or local law, and Borrower has no reasonable expectation that
any such action is or will be required at any time prior to the Maturity Date;
and (c) on the Agreement Date (i) neither Borrower nor any Material Subsidiary
is a party to any labor dispute (other than any immaterial disputes with
Borrower's or such Material Subsidiary's employees as individuals and not
affecting Borrower's or such Material Subsidiary's relations with any labor
group or its workforce as a whole) and (ii) there are no pending or, to the
Borrower's knowledge, threatened strikes or walkouts relating to any labor
contracts to which Borrower or any Material Subsidiary is a party or is
otherwise subject. Except as set forth on Schedule 4.1(h) attached hereto,
none of the employees of the Borrower or any of the Borrower's Subsidiaries is
a party to any collective bargaining agreement with the Borrower or any of the
Borrower's Subsidiaries.
(i) Taxes. All federal, state, and other tax returns of the Borrower and
each of the Borrower's Subsidiaries required by law to be filed have been duly
filed, and all federal, state, and other taxes, assessments, and other
governmental charges or levies upon the Borrower and each of the Borrower's
Subsidiaries and any of their respective properties, income, profits, and
assets, which are due and payable, have been paid, except any payment of any of
the foregoing which the Borrower or any of the Borrower's Subsidiaries, as
applicable, are currently contesting 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 the Borrower's Subsidiaries, as the case may
be. The charges, accruals, and reserves on the books of the Borrower and each
of the Borrower's Subsidiaries in respect of taxes are, in the reasonable
judgement of the Borrower, adequate. Neither the Borrower nor any of the
Borrower's Subsidiaries are
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being audited, or have knowledge of any pending audit, by the Internal Revenue
Service or any other taxing authority.
(j) Financial Statements. The Borrower has furnished, or caused to be
furnished, to the Lender financial statements for the Borrower and the
Borrower's Subsidiaries on a consolidated basis which are complete and correct
in all material respects and present fairly in accordance with GAAP the
financial position of the Borrower and the Borrower's Subsidiaries on a
consolidated basis as at December 31, 1997, and the results of operations for
the periods then ended. Except as disclosed in such financial statements,
neither the Borrower nor any of the Borrower's Subsidiaries has any material
liabilities, contingent or otherwise, and there are no material unrealized or
anticipated losses of the Borrower or any of the Borrower's Subsidiaries which
have not heretofore been disclosed in writing to the Lenders.
(k) No Adverse Change. Since April 30, 1998, there has occurred no event
(except as previously disclosed to the Agent and the Lenders in writing
(including in information delivered to the Agent and the Lenders pursuant to
Section 6.5(c)), which could reasonably be expected to have a Materially
Adverse Effect.
(l) Investments and Guaranties. As of the Agreement Date, the Borrower
does not own the Capital Stock, partnership interests or other securities of or
equity interests in, or have outstanding loans or advances to, or guaranties of
the obligations of, any Person, except as reflected in the financial statements
referred to in Section 4.1(j) above or disclosed on Schedule 4.1(l).
(m) Liabilities, Litigation, etc. Except for liabilities incurred in the
normal course of business, neither the Borrower nor any of the Borrower's
Subsidiaries has any material (individually or in the aggregate) liabilities,
direct or contingent, except as disclosed or referred to in the financial
statements referred to in Section 4.1(j) above or with respect to the
Obligations, the Subordinated Debentures, the LGE Debt or the Additional
Unsecured Debt. As of the Agreement Date, except as described on Schedules
4.1(m) and 4.1(x) attached hereto, there is no litigation, legal or
administrative proceeding, investigation, or other action of any nature pending
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower or any of the Borrower's Subsidiaries or any of their respective
properties which could reasonably be expected to result in any judgment against
or liability of the Borrower or such Subsidiary in excess of $100,000. None of
such litigation disclosed on Schedules 4.1(m) and 4.1(x), individually or
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collectively, could reasonably be expected to have a Materially Adverse Effect.
The Borrower knows of no unusual or unduly burdensome restriction, restraint,
or hazard relative to the business or properties of the Borrower or any of the
Borrower's Subsidiaries that is not customary for or generally applicable to
similarly situated businesses in the same industry as the Borrower and the
Borrower's Subsidiaries.
(n) ERISA. The Borrower and each ERISA Affiliate and each of their
respective Plans are in substantial compliance with ERISA and the Code and
neither the Borrower nor any of its ERISA Affiliates incurred any accumulated
funding deficiency with respect to any such Plan within the meaning of ERISA or
the Code. The Borrower and each of its ERISA Affiliates have complied with all
material requirements of ERISA Sections 601 through 608 and Code Section 4980B.
Neither the Borrower nor, to the best of the Borrower's knowledge, any of its
ERISA Affiliates has made any promises of retirement or other benefits to
employees, except as set forth in the Plans. Neither the Borrower nor any of
the Borrower's Subsidiaries has incurred any material liability to the Pension
Benefit Guaranty Corporation in connection with any such Plan. The assets of
each such Plan which is subject to Title IV of ERISA are sufficient to provide
the benefits under such Plan, the payment of which the Pension Benefit Guaranty
Corporation would guarantee if such Plan were terminated, and such assets are
also sufficient to provide all other "benefit liabilities" (as defined in ERISA
Section 4001(a)(16)) due under the plan upon termination. No Reportable Event
has occurred and is continuing with respect to any such Plan. No such Plan or
trust created thereunder, or party in interest (as defined in Section 3(14) of
ERISA, or any fiduciary (as defined in Section 3(21) of ERISA), has engaged in
a "prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) which would subject such Plan or any other Plan of
the Borrower or any of its ERISA Affiliates, any trust created thereunder, or
any such party in interest or fiduciary, or any party dealing with any such
Plan or any such trust to any material penalty or tax on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code.
Neither the Borrower nor any of its ERISA Affiliates is a participant in or is
obligated to make any payment to a Multiemployer Plan.
(o) Intellectual Property; Licenses. Borrower possesses adequate
Intellectual Property to continue to conduct its business as heretofore
conducted by it, and all Intellectual Property existing on the date hereof,
(together with in the case of patents and Trademarks, the date of issuance
thereof), is listed on Schedule 4.1(o). With respect to Intellectual Property
of the Borrower unless such Intellectual Property has become
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obsolete or is no longer used or useful in the conduct of the business of the
Borrower:
(i) it is valid and enforceable, is subsisting, and has not been
adjudged invalid or unenforceable, in whole or in part;
(ii) Borrower has made all necessary filings and recordations to
protect its interest therein, including, without limitation, recordations
of all of its interest in its Patent Property and Trademark Property in
the United States Patent and Trademark Office and, to the extent necessary
for the conduct of Borrower's business, in corresponding offices
throughout the world;
(iii) Except as set forth on Schedule 4.1(o), Borrower is the exclusive
owner of the entire and unencumbered right, title and interest in and to
such Intellectual Property owned by it and no claim has been made that the
use of any of its owned Intellectual Property does or may violate the
asserted rights of any third party; and
(iv) Borrower has performed, and Borrower will continue to perform,
all acts, and Borrower has paid and will continue to pay, all required fees
and taxes, to maintain each and every item of such Intellectual Property in
full force and effect throughout the world, as applicable.
Borrower owns directly or is entitled to use, by license or otherwise, all
patents, Trademarks, copyrights, mask works, licenses, technology, know-how,
processes and rights with respect to any of the foregoing used in, necessary
for or of importance to the conduct of Borrower's business.
(p) Compliance with Law; Absence of Default. Each of the Borrower and the
Borrower's Subsidiaries is in material compliance with all Applicable Laws and
with all of the provisions of its certificate of incorporation and by-laws, and
no event has occurred or has failed to occur which has not been remedied or
waived, the occurrence or non-occurrence of which (i) constitutes (x) a
Default or (y) a default by the Borrower or any of the Borrower's Subsidiaries
under the Subordinated Debentures, or any other indenture, agreement, or other
instrument (other than any agreement or instrument evidencing the LGE
Obligations or the Salomon Lease Transaction), or any judgment, decree, or
order to which the Borrower or any of the Borrower's Subsidiaries is a party or
by which the Borrower or any of the Borrower's Subsidiaries or any of their
respective
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properties may be bound ; or (ii) has resulted in the acceleration by LGE
of any LGE Obligation or any action by LGE to collect any LGE Obligation or
exercise or enforce any right or remedy under the Reimbursement Agreement, the
LGE Debt or any document evidencing or securing any LGE Obligation.
(q) Casualties; Taking of Properties, etc. Since March 31, 1997, neither
the business nor the properties of the Borrower or any of the Borrower's
Subsidiaries has been materially and adversely affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labor disturbance, embargo, requisition or taking of property or
cancellation of contracts, permits or concessions by any domestic or foreign
government or any agency thereof, riot, activities of armed forces, or acts of
God or of any public enemy.
(r) Accuracy and Completeness of Information. All information, reports,
and other papers and data relating to the Borrower or any of the Borrower's
Subsidiaries furnished to the Agent and the Lenders were, at the time the same
were so furnished, (i) to the extent prepared by third parties, to the best of
Borrower's knowledge, and (ii) to the extent prepared by the Borrower, complete
and correct in all material respects in light of all such information, reports
and other papers and data taken as a whole at such time. No fact is currently
known to the Borrower which has, or could reasonably be expected to have, a
Materially Adverse Effect. With respect to projections, estimates and
forecasts given to the Lenders, such projections, estimates and forecasts are
based on the Borrower's good faith assessment of the future of the business at
the time made. The Borrower had a reasonable basis for such assessments at the
time made.
(s) Compliance with Regulations G, T, U, and X. Neither the Borrower nor
any of the Borrower's Subsidiaries is engaged principally or as one of its
important activities in the business of extending credit for the purpose of
purchasing or carrying, and neither the Borrower nor any of the Borrower's
Subsidiaries owns or presently intends to acquire, any "margin security" or
"margin stock" as defined in Regulations G, T, U, and X (12 C.F.R. Parts 221
and 224) of the Board of Governors of the Federal Reserve System (herein called
"margin stock"). None of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of said
Regulations G, T, U, and X. Neither the Borrower nor any bank acting on its
behalf has taken
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or will take any action which might cause this Agreement or the Notes to
violate Regulation G, T, U, or X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities Exchange
Act of 1934, in each case as now in effect or as the same may hereafter be in
effect. If so requested by the Agent, the Borrower will furnish the Agent with
(i) a statement or statements in conformity with the requirements of Federal
Reserve Forms G-3 and/or U-1 referred to in Regulations G and U of said Board
of Governors and (ii) other documents evidencing its compliance with the margin
regulations, including without limitation an opinion of counsel in form and
substance satisfactory to the Agent. Neither the making of the Loans nor the
use of proceeds thereof will violate, or be inconsistent with, the provisions
of Regulation G, T, U, or X of said Board of Governors.
(t) Intentionally Omitted.
(u) Insurance. The Borrower and each of its Subsidiaries have insurance
meeting the requirements of Section 5.5 hereof, and such insurance policies are
in full force and effect. As of the Agreement Date, all insurance maintained
by the Borrower is fully described on Schedule 4.1(u) hereto.
(v) Broker's or Finder's Commissions. No broker's or finder's fee or
commission will be payable with respect to the issuance of the Notes, and no
other similar fees or commissions will be payable by the Borrower for any other
services rendered to the Borrower ancillary to the transactions contemplated
herein.
(w) Real Property. All real property leased by the Borrower or any
Material Subsidiary as of the Agreement Date, and the name of the lessor of
such real property, is set forth in Schedule 4.1(w)-1. The leases of Borrower
or such Material Subsidiary are valid, enforceable and in full force and
effect, and have not been modified or amended, except as otherwise set forth in
Schedule 4.1(w)-1. The Borrower or such Material Subsidiary is the sole holder
of the lessee's interests under such leases, and has the right to pledge and
assign the same except as qualified in Schedule 4.1(w)-1. Neither Borrower nor
such Material Subsidiary has made any pledge or assignment of any of it rights
under such leases except as set forth in Schedule 4.1(w)-1 and, there is no
default or condition which, with the passage of time or the giving of notice,
or both, would constitute a material default on the part of any party under
such leases. All real property owned by the Borrower or any Material
Subsidiary as of the Agreement Date is set forth in Schedule 4.1(w)-2. As of
the Agreement Date, the Borrower or
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such Material Subsidiary does not own, lease or use any real property other
than as set forth on Schedule 4.1(w). The Borrower and each Material
Subsidiary owns good and marketable fee simple title to all of its owned real
property, and none of its respective owned real property is subject to any
Liens, except Permitted Liens. Neither the Borrower nor such Material
Subsidiary owns or holds, or is obligated under or a party to, any option,
right of first refusal or any other contractual right to purchase, acquire,
sell, assign or dispose of any real property owned or leased by it.
(x) Environmental Matters. Except as is described on Schedule 4.1(x)
attached hereto:
(i) To the best of the Borrower's and its Subsidiaries' knowledge,
after reasonably diligent inquiry, the Property does not contain, in,
on or under, including, without limitation, the soil and groundwater
thereunder, any Hazardous Materials in violation of Environmental Laws or
in amounts that could give rise to liability under Environmental Laws.
(ii) The Borrower and each of the Borrower's Subsidiaries is in
material compliance with all applicable Environmental Laws, and there is
no contamination or violation of any Environmental Law which could
materially interfere with the continued operation of any of the Properties
or impair the financial condition of the Borrower and the Borrower's
Subsidiaries on a consolidated basis.
(iii) Neither the Borrower nor any of the Borrower's Subsidiaries has
received from any Governmental Authority any complaint, or notice of
violation, alleged violation, investigation or advisory action or notice
of potential liability regarding matters of environmental protection or
permit compliance under applicable Environmental Laws with regard to the
Properties, nor is the Borrower aware that any such notice is pending.
(iv) Hazardous Materials have not been generated, treated, stored,
disposed of, at, on or under any of the Property in violation of any
Environmental Laws or in a manner that could give rise to material
liability under Environmental Laws nor have any Hazardous Materials been
transported or disposed of from any of the Properties to any other
location in violation of any Environmental Laws or in a manner that could
give rise to material liability under Environmental Laws.
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(v) Neither the Borrower nor any of its Subsidiaries is a party to any
governmental administrative actions or judicial proceedings pending under
any Environmental Law with respect to any of the Properties, 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 any of the
Properties.
(vi) To the best of the Borrower's and its Subsidiaries' knowledge,
after reasonably diligent inquiry, there has been no release or
threat of release of Hazardous Materials into the environment at or from
any of the Properties, or arising from or relating to the operations of
the Borrower, in violation of Environmental Laws or in amounts that could
give rise to material liability under Environmental Laws.
(y) OSHA. All of the Borrower's and the Borrower Subsidiaries' operations
are conducted in all material respects in compliance with all applicable rules
and regulations promulgated by the Occupational Safety and Health
Administration of the United States Department of Labor.
(z) Name of Borrower. The Borrower and the Material Subsidiaries have not
changed their respective names within the preceding five (5) years from the
Agreement Date, nor has the Borrower or any Material Subsidiary transacted
business under any other name or trade name.
(a)(a) Investment Company Act. Neither the Borrower nor any of the
Borrower's Subsidiaries is required to register under the provisions of the
Investment Company Act of 1940, as amended, and neither the entering into or
performance by the Borrower of this Agreement nor the issuance of the Notes
violates any provision of such Act or requires any consent, approval, or
authorization of, or registration with, any governmental or public body or
authority pursuant to any of the provisions of such Act.
Section 4.2 Representations and Warranties Relating to Eligible Accounts.
With respect to all Eligible Accounts, the Borrower hereby warrants and
represents to the Agent, the Lenders and the Issuing Bank that:
(a) They are genuine and in all respects what they purport to be, and
they are not evidenced by judgments;
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(b) They arise out of completed, bona fide sales and deliveries of
goods or rendition of services by the Borrower in the ordinary course of
its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and forming
a part of the contract between Borrower and the Account Debtors;
(c) They are for liquidated amounts maturing as stated in the duplicate
invoice covering such sale or rendition of services, copies of which have
been furnished or are available to the Agent;
(d) Except as set forth on Schedule 4.2, the Borrower has made no
agreement with any Account Debtor thereunder for any deduction therefrom,
except discounts or allowances which are granted by the Borrower in the
ordinary course of its business for prompt payment and which are reflected
in the calculation of the net amount of each respective invoice related
thereto;
(e) Except as set forth on Schedule 4.2, there are no facts, events or
occurrences of which the Borrower has knowledge which in any way impair the
validity or enforceability thereof or which will reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to
the Agent with respect thereto;
(f) Except as set forth on Schedule 4.2, to the best of Borrower's
knowledge, the Account Debtors thereunder (i) had the capacity to contract
at the time any contract or other document giving rise to the Accounts were
executed and (ii) such Account Debtors are solvent; and
(g) Except as set forth on Schedule 4.2, the Borrower has no knowledge
of any fact or circumstance which would impair the validity or
collectibility of the Accounts, and to the best of Borrower's knowledge
there are no proceedings or actions which are threatened or pending
against any Account Debtor thereunder which might result in any material
adverse change in such Account Debtor's financial condition or the
collectibility of such Account.
Section 4.3 Representations and Warranties Relating to Inventory. Except
as specifically disclosed to and acknowledged by the Agent in writing, with
respect to all Eligible Inventory, the Agent may rely upon all statements,
warranties, or representations made in any Borrowing Base Certificate in
determining the classification of such Inventory and in
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determining which items of Inventory listed in such Borrowing base Certificate
meet the Inventory Eligibility Requirements.
Section 4.4 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement shall be deemed to be
made, and shall be true and correct, at and as of the Agreement Date and the
date of each Advance or issuance of a Letter of Credit hereunder, except to the
extent previously fulfilled in accordance with the terms hereof and to the
extent subsequently inapplicable. All representations and warranties made
under this Agreement shall survive, and not be waived by, the execution hereof
by the Lenders, the Issuing Banks, and the Agent, any investigation or inquiry
by any Lender, or the Agent or the making of any Advance or the issuance of any
Letter of Credit under this Agreement.
ARTICLE 5
GENERAL COVENANTS
So long as any of the Obligations are outstanding and unpaid or the
Borrower shall have the right to borrow, or have Letters of Credit issued,
hereunder (whether or not the conditions to borrowing have been or can be
fulfilled), and unless the Majority Lenders shall otherwise consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
will, and will cause each of the Borrower's Subsidiaries (other than the
Immaterial Subsidiaries and except in connection with a merger permitted by
Section 7.7(e) provided the Agent receives thirty (30) day's prior written
notice of any such merger) to (i) preserve and maintain their respective
existence, rights, franchises, licenses, and privileges in their respective
jurisdiction of incorporation including, without limitation, all Necessary
Authorizations material to its business, and (ii) qualify and remain qualified
and authorized to do business in each jurisdiction in which the character of
their respective properties or the nature of their respective business requires
such qualification or authorization.
Section 5.2 Compliance with Applicable Law. The Borrower will comply, and
will cause each of the Borrower's Subsidiaries to comply, in all material
respects with the requirements of all Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower will maintain and will
cause each of the Borrower's Subsidiaries to maintain or cause to be maintained
in the ordinary course of
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business in good repair, working order, and condition, normal wear and tear,
removal from service for routine maintenance and repair and disposal of
obsolete Equipment excepted, all properties used or useful in their respective
businesses (whether owned or held under lease), and from time to time make or
cause to be made all needed and appropriate repairs, renewals, replacements,
additions, betterments, and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower will
maintain and will cause each of the Borrower's Subsidiaries to maintain a
system of accounting established and administered in accordance with GAAP, and
will keep and will cause each of the Borrower's Subsidiaries to keep adequate
records and books of account in which complete entries will be made in
accordance with such accounting principles consistently applied and reflecting
all transactions required to be reflected by such accounting principles.
Section 5.5 Insurance. The Borrower will maintain and will cause each of
the Borrower's Subsidiaries to maintain insurance including, but not limited to,
public liability, product and manufacturer's liability, business interruption
and fidelity coverage insurance, in such amounts and against such risks as
would be customary for companies in the same industry and of comparable size as
the Borrower from responsible companies having and maintaining an A.M. Best
rating of "A minus" or better and being in a size category of VI or larger or
otherwise acceptable to the Agent. In addition to the foregoing, the Borrower
further agrees to maintain and pay for insurance upon all goods constituting
Collateral wherever located, in storage or in transit in vehicles, including
goods evidenced by documents, covering casualty, hazard, public liability and
such other risks and in such amounts as would be customary for companies in the
same industry and of comparable size as the Borrower, from responsible
companies having and maintaining an A.M. Best rating of "A minus" or better and
being in a size category of VI or larger or otherwise acceptable to the Agent
to insure the Lenders' interest in such Collateral. All such property
insurance policies shall name the Agent as loss payee and all liability
insurance policies shall name the Agent as additional insured. Borrower shall
deliver the original certificates of insurance evidencing that the required
insurance is in force together with satisfactory lender's loss payable and
additional insured, as applicable, endorsements. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
thirty (30) days' prior written notice to the Agent in the event of
cancellation or modification of the policy for any reason whatsoever and a
clause that the interest of the Agent shall not be impaired or invalidated by
any act or neglect
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of the Borrower or owner of the Collateral nor by the occupation of the
premises for purposes more hazardous than are permitted by said policy. If the
Borrower fails to provide and pay for such insurance, the Agent may, at the
Borrower's expense, procure the same, but shall not be required to do so. The
Borrower agrees to deliver to the Agent, promptly as rendered, true copies of
all reports made in any reporting forms to insurance companies.
Section 5.6 Payment of Taxes and Claims. The Borrower will pay and
discharge, and will cause each of the Borrower's Subsidiaries to pay and
discharge, all taxes, assessments, and governmental charges or levies imposed
upon them or upon their respective incomes or profits or upon any properties
belonging to them prior to the date on which penalties attach thereto, and all
lawful claims for labor, materials and supplies which have become due and
payable and which by law have or may become a Lien upon any of their respective
Property; except that, no such tax, assessment, charge, levy, or claim need be
paid which is being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on the appropriate books, but
only so long as such tax, assessment, charge, levy, or claim does not become a
Lien or charge other than a Permitted Lien and no foreclosure, distraint, sale,
or similar proceedings shall have been commenced and remain unstayed for a
period thirty (30) days after such commencement. The Borrower shall timely
file and will cause each of the Borrower's Subsidiaries timely to file all
information returns required by federal, state, or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower will permit and will
cause each of the Borrower's Subsidiaries to permit representatives of the
Agent, the Issuing Banks and each Lender to (a) visit and inspect the
properties of the Borrower and each of the Borrower's Subsidiaries during
normal business hours, (b) inspect and make extracts from and copies of its
books and records, and (c) discuss with its respective principal officers its
businesses, assets, liabilities, financial positions, results of operations,
and business prospects relating to the Borrower; provided, however, if no
Default then exists hereunder, the Agent, any Issuing Bank or any Lender shall
give the Borrower reasonable prior notice of such visit or inspection.
Section 5.8 Conduct of Business. The Borrower shall continue, and shall
cause each Material Subsidiary to continue, to engage in business of the same
general type as now respectively conducted by it.
Section 5.9 ERISA. The Borrower shall at all times make, or cause to be
made, prompt payment of contributions required to meet the minimum funding
standards set forth in ERISA with
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respect to its and its ERISA Affiliates' Plans; furnish to the Agent, promptly
upon the Agent's request therefor, copies of any annual report required to be
filed pursuant to ERISA in connection with each such Plan of it and its ERISA
Affiliates; notify the Agent as soon as practicable of any Reportable Event and
of any additional act or condition arising in connection with any such Plan
which the Borrower believes might constitute grounds for the termination thereof
by the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan;
and furnish to the Agent, promptly upon the Agent's request therefor, such
additional information concerning any such Plan as may be reasonably requested
by the Agent.
Section 5.10 Lien Perfection. The Borrower agrees to, and will cause each
Material Subsidiary to, execute all Uniform Commercial Code financing
statements, and amendments and continuation statements thereto, provided for by
Applicable Law together with any and all other instruments, assignments or
documents and shall take such other action as may be required to perfect or
continue the perfection of the Agent's (on behalf of the Lenders and the
Issuing Banks) security interest in the Collateral. The Borrower hereby
authorizes the Agent to execute and file any such financing statement on the
Borrower's behalf to the extent permitted by Applicable Law.
Section 5.11 Location of Collateral; Consignment of Inventory.
(a) All Collateral, other than Inventory in transit, will at all times be
kept by the Borrower at one or more of the business locations set forth in
Schedule 5.11 and shall not, without the prior written approval of the Agent,
be moved therefrom except, prior to an Event of Default (i) sales of Inventory
in the ordinary course of business; (ii) sales or other dispositions of assets
permitted pursuant to Section 7.7 hereof; and (iii) the storage of Inventory at
locations within the continental United States other than those specified on
Schedule 5.11 hereto if (A) the Borrower gives the Agent written notice of the
new storage location outside of (x) the state, or (y) if the Uniform Commercial
Code as in effect in such state has a county filing requirement, the county, in
which it is currently stored at least thirty (30) days prior to storing
Inventory at such location, (B) the Lenders' security interest in such
Inventory is and continues to be a duly perfected, first priority Lien thereon,
(C) neither the Borrower's nor the Agent's right of entry upon the premises
where such Inventory is stored or its right to remove the Inventory therefrom,
is in any way restricted, (D) the owner of such premises agrees with the Agent
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not to assert any landlord's, bailee's or other Lien in respect of the
Inventory for unpaid rent or storage charges, and (E) all negotiable documents
and receipts in respect of any Collateral maintained at such premises are
promptly delivered to the Agent;
(b) No Inventory will be consigned to any Person without the Agent's
prior written consent, and, if such consent is given, the Borrower shall, prior
to the delivery of any Inventory on consignment, (i) provide the Agent with all
consignment agreements to be used in connection with such consignment, all of
which shall be acceptable to the Agent, (ii) prepare, execute and file
appropriate financing statements with respect to any consigned Inventory,
showing the Agent as assignee, (iii) conduct a search of all filings made
against the consignee in all jurisdictions in which any consigned Inventory is
to be located and deliver to the Agent copies of the results of all such
searches and (iv) notify, in writing, all the creditors of the consignee which
are or may be holders of Liens in the Inventory to be consigned that the
Borrower expects to deliver certain Inventory to the consignee, all of which
Inventory shall be described in such notice by item or type.
Section 5.12 Protection of Collateral. All insurance expenses and
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral (including, without limitation, all rent payable
by the Borrower to any landlord of any premises where any of the Collateral may
be located), and any and all excise, property, sales, and use taxes imposed by
any state, federal, or local authority on any of the Collateral or in respect
of the sale thereof, shall be borne and paid by the Borrower. If the Borrower
fails to promptly pay any portion thereof when due, the Lenders may, at their
option, but shall not be required to, make a Base Rate Advance for such purpose
and pay the same directly to the appropriate Person. The Borrower agrees to
reimburse the Lenders promptly therefor with interest accruing thereon daily at
the Default Rate provided in this Agreement. All sums so paid or incurred by
the Lenders for any of the foregoing and all reasonable costs and expenses
(including attorneys' fees, legal expenses, and court costs) which the Lenders
may incur in enforcing or protecting the Lien on or rights and interest in the
Collateral or any of its rights or remedies under this or any other agreement
between the parties hereto or in respect of any of the transactions to be had
hereunder until paid by the Borrower to the Lenders with interest at the
Default Rate, shall be considered Obligations owing by the Borrower to the
Lenders hereunder. Such Obligations shall be secured by all Collateral and by
any and all other collateral, security, assets, reserves, or funds of the
Borrower in or coming into the hands or inuring to the benefit of the Lenders.
Neither
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the Agent nor the Lenders shall be liable or responsible in any way for
the safekeeping of any of the Collateral or for any loss or damage thereto
(except for reasonable care in the custody thereof while any Collateral is in
the Lenders' actual possession) or for any diminution in the value thereof, or
for any act or default of any warehouseman, carrier, forwarding agency, or
other person whomsoever, but the same shall be at the Borrower's sole risk.
Section 5.13 Assignments and Records of Accounts. Upon the occurrence
of an Event of Default and if so requested by the Agent, the Borrower shall
execute and deliver to the Agent formal written assignments of all of the
Accounts weekly, which shall include all Accounts that have been created since
the date of the last assignment, together with copies of invoices or invoice
registers related thereto. The Borrower shall keep accurate and complete
records of the Accounts and all payments and collections thereon.
Section 5.14 Administration of Accounts.
(a) The Agent retains the right after the occurrence of an Event of
Default to notify the Account Debtors that the Accounts have been assigned to
the Agent and to collect the Accounts directly in its own name and to charge the
collection costs and expenses, including attorneys' fees, to the Borrower. The
Agent has no duty to protect, insure, collect or realize upon the Accounts or
preserve rights in them. The Borrower irrevocably makes, constitutes and
appoints the Agent as the Borrower's true and lawful attorney and agent-in-fact
to endorse the Borrower's name on any checks, notes, drafts or other payments
relating to, the Accounts which come into the Agent's possession or under the
Agent's control as a result of its taking any of the foregoing actions.
Additionally, the Agent shall have the right to collect and settle or adjust
all disputes and claims directly with the Account Debtor and to compromise the
amount or extend the time for payment of the Accounts upon such terms and
conditions as the Agent may deem advisable, and to charge the deficiencies,
reasonable costs and expenses thereof, including attorney's fees, to the
Borrower.
(b) If an Account includes a charge for any tax payable to any
governmental taxing authority, the Lenders are authorized, in their sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of the Borrower and to make a Base Rate Advance to the Borrower to pay
therefor. The Borrower shall notify the Agent if any Account includes any tax
due to any governmental taxing authority and, in the absence of such notice, the
Agent shall have the right to retain the full proceeds of the
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Account and shall not be liable for any taxes to any governmental taxing
authority that may be due by the Borrower by reason of the sale and delivery
creating the Account.
(c) Whether or not a Default or an Event of Default has occurred, any of
the Agent's officers, employees or agents shall have the right, at any time or
times hereafter, in the name of the Lenders, or any designee of the Lenders or
the Borrower, to verify the validity, amount or other matter relating to any
Accounts by mail, telephone, telegraph or otherwise. The Borrower shall
cooperate fully with the Agent and the Lenders in an effort to facilitate and
promptly conclude any such verification process.
Section 5.15 The Blocked Account.
(a) The Borrower shall establish and maintain one or more special
lockboxes or blocked accounts (each, a "Blocked Account") owned by the Borrower
with such bank(s) as may be selected by the Borrower and approved by the Agent
and which shall provide that all proceeds of the Collateral which shall be
received in such Blocked Account shall be remitted in immediately available
funds to the Clearing Account. Each such Blocked Account bank shall agree to
the Agent's standard Blocked Account Letter or such variation thereof as shall
be mutually satisfactory to the Agent and such bank. All amounts which shall be
deposited into any Blocked Account shall immediately be under the sole dominion
and exclusive control of the Agent, on behalf of the Issuing Banks and Lenders,
and the Borrower shall have no right to withdraw such amounts, and all of the
Blocked Account Letters shall so provide.
(b) The Borrower shall cause all proceeds of Collateral to be promptly
deposited directly into a Blocked Account or the Clearing Account.
Additionally, the Borrower shall cause all Tuning Patent Royalties and other
payments to be made to the Borrower under any License Agreement to be promptly
deposited by the obligor thereof directly into the Blocked Account (and the
Borrower has issued such payment instructions to all licensees under such
License Agreements in effect as of the Agreement Date and will issue such
payment instructions to all licensees under any License Agreement entered into
after the Agreement Date). In the event that the Borrower shall at any time
receive any remittances of any of the foregoing directly, the Borrower shall
hold the same as trustee for the Agent, shall segregate such remittances from
its other assets, and shall promptly deposit the same into the Clearing
Account. All cash, cash equivalents, checks, notes, drafts or similar items of
payment received by the Borrower otherwise than as provided elsewhere in this
Section
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5.15 (b) shall be deposited into the Clearing Account, the Blocked Account or
an account which pursuant to Section 5.15(d) hereof is subject to a Blocked
Account Letter.
(c) On the Business Day on which any amount is deposited into the
Clearing Account in immediately available funds the Agent shall withdraw such
amount from the Clearing Account, deposit the same in the Loan Account, and
apply the same against the Obligations in the manner provided for in Section
2.11 hereof; provided, however, and notwithstanding the foregoing, that unless
an Event of Default then exists, no money on deposit in the Clearing Account
shall be applied against any Eurodollar Advance if such application would
constitute a prepayment of such Eurodollar Advance prior to its Payment Date,
and such funds shall be retained in the Clearing Account (and will be invested
by the Agent in overnight deposits for the Borrower's account) until the earlier
of (i) such Payment Date, (ii) the next Business Day on which additional
Obligations arise, or (iii) the occurrence of an Event of Default, at which time
such amount shall be applied to such Eurodollar Advance or such Obligations (in
accordance with the provisions of Section 2.11 hereof), as the case may be;
provided further, however, that unless an Event of Default then exists, if at
any time there are no Revolving Loans outstanding, any funds on deposit in the
Clearing Account at such time shall be delivered to the Borrower upon the
Borrower's request.
(d) The Borrower shall not open any other deposit account unless the
depository bank for such account shall have entered into an agreement with the
Agent substantially in the form of the Blocked Account Letters. As of the
Agreement Date, all bank accounts of the Borrower are listed on Schedule
5.15(d).
Section 5.16 Further Assurances. The Borrower will promptly cure, or
cause to be cured, defects in the creation and issuance of any of the Notes and
the execution and delivery of the Loan Documents (including this Agreement),
resulting from any act or failure to act by the Borrower or any of the
Borrower's Subsidiaries or any employee or officer thereof. The Borrower at
its expense will promptly execute and deliver to the Agent and the Lenders, or
cause to be executed and delivered to the Agent and the Lenders, all such other
and further documents, agreements, and instruments in compliance with or
accomplishment of the covenants and agreements of the Borrower in the Loan
Documents, including this Agreement, or to correct any omissions in the Loan
Documents, or more fully to state the obligations set out herein or in any of
the Loan Documents, or to obtain any consents, all as may be necessary or
appropriate in connection therewith as may be reasonably requested.
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Section 5.17 Broker's Claims. The Borrower hereby indemnifies and agrees
to hold the Agent and each of the Lenders harmless from and against any and all
losses, liabilities, damages, costs and expenses which may be suffered or
incurred by the Agent and each of the Lenders in respect of any claim, suit,
action or cause of action now or hereafter asserted by a broker or any Person
acting in a similar capacity arising from or in connection with the execution
and delivery of this Agreement or any other Loan Document or the consummation
of the transactions contemplated herein or therein.
Section 5.18 Indemnity. The Borrower will indemnify and hold harmless the
Agent, the Issuing Banks and each of the Lenders and each of their respective
employees, representatives, officers and directors from and against any and all
claims, liabilities, investigations, losses, damages, actions, and demands by
any party against the Agent, the Lenders, or any of them resulting from any
breach or alleged breach by the Borrower of any representation or warranty made
hereunder, or otherwise arising out of the Commitment or the making,
administration or enforcement of the Loan Documents and the Loans; unless, with
respect to any of the above, the Agent, the Lenders, or any of them are finally
judicially determined to have acted or failed to act with gross negligence or
wilful misconduct. This Section 5.18 shall survive termination of this
Agreement.
Section 5.19 Environmental Matters. The conduct of each of the Borrower's
and its Subsidiary's business operations will not materially violate any
Environmental Laws, and the Borrower will not use or permit any other party to
use any Hazardous Materials at any of its places of business except such
materials as are incidental to the Borrower's or such Subsidiary's normal
course of business, maintenance and repairs, and then only in material
compliance with all applicable Environmental Laws. The Borrower shall apply
for and/or timely renew all permits required for the business operations at its
places of business. The Borrower shall promptly notify the Agent in writing of
(i) any and all enforcement, cleanup, remedial, removal, or other governmental
or regulatory actions instituted, completed or threatened in writing pursuant
to any applicable Environmental Law; and (ii) all claims made or threatened by
any third party against the Borrower or any Subsidiary of the Borrower relating
to damages, contribution, cost recover compensation, loss or injury resulting
from any Hazardous Materials which, in either case, could reasonably be
expected to result in liability under Environmental Laws in excess of $400,000.
The Borrower shall promptly notify the Agent of any remedial action taken by
the Borrower or any Subsidiary of
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the Borrower pursuant to Environmental Laws with respect to the Borrower's or
such Subsidiary's business operations.
Section 5.20 Warehouse Arrangement. The Borrower shall at all times make
any payments due and owing to GATX Logistics, Inc. pursuant to any warehousing
agreement at the time such payments are due (subject to applicable grace
periods contained therein), and shall otherwise comply with all material
provisions of any such warehousing agreement. The Borrower acknowledges that
the Agent shall establish a reserve against the Borrowing Base in an amount
equal to the greater of (a) $1,500,000, and (b)(i) the monthly average during
the previous three (3) month period of all fees or other compensation payable
to GATX Logistics, Inc. by the Borrower, multiplied by (ii) three. At the time
the financial statements are furnished pursuant to Section 6.1, for so long as
the provisions of this Section 5.20 remain in effect, the Borrower will include
in the certificate to be delivered pursuant to Section 6.3 information with
respect to the amount of all such fees and other compensation paid by the
Borrower to GATX Logistics Inc. for each of the three (3) previous fiscal
months. Within five (5) days after the Agreement Date, the Borrower shall
provide the Agent with copies of all warehousing agreements with GATX
Logistics, Inc., and shall thereafter promptly provide the Agent with copies of
all amendments thereto and any new warehousing agreements entered into after
the Agreement Date with GATX Logistics, Inc. The provisions of this Section
5.20 shall be of no further effectiveness upon the earlier to occur of (a)
receipt by the Agent of a Lien waiver agreement executed by GATX Logistics,
Inc. in form and substance reasonably acceptable to the Agent, and (b) receipt
of an opinion in form and substance reasonably acceptable to the Agent opining
that under Applicable Law or the applicable agreements GATX Logistics, Inc. has
no Lien.
Section 5.21 Dissolution of Finance Corp. The Borrower shall take all
actions necessary to cause Finance Corp. to dissolve itself or otherwise
terminate and wind up its business, and transfer all of its assets to the
Borrower, and provide the Agent with evidence of the same, by no later than
July 31, 1998.
Section 5.22 Post Closing Deliveries. The Borrower shall deliver to the
Agent (a) within forty five (45) days after the Agreement Date, an appraisal and
a Phase I environmental audit report, each in form and substance satisfactory
to the Agent, for each parcel of real property owned by the Borrower and
located in the United States; (b) within twenty (20) days after the Agreement
date, copies of employment contracts for key management level employees of the
Borrower; and (c) within thirty (30) days
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after the Agreement date, duly executed supplements to the Intellectual
Property Security Agreements, and such other documents and instruments,
including amendments to UCC-1 financing statements, as is necessary to grant
to the Agent, for the benefit of the Lenders, a first priority security
interest in any HDTV Patents or Trademarks of the Borrower not already subject
to such security interest.
ARTICLE 6
INFORMATION COVENANTS
So long as any of the Obligations are outstanding and unpaid or the
Borrower has a right to borrow, or have Letters of Credit issued, hereunder
(whether or not the conditions to borrowing have been or can be fulfilled) and
unless the Majority Lenders shall otherwise consent in writing, the Borrower
will furnish or cause to be furnished to each Lender and to the Agent at their
respective offices:
Section 6.1 Monthly Financial Statements and Information. Within thirty
(30) days after each fiscal month end in each year of the Borrower, the balance
sheet of the Borrower as at the end of such fiscal month, and the related
statement of income and related statement of cash flows of the Borrower for
such fiscal month and for the elapsed portion of the year ended with the last
day of such fiscal month, all of which shall be on a consolidated basis with
the Borrower's Subsidiaries and certified by the Authorized Signatory of the
Borrower, in his or her opinion, to present fairly, in accordance with GAAP,
the financial position of the Borrower, as at the end of such period and the
results of operations for such period, and for the elapsed portion of the year
ended with the last day of such period, subject only to normal year-end
adjustments.
Section 6.2 Intentionally Omitted.
Section 6.3 Performance Certificates. At the time the financial statements
are furnished pursuant to Section 6.1 for the months of September and December,
a certificate of an Authorized Signatory of the Borrower in the form of Exhibit
I attached hereto:
(a) Setting forth as at the end of such quarter all domestic Subsidiaries
of the Borrower (other than the Material Subsidiaries) and the total book value
of assets owned by each such Subsidiary; and
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(b) Stating that, to the best of his or her knowledge, no Default
or Event of Default has occurred as at the end of such quarter or year, as the
case may be, or, if a Default or an Event of Default has occurred, disclosing
each such Default or Event of Default and its nature, when it occurred, whether
it is continuing, and the steps being taken by the Borrower with respect to such
Default or Event of Default.
Section 6.4 Access to Accountants. The Borrower hereby authorizes the
Agent to communicate directly with the Borrower's independent public
accountants and authorizes these accountants to disclose to the Agent any and
all financial statements and other supporting financial data, including matters
relating to the annual audit and copies of any arrangement letter with respect
to its business, financial condition and other affairs. On or before the
Agreement Date, the Borrower shall deliver to its independent public
accountants a letter authorizing and instructing them to comply with the
provisions of this Section 6.4.
Section 6.5 Additional Reports.
(a) By Tuesday of each week, the Borrower shall deliver to the Agent and
to any Lender requesting the same, a Borrowing Base Certificate as of the
immediately preceding Saturday which shall be in such form as shall be
satisfactory to the Agent, (i) setting forth the amount of Inventory owned by
the Borrower, and specifically setting forth the amount of Eligible Finished
Goods VCR Inventory, Eligible Finished Goods TV and Other Inventory and
Eligible Picture Tube Inventory, (ii) containing a categorical breakdown of all
Accounts, and (iii) listing any new HDTV Patent obtained by the Borrower, and
disclosing any material impairment in the value of any HDTV Patent or of any
other Other Asset. Within fifteen (15) days after the end of each month, the
Borrower shall deliver to the agent and to the Lenders, in form acceptable to
the Agent, a detailed aged trial balance of all Accounts existing as of the
last day of the preceding month, specifying the names, addresses, face value,
dates of invoices and due dates for each Account Debtor obligated on an Account
so listed and all other information necessary to calculate Eligible Accounts as
of such last day of the preceding month, and, upon the Agent's request
therefor, copies of proof of delivery and the original copy of all documents,
including, without limitation, repayment histories and present status reports
relating to the Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as the Agent shall reasonably
request. If at any time or times any Account Debtor returns any Inventory to
the Borrower, the shipment of which generated an Account on which such Account
Debtor is
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obligated in excess of $2,000,000, the Borrower shall notify the Agent of same
immediately, specifying the reason for such return and the location and
condition of the returned Inventory.
(b) Promptly upon receipt thereof, the Borrower shall deliver to the
Agent and the Lenders copies of all final reports, if any, submitted to the
Borrower by its independent public accountants in connection with any annual or
interim audit of the Borrower or any of the Borrower's Subsidiaries, including,
without limitation, any final management report prepared in connection with any
annual audit;
(c) Promptly after the sending thereof, the Borrower shall deliver to the
Agent and the Lenders copies of all financial statements, reports and other
information which the Borrower or any of the Borrower's Subsidiaries sends to
any holder of its Indebtedness or its securities or which the Borrower or any
of the Borrower's Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange;
(d) The Borrower shall deliver to the Agent on behalf of the Lenders
promptly after the same become available copies of the semi-annual unaudited
and annual audited balance sheet of LGE as at the end of each such period,
respectively, and the related statements of income and cash flows of LGE for
such period, all on a consolidated and consolidating basis with LGE's
Subsidiaries;
(e) From time to time and promptly upon each request the Borrower shall
deliver to the Agent on behalf of the Lenders such data, certificates, reports,
statements, opinions of counsel, documents, or further information regarding
the business, assets, liabilities, financial position, projections, results of
operations, or business prospects of the Borrower or any of the Borrower's
Subsidiaries as the Agent may reasonably request.
Section 6.6 Notice of Litigation and Other Matters.
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(a) Within five (5) Business Days of the Borrower's obtaining knowledge of
the institution of, or written threat of, any action, suit, governmental
investigation or arbitration proceeding against the Borrower or any of the
Borrower's Subsidiaries or any Property, which action, suit, governmental
investigation or arbitration proceeding exposes, in the Borrower's reasonable
judgment, the Borrower or any of the Borrower's Subsidiaries to liability in an
aggregate amount in excess of $400,000, the Borrower shall notify the Agent,
and the Lenders of the occurrence thereof, and the Borrower shall provide such
additional information with respect to such matters as the Agent or the Lenders
may reasonably request (including the information required by Section 6.6 (j);
provided, however, that if the claim is covered by insurance and the insurer
has acknowledged coverage and assumed the defense of such suit, the payment or
value must be $400,000 in excess of the insurance coverage;
(b) The Borrower shall notify the Agent and the Lenders within five (5)
Business Days of the Borrower becoming aware of (i) any labor dispute which may
result in claims or losses from operations greater than $400,000 in the
aggregate not covered by insurance to which the Borrower or any of the
Borrower's Subsidiaries may become a party, including, without limitation, any
strikes, lockouts or other disputes relating to their respective plants and
other facilities and (ii) any liability greater than $400,000 in the aggregate
not covered by insurance and incurred with respect to any closing of any plant
or other facility of the Borrower or any of the Borrower's Subsidiaries;
(c) Within (i) one (1) Business Day of the demand by any lender of any
Additional Unsecured Debt, or by LGE in connection with the LGE Debt, the
Reimbursement Agreement or any other LGE Obligation, for the repayment of all
or any portion of the principal thereof, the Borrower shall notify the Agent
and the Lenders of the occurrence thereof, and (ii) three (3) Business Days' of
the occurrence of any default (whether or not the Borrower has received notice
thereof from any other Person) on Indebtedness of the Borrower or any
Subsidiary of the Borrower which singly, or in the aggregate exceed $1,000,000,
the Borrower shall notify the Agent and the Lenders of the occurrence thereof;
(d) Within fifteen (15) days of the occurrence of any default on any
Indebtedness of any Person owed to the Borrower, which singly or in the
aggregate exceeds $2,000,000, the Borrower shall notify the Agent and the
Lenders of the occurrence thereof;
(e) Promptly upon the Borrower's receipt of notice or the pendency of any
proceeding for the condemnation or other taking
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of any real property of the Borrower or any of the Borrower's Subsidiaries, the
Borrower shall notify the Agent and the Lenders of the occurrence thereof;
(f) Promptly upon the Borrower's receipt of notice of any material adverse
change with respect to the business, assets, liabilities, financial position,
or results of operations of the Borrower or any of the Borrower's Subsidiaries,
other than changes in the ordinary course of business which have not had and
are not likely to have a Materially Adverse Effect, the Borrower shall notify
the Agent and the Lenders of the occurrence thereof;
(g) Promptly following any (i) Default under any Loan Document, or any
default by the Borrower under any Subordinated Debenture, the LGE Debt, the
Reimbursement Agreement or any other LGE Obligation or the Additional Unsecured
Debt, or (ii) default under any other agreement (other than those referenced in
clause (i) of this Section 6.6 (h) above) to which the Borrower or any of the
Borrower's Subsidiaries is a party or by which any of their respective
properties is bound which could reasonably be expected to have a Materially
Adverse Effect, then the Borrower shall notify the Agent and the Lenders of the
occurrence thereof giving in each case the details thereof and specifying the
action proposed to be taken with respect thereto;
(h) Promptly following the occurrence of any event subsequent to the
Agreement Date which, if such event had occurred prior to the Agreement Date,
would have constituted an exception to the representation and warranty in
Section 4.1(x) of this Agreement, the Borrower shall notify the Agent and the
Lenders of the occurrence thereof;
(i) Promptly following the occurrence of any Reportable Event or a
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Plan of the Borrower or any of
its ERISA Affiliates or the institution or threatened institution by the
Pension Benefit Guaranty Corporation of proceedings under ERISA to terminate or
to partially terminate any such Plan or the commencement or threatened
commencement of any litigation regarding any such Plan or naming it or the
trustee of any such Plan with respect to such Plan (other than claims for
benefits in the ordinary course of business), the Borrower shall notify the
Agent and the Lenders of the occurrence thereof; and
(j) Promptly following the filing or service of any material pleadings, or
the entry of any order, judgment or other ruling in the Funai Litigation, the
Borrower shall provide copies of such pleadings, order, judgment or other
ruling to the Agent and the Lenders (except to the extent such documents are
filed
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under seal, protected by court order or otherwise required to be maintained as
confidential by the court).
ARTICLE 7
NEGATIVE COVENANTS
So long as any of the Obligations are outstanding and unpaid or the
Borrower has a right to borrow, or have Letters of Credit issued, hereunder
(whether or not the conditions to borrowing have been or can be fulfilled) and
unless the Majority Lenders shall otherwise give their prior consent in
writing:
Section 7.1 Indebtedness. The Borrower will not create, assume, incur, or
otherwise become or remain obligated in respect of, or permit to be
outstanding, and will not permit any of the Borrower's Subsidiaries to create,
assume, incur, or otherwise become obligated in respect of, or permit to be
outstanding, any Indebtedness except:
(a) Indebtedness under this Agreement and the other Loan Documents;
(b) Indebtedness under the Subordinated Debentures;
(c) Trade or accounts payable and/or similar obligations, and accrued
expenses, incurred in the ordinary course of business, other than for borrowed
money;
(d) Indebtedness secured by Permitted Liens described in clause (f) of
the definition of Permitted Liens set forth in Article 1 hereof and Capitalized
Lease Obligations, collectively, not to exceed the aggregate principal amount
of $6,000,000 at any time;
(e) the LGE Obligations;
(f) Guaranties permitted by Section 7.2; and
(g) (i) the Additional Unsecured Debt, and (ii) other unsecured
Indebtedness incurred by the Borrower not to exceed $2,000,000 in the aggregate
outstanding from time to time.
Section 7.2 Guaranties. The Borrower will not at any time guarantee or
enter into or assume any Guaranty, or be obligated with respect to, or permit
to be outstanding, any Guaranty and will not permit any of the Borrower's
Subsidiaries at any time to guarantee or enter into or assume any Guaranty, or
be obligated
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with respect to, or permit to be outstanding, any Guaranty, in each case other
than (a) obligations under repurchase agreements of the Borrower entered into
in connection with the sale of products in the ordinary course of business of
the Borrower, (b) obligations under agreements to indemnify persons or entities
which have issued bid or performance bonds or letters of credit in the ordinary
course of business of the Borrower securing performance by the Borrower of
activities permissible hereunder, (c) obligations under agreements of the
Borrower entered into in connection with the acquisition of services, supplies,
and equipment in the ordinary course of business of the Borrower, (d) the
Borrower may guaranty Indebtedness of any Material Subsidiary permitted to be
incurred by such Material Subsidiary under clause (c) or (d) of Section 7.1
hereof, (e) endorsements of instruments in the ordinary course of business, and
(f) other obligations of any Affiliate, which do not exceed $1,000,000 in the
aggregate outstanding at any time.
Section 7.3 Liens. The Borrower will not create, assume, incur, or permit
to exist or to be created, assumed, or permitted to exist, directly or
indirectly, and will not permit any of the Borrower's Subsidiaries to create,
assume, incur, or permit to exist or to be created, assumed, or permitted to
exist, directly or indirectly, any Lien on any of its property, real or
personal, now owned or hereafter acquired, except for Permitted Liens.
Section 7.4 Restricted Payments and Purchases. The Borrower shall not
directly or indirectly declare or make, and shall not permit any of the
Borrower's Subsidiaries to directly or indirectly declare or make, any
Restricted Payment or Restricted Purchase, or set aside any funds for any such
purpose; provided, however, the Borrower's Subsidiaries may make Restricted
Payments to the Borrower.
Section 7.5 Investments. The Borrower will not make and will not permit
any of its Subsidiaries to make any loan or advance to, or otherwise acquire for
consideration evidences of Indebtedness, Capital Stock, partnership interests
or other securities of or equity interests in any third party, except that (a)
the Borrower may purchase or otherwise acquire and own and may permit any of
its Subsidiaries to purchase or otherwise acquire and own, (i) marketable,
direct obligations of the United States of America and its agencies maturing
within three hundred sixty-five (365) days of the date of purchase, (ii)
commercial paper issued by corporations, each of which shall (A) have a
consolidated net worth of at least $250,000,000, and (B) conduct substantially
all of its business in the United States of America, which commercial paper
will mature within one hundred eighty (180) days from the date of the original
issue thereof and
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is rated "P-1" or better by ▇▇▇▇▇'▇ Investors Service, Inc., or "A-1+" or
better by Standard & Poor's Corporation, (iii) certificates of deposit
maturing within three hundred sixty-five (365) days of the date of purchase and
issued by a United States national or state bank having deposits totaling more
than $250,000,000, and whose short-term debt is rated "P-1" or better by ▇▇▇▇▇'▇
Investors Service, Inc. or "A-1+" or better by Standard & Poor's Corporation,
and (iv) up to $100,000 per institution and up to $1,000,000 in the aggregate
in (A) short-term obligations issued by any local commercial bank or trust
company located in those areas where the Borrower conducts its business, whose
deposits are insured by the Federal Deposit Insurance Corporation, or (B)
commercial bank-insured money market funds, or any combination of investments
described in clauses (A) and (B); (b) the Borrower may hold the Investments in
existence on the Agreement Date and described on Schedule 4.1(l); (c) so long
as no Default or Event of Default shall have occurred and be continuing, the
Borrower may convert any of its Accounts that are in excess of ninety (90) days
past due into notes or equity interests from the applicable Account Debtor so
long as the Agent is granted a first priority security interest in such equity
or note which Lien is perfected contemporaneously with the conversion of such
Account to equity or notes, (d) the Borrower may hold the Finance Corp.
Subordinated Notes, (e) the Borrower may hold the Capital Stock of its
Subsidiaries in existence on the Agreement Date or formed in accordance with
Section 7.7(g), and (f) the Borrower may make loans or advances to any Material
Subsidiary and any Material Subsidiary may make loans or advances to any other
Material Subsidiary.
Section 7.6 Affiliate Transactions. The Borrower shall not, and shall not
permit its Subsidiaries to, enter into or be a party to any agreement or
transaction with any Affiliate except (a) the Borrower and its Material
Subsidiaries may purchase Inventory from any Mexican Subsidiary in the ordinary
course of business and in a manner consistent with past business practices;
provided, that the amount advanced to any Mexican Subsidiary for such Inventory
production, together with the cash on hand or on deposit held by such Mexican
Subsidiary, shall not exceed the cash needs of such Mexican Subsidiary for
working capital during the period of seven consecutive days following any date
of determination, (b) as listed on Schedule 7.6 hereto, or (c) in the ordinary
course of and pursuant to the reasonable requirements of the Borrower's or such
Subsidiaries business and upon fair and reasonable terms that are no less
favorable to the Borrower or to such Subsidiary than it would obtain in a
comparable arms length transaction with a Person not an Affiliate of Borrower,
and on terms consistent with the business relationship of Borrower or such
Subsidiary and such Affiliate
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prior to the Agreement Date, if any; provided that any contracts, purchase
orders, or other transactions between the Borrower or any Material Subsidiary,
on one hand, and any Affiliate, on the other hand, that provide for payments
in excess of $3,000,000 in a single contract, purchase order or transaction or
a series of related contracts, purchase orders or transactions shall be
summarized in a quarterly report prepared by the Borrower certified by an
Authorized Signatory of the Borrower and delivered to the Agent within
forty-five (45) days following the last day of each fiscal quarter. Nothing
contained in this Agreement shall prohibit increases in compensation and
benefits for officers and employees of the Borrower or any of the Borrower's
Subsidiaries which are customary in the industry or consistent with the past
business practice of the Borrower or any of the Borrower's Subsidiaries, or
payment of customary directors' fees and indemnities.
Section 7.7 Liquidation; Change in Ownership, Name, or Year; Disposition or
Acquisition of Assets; Etc. The Borrower shall not, and shall not permit any
of the Borrower's Subsidiaries to, at any time:
(a) Liquidate or dissolve itself (or suffer any liquidation or dissolution)
or otherwise wind up its business; provided, however, that Finance Corp. shall
(as provided in Section 5.21), and Productos Magneticos de Chihuahau, S.A. de
C.V., ▇▇▇▇▇▇, ▇.▇. de C.V. and any Immaterial Subsidiary may, dissolve or
liquidate;
(b) Sell, lease, abandon, transfer or otherwise dispose of, in a single
transaction or a series of related transactions, any assets, property or
business except for the sale of Inventory in the ordinary course of business at
the fair market value thereof and for cash or cash equivalents and except for
physical assets used, consumed or otherwise disposed of in the ordinary course
of business; provided, however, that (i) the Borrower may sell or otherwise
dispose of assets (other than Collateral) with a sale value not greater than
$1,000,000 in the aggregate for all such assets that may be sold during any
year if the Net Cash Proceeds from such sale are applied to the Loans as
required by Section 2.6(c), (ii) the Borrower may sell the Woodridge Property
provided (A) the Borrower receives gross proceeds from such sale of not less
than $6,000,000, (B) the Borrower delivers to the Agent a copy of the closing
statement for such sale promptly after the consummation thereof, and (C) any
Net Cash Proceeds in excess of $6,500,000 received by the Borrower in
connection with such sale shall be paid on the date of receipt thereof by the
Borrower to the Lenders as a mandatory repayment of the Revolving Loans (but
such payment shall not reduce the Commitment), and (iii) the Borrower may sell
the Glenview Property provided (A) no
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Event of Default then exists, (B) the Borrower receives Net Cash Proceeds from
such sale of not less than $20,000,000, (C) the Borrower delivers to the Agent
a copy of the closing statement for such sale promptly after the consummation
thereof,(D) Net Cash Proceeds in an amount of $20,000,000 received by the
Borrower in connection with such sale shall be paid on the date of receipt
thereof by the Borrower to the Lenders as a mandatory repayment of the
Revolving Loans (but such payment shall not reduce the Commitment), and any Net
Cash Proceeds in excess of $20,000,000 are retained by the Borrower for general
corporate purposes, and (E) the advance amount in connection with the Other
Assets set forth in clause (f) of the Borrowing Base is permanently reduced by
$20,000,000;
(c) Become a partner or joint venturer with any third party;
(d) Acquire (i) all or any substantial part of the assets, property or
business of, or (ii) any assets that constitute a division or operating unit of
the business of, any other Person;
(e) Merge or consolidate with any other Person, except that any Subsidiary
of the Borrower may be merged into or consolidated with the Borrower or another
Wholly-Owned Subsidiary of the Borrower; provided that the Borrower is the
surviving entity in any such merger or consolidation, or if the Borrower is not
a party to such merger or consolidation but any Material Subsidiary is a
party to such merger or consolidation, the surviving entity is a Material
Subsidiary;
(f) Change its corporate name without giving the Agent thirty (30) days
prior written notice of its intention to do so and complying with all reasonable
requirements of the Lenders in regard thereto;
(g) Create any Subsidiary, except for the creation of a Wholly-Owned
Subsidiary of the Borrower provided; that (i) such Subsidiary is organized
under the laws of a jurisdiction within the United States of America, (ii) (A)
if such Subsidiary is or becomes a Material Subsidiary, such Subsidiary
executes at the time of its creation (or within thirty (30) days after it
becomes a Material Subsidiary) a Supplement to the Subsidiary Guaranty in favor
of the Agent, the Issuing Banks and the Lenders in the form of Exhibit J
attached hereto and a Supplement to the Subsidiary Security Agreement in favor
of the Agent, the Issuing Banks and the Lenders in the form of Exhibit K
attached hereto, (B) if such Subsidiary is a domestic Subsidiary, the Borrower
executes an amendment to the Pledge Agreement for purposes of pledging the
stock of such Subsidiary to the Agent pursuant to the terms of
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the Pledge Agreement, and (C) if such Subsidiary is a domestic Subsidiary, or
is or becomes a Material Subsidiary, the Borrower and such Subsidiary take all
steps required and execute all necessary documents (including UCC-1 financing
statements) to perfect the security interest of the Agent in the Capital Stock
of such domestic Subsidiary and the assets of such Material Subsidiary, and
(iii) no Default exists immediately prior to or after the creation of such
Subsidiary; or
(h) Change its year-end for accounting purposes from the calendar year ending
December 31.
Section 7.8 Intentionally Omitted.
Section 7.9 Intentionally Omitted.
Section 7.10 Intentionally Omitted.
Section 7.11 Intentionally Omitted.
Section 7.12 Intentionally Omitted.
Section 7.13 Intentionally Omitted.
Section 7.14 Tuning Patent Royalties; LGE Payable.
(a) As of the fiscal quarter ended June 30, 1998, and each fiscal quarter
end thereafter, the aggregate amount of Tuning Patent Royalties received by the
Borrower during the immediately preceding twelve (12) month period shall not be
less than $18,000,000.
(b) As of the fiscal month ended June 30, 1998, and each fiscal month end
thereafter, the aggregate average outstanding amount of the LGE Payable during
the immediately preceding six (6) month period shall not be less than
$85,000,000.
Section 7.15 Sales and Leasebacks. The Borrower will not enter into and
will not permit any of the Borrower's Subsidiaries to enter into any arrangement
(other than the Salomon Lease Transaction), directly or indirectly, with any
third party whereby the Borrower or such Subsidiary shall sell or transfer any
property, real or personal, whether now owned or hereafter acquired, and
whereby the Borrower or such Subsidiary shall then or thereafter rent or lease
as lessee such property or any part thereof or other property which the
Borrower or such Subsidiary intends to use for substantially the same purpose
or purposes as the property sold or transferred.
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Section 7.16 Amendment and Waiver. The Borrower shall not, without the
prior written consent of the Majority Lenders, enter into any amendment of, or
agree to or accept any waiver which would adversely affect the rights of the
Agent, the Lenders and the Issuing Banks under this Agreement or any other Loan
Document, of (a) its certificate of incorporation and by-laws, (b) the
Subordinated Debentures, or (c) the Reimbursement Agreement and any document
evidencing or securing the Reimbursement Agreement, Additional Unsecured Debt
or LGE Debt.
Section 7.17 ERISA Liability. The Borrower and each of the Borrower's
Subsidiaries shall not fail to meet all of the applicable minimum funding
requirements of ERISA and the Code, without regard to any waivers thereof, and,
to the extent that the assets of any of its Plans would be less than an amount
sufficient to provide all accrued benefits payable under such Plans, shall make
the maximum deductible contributions allowable under the Code. Neither the
Borrower nor any of the Borrower's Subsidiaries shall (a) become a participant
in any Multiemployer Plan after the Agreement Date, or (b) withdraw from any
Multiemployer Plan if such withdrawal would result in material liability to the
Borrower or any Subsidiary.
Section 7.18 Prepayments. The Borrower shall not prepay, redeem, defease or
purchase in any manner, or deposit or set aside funds for the purpose of any of
the foregoing, make any payment in respect of principal of, or make any payment
in respect of interest on, (a) the LGE Payable; provided, however, that so long
as no Default or Event of Default is then existing or would be caused thereby,
the Borrower may make current payments of accounts due on the LGE Payable, and
the accrued interest thereon, if the outstanding aggregate balance of the LGE
Payable remains equal to or greater than the amount required by Section
7.14 (b); and (b) any Funded Debt (including the Subordinated Debentures),
except the Borrower may (i) make regularly scheduled payments of principal or
interest required in accordance with the terms of the instruments governing any
Funded Debt permitted hereunder, and (ii) make payments with respect to the
Obligations; provided, however, the Borrower shall not make any payments
(whether with respect to principal, interest, or otherwise) on or in connection
with (x) the Subordinated Debentures if such payments would violate the
subordination provisions of the Subordinated Debentures and (y) the Additional
Unsecured Debt, the Reimbursement Agreement or the LGE Debt if such payments
would violate the Subordination Agreement.
Section 7.19 Negative Pledge. The Borrower shall not, directly or
indirectly, enter into any agreement (other than the Loan Documents) with any
Person that prohibits or restricts or
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limits the ability of the Borrower to create, incur, pledge, or suffer to exist
any Lien upon any assets of the Borrower.
ARTICLE 8
DEFAULT
Section 8.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule, or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement shall prove
incorrect or misleading in any material respect when made or deemed to have
been made pursuant to Section 4.4 hereof;
(b) The Borrower shall default in the payment of any principal or interest
under the Notes, or any of them, or any reimbursement obligations with respect
to any Letter of Credit, or any fees payable hereunder or under the other Loan
Documents;
(c) The Borrower shall default in the performance or observance of any
agreement or covenant contained in Sections 5.5, 5.7, 5.9, 5.10, 5.11, 5.12,
5.13, 5.14, 5.15, 5.18, 5.20, 5.21 or 5.22, or in Article 6 or Article 7 hereof
or in any Security Document;
(d) The Borrower shall default in the performance or observance of (i)
Section 5.19 hereof, and such default shall not be cured to the Majority
Lenders' satisfaction within a period of ten (10) days from the date that the
Borrower knew or should have known of the occurrence of such default, or (ii)
any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be cured
to the Majority Lenders' satisfaction within a period of thirty (30) days from
the date that the Borrower knew or should have known of the occurrence of such
default;
(e) There shall occur any default in the performance or observance of any
agreement or covenant or breach of any representation or warranty contained in
any of the other Loan Documents (other than this Agreement or the Security
Documents or as otherwise provided in this Section 8.1) which shall not be
cured to the Majority Lenders' satisfaction within the applicable
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cure period, if any, provided for in such Loan Document, or, if there is no
applicable cure period set forth in such Loan Document, within a period of
thirty (30) days from the date that the Borrower knew or should have known of
the occurrence of such default;
(f) There shall occur any Change of Control of the Borrower;
(g) There shall be entered a decree or order for relief in respect of the
Borrower or any of the Borrower's Subsidiaries under the Bankruptcy Code, or
any other applicable federal or state bankruptcy law or other similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator,
or similar official of the Borrower or any of the Borrower's Subsidiaries, or
of any substantial part of their respective properties, or ordering the
winding-up or liquidation of the affairs of the Borrower or any of the
Borrower's Subsidiaries, or an involuntary petition shall be filed against the
Borrower or any of the Borrower's Subsidiaries, and a temporary stay entered,
and (i) such petition and stay shall not be diligently contested, or (ii) any
such petition and stay shall continue undismissed for a period of sixty (60)
consecutive days;
(h) Any of the Borrower or any of the Borrower's Subsidiaries shall file a
petition, answer, or consent seeking relief under the Bankruptcy Code, or any
other applicable federal or state bankruptcy law or other similar law, or the
Borrower or any of the Borrower's Subsidiaries shall consent to the institution
of proceedings thereunder or to the filing of any such petition or to the
appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official of the Borrower or
any of the Borrower's Subsidiaries, or of any substantial part of their
respective properties, or the Borrower or any of the Borrower's Subsidiaries
shall fail generally to pay their respective debts as they become due, or the
Borrower or any of the Borrower's Subsidiaries shall take any action in
furtherance of any such action;
(i) There shall be entered a decree or order for relief in respect of LGE
(or any other direct or indirect holding company between the Borrower and LGE
holding five percent (5%) or more of the Capital Stock of the Borrower or of
any class thereof) under the Bankruptcy Code, or any other applicable federal
or state bankruptcy law or other similar law (including without limitation the
laws of Korea), or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator, or similar official of LGE (or any other direct or
indirect holding company between
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the Borrower and LGE holding five percent (5%) or more of the Capital Stock of
the Borrower or of any class thereof), or of any substantial part of their
respective properties, or ordering the winding-up or liquidation of the affairs
of LGE (or any other direct or indirect holding company between the Borrower
and LGE holding five percent (5%) or more of the Capital Stock of the Borrower
or of any class thereof), or an involuntary petition shall be filed against LGE
(or any other direct or indirect holding company between the Borrower and LGE
holding five percent (5%) or more of the Capital Stock of the Borrower or of
any class thereof), and a temporary stay entered, and (i) such petition and
stay shall not be diligently contested, or (ii) any such petition and stay
shall continue undismissed for a period of sixty (60) consecutive days;
(j) LGE (or any other direct or indirect holding company between the
Borrower and LGE holding five percent (5%) or more of the Capital Stock of the
Borrower or of any class thereof) shall file a petition, answer, or consent
seeking relief under the Bankruptcy Code, or any other applicable federal or
state bankruptcy law or other similar law (including, without limitation, the
laws of Korea), or LGE (or any other direct or indirect holding company between
the Borrower and LGE holding five percent (5%) or more of the Capital Stock of
the Borrower or of any class thereof) shall consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official of LGE (or any
other direct or indirect holding company between the Borrower and LGE holding
five percent (5%) or more of the Capital Stock of the Borrower or of any class
thereof), or of any substantial part of their respective properties, or LGE (or
any other direct or indirect holding company between the Borrower and LGE
holding five percent (5%) or more of the Capital Stock of the Borrower or of
any class thereof) shall fail generally to pay their respective debts as they
become due, or LGE (or any other direct or indirect holding company between the
Borrower and LGE holding five percent (5%) or more of the Capital Stock of the
Borrower or of any class thereof) shall take any action in furtherance of any
such action;
(k) A final judgment (other than a money judgment fully covered by insurance
as to which the insurance company has acknowledged coverage) shall be entered
by any court against any of the Borrower or any of the Borrower's Subsidiaries
for the payment of money which exceeds $1,000,000, or a warrant of attachment
or execution or similar process shall be issued or levied against property of
any of the Borrower or any of the Borrower's Subsidiaries pursuant to a final
judgment which,
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together with all other such property of the Borrower and the Borrower's
Subsidiaries subject to other such process, exceeds in value $1,000,000 in the
aggregate, and if, within sixty (60) days after the entry, issue, or levy
thereof, such judgment, warrant, or process shall not have been paid or
discharged or stayed pending appeal, or if, after the expiration of any such
stay, such judgment, warrant, or process shall not have been paid or discharged;
(l) There shall be at any time any "accumulated funding deficiency," as
defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by any of the Borrower and its ERISA Affiliates, or to which the
Borrower or any of its ERISA Affiliates has any liabilities, or any trust
created thereunder; or a trustee shall be appointed by a United States District
Court to administer any such Plan; or the Pension Benefit Guaranty Corporation
shall institute proceedings to terminate any such Plan; or any of the Borrower
and its ERISA Affiliates shall incur any liability to the Pension Benefit
Guaranty Corporation in connection with the termination of any such Plan; or
any Plan or trust created under any Plan of any of the Borrower and its ERISA
Affiliates shall engage in a non-exempt "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) which would
subject any such Plan, any trust created thereunder, any trustee or
administrator thereof, or any party dealing with any such Plan or trust to any
material tax or penalty on "prohibited transactions" imposed by Section 502 of
ERISA or Section 4975 of the Code or the Borrower or any of its ERISA
Affiliates shall enter into or become obligated after the Agreement Date to
contribute to a Multiemployer Plan;
(m) (i) LGE shall accelerate or otherwise demand repayment of any obligation
under the Reimbursement Agreement, the LGE Debt or any other LGE Obligation, or
LGE shall take any action to collect any LGE Obligation or exercise or enforce
any right or remedy under the Reimbursement Agreement, the LGE Debt, or any
document evidencing or securing any LGE Obligation, or LGE shall terminate the
LGE Debt line of credit; or (ii) there shall occur any default (after the
expiration of any applicable cure period) under any indenture, agreement, or
instrument evidencing Indebtedness(other than the LGE Obligations and the
Salomon Lease Transaction) of the Borrower or any of the Borrower's
Subsidiaries in an aggregate principal amount exceeding $2,000,000, including,
without limitation, the Subordinated Debentures; or (iii) there shall occur any
default (after the expiration of any applicable cure period) under the Salomon
Lease Transaction and all obligations of the Borrower under the Salomon Lease
Transaction shall not be satisfied by LGE within three (3)
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Business Days thereafter; provided, the documentation setting forth and
evidencing LGE's payment of such obligations, and subrogation to any rights of
the lessor thereunder, and the Subrogation Obligations, shall be in form and
substance reasonably acceptable to the Agent
(n) All or any portion of any Security Document shall at any time and for
any reason be declared to be null and void, or a proceeding shall be commenced
by the Borrower or any of its Affiliates, or by any governmental authority
having jurisdiction over the Borrower or any of its Affiliates, seeking to
establish the invalidity or unenforceability thereof (exclusive of questions of
interpretation of any provision thereof), or the Borrower or any of its
Affiliates shall deny that it has any liability or obligation for the payment
of principal or interest purported to be created under any Loan Document;
(o) There shall occur any event or occurrence which, singly or when
aggregated with other events or occurrences, has a Materially Adverse Effect;
(p) Any Tuning Patent, any License Agreement relating thereto or any of the
Borrower's right, title or interest in and to such Tuning Patent or License
Agreement, shall become invalid or shall be terminated or shall otherwise no
longer be enforceable by or for the benefit of the Borrower;
(q) Any lender of any Additional Unsecured Debt shall accelerate such
Additional Unsecured Debt or otherwise demand the repayment of all or part of
the outstanding principal balance thereof (whether from the Borrower, LGE or
any other obligor thereon) and such Additional Unsecured Debt is not (A)
refinanced or otherwise replaced with Funded Debt having substantially similar
terms, and evidenced by documentation in form and substance acceptable to the
Agent, within three (3) Business Days, or (B) satisfied by LGE within three (3)
Business Days; or
(r) LGE shall revoke or otherwise rescind any guaranty of LGE of any
Additional Unsecured Debt or shall contest the validity or enforceability of
the Subordination Agreement.
Section 8.2 Remedies. If an Event of Default shall have occurred and
shall be continuing, in addition to the rights and remedies set forth elsewhere
in this Agreement and the Loan Documents:
(a) With the exception of an Event of Default specified in Section 8.1(g) or
(h), the Agent, at the direction of the Majority Lenders, shall (i) terminate
the Commitments and the
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Letter of Credit Commitment, or (ii) declare the principal of and interest on
the Loans and the Notes and all other Obligations to be forthwith due and
payable without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived, anything in this Agreement or in the Notes
to the contrary notwithstanding, or both.
(b) Upon the occurrence and continuance of an Event of Default specified in
Sections 8.1(g) or (h), such principal, interest, and other Obligations shall
thereupon and concurrently therewith become due and payable, and the
Commitments and the Letter of Credit Commitment, shall forthwith terminate, all
without any action by the Agent or the Lenders or the Majority Lenders or the
holders of the Notes and without presentment, demand, protest, or other notice
of any kind, all of which are expressly waived, anything in this Agreement or
in the Notes to the contrary notwithstanding.
(c) The Agent, with the concurrence of the Majority Lenders, shall exercise
all of the post-default rights granted to it and to them under the Loan
Documents or under Applicable Law. The Agent, for the benefit of itself, the
Issuing Banks and the Lenders, shall have the right to the appointment of a
receiver for the Property of the Borrower, and the Borrower hereby consents to
such rights and such appointment and hereby waives any objection the Borrower
may have thereto or the right to have a bond or other security posted by the
Agent, the Issuing Banks or the Lenders in connection therewith.
(d) In regard to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of any acceleration of the
Obligations pursuant to the provisions of this Section 8.2, the Borrower shall
promptly upon demand by the Agent deposit in a Letter of Credit Reserve Account
opened by Agent for the benefit of the Issuing Bank an amount equal to the
aggregate then undrawn and unexpired amount of such Letter of Credit
Obligations. Amounts held in such Letter of Credit Reserve Account shall be
applied by the Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after such Letters of Credit shall have
expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the Notes in the manner set
forth in Section 2.11 hereof. Pending the application of such deposit to the
payment of the Reimbursement Obligations, the Agent shall, to the extent
reasonably practicable, invest such deposit in an interest bearing open account
or similar available savings deposit account and all interest accrued thereon
shall be held with such deposit as additional security for the Reimbursement
Obligations. After all such Letters of
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Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied, and all other Obligations shall have
been paid in full, the balance, if any, in such Letter of Credit Reserve
Account shall be returned to the Borrower. Except as expressly provided
hereinabove, presentment, demand, protest and all other notices of any kind are
hereby expressly waived by the Borrower.
(e) Intentionally Omitted;
(f) The rights and remedies of the Agent, the Issuing Banks and the Lenders
hereunder shall be cumulative, and not exclusive.
ARTICLE 9
THE AGENT
Section 9.1 Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its Loans and in its Notes irrevocably to appoint and
authorize, the Agent to take such actions as its agent on its behalf and to
exercise such powers hereunder as are delegated by the terms hereof, together
with such powers as are reasonably incidental thereto. Neither the Agent nor
any of its directors, officers, employees, or agents shall be liable for any
action taken or omitted to be taken by it hereunder or in connection herewith,
except for its own gross negligence or willful misconduct as determined by a
final non-appealable order of a court of competent jurisdiction.
Section 9.2 Interest Holders. The Agent may treat each Lender, or the
Person designated in the last notice filed with the Agent under this Section
9.2, as the holder of all of the interests of such Lender in its Loans and in
its Notes until written notice of transfer, signed by such Lender (or the Person
designated in the last notice filed with the Agent) and by the Person
designated in such written notice of transfer, in form and substance
satisfactory to the Agent, shall have been filed with the Agent.
Section 9.3 Consultation with Counsel. The Agent may consult with legal
counsel selected by it and shall not be liable to any Lender or any Issuing
Bank for any action taken or suffered by it in good faith in reliance on the
advice of such counsel.
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Section 9.4 Documents. The Agent shall not be under any duty to examine,
inquire into, or pass upon the validity, effectiveness, or genuineness of this
Agreement, any Note, or any instrument, document, or communication furnished
pursuant hereto or in connection herewith, and the Agent shall be entitled to
assume that they are valid, effective, and genuine, have been signed or sent by
the proper parties, and are what they purport to be.
Section 9.5 Agent and Affiliates. With respect to the Commitment and
Loans, the Lender which is affiliated with the Agent shall have the same rights
and powers hereunder as any other Lender, and the Agent and its other affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Affiliates of, or Persons doing business
with, the Borrower, as if it were not affiliated with the Agent and without any
obligation to account therefor. The Lender and the Issuing Banks acknowledge
that the Agent and its affiliates have other lending and investment
relationships with the Borrower and its Affiliates, and in the future may enter
into additional such relationships.
Section 9.6 Responsibility of the Agent. The duties and obligations of the
Agent under this Agreement are only those expressly set forth in this
Agreement. The Agent shall be entitled to assume that no Default or Event of
Default has occurred and is continuing unless it has actual knowledge, or has
been notified by the Borrower, of such fact, or has been notified by a Lender
that such Lender considers that a Default or an Event of Default has occurred
and is continuing, and such Lender shall specify in detail the nature thereof
in writing. The Agent shall provide each Lender with copies of such documents
received from the Borrower as such Lender may reasonably request.
Section 9.7 Action by Agent.
(a) The Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
by, and with respect to taking or refraining from taking any action or actions
which it may be able to take under or in respect of, this Agreement, unless the
Agent shall have been instructed by the Majority Lenders to exercise or refrain
from exercising such rights or to take or refrain from taking such action,
provided that the Agent shall not exercise any rights under Section 8.2 (a) of
this Agreement without the approval of the Majority Lenders. The Agent shall
incur no liability under or in respect of this Agreement with respect to
anything which it may do or refrain from doing in the reasonable
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exercise of its judgment or which may seem to it to be necessary or desirable
in the circumstances.
(b) The Agent shall not be liable to the Lenders or to any Lender in acting
or refraining from acting under this Agreement in accordance with the
instructions of the Majority Lenders, and any action taken or failure to act
pursuant to such instructions shall be binding on all Lenders.
Section 9.8 Notice of Default or Event of Default. In the event that the
Agent or any Lender shall acquire actual knowledge, or shall have been notified
in writing, of any Default or Event of Default, the Agent or such Lender shall
promptly notify the Lenders and the Agent, and the Agent shall take such action
and assert such rights under this Agreement as the Majority Lenders shall
request in writing, and the Agent shall not be subject to any liability by
reason of its acting pursuant to any such request. If the Majority Lenders
shall fail to request the Agent to take action or to assert rights under this
Agreement in respect of any Default or Event of Default within ten (10) days
after their receipt of the notice of any Default or Event of Default from the
Agent, or shall request inconsistent action with respect to such Default or
Event of Default, the Agent may, but shall not be required to, take such action
and assert such rights (other than rights under Article 8 hereof) as it deems
in its discretion to be advisable for the protection of the Lenders, except
that, if the Majority Lenders have instructed the Agent not to take such action
or assert such right, in no event shall the Agent act contrary to such
instructions.
Section 9.9 Responsibility Disclaimed. The Agent shall not be under any
liability or responsibility whatsoever as Agent:
(a) To the Borrower or any other Person or entity as a consequence of any
failure or delay in performance by or any breach by, any Lender or Lenders of
any of its or their obligations under this Agreement;
(b) To any Lender or Lenders, as a consequence of any failure or delay in
performance by, or any breach by, the Borrower or any other obligor of any of
its obligations under this Agreement or the Notes or any other Loan Document;
or
(c) To any Lender or Lenders for any statements, representations, or
warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other
Loan Document, or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability, or sufficiency of this
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Agreement, the Notes, any other Loan Document, or any other document
contemplated by this Agreement.
Section 9.10 Indemnification. The Lenders agree to indemnify the Agent
(to the extent not reimbursed by the Borrower) pro rata in accordance with their
Commitment Ratios from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, investigations, costs, expenses
(including fees and expenses of experts, agents, consultants, and counsel), or
disbursements of any kind or nature (whether or not the Agent is a party to any
such action, suit or investigation) whatsoever which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement, any other Loan Document, or any other document
contemplated by this Agreement or any action taken or omitted by the Agent
under this Agreement, any other Loan Document, or any other document
contemplated by this Agreement, except that no Lender shall be liable to the
Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the gross negligence or willful misconduct of the Agent as
determined by a final non-appealable order of a court of competent
jurisdiction. The provisions of this Section 9.10 shall survive the
termination of this Agreement.
Section 9.11 Credit Decision. Each Lender represents and warrants to each
other and to the Agent that:
(a) In making its decision to enter into this Agreement and to make its
Advances it has independently taken whatever steps it considers necessary to
evaluate the financial condition and affairs of the Borrower and that it has
made an independent credit judgment, and that it has not relied upon
information provided by the Agent; and
(b) So long as any portion of the Loans remains outstanding, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Borrower.
Section 9.12 Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, the Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Majority Lenders shall have the right to appoint a successor
Agent (with the consent of the Borrower if no Event of Default then exists).
If no successor Agent shall have been so appointed by the Majority Lenders, and
shall have accepted such appointment
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within thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be any Lender or a commercial bank organized under
the laws of the United States of America or any political subdivision thereof
which has combined capital and reserves in excess of $250,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, duties, and obligations of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article 9.12 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.
Section 9.13 Agent May File Proofs of Claim. The Agent may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Agent, its agents,
financial advisors and counsel), the Lenders and the Issuing Banks allowed in
any judicial proceedings relative to the Borrower or any Material Subsidiary,
or any of their respective creditors or property, and shall be entitled and
empowered to collect, receive and distribute any monies, securities or other
property payable or deliverable on any such claims and any custodian in any
such judicial proceedings is hereby authorized by each Lender and Issuing Bank
to make such payments to the Agent and, in the event that the Agent shall
consent to the making of such payments directly to the Lenders and the Issuing
Banks, to pay to the Agent any amount due to the Agent for the reasonable
compensation, expenses, disbursements and advances of the Agent, its agents,
financial advisors and counsel, and any other amounts due the Agent under
Section 10.2 hereof. Nothing contained in the Loan Agreement or the Loan
Documents shall be deemed to authorize the Agent to authorize or consent to or
accept or adopt on behalf of any Lender or any Issuing Bank any plan of
reorganization, arrangement, adjustment or composition affecting the Notes, the
Letters of Credit or the rights of any holder thereof, or to authorize the
Agent to vote in respect of the claim of any Lender of any Issuing Bank in any
such proceeding.
Section 9.14 Collateral. The Agent is hereby authorized to hold all
Collateral pledged pursuant to any Loan Document and to act on behalf of the
Lenders and the Issuing Banks, in its own capacity and through other agents
appointed by it, under the Security Documents; provided, that the Agent shall
not agree to
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the release of any Collateral except in accordance with the terms hereof.
Section 9.15 Release of Collateral.
(a) Each Lender and each Issuing Bank hereby directs, in accordance with the
terms of this Agreement, the Agent to release or to subordinate any Lien held
by the Agent for the benefit of the Lenders and the Issuing Banks:
(i) against all of the Collateral, upon final and indefeasible payment in
full of the Obligations and termination of this Agreement; or
(ii) against any part of the Collateral sold or disposed of by the
Borrower if such sale or disposition is permitted by Sections 7.7 or 7.15
hereof or is otherwise consented to by the requisite Lenders for such release
as set forth in Section 10.12 hereof, as certified to the Agent by the
Borrower in a certificate of an Authorized Signatory.
(b) Each Lender and each Issuing Bank hereby directs the Agent to execute
and deliver or file such termination and partial release statements and do such
other things as are necessary to release Liens to be released pursuant to this
Section 9.15 promptly upon the effectiveness of any such release. Upon request
by the Agent at any time, the Lenders and the Issuing Banks will confirm in
writing the Agent's authority to release particular types or items of
Collateral pursuant to this Section 9.15.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices.
(a) All notices and other communications under this Agreement shall be in
writing and shall be deemed to have been given five (5) days after deposit in
the mail, designated as certified mail, return receipt requested, post-prepaid,
or one (1) day after being entrusted to a reputable commercial overnight
delivery service, or when delivered to the telegraph office or sent out by
telex or telecopy addressed to the party to which such notice is directed at its
address determined as provided in this Section 10.1. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:
(i) If to the Borrower, to it at:
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Zenith Electronics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Manager Banking and Finance
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to (which copies shall only be required to be
sent in connection with a notice under Article 8 hereof):
Zenith Electronics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Agent, to it at:
▇▇. ▇▇▇ ▇▇▇▇▇▇
Citicorp North America, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to the Lenders, to them at the addresses
set forth on the signature pages hereof.
(iv) If to the Issuing Banks, at the addresses
set forth on the signature pages hereof.
Copies shall be provided to persons other than parties hereto only in the case
of notices under Article 8 hereof.
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(b) Any party hereto may change the address to which notices shall be
directed under this Section 10.1 by giving ten (10) days' written notice of
such change to the other parties.
Section 10.2 Expenses. The Borrower agrees to promptly pay:
(a) All reasonable out-of-pocket expenses of the Agent in connection with
the preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents, the transactions contemplated hereunder and thereunder,
and the making of the initial Advance hereunder, including, but not limited to,
the fees and disbursements of counsel for the Agent, and reasonably allocated
costs for services of internal counsel for the Agent;
(b) All reasonable out-of-pocket expenses of the Agent in connection with
the administration of the transactions contemplated in this Agreement or the
other Loan Documents, and the preparation, negotiation, execution, and delivery
of any waiver, amendment, or consent by the Lenders relating to this Agreement
or the other Loan Documents, including, but not limited to, all reasonable
out-of-pocket expenses of the Agent in connection with its quarterly field
audits, and the fees and disbursements of counsel for the Agent and reasonably
allocated costs for services of internal counsel for the Agent;
(c) All reasonable out-of-pocket costs and expenses of the Agent, the
Issuing Banks and any Lender in connection with any restructuring, refinancing,
or "work out" of the transactions contemplated by this Agreement, and of
obtaining performance under this Agreement or the other Loan Documents, and all
out-of-pocket costs and expenses of collection if default is made in the payment
of the Notes, which in each case shall include fees and out-of-pocket expenses
of counsel for the Agent, the Issuing Banks and any Lender, and the fees and
out-of-pocket expenses of any experts, agents, or consultants of the Agent,
including in each case, but without in any way limiting the generality of the
foregoing reasonably allocated costs for service of their internal counsel; and
(d) All taxes, assessments, general or special, and other charges levied on,
or assessed, placed or made against any of the Collateral, the Notes or the
Obligations.
Section 10.3 Waivers. The rights and remedies of the Agent and the Lenders
under this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which they would otherwise have. No
failure or delay by the Agent, the Issuing Banks, the Majority Lenders or the
Lenders in exercising any right shall operate as a waiver of such right.
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The Agent and the Lenders expressly reserve the right to require strict
compliance with the terms of this Agreement in connection with any funding of
a request for an Advance. In the event the Lenders decide to fund a request
for an Advance at a time when the Borrower is not in strict compliance with the
terms of this Agreement, such decision by the Lenders shall not be deemed to
constitute an undertaking by the Lenders to fund any further requests for
Advances or preclude the Lenders from exercising any rights available to the
Lenders under the Loan Documents or at law or equity. Any waiver or indulgence
granted by the Lenders or by the Majority Lenders shall not constitute a
modification of this Agreement, except to the extent expressly provided in such
waiver or indulgence, or constitute a course of dealing by the Lenders at
variance with the terms of the Agreement such as to require further notice by
the Lenders of the Lenders' intent to require strict adherence to the terms of
the Agreement in the future. Any such actions shall not in any way affect the
ability of the Lenders, in their discretion, to exercise any rights available
to them under this Agreement or under any other agreement, whether or not the
Lenders are party, relating to the Borrower.
Section 10.4 Set-Off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, except to
the extent limited by Applicable Law, upon the occurrence of a Default or an
Event of Default and during the continuation thereof, the Lenders and any
subsequent holder or holders of the Notes are hereby authorized by the Borrower
at any time or from time to time, without notice to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set-off and to
appropriate and apply any and all deposits (general or special, time or demand,
including, but not limited to, Indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other Indebtedness
at any time held or owing by the Lenders or such holder to or for the credit or
the account of the Borrower, against and on account of the obligations and
liabilities of the Borrower, to the Lenders or such holder under this
Agreement, the Notes, and any other Loan Document, including, but not limited
to, all claims of any nature or description arising out of or connected with
this Agreement, the Notes, or any other Loan Document, irrespective of whether
or not (a) the Lenders or the holder of the Notes shall have made any demand
hereunder or (b) the Lenders shall have declared the principal of and interest
on the Loans and Notes and other amounts due hereunder to be due and payable as
permitted by Section 8.2 and although said obligations and liabilities, or any
of them, shall be contingent or unmatured. Any sums obtained by any Lender or
by any subsequent holder of the Notes shall be subject to the application of
payments provisions of Article 2 hereof. Upon direction by the Agent, with the
consent of the
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Majority Lenders, each Lender holding deposits of the Borrower shall exercise
its set-off rights as so directed.
Section 10.5 Assignment.
(a) The Borrower may not assign or transfer any of its rights or obligations
hereunder, under the Notes or under any other Loan Document without the prior
written consent of each Lender.
(b) Each of the Lenders may at any time enter into assignment agreements or
participations with one or more other banks or other Persons pursuant to which
each Lender may assign or participate its interest under this Agreement and the
other Loan Documents, including, its interest in any particular Advance or
portion thereof, provided, that (1) all assignments (other than assignments
described in clause (2) herein and in Section 10.12 (b) hereof) shall be in
minimum principal amounts of the lesser of (X) $5,000,000, and (Y) the amount
of such Lender's Commitment (in a single assignment only), (2) each Lender may
sell assignments or participations of up to one hundred percent (100%) of its
interest hereunder to (A) one or more Affiliates of such Lender, or (B) any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank (no assignment under this clause (B) shall
relieve such Lender from its obligations hereunder), and (3) all assignments
(other than assignments described in clause (2) herein and in Section 10.12(b)
hereof) and participations hereunder shall be subject to the following
additional terms and conditions:
(i) No assignment (except assignments permitted in Section 10.5(b)(2)
hereof) shall be sold without the prior consent of the Agent and, if no
Event of Default then exists, the Borrower, which consents shall not be
unreasonably withheld;
(ii) Any Person purchasing a participation or an assignment of the Loans
from any Lender shall be required to represent and warrant that its purchase
shall not constitute a "prohibited transaction" (as defined in Section
4.1(n) hereof);
(iii) The Borrower, the Lender, and the Agent agree that assignments
permitted hereunder (including the assignment of any Advance or portion
thereof) may be made with all voting rights, and shall be made pursuant to
an Assignment and Assumption Agreement. An administrative fee of $2,500
shall be payable to the Agent by the assigning Lender at the time of any
assignment hereunder;
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(iv) No participation agreement shall confer any rights under this
Agreement or any other Loan Document to any purchaser thereof, or relieve
any issuing Lender from any of its obligations under this Agreement, and all
actions hereunder shall be conducted as if no such participation had been
granted; provided, however, that any participation agreement may confer on
the participant the right to approve or disapprove decreases in the rate of
interest or fees to the Lenders, increases in the advance rates set forth in
the definition of "Borrowing Base" herein, increases in the principal amount
of such participant's pro rata share of the Commitment and extensions of the
Maturity Date for, or the date for any scheduled payment of principal,
interest or fees on, the Loans;
(v) Each Lender agrees to provide the Agent and the Borrower with prompt
written notice of any issuance of participation or assignments of its
interests hereunder;
(vi) No assignment, participation or other transfer of any rights
hereunder or under the Notes shall be effected that would result in any
interest requiring registration under the Securities Act of 1933, as amended,
or qualification under any state securities law;
(vii) No such assignment may be made to any bank or other financial
institution (x) with respect to which a receiver or conservator (including,
without limitation, the Federal Deposit Insurance Corporation, the
Resolution Trust Company or the Office of Thrift Supervision) has been
appointed or (y) that is not "adequately capitalized" (as such term is
defined in Section 131(b) (1) (B) of the Federal Deposit Insurance
Corporation Improvement Act as in effect on the Agreement Date); and
(viii) If applicable, each Lender shall, and shall cause each of its
assignees to provide to the Agent on or prior to the Agreement Date or
effective date of any assignment, as the case may be, an appropriate
Internal Revenue Service form as required by Applicable Law supporting such
Lender's position that no withholding by the Borrower or the Agent for U.S.
income tax payable by such Lender in respect of amounts received by it
hereunder is required. For purposes of this Agreement, an appropriate
Internal Revenue Service form shall mean Form 1001 (Ownership Exemption or
Reduced Rate Certificate of the U.S. Department of Treasury), or Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States), or any successor or
related forms adopted by the relevant U.S. taxing authorities.
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(c) Except as specifically set forth in Section 10.5(b) hereof, nothing in
this Agreement or the Notes, expressed or implied, is intended to or shall
confer on any Person other than the respective parties hereto and thereto and
their successors and assignees permitted hereunder and thereunder any benefit
or any legal or equitable right, remedy or other claim under this Agreement or
the Notes.
(d) Anything in this Agreement to the contrary notwithstanding, in the case
of any participation, all amounts payable by the Borrower under the Loan
Documents shall be calculated and made in the manner and to the parties hereto
as if no such participation had been sold.
Section 10.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
Section 10.7 Governing Law. This Agreement and the Loan Documents shall be
construed in accordance with and governed by the laws of the State of New York,
except to the extent otherwise provided in the Loan Documents.
Section 10.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 10.9 Headings. Headings used in this Agreement are for convenience
only and shall not be used in connection with the interpretation of any
provision hereof.
Section 10.10 Source of Funds. Notwithstanding the use by the Lenders of
the Base Rate and the Eurodollar Rate as reference rates for the determination
of interest on the Loans, the Lenders shall be under no obligation to obtain
funds from any particular source in order to charge interest to the Borrower at
interest rates tied to such reference rates.
Section 10.11 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement and the other documents described or contemplated herein
embody the entire Agreement and understanding among the parties hereto and
thereto and supersede all prior agreements, understandings, and conversations
relating to the subject matter hereof and thereof. The Borrower represents and
warrants to the Agent and each of the Lenders that it has read the provisions of
this Section 10.11 and discussed the provisions of this Section 10.11 and the
rest of the Loan
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Agreement with counsel for the Borrower, and the Borrower acknowledges and
agrees that the Agent and each of the Lenders are expressly relying upon such
representations and warranties of the Borrower (as well as the other
representations and warranties of the Borrower set forth in Section 4.1 hereof)
in entering into this Agreement.
Section 10.12 Amendments and Waivers.
(a) Neither this Agreement nor any term hereof may be amended orally, nor
may any provision hereof be waived orally but only by an instrument in writing
signed by the Majority Lenders and, in the case of an amendment, also by the
Borrower, except that the consent of the Super-Majority Lenders shall be
required for any increase of the advance rates set forth in the definition of
"Borrowing Base" herein, and the consent of each of the Lenders shall be
required for (i) any increase in the amount of the Commitment, (ii) any sale or
release of any material Collateral except as permitted hereunder or any release
of any guarantor of the Obligations, (iii) any extensions of the Maturity Date,
the date of payment of interest or principal or fees, or reduction of principal
(without a corresponding payment with respect thereto), or reduction in the
rate of interest or fees due to the Lenders hereunder, and (iv) any amendment
of this Section 10.12 or of the definition of "Majority Lenders" or
"Super-Majority Lenders", and, in the case of an amendment with respect to any
of the foregoing, the consent of the Borrower.
(b) Each Lender grants to the Agent the right to purchase all (but not less
than all) of such Lender's Commitment, Letter of Credit Commitment, the Loans
and Letter of Credit Obligations owing to it and the Notes held by it and all
of its rights and obligations hereunder and under the other Loan Documents at a
price equal to the aggregate amount of outstanding Loans and Letter of Credit
Obligations owed to such Lender (together with all accrued and unpaid interest
and fees owed to such Lender), which right may be exercised by the Agent if
such Lender refuses to execute any amendment, waiver or consent which requires
the written consent of all of the Lenders and to which the Majority Lenders,
the Agent and the Borrower have agreed. Each Lender agrees that if the Agent
exercises its option hereunder, it shall promptly execute and deliver an
Assignment and Assumption Agreement and other agreements and documentation
necessary to effectuate such assignment. The Agent may assign its purchase
rights hereunder to any assignee if such assignment complies with the
requirements of Section 10.5(b)(i), (ii), (vi), (vii) and (ix).
Section 10.13 Other Relationships. No relationship created hereunder or
under any other Loan Document shall in any way affect the ability of the Agent,
each Issuing Bank and each
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Lender to enter into or maintain business relationships with the Borrower, or
any of its Affiliates, beyond the relationships specifically contemplated by
this Agreement and the other Loan Documents.
Section 10.14 Pronouns. The pronouns used herein shall include, when
appropriate, either gender and both singular and plural, and the grammatical
construction of sentences shall conform thereto.
Section 10.15 Disclosure. Subject to Section 10.16 hereof, the Borrower
agrees that the Agent shall have the right to issue press releases regarding the
making of the Loans to the Borrower pursuant to the terms of this Agreement.
Section 10.16 Replacement of Lender. In the event that a Replacement
Event occurs and is continuing with respect to any Lender, the Borrower may
designate another financial institution (such financial institution being herein
called a "Replacement Lender") acceptable to the Agent, and which is not the
Borrower or an Affiliate of the Borrower, to assume such Lender's Commitment
hereunder, to purchase the Loans and participations of such Lender and such
Lender's rights hereunder and (if such Lender is an Issuing Bank) to issue
Letters of Credit in substitution for all outstanding Letters of Credit issued
by such Lender, without recourse to or representation or warranty by, or
expense to, such Lender for a purchase price equal to the outstanding principal
amount of the Loans payable to such Lender plus any accrued but unpaid interest
on such Loans and accrued but unpaid commitment fees and letter of credit fees
owing to such Lender, and upon such assumption, purchase and substitution, and
subject to the execution and delivery to the Agent by the Replacement Lender of
documentation satisfactory to the Agent (pursuant to which such Replacement
Lender shall assume the obligations of such original Lender under this
Agreement), the Replacement Lender shall succeed to the rights and obligations
of such Lender hereunder and such Lender shall no longer be a party hereto or
have any rights hereunder provided that the obligations of the Borrower to
indemnify such Lender with respect to event occurring or obligations arising
before such replacement shall survive such replacement. "Replacement Event"
means, with respect to any Lender, the commencement of or the talking of
possession by, a receiver, custodian, conservator, trustee or liquidator of
such Lender, or the declaration by the appropriate regulatory authority that
such Lender is insolvent.
ARTICLE 11
YIELD PROTECTION
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Section 11.1 Eurodollar Rate Basis Determination. Notwithstanding anything
contained herein which may be construed to the contrary, if with respect to any
proposed Eurodollar Rate Advance for any Eurodollar Advance Period, the Agent
determines that deposits in dollars (in the applicable amount) are not being
offered to the Agent in the relevant market for such Eurodollar Advance Period,
the Agent shall forthwith give notice thereof to the Borrower and the Lenders,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such situation no longer exist, the obligations of the Lenders to make
such types of Eurodollar Rate Advances shall be suspended.
Section 11.2 Illegality. If any applicable law, rule, or regulation, or
any change therein, or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank, or comparable agency,
shall make it unlawful or impossible for any Lender to make, maintain, or fund
its Eurodollar Rate Advances, such Lender shall so notify the Agent, and the
Agent shall forthwith give notice thereof to the other Lenders and the
Borrower. Before giving any notice to the Agent pursuant to this Section 11.2,
such Lender shall designate a different lending office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender. Upon receipt of such
notice, notwithstanding anything contained in Article 2 hereof, the Borrower
shall repay in full the then outstanding principal amount of each affected
Eurodollar Rate Advance of such Lender, together with accrued interest thereon,
either (a) on the last day of the then current Eurodollar Advance Period
applicable to such Eurodollar Rate Advance if such Lender may lawfully continue
to maintain and fund such Eurodollar Rate Advance to such day or (b)
immediately if such Lender may not lawfully continue to fund and maintain such
Eurodollar Rate Advance to such day. Concurrently with repaying each affected
Eurodollar Rate Advance of such Lender, notwithstanding anything contained in
Article 2 hereof, the Borrower shall borrow a Base Rate Advance (or the other
type of Eurodollar Rate Advance, if available) from such Lender, and such
Lender shall make such Advance in an amount such that the outstanding principal
amount of the Note held by such Lender shall equal the outstanding principal
amount of such Note immediately prior to such repayment.
Section 11.3 Increased Costs.
(a) If after the Agreement Date any applicable law, rule, or regulation, or
any change therein, or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency
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charged with the interpretation or administration thereof or compliance by any
Lender with any request or directive (whether or not having the any such
authority, central bank, or comparable agency:
(i) Shall subject any Lender to any tax, duty, or other charge with
respect to its obligation to make Eurodollar Rate Advances, or its Eurodollar
Rate Advances, or shall change the basis of taxation of payments to any
Lender of the principal of or interest on its Eurodollar Rate Advances or in
respect of any other amounts due under this Agreement in respect of its
Eurodollar Rate Advances or its obligation to make Eurodollar Rate Advances
(except for changes in the rate of tax on the overall net income of such
Lender imposed by the jurisdiction in which such Lender's principal executive
office is located); or
(ii) Shall impose, modify, or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System, but excluding any included in an applicable Eurodollar
Reserve Percentage), special deposit, capital adequacy, assessment, or other
requirement or condition against assets of, deposits with or for the account
of, or commitments or credit extended by any Lender, or shall impose on any
Lender or the eurodollar interbank borrowing market any other condition
affecting its obligation to make such Eurodollar Rate Advances or its
Eurodollar Rate Advances; and the result of any of the foregoing is to
increase the cost to such Lender of making or maintaining any such
Eurodollar Rate Advances, or to reduce the amount of any sum received or
receivable by the Lender under this Agreement or under its Notes with
respect thereto, and such increase is not given effect in the determination
of the Eurodollar Rate then,
on the earlier of demand by such Lender or the Maturity Date, the Borrower
agrees to pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased costs. Each Lender will promptly
notify the Borrower and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to compensation
pursuant to this Section 11.3 and will designate a different lending office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole judgment of such Lender, be otherwise
disadvantageous to such Lender.
(b) A certificate of any Lender claiming compensation under this Section
11.3 and setting forth the additional amount or amounts to be paid to it
hereunder and calculations therefor shall be conclusive in the absence of
manifest error. In
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determining such amount, such Lender may use any reasonable averaging and
attribution methods. If any Lender demands compensation under this Section
11.3, the Borrower may at any time, upon at least five (5) Business Days' prior
notice to such Lender, prepay in full the then outstanding affected Eurodollar
Rate Advances of such Lender, together with accrued interest thereon to the
date of prepayment, along with any reimbursement required under Section 2.9
hereof. Concurrently with prepaying such Eurodollar Rate Advances the Borrower
shall borrow a Base Rate Advance, or a Eurodollar Rate Advance not so affected,
from such Lender, and such Lender shall make such Advance in an amount such
that the outstanding principal amount of the Notes held by such Lender shall
equal the outstanding principal amount of such Notes immediately prior to such
prepayment.
Section 11.4 Effect On Other Advances. If notice has been given pursuant
to Section 11.1, 11.2 or 11.3 suspending the obligation of any Lender to make
any type of Eurodollar Rate Advance, or requiring Eurodollar Rate Advances of
any Lender to be repaid or prepaid, then, unless and until such Lender notifies
the Borrower that the circumstances giving rise to such repayment no longer
apply, all Advances which would otherwise be made by such Lender as to the type
of Eurodollar Rate Advances affected shall, at the option of the Borrower, be
made instead as Base Rate Advances.
Section 11.5 Capital Adequacy. If after the date hereof, any Lender or
Issuing Bank (or any affiliate of the foregoing) shall have reasonably
determined that the adoption of any applicable law, governmental rule,
regulation or order regarding the capital adequacy of banks or bank holding
companies, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Lender or Issuing Bank (or any affiliate of the foregoing) with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such governmental authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on such Lender's or
Issuing Bank's (or any affiliate of the foregoing) capital as a consequence of
such Lender's or Issuing Bank's Commitment or Obligations hereunder to a level
below that which it could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or Issuing Bank's (or any
affiliate of the foregoing) policies with respect to capital adequacy
immediately before such adoption, change or compliance and assuming that such
Lender's or Issuing Bank's (or any affiliate of the foregoing) capital was
fully utilized prior to such adoption, change or compliance), then, upon demand
by such Lender or Issuing Bank, the Borrower shall immediately pay to such
Lender or Issuing Bank such
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additional amounts as shall be sufficient to compensate such Lender or Issuing
Bank for any such reduction actually suffered; provided, however, that there
shall be no duplication of amounts paid to a Lender pursuant to this sentence
and Section 11.3 hereof. A certificate of such Lender or Issuing Bank setting
forth the amount to be paid to such Lender or Issuing Bank by the Borrower as a
result of any event referred to in this paragraph shall, absent manifest error,
be conclusive.
ARTICLE 12
JURISDICTION, VENUE AND WAIVER OF JURY TRIAL
Section 12.1 Jurisdiction and Service of Process. For purposes of any
legal action or proceeding brought by the Agent or the Lenders with respect to
this Agreement or any other Loan Document, the Borrower hereby irrevocably
submits to the personal jurisdiction of the federal and state courts sitting in
the state of New York and hereby irrevocably designates and appoints, as its
authorized agent for service of process in the State of New York, CT
Corporation System, whose address is [1633 ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,]
or such other person as the Borrower shall designate hereafter by written
notice given to the Agent. The consent to jurisdiction herein shall not be
exclusive. The Agent, the Lenders and the Issuing Banks shall for all purposes
automatically, and without any act on their part, be entitled to treat such
designee of the Borrower as the authorized agent to receive for and on behalf
of the Borrower service of writs, or summons or other legal process in the
State of New York, which service shall be deemed effective personal service on
the Borrower served when delivered, whether or not such agent gives notice to
the Borrower; and delivery of such service to its authorized agent shall be
deemed to be made when personally delivered or four (4) Business Days after
mailing by registered or certified mail addressed to such authorized agent.
The Borrower further irrevocably consents to service of process in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail to the Borrower at the address set forth above, such service to
become effective four (4) Business Days after such mailing. In the event that,
for any reason, such agent or his or her successors shall no longer serve as
agent of the Borrower to receive service of process in the State of New York,
the Borrower shall serve and advise the Agent thereof so that at all times the
Borrower will maintain an agent to receive service of process in the State of
New York on behalf of the Borrower with respect to this Agreement and all other
Loan Documents. In the event that, for any reason, service of legal process
cannot be made in the manner described above, such service may be made in such
manner as permitted by law.
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Section 12.2 Consent to Venue. The Borrower hereby irrevocably waives any
objection it would make now or hereafter for the laying of venue of any suit,
action, or proceeding arising out of or relating to this Agreement or any other
Loan Document brought in the federal courts of the United States of America
sitting in New York, New York, and hereby irrevocably waives any claim that any
such suit, action, or proceeding has been brought in an inconvenient forum.
Section 12.3 Waiver of Jury Trial. THE BORROWER AND EACH OF THE AGENT, THE
LENDERS AND THE ISSUING BANKS TO THE EXTENT PERMITTED BY APPLICABLE LAW WAIVE,
AND OTHERWISE AGREE NOT TO REQUEST, A TRIAL BY JURY IN ANY COURT AND IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM OF ANY TYPE IN WHICH THE BORROWER, ANY OF
THE LENDERS, THE ISSUING BANKS, THE AGENT, OR ANY OF THEIR RESPECTIVE
SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY
OR INDIRECTLY OUT OF THIS AGREEMENT, ANY OF THE NOTES OR THE OTHER LOAN
DOCUMENTS AND THE RELATIONS AMONG THE PARTIES LISTED IN THIS ARTICLE 12.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first above written.
BORROWER: ZENITH ELECTRONICS CORPORATION
By:________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Treasurer
(SEAL)
AGENT: CITICORP NORTH AMERICA, INC.
By:________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President
ISSUING BANK: CITIBANK, N.A.
By:______________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Attorney-in-Fact
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
Zone 4
New York, New York 10043
LENDERS: CITICORP USA, INC.
By:______________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Attorney-in-Fact
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
By: ___________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Director
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Stop 01-09-06
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ FINANCIAL, INC.
By: __________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Vice President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
BNY FINANCIAL CORPORATION
By: ___________________
Name: ▇▇▇▇▇▇▇ ▇. Magiante
Its: Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SANWA BUSINESS CREDIT CORPORATION
By: ___________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
127
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: ___________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Senior Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
By: ___________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: Vice President
Address: ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
128
Schedule C-1
Commitment Ratios
I. LOANS
Commitment
Lender Commitment Ratio Principal Amount
------ ---------------- ----------------
Citicorp USA, Inc. 22.2% $27,700,000
Bank Boston, N.A. 12.2% $15,300,000
▇▇▇▇▇▇ Financial, Inc. 12.4% $15,500,000
Sanwa Business Credit
Corporation 16.0% $20,000,000
Transamerica Business
Credit Corporation 12.4% $15,500,000
▇▇▇▇▇ Fargo Bank,
National Association 12.4% $15,500,000
BNY Financial
Corporation 12.4% $15,500,000
------------------- --------------
Totals: 100% $125,000,000
=================== ================
II. LETTERS OF CREDIT
Issuing Banks Letter of Credit Commitment %
-------------- ------------------------------
Citibank, N.A. 100%